EUROHOME MORTGAGES 2007-1 P.L.C. (Incorporated in Ireland with limited liability under Registered Number 436765) €262,500,000 Class A Mortgage Backed Floating Rate Notes due 2050 €15,000,000 Class B Mortgage Backed Floating Rate Notes due 2050 €12,000,000 Class C Mortgage Backed Floating Rate Notes due 2050 €6,300,000 Class D Mortgage Backed Floating Rate Notes due 2050 €4,200,000 Class E Mortgage Backed Floating Rate Notes due 2050 €2,700,000 Class X Mortgage Backed Floating Rate Notes due 2050 German Mortgage Early Repayment Certificates due 2050 Italian Mortgage Early Repayment Certificates due 2050 Residual Mortgage Backed Notes due 2050 The Mortgage Backed Floating Rate Notes to be issued by Eurohome Mortgages 2007-1 p.l.c. (the Issuer) will comprise €262,500,00 Class A Notes (the A Notes), €15,000,000 Class B Notes (the B Notes), €12,000,000 Class C Notes (the C Notes), €6,300,000 Class D Notes (the D Notes), €4,200,000 Class E Notes (the E Notes) and €2,700,000 Class X Notes (the X Notes, and together with the A Notes, the B Notes, the C Notes, the D Notes and the E Notes, the Notes). The holders of the A Notes are referred to herein as the A Noteholders. The holders of the B Notes are referred to herein as the B Noteholders. The holders of the C Notes are referred to herein as the C Noteholders. The holders of the D Notes are referred to herein as the D Noteholders. The holders of the E Notes are referred to herein as the E Noteholders. The holders of the X Notes are referred to herein as the X Noteholders. The holders of the Notes are referred to herein as the Noteholders. The Notes will be issued on or about 26 July 2007 (the Issue Date). Interest is payable on the Notes, beginning on 2 November 2007 and thereafter quarterly in arrear on the 2nd day in February, May, August and November in each year, unless such day is not a Transaction Business Day, in which case interest will be payable on the following Transaction Business Day (each such date, a Payment Date). Interest on the A Notes will accrue at an annual rate equal to the Euro Interbank Offered Rate (EURIBOR) for deposits in euro for three months or, in the case of the first Interest Period, at an annual rate obtained by the interpolation of EURIBOR for 3 months euro deposits and EURIBOR for 4 months euro deposits, (Note EURIBOR) plus 0.21 per cent. per annum. Interest on the B Notes will accrue at an annual rate of Note EURIBOR plus 0.31 per cent. per annum. Interest on the C Notes will accrue at an annual rate of Note EURIBOR plus 0.48 per cent. per annum. Interest on the D Notes will accrue at an annual rate of Note EURIBOR plus 0.85 per cent. per annum. Interest on the E Notes will accrue at an annual rate of Note EURIBOR plus 2.50 per cent. per annum. Interest on the X Notes will accrue at an annual rate of Note EURIBOR plus 1.50 per cent. per annum. In addition, on the Issue Date, the Issuer will issue to Deutsche Bank AG, London Branch German Mortgage Early Repayment Certificates due 2050 (the GMERCs and the holders thereof, the GMERC Holders), Italian Mortgage Early Repayment Certificates due 2050, (the IMERCs (and together with the GMERCs, the MERCs) and the holders thereof the IMERC Holders (and together with the GMERC Holders, the MERC Holders)) and Residual Mortgage Backed Notes due 2050 (the Residuals and the holders thereof, the Residual Holders).

The GMERCs will pay on each Payment Date an amount (a GMERC Payment) equal to the total of German Mortgage Early Repayment Charges corresponding to Margin Losses (as defined below) (if any) received by the Issuer in respect of the relevant Collection Period (as defined below) less certain amounts to be paid to the German Swap Provider, immediately preceding the relevant Payment Date. The IMERCs will pay on each Payment Date an amount (an "IMERC Payment", and together with a GMERC Payment, each a "MERC Payment") equal to the total of Italian Mortgage Early Repayment Charges (as defined below) (if any) received by the Italian Purchaser in respect of the relevant Collection Period (as defined below) and paid to the Issuer as IMERC Interest Component (as defined below) under the Italian Notes (as defined below) immediately preceding the relevant Payment Date. The Residuals will pay on each Payment Date an amount (a Residual Payment) equal to the residual amount of funds (if any) available to the Issuer following the payment of all other items in the Pre-Enforcement Revenue Priority of Payments or the Post-Enforcement Priority of Payments (as applicable) in respect of the relevant Collection Period (as defined below) immediately preceding the relevant Payment Date. The period from (and including) a Payment Date to (but excluding) the next Payment Date is an Interest Period. The first Interest Period shall be from (and including) the Issue Date to (but excluding) the first Payment Date. The rate of interest payable from time to time (the Rate of Interest) in respect of each class of the Notes will be determined on the day falling two Transaction Business Days before each Payment Date or, in the case of the first Interest Period, on the day falling two Transaction Business Days before the Issue Date (each an Interest Determination Date). Prior to redemption on the Payment Date falling in August 2050 (the Final Payment Date), the Notes will be subject to mandatory and/or optional redemption in certain circumstances. The Issuer may not purchase any Notes. See Terms and Conditions of the Notes – Condition 5. The MERCs and the Residuals will be redeemed at their principal amount (or such lesser amount as is available for such purpose in accordance with their terms) on the date when all of the outstanding Notes are redeemed. The A Notes are each anticipated to be rated AAA by Fitch Ratings Ltd (Fitch) and Aaa by Moody's Investors Service Limited (Moody's and, together with Fitch, the Rating Agencies). The B Notes are each anticipated to be rated AA by Fitch and Aa2 by Moody's. The C Notes are each anticipated to be rated A by Fitch and A1 by Moody's. The D Notes are each anticipated to be rated BBB by Fitch and Baa2 by Moody's. The E Notes are each anticipated to be rated BBB by Fitch and Ba2 by Moody's. The X Notes are each anticipated to be rated BB+ by Fitch and Ba2 by Moody’s. The MERCs are each anticipated to be rated AAA by Fitch and Aaa by Moody’s. The issue of the Residuals is not conditional upon a rating and the Issuer has not requested any rating of the Residuals. A security rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at any time by the relevant Rating Agency. The rating of the MERCs addresses the likelihood of receipt of MERC Payments assuming that: (i) payment of the Mortgage Early Repayment Charges (as defined below) is legally valid, binding and enforceable against the Borrowers and (ii) the Mortgage Early Repayment Charges are actually collected from Borrowers, and not waived by the German Originator or the Italian Originator (as applicable). It is intended that the Notes, the MERCs and the Residuals will be held in a manner which would allow Eurosystem eligibility. It is intended that the Notes, the MERCs and the Residuals are intended upon issue to be deposited with one of the international central securities depositaries as common safekeeper and does not necessarily mean that the Notes, the MERCs and the Residuals will be recognised as eligible collateral for Eurosystem monetary policy and intra-day credit operations by the Eurosystem either upon issue or at any or all times during their life. Such recognition will depend upon satisfaction of the Eurosystem eligibility criteria. Application has been made to the Irish Financial Services Regulatory Authority (IFSRA), as competent authority under Directive 2003/71EC (the Prospectus Directive), for this Offering Circular to be approved. Such approval from IFSRA in relation to the Offering Circular relates only to the admittance to trading of the Notes on the regulated market of the Irish Stock Exchange. Application has also been made to the Irish Stock Exchange for the Notes to be admitted to the Official List and to trading on its regulated market. It is expected that admission to the Official List of the Irish Stock Exchange (the Official List) and to trading on the regulated market of the Irish Stock Exchange will, with respect to the Notes, be granted on or about the Issue Date subject to the issue of the Global Notes (as defined below). However, there can be no assurance that any such listing will be obtained, and if Page 2

obtained, maintained. This Offering Circular constitutes a prospectus for the purpose of the Prospectus Directive with respect only to the Notes. References throughout this document to "Offering Circular" should, to the extent this document relates to the Notes, be taken to read "Prospectus". This Offering Circular constitutes a “Prospetto Informativo” for the purpose of Article 2, paragraph 3 of Italian Law No. 130 of 30 April 1999 (the Italian Securitisation Law) in respect of Euro 193,950,000 Asset Backed Floating Rate Variable Return Notes due 2050 (the Italian Notes) which will be issued by Sofia Mortgages S.r.l., a limited liability company incorporated under the laws of the Republic of Italy (the Italian Issuer) on 26 July 2007 (the Italian Issue Date) in accordance with Article 3 of the Italian Securitisation Law. Terms and conditions of the Italian Notes are set out in the section entitled “Italian Notes”. At the date hereof, no application has been made for the Italian Notes to be rated by any Rating Agencies. Application has also been made to the Irish Stock Exchange for the MERCs and the Residuals to be admitted to its Official List and to trading on its alternative securities market. It is expected that admission to the Official List of the Irish Stock Exchange and to trading on the alternative securities market of the Irish Stock Exchange will, with respect to the MERCs and the Residuals, be granted on or about the Issue Date, subject to the issue of the Global MERCs and Global Residuals (as defined below). However, there can be no assurance that any such listing will be obtained, and if obtained, maintained. This Offering Circular constitutes the listing particulars (the Listing Particulars) for the purposes of the application to the Irish Stock Exchange for the MERCs and the Residuals to be admitted to its Official List and to trading on its alternative securities market. Application has been made to the Irish Stock Exchange for the Listing Particulars to be approved. Such approval relates only to the MERCs and the Residuals which are to be admitted to trading on the alternative securities market of the Irish Stock Exchange. See Risk Factors below for a description of certain factors which should be considered by prospective investors in connection with an investment in the Notes, the MERCs and/or the Residuals.

Instruments

Initial Principal Amount €

Margin over EURIBOR

Final Payment Date

Issue Price

A Notes B Notes C Notes D Notes E Notes X Notes GMERCs IMERCs Residuals

262,500,000 15,000,000 12,000,000 6,300,000 4,200,000 2,700,000

0.21% 0.31% 0.48% 0.85% 2.50% 1.50% Variable Rate Variable Rate Variable Rate

August 2050 August 2050 August 2050 August 2050 August 2050 August 2050 August 2050 August 2050 August 2050

100% 100% 100% 100% 100% 100% 100% 100% 100%

20,000 20,000 100,000

Arranger and Lead Manager

DEUTSCHE BANK The date of this Offering Circular is 24 July 2007.

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The Notes, the MERCs and the Residuals will be obligations solely of the Issuer and will not be guaranteed by, or be the responsibility of, any other entity. In particular, the Notes, the MERCs and the Residuals will not be obligations of, and will not be guaranteed by, or be the responsibility of, Deutsche Bank AG, London Branch in its capacity as lead manager, (the Lead Manager), Wilmington Trust SP Services (Dublin) Limited in its capacity as corporate services provider to the Issuer, (the Corporate Services Provider), Wilmington Trust SP Services (London) Limited in its capacity as share trustee (the Share Trustee), Deutsche Bank AG, London Branch in its capacity as account bank to the Issuer and to the Italian Purchaser (the Account Bank), in its capacity as liquidity facility provider to the Issuer (the Liquidity Provider), cash manager to the Issuer (the Cash Manager), cash manager to the Italian Purchaser (the Italian Cash Manager) or Italian Calculation Agent to the Italian Purchaser (the Italian Calculation Agent), Deutsche Bank S.p.A., in its capacity as Italian account bank to the Italian Purchaser (the Italian Account Bank) or principal paying agent for the Italian Purchaser (the Italian Paying Agent), Sofia Mortgages S.r.l., in its capacity as the Italian Purchaser, Deutsche Bank Aktiengesellschaft, in its capacity as German originator (the German Originator), German Swap Provider to the Issuer (the German Swap Provider), Italian Swap Provider to the Issuer (the Italian Swap Provider) or German servicer, (the German Servicer), DB Mutui S.p.A., in its capacity as Italian originator (the Italian Originator) or Italian servicer (the Italian Servicer), or Deutsche Trustee Company Limited, in its capacity as note trustee or security trustee (in such capacities, the Note Trustee, and the Security Trustee), or representative of the holders of the Italian Notes (the Representative of the Italian Noteholders). The Issuer accepts responsibility for the information contained in this Offering Circular. To the best of its knowledge and belief (having taken all reasonable care to ensure that such is the case) the information contained in this Offering Circular is in accordance with the facts and does not omit anything likely to affect the import of such information. The Italian Servicer and the Italian Originator accept responsibility for the information contained in the section entitled "DB Mutui S.p.A.". To the best of their knowledge and belief (having taken all reasonable care to ensure that such is the case) the information contained therein is in accordance with the facts and does not omit anything likely to affect the import of such information. No representation, warranty or undertaking, express or implied, is made and no responsibility or liability is accepted by the Italian Servicer or the Italian Originator as to the accuracy or completeness of any other information contained in this Offering Circular or any other information supplied in connection with the Notes, the MERCs and the Residuals or their distribution. The Italian Purchaser accepts responsibility for the information contained in the section entitled "Sofia Mortgages S.r.l." and for the other information relating to the Italian Securitisation and the Italian Notes. To the best of its knowledge and belief (having taken all reasonable care to ensure that such is the case) the information contained therein is in accordance with the facts and does not omit anything likely to affect the import of such information. No representation, warranty or undertaking, express or implied, is made and no responsibility or liability is accepted by the Italian Purchaser as to the accuracy or completeness of any other information contained in this Offering Circular or any other information supplied in connection with the Notes, the MERCs and the Residuals or their distribution. Deutsche Bank AG, London Branch in its capacity as Account Bank, Liquidity Provider, Cash Manager, Italian Cash Manager, German Servicer, German Originator, Italian Calculation Agent, German Swap Provider and Italian Swap Provider respectively accepts responsibility for the information related to it contained in the section entitled "Deutsche Bank Aktiengesellschaft". To the best of its respective knowledge and belief (having taken all reasonable care to ensure that such is the case) the information contained therein is in accordance with the facts and does not omit anything likely to affect the import of such Page 4

information. No representation, warranty or undertaking, express or implied, is made and no responsibility or liability is accepted by Deutsche Bank AG, London Branch as to the accuracy or completeness of any information contained in this Offering Circular (other than the information mentioned above) or any other information supplied in connection with the Notes, the MERCs or the Residuals or their distribution. The Italian Paying Agent and the Italian Account Bank respectively accepts responsibility for the information related to it contained in the section entitled "Deutsche Bank S.p.A.". No representation, warranty or undertaking, express or implied, is made and no responsibility or liability is accepted by any of the Italian Paying Agent and the Italian Account Bank as to the accuracy or completeness of any information contained in this Offering Circular (other than the information mentioned above) or any other information supplied in connection with the Notes, the MERCs and the Residuals or their distribution. Each initial and subsequent purchaser of the Notes, the MERCs and/or the Residuals will be deemed, by its acceptance of such Notes, MERCs and/or Residuals (as applicable), to have made certain acknowledgements, representations and agreements intended to restrict the resale or other transfer thereof as set forth therein and described in this Offering Circular and, in connection therewith, may be required to provide confirmation of its compliance with such resale and other transfer restrictions in certain cases. The Notes, the MERCs and the Residuals have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the Securities Act). The Notes, the MERCs and the Residuals are in bearer form and subject to US tax law requirements. Subject to certain exceptions, the Notes, the MERCs and the Residuals may not be offered, sold or delivered within the United States or to U.S. persons. This Offering Circular does not constitute, and is not intended to be, an offer of, or an invitation by or on behalf of, the Issuer or the Lead Manager to subscribe for or purchase any of the Notes, the MERCs or the Residuals. Other than (i) the approval by the IFSRA of this Offering Circular, to the extent this document relates to the Notes, as a prospectus in accordance with the requirements of the Prospectus Directive and relevant implementing measures in Ireland, application having been made for the Notes to be admitted to the Official List of the Irish Stock Exchange and to trading on the regulated market of the Irish Stock Exchange, and (ii) the approval by the Irish Stock Exchange of this Offering Circular as the Listing Particulars, to the extent this document relates to the MERCs and the Residuals, application having been made for the MERCs and the Residuals to be admitted to the Official List of the Irish Stock Exchange and to trading on its alternative securities market, no action has been, nor will be taken to permit a public offering of the Notes, the MERCs or the Residuals or the distribution of this Offering Circular in any jurisdiction. The distribution of this Offering Circular and the offering of the Notes, the MERCs and the Residuals in certain jurisdictions may be restricted by law. Persons into whose possession this Offering Circular comes are required by the Issuer and the Lead Manager to inform themselves about and to observe such restrictions. For a description of certain further restrictions on offers and sales of the Notes, the MERCs and the Residuals and distribution of this Offering Circular, see the section entitled "Subscription and Sale and Notice to Investors". This Offering Circular does not constitute, and may not be used for the purposes of, an offer or solicitation by any person in any jurisdiction in which such offer or solicitation is not authorised or to any person to whom it is unlawful to make such offer or solicitation and no action is being taken to permit an offering of the Notes, the MERCs and the Residuals or the distribution of this Offering Circular in any jurisdiction where such action is required. The Lead Manager has not independently verified the information contained herein. Accordingly, no representation, warranty or undertaking, express or implied, is made and no responsibility or liability is accepted by the Lead Manager as to the accuracy or completeness of the information contained in this Offering Circular. In making an investment decision, investors must rely on their own examination of the terms of this offering, including the Page 5

merits and risks involved. The contents of this Offering Circular should not be construed as providing legal, business, accounting or tax advice. Each prospective investor should consult its own legal, business, accounting and tax advisers prior to making a decision to invest in the Notes, the MERCs and/or the Residuals. Any investor in the Notes, the MERCs and/or the Residuals should be able to bear the economic risk of an investment in the Notes, the MERCs or the Residuals (as applicable) for an indefinite period of time. No person has been authorised to give any information or to make any representation concerning the issue of the Notes, the MERCs and the Residuals other than those contained in this Offering Circular. Nevertheless, if any such information is given by any broker, seller or any other person, it must not be relied upon as having been authorised by the Issuer, the Lead Manager or any of the other Transaction Parties. Neither the delivery of this Offering Circular nor any offer, sale or solicitation made in connection herewith shall, in any circumstances, imply that the information contained herein is correct at any time subsequent to the date of this Offering Circular. Any website referred to in this Offering Circular does not form part of this Offering Circular. Unless the context otherwise indicates or requires, a reference to a particular numbered Condition in this Offering Circular shall be a reference to a Condition of the Notes as set out under Terms and Conditions of the Notes. Unless the context otherwise indicates or requires, a reference to a particular numbered MERC Condition or Residual Condition (as the case may be) in this Offering Circular shall be a reference to a condition of the MERCs or Residuals (as applicable) as set out under Terms and Conditions of the MERCs and Terms and Conditions of the Residuals (respectively). Payments of interest and principal in respect of the Notes, the MERCs and the Residuals will be subject to any applicable withholding taxes without the Issuer being obliged to pay additional amounts therefor. This Offering Circular prepared in connection with the Notes, the MERCs and the Residuals has not been submitted to the clearance procedures of the Autorité des marchés financiers. In connection with the issue of any class of the Notes, the MERCs and the Residuals, Deutsche Bank AG, London Branch (in this capacity, the Stabilising Manager) or any person acting for it may over-allot the Notes, the MERCs and/or the Residuals (provided that the aggregate principal amount of Notes, the MERCs or the Residuals (as applicable) allotted does not exceed 105 per cent. of the aggregate principal amount of the relevant class of the Notes, the MERCs or the Residuals (as applicable)) or effect transactions with a view to supporting the market prices of the Notes (or any class of them), MERCs or Residuals at a level higher than that which might otherwise prevail. However, there is no assurance that the Stabilising Manager (or persons acting on behalf of the Stabilising Manager) will undertake stabilising action. Any stabilising action may begin on or after the date on which adequate public disclosure of the terms of the offer of the Notes, the MERCs or the Residuals is made and, if begun, may be ended at any time, but it must end no later than the earlier of 30 days after the Issue Date and 60 days after the date of allotment of the relevant class of the Notes, MERCs or Residuals (as applicable). Any stabilisation action or over-allotment must be conducted by the Stabilising Manager in accordance with all applicable laws and rules.

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TABLE OF CONTENTS Page TRANSACTION OVERVIEW ..........................................................................................................8 SUMMARY.....................................................................................................................................10 RISK FACTORS..............................................................................................................................44 CREDIT STRUCTURE ...................................................................................................................88 CASH MANAGEMENT................................................................................................................109 THE ISSUER.................................................................................................................................110 USE OF PROCEEDS.....................................................................................................................112 DEUTSCHE BANK AKTIENGESELLSCHAFT...........................................................................113 DEUTSCHE BANK MUTUI S.P.A. ..............................................................................................114 SOFIA MORTGAGES S.R.L.........................................................................................................116 THIRD PARTY INFORMATION..................................................................................................118 CHARACTERISTICS OF THE MORTGAGE POOL....................................................................119 CHARACTERISTICS OF THE GERMAN ASSETS .....................................................................123 CHARACTERISTICS OF THE ITALIAN PORTFOLIO ...............................................................129 DESCRIPTION OF THE GERMAN MORTGAGE LOANS..........................................................136 TITLE TO AND SALE OF THE GERMAN ASSETS....................................................................144 ADMINISTRATION OF THE GERMAN ASSETS.......................................................................156 DESCRIPTION OF THE ITALIAN MORTGAGE LOANS...........................................................162 TITLE TO AND SALE OF THE ITALIAN PORTFOLIO .............................................................168 ADMINISTRATION OF THE ITALIAN PORTFOLIO.................................................................177 DESCRIPTION OF THE ITALIAN TRANSACTION DOCUMENTS ..........................................182 THE ITALIAN NOTES .................................................................................................................192 WEIGHTED AVERAGE LIVES OF THE NOTES........................................................................255 TERMS AND CONDITIONS OF THE NOTES.............................................................................259 TERMS AND CONDITIONS OF THE MERCS ............................................................................291 TERMS AND CONDITIONS OF THE RESIDUALS ....................................................................308 IRISH TAXATION........................................................................................................................330 GERMAN TAXATION .................................................................................................................335 ITALIAN TAXATION ..................................................................................................................343 EU DIRECTIVE ON THE TAXATION OF SAVINGS INCOME .................................................351 SUBSCRIPTION AND SALE .......................................................................................................352 GENERAL INFORMATION.........................................................................................................357 APPENDIX 1 ENGLISH TRANSLATION OF THE ITALIAN PURCHASER’S FINANCIAL STATEMENTS FOR THE YEAR END 31 DECEMBER 2006 ..................................................................................................................................360

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TRANSACTION OVERVIEW The information set out below is a summary of the principal features of the issue of the Notes, the MERCs and the Residuals. The Notes, the MERCs and the Residuals will be secured over the same property. This summary should be read in conjunction with, and is qualified in its entirety by references to, the detailed information presented elsewhere in this Offering Circular. In addition, investors must consider the risks relating to the Notes, the MERCs and the Residuals. See "Risk Factors" for a description of certain aspects of the issue of the Notes, the MERCs and the Residuals about which prospective investors should be aware. Transaction Schematic Diagram Investors Notes, MERCs and Residuals

Liquidity Facility

Liquidity Provider

Note Trustee

Interest Rate Hedging

Swap Counterparty Security Trustee

Security

Servicing

Issuer Eurohome Mortgages 2007-1 p.l.c.

Sale and transfer of German Assets

Payment of Purchase Price

Sofia Mortgages S.r.l.

Servicing

(a)

Italian Note

Sale and transfer of Italian Assets

DB AG (Germany) German Originator

DB Mutui S.p.A. (Italy) Italian Originator

German Borrowers/ Properties

Italian Borrowers/ Properties

On the Issue Date the Notes, the MERCs and the Residuals will be issued and the net offering proceeds will be paid to the Issuer. On each Payment Date, the applicable Interest Amount will be due on each class of Notes, MERC Payments (if any) will be due on the MERCs and Residual Payments (if any) will be due on the Residuals. Unless previously redeemed, the Notes of each class will be redeemed on the Final Payment Date in an amount equal in each case to their then Principal Amount Outstanding together with accrued and unpaid interest. Any MERC Payments or Page 8

Residual Payments will constitute interest until the MERC and Residuals are redeemed at which point any final MERC Payments or Residual Payments will repay the Principal Amount Outstanding thereof and any surplus amounts remaining thereafter on such redemption date shall constitute interest. (b)

The Issuer will use the net offering proceeds of the Notes (other than the X Notes), the MERCs and the Residuals (i) to acquire the German Assets from the German Originator, (ii) to purchase the Italian Notes from the Italian Purchaser on the Issue Date, and (iii) to fund the Further Disbursements Amount. On the Italian Portfolio Transfer Date, the Italian Purchaser acquired the Italian Loan Receivables and the Italian Related Securities from the Italian Originator. By operation of Italian law, the Italian Purchaser's right, title and interest in the Italian Portfolio will be segregated from all other assets of the Italian Purchaser and will only be available to satisfy the obligations of the Italian Purchaser in respect of the Italian Notes and any other creditors of the Italian Purchaser in relation to the transactions related to the issue of the Italian Notes. The German Assets will be serviced by the German Originator in accordance with the German MRTSA (defined below) and the Italian Loan Receivables will be serviced by the Italian Servicer in accordance with the Italian Servicing Agreement (defined below).

(c)

The Issuer will credit part of the net offering proceeds of the X Notes to the Reserve Account and any remainder of such proceeds thereafter will be used to pay certain of its expenses.

(d)

Amounts in respect of the German Assets will be collected into the German Collection Account and swept from the German Collection Account into the Issuer Transaction Account daily. The Issuer may hold certain amounts of Eligible Investments from time to time. Amounts received in respect of the Italian Loan Receivables will be collected into the Italian Collection Account and swept from the Italian Collection Account into the Italian Purchaser Collection Account daily. The Italian Purchaser will hold certain amounts of Italian Eligible Investments from time to time. The Italian Purchaser will use such amounts to pay its expenses and to pay amounts due on the Italian Notes on the Italian Payment Dates.

(e)

The obligations of the Issuer, including its obligations in respect of the Notes, the MERCs, and the Residuals, will be secured pursuant to the Security Documents, subject to the terms and conditions thereof.

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SUMMARY The information set out below is a summary of the principal features of the issue of the Notes, the MERCs and Residuals. The Notes, the MERCs and the Residuals, subject as described herein, will be secured over the same property. This summary should be read in conjunction with, and is qualified in its entirety by references to, the detailed information presented elsewhere in this Offering Circular. Capitalised terms used in this section and throughout this Offering Circular may be defined in other sections of this Offering Circular and may not necessarily be defined where they first appear. An index of defined terms is contained at the end of this Offering Circular.

The Parties The Issuer:

Eurohome Mortgages 2007-1 p.l.c. (the Issuer), the registered office of which is at First Floor, 7 Exchange Place, International Financial Services Centre, Dublin 1, Ireland, a public limited company incorporated in Ireland (registered number 436765) which has been established for the limited purposes of the issue of the Notes, the MERCs and the Residuals, the acquisition of the German Assets, the subscription for the Italian Notes and the other transactions contemplated by the Transaction Documents. The authorised share capital of the Issuer is €40,000 divided into 40,000 ordinary shares of €1 each. 40,000 ordinary shares of the Issuer have been issued. The shares have been paid up to €0.25 each. All of the shares are held by Wilmington Trust SP Services (London) Limited (the Share Trustee) or its nominee as trustee pursuant to the terms of a charitable trust established pursuant to a declaration of trust dated 10 July 2007.

The German Originator and German Servicer:

Deutsche Bank Aktiengesellschaft, the registered office of which is at Taunusanlage 12, 60325 Frankfurt am Main, Germany, a credit institution incorporated in the Federal Republic of Germany (the German Originator). Pursuant to a mortgage receivables transfer and servicing agreement in respect of the German Assets (the German MRTSA), the German Originator will (i) sell and transfer its rights and claims in and title to the German Assets to the Issuer and (ii) act as servicer to the Issuer in respect of the German Assets (in such capacity, the German Servicer).

The Italian Originator:

Deutsche Bank Mutui S.p.A. a joint stock company incorporated and organised under the laws of Italy, the registered office of which is at Via Santa Sofia 10, 20122 Milan, Italy, enrolled with the Companies Register of Milan, Italy with fiscal code and registration No. 08226630153, registered with the register of the banks referred to in Article 13 of the Italian Banking Act (Deutsche Bank Mutui) (in such capacity, the Italian Originator and with the German Originator, the Originators). The Italian Originator has sold and assigned its right, title, interest and benefit in, to and under the Italian Page 10

Loan Receivables and their Italian Related Securities to the Italian Purchaser on 12 July 2007 (the Italian Portfolio Transfer Date) pursuant to a mortgage sale agreement (the Italian Transfer Agreement) entered into by the Italian Purchaser and the Italian Originator on such date, as amended on 24 July 2007. The Italian Servicer:

Deutsche Bank Mutui S.p.A. (with its registered office at Via Santa Sofia 10, 20122 Milan, Italy )will act as servicer for the Italian Purchaser, inter alia, to service the Italian Portfolio (in such capacity, the Italian Servicer and, together with the German Servicer, the Servicers) in accordance with the terms of a servicing agreement entered into between, inter alios, the Italian Purchaser and the Italian Servicer on the Italian Portfolio Transfer Date (the Italian Servicing Agreement and together with the German MRTSA the Servicing Agreements), as amended on 24 July 2007.

The Italian Purchaser:

Sofia Mortgages S.r.l., the registered office of which is at Via Eleonora Duse 53, Rome, a special purpose vehicle established pursuant to Italian Law of 1 April 1999, No. 130 (the Italian Securitisation Law), enrolled with the Companies Registrar of Rome, Italy with fiscal code and registration No. 08986081001. The Italian Purchaser is registered: (i) in the general register held by the Ufficio Italiano dei Cambi pursuant to Article 106 of the Italian Banking Act, under number 38154; and (ii) in the special register of financial intermediaries held by the Bank of Italy pursuant to Article 107 of the Italian Banking Act. The telephone number of the Italian Purchaser is +39 06 8091531.

The Italian Cash Manager:

Deutsche Bank AG, London Branch (with its principal office at Winchester House, 1 Great Winchester Street, London EC2N 2DB) (in such capacity, the Italian Cash Manager) in accordance with the terms of a cash management agreement entered into between the Italian Purchaser and the Italian Cash Manager on or about the Italian Issue Date (the Italian Purchaser Cash Management Agreement).

The Italian Calculation Agent:

Deutsche Bank AG, London Branch (with its principal office at Winchester House, 1 Great Winchester Street, London EC2N 2DB) (in such capacity, the Italian Calculation Agent) in accordance with the terms of the Italian Purchaser Cash Management Agreement.

The Italian Account Bank:

Deutsche Bank S.p.A. (with its principal office at Piazza del Calendario 3, 20126 Milan, Italy (in such capacity, the Italian Account Bank) in accordance with the terms of the Italian Purchaser Cash Management Agreement.

The Representative of the Italian Noteholders:

Deutsche Trustee Company Limited (with its principal office at Winchester House, 1 Great Winchester Street, London EC2N 2DB) (in such capacity, the Representative of the Italian Noteholders) in accordance with the terms of an intercreditor agreement entered into between, inter alios, the Italian Purchaser and the Representative of the Italian Noteholders on or Page 11

about the Italian Issue Date (the Italian Purchaser Intercreditor Agreement). The Italian Paying Agent:

Deutsche Bank S.p.A., a joint stock company (società per azioni) organised under the laws of Italy, the registered office of which is at Piazza del Calendario 3, 20126 Milan, Italy, enrolled in the register of banks held by Bank of Italy pursuant to Article 13 of the Italian Banking Act (in such capacity, the Italian Paying Agent) in accordance with the terms of an agency agreement entered into between the Italian Purchaser and the Italian Paying Agent on or about the Italian Issue Date (the Italian Purchaser Agency Agreement).

The Note Trustee:

Deutsche Trustee Company Limited (with its principal office at Winchester House, 1 Great Winchester Street, London EC2N 2DB) (the Note Trustee) will be appointed pursuant to a trust deed (the Trust Deed) to be entered into on or prior to the Issue Date between the Issuer and the Note Trustee to represent the interests of the Noteholders, the MERC Holders and the Residual Holders.

The Security Trustee:

Deutsche Trustee Company Limited (with its principal office at Winchester House, 1 Great Winchester Street, London EC2N 2DB) (the Security Trustee) will be appointed pursuant to an English law governed deed of charge and assignment (the Deed of Charge) to be entered into on or prior to the Issue Date between inter alios the Issuer and the Security Trustee. In addition, in respect of the German Assets, the Security Trustee, the German Originator and the Issuer will enter into a German law governed security and trust agreement (the German STA) on or around the Issue Date, and, in respect of the Italian Notes, the Security Trustee and the Issuer will enter into an Italian law governed pledge agreement (the Italian Note Pledge Agreement). The Security Trustee will hold on trust the security granted by the Issuer under the Deed of Charge, German STA and Italian Note Pledge Agreement (together, the Security Documents) for the benefit of, inter alios, the Noteholders, the MERC Holders and the Residual Holders.

The Principal Paying Agent and the Agent Bank:

Deutsche Bank AG, London Branch (with its branch office at Winchester House, 1 Great Winchester Street, London EC2N 2DB) (Deutsche Bank AG, London Branch) (in such capacities, the Principal Paying Agent and the Agent Bank and, together with the Irish Paying Agent and any other paying agent appointed under the Agency Agreement, the Agents) acting in accordance with the terms of an agency agreement to be entered into between the Issuer, the Principal Paying Agent, the Irish Paying Agent, the Agent Bank and the Note Trustee on or about the Issue Date (the Agency Agreement).

The Irish Paying Agent:

Deutsche International Corporate Services (Ireland) Limited, the specified office of which is 5 Harbourmaster Place, International Financial Services Page 12

Centre, Dublin 1, Ireland (the Irish Paying Agent, together with the Principal Paying Agent and any other paying agent appointed under the Agency Agreement, the Paying Agents). The German Swap Provider:

Deutsche Bank Aktiengesellschaft, the registered office of which is at Taunusanlage 12, 60325 Frankfurt am Main, Germany (in such capacity, the German Swap Provider) in accordance with the terms of a swap agreement to be entered into between the Issuer, the Security Trustee and the German Swap Provider on or about the Issue Date (the German Interest Rate Swap Agreement).

The Italian Swap Provider:

Deutsche Bank Aktiengesellschaft, the registered office of which is at Taunusanlage 12, 60325 Frankfurt am Main, Germany (in such capacity, the Italian Swap Provider and together with the German Swap Provider, the Swap Providers) in accordance with the terms of a swap agreement to be entered into between the Issuer, the Security Trustee and the Italian Swap Provider on or about the Issue Date (the Italian Interest Rate Swap Agreement and together with the German Interest Swap Agreement, the Interest Rate Swap Agreement).

The Liquidity Provider:

Deutsche Bank AG, London Branch (in such capacity, the Liquidity Provider) in accordance with the terms of a liquidity facility agreement to be entered into between the Issuer, the Security Trustee and the Liquidity Provider on or about the Issue Date (the Liquidity Facility Agreement).

The Account Bank:

Deutsche Bank AG, London Branch (in such capacity, the Account Bank) in accordance with the terms of the bank account agreement to be entered into between the Issuer, the Cash Manager, the Account Bank and the Security Trustee on or about the Issue Date (the Bank Account Agreement).

The Cash Manager:

Deutsche Bank AG, London Branch (in such capacity, the Cash Manager) in accordance with the terms of a cash management agreement to be entered into between the Issuer, the Cash Manager, the Note Trustee and the Security Trustee on or about the Issue Date (the Cash Management Agreement).

The Data Trustee:

Deutsche Bank Luxembourg, S.A., the registered office of which is at 2 Boulevard Konrad Adenauer, L-1115 Luxembourg (in such capacity, the Data Trustee) appointed pursuant to the terms of the data trustee agreement to be entered into between the Data Trustee, the German Originator, the Issuer and the Security Trustee on or about the Issue Date (the Data Protection Trust Agreement).

The Corporate Services Provider:

Wilmington Trust SP Services (Dublin) Limited, a private limited liability company incorporated in Ireland (registered number 318390) the registered office of which is First Floor, 7 Exchange Place, IFSC, Dublin 1, Ireland (in such capacity, the Corporate Services Provider) in accordance with the terms of a corporate Page 13

services agreement to be entered into between the Issuer and the Corporate Services Provider on or about the Issue Date (the Corporate Services Agreement). Italian Corporate Servicer:

KPMG Fides Servizi Di Amministrazione S.p.A., a joint stock company incorporated in Italy with registered office at via Vittor Pisani 27, 20124 Milan, acting through its office at Via Eleonora Duse, 53, 00197 Rome, enrolled with the companies' register of Milan under no. 103478, fiscal code and VAT number 00731410155 (in such capacity, the Italian Corporate Servicer ) in accordance with the terms of a corporate services agreement entered into between the Italian Purchaser and the Italian Corporate Servicer on or before the Italian Portfolio Transfer Date (the Italian Purchaser Corporate Services Agreement).

The Share Trustee:

Wilmington Trust SP Services (London) Limited, a private limited liability company incorporated in England and Wales (registered number 02548079) the registered office of which is Tower 42 International Financial Centre, 25 Old Broad Street, London, EC2N 1HQ (the Share Trustee) which holds all of the issued shares of the Issuer, directly or through its nominees, under the terms of a trust established under English law by a declaration of trust dated 10 July 2007 and made by the Share Trustee for the benefit of such charities as the Share Trustee may determine from time to time at its discretion.

The Auditors to the Issuer:

PricewaterhouseCoopers of One Spencer Dock, North Wall Quay, Dublin 1, Ireland have been appointed as auditors to the Issuer pursuant to an engagement letter dated 19 July 2007.

The Listing Agent:

McCann FitzGerald Listing Services Limited of Riverside One, Sir John Rogerson's Quay, Dublin 2, Ireland (the Listing Agent).

Application of Proceeds of the Notes, the MERCs and the Residuals Use of Issue Proceeds:

The aggregate net proceeds of the issue of the Notes (except for the X Notes) are expected to be €300,000,000. On the Issue Date, this amount and the aggregate net proceeds of the issue of the MERCs and Residuals (which are expected to be €140,000) will be applied by the Issuer towards payment to the German Originator of the consideration for the acquisition of the German Assets, the payment of any Further Disbursement Amounts into the Further Disbursement Account and the payment to the Italian Purchaser of the subscription price for the acquisition of the Italian Notes. The aggregate net proceeds of the issue of the X Notes are expected to be €2,700,000. On the Issue Date, this amount will be applied by the Issuer to fund: (a) the expenses of the issue being, start-up costs (including the underwriting and selling commissions payable in respect of the Notes, the MERCs and the Residuals and expenses incurred in connection with the offering of the Notes, the MERCs and the Residuals); and (b) the establishment of Page 14

the Reserve Account. The German Assets: The German Assets will consist of: (1)

the current or future, actual or contingent claims for the payment of principal and interest and any other payment claims (Geldforderungen) (the German Loan Receivables and together with the Italian Loan Receivables, the Loan Receivables) arising under residential mortgage loans (the German Mortgage Loans, and together with the Italian Mortgage Loans, the Mortgage Loans) secured on (a) certain residential properties located in Germany, (b) condominiums (Wohnungseigentum) located in Germany, or (c) hereditary building rights (Erbbaurecht), granted in respect of residential properties located in Germany, or (d) land (Grundstücke) located in Germany (the German Properties and together with the Italian Properties, the Properties), which have been originated by the German Originator,

(2)

the certificated mortgages (Briefgrundschulden) over the relevant German Properties securing the repayment of the German Mortgage Loans (each a German Mortgage), and

(3)

any German Related Security,

(the assets listed in (1)-(3), together, the German Assets). The Issuer will acquire the German Assets on or around the Issue Date. The borrowers in respect of the German Mortgage Loans are referred to herein as the German Borrowers (and together with the Italian Borrowers, the Borrowers). The German MRTSA:

The German Originator will agree to sell and transfer the German Assets to the Issuer pursuant to and in accordance with the German MRTSA. The Issuer, together with the Security Trustee, will have the benefit of certain warranties from the German Originator relating to the German Assets. In the event of a breach of the warranties in respect of a German Asset given pursuant to the German MRTSA, the German Originator will be obliged to either repurchase the relevant German Loan Receivable together with the relevant German Mortgage and any German Related Security, or substitute them with other German Assets, as set forth in the German MRTSA.

The German Related Security:

The German Related Security will consist of the German Originator's rights in and (if applicable) title to or in respect of claims of the relevant German Borrower arising under: (a)

any Amortisation Surrogate, which may be a transfer for security purpose or a pledge over such Amortisation Surrogate,

(b)

any German Pledges, Page 15

(c)

any Immediately Enforceable Assumption of Debt, and

(d)

any other collateral granted in connection with a German Mortgage Loan other than the relevant German Mortgage.

The term Amortisation Surrogate means certain types of life insurance policies, building savings agreements (Bausparverträge), or savings or investment plans. The term German Pledges means the pledges granted by the relevant German Borrower according to the underlying loan documentation over: (a)

any securities or other asset in respect of which the German Originator or any of its German branch offices (Geschäftsstellen) acquires possession in its ordinary course of business; and

(b)

the claims of the relevant German Borrower against the German Originator arising from such banking relationship (in particular, the German Borrower's accounts kept with the German Originator).

The term Immediately Enforceable Assumption of Debt means, in relation to a German Mortgage Loan, a personal assumption of debt by the relevant German Borrower accompanied by a submission to immediate enforcement (persönliche Haftungsübernahme mit Unterwerfung unter die sofortige Zwangsvollstreckung). Partially Disbursed Loans:

Certain German Mortgage Loans are disbursed in instalments (such German Mortgage Loans, the Partially Disbursed Loans) and will have been disbursed to the relevant German Borrowers only in part as at the Cut-Off Date (the part which is disbursed, the Disbursed Amounts and the payment claims arising thereunder against the relevant German Borrower, the Disbursed Amount Receivables). In addition, the German Originator will be obliged to advance Further Disbursements (as defined below and the receivables arising thereunder, the Further Disbursement Receivables) to the relevant German Borrowers following the Cut-Off Date. The term Further Disbursements means in respect of a Partially Disbursed Loan, disbursements to the relevant German Borrower by the German Originator in freely available funds following the Cut-Off Date (which will be netted against any Accrued Interest and any Commitment Fees payable by the relevant German Borrower on or prior to the relevant date). The term Accrued Interest, in respect of a Partially Disbursed Loan, means any interest payments (a) owed but not payable by a German Borrower due to the fact that a German Borrower is only required to make payments in freely available funds once the relevant German Mortgage Loan is fully disbursed (b) which will be netted against the nominal amount of Further Disbursements made under such Partially Disbursed Loan. Page 16

The term Commitment Fee means, in respect of a Partially Disbursed Loan, payments owed, if any, by the relevant German Borrower to the German Originator in respect of the commitment of the German Originator to make available further disbursements upon fulfilment of the relevant disbursement conditions (Auszahlungsvoraussetzungen) and which will be netted against the nominal amount of further disbursements made under such Partially Disbursed Loan. Some of the Partially Disbursed Loans will qualify as a Construction Loan (Baufortschrittsdarlehen), being a German Mortgage Loan which is not fully disbursed to the relevant German Borrower on the Cut-Off Date but in respect of which the German Originator will be obliged to advance Further Disbursements to the relevant German Borrower, subject to certain disbursement conditions (Auszahlungsvoraussetzungen) in the relevant German Mortgage Loan documentation, including the achievement of certain building construction milestones (Auszahlung nach Baufortschritt) being met. Purchase Price and bookings to the Further Disbursement Account:

The total Purchase Price in respect of a German Loan Receivable together with the related German Mortgage and the corresponding German Related Security will be equal to the sum of: (a)

the Existing Loan Amount; and

(b)

the aggregate Further Disbursements (if any).

The Existing Loan Amount in respect of a German Loan Receivable together with the related German Mortgage and the corresponding German Related Security will be equal to the sum of: (a)

the aggregate Principal Amount of such German Mortgage Loan if it does not qualify as a Partially Disbursed Loan as at the Cut-Off Date;

(b)

the Disbursed Amounts as at the Purchase Date in respect of such German Mortgage Loan if it qualifies as a Partially Disbursed Loan as at the Cut-Off Date; and

(c)

any Accrued Interest and Commitment Fee accrued during the period up to but excluding the Cut-Off Date.

On the Issue Date an amount equal to the aggregate of the Further Disbursement Amounts relating to all Partially Disbursed Loans as at the Cut-Off Date will be paid in same day funds by the Issuer into the Further Disbursement Account. Following the Purchase Date amounts representing principal in such an account in the name of the Issuer held at the Account Bank (such account, the Further Disbursement Account) (net of amounts attributable to Accrued Interest or accrued Commitment Fees) will be used to pay for any Further Disbursements. The total Further Disbursement Amount held in the Further Disbursement Account in respect of all German Page 17

Loan Receivables relating to Partially Disbursed Loans assigned to the Issuer on the Purchase Date will be €9,884,040.87. The Further Disbursement Amount in respect of a Partially Disbursed Loan will be equal to the difference between: (a)

the Partially Disbursed Loan's total principal amount (including amounts which may be disbursed to the relevant German Borrower) as at the Cut-Off Date; and

(b)

the sum of: (i) the aggregate Disbursed Amounts plus (ii) any Accrued Interest on such Partially Disbursed Loan plus (iii) any Commitment Fee on such Partially Disbursed Loan, as at the relevant date.

The term Cut-Off Date 31 May 2007.

as used

herein

means

Subject to the terms of the German MRTSA and the Cash Management Agreement, the Purchase Price for the German Assets shall be paid by the Issuer as follows: (i)

On the Purchase Date the aggregate of the Existing Loan Amounts for all German Assets to be purchased on such date shall be paid in same day funds by the Issuer to a bank account of the German Originator; and

(ii)

On each date on which the German Servicer notifies the Issuer and the Cash Manager in accordance with the provisions of the German MRTSA that a Further Disbursement has been made, the German Originator shall be entitled to an amount equal to such Further Disbursement (for the avoidance of doubt, after the application of any netting arrangements described below) to be taken from the Further Disbursement Account on or around the 12th German Business Day of the month falling immediately thereafter (or if such day is not a Transaction Business Day, the next day thereafter which is a Transaction Business Day) and the Issuer shall be entitled to any Accrued Interest and Commitment Fee which shall be netted from the corresponding Further Disbursement and transferred from the Further Disbursement Account into the Issuer Transaction Account and distributed in accordance with the PreEnforcement Revenue Priority of Payments or the Post-Enforcement Priority of Payments (as applicable).

On the Payment Date falling in November 2008, any amounts standing to the credit of the Further Disbursement Account which do not constitute interest on the balance of the Further Disbursement Account, or amounts in respect of Accrued Interest or Commitment Page 18

Fees, will be applied as principal in accordance with the Principal Priority of Payments. The Italian Portfolio:

The Italian Portfolio originated by the Italian Originator and purchased by the Italian Purchaser comprises monetary receivables arising from mortgage loans secured on certain residential and, to a very limited extent, commercial properties in Italy (the Italian Properties) and meeting the identification criteria set forth in the Italian Transfer Agreement (the Italian Criteria) (such mortgage loans, the Italian Mortgage Loans and such receivables, the Italian Loan Receivables). The borrowers in respect of the Italian Mortgage Loans are referred to herein as the Italian Borrowers. The mortgages securing the Italian Mortgage Loans are referred to herein as the Italian Mortgages. The Italian Loan Receivables and the Italian Related Security (as defined below) are referred to herein as the Italian Portfolio.

The Italian Loan Receivables:

On or prior to the Italian Portfolio Transfer Date, the Italian Originator and the Italian Purchaser entered into the Italian Transfer Agreement pursuant to which the Italian Originator sold the Italian Portfolio to the Italian Purchaser without recourse (pro soluto) in accordance with Articles 1 and 4 of the Italian Securitisation Law. The transfer of the Italian Portfolio from the Italian Originator to the Italian Purchaser takes economic effect from (and including) 31 May 2007 (the Italian Cut-Off Date) and the Italian Purchaser is entitled to all right, title and interest in and to the Italian Portfolio (including all Collections in respect thereof) accruing from (and including) the Italian Cut-Off Date.

The Italian Related Security:

The Italian Related Security includes, in addition to the Italian Mortgages, any guarantee or security (garanzia personale o reale), including any ancillary rights, in respect of each Italian Mortgage Loan granted, or existing in any other way, to or in favour of the Italian Originator and transferred by it to the Italian Purchaser together with the Italian Portfolio under the Italian Transfer Agreement. The Italian Originator has assigned and transferred to the Italian Purchaser together with the Italian Loan Receivables and the Italian Related Security the benefit of any insurance policy entered into by the Italian Originator, any Italian Borrower and/or any Italian Guarantor in relation to an Italian Property (each an Italian Insurance Policy). In combination with the German Related Security, the Italian Related Security is referred to herein as the Related Security.

The Italian Notes:

Means the € 193,950,000 asset backed floating rate variable return notes due 2050 issued by the Italian Purchaser pursuant to the Italian Securitisation Law on or about 26 July 2007 (the Italian Issue Date) in order to finance the purchase from the Italian Originator of the Italian Portfolio (the Italian Notes). The principal source of payment of interest and repayment of principal on the Page 19

Italian Notes will be from collections under the Italian Portfolio. The Italian Purchaser will also receive certain amounts in respect of Italian Eligible Investments held by it or on its behalf. Each Italian Note bears interest on its outstanding principal amount from (and including) the Italian Issue Date. Subject as provided in the terms and conditions of the Italian Notes, interest on the Italian Notes will be payable by reference to successive interest periods (each an Italian Interest Period) in arrear in euro on 18th October 2007 and thereafter quarterly on the date set out for such payment in the Italian Conditions falling in the months of January, April, July and October in each year (each such day being an Italian Payment Date). The first Italian Payment Date will be the Italian Payment Date falling in October 2007 in respect of the first Italian Interest Period. The rate of interest payable from time to time in respect of the Italian Notes will be the aggregate of the rate offered in the Euro-zone inter- bank market (EURIBOR) for three month Euro deposits plus a margin of 0.21% (except in respect of the first Italian Interest Period, where an interpolated interest rate based on interest rates for 2 and 3 months euro deposits will be applied). Subject to the provisions of the Italian Notes Conditions, on each Italian Payment Date, an amount equal to the aggregate amount of the Italian Mortgage Early Repayment Charges received by the Italian Purchaser in the immediately preceding Collection Period shall be paid as an additional interest component in respect of the Italian Notes (the IMERC Interest Component). In addition, subject to and in accordance with the Italian Notes Conditions, the Italian Noteholders shall be entitled to receive on each Italian Payment Date a variable return calculated in accordance with the provisions set out in Italian Notes Conditions 6(i) (Italian Additional Return) (the Italian Additional Return). For a description of the characteristics of the Italian Notes see the section The Italian Notes below. Segregation of assets of the Italian By operation of Italian law, the Italian Purchaser's rights, Purchaser in respect of the Italian title and interests in and to the Italian Portfolio will be Notes: segregated from all other assets of the Italian Purchaser (if any) and the Italian Portfolio and any relevant Italian Collections, once received by the Italian Purchaser, will only be available, both prior to and following a winding up of the Italian Purchaser, to satisfy the obligations of the Italian Purchaser to the Issuer as holder of the Italian Notes and any other creditors in relation to the issue of the Italian Notes. Under the Italian Securitisation Law, it is unclear whether all claims relating to a securitisation transaction are caught by the asset segregation principle outlined above. For this reason, the Italian Purchaser will grant additional security pursuant to the Italian Purchaser Pledge Agreement and the Italian Purchaser Deed of Charge. Page 20

Further security in respect of the Notes will be provided by the Italian Note Pledge Agreement pursuant to which the Issuer will grant a pledge in favour of the Security Trustee of the Italian Notes to secure its obligations in respect of the Notes. The Mortgage Pool:

The Mortgage Pool will consist of the German Loan Receivables held by the Issuer and the Italian Loan Receivables held by the Italian Purchaser.

Description of the Notes, the MERCs and the Residuals The Notes, the MERCs and the Residuals:

On the Issue Date, the Issuer will issue the €262,500,000 Class A Mortgage Backed Floating Rate Notes due 2050 (the A Notes), the €15,000,000 Class B Mortgage Backed Floating Rate Notes due 2050 (the B Notes), the €12,000,000 Class C Mortgage Backed Floating Rate Notes due 2050 (the C Notes), the €6,300,000 Class D Mortgage Backed Floating Rate Notes due 2050 (the D Notes), the €4,200,000 Class E Mortgage Backed Floating Rate Notes due 2050 (the E Notes), the €2,700,000 Class X Mortgage Backed Floating Rate Notes due 2050 (the X Notes), the German Mortgage Early Repayment Certificates (the GMERCs), the Italian Mortgage Early Repayment Certificates (the IMERCs and together with the GMERCs, the MERCs) (with the GMERCs and IMERCs being referred to herein as categories of MERC) and the Residual Mortgage Backed Notes (the Residuals) which in each case will be constituted by the Trust Deed and which will share (subject as provided below in relation to the MERCs) in the same security. The A Notes will be secured by the same security that will secure the B Notes, the C Notes, the D Notes, the E Notes, the X Notes, the MERCs, the Residuals and the other obligations of the Issuer under the Transaction Documents although, upon enforcement, the A Notes will rank in priority to the B Notes, the C Notes, the D Notes, the E Notes, the X Notes and the Residuals in point of security, the B Notes will rank in priority to the C Notes, the D Notes, the E Notes, the X Notes and the Residuals but after the A Notes in point of security, the C Notes will rank in priority to the D Notes, the E Notes, the X Notes and the Residuals but after the A Notes and the B Notes in point of security, the D Notes will rank in priority to the E Notes, the X Notes and the Residuals, but after the A Notes, the B Notes and the C Notes in point of security, the E Notes will rank in priority to the X Notes and the Residuals, but after the A Notes, the B Notes, the C Notes, the D Notes and the E Notes in point of security the X Notes will rank in priority over the Residuals, save that none of the Noteholders and Residual Holders will be entitled to any amounts derived from any Mortgage Early Repayment Charges, and Italian Mortgage Early Repayment Charges are only distributable to the IMERC Holders and the Margin Losses relating to the German Mortgage Early Repayment Charges are only distributable to the GMERC Holders. Payments under the GMERCs will be made from amounts Page 21

received by the Issuer corresponding to Margin Losses (Zinsmargenschaden) in respect of Mortgage Early Repayment Charges received from German Borrowers. Payments in respect of the IMERCS will be made from amounts received by the Issuer in respect of the Mortgage Early Repayment Charges from Italian Borrowers under the Italian Notes. In each case, such amounts will not be available, before or after enforcement of the Security, for application towards payment of amounts due to Noteholders or Residual Holders or any other Secured Creditors. The A Notes will rank in priority to the B Notes, the C Notes, the D Notes, the E Notes, the X Notes, the MERCs (except in relation to the Mortgage Early Repayment Charges) and the Residuals for all purposes. The B Notes will rank in priority to the C Notes, the D Notes, the E Notes, the X Notes, the MERCs (except in relation to the Mortgage Early Repayment Charges) and the Residuals for all purposes. The C Notes will rank in priority to the D Notes, the E Notes, the X Notes, the MERCs (except in relation to the Mortgage Early Repayment Charges) and the Residuals for all purposes. The D Notes will rank in priority to the E Notes, X Notes, the MERCs (except in relation to the Mortgage Early Repayment Charges) and the Residuals for all purposes. The E Notes will rank in priority to the X Notes, the MERCs (except in relation to the Mortgage Early Repayment Charges) and Residuals for all purposes. The X Notes will rank in priority to the MERCs (except in relation to the Mortgage Early Repayment Charges) and Residuals for all purposes. The MERCs will rank in priority to the Residuals for all purposes.

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Following the redemption of the Notes or an enforcement of the Security for the Notes pursuant to Condition 10 and disposal of the German Assets and the Italian Notes (or the sale of the Italian Mortgage Loans and the redemption of the Italian Notes), no termination payment or other amount (other than amounts in respect of the final Collection Period then payable in respect of the MERCs) will be payable in respect of the MERCs and, following the payment of any amounts then payable in respect of MERC Payments, the MERCs will no longer constitute a claim against the Issuer. Following the redemption of all the Notes, other than pursuant to enforcement pursuant to Condition 10, and payment by the Issuer of all sums to be applied pursuant to the Pre-Enforcement Revenue Priority of Payments, no termination payment or other amount will be payable in respect of the Residuals and the Residuals will no longer constitute a claim against the Issuer. Following an enforcement of the security for the Notes pursuant to Condition 10 and payment by the Issuer of all sums to be applied pursuant to the Post-Enforcement Priority of Payments no termination payment or other amount will be payable in respect of the Residuals and the Residuals will no longer constitute a claim against the Issuer. The Notes, the MERCs and the Residuals will be obligations of the Issuer only and will not be obligations or responsibilities of, or guaranteed by, any person other than the Issuer. In particular, the Notes, the MERCs and the Residuals will not be obligations or responsibilities of, or guaranteed by, the Security Trustee, the Note Trustee, the Servicers, the Lead Manager, the Arranger, the Swap Providers, the Liquidity Provider, the Italian Purchaser, the Paying Agents, the Agent Bank, the Account Bank, the Cash Manager, the Corporate Services Provider, the Data Trustee or the Originators.

Inter Creditor Rights/Conflicts of Interest:

In respect of the interests of the Noteholders, the MERC Holders and the Residual Holders, the Trust Deed will contain provisions requiring the Note Trustee to have regard to the interests of the Noteholders as regards all powers, trusts, authorities, duties and discretions of the Note Trustee (except where expressly provided otherwise) but requiring the Note Trustee in any such case to have regard only to the interests of: (a) the A Noteholders if, in the Note Trustee's opinion, there is a conflict between the interests of the A Noteholders and those of the B Noteholders and/or those of the C Noteholders and/or those of the D Noteholders and/or those of the E Noteholders and/or those of the X Noteholders and/or those of the MERC Holders and/or those of the Residual Holders; (b) the B Noteholders if, in the Note Trustee's opinion, there is a conflict between the interests of the B Noteholders and those of the C Noteholders and/or those Page 23

of the D Noteholders and/or those of the E Noteholders and/or those of the X Noteholders and/or those of the MERC Holders and/or those of the Residual Holders; (c) the C Noteholders if, in the Note Trustee's opinion, there is a conflict between the interests of the C Noteholders and those of the D Noteholders and/or those of the X Noteholders and/or those of the MERC Holders and/or those of the Residual Holders; (d) the D Noteholders if, in the Note Trustee's opinion, there is a conflict between the interests of the D Noteholders and those of the E Noteholders and/or those of the X Noteholders and/or those of the MERC Holders and/or those of the Residual Holders; (e) the E Noteholders if, in the Note Trustee's opinion, there is a conflict between the interest of the E Noteholders and those of the X Noteholders and/or those of the MERC Holders and/or those of the Residual Holders; (f) the X Noteholders if, in the Note Trustee's opinion, there is a conflict between the interest of the X Noteholders and those of the MERC Holders and/or those of the Residual Holders; (g) the MERC Holders if, in the Note Trustee's opinion, there is a conflict between the interest of the MERC Holders and/or those of the Residual Holders; (h) following redemption in full of the A Notes, the interests of the B Noteholders; (i) following redemption in full of the A Notes and the B Notes, the interests of the C Noteholders; (j) following redemption in full of the A Notes, the B Notes and the C Notes, the interests of the D Noteholders; (k) following redemption in full of the A Notes, the B Notes, the C Notes and the D Notes, the interests of the E Noteholders; (l) following redemption in full of the A Notes, the B Notes, the C Notes, the D Notes and the E Notes, the interests of the X Noteholders (l) following redemption in full of the Notes the interests of MERC Holders; and (m) following redemption in full of the MERCs, the Residual Holders. The Trust Deed and Condition 11 will contain provisions limiting the powers of: (a) the B Noteholders, the C Noteholders, the D Noteholders, the E Noteholders and the X Noteholders to request or direct the Note Trustee to take any action or to pass any Extraordinary Resolution according to the effect thereof on the interests of the A Noteholders;

Page 24

(b) the C Noteholders, the D Noteholders, the E Noteholders and the X Noteholders to request or direct the Note Trustee to take any action or to pass any Extraordinary Resolution according to the effect thereof on the interests of the A Noteholders and/or the B Noteholders; (c) the D Noteholders, the E Noteholders and the X Noteholders to request or direct the Note Trustee to take any action or to pass any Extraordinary Resolution according to the effect thereof on the interests of the A Noteholders and/or the B Noteholders and/or the C Noteholders; (d) the E Noteholders and the X Noteholders to request or direct the Note Trustee to take any actions or to pass any Extraordinary Resolutions according to the effect thereof on the interests of the A Noteholders, and/or the B Noteholders and/or the C Noteholders and/or the D Noteholders; (e) the X Noteholders to request or direct the Note Trustee to take any actions or to pass any Extraordinary Resolutions according to the effect thereof on the interests of the A Noteholders, and/or the B Noteholders and/or the C Noteholders and/or the D Noteholders and/or the E Noteholders; (f) the MERC Holders to request or direct the Note Trustee to take any actions or to pass any Extraordinary Resolutions according to the effect thereof on the interests of the A Noteholders, and/or the B Noteholders and/or the C Noteholders and/or the D Noteholders the E Noteholders and/or the X Noteholders; (g) the GMERC Holders to request or direct the Note Trustee to take any actions or to pass any Extraordinary Resolutions according to the effect thereof on the interests of the IMERC Holders and vice versa. Except in certain circumstances, the Trust Deed imposes no limitations on the powers of: (a) the A Noteholders, the exercise of which will be binding on the B Noteholders, the C Noteholders, the D Noteholders, the E Noteholders, the X Noteholders the MERC Holders and the Residual Holders; (b) the B Noteholders, the exercise of which will be binding on the C Noteholders, the D Noteholders, the E Noteholders, the X Noteholders, the MERC Holders and the Residual Holders; (c) the C Noteholders, the exercise of which will be binding on the D Noteholders, the X Noteholders, the MERC Holders and the Residual Holders; (d) the D Noteholders, the exercise of which will be binding on the E Noteholders, the X Noteholders, the MERC Holders and the Residual Holders; (e) the E Noteholders, the exercise of which will be binding on the X Noteholders, the MERC Holders and the Residual Holders; (f) the X Noteholders, the exercise of which will be binding on the MERC Holders and the Residual Holders; and (g) the MERC Holders, the exercise of which will be binding on the Residual Holders in each case irrespective of the effect thereof on their interests. Page 25

In respect of the interests of the Residual Holders, the Trust Deed contains provisions requiring the Note Trustee not to have regard to the interests of the Residual Holders as regards all powers, trusts, authorities, duties and discretions of the Note Trustee. The Note Trustee may only be directed by the Residual Holders and any Extraordinary Resolution of the Residual Holders will only be effective if the Note Trustee is of the opinion that the effect of the same will not be materially prejudicial to the interests of any or all of the Noteholders and/or the MERC Holders or its action is sanctioned by an Extraordinary Resolution of each class of Noteholders and of the MERC Holders. Form and Denomination:

The Notes of each class will each be represented by a temporary global note in bearer form (each, a Temporary Global Note). Interests in the Temporary Global Note of each class will upon confirmation as to non-US beneficial ownership be exchangeable on or after the Exchange Date (as defined below) for interests in a permanent global note of the same class (each, a Permanent Global Note and, together with the Temporary Global Notes, the Global Notes and each, a Global Note). The GMERCs and IMERCs will each be represented by a temporary global note in bearer form (each, a Temporary Global MERC). Interests in the Temporary Global MERC in respect of the GMERCs and the Temporary Global MERC in respect of the IMERCs will upon confirmation as to non-US beneficial ownership in relation to the relevant category of MERCs be exchangeable on or after the Exchange Date (as defined below) for interests in a permanent global note in respect of the same category of MERCs (each, a Permanent Global MERC and, together with the Temporary Global MERCs, the Global MERCs and each, a Global MERC). The Residuals will be represented by a temporary global note in bearer form (the Temporary Global Residual). Interests in the Temporary Global Residual will upon confirmation as to non-US beneficial ownership be exchangeable on or after the Exchange Date (as defined below) for interests in a permanent global note of the same class (the Permanent Global Residual and, together with the Temporary Global Residual, the Global Residuals and each a Global Residual). The Global Notes, the Global MERCs and the Global Residuals will be held by a common safekeeper for Euroclear and Clearstream, Luxembourg (as defined below). The Notes will be issued in minimum denominations of €50,000 and increments of €1,000 thereafter. The MERCs and the Residuals will be issued in minimum denominations of €1,000.

Status:

The Notes of each class, the MERCs and the Residuals, each constitute direct, secured (as more particularly described in the Security Documents) and unconditional obligations of the Issuer and rank pari passu without Page 26

preference or priority amongst Notes of the same class, or securities of the same category, as the case may be. Regulation S:

The Notes, the MERCs and the Residuals have not been and will not be registered under the United States Securities Act of 1933, as amended (the Securities Act) or any U.S. State securities laws and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in accordance with Regulation S under the Securities Act or pursuant to an exemption from the registration requirements of the Securities Act (as defined by Regulation S under the Securities Act).

Principal Amount Outstanding:

The Principal Amount Outstanding of any class of Notes or the MERCs or the Residuals (as the case may be) means, at any time, the initial principal amount of such Notes, MERCs or Residuals less any payments of principal in respect thereof prior to such time. No payment of principal will be made in respect of the MERCs or the Residuals prior to the redemption thereof in accordance with the applicable MERC Conditions or Residual Conditions.

Collection Periods:

Collection Period means a period which: (i) for each Payment Date which falls in February, begins on and includes the first calendar day of the previous October and ends on and includes the last calendar day of the previous December; (ii) for each Payment Date which falls in May, begins on and includes the first calendar day of the previous January and ends on and includes the last calendar day of the previous March; (iii) for each Payment Date which falls in August, begins on and includes the first calendar day of the previous April and ends on and includes the last calendar day of the previous June; (iv) for each Payment Date which falls in November (other than the first Collection Period), begins on and includes the first calendar day of the previous July and ends on and includes the last calendar day of the previous September and (v) for the first Collection Period begins on and excludes the Cut-Off Date and ends on and includes the last calendar day of September 2007.

Interest on the Notes:

Interest on the Notes is payable by reference to successive Interest Periods. Interest on the Notes will be payable quarterly in arrear in euro on 2 February, 2 May, 2 August, and 2 November in each year (subject to adjustment for non-business days in accordance with the following business day convention), (each a Payment Date) commencing on the Payment Date falling in November 2007. The first Interest Period will commence on (and include) the Issue Date and (subject to adjustment for non-business days) end on (but exclude) the first Payment Date. Each subsequent Interest Period will commence on (and include) a Payment Date and end on Page 27

(but exclude) the next succeeding Payment Date. Interest on the A Notes shall accrue at an annual rate of Note EURIBOR plus 0.21 per cent. per annum. Interest on the B Notes shall accrue at an annual rate of Note EURIBOR plus 0.31 per cent. per annum. Interest on the C Notes shall accrue at an annual rate of Note EURIBOR plus 0.48 per cent. per annum. Interest on the D Notes shall accrue at an annual rate of Note EURIBOR plus 0.85 per cent. per annum. Interest on the E Notes shall accrue at an annual rate of Note EURIBOR plus 2.50 per cent. per annum. Interest on the X Notes shall accrue at an annual rate of Note EURIBOR plus 1.50 per cent. per annum. Where interest on the B, Notes, the C Notes, the D Notes, the E Notes or the X Notes is not paid in accordance with the above paragraphs, and Notes of a more senior class are outstanding, such interest will be deferred until such later Payment Date on which it can be paid in accordance with the Pre-Enforcement Revenue Priority of Payments and any amount of interest so deferred will itself accrue interest at the Rate of Interest for that class of Note, but any such deferral will cease on the Final Payment Date, when all accrued interest will become due and payable. See Condition 4(f). Utilisation of Mortgage Early Repayment Charges:

Amounts received by the Issuer or the Italian Purchaser (as the case may be) in respect of the obligation of Borrowers, in certain circumstances, to pay an early repayment charge in the event they repay all or any part of the relevant Mortgage Loan voluntarily or to the extent recovered following an enforcement event, at any time before the end of the mortgage term are referred to herein as the Mortgage Early Repayment Charges. Mortgage Early Repayment Charges in respect of the German Assets (German Mortgage Early Repayment Charges) consist of the following components to be calculated by the German Servicer: (a) the interest margin lost as result of the applicable early repayment (Margin Loss) (Zinsmargenschaden), calculated as (i) the difference between the interest rate agreed between the German Originator and the applicable German Borrower and the German Originator's financing costs at the time when such agreement was made, less (ii) any risk premium and administration fees which would be charged by the German Originator to the German Borrower on a periodic basis; and (b) the reduction of the margin which can be obtained on reinvestment of the repayment proceeds in the applicable market conditions at the time when the relevant German Mortgage Loan is repaid which the German Originator would suffer if it could only lend the repaid principal to a third-party borrower by agreeing to a lesser interest rate (Zinsverschlechterungsschaden) (Reinvestment Loss). Page 28

To the extent that the Issuer receives amounts in respect of German Mortgage Early Repayment Charges, it will be obliged to pay all amounts in respect of Reinvestment Loss to the German Swap Provider pursuant to the terms of the German Interest Rate Swaps. The Issuer will be required to pay amounts it receives in respect of Margin Loss to the GMERC Holders pursuant to the terms of the GMERCs. Payments to the German Swap Provider in respect of Reinvestment Losses are referred to herein as Notional Adjustment Payments. Notional Adjustment Payments will be capped at the Reinvestment Loss in respect of the relevant repaid German Loan Receivables. The Mortgage Early Repayment Charges consisting of Margin Loss (if any) received by the Issuer in respect of the German Assets in the Collection Period immediately preceding the relevant Payment Date will be paid to the holders of the GMERCs on such Payment Date, subject to the applicable MERC Conditions (the GMERC Payments). The monies relating to Mortgage Early Repayment Charges (if any) paid by Italian Borrowers to the Italian Purchaser and received by the Issuer from the Italian Purchaser under the Italian Notes in the Collection Period immediately preceding the relevant Payment Date will be paid to the holders of the IMERCs on such Payment Date, subject to the applicable MERC Conditions (the IMERC Payments and together with the GMERC Payments, the MERC Payments). The relevant MERC Payments will be calculated on the Determination Date before each Payment Date. MERC Payments:

The MERCs constitute amounts payable to the MERC Holders derived from amounts equal to certain of the Mortgage Early Repayment Charges received by the Issuer (as described above). Any MERC Payments will constitute interest until the date on which the MERCs are redeemed when any MERC Payments shall constitute a repayment of principal until the Principal Amount Outstanding of the MERCs is repaid, and any surplus remaining thereafter on such redemption date shall constitute interest. For the avoidance of doubt, the Mortgage Early Repayment Charges in respect of the Italian Mortgage Loans will not be used to make payments on the GMERCs and Mortgage Early Repayment Charges in respect of the German Mortgage Loans will not be used to make payments on the IMERCs. Following the redemption of the Notes or an enforcement of the Security for the Notes pursuant to Condition 10 and disposal of the German Assets and the Italian Notes (or the sale of the Italian Mortgage Loans and the redemption of the Italian Notes), no termination payment or other amount (other than amounts in respect of the final Collection Period then payable in respect of MERCs) will be payable in respect of the MERCs and, following the Page 29

payment of any amounts then payable in respect of MERC Payments, the MERCs will no longer constitute a claim against the Issuer. Residuals Payments:

The Residuals constitute amounts payable to the Residual Holders on a pro rata basis from amounts equal to the residual amount available for such purpose in accordance with the Pre-Enforcement Revenue Priority of Payments or Post-Enforcement Priority of Payments, as applicable, following payment of or provision for all higher ranking items. Prior to enforcement, the Residuals will pay on each Payment Date such residual amount (the Residual Payment) as is available for such purpose in accordance with the Pre-Enforcement Revenue Priority of Payments (following payment of or provision for all higher ranking items). Any Residual Payments will constitute interest until the date on which the Residuals are redeemed when any Residual Payments shall constitute a repayment of principal until the Principal Amount Outstanding of the Residuals is repaid, and any surplus remaining thereafter on such redemption date shall constitute interest. Following the redemption of all the Notes, other than pursuant to enforcement pursuant to Condition 10, and payment by the Issuer of all sums to be applied pursuant to the Pre-Enforcement Revenue Priority of Payments, no termination payment or other amount will be payable in respect of the Residuals and the Residuals will no longer constitute a claim against the Issuer. Following an enforcement of the Security for the Notes pursuant to Condition 10 and payment by the Issuer of all sums to be applied pursuant to the Post-Enforcement Priority of Payments no termination payment or other amount will be payable in respect of the Residuals and the Residuals will no longer constitute a claim against the Issuer.

Withholding Tax:

All payments under the Notes, the MERCs and the Residuals will be made subject to any applicable withholding or deduction for or on account of any tax (wherever such tax is imposed) and neither the Issuer nor the Paying Agents nor any other person will be obliged to pay any additional amounts as a consequence.

Final Redemption of the Notes:

Unless previously redeemed in full, each class of Notes will mature at their then Principal Amount Outstanding on the Payment Date falling in August 2050 (the Final Payment Date), together with accrued interest thereon.

Redemption of the MERCs and the Residuals:

Subject to the prior payment to the MERC Holders of all amounts (if any) then payable to them at such time, the MERCs will no longer constitute claims against the Issuer following a redemption of all (but not some only) of the Notes. Subject to the prior payment to the Residual Holders of all amounts (if any) then payable to them at such time, the Residuals will no longer constitute claims against the Page 30

Issuer following a redemption of all (but not some only) of the Notes. Optional Redemption:

The Notes will be subject to redemption (in whole, but not in part and without the prior approval of the Noteholders) at the option of the Issuer (subject to the conditions set out in Condition 5) at their Principal Amount Outstanding in each of the following circumstances: (a) if on any Payment Date, the Issuer or any Paying Agent is obliged to make any withholding or deduction on account of tax from payments in respect of the Notes, the MERCs or the Residuals, or in the event of certain tax or other changes affecting the Loan Receivables or in the event of certain tax changes affecting the Italian Notes (see Condition 5(f)); and (b) at the option of the Issuer, on any Payment Date following the Payment Date on which: (i) the aggregate Principal Amount Outstanding of the Notes is equal to or less than 10 per cent, of the initial aggregate Principal Amount Outstanding of the Notes; and (ii) the aggregate outstanding principal amount of the German Mortgage Loans is equal to or less than 10 per cent. of the aggregate outstanding principal amount of the German Mortgage Loans plus the Further Disbursement Amount on the Issue Date; and (iii) the aggregate outstanding principal amount of the Italian Mortgage Loans is equal to or less than 10 per cent. of the aggregate outstanding principal amount of the Italian Mortgage Loans on the Issue Date (see Condition 5(e)). The term Optional Redemption refers to redemption of the Notes under any of the foregoing circumstances or procedures. The Issuer will not have optional right of redemption in respect of the MERCs or the Residuals in whole.

Mandatory Redemption in Part:

Prior to enforcement, the Notes of each class (other than the X Notes) will be subject to mandatory redemption in part on each Payment Date (other than a Payment Date on which the Notes are to be redeemed pursuant to an Optional Redemption or on the Final Payment Date) in accordance with the Principal Priority of Payments and Condition 5(b). Such mandatory redemption in part will be primarily caused by scheduled principal payments by the Borrowers under the Mortgage Loans and principal prepayments (whether voluntarily by the Borrowers, as a result of enforcement upon the related Property or otherwise). The X Notes will be subject to mandatory redemption in part on each Payment Date, other than on a Payment Date on which the Notes are to be redeemed pursuant to an Optional Redemption or on the Final Payment Date, prior to enforcement of the Notes in accordance with the PreEnforcement Revenue Priority of Payments and Condition 5(c). Such mandatory redemption in part of the X Notes will be covered by interest payments by the Borrowers and other payments giving rise to sufficient Available Page 31

Revenue Funds for such purpose. On the Payment Date falling November 2008 the Notes, other than the X Notes, may be subject to a mandatory redemption in part in accordance with Conditions 5(g) to the extent of any Principal Rebate (as defined therein) in respect of unutilised amounts not constituting interest standing to the credit of the Further Disbursement Account. The MERCs and Residuals will not be subject to mandatory redemption in part. Principal Amortisation:

Prior to the enforcement of the Security, Noteholders will be entitled to receive payments of principal on their respective classes of Notes on each Payment Date, but only to the extent that the Issuer has funds available for the purpose (and any other items ranking pari passu therewith) after making payment, on such Payment Date, of any liabilities due for payment and ranking in priority to payments of principal on such class of Notes as provided in the Conditions, the Trust Deed, the Cash Management Agreement and the Security Documents. Any MERC Payments will constitute interest until the date on which the MERCs are redeemed when any MERC Payments will constitute a repayment of principal until the Principal Amount Outstanding of the MERCs is repaid, and any surplus remaining thereafter on such redemption date will constitute interest. Any Residual Payments will constitute interest until the date on which the Residuals are redeemed when any Residual Payments will constitute a repayment of principal until the Principal Amount Outstanding of the Residuals is repaid, and any surplus remaining thereafter on such redemption date will constitute interest.

Limited Recourse:

In the event of non-payment, the only remedy for recovering amounts due on the Notes, the MERCs and the Residuals is through the enforcement of the Security. If the Security is enforced, the proceeds of enforcement may be insufficient to pay amounts due on the Notes, the MERCs and the Residuals, and in such event none of the Security Trustee, the Noteholders, the MERC Holders or the Residual Holders may take any further steps against the Issuer in respect of amounts payable to them and all such claims against the Issuer shall be extinguished and discharged.

Rating:

It is expected that the Notes will be rated by Fitch Ratings Ltd (Fitch) and Moody's Investors Service Limited (Moody's and, together with Fitch, the Rating Agencies). It is expected that the A Notes, when issued, will be assigned an AAA rating by Fitch and an Aaa rating by Moody's. It is expected that the B Notes, when issued, will be assigned an AA rating by Fitch and an Aa2 rating by Moody's. It is expected that the C Notes, when issued, will be assigned an A rating by Fitch and an A1 rating by Moody's. It is expected that the D Notes, when issued, will be assigned a BBB rating by Fitch and a Baa2 rating by Moody's. It is expected that the E Notes, when issued, Page 32

will be assigned a BBB rating by Fitch and a Ba2 rating by Moody's. It is expected that the X Notes, when issued, will be assigned a BB+ rating by Fitch and a Ba2 rating by Moody's. It is expected that the MERCs, when issued, will be assigned an AAA rating by Fitch and an Aaa rating by Moody's. The rating of the MERCs addresses the likelihood of receipt of MERC Payments assuming that: (i) payment of the Mortgage Early Repayment Charges is legally valid, binding and enforceable against the relevant Borrowers; and (ii) the Mortgage Early Repayment Charges are actually collected from Borrowers (and in the case of the IMERCs received by the Issuer from the Italian Purchaser), and not waived by the German Originator or the Italian Originator (as applicable). The issue of the Residuals is not conditional upon a rating and the Issuer has not requested any rating of the Residuals. A security rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at any time by the assigning rating organisation if, in its judgement, circumstances in the future so warrant (including a withdrawal or a downgrade in the credit rating of either of the Swap Providers). Listing:

Application has been made to the Irish Stock Exchange for the Notes to be admitted to its Official List and to trading on its regulated market. Application has also been made to the Irish Stock Exchange for the MERCs and the Residuals to be admitted to its Official List and to trading on its alternative securities market.

Purchases:

The Issuer is not permitted to purchase the Notes, the MERCs and/or the Residuals.

Governing Law of the Notes, MERCs and Residuals:

English law.

Security for the Notes, the MERCs and the Residuals:

The Notes, the MERCs and the Residuals will have the benefit of security that is granted, or created, as the case may be:

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1.

pursuant to the German STA and the agreements executed in connection therewith, as a consequence of which the Issuer will grant German law security: (a)

over the German Assets by means of a transfer for security purposes; and

(b)

over the Issuer Claims by means of a pledge.

The term Issuer Claims means all present and future, actual or contingent rights and claims of the Issuer arising under or in respect of: (a)

the German Security and Trust Agreement, the Data Protection Trust Agreement, any issuer assignment agreement (transferring title to the relevant German Loan Receivables to the Security Trustee) or issuer assignment of mortgages (transferring title to the corresponding German Mortgages to the Security Trustee);

(b)

the German MRTSA, any Assignment Agreement or German Originator assignment of mortgages (transferring title to the corresponding German Mortgages to the Issuer); and

(c)

any other Transaction governed by German law,

Document

but excluding the German Assets. 2.

pursuant to the Italian Note Pledge Agreement entered into between, amongst others, the Issuer and the Security Trustee on or about the Issue Date pursuant to which the Issuer will grant for the benefit of the Security Trustee, the Noteholders, the MERC Holders, the Residual Holders and the other Secured Creditors an Italian law pledge over its interest in the Italian Notes and all monetary rights and claims arising thereunder;

3.

pursuant to the Deed of Charge between, among others, the Issuer and the Security Trustee for the benefit of the Security Trustee, the Noteholders, the MERC Holders, the Residual Holders and the other Secured Parties which will create the following English law security interests: (i) a first priority charge over the English law governed bank account(s) of the Issuer including the Issuer Transaction Account, the Reserve Account, the Standby Account (if any), and the Further Disbursement Account, provided that any share capital account of the Issuer shall be excluded from the Security; (ii) a first priority charge over any Eligible Page 34

Investments of the Issuer; (iii) first priority security assignments over the Issuer's right, title and interest in the following English or Irish law governed documents: (A) the Agency Agreement; (B) the Cash Management Agreement; (C) the Interest Rate Swap Agreement; (D) the Liquidity Facility Agreement; (E) the Bank Account Agreement; (F) the Subscription Agreement; (G) the Corporate Services Agreement; and (iv) a floating charge the whole of the undertaking, property, assets and any rights of the Issuer excluding its uncalled capital and the bank account into which share capital proceeds are paid (which, to the extent such floating charge extends to any asset which is secured by any of the Security referred to above, such floating charge shall rank after such Security). The security interests described in paragraph 1 above are together referred to as the German Security, the security interests described in paragraph 2 above are together referred to as the Italian Security and the charges and assignments referred to in paragraph 3 above are together referred to as the English Security and the English Security, the German Security and the Italian Security are together referred to as the Security. The Deed of Charge, the German STA, the Italian Note Pledge Agreement and any other documents creating security over the assets of the Issuer in favour of the Security Trustee for the benefit of the Secured Creditors shall be known collectively as the Security Documents. The rights and assets subject to the Security are referred to as the Secured Property. The assignments and other ancillary agreements entered into between any of the Issuer, the Security Trustee, the Data Trustee and the German Originator in relation to the German MRTSA and German STA and the Italian Transaction Documents are referred to as the Transaction Documents.

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Eligible Investments:

Eligible Institution:

Eligible Investment means any senior, unsubordinated debt security, investment, commercial paper, deposit or other debt instrument issued by, or fully and unconditionally guaranteed by, an Eligible Institution, which: (i)

is denominated in euro;

(ii)

(except in the case of a deposit) is primarily settled through Euroclear or Clearstream, Luxembourg;

(iii)

has a maturity date falling, or which is redeemable at par together with accrued unpaid interest, without penalty, not later than one Transaction Business Day prior to the next following Payment Date;

(iv)

(except in the case of a deposit) is in the form of (A) commercial paper, bonds, notes or financial instruments having a rating from Fitch of "F1+", if the maturity date is between 1 and 3 months, and "F1" if the maturity date is less than 1 month, from Moody's of "P-1"; or (B) money market funds which have a long-term rating of "AAA" and a short-term rating of "V1+" from Fitch, and a long-term rating of "Aaa" and a short-term rating of "MR1+" from Moody's; and

(v)

where it is to be held by the Issuer, is a "qualifying asset" for the purposes of Section 110 of the Taxes Consolidation Act 1997 of Ireland as amended.

Eligible Institution means any depository institution, organised under the laws of any state which is a member of the European Union or of the United States, the shortterm unsecured, unsubordinated and unguaranteed debt obligations of which are rated, at least "F1" by Fitch and P-1 by Moody's.

Other Agreements Italian Servicing Agreement:

Under the Italian Servicing Agreement, the Italian Servicer will agree to provide certain mortgage administration services to the Italian Purchaser in relation to the Italian Portfolio. Such services will include administering and enforcing the Italian Loan Receivables, receiving and paying to the Italian Purchaser Collection Account all cash collections in respect of the Italian Portfolio and the storing and safe-keeping of all documents relating to the Italian Loan Receivables and the Italian Related Securities. The Italian Servicing Agreement will be governed by Italian law.

Italian Note Issuance Agreement:

Under the Italian Note Issuance Agreement to be entered into on or about the Italian Issue Date between the Italian Purchaser, the Issuer, and the Representative of the Italian Noteholders, the Issuer will have agreed to subscribe for the Italian Notes. The Italian Note Issuance Agreement will be governed by Italian law. Page 36

Italian Purchaser Pledge Agreement:

Under the terms of the Italian Purchaser Pledge Agreement to be entered into on or prior to the Italian Issue Date, the Italian Purchaser will grant in favour of the Representative of the Italian Noteholders, as agent for the Italian Noteholders and the Other Italian Purchaser Secured Creditors, an Italian law pledge over all the Italian Purchaser's monetary rights (other than the Italian Portfolio and the relevant Italian Collections) in, to and under: (a)

the Italian Purchaser Agency Agreement;

(b)

the Italian Purchaser Cash Management Agreement;

(c)

the Italian Notes Issuance Agreement;

(d)

the Italian Purchaser Corporate Services Agreement;

(e)

the Italian Purchaser Intercreditor Agreement;

(e)

the Italian Servicing Agreement; and

(f)

the Italian Transfer Agreement,

all as more particularly described in the Italian Purchaser Pledge Agreement. The Italian Purchaser Pledge Agreement will be governed by Italian law. Pursuant to the Italian Purchaser Intercreditor Agreement and the Italian Purchaser Pledge Agreement, the Representative of the Italian Noteholders will, following the service of an Italian Purchaser Enforcement Notice on the Italian Purchaser or the occurrence of an Italian Purchaser Insolvency Event, exercise the Italian Purchaser Secured Creditors' rights under the Italian Purchaser Pledge Agreement and the Italian Purchaser Deed of Charge for the account and the benefit of the Italian Purchaser Secured Creditors. Italian Purchaser Deed of Charge:

Under the Italian Purchaser Deed of Charge to be entered into on or prior to the Italian Issue Date, the Italian Purchaser will create security in favour of the Representative of the Italian Noteholders, on trust for the benefit of itself, the Italian Noteholders and the Other Italian Purchaser Secured Creditors, (i) a first fixed charge over all sums of money standing to the credit of the Italian Purchaser Investment Account and the Italian Purchaser Securities Account; and (ii) a first priority security assignment over the Italian Purchaser's right, title and interest pursuant to any English governed documents to which it is a party. Pursuant to the Italian Purchaser Deed of Charge, the Representative of the Italian Noteholders will, following the service of an Italian Purchaser Enforcement Notice or the occurrence of an Italian Purchaser Insolvency Event, hold and exercise the Italian Purchaser Secured Creditors' rights under the Italian Purchaser Deed of Charge for the account and benefit of the Italian Purchaser Secured Creditors. The Italian Purchaser Deed of Charge will be governed by Page 37

English law. The Italian Purchaser Pledge Agreement and the Italian Purchaser Deed of Charge are referred to herein collectively as the Italian Purchaser Security Documents. Italian Purchaser Cash Management Agreement:

Under the Italian Purchaser Cash Management Agreement to be entered into on or about the Italian Issue Date, between the Italian Purchaser, the Representative of the Italian Noteholders, the Italian Calculation Agent, the Italian Cash Manager and the Italian Account Bank and the Account Bank (the Italian Account Bank and the Account Bank, together referred to as the Italian Purchaser Account Banks): (i) the Account Bank will agree to hold and operate the Italian Purchaser English Accounts and to provide the Italian Purchaser with account handling services in relation to moneys from time to time standing to the credit of such accounts; (ii) the Italian Account Bank will agree to hold and operate the Italian Purchaser Italian Accounts and to provide the Italian Purchaser with account handling services in relation to moneys from time to time standing to the credit of such accounts; (iii) the Italian Cash Manager will agree to manage and administer all amounts of cash standing to the credit of the Italian Purchaser English Accounts; and (iv) the Italian Calculation Agent will agree to provide certain calculation, notification and reporting services to the Italian Purchaser, including the calculation of the interest payable on the Italian Notes. In addition, under the Italian Purchaser Cash Management Agreement, each of the Italian Purchaser Account Banks will agree, so long as each of the Italian Purchaser English Accounts and/or the Italian Purchaser Italian Accounts (as the case may be) remains open with it, to pay to the Italian Purchaser interest on any credit balance thereof at a rate as separately agreed between it and the Italian Purchaser.

Italian Purchaser Agency Agreement:

Under the Italian Purchaser Agency Agreement, to be entered into on or about the Italian Issue Date, the Italian Paying Agent will arrange on behalf of the Italian Purchaser for the payment of interest and repayment of principal on the Italian Notes, including the payment of the IMERC Interest Component and the Italian Variable Return (if any).

Italian Purchaser Intercreditor Agreement:

Under the Italian Purchaser Intercreditor Agreement to be entered into on or about the Italian Issue Date, between, inter alios, the Italian Purchaser, the Italian Originator, the Representative of the Italian Noteholders for itself and as Representative of the Italian Noteholders, the Italian Servicer, the Italian Calculation Agent, and the Italian Account Bank, the parties thereto have agreed on the cash flow allocation of the proceeds in respect of the Italian Portfolio and the Representative of the Italian Noteholders has been granted certain rights in relation to the Italian Portfolio.

Italian Note Pledge Agreement:

Under the Italian Note Pledge Agreement entered into on Page 38

or about the Issue Date between, among others, the Issuer and the Security Trustee, the Issuer will grant for the benefit of the Security Trustee, the Noteholders, MERC Holders, Residual Holders and the other Secured Creditors an Italian law pledge over the Italian Notes and all the monetary rights and claims arising thereunder. The Italian Note Pledge Agreement shall be governed by Italian law. Italian Purchaser Quotaholder's Agreement:

Under a quotaholder's agreement to be entered into on or about the Italian Issue Date between the Italian Purchaser, the Representative of the Italian Noteholders and Stichting Mauritsburg, Stichting Mauritsburg (i) has assumed certain undertakings with respect to, inter alia, the exercise of their voting rights in the Italian Purchaser, and (ii) has undertaken not to dispose of its interest in the Italian Purchaser (the Italian Purchaser Quotaholder's Agreement).

Italian Purchaser Corporate Services Agreement:

Under a corporate services agreement to be entered into on or about the Italian Issue Date between the Italian Purchaser and the Italian Corporate Servicer, the Italian Corporate Servicer will agree to provide certain corporate administration and management services to the Italian Purchaser (the Italian Purchaser Corporate Services Agreement).

Italian Purchaser Master Definitions and Construction Agreement:

Under a master definitions agreement to be entered into on or about the Italian Issue Date between, inter alios, the Italian Purchaser, the Italian Originator, the Representative of the Italian Noteholders, the Italian Servicer, the Italian Calculation Agent and the Italian Account Bank, the parties thereto will agree the definitions, the principles of construction, the common terms and other provisions applicable to the Italian transaction documents executed or to be executed in connection with the Italian Securitisation. The Italian Transfer Agreement, the Italian Servicing Agreement, the Italian Purchaser Corporate Services Agreement, the Italian Notes Issuance Agreement, the Italian Purchaser Cash Management Agreement, the Italian Purchaser Pledge Agreement, the Italian Purchaser Deed of Charge, the Italian Purchaser Agency Agreement, the Italian Purchaser Intercreditor Agreement, the Italian Purchaser Quotaholder's Agreement and the Italian Purchaser Master Definitions and Construction Agreement are together referred to, together with any other agreement entered into in the context of the Italian Securitisation as determined by the Italian Purchaser and the Representative of the Italian Noteholders, as the Italian Transaction Documents.

German Interest Rate Swap Agreement:

The Issuer will enter into one or more swap transactions in order to mitigate the interest rate exposure which may arise as a result of differences between the rates of interest payable under the German Loan Receivables and the rates at which the Notes bear interest.

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The German Swap Provider is subject to certain conditions as set out in the German Interest Rate Swaps. As used herein, the German Interest Rate Swap Agreement relates to the one ISDA Master Schedule and all swap transactions relating to hedging the aforementioned risks. (See Credit Structure – Interest Rate Matching for further information). Italian Interest Rate Swap Agreement:

The Issuer will enter into one or more swap transactions in order to mitigate the interest rate exposure which may arise as a result of differences between fixed rates of interest payable under the Italian Modular Mortgage Loans (in the event that Italian Borrowers exercise their option under the Italian Modular Mortgage Loans to convert their interest rates from floating to fixed rates of interest) and the floating rates at which the Notes bear interest. The Italian Swap Provider is subject to certain conditions as set out in the Italian Interest Rate Swaps. As used herein, the Italian Interest Rate Swap Agreement relates to the one ISDA Master Schedule (being the same for the German Interest Rate Swap Agreement) and the swap transactions relating to hedging the aforementioned risks. (See Credit Structure – Interest Rate Matching for further information).

Liquidity Facility Agreement:

The Liquidity Facility (as more particularly described under Credit Structure – Liquidity Facility) will be available to the Issuer to make good certain shortfalls of funds available to the Issuer to meet its obligations and will be provided pursuant to the Liquidity Facility Agreement to be entered into between, inter alios, the Issuer and the Liquidity Provider on or about the Issue Date. Amounts drawn under the Liquidity Facility are referred to herein as Liquidity Drawings.

Transaction Accounts:

The German Borrowers will make all payments of interest, repayment of principal or any other payment on or after the Cut-Off Date (as defined below in the section entitled Title to and Sale of the German Assets) into an account in the name of the German Originator held at the German Originator (the German Collection Account). Amounts standing to the credit of the German Collection Account which represent receipts in respect of the German Loan Receivables (other than in respect of interest which has accrued in the period prior to the Cut-Off Date in respect of German Mortgage Loans other than Partially Disbursed Loans, which shall be retained by the German Originator) will be transferred daily from the German Collection Account to an account (the Issuer Transaction Account) in the name of the Issuer held at the Account Bank (or such other banking institution with a suitable rating in accordance with the terms of the Transaction Documents). The Italian Borrowers will make all payments in relation Page 40

to the Italian Loan Receivables (the Italian Collections and with the German Collections, the Collections) into an account in the name of the Italian Originator held at the Italian Account Bank (the Italian Collection Account). Amounts standing to the credit of the Italian Collection Account which represent receipts in respect of the Italian Loan Receivables will be transferred daily from the Italian Collection Account to an account in the name of the Italian Purchaser which is held at the Italian Account Bank (the Italian Purchaser Collection Account) and then transferred on a weekly basis to an account in the name of the Italian Purchaser held with the Account Bank (or such other banking institution with a suitable rating in accordance with the terms of the Transaction Documents) (the Italian Purchaser Investment Account). On the 15th calendar day and the last calendar day of each month (provided that, if any of such dates is not a London Business Day, such date will be the first following day that is a London Business Day, and further provided that such day is not an Italian Payment Date), amounts standing to the credit of the Italian Purchaser Investment Account may be invested by the Italian Cash Manager on behalf of the Italian Purchaser under the terms of the Italian Purchaser Cash Management Agreement in Italian Eligible Investments (as defined below) which, if represented by securities (including money market fund positions), will be credited to a securities account in the name of the Italian Purchaser held with the Account Bank (the Italian Purchaser Securities Account). “London Business Day” means a day (other than Saturday or Sunday) on which banks are open for business in London. On or prior to each Italian Payment Date, the Italian Cash Manager on behalf of the Italian Purchaser will: (i) liquidate the Italian Eligible Investments standing to the credit of the Italian Purchaser Securities Account and transfer the relevant proceeds thereof to the Italian Purchaser Investment Account; and (ii) transfer all amounts standing to the credit of the Italian Purchaser Investment Account to a bank account in the name of the Italian Purchaser held with the Italian Account Bank (the Italian Purchaser Payment Account). On each Italian Payment Date, falling prior to the Italian Payment Date in April 2009 (the period from the Italian Issue Date to such date being the Initial Period) the Italian Cash Manager and the Italian Paying Agent, will, in compliance with the Italian Payments Report, apply the amounts so transferred to the Italian Purchaser Payment Account, respectively, to: (A) pay certain expenses of the Italian Purchaser; (B) credit an amount equal to the Italian Purchaser Principal Available Funds to the Italian Purchaser Principal Reserve Account; and (C) make payments of (i) interest, (ii) the IMERC Interest Component (if any), and (iii) the Italian Additional Return (if any), due under the Italian Notes. On each Italian Payment Date falling during the Initial Period, all amounts transferred to the Italian Purchaser Page 41

Principal Reserve Account shall be subsequently credited to the Italian Purchaser Investment Account and may be invested, in whole or in part, by the Italian Cash Manager on behalf of the Italian Purchaser under the terms of the Italian Purchaser Cash Management Agreement, in Italian Eligible Investments which, if represented by securities, will be credited to the Italian Purchaser Securities Account. The Italian Purchaser Principal Reserve Account will be closed following the Initial Period (and amounts previously credited thereto will be credited to the Italian Purchaser Investment Account). On each Italian Payment Date after the expiry of the Initial Period, the Italian Cash Manager and the Italian Paying Agent, will, in compliance with the Italian Payments Report, apply the amounts standing to the credit of the Italian Purchaser Payment Account, respectively, to: (A) pay certain expenses of the Italian Purchaser; and (B) make payments of (i) interest, (ii) the IMERC Interest Component (if any), (iii) the Italian Additional Return (if any), and (iv) principal due under the Italian Notes, in accordance with the priority of payments in respect of the Italian Notes. Pursuant to the Italian Purchaser Cash Management Agreement, the Italian Account Bank and the Account Bank will contract to pay an agreed rate of interest on funds on deposit in the relevant Italian Purchaser Accounts. Each of the Italian Account Bank and the Account Bank will waive any set-off, retention and other rights in respect of the relevant Italian Purchaser Accounts held by it. Payments under the Italian Notes will be credited to the Issuer Transaction Account. In addition to the Issuer Transaction Account, the Issuer will hold the Further Disbursement Account and Reserve Account (each as described under Credit Structure below) at the Account Bank pursuant to the Bank Account Agreement. Italian Eligible Investments

Italian Eligible Investments means (a) euro denominated money-market funds which have: (i) a long-term rating of "AAA" and a short-term rating of "V1+" from Fitch, and (ii) a long-term rating of "Aaa" and a short-term rating of "MR1+" from Moody's, and permit daily liquidation of investments or have a maturity date falling before the immediately following Italian Payment Date, provided that they are disposable without penalty; and (b) eurodenominated senior (unsubordinated) debt securities or other debt instruments providing reimbursement in full of the principal at maturity, or repurchase transactions between the Italian Purchaser and the Account Bank in respect of debt securities or other debt instruments provided that, in all cases: (i) such investments are immediately repayable on demand, disposable without penalty or have a maturity date falling on or before the next following Italian Payment Date; and (ii) the debt securities or other debt instruments, or in the case of repurchase transactions, the debt securities or other debt instruments underlying the repurchase transactions, are Page 42

issued by, or fully and unconditionally guaranteed on an unsubordinated basis by, an institution whose unsecured and unsubordinated debt obligations are rated: (A) at least "F1" by Fitch in respect of short-term debt and "P-1" by Moody's in respect of short-term debt if they have a maturity of less than one month or (B) at least "F1+" by Fitch in respect of short-term debt and "P-1" by Moody's in respect of short-term debt, if they have a maturity between one and three months.

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RISK FACTORS The following is a summary of certain aspects of the issue of the Notes, the MERCs and the Residuals about which prospective investors should be aware, but it is not intended to be exhaustive. Prospective investors should carefully consider the risk factors set out in this summary, in addition to the other information contained in this Offering Circular, in evaluating whether to purchase the Notes, the MERCs or the Residuals. Risks Related to the Notes, the MERCs and the Residuals Limited Recourse Obligations The Notes, the MERCs and the Residuals represent obligations of the Issuer and do not constitute obligations or responsibilities of, and are not guaranteed by, any other person (including the Originators, the Share Trustee, the Security Trustee, the Note Trustee, the Cash Manager, the Account Bank, the Servicers, the Lead Manager, the Italian Purchaser, the Liquidity Provider, the Swap Providers, the Data Trustee, any agents appointed under the Paying Agency Agreement or any affiliates of any of the foregoing). The Issuer will rely primarily on monies received or recovered in respect of the German Assets and payments under the Italian Notes (other than in each case in respect of Mortgage Early Repayment Charges) to enable it to make payments in respect of the Notes and the Residuals. The Issuer may, in certain circumstances, be entitled to utilise amounts standing to the credit of the Reserve Account, the Further Disbursement Account and may be entitled to the receipt of funds (if available to be drawn) under the Liquidity Facility Agreement to enable it to make payments in respect of the Notes, other than the X Notes. The Issuer will rely solely on monies received or recovered in respect of Mortgage Early Repayment Charges to enable it to make payments in respect of the MERCs. In the event that the proceeds of enforcement against the Security are insufficient (after payment of all other claims ranking higher in priority to or pari passu with amounts due under the Notes, the MERCs and the Residuals (as applicable)), the Issuer's obligation to pay such amounts will cease and the Noteholders, the MERC Holders and the Residual Holders (as applicable) will have no further claim against the Issuer in respect of such unpaid amounts, in which event the Issuer's liability to discharge the then unpaid amounts will be extinguished. Enforcement of the Security is, therefore, the only remedy available for the purpose of recovering amounts owed in respect of the Notes, the MERCs and the Residuals. It should be noted that in certain limited circumstances, the Issuer will not be able to make any drawings under the Liquidity Facility Agreement. Following the redemption of the Notes or an enforcement of the Security for the Notes pursuant to Condition 10 and disposal of the German Assets and the Italian Notes (or the sale of the Italian Mortgage Loans and the redemption of the Italian Notes), no termination payment or other amount (other than amounts in respect of the final Collection Period then payable in respect of MERCs) will be payable in respect of the MERCs and, following the payment of any amounts then payable in respect of MERC Payments, the MERCs will no longer constitute a claim against the Issuer. Following the redemption of all the Notes, other than pursuant to enforcement pursuant to Condition 10, and payment by the Issuer of all sums to be applied pursuant to the PreEnforcement Revenue Priority of Payments, no termination payment or other amount will be payable in respect of the Residuals and the Residuals will no longer constitute a claim against the Issuer. Following an enforcement of the Security for the Notes pursuant to Condition 10 and payment by the Issuer of all sums to be applied pursuant to the Post-Enforcement Priority of Payments no termination payment or other amount will be payable in respect of the Residuals and the Residuals will no longer constitute a claim against the Issuer. Page 44

Other than as provided in the German MRTSA and or the German STA, the Issuer and the Security Trustee will have no recourse to the German Originator. Other than as provided in the Italian Notes, the Issuer and the Security Trustee will have no recourse to the Italian Purchaser. The Issuer and the Security Trustee have no recourse to the Italian Originator. Yield and Prepayment Considerations The yield to maturity of the Notes of each class and the Residuals will depend on, among other things, the amount and timing of payment of principal on the Mortgage Loans (including full and partial prepayments, sale proceeds arising on enforcement of a Mortgage Loan or repurchases by the relevant Originator, for example, due to breach of warranty under the German MRTSA or the Italian Transfer Agreement (as applicable)) and the price paid by the Noteholders for the Notes and by the Residual Holders for the Residuals (as applicable). Such yield may be adversely affected by a higher or lower than anticipated rate of prepayments on the Mortgage Loans. The yield to maturity of the MERCs will be particularly sensitive to the rate of prepayment on the Mortgage Loans. The repurchase, substitution or (in the case of the Italian Mortgage Loans only) provision of a Limited Recourse Loan in relation to a Mortgage Loan by the applicable Originator will end the possibility of Mortgage Early Repayment Charges being received by the Issuer in respect of such Mortgage Loan and such repurchases will therefore reduce the MERC Payments which may be made by the Issuer. Principal prepayments in full may arise in connection with the refinancing of Mortgage Loans and/or sales of Properties by Borrowers voluntarily or as a result of enforcement proceedings under the relevant Mortgage Loan. Certain principal prepayments may trigger an early repayment charge payable by the relevant Borrower. Such early repayment charges, once received by the Issuer (whether directly in respect of the German Mortgage Loans or indirectly in respect of the Italian Mortgage Loans), constitute the Mortgage Early Repayment Charges and will be distributed to the MERC Holders (other than German Mortgage Early Repayment Charges corresponding to Reinvestment Losses (Zinsverschlechterungsschaden) which will be paid to the German Swap Provider). Mortgage Early Repayment Charges will not be available to the Noteholders or the Residual Holders. For a description of Mortgage Early Repayment Charges payable under German law, see the section entitled Ordinary Statutory Termination Rights of the German Borrowers (Ordentliche Kündigungsrechte der Darlehensnehmer); Contractual Prepayment Rights and Extraordinary Termination Rights (Außerordentliche Kündigungsrechte) and Early Repayment Charges (Vorfälligkeitsentschädigungen) below. For a description of Mortgage Early Repayment Charges payable under Italian law, see Yield and repayment consideration on the Italian Notes and Decree 31 January 2007 No. 7 (Decree No. 7) below. The rate of prepayment of the Mortgage Loans cannot be predicted and is influenced by a wide variety of economic, social and other factors, including prevailing mortgage market interest rates, the availability of alternative financing, local and regional economic conditions and homeowner mobility. No assurance can be given as to the level of prepayment that the Mortgage Loans will experience. See the section entitled Weighted Average Lives of the Notes. Subordination of the A Notes, the B Notes, the C Notes, the D Notes, the E Notes, the X Notes and the Residuals To the extent set forth in Condition 2, (a) the B Notes are subordinate in right of payment to the A Notes; (b) the C Notes are subordinate in right of payment to the A Notes and the B Page 45

Notes; (c) the D Notes are subordinate in right of payment to the A Notes, the B Notes and the C Notes; (d) the E Notes are subordinate in right of payment to the A Notes, the B Notes, the C Notes and the D Notes and (e) the X Notes are subordinate in right of payment to the A Notes, the B Notes, the C Notes, the D Notes and the E Notes; (f) the Residuals are subordinate in right of payment to the A Notes, the B Notes, the C Notes, the D Notes, the E Notes and the X Notes. See also the section entitled Credit Structure – Subordination of the A Notes, B Notes, C Notes, D Notes, E Notes, X Notes and the Residuals. In respect of the interests of the Noteholders, the MERC Holders and the Residual Holders, the Trust Deed will contain provisions requiring the Note Trustee to have regard to the interests of the Noteholders, the MERC Holders and the Residual Holders as regards all powers, trusts, authorities, duties and discretions of the Note Trustee (except where expressly provided otherwise) but requiring the Note Trustee in any such case to have regard only to the interests of: (a)

the A Noteholders if, in the Note Trustee's opinion, there is a conflict between the interests of the A Noteholders and those of the B Noteholders and/or those of the C Noteholders and/or those of the D Noteholders and/or those of the E Noteholders and/or those of the X Noteholders and/or those of the MERC Holders and/or those of the Residual Holders;

(b)

the B Noteholders if, in the Note Trustee's opinion, there is a conflict between the interests of the B Noteholders and those of the C Noteholders and/or those of the D Noteholders and/or those of the E Noteholders and/or those of the X Noteholders and/or those of the MERC Holders and/or those of the Residual Holders;

(c)

the C Noteholders if, in the Note Trustee's opinion, there is a conflict between the interests of the C Noteholders and/or those of the D Noteholders and/or those of the E Noteholders and/or those of the X Noteholders and/or those of the MERC Holders and/or those of the Residual Holders;

(d)

the D Noteholders if, in the Note Trustee's opinion, there is a conflict between the interests of the D Noteholders and/or those of the E Noteholders and those of the X Noteholders and/or those of the MERC Holders and/or those of the Residual Holders;

(e)

the E Noteholders, if in the Note Trustee's opinion there is a conflict between the interests of the E Noteholders, and/or those of the X Noteholders, and/or those of the MERC Holders and/or those of the Residual Holders;

(f)

the X Noteholders if, in the Note Trustee's opinion, there is a conflict between the interests of the X Noteholders and/or those of the MERC Holders and/or those of the Residual Holders;

(g)

the MERC Holders if, in the Note Trustee's opinion, there is a conflict between the interests of the MERC Holders and those of the Residual Holders;

(h)

following redemption in full of the A Notes, the interests of the B Noteholders;

(i)

following redemption in full of the A Notes and the B Notes, the interests of the C Noteholders;

(j)

following redemption in full of the A Notes, the B Notes and the C Notes, the interests of the D Noteholders;

(k)

following redemption in full of the A Notes, the B Notes, the C Notes and the D Notes, the interests of the E Noteholders;

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(l)

following redemption in full of the A Notes, the B Notes, the C Notes, the D Notes and the E Notes, the interests of the X Noteholders; and

(m)

following redemption in full of the Notes, the interests of the MERC Holders.

If, upon default by Borrowers and after exercise by or on behalf of the Issuer and/or the Italian Purchaser of all available remedies in respect of the applicable Mortgage Loans, the Issuer or the Italian Purchaser (as the case may be) does not receive the full amount due from such Borrowers, Noteholders may receive by way of principal repayment an amount less than the face amount of the Notes and the Issuer may be unable to pay in full interest accrued on the Notes. On any Payment Date, any such Principal Deficiencies on the Mortgage Loans, to the extent that there are sufficient Available Revenue Funds to be applied towards items (vii), (ix), (xi), (xiii) and (xv) of the Pre-Enforcement Revenue Priority of Payments (or any of such items), will be covered from such application of Available Revenue Funds and to the extent that such application of Available Revenue Funds is insufficient to cover such Principal Deficiencies in full, such Principal Deficiencies (or such amount thereof as has not been covered by application of Available Revenue Funds) will be allocated in the following manner: (a) first as withdrawals from the Reserve Account, to the extent of the funds on deposit therein on such Payment Date and subject to such withdrawals being permitted; (b) secondly to the E Note Principal Deficiency Sub-Ledger, until the amount on such sub-ledger is equal to the E Note Principal Deficiency Limit, (c) thirdly to the D Note Principal Deficiency Sub-Ledger, until the amount on such sub-ledger is equal to the D Note Principal Deficiency Limit; (d) fourthly to the C Principal Deficiency Sub-Ledger, until the amount on such sub-ledger is equal to the C Note Principal Deficiency Limit; (e) fifthly to the B Principal Deficiency Sub-Ledger, until the amount on such sub-ledger is equal to the B Note Principal Deficiency Limit; and (f) thereafter, to the A Principal Deficiency Sub-Ledger. The application of Available Revenue Funds towards redemption of certain of the Notes as described above will reduce the amounts that would otherwise be available to make payment of amounts of interest accrued on, or principal in respect of, the X Notes and the Residuals. Interest on the X Notes and the Residuals is payable only from the Available Revenue Funds or, after enforcement of the Notes pursuant to Condition 10, from the proceeds of enforcement of the Security. Principal on the X Notes and the Residuals is payable in most circumstances from the Available Revenue Funds (other than amounts standing to the credit of the Reserve Account). Amounts of principal repaid or prepaid under the Mortgage Loans and amounts standing to the credit of the Reserve Account will not be available to make any payments of principal in respect of the X Notes and the Residuals, other than after the enforcement of the Notes pursuant to Condition 10 and other than as set out below. As set out further below, drawings under the Liquidity Facility and withdrawals from the Standby Account will not be available to make any payments of interest or principal in respect of the X Notes and the Residuals. The ability of the Issuer to make payments of interest and principal under the X Notes and Residuals will therefore be sensitive to delinquencies and losses on the Mortgage Loans, as these will reduce the funds available for application towards payment of interest and principal on the X Notes and the Residuals. Delays by Borrowers in making payments under the Mortgage Loans may lead to the Issuer having insufficient funds on any given Payment Date to make payment in full of all amounts referred to in the PreEnforcement Revenue Priority of Payments. The Notes (other than the X Notes) may, in the above circumstances, benefit from drawings made by the Issuer under the Liquidity Facility or withdrawals from the Standby Account (where applicable) which will be available to meet certain payments of interest under the Notes (other than the X Notes). No such drawings will be available to make payment of amounts accruing in respect of the X Notes, the MERCs or the Residuals and the repayment of amounts drawn under the Liquidity Facility from subsequent payments made by German Borrowers under the German Mortgage Loans and payments under the Italian Notes may reduce the amounts that would otherwise be available to be paid to the X Noteholders and the Residual Holders on Payment Dates which fall after the drawing under the Liquidity Facility. Page 47

Amounts standing to the credit of the Reserve Account will not be available for making payments of principal in respect of the X Notes or the Residuals other than: (i) when the Reserve Account Required Amount is reduced on a Payment Date following a Reserve Account Determination Date; (ii) following the enforcement of the Security and the application of funds pursuant to the Post-Enforcement Priority of Payments; or (iii) upon final redemption of the Notes, when all amounts standing to the credit of the Reserve Account will be released towards payment of amounts due and payable by the Issuer in accordance with the Pre-Enforcement Revenue Priority of Payments. In each case, application of any of such funds in or towards payment of amounts to the X Noteholders and the Residual Holders will be dependent on there being sufficient amounts available to the Issuer after paying in full all amounts due in priority to the X Notes and the Residuals in accordance with the PreEnforcement Revenue Priority of Payments or the Post-Enforcement Priority of Payments, as the case may be. In no circumstances will amounts standing to the credit of the Reserve Account be available for making payments in respect of the MERCs. At the Issue Date, the aggregate principal amount of the Notes (other than the X Notes) is approximately 100 per cent. of the face value of the Mortgage Loans and the aggregate Further Disbursement Amounts on the Issue Date. Accordingly, the principal amount of the X Notes at the Issue Date is not represented by the principal amount of the Mortgage Loans and the aggregate Further Disbursement Amounts on the Issue Date. At the Issue Date, the aggregate of the amount credited to the Reserve Account will be 0.50 per cent of the aggregate Principal Amount Outstanding of the Notes on the Issue Date. However, amounts standing to the credit of the Reserve Account are unlikely, other than in limited circumstances as set out above, to be available for application in or towards payment of principal amounts payable to the X Noteholders or the Residual Holders. The IMERC Holders are only entitled to receive payments under the IMERCs to the extent that the Issuer has received IMERC Interest Component in respect of the Italian Mortgage Early Repayment Charges arising in relation to the Italian Loan Receivables and paid to the Issuer pursuant to the Italian Notes. The GMERC Holders are only entitled to receive payments under the GMERCs to the extent that the Issuer has received German Mortgage Early Repayment Charges corresponding to Margin Losses. The Residual Holders are only entitled to payments to the extent that amounts are allocated to them in accordance with the Priority of Payments which may be zero. Optional Redemption Although the Issuer is entitled to redeem the Notes at its option (as to which see Condition 5), when the following conditions are met: (i) the aggregate Principal Amount Outstanding of the Notes is equal to or less than 10 per cent. of the initial aggregate Principal Amount Outstanding of the Notes; (ii) the aggregate outstanding principal amount of the German Mortgage Loans is equal to or less than 10 per cent. of the aggregate outstanding principal amount of the German Mortgage Loans plus the aggregate Further Disbursement Amounts on the Issue Date; and (iii) the aggregate outstanding principal amount of the Italian Mortgage Loans is equal to or less than 10 per cent. of the aggregate outstanding principal amount of the Italian Mortgage Loans on the Issue Date, it is not obliged to do so. The ability of the Issuer to redeem the Notes in the circumstances outlined above will be dependent primarily upon its ability to sell or refinance the German Assets and to sell the Italian Notes or for the Italian Notes to be redeemed for an amount sufficient to enable the Issuer to make payments of all sums due to Noteholders upon any such redemption and to pay or make provision for all amounts ranking in priority thereto. Accordingly, if the Issuer is unable to raise sufficient redemption funds, whether by the sale or refinancing of the German Assets and/or by the sale of the Italian Notes or the redemption of the Italian Notes or otherwise, the Issuer will not be able to exercise its rights of optional early redemption of the Notes. Page 48

Interest Rate Matching Interest on the Notes is payable at a rate equal to Note EURIBOR plus the applicable margin. The majority of the Italian Mortgage Loans will, throughout the term thereof, accrue interest at the rate of three month EURIBOR with the relevant rate of EURIBOR set on a variety of different dates. However, a small proportion of the Italian Mortgage Loans will accrue interest at a variety of fixed rates throughout their term (the Italian Fixed Rate Mortgage Loans). Certain of the Italian Mortgage Loans (the Italian Modular Mortgage Loans) give the relevant Italian Borrower the option to change the interest rate payable from a floating rate to a fixed rate based on prevailing market rates on and from the third anniversary of taking out such Italian Mortgage Loan and the relevant Italian Borrower may then opt to alternate between fixed and floating rate products at three yearly intervals thereafter. The German Mortgage Loans accrue interest at a variety of fixed rates during certain agreed periods (in each case the Fixed Interest Period). In addition, upon the expiry of the Fixed Interest Period the German Originator and the relevant German Borrower may agree on either a new fixed interest rate for a new Fixed Interest Period or, if a fixed rate is not agreed, a floating interest rate. In the event that the fixed rates (in relation to the German Mortgage Loans, the Italian Fixed Rate Mortgage Loans and the Italian Modular Mortgage Loans) and EURIBOR diverge such that EURIBOR is significantly higher than the relevant fixed rates, the Issuer may not receive sufficient income from the German Assets and the Italian Notes to meet its obligations due under the Notes. The exposure of the Issuer to the Italian Modular Mortgage Loans in respect of which the relevant Italian Borrowers have opted for fixed interest rates will be hedged by the Italian Interest Rate Swaps with the Italian Swap Provider (as described more fully under the section entitled Credit Structure – The Italian Interest Rate Swaps). The exposure of the Issuer to the German Mortgage Loans during fixed interest periods will be hedged by the German Interest Rate Swaps (as described more fully under the section entitled Credit Structure – The German Interest Rate Swaps) with the German Swap Provider under the German Interest Rate Swap Agreement. The Issuer's exposure to the Italian Fixed Rate Mortgage Loans will not be hedged on the basis that they will constitute on the Issue Date only approximately 2.5 per cent. of the Mortgage Pool and funds standing to credit of the Further Disbursement Account and therefore are not considered to materially impair the ability of the Issuer to meet its obligations to make payments under the Notes by virtue of their interest rate characteristics. Risks in respect of the German Interest Rate Swaps If the Issuer does not have sufficient funds to make the full payment in respect of amounts due under the German Interest Rate Swap Agreement, the amount payable by the German Swap Provider will be reduced proportionately by a corresponding amount and such unpaid amounts will be deferred until the next Payment Date when such payment will be due and payable. Such event will not give rise to an event of default or termination event under the Interest Rate Swap Agreements. If the German Swap Provider terminates the German Interest Rate Swap Agreement or if the German Swap Provider defaults in its obligations to make payments of amounts determined by reference to Note EURIBOR under the German Interest Rate Swap Agreement, the Issuer will be exposed to changes in interest rates and could have insufficient funds to enable it to make payments under the Notes. Page 49

If the German Swap Provider defaults under the German Interest Rate Swap Agreement, the Issuer will have the right under certain circumstances to terminate the German Interest Rate Swap Agreement. Upon such termination the Issuer is obliged to obtain a replacement swap. There can be no assurance that a suitable replacement swap could be obtained or that the Issuer would have sufficient funds to pay any premium which may be required to be paid to the relevant replacement swap provider depending on the terms of the replacement swap and prevailing market rates. Unless a suitable replacement swap is entered into, the Issuer would be exposed to interest rate risks in connection with the Notes. The Italian Interest Rate Swap Agreement and the German Interest Rate Swap Agreement will be documented under a single ISDA Master Agreement and will govern the over-thecounter swap transactions negotiated at arm's length between the Issuer and the relevant Swap Provider. In the event that the German Interest Rate Swap Agreement is terminated in accordance with its terms for default related events and certain additional termination events relating to the Notes redeeming in full or an Event of Default in relation to the Notes having occurred or the priorities of payments being amended in a detrimental way to the relevant Swap Provider, the Italian Interest Rate Swap Agreement shall also terminate and vice versa. In the event the Italian Interest Rate Swaps are terminated early pursuant to the Italian Notes becoming accelerated and due and payable prior to its maturity date, there is no correlating termination event on the German Interest Rate Swap Agreement. Risks in respect of the Italian Interest Rate Swaps If the Issuer does not have sufficient funds to make the full payment in respect of amounts due under the Italian Interest Rate Swap Agreement, the amount payable by the Italian Swap Provider will be reduced proportionately by a corresponding amount and such unpaid amounts will be deferred until the next Payment Date when such payment will be due and payable. Such event will not give rise to an event of default or termination event under the Italian Interest Rate Swap Agreement. If the Italian Swap Provider terminates the Italian Interest Rate Swap Agreement or if the Italian Swap Provider defaults in its obligations to make payments of amounts determined by reference to Note EURIBOR under the Italian Interest Rate Swap Agreement, the Issuer will be exposed to changes in interest rates and could have insufficient funds to enable it to make payments under the Notes. If the Italian Swap Provider defaults under the Italian Interest Rate Swap Agreement, the Issuer will have the right under certain circumstances to terminate the Italian Interest Rate Swap Agreement. Upon such termination the Issuer is obliged to obtain a replacement swap. There can be no assurance that a suitable replacement swap could be obtained or that the Issuer would have sufficient funds to pay any premium which may be required to be paid to the relevant replacement swap provider depending on the terms of the replacement swap and prevailing market rates. Unless a suitable replacement swap is entered into, the Issuer would be exposed to interest rate risks in connection with the Notes. Termination Payments on the Interest Rate Swap Agreements If an Interest Rate Swap Agreement terminates, the Issuer may be obliged to make a termination payment to the relevant Swap Provider. The amount of the termination payment will be based on the cost of entering into a replacement fixed/floating rate swap agreement. There can be no assurance that the Issuer will have sufficient funds available to make any termination payment due under the relevant Interest Rate Swap Agreement. Except where the relevant Swap Provider has caused the applicable Interest Rate Swap Agreement to terminate as a result of the relevant Swap Provider's own default or ratings downgrade, any termination payment due by the Issuer following termination of the Page 50

applicable Interest Rate Swap Agreement will rank in priority to payments due under the Notes and Residuals. Therefore, if the Issuer is obliged to make a termination payment to a Swap Provider or pay any other additional amounts as a result of the termination of an Interest Rate Swap Agreement, this could affect the Issuer's ability to make timely payments due in respect of the Notes and to make any payment on the Residuals. Realisation of Charged Assets and Liquidity Risk The ability of the Issuer to redeem all the Notes, the MERCs and the Residuals in full and to pay all amounts due to the Noteholders, the MERC Holders and/or the Residual Holders, including after the occurrence of an Event of Default, will depend upon whether the German Assets and the Italian Notes can be realised to obtain an amount sufficient to redeem the Notes, the MERCs and the Residuals. There is not at present an active and liquid secondary market for mortgage loan receivables with characteristics similar to the German Loan Receivables and the Italian Loan Receivables or for notes such as the Italian Notes. It may not, therefore, be possible for the Issuer or, as the case may be, the Security Trustee, or the Italian Purchaser or a receiver of the Issuer to sell the German Loan Receivables or the Italian Loan Receivables or the Italian Notes, as the case may be, on appropriate terms should such a course of action be required. Risks Related to the MERCs The MERCs represent an entitlement only to amounts received by the Issuer in respect of the obligation of German Borrowers to pay the Margin Loss component of German Mortgage Early Repayment Charges in the case of the GMERCs and the IMERC Interest Component in respect of the Italian Notes corresponding to the obligation of Italian Borrowers (which shall be in certain circumstances, to pay Italian Mortgage Early Repayment Charges). The entitlement of MERC Holders to receive MERC Payments (as defined in MERC Condition 4) from the Issuer from time to time will be contingent upon the Notes remaining outstanding. High rates of prepayment of Mortgage Loans, are likely to result in increased Mortgage Early Repayment Charges and thus an increase in the MERC Payments. Correspondingly, lower rates of prepayment of Mortgage Loans are likely to result in reduced MERC Payments. The actual payments on the MERCs cannot be predicted however, as the future rate of prepayment of the Mortgage Loans is unknown. Payments on the MERCs will be dependent on the Mortgage Early Repayment Charges being recoverable from the relevant Borrower and being recovered and not waived by the German Servicer or the Italian Servicer, as applicable, and on proper allocation and recording of amounts received by the Issuer and, in the case of the IMERCs, received by the Italian Purchaser and paid to the Issuer, in each case in respect of Mortgage Early Repayment Charges. A failure by any of the Servicers, the Italian Cash Manager or the Cash Manager to correctly record and track these amounts could have adverse consequences on the MERC Holders. The MERCs will be redeemed in accordance with their terms on the earliest to occur of the date on which all the outstanding Notes are redeemed or the claims thereunder are extinguished following enforcement of the Security and the Payment Date falling in August 2050 (see MERC Condition 5). The MERC Holders will only be entitled to any accrued but unpaid MERC Payments on redemption which may be zero. Risks Related to the Residuals The Residuals represent an entitlement only to amounts allocated to the Residuals in accordance with items (xxi) and (xxii) of the Pre-Enforcement Revenue Priority of Payments and items (xii) and (xiii) of the Post-Enforcement Priority of Payments and, as such, are Page 51

deeply subordinated and as a consequence may not entitle the Residual Holders to receive regular payments and may not entitle the Residual Holders to receive any payments at all. Payments to the Residual Holders are payable only from the Available Revenue Funds. The ability of the Issuer to make payments under the Residuals is highly sensitive to delinquencies and losses on the Mortgage Loans, as these are likely to reduce amounts of cash available for application towards payment to the Residual Holders. Delays by Borrowers in making payments under the Mortgage Loans may lead to the Issuer having insufficient funds on any given Payment Date to make payment in full of all amounts referred to in the PreEnforcement Revenue Priority of Payments which rank in priority to the Residual Holders and in such circumstances the Residual Holders will not be entitled to any payment. The Residuals will be redeemed in accordance with their terms on the earliest to occur of the date on which all the outstanding Notes are redeemed or the claims thereunder are extinguished following enforcement of the Security and the Final Payment Date (see Residual Condition 5). The Residual Holders will only be entitled to any accrued but unpaid Residual Payments on redemption which may be zero. Limited Liquidity There is not, at present, an active and liquid secondary market for the Notes, the MERCs and/or the Residuals. There can be no assurance that a secondary market for the Notes, the MERCs or the Residuals will develop or, if a secondary market does develop, that it will provide Noteholders, MERC Holders and/or Residual Holders with liquidity of investment or that it will continue for the life of the Notes, the MERCs and/or the Residuals. To date, no underwriter has indicated that they intend to establish a secondary market in the Notes, the MERCs or the Residuals. Definitive Notes and denominations in integral multiples The Notes have a denomination consisting of a minimum authorised denomination of €50,000 in the case of the Notes plus higher integral multiples of €1,000. Accordingly, it is possible that the Notes may be traded in amounts in excess of the minimum authorised denomination that are not integral multiples of such denomination. In such a case, if definitive Notes are required to be issued, a Noteholder who holds a principal amount less than the minimum authorised denomination at the relevant time may not receive a definitive Note in respect of such holding and may need to purchase a principal amount of Notes such that their holding amounts to the minimum authorised denomination (or another relevant denomination amount). If definitive Notes are issued, Noteholders should be aware that definitive Notes which have a denomination that is not an integral multiple of the minimum authorised denomination, may be illiquid and difficult to trade. No Definitive Notes will be issued with a denomination above €99,000. The Capital Requirements Directive In June 2004 the Basel Committee issued a revised framework to replace the 1988 Capital Accord, which placed enhanced emphasis on market discipline and sensitivity to risk. It was envisaged that the revised framework would come into effect at the beginning of 2007 or, in the case of the advanced approaches that are permitted under the revised framework, the beginning of 2008, although it is likely that different implementation dates will be adopted in different countries. The text of the Capital Requirements Directive, which implements the revised Basel framework within the EEA, was finalised in June 2006. The Capital Requirements Directive is in the process of being transposed into national law or regulation by the EEA member states and has been implemented into revised regulatory requirements in the UK and Germany. The new requirements could affect the risk weighting of the Notes, the Page 52

MERCs and/or the Residuals in respect of certain investors if those investors are regulated in a manner that would be affected by the requirements. Consequently, prospective investors in the Notes, the MERCs and/or the Residuals should consult their own advisers as to the consequences to and effect on them of the application of the revised Basel framework and the Capital Requirements Directive. The Issuer cannot predict the precise effects of potential changes that might result from the adoption of the new requirements. Risk Related to the Italian Notes No Direct Recourse against the Italian Portfolio The Notes, the MERCS and the Residuals are not secured on the Italian Portfolio and any enforcement of the Notes, the MERCS or the Residuals in relation to the Italian Portfolio may only be performed by way of the enforcement of the Issuer's rights as Italian Noteholder. Source of Payments to the Issuer The Italian Notes will be a limited recourse obligation solely of the Italian Purchaser. In particular, the Italian Notes will not be the obligation or responsibility of, or guaranteed by, the Representative of the Italian Noteholders, the Italian Paying Agent, the Italian Cash Manager, the Account Bank, the Italian Account Bank, the Italian Originator, the Italian Servicer, the Italian Purchaser Corporate Administrator, the Lead Manager or the Arranger, (in each case, such person in any capacity in which it is acting), or any other person except the Italian Purchaser. Furthermore, none of such persons accepts any liability whatsoever in respect of any failure by the Italian Purchaser to make any payment of any amount due on the Italian Notes. As of the Issue Date the Italian Purchaser's principal asset is the Italian Portfolio. The Italian Purchaser will not have any assets other than the Italian Portfolio, the Italian Collections from the Italian Cut-Off Date balances standing to the credit of the Italian Purchaser Accounts from time to time and its rights under the Italian Transaction Documents to which it is a party. Therefore, there is no assurance that, over the life of the Italian Notes or at the redemption date of the Italian Notes (whether on maturity or upon redemption by acceleration of maturity upon the Representative of the Italian Noteholders giving the Italian Purchaser an enforcement notice following the occurrence of an Italian Purchaser Event of Default or an Italian Purchaser Insolvency Event or otherwise), there will be sufficient funds to enable the Italian Purchaser to repay the Italian Notes in full. Upon enforcement of the Italian Security, the Representative of the Italian Noteholders will have recourse only to the Italian Portfolio and the assets pledged and charged pursuant to the Italian Purchaser Security Documents. Other than as provided for in the Italian Transfer Agreement and the Italian Servicing Agreement, the Italian Purchaser and the Representative of the Italian Noteholders will have no recourse to the Italian Originator or any other entity and the only remedy available to the Italian Noteholders and the other secured creditors of the Italian Purchaser in connection with the enforcement of the Italian Security is the exercise by the Representative of the Italian Noteholders of the Italian Purchaser's rights under the Italian Transaction Documents. The ability of the Italian Purchaser to meet its obligations in respect of the Italian Notes will be dependent on the due performance by the parties to the Italian Transaction Documents of their respective obligations. The payment by the Italian Purchaser of amounts due on the Italian Notes depends primarily on receipt by the Italian Purchaser of the Italian Collections derived from the Italian Originator in respect of the Italian Portfolio and any other amounts to be received by the Italian Purchaser pursuant to the terms of the Italian Transaction Documents. If any Italian Borrowers default under the relevant Italian Mortgage Loan(s) and, after the exercise by the Italian Servicer of available remedies in respect of the Italian Mortgage Loans, the Issuer does not receive the full amount due from those Italian Borrowers, the Issuer will receive by way of principal repayment an amount less than the face value of the Italian Notes, and the Italian Purchaser may be unable to pay in full interest due on the Italian Notes. Page 53

In addition, the ability of Italian Borrowers to repay the Italian Mortgage Loans may be also affected by adverse changes in macroeconomic conditions affecting the Republic of Italy.

Credit risk The Italian Purchaser is subject to the risk of delay arising between the scheduled payment dates under the relevant Italian Loan Receivables and the receipt of payments due from Italian Borrowers. The Italian Purchaser is also subject to the risk of, amongst other things, default in payment by Italian Borrowers and the failure by the Italian Servicer to collect or recover sufficient funds in respect of the Italian Loan Receivables in order to enable the Italian Purchaser to discharge all amounts payable under the Italian Notes in full as they fall due. As with other financial institutions, the performance of the Italian economy will have a significant impact on the Italian Originator as its activities are concentrated in Italy. A severe or extended downturn in Italy's economy could adversely affect the results of operations and the financial condition of the Italian Originator which could in turn affect the ability to perform its obligations under the Italian Transaction Documents to which it is a party.

Administration and reliance on third parties The ability of the Italian Purchaser to meet its obligations under the Italian Notes is dependent on the performance of the other parties to the Italian Transaction Documents, in particular, the due performance of the Italian Originator of its obligations under the Italian Transfer Agreement and the ability of the Italian Servicer to service the Italian Portfolio in accordance with its obligations under the Italian Servicing Agreement.

The Representative of the Italian Noteholders – Limited enforcement rights for Issuer Under Condition 11 (Events of Default -Italian Purchaser Insolvency Events) of the terms and conditions of the Italian Notes following an Event of Default, the Representative of the Italian Noteholders is not obliged to give the Italian Purchaser an Italian Enforcement Notice declaring the Italian Notes to be due and payable, unless it is directed to do so by the Italian Noteholders and provided that it has been indemnified and/or secured to its satisfaction. In the case of each of the events described in paragraphs (a)(ii) (Breach of other obligations), (iii) (Misrepresentation) or (vii) (Unlawfulness) of Condition 11 (Events of Default – Italian Purchaser Issuer Insolvency Events), of the terms and conditions of the Italian Notes no "Event of Default" (as defined therein) shall occur unless the Representative of the Italian Noteholders shall have certified to the Italian Purchaser that such event is, in its opinion, materially prejudicial to the interests of the Italian Noteholders. The Italian Purchaser Intercreditor Agreement contains provisions requiring the Representative of the Italian Noteholders to have regard to the Italian Purchaser Secured Creditors as regards all powers, trusts, authorities, duties and discretions of the Representative of the Italian Noteholders (except where expressly provided otherwise).

Italian Noteholders directions and resolutions in respect of early redemption of the Italian Notes In a number of circumstances, the Italian Notes may become subject to early redemption. Early redemption of the Italian Notes as a result of some circumstances may be dependent upon receipt by the Representative of the Italian Noteholders of a direction from the Italian Noteholders.

Ring Fencing Under the terms of Article 3 of the Italian Securitisation Law, the assets relating to each individual securitisation transaction performed by the Italian Purchaser (the Securitised Assets) will, by operation of law, be segregated for all purposes from all other assets of the Page 54

Italian Purchaser (see further "Italian Regulatory Considerations – Application of Italian Securitisation Law" below). On a winding up of the Italian Purchaser, such Securitised Assets will only be available to holders of the notes issued to finance the acquisition of the relevant Securitised Assets and to certain creditors claiming payments of debts incurred by the company in connection with the securitisation of the relevant Securitised Assets and they will not be available to the holders of notes issued to finance any other securitisation transaction or to general creditors of the Italian Purchaser. In relation to the securitisation, under the Italian Securitisation Law the Italian Portfolio and the Italian Collections, when received by the Italian Purchaser, are segregated from all other assets of the Italian Purchaser and will only be available to satisfy the obligations of the Italian Purchaser to the Italian Noteholders, the Italian Purchaser Secured Creditors and Italian Connected Third Party Creditors in the order of priority set out in the terms and conditions of the Italian Notes, subject to the terms of the Italian Intercreditor Agreement. The Italian Purchaser is unlikely to have a large number of creditors unrelated to this securitisation or any other securitisation transaction which it may perform in the future because the corporate object of the Italian Purchaser as contained in its by-laws (statuto), is limited and the Italian Purchaser will covenant in the Italian Notes Conditions, inter alia, not to engage in any activity which is not incidental to or necessary in connection with any activities which the Italian Transaction Documents provide for or envisage that the Italian Purchaser may engage in or which is necessary in connection with or incidental to the Italian Transaction Documents, although the Italian Purchaser will be permitted to enter into further ring fenced securitisation transactions subject to the conditions described below. Nonetheless, there remains the risk that the Italian Purchaser may incur unexpected expenses payable to Italian Connected Third Party Creditors (which rank ahead of all other items in the priority of payments of the Italian Notes) which means that the funds available to the Italian Purchaser for the purposes of fulfilling its payment obligations under the Italian Notes could be reduced. Under the Italian Securitisation Law, it is unclear whether all claims relating to a securitisation transaction are caught by the asset segregation principle outlined above. For this reason, the Italian Purchaser will grant additional security pursuant to the Italian Purchaser Pledge Agreement and the Italian Purchaser Deed of Charge. The terms and conditions of the Italian Notes contain provisions stating, that each of the secured creditors of the Italian Purchaser has undertaken in the Italian Purchaser Intercreditor Agreement, that neither the Italian Noteholders nor any other Italian Purchaser Secured Creditor will petition or begin proceedings for a declaration of insolvency against the Italian Purchaser. However, there can be no assurance that each and every Italian Purchaser Secured Creditor will honour its contractual obligation not to petition or begin proceedings for a declaration of insolvency against the Italian Purchaser. If any bankruptcy proceedings were to be commenced against the Italian Purchaser, no creditors other than the Representative of the Italian Noteholders on behalf of the Italian Noteholders, the Italian Purchaser Secured Creditors and any Italian Connected Third Party Creditor would have the right to claim in respect of the Italian Loan Receivables. However, there can be no assurance that the Italian Purchaser would be able to meet all of its obligations under the Italian Notes. Further Italian Securitisations The Italian Purchaser may by way of one or more separate transactions enter into further securitisations by purchasing and securitising further monetary receivables, including those from other originators, in addition to the Italian Portfolio. Under the terms of Article 3 of the Italian Securitisation Law, the assets relating to each individual securitisation transaction will, by operation of law, not be available to the holders of notes issued to finance any other securitisation transaction. In addition, it is a condition precedent to any such further securitisation, inter alia, that: (a) the Italian Purchaser notifies in writing the Representative of the Italian Noteholders and the Rating Agencies of the occurrence of such further securitisation; and (b) each Rating Agency confirms that such further securitisation will not result in the withdrawal, reduction or other adverse action with respect to the then-current rating of the Notes. Page 55

Yield and repayment considerations on the Italian Notes The yield to maturity of the Italian Notes will depend, inter alia, on the amount and timing of repayments or prepayments of principal under the Italian Mortgage Loans. Such yield may therefore be affected by a higher or lower than anticipated rate of prepayments under the Italian Loan Agreements by the Italian Borrowers. Italian Borrowers are, in general, entitled to prepay under the Italian Loan Agreements at any time, subject to the payment of a prepayment fee in accordance, inter alia, with Article 40 of the Italian Banking Act (see below paragraph headed "Risk related to the Italian Portfolio" - "Decree 31 January 2007, No. 7"). Prepayments under the Italian Loan Agreements may occur as a consequence of, inter alia, the refinancing or sale of properties subject to the relevant Italian Mortgages by Italian Borrowers, the application of the proceeds of building insurance policies in relation to properties subject to the relevant Italian Mortgages by Italian Borrowers or as a result of the application of the proceeds of enforcement proceedings in relation to defaulted Italian Loan Agreements or in case of exercise by the Italian Borrower of the facility set forth in Article 1202 of the Italian Civil Code pursuant to Article 8 of the Decree 31 January 2007, No. 7 (see below paragraph headed "Risk related to the Italian Portfolio" - "Decree 31 January 2007, No. 7"). The rate of prepayment of the Italian Loan Agreements cannot be predicted and is influenced by a wide variety of economic, social and other factors, including prevailing mortgage loan market interest rates, prevailing margins offered by the banking system and the availability of alternative financing and local and regional economic conditions. The stream of principal payments received and the yield to maturity which will be experienced by the Italian Noteholders cannot be assured, given that the level of prepayments under the Italian Loan Agreements cannot be predicted by the Italian Purchaser. At any time prior to the service of an Italian Purchaser Enforcement Notice or the occurrence of an Italian Purchaser Insolvency Event, the Italian Purchaser may redeem at its option all, but not some only of, the Italian Notes at their Italian Principal Amount Outstanding subject as provided inter alia in Condition 7(d) (Redemption, Purchase and Cancellation – Early redemption at the option of the Italian Purchaser). The yield to maturity of the Italian Notes may also be affected by the exercise or non-exercise by the Issuer of such option. Early redemption of the Italian Notes - tax implications In the event that the Italian Notes, having an original maturity of eighteen months or more, are subject to an early redemption by the Italian Purchaser within eighteen months from the Italian Issue Date, the Italian Purchaser will be subject, on the amount so redeemed, to tax at the rate of 20 per cent. in respect of interest and premium (if any) accrued between the date of issue and the date on which such sums are repaid, pursuant to Article 26 (1) of the Presidential Decree No. 600 of 29 September 1973. As a consequence, the terms and conditions of the Italian Notes will not provide for any payment of principal during the Initial Period. On each Italian Payment Date during the Initial Period, amounts otherwise available to make payments of principal on the Italian Notes will be credited to the Italian Purchaser Principal Reserve Account and further transferred to the Italian Purchaser Investment Account. On the first Italian Payment Date occurring after the expiry of the Initial Period, amounts credited to the Italian Purchaser Principal Reserve Account as further transferred to the Italian Purchaser Investment Account will constitute Italian Principal Available Funds available for distribution in accordance with the Italian Principal Collection Priority of Payments. If an Italian Purchaser Insolvency Event occurs or an Italian Purchaser Enforcement Notice is served by the Representative of the Italian Noteholders on the Italian Purchaser during the Initial Period, amounts credited to the Italian Purchaser Investment Account as Italian Principal Available Funds will be applied together with all the other amounts received or recovered in respect of the Italian Securitisation Assets to make payments in accordance with Page 56

the Italian Enforcement Priority of Payments. In such event the Italian Purchaser would become subject to tax in respect of accrued interest and premium (if any) paid on the amount so redeemed as described above and the Italian tax authority would become and Italian Connected Third Party Creditor having a preferential claim in respect of such tax charge.

Risk Factors common to the German Assets and the Italian Portfolio No Independent Investigation of the Portfolio None of the Issuer, the Security Trustee, the Note Trustee, the Liquidity Provider, the Swap Providers, the Principal Paying Agent, the Irish Paying Agent, the Listing Agent, the Data Trustee, any of the Directors, the Italian Purchaser, the Representative of the Italian Noteholders or any other party to the Transaction Documents (other than the Italian Originator in relation to the Italian Portfolio and the German Originator in relation to the German Assets) has undertaken, or will undertake, any investigations, searches or other actions to verify the details of the Italian Loan Receivables or the German Assets or to establish the creditworthiness of any Italian Borrower or a German Borrower or to establish the value of the Italian Mortgages or the Italian Loan Agreements or the value of the German Assets. The Issuer and the Security Trustee will rely solely on representations and warranties given by the Italian Originator to the Italian Purchaser under the Italian Transfer Agreement in respect of, inter alia, the Italian Loan Receivables, the Italian Borrowers, the Italian Mortgages and the Italian Loan Agreements as of the Italian Cut-Off Date and the Italian Transfer Date (and repeated by the Italian Originator on the Italian Issue Date) and will have only the remedies provided for therein (see "Risks related to the Italian Portfolio – Reliance on Representations and Warranties" below). The Issuer will rely solely on the representations and warranties of the German Originator under the German MRTSA in respect of the German Assets as at the Purchase Date and will have only the remedies provided for therein (see "Risks relating to the German Assets – Reliance on Representations and Warranties" below). Exposure to Credit Risks of the Mortgage Loans The payment of principal and interest on the Notes, the MERCs and the Residuals is, inter alia, conditional upon the performance of the Mortgage Loans. Certain of the Loan Receivables may be or may have been delinquent prior to inclusion in the Mortgage Pool. The credit risk in relation to such Loan Receivables may be greater than the credit risk in respect of other Loan Receivables in the Mortgage Pool. The collectability of the Mortgage Loans is subject to credit, liquidity and interest rate risks and will generally vary in response to, among other things, market interest rates, general economic conditions, the financial standing of Borrowers and other similar factors. Other factors such as loss of earnings, illness, divorce and other similar factors may lead to an increase in delinquencies and bankruptcy filings by Borrowers and could ultimately have an adverse impact on the ability of Borrowers to repay Mortgage Loans. Accordingly, the holders of the Notes, the MERCs and the Residuals will be exposed to the credit risk of the Mortgage Loans and the Borrowers thereunder to the full extent of their investment therein. There is no certainty that any holder of a Note, a MERC or a Residual will receive the full principal amount thereof or interest thereon.

Risks of Losses Associated with Declining Property Values The ability of the Issuer or the Italian Purchaser to dispose of a Property at a price sufficient to repay the amounts outstanding under the relevant Mortgage Loan will depend upon a number of factors including the availability of buyers for the Property and property values in general at the time. No assurance can be given that the value of the Properties have remained Page 57

or will remain at the level at which they were on the date of origination of the related Mortgage Loans. Should the residential property markets in Germany and/or Italy or in particular regions of Germany or Italy experience a decline in property values, such decline could result in the value of the security for mortgage loans in that country being significantly reduced and ultimately may result in losses to the Noteholders, MERC Holders and Residual Holders if the security over a property is required to be enforced. Administration of the Mortgage Loans and Reliance on Third Parties Notwithstanding any sub-contracting or delegation of the performance of any of their respective obligations under the Italian Servicing Agreement or the German MRTSA, the Servicers will remain primarily responsible for the performance of their obligations thereunder. If the appointment of a Servicer is terminated under the Italian Servicing Agreement or the German MRTSA (as the case may be), it will be necessary for a successor servicer to assume the administration functions. The successor servicer would be required to assume responsibility for the provision of the administration services in accordance with the terms of the Italian Servicing Agreement or the German MRTSA (as the case may be). There can be no assurance that a successor Italian Servicer or a successor German Servicer would be found or that any successor Italian Servicer or successor German Servicer would be willing to accept such appointment on the terms and conditions of the Italian Servicing Agreement or the German MRTSA. If a successor Italian Servicer or successor German Servicer is appointed the ability of such successor servicer to fully perform the required services would depend on the information, software and records available at the time of the relevant appointment. Therefore there is no assurance that a substitute Italian Servicer or substitute German Servicer will be able to assume and perform the obligations of the Italian Servicer or the German Servicer, as the case may be. The Representative of the Italian Noteholders has no responsibility to assume the role and responsibilities of the Italian Servicer or to appoint a successor Italian Servicer. Neither the Note Trustee nor the Security Trustee has any obligations to assume the role or responsibilities of the German Servicer or to appoint a successor German Servicer. The Issuer is party to contracts with a number of other third parties who have agreed to perform services in relation to the Notes, the MERCs and the Residuals. In particular, but without limitation, the Liquidity Provider has agreed to provide the Issuer with the Liquidity Facility, the Swap Providers have agreed to provide the Issuer with the Interest Rate Swap Agreements and the Note Trustee, the Security Trustee, the Paying Agents, the Cash Manager and the Agent Bank have all agreed to provide services with respect to the Notes, the MERCs and the Residuals. If any of the above parties were to fail to perform their obligations under the respective agreements to which they are a party, investors may be adversely affected. Risks Related to the German Assets

Reliance on Representations and Warranties Each of the Issuer and the Security Trustee will rely solely on the accuracy of the representations and warranties given by the German Originator to the Issuer in the German MRTSA in respect of, inter alia, the German Assets. Any rights and claims of the Issuer pursuant to the German MRTSA will be pledged by the Issuer in favour of the Security Trustee under the German STA. The primary remedy of the Issuer and the Security Trustee for breaches of representations and warranties with respect to the German Assets will be the obligation of the German Originator to repurchase such German Assets against the payment of the Repurchase Price or to substitute them for eligible German Assets, subject to the provisions of the German MRTSA. However, the Issuer's right to receive the Repurchase Price is unsecured. Consequently, a risk of loss exists if any of the German Originator's representations or warranties in respect of a Page 58

German Asset proves to be incorrect or is breached. This could increase the risk of the Issuer being unable to make payments in full under the Notes, the MERCs and the Residuals.

Proceeds of Foreclosure of German Assets There can be no assurance that, on enforcement, the proceeds from the foreclosure of the German Assets are sufficient to cover interest and principal of the Notes and amounts due in respect of the MERCs and the Residuals after satisfying all prior ranking obligations of the Issuer, see "Credit Structure – Priority of Payments prior to the Enforcement Date".

Assignability of German Loan Receivables In principle, receivables governed by German law are freely assignable on the basis of Sections 398 et seq. of the German Civil Code (the BGB), unless their assignment is excluded (i) by mutual agreement, (ii) by the nature of the relevant receivable, or (iii) on the basis of legal restrictions applicable thereto. Under the German Mortgage Loans and the standard terms and conditions under which the German Loan Receivables arise, the German Borrowers expressly agree that the German Originator may assign and transfer the German Loan Receivables and the security related thereto. Furthermore, there are no reasonable grounds to believe that the assignment of the German Loan Receivables in accordance with the German MRTSA and the German STA is excluded by the nature of such loan receivables or on the basis of other legal restrictions (however, see "Bank Secrecy" and "Data Protection (Datenschutz)" below). Pursuant to the German MRTSA, the German Originator has represented and warranted to the Issuer that: (a) the German Mortgage Loans and the standard terms and conditions under which such German Loan Receivables arise comply in all material respects with the laws of Germany applicable thereto and contain the German Borrowers' consent to the transfer of the German Assets; and (b) the transfer of the German Loan Receivables is not subject to any legal restriction (however, see "Reliance on Representations and Warranties" above and "Bank Secrecy", "Data Protection (Datenschutz)" and "Title to and Sale of the German Assets" below).

Notice of Assignment and Defences in respect of German Loan Receivables; Set-off The German MRTSA and the German STA provide that the assignment of the German Loan Receivables may only be disclosed to the relevant German Borrowers in certain limited circumstances (see "Administration of the German Assets" below). Prior to notification to the German Borrowers of the assignment of the German Loan Receivables to the Issuer, the Issuer and the Security Trustee will be required to recognise an act of performance by the German Borrowers in favour of the German Originator after the assignment of the German Loan Receivables and any other legal transaction entered into between the German Borrower and the German Originator in respect of the German Loan Receivable after the assignment of such loan receivable (cf. Section 407 of the German Civil Code). According to Section 404 of the German Civil Code, each German Borrower may invoke against the Issuer and the Security Trustee all defences which were available (begründet) against the German Originator at the time of assignment of the German Loan Receivables to the Issuer. Furthermore, the German Borrowers may, according to Section 406 of the German Civil Code set off against the Issuer and the Security Trustee an existing counter-claim which the relevant German Borrower has against the German Originator, unless the German Borrower knew of the assignment at the time he acquired the counter-claim, or unless the counter-claim has only become due after (i) the relevant German Borrower had acquired such knowledge and (ii) maturity of the relevant German Loan Receivables. After notification of the assignment of the German Loan Receivables to the German Borrowers, such German Borrowers will no longer have any set-off right against the German Originator in respect of the German Loan Receivables. Section 496 of the German Civil Code which also applies to real estate loan contracts (Immobiliendarlehensverträge), provides that any agreement by which a borrower (i.e., a Page 59

German Borrower) waives his right pursuant to Section 406 of the German Civil Code to set off against the assignee (i.e., the Issuer) a claim which he has against the assignor (i.e., the German Originator) is invalid. As the German Originator is engaged in the business of deposit taking, it is possible that German Borrowers maintain deposits with the German Originator. In addition, a German Borrower could acquire a claim against the German Originator, if the German Originator were the relevant German Borrower's counterparty under an Amortisation Surrogate. If this were the case, the German Loan Receivables could be subject to the set-off risk described above. However, the Issuer has been informed that (a) the scale of the German Originator's deposit taking business has decreased over time, (b) within the Deutsche Bank group's German activities the deposit taking business is now mostly undertaken by a separate legal entity and (c) as far as Amortisation Surrogates are concerned, the German Originator does not offer Amortisation Surrogates itself, but only through separate legal entities. In addition, the German MRTSA provides that in the event that a German Borrower sets off amounts due to it by the German Originator against the relevant German Loan Receivable and, as a consequence of such set-off, the Issuer does not receive the amount it would have received in respect of such German Loan Receivable without such set-off, the German Originator will be regarded as having received a collection. Further, when selling German Assets, the German Originator, inter alia, represents and warrants that it is not aware of any set-off (Aufrechnung) raised by a German Borrower. The set-off risk is also mitigated by the fact that pursuant to Sections 1157, 1192 of the German Civil Code the owner of real estate can raise defences (including set-off rights) against the assignee in respect of mortgages only if (i) such defences have come into existence prior to the transfer of the relevant mortgage and (ii) the assignee is not in good faith at the time it acquires ownership of the relevant mortgage. Defences which come into existence after the transfer of the mortgage has become effective, will not affect the mortgage due to the fact that pursuant to Sections 1156, 1192 of the German Civil Code, the provisions of Sections 406 to 408 of the German Civil Code applicable to the assignment of the German Loan Receivables do not apply to the legal relationship between the owner of real estate (i.e., the relevant German Borrower) and the new creditor (i.e., the Issuer) in respect of the mortgage. Therefore, the Issuer's rights under the German Mortgages can be enforced by the Issuer, or as the case may be, the Security Trustee even if the German Borrower has any setoff rights or other defences against the German Originator under the German Loan Receivables according to Sections 406 to 408 of the German Civil Code.

Ordinary Statutory Termination Rights of the German Borrowers (Ordentliche Kündigungsrechte der Darlehensnehmer); Contractual Prepayment Rights In respect of the German Borrowers' statutory right to terminate (kündigen) a German Mortgage Loan it is necessary to distinguish between loan contracts with a variable rate of interest (veränderlicher Zinssatz, Variable Interest Loans) and loan contracts, in respect of which a fixed interest rate (fester Zinssatz, Fixed Rate Mortgage Loans) has been agreed for a specific period of time. A Fixed Rate Mortgage Loan may become a Variable Interest Loan, if the German Borrower and the German Originator fail to agree to a fixed interest rate for a specified time upon expiry of the initial or (as applicable) the preceding fixed rate period. Pursuant to Section 489 (2) of the German Civil Code, the borrower under a Variable Interest Loan may terminate the loan contract at any time by giving three months' prior notice. Fixed Rate Mortgage Loans may be terminated by a borrower: (a)

pursuant to Section 489 (1) no. 1 of the German Civil Code with effect as at a date not earlier than the day on which the fixed interest period (Zinsbindung) ends by giving one month prior notice, if (i) the fixed interest period ends prior to the date as at which the loan is due for repayment and (ii) no new agreement is reached in respect of the interest rate. If an adjustment of the interest rate is agreed in intervals Page 60

of up to one year a borrower may only terminate the loan contract with effect as at the date on which the fixed interest period ends, or (b)

pursuant to Section 489 (1) no. 3 of the German Civil Code in any case upon the expiry of ten years after complete disbursement of the loan (the Disbursement Date) by giving six months prior notice. If following the Disbursement Date a new agreement is reached on the repayment date or the interest rate, the date of this agreement will be substituted for the Disbursement Date.

Pursuant to Section 489 (4), sentence 1 of the German Civil Code, the statutory termination rights described above can neither be excluded nor derogated from to the detriment of a borrower. In particular, the borrower is not obliged to pay an early repayment charge. However, if the borrower exercises its statutory termination right, the borrower is obliged to repay the loan within two weeks after the notice of termination becoming effective, failing which the notice is deemed not to have been given (Section 489 (3) of the German Civil Code). Apart from the German Borrower's termination rights established by statutory law, German Borrowers may be allowed to terminate a German Mortgage Loan qualifying as a Variable Interest Loan pursuant to the relevant mortgage loan conditions if the relevant interest rate has changed and repay the relevant German Mortgage Loan without being obliged to pay an early repayment charge. In addition, the Issuer has been advised that pursuant to the mortgage loan conditions on which certain of the German Mortgage Loans are based, on certain effective dates some of the German Borrowers may have the right to make unscheduled prepayments (Sondertilgung) up to a certain maximum percentage of the outstanding loan amount as at a certain date (for example, 31 December of the preceding year) per calendar year without being obliged to pay an early repayment charge. In connection with an Annuity Loan (as defined below) prepayments shorten the relevant German Mortgage Loan's term, but do not trigger a decrease of the relevant amortisation rate or the relevant annuity during the applicable fixed interest period. In the above circumstances the Issuer is likely not to receive payments qualifying as German Mortgage Early Repayment Charges to the extent the relevant German Borrower prepays within the guidelines described above. Accordingly no payments allocable to MERC Holders will arise.

Extraordinary Termination Rights (Außerordentliche Kündigungsrechte) and Early Repayment Charges (Vorfälligkeitsentschädigungen) (a)

Extraordinary Termination Right of a lender If: (i)

a material adverse change (wesentliche Verschlechterung) occurs in respect of: (A)

the relevant borrower's assets (Vermögensverhältnisse); or

(B)

the value of a security interest granted in respect of the relevant loan (Werthaltigkeit einer für das Darlehen gestellten Sicherheit),

or such material adverse change is imminent, and (ii)

thereby, the repayment of the loan (including by enforcing the security interest) is endangered,

Section 490 (1) of the German Civil Code grants the relevant lender an extraordinary termination right. Prior to the relevant loan's disbursement the lender is, in case of doubt, always (im Zweifel stets) entitled to exercise such termination right without giving prior notice (fristlos). Upon disbursement this only applies as a general rule (in der Regel). Page 61

(b)

Extraordinary Termination Right of a borrower Following the expiry of six months starting from the relevant loan's disbursement and by observing a notice period of three months, a borrower can terminate a fixed interest loan which is secured by a mortgage over a property or a ship (Grund- oder Schiffspfandrecht) pursuant to Section 490 (2) of the German Civil Code, if the borrower's legitimate interests (berechtigte Interessen) justify such termination. Pursuant to Section 490 (2) of the German Civil Code such "legitimate interest" is, in particular, deemed present if the borrower needs to make use of the asset over which security is created for other purposes (for example, if due to a divorce or a relocation, the borrower would like to sell the property).

(c)

General Extraordinary Termination Rights Apart from the extraordinary termination rights set forth in Section 490 of the German Civil Code, the general rules contained in Sections 313 and 314 of the German Civil Code need to be observed. If: (i)

circumstances upon which a contract was based have materially changed after the conclusion of such contract, or

(ii)

material assumptions that have become the basis of the contract subsequently turn out to be incorrect, and

(iii)

the parties would not have concluded the contract or would have done so upon different terms if they had foreseen that change or the incorrectness of such material assumptions,

adaptation of the contract may be claimed pursuant to Section 313 of the German Civil Code in so far as, having regard to all the circumstances of the specific case, in particular the contractual or statutory allocation of risk, it cannot reasonably be expected that a party should continue to be bound by the contract in its unaltered form. If adaptation of the contract is not possible or cannot reasonably be expected of one party, the disadvantaged party may withdraw from the contract, or, in case of a contract generating continuing obligations (Dauerschuldverhältnis), terminate the contract. Pursuant to Section 314 of the German Civil Code, each party to a contract generating continuing obligations (Dauerschuldverhältnis) may terminate such contract without giving prior notice if there is good cause (wichtiger Grund) to do so. There is "good cause" if, having regard to all circumstances of the specific case and balancing the interests of both parties, the terminating party cannot reasonably be expected to continue the contractual relationship until the agreed termination date or until the end of a notice period. (d)

Early Repayment Charges Should the borrower exercise its extraordinary termination right described under (b) above, it is obliged to reimburse the lender for damages resulting from the early termination (Vorfälligkeitsentschädigung, for the remainder of this paragraph, Early Repayment Charges). German statutory provisions do not expressly provide for a calculation of Early Repayment Charges. However, German courts and legal doctrine have developed certain guidelines according to which Early Repayment Charges can be determined which are described below: (i)

Generally, the lender is neither supposed to obtain an advantage nor to incur a disadvantage by receiving an Early Repayment Charge. Therefore, if the termination of the loan and the loan's early repayment is not only detrimental,

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but also yields a benefit for the lender, a German court is likely to take into account the benefits when calculating the Early Repayment Charge. (ii)

The exact amount of an Early Repayment Charge cannot be agreed upon in advance.

(iii)

As Early Repayment Charges are considered a compensation for damages (Schadenersatz), the general rules of the German Civil Code apply, in particular:

(iv)

(A)

Section 252 of the German Civil Code, according to which a compensation for damages comprises profits foregone (entgangener Gewinn); and

(B)

Section 254 of the German Civil Code, according to which a party claiming damages (the Claimant) from another party in a scenario where both parties contributed to the occurrence of the event giving rise to such damages may be subject to a deduction corresponding to the Claimant's share in causing such damage;

Therefore, Early Repayment Charges may have the following components: (A)

damages (in particular in respect of loss of profit) which can be calculated in two separate ways (in each case (I) and (II) below as discounted (abgezinst) to the point in time as at which the Early Repayment Charge is calculated): (I)

(II)

Method 1 ("active / active") (aa)

the interest margin lost as result of the applicable early repayment (Margin Loss) (Zinsmargenschaden), calculated as (i) the difference between the interest rate agreed between the lender and the borrower and the lender's financing costs at the time when such agreement was made, less (ii) any risk premium and administration fees which would have been charged by the lender to the borrower on a periodic basis; and

(bb)

the reduction of the margin which can be obtained on reinvestment of the repayment proceeds in the applicable market conditions at the time when the relevant loan is repaid which the lender would suffer if it could only lend the repaid principal to a thirdparty borrower by agreeing to a lesser interest rate (Reinvestment Loss) (Zinsverschlechterungsschaden);

Method 2 ("active / passive") Alternatively, the lender could calculate its damages on the basis of a virtual, time congruent investment of the prepaid principal in secure capital markets products (for example, determined according to the capital market statistics (Kapitalmarktstatistik) of the German Central Bank (Bundesbank)) less any risk premium and administration fees to the extent the lender charges such administration fees on a periodic basis (which would have been charged but for the repayment of the loan);

and (B)

administration costs associated with the early settlement of the relevant loan. Page 63

These guidelines may change over time and the German courts may apply different rules. In addition, the relevant borrower may argue and try to give evidence that the damages actually incurred by the lender fall below the amount calculated by the lender (for example, in respect of (A)(I)(aa) argue and give evidence that the lender expected a lesser profit). The German Originator has elected to apply Method 1 in relation to the German Mortgage Loans including those in respect of which receivables have been assigned to the Issuer. Apart from the borrower's obligation to pay an Early Repayment Charge pursuant to Section 490 (2) of the German Civil Code, the above calculation principles apply mutatis mutandis should a borrower and a lender mutually agree on a termination of the relevant loan contract (for example, a German Borrower and the German Originator in connection with a German Mortgage Loan) and an early repayment of the loan outside the scope of statutory provisions against payment of an Early Repayment Charge. A green paper of the Commission of the European Communities issued on 19 July 2005 (COM(2005) 327) indicates that the European Commission (a) views the early repayment of the loan as a crucial aspect of the mortgage credit bargain and (b) records that early repayment regimes vary widely across Member States. Consequently, the Commission considers that some level of consistency in the area of early repayment, notably on the imposition of fees, could facilitate integration. The green paper is supposed to be transformed into a white paper. Depending on the outcome of this process the legal framework for Early Repayment Charges in Germany may change over time. (e)

Damage Claims

Should the lender exercise its extraordinary termination right arising from Section 314 of the German Civil Code described under (c) above, the lender may be entitled to claim damages, in particular, interest based on the interest rate as agreed with the borrower. However, such claim is limited insofar as the lender is only entitled to claim interest to the extent it could expect to receive such interest (for example, not beyond the due date for repayment or the date as at which the borrower could exercise its termination rights pursuant to Section 489 of the German Civil Code (see "Ordinary Statutory Termination Rights of the German Borrowers (Ordentliche Kündigungsrechte der Darlehensnehmer); Contractual Prepayment Rights" above)). Such damage claim may therefore, depending on the particular circumstances, be calculated differently from an Early Repayment Charge. Excessive Related Security Pursuant to the excessive security rules of German law, security which is excessive compared to the secured obligation at the closing date of the relevant German Mortgage Loan (anfängliche Übersicherung) will result in the relevant security arrangement being void in its entirety. In the event of subsequent excessive security (nachträgliche Übersicherung), only the portion of the collateral considered to be excessive would have to be released. Pursuant to the relevant case law precedents, the liquidation value that can be expected to be realised in insolvency proceedings against the provider of the security would be relevant in determining whether or not excessive security exists. No assurance can be given as to how a competent court would view the security structure of each German Mortgage Loan, particularly with regard to the relevant German Mortgage and the German Related Security provided in respect of the obligations of the German Borrower under the relevant German Mortgage Loan. The Issuer believes that security granted in respect of each German Mortgage Loan pursuant to the relevant documents should not be deemed to be excessive because such security has been sized having regard to the principal amount outstanding under the relevant German Mortgage Loan together with interest, anticipated costs and fees (including, among other things, potential enforcement costs) in a manner which is consistent with commercial lending practices based on expected foreclosure proceeds. However, no assurance can be given that the security will not be found to be excessive under the excessive security rules of German law. Page 64

Insolvency Electoral Rights of Insolvency Administrator Pursuant to Section 103 of the German Insolvency Code (Insolvenzordnung) (the Insolvency Code), the insolvency administrator (Insolvenzverwalter) of an insolvent person is granted the right to either assume or reject any mutual contract (gegenseitiger Vertrag) if the obligations of both the insolvent person and its counterparty under such contract have not been completely discharged as at the opening of insolvency proceedings. If the insolvency administrator assumes the contract, he is obliged to perform in lieu of the insolvent person and may at the same time demand performance from the counterparty. Furthermore, the counterparty's claim under such assumed contract is granted preference over all insolvency creditors' claims (Masseforderung). If the insolvency administrator rejects the contract, the counterparty may claim compensation for damages resulting from non-performance. Such claim, however, will merely be treated as a claim of an unsecured insolvency creditor (Insolvenzforderung). The German Supreme Court (Bundesgerichtshof) held in a ruling regarding the security assignment of receivables for the provision of services (BGH WM 2002, 1199, 1201) that the commencement of insolvency proceedings does not result in the extinction of the performance claims arising under such contract, but that the non-discharged claims cease to be enforceable against the insolvency estate, unless such claims relate to actions or services performed prior to the commencement of insolvency proceedings. According to the court, any assignment effected prior to the commencement of insolvency proceedings in respect of receivables that relate to services to be rendered after the commencement of insolvency proceedings (whether by way of outright sale or by way of security), will cease to be effective upon commencement of insolvency proceedings because the non-discharged claims would be reinstated as claims of the insolvency estate (originäre Forderungen der Masse) once the insolvency administrator assumes the contract. It is disputed in legal doctrine, to what extent Section 103 of the Insolvency Code applies to loan agreements: Where a loan (at the time of the commencement of insolvency proceedings) has been fully disbursed to a borrower, a strong minority opinion amongst legal commentators argued that Section 103 of the Insolvency Code should apply because it would be part of the lender's main obligations under the loan agreement to allow the borrower to retain the loan amount. However, the majority opinion of legal commentators took the view that (i) by disbursing the loan to the borrower the lender has fully performed its funding obligation under the loan contract and (ii) after the disbursement of the loan there would be no ongoing obligation of the lender to allow the borrower to retain the disbursed loan because the lender is not able to dispose of such loan any longer. In its ruling dated 27 May 2003 (ZIP 2003, 1208 et seq.) the German Supreme Court held that the assignment of a repayment claim relating to services rendered under a mutual contract prior to the commencement of insolvency proceedings would not be affected by the commencement of insolvency proceedings, in particular in cases where the assignor had refinanced the advance payment. It has been suggested in legal literature that this reasoning could be applied by analogy to loan contracts. It can be expected that the above dispute will be solved in the future, since the German legislature has decided to introduce a new Section 108 (2) to the Insolvency Code. Pursuant to Section 108 (2) of the Insolvency Code a loan agreement stays in force with effect for the insolvency estate (Insolvenzmasse): (i) if the insolvent entity is the lender under such loan agreement; and (ii) to the extent the borrower has already been provided with the loan amount. The introduction of Section 108 (2) to the Insolvency Code has been announced (verkündet) in the German Federal Gazette (Bundesgesetzblatt 2007, Part I, no. 13, pp. 509 et seqq.) on 17 April 2007 and Section 108 (2) of the Insolvency Code came into force on 1 July 2007. In respect of Partially Disbursed Loans where the loan has not been fully disbursed, it is necessary to distinguish between the funded and the unfunded part of the relevant Partially Disbursed Loan. Regarding the funded part the principles described above should apply. Page 65

According to a ruling of the German Supreme Court dated 25 April 2002 (BGHZ 150, 353) relating to partially performed contracts, if and to the extent services to be performed by the insolvent debtor are divisible (teilbar) into several parts (which should be the case for loan agreements relating to Partially Disbursed Loans) the insolvency administrator would only be entitled to exercise its electoral right in respect of the non-performed part of a contract. In the event of a decision by an insolvency administrator of the German Originator not to perform the unfunded part of a Partially Disbursed Loan, the affected German Borrower could assert damages (if any) for non-performance against the insolvency estate. There is a risk that the German Borrower could set off such claim for damages against claims of the Issuer against the relevant German Borrower (including the claim for payment of principal and interest under the relevant Mortgage Loan). If an insolvency administrator of the German Originator elected to perform the obligations of the German Originator under both (i) the unfunded part of a Partially Disbursed Loan and (ii) the German MRTSA, the following principles would apply. Subject to the conditions in the relevant German Mortgage Loan documentation, the insolvency administrator would be obliged to advance Further Disbursements (in preference to claims from insolvency creditors) and may demand performance from the relevant Borrower (i.e., repayment of principal and interest payments with respect to Further Disbursements). Furthermore, upon making Further Disbursements, the insolvency administrator would be obliged to transfer such reinstated performance claims against the relevant German Borrower to the Issuer and may demand the corresponding (share of the) relevant Further Disbursement Amount. Registration of Mortgages The German Mortgages are in certificated form only. The creation of a certificated mortgage becomes effective only upon its registration in the relevant land register (Grundbuch), issuance of the mortgage certificate (Grundschuldbrief) by the relevant land registry and delivery (Übergabe) of the mortgage certificate by the beneficiary of the mortgage. The transfer of the German Mortgages by the German Originator to the Issuer and, subsequently, by the Issuer to the Security Trustee becomes effective only upon the entry of the original mortgage in the land register and upon the delivery of the mortgage certificate. If the German Originator were to become insolvent prior to the registration of the original mortgage or the delivery of the relevant mortgage certificate being effected, there is a risk that such transfer could not be perfected following the commencement of insolvency proceedings because the transfer could be prevented by Section 91 of the Insolvency Code. True Sale vs. Secured Lending Under German insolvency law, a creditor who is secured by the assignment of receivables by way of security will have a right to preferential satisfaction in respect of such receivables (Absonderungsrecht) if insolvency proceedings are commenced in respect of the relevant debtor. Enforcement of such right for preferential satisfaction is subject to the provisions of the Insolvency Code. In particular, the secured creditor may not enforce its security interest itself with respect to movables in possession of the insolvency administrator and receivables (Forderungen) that have been assigned by way of security. Instead, the insolvency administrator appointed in respect of the estate of the debtor will be entitled to enforcement. The insolvency administrator is obliged to transfer the proceeds from such enforcement to the creditor. It may, however, deduct from the enforcement proceedings fees which may amount to up to 4 per cent. plus up to 5 per cent. (and in certain cases more than 5 per cent.) of the enforcement proceeds (plus VAT, if applicable). Accordingly, the Issuer would have to share in the costs of any insolvency proceedings in respect of the German Originator, reducing the funds available to repay the Notes, the Residuals and the MERCs, if the sale and transfer of the German Loan Receivables by the German Originator to the Issuer were to be regarded as a secured lending rather than a receivables sale. The Issuer has been advised, however, that the transfer of the German Loan Receivables would not be construed as a transfer by way of security. Therefore, the German Loan Receivables to the extent they do not derive from Partially Disbursed Loans would not form part of the insolvency estate of the German Originator and the Issuer would have a right to segregation (Aussonderungsrecht) of the German Loan Receivables from the estate of the Page 66

German Originator in the event of its insolvency and, consequently, the cost sharing provisions described above would not apply with respect thereto. In respect of Partially Disbursed Loans, however, the analysis set forth above would apply and the German Originator's insolvency administrator might reject performance in respect of the unfunded part of a Partially Disbursed Loan, in which case the right to segregation (Aussonderungsrecht) might only apply in respect of receivables relating to Disbursed Amounts. If insolvency proceedings are commenced in respect of any of the German Borrowers, the Issuer, as holder of the corresponding German Mortgage and certain other security interests (the Loan Security), will have a right to preferential satisfaction (abgesonderte Befriedigung) in respect of such Loan Security, to the extent that the Loan Security comprises moveable objects in possession of the insolvency administrator and/or receivables that have been assigned to it by way of security. In that case, the cost sharing provisions will apply. Enforcement of Mortgages under German Law; Immediately Enforceable Assumptions of Debt 1.

General

Under German law, the enforcement of a mortgage will be carried out in accordance with the German Compulsory Auction and Compulsory Administration of Immoveable Property Act (Zwangsversteigerungs- und Zwangsverwaltungsgesetz, the ZVG). The ZVG provides for two different types of enforcement of a mortgage: (a)

compulsory sale (Zwangsversteigerung) of the relevant properties; and

(b)

compulsory administration (Zwangsverwaltung) of the relevant properties.

In the case of a compulsory sale, the court will effect a public auction of the relevant property. The organisation of such auction and the sale of the property therein may take a considerable amount of time (likely to be more than one year and, depending upon the workload of the court, possibly significantly longer, especially if an insolvency administrator requests a suspension of the sale). If the highest bid at the auction is not at least 70 per cent. of the market value of the property estimated by the court, any person who has an interest in the outcome of the decision (Berechtigte) and is a person ranking behind the most senior enforcing creditor with claims that would not be fully satisfied after the distribution of the proceeds, may require the court not to sell the property to the relevant bidder. The enforcing creditor may oppose such request by providing prima facie evidence that the non-acceptance of the bid would cause the creditor an unreasonable disadvantage. In no event may the court dispose of the property if the highest bid in the auction does not reach 50 per cent. of the estimated value of the property. If a second auction is necessary because the highest bid in the first auction was too low, the highest bid in such further auction does not need to meet any threshold with regard to the estimated value of the property. In a compulsory administration, which can be started immediately after attachment (Beschlagnahme) of the relevant property, the court will appoint an administrator for the relevant property (Zwangsverwalter) to administer such property on behalf of the enforcing creditors. The administrator alone is entitled to receive all income generated from such property, including all rental and insurance claims. The right of the administrator to collect rents takes priority over all other rights to the rental stream. The administrator, subject to the supervision of the court, is required to pass any collections to the enforcing creditors after deducting ongoing costs and enforcement costs calculated in accordance with the Compulsory Administration Ordinance (Zwangsvollstreckungsordnung), which came into force on 4 January 2004. 2.

Ranking

According to Section 10 of the ZVG, the proceeds of a compulsory sale or a compulsory administration will be used to pay the claims by allocating them to eight classes. Creditors whose claims fall within a certain class will only be paid upon satisfaction in full of the claims falling within higher classes; for example, a creditor in class 6 will only be satisfied after all creditors in classes 1 to 5 have been satisfied.

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In a compulsory sale of a property (following an enforcement of the mortgage by compulsory sale), the Issuer, or following the enforcement of the German Security, the Security Trustee, will generally rank in class 4. Classes 1 to 3 consist of typical procedural and public claims resulting from the costs of the proceedings, certain costs incurred in the compulsory administration proceedings, public charges such as development contributions and real property taxes (only for ongoing claims and arrears for the last two years) and, in case of condominiums which form part of a joint ownership of property (Wohnungseigentümer) in the meaning of the Condominium Ownership Act (Wohnungseigentümergesetz), certain claims (if any) relating to the joint ownership (gemeinschafltiches Eigentum) or individual ownership (Sondereigentum) of the other condominium owners, up to a predetermined limit of five per cent. of the market value (Verkehrswert) of the property (Section 10 (1) No 2 of the ZVG which came into force on 1 July 2007). Such claims always have priority over the claims of the creditor enforcing payment. Class 4 consists of claims resulting from rights relating to the property (for example, a mortgage), but only to the extent they have not become ineffective vis-à-vis the enforcing creditor as a consequence of the attachment of the property, including all claims resulting from such amounts which are payable for a gradual repayment of a debt as an extra charge on the interest payments. Claims resulting from periodic charges (for example, interest, extra charges, administrative costs, annuities) are in this Class only for ongoing claims and arrears for the last two years. Therefore, creditors falling into classes 1 to 3 (if any) must be fully satisfied out of the proceeds of the compulsory sale or compulsory administration before amounts can be paid to satisfy the relevant German Borrower's secured obligations under a German Mortgage Loan. In respect of a compulsory administration the same rule applies. However, in such case, prior to distributing (in the above order) the proceeds resulting from the usage of the property, the costs of administration and enforcement proceedings will be deducted. Pursuant to Section 155 (2) of the ZVG in the event of a compulsory administration only current periodic charges will rank in class 4. Arrears and principal will rank in class 5. The right to satisfy claims secured by a mortgage also includes the redistribution of costs triggered by the termination of a mortgage (excluding costs for acceleration of the claims) and the legal costs. In principle, the claims within each class rank pari passu amongst themselves. However, satisfaction of the claims in classes 4, 6 and 8 will occur in the order in which such claims rank amongst themselves. The claims ranking in class 5 will be satisfied in accordance with the order in which the property has been attached. Any claim will be satisfied in the following order: (i) costs, (ii) periodic charges and other additional charges, (iii) principal. 3.

Rights ranking in class 4

The rights relating to a property in class 4 are such rights which are registered in the land register relating to the relevant property. A creditor secured by a mortgage forms part of class 4 and, in case of a compulsory sale, will be satisfied to the extent its claim is covered by the nominal value of the relevant mortgage plus interest for the last two years. Depending on the due dates for interest, up to three years of interest may effectively be covered. In the case of a compulsory administration, the rules explained above apply. If the creditor secured by the relevant mortgage applies for a compulsory sale of the property, all rights ranking prior to such creditor will continue to be registered after a compulsory sale, whilst all rights ranking below the creditor will be deleted and satisfied with their claims from the enforcement proceeds after deduction of the creditor's claims secured by the relevant mortgage. 4.

Immediately Enforceable Assumptions of Debt

In addition to granting a German Mortgage the relevant German Borrower may, in connection with entering into a German Mortgage Loan, agree to an Immediately Enforceable Assumption of Debt. If contained in the corresponding notarial deed, the Immediately Enforceable Assumption of Debt generates an executory title which (a) is immediately Page 68

enforceable and (b) can be enforced instead of or in addition to the relevant German Mortgage. The enforcement of an Immediately Enforceable Assumption of Debt may, depending on the particular factual circumstances, lead to quicker results as compared to an enforcement of the relevant German Mortgage. However, since the Immediately Enforceable Assumption of Debt is transferred from the German Originator to the Issuer, but the executory title is granted to the German Originator, an enforcement of the Immediately Enforceable Assumption of Debt is only possible if the executory title is transcribed to correctly reflect the new creditor position. Such transcription will trigger costs and the time required for such transcription may reduce the advantage associated with an Immediately Enforceable Assumption of Debt.

Hereditary Building Rights (Erbbaurechte) A German Mortgage Loan may be secured by a mortgage on a hereditary building right (Erbbaurecht) in which case the German Originator will typically have investigated the particular terms and conditions of the underlying hereditary building right agreement. As the grantor and the beneficiary of the hereditary building right will stipulate the conditions of the hereditary building right, the German Originator will, inter alia, review the residual term (Restlaufzeit) (the underwriting guidelines used by the German Originator require that the residual term of the hereditary building right is at least 10 years after the scheduled maturity of the relevant German Mortgage Loan), the amount of hereditary building interest (Erbbauzins) which is to be paid and provisions under which the beneficiary of the hereditary building right is obliged to re-transfer its title to the hereditary building right to the grantor (Heimfall). Such re-transfer of title may occur, for example, if hereditary building interest is not paid completely and accurately or if the building is used for prohibited purposes. In such case the hereditary building right and mortgages thereon will continue to exist by operation of law. The beneficiary of the hereditary building right is usually obliged to pay (often on an annual basis) hereditary building interest to the grantor. The grantor's claim for the hereditary building interest may be secured by encumbering the hereditary building right with a registered obligation (Reallast), which will be registered in Section II of the hereditary building right register (Erbbaugrundbuch). Consequently, even if the German Mortgages are registered with a first priority ranking in favour of the mortgagee in Section III of the hereditary building right register, any registered obligation for the payment of hereditary building interest in Section II will rank in priority to a mortgage registered in Section III unless agreed otherwise. Consequently, upon enforcement of the hereditary building right the proceeds available for distribution to the mortgagee might have to be reduced by the proceeds distributed to the prior ranking grantor of the hereditary building right. To the extent that any future hereditary building interest payments are capitalised, the amounts that have to be paid to the grantor of the hereditary building right may be substantial and, as a consequence, the respective German Mortgage may not cover principal and interest in full. To mitigate this risk the German Originator’s current banking practice is to ensure that the grantor holding such a priority right to hereditary building interest payments concludes a standstill agreement (Stillhalteerklärung). Under such a standstill agreement the grantor undertakes to the mortgagee not to capitalise the hereditary building interest payments in the event of a foreclosure sale and agrees to the persistence of the registered obligation for the hereditary building interest payments pursuant to Sections 59 (1) or 91 (2) of the ZVG. Furthermore, for a calculation of the value of the hereditary building right as a security (Beleihungswert) the underwriting guidelines used by the German Originator provide that the value of the land is not to be considered and that any hereditary building interest payments are to be capitalised at 6 per cent. per annum and are to be included in the lending limit (Beleihungsgrenze) with such value as a prior encumbrance (Vorlast). The grantor's right to increase the interest on the hereditary building right will not be considered separately. Construction Loans A Construction Loan is generally disbursed in several instalments and the related building (Bauwerk) is not fully completed when making the first disbursement. Page 69

Under a Construction Loan risks can materialise (a) in respect of the payments owed by the borrower as customer (Besteller) under the building contract (the Customer) or (b) due to the insolvency of the relevant constructor (Bauunternehmer, the Constructor). (a)

Payments owed by the Customer Under German law the Constructor has certain rights in order to ensure payment by the Customer. These include the rights described below. (i)

Pursuant to Section 648 of the German Civil Code (Bürgerliches Gesetzbuch), the Constructor may acquire a claim against the Customer for being granted a mortgage which secures the relevant debt (Sicherungshypothek). To the extent the building is not completed, the Constructor's claim is limited to a portion of the remuneration equivalent to the work performed and to expenses not included in the Constructor's remuneration (nicht inbegriffene Auslagen).

(ii)

Pursuant to Section 648a of the German Civil Code, a Constructor may request security in respect of the Constructor's advance input (Vorleistungen) and certain ancillary claims. In this regard the Constructor can set the Customer an appropriate time limit by which such security needs to be granted accompanied by a statement that the Constructor will refuse to continue its construction work upon expiry of such time limit. Section 648a of the German Civil Code contains various provisions (aa) as to how such security is to be granted, (bb) describing appropriate security interests and (cc) setting forth the consequences of a failure to provide security.

Any of the above could lead to an interruption of the corresponding building process and may increase the risk of a failure of the relevant building project. The Issuer has been advised that pursuant to the German Act Regarding the Discharge of Construction Claims (Gesetz über die Sicherung von Bauforderungen, the GSB) a person receiving building capital (Baugeld, as such term is defined in the GSB) is obliged to use such building capital to discharge claims of the persons constructing the building. The violation of certain provisions of the GSB creates a criminal offence. (b)

Insolvency of the Constructor Should the relevant Constructor become insolvent prior to completion of the building, the Customer may be required to find a successor Constructor in order to finalise the building process. Such successor Constructor may require a fee which, if combined with the remuneration already charged by the initial Constructor, may exceed the projected construction costs. This may lead to the consequence that the principal amount of a Construction Loan as initially agreed between the German Originator and a German Borrower may not suffice to cover the combined construction costs, rendering it necessary to renegotiate such Construction Loan's terms. The risk described above is mitigated by the fact that the German Originator has undertaken in the German MRTSA to repurchase certain Construction Loans, in particular if: (i) such Partially Disbursed Loan is not fully disbursed within 12 months after the date on which the initial disbursement was made, or (ii) a Further Disbursement is not made due to the fact that the relevant building constructor (Bauunternehmer) becomes insolvent (see the section entitled "Title to and Sale of the German Assets").

Risks associated with certain types of German Mortgage Loans The German Mortgage Loans will mainly qualify as Annuity Loans (as defined below). However, in some cases the German Borrower and the German Originator may agree that the German Borrower builds up capital under an Amortisation Surrogate and uses the funds received thereunder to repay the German Mortgage Loan. Page 70

Neither the amounts paid out nor the dates on which such amounts are paid under an Amortisation Surrogate will necessarily match the amounts due or the due dates under a German Mortgage Loan (e.g., due to return on investment expectations of the German Borrower under the relevant Amortisation Surrogate not being met, or due to tax deductions on payments under an Amortisation Surrogate). Should an Amortisation Surrogate prove insufficient to repay the German Mortgage Loan, the German Borrower is obliged to apply additional funds to discharge the German Mortgage Loan and, therefore, remains liable for the repayment of the German Mortgage Loan. However, an Amortisation Surrogate proving insufficient to discharge a German Borrower's obligations under a German Mortgage Loan may cause financial difficulties for the German Borrower and the German Borrower may not be able to repay the remaining amounts outstanding under such German Mortgage Loan (see the section entitled "Description of the German Mortgage Loans").

Servicing of the German Assets Under the German MRTSA, the German Servicer has been appointed as the servicer of the German Assets by the Issuer in relation to the administration, servicing, management, collection and recovery procedures in relation to the German Assets. In order to alleviate the risks associated with the servicing activities and to ensure that the German Assets are managed and serviced in a uniform and coherent fashion the German Servicer has undertaken in the German MRTSA to utilise personnel to carry out its activities under the German MRTSA with appropriate experience in relation to such activities. However, such personnel will also continue to perform similar services for the German Servicer and will not be dedicated to the performance of the German Servicer's activities under the German MRTSA. Risks related to the Italian Portfolio

Reliance on Representations and Warranties Each of the Issuer and the Security Trustee will rely solely on the accuracy of the representations and warranties given by the Italian Originator to the Italian Purchaser in the Italian Transfer Agreement in respect of, inter alia, the Italian Loan Receivables, the Italian Borrowers, the Italian Mortgage Loans and the relevant Italian Related Securities. In case of breach of any such representation and warranty under the Italian Transfer Agreement, the Italian Originator will be obliged, under the terms and subject to the conditions set out therein, to indemnify the Italian Purchaser and/or, as the case may be, to grant a limited recourse loan in favour of the Italian Purchaser in an amount calculated according to the provisions set out therein. Any amount received by the Italian Purchaser as an indemnity or a limited recourse loan from the Italian Originator will be applied in favour of the Italian Noteholders and the Other Italian Purchaser Secured Creditors in accordance with the Italian Priority of Payments. Any collection or recovery in respect of an Italian Loan Receivable for which a limited recourse loan was granted by the Italian Originator will not constitute part of the available funds of the Italian Purchaser to be applied according to the Italian Priority of Payments, as it will be transferred to the Italian Originator. The Italian Purchaser's rights against the Italian Originator under the Italian Transfer Agreement are unsecured. Consequently a risk of loss exists if any of the Italian Originator's representations and warranties in respect of the Italian Portfolio proves to be incorrect or is breached. This could increase the risk of the Issuer being unable to make payments in full respect of the Notes. Statutes of Limitation Certain rights of the Italian Purchaser under the Italian Transaction Documents may become barred under statutes of limitation by operation of law. In particular, although the parties to the Italian Transfer Agreement have expressly agreed that claims for a breach of representation or warranty given by the Italian Originator may be pursued against that Italian Page 71

Originator until the later of: (i) the date on which the Italian Notes have been repaid or cancelled in full; or (ii) the date on which all Italian Loan Receivables have been either written off or paid in full and no sums are due and payable by the Italian Originator to the Italian Purchaser under the Italian Transfer Agreement, there is a possibility that the one year statute of limitation period set out in Article 1495 of the Italian Civil Code could be held to apply to some or all of the representations and warranties given by the Italian Originator in the Italian Transfer Agreement, on the ground that such provisions may not be derogated from by the parties to a sale contract ("contratto di compravendita") (such as the Italian Transfer Agreement).

Risk of avoidance of prepayments upon the insolvency of an Italian Borrower Pursuant to Article 65 of the Italian Bankruptcy Act, payments of receivables made in the two years preceding the payer's declaration of insolvency are ineffective as against the payer's creditors (including a receiver in the payer's insolvency) if the receivables fall due on or after the payer's declaration of insolvency. A supreme court decision (Corte di Cassazione decision no. 4842 of 5 April 2002), overruling the view taken by previous decisions, has held that prepayments of loans generally fall within the scope of application of Article 65 of the Italian Bankruptcy Act, irrespective of the borrower being entitled to prepay the loan by statute or pursuant to an express provision of the relevant loan agreement. Whilst as a result of the provisions of Article 4 of the Italian Securitisation Law, no claw-back under Article 67 of the Italian Bankruptcy Act would apply to payments made by the assigned borrowers to companies organised under the Italian Securitisation Law (such as the Issuer), the application of Article 65 of the Italian Bankruptcy Act to such payments is not excluded by any provision of the Italian Securitisation Law. Therefore it cannot be excluded that, prepayments of the underlying Italian Loan Receivables made to the Italian Purchaser by Italian Borrowers who may be subject to insolvency proceedings (i.e. corporate entities and private individuals carrying out certain business activities) may be subject to claw-back under Article 65 of the Insolvency Act, with the consequence that the Italian Purchaser would be required to pay to the receiver of each such Italian Borrower, in priority to any payment due to the Issuer under the Notes, any amount prepaid by such Italian Borrower in the two years preceding the date such Italian Borrower was declared insolvent. This risk is mitigated, to some extent, by the fact that under the Italian Bankruptcy Act individuals who are not entrepreneurs or owners of small businesses (piccoli imprenditori) are not subject to insolvency proceedings. It should also be noted that, according to certain Italian lower court decisions and arguments posited by certain scholars, the principle set out in the above decision of the Corte di Cassazione should not apply to the early repayment of loans secured by a mortgage. Moreover, it is not certain that the ratio decidendi of decision 4842 of the Corte di Cassazione (which deals with the prepayment of an unsecured bond) would be applied to mortgage loans such as those included in the Italian Portfolio. Please note that the Non Resident Italian Loan Receivable (as defined in Italian Notes Condition 1 (Definitions) comprised in the Italian Portfolio is owing by an Italian Borrower who is not resident in the Republic of Italy but in the Federal Republic of Germany. As a consequence of this, certain Italian law rules (including, but not limited to, certain provisions of the Italian Securitisation Law, the Italian Bankruptcy Act and the Italian law rules governing enforcement proceedings) will not apply as any payments made by such Italian Borrower and any enforcement thereof (if any), will be subject to German law rules.

Performance of Loan Agreements The Italian Portfolio is comprised of residential and, to a very limited extent, commercial mortgage loans (see the section entitled "The Italian Portfolio"). There can be no guarantee that the Italian Borrowers will continue to perform their respective obligations under the Italian Mortgage Loans. The recovery of amounts due in relation to non-performing Italian Mortgage Loans is dependent on the effectiveness and duration of enforcement proceedings in the Republic of Italy. Mortgage enforcement proceedings in Italy can take considerable time depending on the nature of the action, where such action takes place and other factors, including: (i) that proceedings in certain courts in which action must be taken for the Page 72

enforcement of the Italian Mortgage Loans and the applicable Italian Mortgage Loans may take longer than the national average; (ii) that obtaining title deeds from land registries (which are in the process of computerising their records) can take up to two or three years; and (iii) that it takes a number of years from the time of commencement of enforcement proceedings until the time an auction date is set for the forced sale of mortgaged assets. Pursuant to Italian law No. 302 of 3 August 1998 and Italian law No. 80 of 14 May 2005, notaries, lawyers and accountants are allowed to conduct certain stages of the foreclosure procedures in place of the courts; such provisions are expected to reduce the length of foreclosure proceedings, although at the date of this Prospectus the impact which such laws will have on the Italian Portfolio cannot be assessed. Mutui fondiari enforcement proceedings Some Italian Loans are mutui fondiari. Enforcement proceedings in respect of mutui fondiari commenced after 1 January 1994 are currently regulated by Article 38 (and following) of the Italian Banking Act in which several exceptions to the rules applying to enforcement proceedings in general are provided for. In particular, there is no requirement to serve a copy of the loan agreement directly on the borrower and the mortgage lender of mutui fondiari is entitled to commence or continue enforcement proceedings after the borrower is declared insolvent or insolvency proceedings have been commenced. Moreover, the custodian appointed to manage the mortgaged property in the interest of the fondiario lender pays directly to the lender the revenues recovered on the mortgaged property (net of administration expenses and taxes). After the sale of the mortgaged property, the court orders the purchaser (or the assignee in the case of an assignment) to pay that part of the price corresponding to the mutuo fondiario lender's debt directly to the lender. Pursuant to Article 58 of the Italian Banking Act, as amended by Article 12 of Legislative Decree number 342 of 4 August 1999, the Issuer will be entitled to benefit from such procedural advantages which apply in favour of a lender of a mutuo fondiario loan. Enforcement proceedings for mutui fondiari commenced on or before 31 December 1993 are regulated by Royal Decree number 646 of 16 July 1905 which confers on the mutuo fondiario lender rights and privileges which are not conferred by the Italian Banking Act with respect to enforcement proceedings on mutui fondiari commenced on or after 1 January 1994. Such additional rights and privileges include the right of the bank to commence enforcement proceedings against the borrower even after the real estate has been sold to a third party who has replaced the borrower as borrower under the mutuo fondiario, provided that the name of such third party has not been notified to the lender. Further rights include the right of the bank to apply for the real estate to be valued by the court after commencement of enforcement proceedings, at the value indicated in the mutuo fondiario agreement without having to have a further expert valuation.

Servicing of the Italian Portfolio Under the Italian Servicing Agreement, DB Mutui S.p.A. has been appointed as the Servicer of the Italian Portfolio by the Italian Purchaser in relation to the administration, servicing, management, collection and recovery procedures in relation to the Italian Loan Receivables transferred by the Italian Originator to the Italian Purchaser pursuant to the Italian Transfer Agreement. In order to mitigate the risks associated with the servicing activities and to ensure that the Italian Loan Receivables are managed and serviced in a uniform and coherent fashion: (a)

the Italian Servicer will utilise personnel to carry out its activities under the Italian Servicing Agreement with appropriate experience in relation to such activities (however, such personnel will also continue to perform debt collection services for the Italian Servicer and therefore will not be exclusively dedicated to the performance of the Italian Servicer's activities under the Italian Servicing Agreement); and Page 73

(b)

the Italian Servicer has agreed, under the Italian Servicing Agreement, to take overall responsibility for the administration, servicing, management, collection and the taking of recovery procedures in relation to the Italian Portfolio.

Decree 31 January 2007 No. 7 (Decree No. 7) Decree No. 7 was issued on 31 January 2007 and was converted into law (Law No. 40) by the Italian Parliament on 2 April 2007. Pursuant to Article 7 of the Decree No. 7, loans granted to private individuals to purchase or refurbish a real estate asset, whether residential or for the purposes of carrying out a business activity (the Relevant Loans), cannot provide for penalty clauses in the event of early or partial repayment made by the relevant borrower. Any clause breaching or contravening such provision is null and void by operation of law. This means that pursuant to the agreements relating to Relevant Loans which will be entered after Decree 7 coming into force, each relevant borrower will always be entitled to make an early repayment of the loan without incurring additional costs. As noted above, this new regime applies to loans granted to purchase or refurbish a real estate asset, whether residential or for the purposes of carrying out a business activity by individuals. Although such wording may result in a very broad application, it should be sufficient to exclude from the application of these new provisions loans granted for purposes other than those stated above (i.e. the so-called "cash-out loans"), including loans granted to refinance or consolidate previous financial indebtedness originally incurred for other purposes. Outstanding Relevant Loans would also be affected. Pursuant to Article 7 of Decree No. 7, in a 3 month period from the date of coming into force of Decree No. 7, ABI (Associazione Bancaria Italiana) and Italian national customers' associations shall agree on general principles for the renegotiation of the penalties clauses under outstanding loans and, in particular, fix the maximum amount of such penalties. In accordance with such provision, on 2 May 2007, ABI (Associazione Bancaria Italiana) and the national customers' associations agreed on the maximum amount of such penalties which are dependent on, inter alia, the date on which the relevant loan agreement was entered into and on whether the applicable interest rate is fixed, floating, or a combination of them. In addition, Article 8 of the Decree No. 7 states that, in case of a loan, overdraft facility or any other financing granted by a bank, the relevant borrower can exercise the right of subrogation set forth in Article 1202 of Italian Civil Code, (“Subrogation”) even if the borrower's debt towards the lending bank is not due and payable or a term for repayment has been agreed for the benefit of the creditor. If the Subrogation is exercised by the borrower, a new lender will succeed to the former lender also as beneficiary of all existing ancillary security interests and guarantees. Any provision of the relevant agreement which may prevent the borrower from exercising such Subrogation or render the exercise of such right more cumbersome for the borrower is void. The subrogation shall not lead to the application of further taxes on the borrowers' side in addition to the "imposta sostitutiva" originally paid by the borrower. As a consequence of the above, the Italian Mortgages Early Repayment Charges relating to Italian Loan Receivables which arise from Relevant Loans could be significantly reduced and the yield to maturity of the Italian Notes may be affected. In particular, Decree No. 7 may have an impact on (i) the amounts of the Italian Mortgages Early Repayment Charges which shall be received by the Italian Purchaser and thereafter applied to pay the IMERC Interest Component under the Italian Notes (such amount being in turn used by the Issuer to make the IMERCs Payments), and (ii) the rate of prepayment of the Italian Loan Agreements which are Relevant Loans (the Italian Borrower would have fewer "disincentives" should a "more Page 74

attractive" loan be found on the market) and the consequent yield to maturity of the Italian Notes.

Proceeds of Foreclosure of Italian Mortgage Loans There can be no assurance that, on enforcement, the proceeds from the foreclosure of the Italian Portfolio would be sufficient (following liquidation of the Italian Notes and with the proceeds of enforcement of the German Assets) to cover the obligations of the Issuer to pay interest and principal of the Notes, the MERCs and the Residuals after satisfying all prior ranking obligations of the Issuer, see "Credit Structure – Priority of Payments prior to the Enforcement Date".

Termination of Italian Loan Agreements The Italian Portfolio comprises Italian Loan Agreements some of which qualify as mutui fondiari. Pursuant to Article 40, paragraph 2 of the Italian Banking Act, a mortgage lender is entitled to terminate a loan agreement qualifying as mutuo fondiario and accelerate the mortgage loan solely if the relevant borrower has delayed payment of a loan instalment at least seven times, whether consecutively or otherwise. For this purpose, a payment is considered delayed if it is made between 30 and 180 days after the due date for payment. Article 40 of the Italian Banking Act therefore prevents the Italian Servicer from commencing proceedings to recover amounts in relation to any Italian Loan Agreement until the relevant Italian Borrower has defaulted to timely pay at least seven loan instalments, albeit non consecutive.

Value of the Mortgages Pursuant to Article 39, paragraph 5, of the Italian Banking Act, upon repayment of each fifth of the original debt, the borrowers under loan agreements qualifying as mutui fondiari are entitled to a proportional reduction of any mortgage related to the loan. Accordingly, the underlying value of the Italian Mortgages comprised in the Italian Portfolio relating to Italian Loan Agreements qualifying as mutui fondiari may decrease from time to time in connection with the partial repayment of the Italian Loan Agreements, it being understood that, in compliance with the provisions set forth in Article 38, paragraph 2, of the Italian Banking Act and the Bank of Italy Instructions on loans qualifying as mutui fondiari, the principal amount of each Italian Mortgage Loan outstanding from time to time shall never exceed 80 per cent. of the value of the real estate assets constituting security for such Italian Loan, unless additional guarantees are given in respect of the relevant Italian Loan Agreement. German Regulatory Considerations

Bank Secrecy According to the General Business Conditions (Allgemeine Geschäftsbedingungen) used by the German Originator and also, in particular, as a consequence of general legal principles deriving from the bank-customer relationship, a German bank (such as the German Originator) is required to comply with the so-called bank secrecy rules (Bankgeheimnis), i.e. it is required to keep confidential all customer related facts and information which it receives in the course of its business relationship, and in particular in connection with the entry into a loan agreement with such customer (the Loan Data). Pursuant to the bank secrecy rules the Page 75

German Originator may disclose Loan Data only in limited circumstances, in particular, if the customers have expressed their consent to the disclosure of the Loan Data. The German Mortgage Loans and the standard terms and conditions under which such German Loan Receivables arise contain provisions stating that the German Borrowers release the German Originator from all of its obligations under the banking secrecy rules and agree to the transfer of the Loan Data to third parties in connection with any refinancing of the German Mortgage Loans. The German Originator has represented and warranted that all German Borrowers have given their consent to the disclosure of personal data in accordance with terms and conditions of the German Mortgage Loans. In addition, the German Originator and the Issuer have appointed the Data Trustee in order to safeguard the interests of the German Borrowers as far as banking secrecy issues are concerned. However, even if the transfer of the German Loan Receivables resulted in a violation of banking secrecy, this will not invalidate the assignment of the German Loan Receivables. In a recent judgement (dated 27 February 2007, Reference (Aktenzeichen): XI ZR 195/05, NJW 2007, 2106) the German Supreme Court (Bundesgerichtshof) held that a violation of banking secrecy may trigger damage claims, but will not invalidate the assignment of a loan claim.

Data Protection (Datenschutz) The collection, processing, use and transfer of personal data must comply with the requirements of the Federal Data Protection Act (Bundesdatenschutzgesetz, the BDSG). According to the BDSG the transfer, processing and use of personal data is only allowed if so permitted by such act or any other legal provision or if the relevant person has consented to such transfer, processing or use and such declaration of consent fulfils the requirements of the BDSG. The German Mortgage Loans and the standard terms and conditions under which such German Loan Receivables arise contain provisions stating that the German Borrowers agree to the transfer of the Loan Data to third parties in connection with the refinancing of the German Mortgage Loans. There are reasonable grounds to believe that such agreements meet the requirements set forth in the BDSG. In addition, the German Originator and the Issuer have appointed the Data Trustee in order to safeguard the interests of the German Borrowers as far as data protection issues are concerned. However, even if the transfer of the German Loan Receivables resulted in a violation of the BDSG, this will not invalidate the assignment of the German Loan Receivables. In a recent judgement (dated 27 February 2007, Reference (Aktenzeichen): XI ZR 195/05, NJW 2007, 2106) the German Supreme Court (Bundesgerichtshof) held that a violation of the BDSG may trigger damage claims, but will not invalidate the assignment of a loan claim.

Consumer Protection Consumer loan contracts (Verbraucherdarlehensverträge); Right of revocation: In accordance with the protection granted by the statutory consumer protection provisions in the German Civil Code, a borrower may be entitled, under certain circumstances, to revoke or terminate his real estate loan contract within the meaning of Section 492 (1a) Sentence 2 of the German Civil Code provided that he is a ''consumer'' within the meaning of Section 13 of the German Civil Code, i.e., a natural person who enters into a legal transaction for a purpose that is outside his trade, business or profession. Besides the aforementioned, the consumer protection laws include, inter alia, form and information requirements with regard to the real estate loan contracts. Pursuant to Sections 492 (1), 125 of the German Civil Code, the real estate loan contract is void, if the written form requirements (Schriftformerfordernis) are not met. The same applies, if the information requirements pursuant to Section 492 (1) Sentence 5 of the German Civil Code are not fulfilled. Irrespective of any defects under the written form or the information requirements, real estate loan contracts become valid to the extent that the Borrower receives the loan or avails himself of it. However, in such case the subject matter (Vertragsinhalt) of such loan contract may be modified by operation of law according to Section 494 (2) as follows: (i) the interest rate on which such loan contract is based (Section 492 (1) Sentence 5 Page 76

no. 4) is reduced to the statutory interest rate (gesetzlicher Zinssatz), if the indication of the agreed interest rate (Vertragszinssatz), the indication of the effective or initial effective annual interest rate (anfänglicher effektiver Jahreszinssatz) or the indication of the total amount is lacking; (ii) the borrower does not owe any charges which it has not been made aware of; (iii) agreed instalments must be recalculated by reference to the reduced interest rate or charges; (iv) if there is no indication of conditions under which the factors determining the price (preisbestimmende Faktoren) may be changed, they may not be changed to the detriment of the borrower; and (v) if there is no indication regarding securities, they may not be demanded, unless the net loan amount exceeds Euro 50,000. Further, the provisions on consumer protection provide for a right of revocation (Widerrufsrecht). According to such right, the consumer is no longer bound by his declaration of intention to enter into the relevant contract, if he has revoked it within a two-week revocation period. Such period begins on the later of the date on which: (i) the real estate loan contract has been concluded; (ii) the consumer has been duly notified of his right of revocation in a form that meets the requirements set forth in Section 355 (2) of the German Civil Code; (iii) the consumer received a copy of the contract document (Vertragsurkunde); or (iv) if the real estate loan contract qualifies as a "distance contract" (Fernabsatzvertrag), the consumer received the information required pursuant to Section 312c (2) No. 1 German Civil Code. If the aforementioned notice is given after the conclusion of the real estate loan contract the revocation period amounts to one month. The consumer's right of revocation is extinguished at the latest six (6) months after the conclusion of the contract. However, the right of revocation is not extinguished if (i) the consumer has not been duly notified of his right of revocation, and (ii) in case of contracts regarding financial services (Fernabsatzverträge über Finanzdiensleistungen), if the entrepreneur (within the meaning of Section 14 of the German Civil Code) has not duly fulfilled his duty of notification pursuant to Section 312c (2) no. 1 of the German Civil Code. If the annual effective rate of interest or the initial annual effective rate of interest is understated, the interest rate applicable to the real estate loan contract is reduced by the percentage amount by which the annual effective rate of interest or the initial annual effective rate of interest are understated. Related contracts (Verbundene Verträge): Pursuant to Section 358 (1) of the German Civil Code, a consumer (Verbraucher) who has effectively revoked his declaration to enter into a contract for the supply of goods (Lieferung einer Ware) or the rendering of other services (Erbringung einer anderen Leistung) by an entrepreneur (Unternehmer) (including a property purchase agreement, such contract, for the remainder of this paragraph, a Supply Contract), may no longer be bound by his declaration to enter into a consumer loan contract, if the consumer loan contract is related to such Supply Contract. A Supply Contract and a consumer loan contract are related, if the consumer loan fully or partially serves to finance the Supply Contract and both contracts constitute an economic unit (wirtschaftliche Einheit). Pursuant to Section 358 (3), sentence 3 of the German Civil Code a Supply Contract that qualifies as an acquisition of real property or of rights equivalent to real property (grundstücksgleiche Rechte, for the purpose of this paragraph an equivalent right) constitutes an economic unit with a consumer loan contract only if the lender (i) himself provides the real property or the equivalent right, or (ii) if the lender, beyond the provision of the loan, promotes the acquisition of the real property or the equivalent right in cooperation with the relevant entrepreneur. The latter is the case, if the lender (i) adopts the disposing party's interest in the disposal (in full or in part), (ii) assumes functions of the disposing party in planning, advertising or carrying out the project, or (iii) unilaterally favours the disposing party. The risks described in this section Consumer Protection are mitigated by the fact that the German Originator has represented and warranted in the German MRTSA that (i) the German Mortgage Loans and the German Mortgage Conditions comply in all material respects with the consumer protection legislation, (ii) the period for exercising the relevant German Borrower's revocation right (Widerrufsrecht) pursuant to Sections 495, 355, 312 or 312d of

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the BGB has expired, and (iii) none of the German Mortgage Loans is closely connected to, and constitutes an economic unit with, a Supply Contract. Italian Regulatory Considerations Italian Usury Law Italian law No. 108 of 7 March 1996 (the Usury Law) introduced legislation preventing lenders from applying interest rates higher than those deemed to be usurious (Usury Rates). Usury Rates are set on a quarterly basis by a decree issued by the Italian Treasury. Recent case law (and in particular Italian Supreme Court judgments 1126 of 2 February 2000, 5286 of 22 April 2000 and 14899 of 17 November 2000) has held that the Usury Law applies to loan agreements executed prior to the Usury Law coming into force with regard to interest payments made following such date. Based on such judgments, Italian borrowers of loans bearing interest at a rate which is at any time above the prevailing Usury Rate or any interested person, including the judge deciding the case, may claim or declare, as the case may be, that the clause providing for the payment of interest is null and void or that a corresponding reduction in the contractual rate payable under the relevant loan should be made and the amounts paid in excess be returned. With a view to limiting the impact of the application of the Usury Law to Italian loans executed prior to its entering into force, on 29 December 2000 the Italian Government issued a law decree (decreto legge) (Decree 394/2000) converted into law by the Italian Parliament with Law No. 24 of 28 February 2001 (Law 24/2001), interpreting the provisions of the Usury Law. Pursuant to Law 24/2001, an interest rate is usurious if it is higher than the legal limit in force at the time at which it is promised or agreed, in any form, regardless of the time at which payment is made. Law 24/2001 further provides that, due to the exceptional fall in interest rates in the years 1998 and 1999, rates of interest set in relation to fixed interest loans (granted in the form of mutui as defined pursuant to article 2, paragraph 2, of the Usury Law) other than subsidised loans (finanziamenti non agevolati) in force at the date of Decree 394/2000 and in respect of instalments payable after 2 January 2001, shall, as an extraordinary measure, except where the parties have agreed more favourable contractual terms, be replaced with the rates specified in Law 24/2001 being a rate of 9.96 per cent. per annum for all loans except for certain mortgages financing the purchase of certain residential property for an amount not in excess of Euro 77,468 (which are subject to a rate of 8 per cent. per annum). Furthermore, pursuant to Law 24/2001, Italian borrowers may not claim exceptions to, or assert claims based on, the Usury Law in respect of interest payable on the relevant loans up to 2 January 2001, unless at the time of execution of the relevant loan agreement or at the time at which the rate of interest in respect thereof was agreed (if different), the interest rate exceeded the then applicable Usury Rate. Law 24/2001 has however been challenged before the Italian Constitutional Court on the grounds that it would not comply with the provisions of the Constitution. In February 2002, the Constitutional Court confirmed that under Decree 394/2000, the reference point in considering whether a rate is usurious or not is the date of execution of the relevant loan agreement and that the replacement of usurious rates with rates fixed by the Decree 394/2000 should operate as from 31 December 2000 and not 2 January 2001 as stated in the decree. The Italian Originator has represented in the Italian Transfer Agreement that the Italian Loan Receivables in the Italian Portfolio comply with applicable Italian laws relating to usury. Compounding of Interest (Anatocismo) According to Article 1283 of the Italian Civil Code, in respect of a monetary claim or receivable, accrued interest may be capitalised only from the date when any legal proceedings are commenced in respect of that monetary claim or receivable by virtue of an agreement entered into by the parties after the date when such claim or receivable became due and provided that such interest has accrued for at least six months. Article 1283 of the Civil Code allows derogation from this provision in the event that there are recognised customary practices (usi normativi) to the contrary. Banks and financial institutions in the Republic of Italy have traditionally capitalised accrued interest on a three monthly basis on the grounds Page 78

that such practice could be characterised as a customary practice (uso normativo). However, a number of recent judgments from Italian courts (including judgments from the Italian Supreme Courts No. 13739/2003, No. 12222/2003, No. 2593/2003, No. 3096/1999 and No. 2374/99 from the Supreme Court) have held that such practices are not customary practices (uso normativo). In this respect, it should be noted that Article 25 of Legislative Decree no. 342 of 4 August 1999 (Law No. 342) enacted by the Italian Government under a delegation granted pursuant to law No. 142 of 19 February 1992 (Legge Delega) has considered the capitalisation of accrued interest (anatocismo), made by banks prior to the date on which the resolution of the Interministerial Committee of Credit and Savings (CICR) of 9 February 2000 (the Resolution) came into force (22 April 2000), to be valid. After such date, the capitalisation of accrued interest will still be possible upon the terms established by the Resolution which further provided that all conditions applied in relation to contracts executed prior to its entry into force were to be adjusted to such new rules by 30 June 2000 with effect from 1 July 2000. Law No. 342 has been challenged, however, before the Italian Constitutional Court on the grounds that it falls outside the scope of the legislative powers delegated under the Legge Delega. On 17 October 2000, the Italian Constitutional Court (judgment 425/2000) upheld the challenge of Article 25 of Law 342 on the grounds of eccesso di delega, declaring such article to be null and void on the basis of conflict with Italian constitutional principles. As a consequence thereof, the challenge by any Italian Borrower of the practice of capitalising interest and the upholding of such interpretation of the Italian Civil Code in judgments of the other courts of the Republic of Italy could have a negative effect on the returns generated from the Italian Mortgage Loans. The Italian Originator has undertaken in the respective Italian Transfer Agreement to which it is a party to indemnify the Italian Purchaser fully in respect of any losses, costs and expenses that may be incurred by the Issuer in connection with any loss or reduction in any interest accrued on the Italian Loan Receivables in the Italian Portfolio as a result of the application of Italian law provisions concerning the capitalisation of accrued interest. Application of Italian Securitisation Law The Italian Securitisation Law was enacted on 30 April 1999 and was conceived to simplify the process and facilitate the increased use of securitisation as a financing technique in the Republic of Italy. It applies to securitisation transactions involving the "true" sale (by way of non-gratuitous assignment) of receivables where the sale is to a company created in accordance with Article 3 of the Italian Securitisation Law and all amounts paid by the assigned borrowers are to be used by the relevant company exclusively to meet its obligations under notes issued to fund the purchase of such receivables and other costs and expenses associated with the securitisation transaction. The Italian Securitisation Law requires that the Italian Portfolio must be assigned to the Italian Purchaser in accordance with the provisions of paragraphs 2, 3 and 4 of Article 58 of the Italian Banking Act. The prevailing interpretation of these provisions is that:

(a)

the assignment should be perfected against the assigned borrowers and third party creditors by way (i) of publication of a notice of transfer in the Official Gazette, and (ii) registration of such notice with the companies' registrar of the district where the issuer has its registered office, so avoiding the need for notification to be served on each assigned borrower;

(b)

as from the later of the date of publication of the notice in the Official Gazette and the date of the registration of the notice with the companies' registrar of the district where the Italian Purchaser has its registered office, the assignment becomes enforceable against:

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(i)

the assigned private borrowers and any creditors of the Italian Originator who have not prior to the date of publication and deposit of the notice commenced enforcement proceedings in respect of the relevant receivables;

(ii)

the liquidator or other bankruptcy official of the assigned Italian Borrowers (so that any payments made by an assigned borrower to the purchasing company may not be subject to any claw back action according to Article 67 of the Italian Bankruptcy Act); and

(iii)

any other permitted assignees of the Italian Originator who have not perfected their assignment prior to the later of the date of publication of the notice in the Official Gazette and the date of registration of the notice with the companies registrar of the district where the Italian Purchaser has its registered office;

(c)

the benefit of any privilege, guarantee or security interest guaranteeing or securing repayment of the receivables will automatically be transferred to and perfected with the same priority in favour of the Italian Purchaser, without the need for any formality or annotations with the relevant land registry in Italy;

(d)

as from the later of the date of publication of the assignment in the Official Gazette and the registration with the companies registrar of the district where the issuer has its registered office, no legal action may be brought to attach the receivables assigned, or the sums derived therefrom, other than for the purposes of enforcing the rights of the noteholders issued for the purpose of financing the acquisition of the relevant receivables and to meet the costs of the transaction; and

(e)

assignments executed under the Italian Securitisation Law are subject to revocation or bankruptcy under Article 67 of the Italian Bankruptcy Act but only in the event that the securitisation transaction is entered into within three months of the adjudication of bankruptcy of the relevant party or, in cases where paragraph 1 of Article 67 applies, within six months of the adjudication of bankruptcy. (Under the Italian Transfer Agreement, the Italian Originator represents and warrants, in summary, that it is not subject to Insolvency Proceedings nor are there any circumstances which might cause it to become insolvent).

Under Article 3 of the Italian Securitisation Law, by operation of law, the Italian Purchaser's right, title and interest in and to the Italian Portfolio will be segregated from all other assets of the Italian Purchaser and the Italian Portfolio and the relevant Italian Collections, once received by the Italian Purchaser, will be available on a winding up of the Italian Purchaser only to satisfy the obligations of the Italian Purchaser to the Issuer, each of the Other Italian Portfolio Secured Creditors and any Italian Connected Third Party Creditor. Amounts derived from the Italian Portfolio will not be available to any other creditors of the Italian Purchaser. Under the Italian Purchaser Intercreditor Agreement, the Italian Secured Creditors party thereto will agree not to commence insolvency or winding up proceedings against the Italian Purchaser except in certain limited circumstances and, in addition, the obligations of the Italian Purchaser under the Italian Notes are limited recourse. However, under Italian law, any creditor of the Italian Purchaser would be able to commence insolvency or winding up proceedings against the Italian Purchaser in respect of any unpaid debt. As at the date of this document, the application of the Italian Securitisation Law has not been considered by an Italian Court and only a number of interpretations of its application have been issued by Italian governmental or regulatory authorities. Consequently, it is possible that such authorities may issue further regulations relating to the Italian Securitisation Law or the interpretation thereof, the impact of which cannot be predicted by the Issuer as at the date of this document.

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Rights of set-off of Borrowers Under general principles of Italian law, the Italian Borrowers are entitled to exercise rights of set-off in respect of amounts due under any Italian Mortgage Loan to the Italian Purchaser against any amounts payable by the Italian Originator to the relevant Italian Borrower and which came into existence (were crediti esistenti) prior to the later of the publication of the notice of assignment of the Italian Loan Receivables in the Official Gazette and the date of the registration of the notice with the companies registrar of the district where the issuer has its registered office. Under the terms of the Italian Transfer Agreement, the Italian Originator has agreed to indemnify the Italian Purchaser in respect of any reduction in amounts received by the Italian Purchaser in respect of the Italian Portfolio as a result of the exercise by any Italian Borrower of a right of set-off. Preferred Claims According to rulings of the Tribunal of Genoa on 25 January 2001 and the Tribunal of Reggio Emilia on 22 November 2002 and the Supreme Court decision no. 17197 of 14 November 2003, issued with reference to Italian Law decree No. 669 of 31 December 1996 and converted into law No. 30 of 28 February 1997, claims of any persons who have concluded preliminary agreements (contratti preliminari) with a mortgagor for the purchase of real estate which were registered in real estate registries (Conservatorie dei Registri Immobiliari) prior to the registration of mortgages or even after such registration, would be preferred to the claims of the creditors of the relevant mortgage.

Other legal considerations in relation to the Italian Portfolio Fixed and floating security – Italian Purchaser Deed of Charge – Pledge on the Italian Purchaser Accounts Security given under the English law governed Italian Purchaser Deed of Charge, even if expressed as a first fixed security interest, may take effect as a floating charge and thus, on enforcement, certain preferential creditors may rank ahead of the Italian Purchaser Secured Creditors. One of the characteristics of a floating charge is the ability of the chargor to carry on business in relation to the relevant assets, until some future step is taken by or on behalf of the chargee. Where a chargor is free to deal with the assets subject to the charge without the consent of the chargee, an English court may hold that the charge constitutes a floating charge, notwithstanding that it may be described as a fixed charge. There is a risk that the Security Interests created by the Italian Purchaser Deed of Charge may be held to take effect as floating charges. In that case, the claims of the Italian Purchaser Secured Creditors (including the Issuer) would, on a winding-up of the Italian Purchaser under English law, be subject to the claims which are given priority over a floating charge by law, including prior charges, the expenses of any winding-up and the claims of preferential creditors. However, having regard to the fact that the Italian Purchaser is an Italian company (having their registered offices in the Republic of Italy), it is likely that a winding-up of the Italian Purchaser would take place under the laws of the Republic of Italy and therefore questions regarding the priority of creditors' claims against the Italian Purchaser's bankruptcy estate would be determined in accordance with principles of Italian law.

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Tax Considerations Prospective investors should consult their own tax advisers regarding the appropriate characterisation of the Notes, the MERCs and the Residuals. Taxation Position of the Noteholders, the MERC holders and the Residual holders in Germany See "German Taxation" below. Taxation Position of the Issuer in Germany The Issuer having its registered seat in Ireland will benefit from the Double Tax Treaty between Ireland and Germany (the Treaty) if its place of management in the meaning of Art. II (1) (d) of the Treaty is in Ireland. In particular, according to Art. VII and Art. XXIII of the Treaty, Ireland has the exclusive right of taxation of the interest received by a company resident in Ireland from sources within Germany (such as interest received under the German Loan Receivables), thus superseding rules described below of the German Income Tax Act (Einkommensteuergesetz) dealing with a limited tax liability from certain income sources located in Germany (see "German Taxation" below). There are good and valid reasons why the Issuer should not be deemed to have a permanent establishment or even its place of management in Germany since the principal business decisions of the Issuer are taken by the Issuer's directors in Ireland, in particular in connection with the financing of the acquisition of the Issuer's assets, and the German Servicer performs mere collecting activities on the German Loan Receivables. However, there is no case law on defining the term "permanent establishment" in the context of a securitisation transaction and, accordingly, there remains some legal uncertainty in that respect. See "German Taxation – Taxation Of The Issuer" below.

Italian tax considerations Taxation Position of the Noteholders, the MERC Holders and the Residual Holders on Italy See the section entitled "Italian Taxation" Taxation Position of the Issuer in Italy In accordance with the general principles of Italian law, the mere subscription of the Notes, the MERCs and the Residuals will not give rise to a permanent establishment in Italy for the Issuer to the extent that no other activities are carried out by the Issuer in Italy. In this respect, the Issuer will not be liable to any income taxation in Italy whether the incidence of that taxation is of a direct or indirect nature or whether imposed by law, regulation or the practices of an authorised taxation authority in Italy, in the absence of a permanent establishment in Italy. For more details, of the tax treatment applicable to the Issuer upon the subscription of the Italian Notes, please see the paragraph headed "Withholding Tax in respect of the Italian Notes" below. Taxation position of the Italian Purchaser in Italy The Italian Purchaser is a società a responsabilità limitata registered with the Ufficio Italiano dei Cambi and the Bank of Italy as a non-banking financial intermediary and, as such, is currently liable to (i) Italian corporation tax (IRES) at a rate of 33 per cent. and (ii) Italian regional tax (IRAP) at a rate of 4.25 per cent. (local surcharge may apply up to 1 per cent.). Pursuant to the regulations issued by the Bank of Italy on 29 March 2000 (schemi di bilancio delle società per la cartolarizzazione dei crediti) and on February 14, 2006 (istruzioni per la Page 82

redazione dei bilanci degli intermediari iscritti nell'"elenco speciale" degli IMEL, delle SGR e delle SIM) as to accounting treatment of companies incorporated pursuant to the Italian Securitisation Law, all assets, liabilities, income and expenses attributable directly to the securitisation of the Italian Loan Receivables will be treated as off-balance sheet assets, liabilities, income and expenses. Circular No. 8/E of 6 February 2003 (Circular No. 8/E), issued by the Italian Agency of Revenues (Agenzia delle Entrate), has stated that the tax regime applicable to the Italian Purchaser as long as the Italian Notes are outstanding is consistent with the above applicable accounting regime. According to Circular No. 8/E, an issuer will be taxed on the proceeds generated by a securitisation transaction under the ordinary Italian tax rules if and to the extent that such proceeds are legally available to such issuer when all obligations of the issuer to the noteholders and to the other creditors in respect of the relevant securitisation transaction have been fully discharged. As a consequence of the position taken by the Italian tax authorities in Circular No. 8/E, no taxable income will be realised by the Italian Purchaser whilst the Italian Notes are outstanding (except only for non-expensed amounts retained by the Italian Purchaser). However, it is possible that the Italian Ministry of Finance or another competent authority may issue further regulations, circular letters or generally binding rulings relating to the Italian Securitisation Law which might alter or affect or take a different view with respect to the tax position of the Issuer as described above. Interest on any accounts opened and entertained in the name of Italian Purchaser with a bank resident of Italy for tax purposes or of a permanent establishment in Italy of a non resident bank will be subject to withholding tax applicable, as at the date of this Offering Circular, at the rate of 27 per cent. However, pursuant to Resolution No. 222/E, of 5 December 2003 (Resolution No. 222/E), issued by the Agenzia delle Entrate, the Italian Purchaser may not be able to effectively utilise this withholding tax against its Italian corporate income tax liability, until the obligation of the Italian Purchaser to the holders of the Italian Notes, to any other creditors of the Italian Purchaser and to any third party to whom the Italian Purchaser has incurred costs, liabilities fees and expenses in relation to the transaction are satisfied ("fino a che non siano stati soddisfatti tutti i creditori del patrimonio separato") and the conditions described above are met. As a consequence of Resolution No. 222/E, if and to the extent that no taxable income will accrue to the Italian Purchaser at the end of the securitisation, the Italian Purchaser will not be entitled to recover the 27 per cent. withholding tax already paid on interests accrued on the accounts.

Withholding Tax in respect of the Italian Notes According to the provisions of Article 6 of Legislative Decree No. 239 of 1 April 1996 (Decree 239), as amended and supplemented from time to time, any Italian Noteholder who (i) is the beneficial owner of payments of interest or other proceeds on the Italian Notes; (ii) is resident for tax purposes (or an institutional investor incorporated) in a country which recognises the Italian fiscal authorities' right to an adequate exchange of information and (iii) complies in a timely manner with all the requirements and procedures set forth in Decree 239 and in the relevant application rules, will receive amounts of interest payable on the Italian Notes gross of Italian substitute tax (imposta sostitutiva) (see section entitled "Italian Taxation"). Conversely, any Italian Noteholder who (a) is not a person resident for tax purposes (or an institutional investor incorporated) in a country that recognizes the Italian tax authorities' right to a satisfactory exchange of information (as per the list provided in Ministerial Decree of 4 September 1996) (the Qualifying Countries), or (b) is resident/incorporated in such a country but has not fulfilled all the requisite documentary requirements under Decree 239 or (c) is not the beneficial owner of the Italian Notes and of the interest payments thereon, will receive amounts of interest payable on the Italian Notes, net of Italian substitute tax (imposta sostitutiva) (see section entitled "Italian Taxation"). At the date of this Prospectus such Page 83

substitute tax is levied at the rate of 12.5 per cent. or such lower rate as may be applicable under the relevant double taxation treaty. The Issuer, being a resident of the Republic of Ireland qualifies for the exemption from the Italian substitute tax under Decree 239 in relation to the interest payments received on the Italian Notes. For these purposes, the Issuer shall deposit the Italian Notes with a qualifying financial intermediary, shall qualify as beneficial owner of the Italian Notes and of the interest payment due thereon and shall comply with the documentary procedure set forth in the Decree 239. However, the Italian tax authorities have not issued so far any guidance or regulation concerning the application of the Decree 239 exemption when, as in the case at hand, the Italian Notes are subscribed for by a foreign entity, the Issuer, that in turn issues asset backed securities (such as the Notes) secured on the underlying Italian Notes. In the event that the Italian Notes are redeemed in whole or in part prior to eighteen months from the Italian Issue Date, the Italian Purchaser will be required to pay a tax equal to 20 per cent. of interest and premium (if any) accrued up to the time of the early redemption, pursuant to Article 26 (1) of the Presidential Decree No. 600 of 29 September 1973. Except where the Italian Notes are declared due and payable following the service of an Italian Purchaser Enforcement Notice on the Italian Purchaser, upon the occurrence of an Insolvency Event or where the Italian Notes are redeemed for a Tax Event in accordance with Italian Notes Condition 7(c) (Redemption, Purchase and Cancellation – Redemption Italian Tax or Italian Revelatory Event), no redemption of the Italian Notes may occur under the terms and conditions of the Italian Notes until after the expiry of the Initial Period. Registration tax on transfer of Italian Loan Receivables Registration and/or other forms of documentary taxes are applied upon execution in Italy of agreements and certain other deeds, depending on the manner in which they are documented, the place of execution and whether or not such documents or deeds are required to be registered with a public registry in Italy. These taxes include, in the case of an assignment of a receivable or claim under the contract, registration tax in an amount equal to 0.50% of the amount of the relevant receivable or monetary claim being assigned (the proportional registration tax), unless VAT is applicable to a transaction in which event - in line with the principle pursuant to which VAT is applied as an alternative to proportional registration tax (the so-called principio di alternatività) – only registration tax in a fixed amount of euro 168 will apply. Registration tax on judgments If the Italian Purchaser were to obtain a judgment from an Italian court (this includes a decree executing an arbitral award) in respect of a breach of any Italian Transaction Document or were to enforce a judgment in Italy in respect of any such breach in the event that such judgement has been given in a state which is not a member of the European Union, a registration tax of up to three per cent. of the amount awarded pursuant to any such judgment may be payable. However, in normal circumstances such registration tax would be chargeable to the losing party as damages. No registration tax or other duty will be due in Italy, other than a registration tax at the flat rate of euro 168, in the proceedings of the declaration of enforceability of a judgment in respect of any such breach given in a member state of the European Union. Since 1 March, 2002, no stamp duty and other administrative charges apply on documents and decrees related to civil, criminal and administrative proceedings, as such charges has been replaced by a single tax (the so-called contributo unificato di iscrizione a ruolo). Such tax which does not replace registration tax - would apply at a rate varying from Euro 30 to Euro 1,110. Registration tax in "caso d'uso" and "enunciazione" Page 84

In addition, each Italian Transaction Document may be subject to registration tax at a rate up to three per cent. of the amount indicated in each Italian Transaction Document where a caso d'uso or an enunciazione will occur. Caso d'uso means the filing of a document with an Italian Court which is called to decide on noncontentious matters (un atto si deposita per essere acquisito agli atti presso le cancellerie giudiziarie nell'esplicazione di attività amministrative) or with an Italian administrative authority or public body where the filing is aimed at obtaining the granting of a right from such administrative authority or public body, unless such filing is compulsory as a matter of law. The filing of an Italian Transaction Document with any Italian Court for the purposes of judicial proceedings (i.e. contentious matters) does not give rise to a caso d'uso. Cross-references to an Italian Transaction Document in a deed, agreement or other document which has been filed with the Italian registration tax office will give rise to a case of enunciazione for such Italian Transaction Document if the relevant document filed for registration has been entered into by the same parties which entered into the former Italian Transaction Document. In such a case, the Italian tax authorities may ask for the crossreferenced Italian Transaction Document(s) to be filed with the competent Italian registration tax office and, consequently, the application of registration tax to such Italian Transaction Document(s) according to the taxation rules. The rule applies at Italian tax authorities' request and only to the extent that the document filed with the registration tax office and the Italian Transaction Document which has been mentioned therein are entered into by the same parties. Where one of the parties of the Italian Transaction Documents is not also a party of the document filed for registration with the Italian registration tax office, no enunciazione will apply in respect of the specific Italian Transaction Document. The same rule also applies in case of cross-references into a judicial decision of an Italian Transaction Document which has not been subject to registration tax in Italy. In case the Italian Transaction Documents filed with the registration tax office as a consequence of a caso d'uso or enunciazione are subject to VAT, registration tax would be levied at the fixed rate of euro 168. Legal Considerations Change of Law The structure of the issue of the Notes, the MERCs and the Residuals and the related transactions is based on English, Irish, German and Italian law in effect as at the date of this document. No assurance can be given as to the impact of any possible judicial decision or changes to any relevant law, the interpretation thereof or administrative practice after the date of this document. Fixed charges over accounts may take effect under English law as floating charges The Issuer will purport to grant, inter alia, fixed charges in favour of the Security Trustee over the Issuer's interest in the Issuer Accounts and any other bank account in which the Issuer has an interest (other than in the account in which its share capital is held) and are Eligible Investments of the Issuer. The law in England and Wales relating to the characterisation of fixed and floating charges is unsettled. The fixed charges purported to be granted by the Issuer (other than by way of assignment in security) may take effect under English law as floating charges only, if, for example, it is determined that the Security Trustee does not exert sufficient control over the relevant account or the proceeds thereof and are Eligible Investments of the Issuer for the security to be said to "fix" over those assets. If the charges take effect as floating charges instead of fixed charges then certain matters, which are given priority over the floating charge by English law, will be given priority over the claims of the floating chargeholder.

Fixed/Floating Security under Irish Law Page 85

Under Irish law, for a charge to be characterised as a fixed charge, it must be expressed to be such and the charge holder must be entitled to and must in practice exercise the requisite level of control over the assets purported to be charged and the proceeds of such assets including any bank account into which such proceeds are paid. A security interest expressed to be of a fixed nature may be recharacterised as floating by an Irish court if the court determines that all of the above features are not present throughout the life of the arrangements. Although certain of the security to be granted by the Issuer pursuant to the Security Documents, may be expressed to be of a fixed nature, there can be no assurance that an Irish court would not nevertheless recharacterise such security as floating. The priority of the holder of floating security is more vulnerable than that of the holder of fixed security in certain circumstances. See further Preferred Creditors under Irish Law below. Preferred Creditors under Irish Law Under Irish law, upon an examinership (see further "Examinership under Irish Law" below) or an insolvency of an Irish company such as the Issuer when applying the proceeds of assets subject to fixed security which have been realised in the course of a liquidation or receivership, the claims of a limited category of preferential creditors will take priority over the claims of creditors holding the relevant fixed security. These preferred claims include the remuneration, costs and expenses properly incurred by any examiner of the company (which includes any borrowings made by an examiner to fund the company's requirements for the duration of his appointment) which have been approved by the Irish courts. The interest of secured creditors in property and assets of an Irish company over which there is a floating charge only will rank behind the claims of certain preferential creditors on enforcement of such security. Preferential creditors include the Irish Revenue Commissioners, statutory redundancy payments due to employees (including where those employees have been made redundant as a result of the liquidation of the borrower) and money due to be paid by the Irish company in respect of employers contributions under any pension scheme. The holder of a fixed security over the book debts of an Irish tax resident company (which would include the Issuer) may be required by the Irish Revenue Commissioners, by notice in writing from the Irish Revenue Commissioners, to pay to them sums equivalent to those which the holder received in payment of debts due to it by the company. Where the holder of the security has given notice to the Irish Revenue Commissioners of the creation of the security within 21 days of its creation, the holder's liability is limited to the amount of certain outstanding Irish tax liabilities of the company (including liabilities in respect of value added tax) arising after the issuance of the Irish Revenue Commissioners' notice to the holder of fixed security. The Irish Revenue Commissioners may also attach any debt due to an Irish tax resident company by another person in order to discharge any liabilities of the company in respect of outstanding tax whether the liabilities are due on its own account or as an agent or trustee. The scope of this right of the Irish Revenue Commissioners has not yet been considered by the Irish courts and it may override the rights of holders of security (whether fixed or floating) over the debt in question. In relation to the disposal of assets of an Irish tax resident company which are subject to security, a person entitled to the benefit of the security may be liable for tax in relation to any capital gains made by the company on a disposal of those assets on exercise of the security Examinership under Irish Law Examinership is a court moratorium/protection procedure available under Irish company law. An examiner may be appointed to a company which is likely to be insolvent if the court is satisfied that there is a reasonable prospect of the survival of the company and all or part of its undertaking as a going concern. During the examinership period (70 days, or longer in certain Page 86

circumstances) the company is protected from most forms of enforcement procedure and the rights of its secured creditors are largely suspended. Accordingly, if an examiner is appointed to the Issuer, the Security Trustee would be precluded from enforcing the security over any of the Security during the period of the examinership. An examiner has various powers during the examinership period, including power to deal with secured property of the company, repudiate certain contracts, and incur borrowing costs and other expenses some of which will take priority over rights of secured creditors. If the examiner concludes that it would facilitate the survival of the company as a going concern, he must formulate proposals for a compromise or scheme of arrangement in relation to the company. The members and creditors of the company will have an opportunity to consider any such proposals, and the proposals require court approval. A compromise or scheme of arrangement, if confirmed by the court, is binding on creditors (including secured creditors) and may result in amounts payable to creditors (including secured creditors) being reduced. Introduction of International Financial Reporting Standards The Issuer's Irish corporation tax position depends to a significant extent on the accounting treatment applicable to the Issuer. The accounts of the Issuer are required to comply with International Financial Reporting Standards (IFRS) or with generally accepted accounting principles in Ireland (Irish GAAP) which has been substantially aligned with IFRS. Companies such as the Issuer might, under either IFRS or Irish GAAP, be forced to recognise in their accounts movements in the fair value of assets that could result in profits or losses for accounting purposes which bear little relationship to the company's actual cash position. These movements in value may generally be brought into the charge to tax (if not relieved) as a company's tax liability on such assets broadly follows the accounting treatment. However, the taxable profits of a qualifying company within the meaning of Section 110 of the Taxes Consolidation Act 1997 of Ireland, as amended, (which it is anticipated that the Issuer will be) will be based on the profits that would have arisen to the company had its accounts been prepared under Irish GAAP as it existed at 31 December 2004. It is possible to elect out of such treatment and such election, if made, is irrevocable. If the Issuer makes such an election, then taxable profits or losses could arise to the Issuer as a result of the application of IFRS or current Irish GAAP that are not contemplated in the cash-flows for the transaction and as such may have a negative effect on the Issuer and its ability to make payments to the holders of the Notes, the MERCs and/or the Residuals. The Issuer has covenanted in the Trust Deed that if its cashflows would thereby be affected adversely, no such election will be made.

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CREDIT STRUCTURE General The following is a summary of the credit structure underlying the Notes, the MERCs and the Residuals. Such summary should be read in conjunction with information appearing elsewhere in this Offering Circular. The Notes, the MERCs and the Residuals will not be obligations of the Note Trustee, the Security Trustee, the Account Bank, the Swap Providers, the Liquidity Provider, the Servicers, the Cash Manager, the Italian Purchaser, the Originators, the Corporate Services Provider, the Share Trustee, the Paying Agents, the Lead Manager, the Arranger or any other party other than the Issuer and will not be guaranteed by any such party. Neither the Note Trustee, the Security Trustee, the Account Bank, the Swap Providers, the Liquidity Provider, the Servicers, the Cash Manager, the Italian Purchaser, the Originators, the Corporate Services Provider, the Share Trustee, the Paying Agents, the Lead Manager, the Arranger nor anyone other than the Issuer will accept any liability whatsoever in respect of any failure by the Issuer to pay any amount due under the Notes, the MERCs or the Residuals. Use of Available Revenue Funds The interest rates payable by Borrowers in respect of the Mortgage Loans will vary. It is anticipated (although not guaranteed) that the revenues generated by the interest rates applicable to the Loan Receivables will exceed the interest rates payable on the Notes. The actual amount of any such excess will vary during the life of the Notes. Among the key factors determining such variations will be the level of delinquencies and defaults experienced, the level of prepayments and the weighted average of the mortgage interest rates from time to time. To the extent that the Available Revenue Funds on the relevant Payment Date are sufficient therefor, each amount referred to in items (i) to (xxii) of the Pre-Enforcement Revenue Priority of Payments will be paid to the persons entitled thereto, applied or provided for on such Payment Date, as the case may be, and, after such payment, application or provision, it is not expected that any surplus will be accumulated by the Issuer. Liquidity Facility Pursuant to the terms of a liquidity facility agreement to be entered into on or prior to the Issue Date between the Liquidity Provider, the Issuer, the Security Trustee and the Note Trustee (the Liquidity Facility Agreement), the Liquidity Provider will provide the Issuer with a revolving facility (the Liquidity Facility). Any drawings by the Issuer (each a Liquidity Drawing) will be credited initially to the Issuer Transaction Account and recorded in a ledger maintained by the Cash Manager established for the purpose of recording Liquidity Drawings (the Liquidity Ledger). The aggregate principal amount of liquidity drawings from time to time outstanding under the Liquidity Facility cannot exceed the Liquidity Maximum Amount from time to time, being, on the Issue Date, €12,000,000 (such amount the Initial Liquidity Maximum Amount). The Liquidity Maximum Amount will be reduced in the circumstances described below. Accordingly, the Issuer may, on any Payment Date only make drawings to the extent of the lesser of (a) the Relevant Shortfall Amount (defined below) and (b) the Liquidity Maximum Amount minus any amount then outstanding under the Liquidity Facility (excluding interest accrued but unpaid on any outstanding drawings) (the amount that may be drawn on any Payment Date being the Available Commitment).

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The Issuer will pay to the Liquidity Provider inter alia (a) a commitment fee based on the Available Commitment and (b) interest accruing at EURIBOR plus the relevant margin for any Liquidity Drawing. The Issuer will be entitled to make a Liquidity Drawing when, after the application of amounts standing to the credit of the Reserve Account, there are insufficient amounts able to be withdrawn from the Issuer Transaction Account to meet items (i) to (xiv) (other than items (vii), (ix), (xi) and (xiii)) of the Pre-Enforcement Revenue Priority of Payments on a Payment Date (such shortfall, being the Relevant Shortfall Amount), provided that no Liquidity Drawing may be made: (a)

to meet interest payments on the B Notes if, after the application of the Available Revenue Funds, the B Principal Deficiency Sub-Ledger would have a debit balance equal to or greater than 20 per cent. of the then aggregate Principal Amount Outstanding of the B Notes;

(b)

to meet interest payments on the C Notes if, after the application of the Available Revenue Funds, the C Principal Deficiency Sub-Ledger would have a debit balance equal to or greater than 20 per cent. of the then aggregate Principal Amount Outstanding of the C Notes;

(c)

to meet interest payments on the D Notes if, after the application of the Available Revenue Funds, the D Principal Deficiency Sub-Ledger would have a debit balance equal to or greater than 50 per cent. of the then aggregate Principal Amount Outstanding of the D Notes; or

(d)

to meet interest payments on the E Notes if, after the application of the Available Revenue Funds, the E Principal Deficiency Sub-Ledger would have a debit balance equal to or greater than 50 per cent. of the then aggregate Principal Amount Outstanding of the E Notes.

The Issuer may not be entitled to make a Liquidity Drawing if certain events of default under the Liquidity Facility Agreement have occurred and are continuing (including if an Event of Default in respect of the Notes has occurred and is continuing). Liquidity Drawings credited to the Liquidity Ledger on any Payment Date (the date of such Liquidity Drawing, a Liquidity Drawdown Date) will be transferred to the Revenue Ledger on that Payment Date for application in accordance with items (i) to (xiv) (other than items (vii), (ix), (xi) and (xiii)) of the Pre-Enforcement Revenue Priority of Payments on that Payment Date. Interest will be paid on the amount of drawings from time to time outstanding under the Liquidity Facility and principal will be repaid to the extent of available funds in accordance with item (iv) of the Pre-Enforcement Revenue Priority of Payments. Amounts repaid under the Liquidity Facility or, on or after a Liquidity Drawdown Date, amounts representing principal standing to the credit of the Liquidity Ledger, will be capable of being redrawn on any Payment Date for the purposes and to the extent described above. Under the terms of the Liquidity Facility, the Liquidity Maximum Amount will be reduced on each Payment Date falling on or after the first Payment Date on which the Initial Liquidity Maximum Amount is equal to or greater than 4.0 per cent. of the aggregate Principal Amount Outstanding of the Notes (excluding the X Notes) following application of the Actual Redemption Funds on such Payment Date, to an amount which is the greater of: (a)

4.0 per cent. of the aggregate Principal Amount Outstanding of the Notes (excluding the X Notes) on the relevant Payment Date; and Page 89

(b)

1.0 per cent. of the aggregate Principal Amount Outstanding of the Notes (excluding the X Notes) on the Issue Date,

provided that, no such reduction will be permitted on a Payment Date if, following the application of the Actual Redemption Funds as at such Payment Date: (a)

there is a debit balance on any of the Principal Deficiency Sub-Ledgers;

(b)

the German Servicer is in breach of any of its obligations in the German MRTSA or the German STA;

(c)

the Italian Servicer is in breach of any of its obligations in the Italian Servicing Agreement, the Italian Purchaser Intercreditor Agreement or the Italian Transfer Agreement;

(d)

the Italian Purchaser is in breach of any of its obligations under the Italian Note Issuance Agreement or the Italian Purchaser Intercreditor Agreement or the Italian Purchaser Deed of Charge;

(e)

the Cash Manager is in breach of any of its obligations under the Cash Management Agreement, the Security Documents, the Corporate Services Agreement or the Bank Account Agreement;

(f)

any amount is then outstanding under the Liquidity Facility;

(g)

as at the immediately preceding Payment Date, the aggregate balance of all the German Mortgage Loans in the Mortgage Pool in relation to which the relevant Borrowers are three or more monthly instalments in arrears is higher than 4.0 per cent. of the sum of (i) the aggregate balance of all the German Loan Receivables in the Mortgage Pool, and (ii) the Further Disbursement Amount;

(h)

as at the immediately preceding Payment Date, the aggregate balance of all the Italian Mortgage Loans in the Mortgage Pool in relation to which the relevant Borrowers are three or more monthly instalments in arrears (excluding, for the avoidance of doubt, any Defaulted Italian Loan Receivable) is higher than 4.0 per cent. of the aggregate balance of all the Italian Loan Receivables in the Mortgage Pool;

(i)

the cumulative Realised Loss in respect of the Mortgage Pool exceeds 6.0 per cent.; and

(j)

the amount standing to the credit of the Reserve Account is lower than the Reserve Account Required Amount.

Any reduction in the Liquidity Maximum Amount in the circumstances described above, will accordingly reduce the Available Commitment of the Liquidity Facility. If, at any time, the short term credit rating of the Liquidity Provider falls below P-1 by Moody's or F1 by Fitch or the Liquidity Provider refuses to grant an extension of the Liquidity Facility in accordance with the Liquidity Facility Agreement and in each case the Liquidity Facility is not replaced by an alternative Liquidity Facility provided by an alternative liquidity facility provider the short term credit rating of which is at least equal to the ratings specified above, then the Issuer will forthwith drawdown the entirety of the undrawn Available Commitment under the Liquidity Facility (such drawing being a Standby Liquidity Drawing). Each date upon which a Standby Liquidity Drawing is made, is a Liquidity Drawdown Date, and such drawn funds will be credited to a separate Standby Account (which is an account in the name of the Issuer held with the Account Bank or, if the Account Bank ceases to have the requisite ratings, such other bank which does have the requisite ratings) (the Standby Account). The Issuer will be entitled on any Payment Date to Page 90

withdraw amounts from the Standby Account in the same circumstances as it would have been entitled to make a Liquidity Drawing and such amounts shall be applied in the same manner and treated for all purposes as Liquidity Drawings. The Issuer is not required to pay a commitment fee in respect of amounts standing to the credit of the Standby Account. The Issuer will charge the Standby Account in favour of the Security Trustee for the benefit of the Secured Creditors. On enforcement of the Security, the monies standing to the credit of the Standby Account will be applied in accordance with the Liquidity Facility Agreement. Reserve Account To provide limited coverage for shortfalls in amounts under items (i) to (xvi) inclusive of the Pre-Enforcement Revenue Priority of Payments, the Cash Manager on behalf of the Issuer will on the Issue Date open a bank account at the Account Bank (the Reserve Account) which, on the Issue Date, will be credited in the initial amount of €1,500,000, using part of the proceeds from the issue of the X Notes. Reserve Account Required Amount means €3,300,000, provided that, on each Payment Date falling on or after the first Payment Date on which the amount standing to the credit of the Reserve Account is equal to or greater than 2.20 per cent. of the aggregate Principal Amount Outstanding of the Notes (excluding the X Notes) (the Reserve Account Determination Date) and if: (i)

all balances on each of the Principal Deficiency Sub-Ledgers are zero;

(ii)

no amount in the Liquidity Facility has been drawn before the relevant Reserve Account Determination Date;

(iii)

the amount standing to the credit of the Reserve Account is equal to or greater than the Reserve Account Required Amount as of the relevant Reserve Account Determination Date;

(iv)

as at the immediately preceding Payment Date, the aggregate balance of all the German Mortgage Loans in the Mortgage Pool in relation to which the relevant Borrowers are three or more monthly instalments in arrears is equal to or lower than 4.0 per cent. of the sum of (i) the aggregate balance of all the German Loan Receivables in the Mortgage Pool, and (ii) the Further Disbursement Amount;

(v)

as at the immediately preceding Payment Date, the aggregate balance of all the Italian Mortgage Loans in the Mortgage Pool in relation to which the relevant Borrowers are three or more monthly instalments in arrears (excluding, for the avoidance of doubt, any Defaulted Italian Loan Receivable) is equal to or lower than 4.0 per cent. of the aggregate balance of all the Italian Loan Receivables in the Mortgage Pool; and

(vi)

the cumulative Realised Loss in respect of the Mortgage Pool does not exceed 6.0 per cent.,

then the Reserve Account Required Amount will be reduced to an amount equal, on each such Reserve Account Determination Date, to the greater of €1,500,000 and 2.20 per cent. of the then Principal Amount Outstanding of the Notes (other than the X Notes following application of the Actual Redemption Funds on such Payment Date). If on any Reserve Account Determination Date, any of the conditions referred to in items (i) to (iv) above are not met, then the Reserve Account Required Amount shall be equal to the Reserve Account Required Amount as at the preceding Reserve Account Determination Date. Following a reduction to the Reserve Account Required Amount, on or prior to each Payment Date, any amounts standing to the credit of the Reserve Account in excess of the Reserve Account Required Amount (the Reserve Account Excess) will be withdrawn from the Page 91

Reserve Account and deposited into the Issuer Transaction Account as Available Revenue Funds and applied in accordance with the Pre-Enforcement Revenue Priority of Payments. On any Payment Date, to the extent that amounts are available after payment of any amounts under items (i) to (xvi) of the Pre-Enforcement Revenue Priority of Payments, the excess, if any, will be deposited into the Reserve Account to the extent necessary to replenish and maintain the Reserve Account Required Amount as set out under item (xvii) of the PreEnforcement Revenue Priority of Payments. On any Payment Date, an amount equal to the amount standing to the credit of the Reserve Account in excess of the Reserve Account Required Amount will be withdrawn from the Reserve Account and deposited into the Issuer Transaction Account as Available Reserve Funds to be applied in accordance with the PreEnforcement Revenue Priority of Payments. On any Payment Date on which the Notes are redeemed in full, amounts standing to the credit of the Reserve Account will be applied towards Available Revenue Funds. German Collection Account and Italian Purchaser Collection Account Payments in respect of the Mortgage Loans will be paid into the German Collection Account of the German Originator, in the case of the German Mortgage Loans, and into the Italian Collection Account of the Italian Originator, in the case of the Italian Mortgage Loans. Amounts standing to the credit of the German Collection Account representing German Collections will be transferred on each day which commercial banks are open for business in Frankfurt am Main to the Issuer Transaction Account. Amounts standing to the credit of the Italian Collection Account representing receipts in respect of the Italian Mortgage Loans will be transferred on each day which commercial banks are open for business in Milan (each such day, an Italian Business Day) to the Italian Purchaser Collection Account (see paragraph below this section headed Italian Purchaser Accounts). The German Collection Account is held with the German Originator. The Italian Collection Account is held with the Italian Account Bank. The long-term, unsecured, unguaranteed and unsubordinated debt obligations of the German Originator are currently rated Aa1 (outlook stable) by Moody's and AA- (outlook stable) by Fitch. No credit rating is assigned to Deutsche Bank S.p.A. as Italian Account Bank, which is a subsidiary of the Account Bank. Under the Italian Purchaser Cash Management Agreement it is provided that if at any time the Italian Account Bank (or, for so long as the Italian Account Bank is Deutsche Bank S.p.A., the company of which it is a ''subsidiary'' being, at the date hereof, Deutsche Bank Aktiengesellschaft) ceases to be rated ''F1'' by Fitch and ''A1'' or ''P-1'' by Moody's (and/or, where the Italian Account Bank is Deutsche Bank S.p.A., ceases to be a ''subsidiary'' of Deutsche Bank Aktiengesellschaft or ceases to have ''Deutsche Bank'' in its name or ceases to be owned (directly or indirectly) by Deutsche Bank Aktiengesellschaft), the Italian Account Bank shall, within 2 (two) days of becoming aware of such circumstance, give notice of such event to the Italian Purchaser and the Representative of the Italian Noteholders, and the Italian Purchaser together with the Italian Account Bank and at the Italian Account Bank expenses, without prejudice to any provision or remedy contained in any Italian Transaction Document, shall, within 30 (thirty) calendar days: (a)

arrange for a guarantee provided by an institution which is an Eligible Institution or cash collateral or other collateral arrangement; or

(b)

procure the transfer of the relevant Italian Purchaser Italian Accounts to any other institution which is an Eligible Institution, subject to establishing arrangements substantially similar to those contained in this Agreement, and direct the relevant Italian Borrowers and Italian Guarantors to pay the amounts received in respect of the Italian Loan Receivables, into the accounts opened with such institution. Page 92

Issuer Accounts The Issuer shall open and maintain with the Account Bank, the Issuer Transaction Account, the Further Disbursement Account, the Reserve Account and, if required, the Standby Account, (such accounts, the Issuer Accounts). The Issuer Accounts shall at all times be maintained with an Eligible Institution. If the Cash Manager becomes aware that the institution at which the Issuer Accounts are held is no longer an Eligible Institution, the Cash Manager will give notice thereof to the Rating Agencies and the Security Trustee, and the Cash Manager and the Issuer will, as soon as practicable but in any event within one month of such notice or such longer period as the Security Trustee may agree after notice to the Rating Agencies, procure the transfer of the Issuer Accounts to an Eligible Institution approved in writing by the Security Trustee in respect of which such criteria are satisfied or, in the event that such criteria are not satisfied in respect of any institution to an Eligible Institution in respect of which the criteria (in the opinion of each of the Rating Agencies, failing which the Security Trustee) are closest to being satisfied. The long-term, unsecured, unguaranteed and unsubordinated debt obligations of the Account Bank are currently rated Aa1 (outlook stable) by Moody's and AA- (outlook stable) by Fitch. On the Issue Date, the Issuer will deposit €1,500,000 into the Reserve Account. Such amounts, as increased to the Reserve Account Required Amount, will be available in certain circumstances to make good certain shortfalls of funds available to the Issuer to meet its obligations as described under Credit Structure – Reserve Account (above). Pursuant to the Bank Account Agreement, the Account Bank will contract to pay a specific rate of interest on funds on deposit in the Issuer Transaction Account. Pursuant to the Deed of Charge, the Issuer Accounts will be charged in favour of the Security Trustee for the benefit of the Secured Creditors. Further Disbursement Account The Issuer will deposit the Further Disbursement Amounts in respect of Partially Disbursed Loans into an account held in the name of the Issuer at the Account Bank (Further Disbursement Account) on the Purchase Date (as described in further detail in Transfer and Sale of the German Assets – Purchase Price). Further Disbursement Amounts (less any Accrued Interest and Commitment Fees which have accrued following the applicable Purchase Date of the relevant Partially Disbursed Loans) will be paid to the German Originator as consideration for Further Disbursement Receivables. Such Accrued Interest and Commitment Fees will constitute Available Revenue Funds and will be paid through the PreEnforcement Revenue Priority of Payments. Issuer Share Capital Account The Issuer shall open and maintain an account in Ireland exclusively for the purposes of holding its share capital. Such account shall not constitute part of the Security.

Italian Purchaser Accounts The Italian Purchaser shall open and maintain the Italian Purchaser Italian Accounts, with the Italian Account Bank (or another bank being an Eligible Institution). The Italian Purchaser Italian Accounts shall comprise: Page 93

(i) (ii) (iii) (iv)

the Italian Purchaser Collection Account; the Italian Purchaser Principal Reserve Account; the Italian Purchaser Expenses Account; the Italian Purchaser Payment Account; and

(v)

the Italian Purchaser Equity Capital Account.

The Italian Purchaser shall open and maintain the Italian Purchaser English Accounts, with the Account Bank (or another bank having a suitable credit rating). The Italian Purchaser English Accounts shall comprise: (i) (ii)

the Italian Purchaser Investment Account; the Italian Purchaser Securities Account;

The Italian Purchaser Italian Accounts and the Italian Purchaser English Accounts are together referred to as the Italian Purchaser Accounts. Amounts standing to the credit of the Italian Collection Account will be transferred daily from the Italian Collection Account to the Italian Purchaser Collection Account and then further transferred on a weekly basis to the Italian Purchaser Investment Account. On the 15th calendar day and the last calendar day of each month (provided that, if any of such dates is not a London Business Day, such date will be the first following day that is a London Business Day, and further provided that such day is not an Italian Payment Date), amounts standing to the credit of the Italian Purchaser Investment Account may be invested by the Italian Cash Manager on behalf of the Italian Purchaser under the terms of the Italian Purchaser Cash Management Agreement in Italian Eligible Investments which, if represented by securities, shall be credited to the Italian Purchaser Securities Account. On or prior to each Italian Payment Date, the Italian Cash Manager shall on behalf of the Italian Purchaser (i) liquidate the Italian Eligible Investments standing to the credit of the Italian Purchaser Securities Account and transfer the relevant proceeds thereof to the Italian Purchaser Investment Account and (ii) transfer all amounts standing to the credit of the Italian Purchaser Investment Account to the Italian Purchaser Payment Account. On each Italian Payment Date, falling prior to the expiry of the Initial Period, the Italian Cash Manager and the Italian Paying Agent, shall, in compliance with the Italian Payments Report, apply the amounts so transferred to the Italian Purchaser Payment Account, respectively, to (A)(i) pay certain expenses of the Italian Purchaser, and (ii) credit an amount equal to the Italian Purchaser Principal Available Funds to the Italian Purchaser Principal Reserve Account, and (B) make payments of (i) interest, (ii) IMERC Interest Component, and (iii) Italian Additional Return (if any), due under the Italian Notes On each Italian Payment Date falling during the Initial Period, all amounts transferred to the Italian Purchaser Principal Reserve Account shall be subsequently credited to the Italian Purchaser Investment Account and may be invested, in whole or in part, by the Italian Cash Manager on behalf of the Italian Purchaser under the terms of the Italian Purchaser Cash Management Agreement, in Italian Eligible Investments which, if represented by securities, shall be further credited to the Italian Purchaser Securities Account. The Italian Purchaser Principal Reserve Account shall be closed following the Initial Period (and amounts previously credited thereto shall be credited to the Italian Purchaser Investment Account). On each Italian Payment Date after the expiry of the Initial Period, the Italian Cash Manager and the Italian Paying Agent, shall, in compliance with the Italian Payments Report, apply the amounts standing to the credit of the Italian Purchaser Payment Account, respectively, to (A) pay certain expenses of the Italian Purchaser, and (B) make payments of (i) interest, (ii) IMERC Interest Component, (iii) Italian Additional Return (if any), and (iv) principal due Page 94

under the Italian Notes in accordance with the priority of payments in respect of the Italian Notes. Pursuant to the Italian Purchaser Cash Management Agreement, the Italian Account Bank and the Account Bank will contract to pay an agreed rate of interest on funds on deposit in the relevant Italian Purchaser Accounts. Each of the Italian Account Bank and the Account Bank shall waive any set-off, retention and other rights in respect of the relevant Italian Purchaser Accounts held by it. Use of Ledgers The Cash Manager will be required to record or cause to be recorded all amounts received from German Borrowers in respect of the German Mortgage Loans or otherwise paid or recovered in respect of the German Mortgage Loans, all amounts received from the Italian Purchaser pursuant to the Italian Notes and all payments representing interest received and, as at a relevant Determination Date, expected to be received from the Swap Providers under the Interest Rate Swap Agreements or any guarantor in respect thereof (in each case to the extent not otherwise recorded) and any termination payments received from the Swap Providers under the Fixed/Floating Rate Swaps (the Swap Termination Amounts) and any payment received and, as at a relevant Determination Date, expected to be received by the Issuer from a replacement fixed/floating rate swap provider in consideration for the Issuer entering into a replacement fixed/floating rate swap agreement with such provider other than: (i)

principal amounts received representing monthly repayments of principal, redemption proceeds and amounts in respect of principal recovered on enforcement, sale or repurchase of German Mortgage Loans (the Principal Funds); and

(ii)

amounts calculated by reference to the Mortgage Early Repayment Charges,

each in a ledger for that purpose (the Revenue Ledger). The Cash Manager will be required to record Principal Funds, in a ledger for that purpose (the Principal Ledger), the IMERC Interest Component received by the Issuer in respect of the Italian Mortgage Early Repayment Charges arising in relation to the Italian Loan Receivables and paid to the Issuer pursuant to the Italian Notes in a ledger for that purpose (the IMERC Ledger) and Mortgage Early Repayment Charges in respect of German Mortgage Loans in a ledger for that purpose (the GMERC Ledger and together with the IMERC Ledger, the MERC Ledgers). The ledgers will be used to monitor the receipt and subsequent utilisation of cash available to the Issuer from time to time and will be credited and debited in the manner described in PreEnforcement Revenue Priority of Payments below or otherwise as described above. Principal Deficiency Ledger A principal deficiency ledger (the Principal Deficiency Ledger) comprising five sub-ledgers, known as the A Principal Deficiency Sub-Ledger, the B Principal Deficiency Sub-Ledger, the C Principal Deficiency Sub-Ledger, the D Principal Deficiency Sub-Ledger and the E Principal Deficiency Sub-Ledger, respectively, and collectively the Principal Deficiency Sub-Ledgers will be established in order to record any Principal Deficiencies (the determination of which is described below) in respect of Defaulted German Loan Receivables and Defaulted Italian Loan Receivables (each, respectively, the A Principal Deficiency, the B Principal Deficiency, the C Principal Deficiency ,the D Principal Deficiency and the E Principal Deficiency, and each a Principal Deficiency). Any Principal Deficiency shall be debited (a) first, to the E Principal Deficiency Sub-Ledger so long as the debit balance on such sub-ledger is less than the Principal Amount Outstanding of the E Notes (the E Note Principal Deficiency Limit), (b) second, to the D Principal Deficiency Sub-Ledger so long as the debit balance on such sub-ledger is less than the Principal Amount Outstanding of the D Page 95

Notes (the D Note Principal Deficiency Limit), (c) third, to the C Principal Deficiency SubLedger so long as the debit balance on such sub-ledger is less than the Principal Amount Outstanding of the C Notes (the C Note Principal Deficiency Limit), (d) fourth, to the B Principal Deficiency Sub-Ledger so long as the debit balance on such sub-ledger is less than the Principal Amount outstanding of the B Notes (the B Principal Deficiency Limit) and (e) fifth, to the A Principal Deficiency Sub-Ledger. A Principal Deficiency will be recorded on the relevant, sub-ledger created and maintained by the Cash Manager in accordance with the Cash Management Agreement (the Principal Deficiency Sub-Ledger) in respect of the amount of any Realised Loss on a German Mortgage Loan (a German Mortgage Loan against which a Realised Loss has been determined, a Defaulted German Loan Receivable). A Principal Deficiency will be recorded on the relevant Principal Deficiency Sub-Ledger in respect of the total amount of principal of any Italian Loan Receivable (each a Defaulted Italian Loan Receivable and with the Defaulted German Loan Receivables, the Defaulted Loan Receivables) classified as defaulted (credito in sofferenza) in accordance with the guidelines of the Bank of Italy or under which there are twelve or more consecutive or nonconsecutive delinquent monthly instalments. A Realised Loss means an amount in euro equal, on any Determination Date, to the sum of (I) the greater of zero and the amount of the difference between (a) the aggregate outstanding principal amount on each Mortgage Loan relating to a Mortgage Receivable which has been foreclosed from the Purchase Date up to and including such Determination Date and (b) the sum of the Net Proceeds on such foreclosed Loan Receivable; and (II) with respect to Loan Receivables sold by the Issuer or the Italian Purchaser (as the case may be), the greater of zero and the amount of the difference, if any, between (x) the aggregate outstanding principal amounts in respect of such sold Loan Receivable and (y) the purchase price received in respect of such Loan Receivable to the extent relating to the principal. Net Proceeds means, in relation to a Mortgage Loan, an amount in euro equal to the sum of the following: (a) the proceeds of a foreclosure on the relevant Mortgage Loan (including, for the avoidance of doubt the relevant mortgage); (b) the proceeds of foreclosure on any Related Security in respect of the relevant Mortgage Loan; (c) the proceeds, if any, of collection of any insurance policies in connection with the relevant Mortgage Loan, including but not limited to fire insurance; (d) the proceeds of any guarantees or sureties; and (e) the proceeds of foreclosure on any other assets of the relevant debtor, in each case after deduction of foreclosure costs in respect of such Mortgage Loan. Use of Proceeds of the X Notes The proceeds of the issue of the X Notes are expected to be €2,700,000 and will be used to fund: (a)

the costs and expenses arising in respect of the Notes, the MERCs and the Residuals which are issued on the Issue Date (including any upfront amounts payable by the Issuer to the Swap Providers under the Interest Rate Swap Agreements); and

(b)

the Reserve Account.

Subordination of the B Notes, C Notes, D Notes, E Notes, X Notes and Residuals B Noteholders, C Noteholders, D Noteholders, E Noteholders and X Noteholders will not be entitled to receive any payment of interest and the Residual Holders will not be entitled to any payments, unless and until all amounts, to be paid senior to such interest or payments, then due to, inter alios, the A Noteholders and the Liquidity Provider have been paid in full, in accordance with the Pre-Enforcement Revenue Priority of Payments. Page 96

If on any Determination Date there are insufficient Available Revenue Funds to make payment in full of amounts of interest due and payable on the B Notes, the C Notes, the D Notes, the E Notes and/or the X Notes then, to that extent, interest on such Notes shall be deferred until the next Payment Date on which there are sufficient Available Revenue Funds, as more fully described in Condition 4(f). The Notes will be constituted by the Trust Deed and will share the same security as amongst themselves and with the MERCs and Residuals, although, upon enforcement, the A Notes will rank in priority to the B Notes, the C Notes, the D Notes, the E Notes, the X Notes and the Residuals in point of security; and the B Notes will rank in priority to the C Notes, the D Notes, the E Notes, the X Notes and the Residuals but after the A Notes in point of security; the C Notes will rank in priority to the D Notes, the E Notes, the X Notes and the Residuals but after the A Notes and the B Notes in point of security; the D Notes will rank in priority to the E Notes, the X Notes and the Residuals but after the A Notes, the B Notes and C Notes in point of security; the E Notes will rank in priority to the X Notes and the Residuals but after the A Notes, the B Notes, the C Notes and the D Notes in point of security; and the X Notes will rank in priority to the Residuals but after the A Notes, the B Notes, the C Notes, the D Notes and the E Notes in point of security. Payments received by the Issuer in respect of Mortgage Early Repayment Charges less any amount in respect thereof due to be paid to the applicable Swap Provider will be paid to the MERC Holders. Such amounts will not be available, before or after enforcement of the Security, for application towards repayment of amounts due to Noteholders or Residual Holders and the MERC Holders shall not be entitled to any funds other than those consisting of the proceeds of Mortgage Early Repayment Charges. See also Risk Factors – Risks Related to the Note and Residuals – Subordination of the B Notes, C Notes, D Notes, E Notes, X Notes and Residuals. Interest Rate Matching Interest on the Notes is payable at a rate equal to Note EURIBOR plus the applicable margin. The German Mortgage Loans accrue interest at a variety of fixed rates during a Fixed Interest Period in respect thereof. In addition, upon the expiry of a Fixed Interest Period the German Originator and the relevant German Borrower may either agree on a new fixed interest rate or, if a fixed rate is not agreed, a floating interest rate. The Italian Modular Mortgage Loans give the relevant Italian Borrower the option to change the interest rate they pay from a floating rate to a fixed rate based on prevailing market rates on and from the third anniversary of taking out such Italian Mortgage Loan and the relevant Italian Borrower may then opt to alternate between fixed and floating rate products at three yearly intervals thereafter. German Interest Rate Swaps Payments will be received by the Issuer from the German Borrowers under the German Mortgage Loans calculated by reference to fixed interest rates, provided that from time to time the interest rate may be reset to a new fixed interest rate, or if a fixed rate is not agreed, a floating interest rate. In order to mitigate the risk of exposure to such fixed rates, the Issuer will enter into interest rate swap transactions (each a German Interest Rate Swap) with the German Swap Provider, in each case documented under fixed/floating rate swap confirmations each of which will supplement, amend, form part of and be subject to the German Interest Rate Swap Agreement. Under each German Interest Rate Swap, the Issuer will make payments to the German Swap Provider calculated on the basis of the relevant fixed rate multiplied by the Notional Amount (as defined in the confirmation for such German Interest Rate Swap).

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Pursuant to the German Interest Rate Swap Agreement, the German Swap Provider will agree that it will enter into German Interest Rate Swaps as required by the Issuer based on a pro forma form agreed on the Issue Date. German Reset Swaps On each Payment Date, the Issuer will enter into a German Interest Rate Swap under the German Interest Rate Swap Agreement to hedge against potential interest rate exposure arising from German Mortgage Loans in respect of which the rate of interest has been reset in the Collection Period preceding such Payment Date to a new fixed rate (such German Interest Rate Swap, a German Reset Swap). The fixed rate amounts payable by the Issuer under a German Reset Swap will be calculated on the basis of the Notional Amount (as defined in the confirmation for such German Reset Swap) and a fixed rate based on the weighted average of the new fixed rates (less any margin) payable by the borrowers under the reset German Mortgage Loans to which such German Reset Swap relates. Italian Interest Rate Swap Payments will be received by the Italian Purchaser from the Italian Borrowers under certain of the Italian Modular Mortgage Loans at certain times calculated by reference to fixed interest rates. The Italian Purchaser is reliant on collections from the Italian Mortgage Loans (including the Italian Modular Mortgage Loans) in order to make payments to the Issuer under the Italian Notes. In order to mitigate the risks caused by such fixed interest rates and EURIBOR payable on the Notes diverging, the Issuer will enter into an interest rate swap transaction (each an Italian Interest Rate Swap and with the German Interest Rate Swaps, an Interest Rate Swap) with the Italian Swap Provider, documented under a fixed/floating rate swap confirmation. On each Payment Date, the Issuer will, under the Italian Interest Rate Swap Agreement, hedge against potential interest rate exposure arising from Italian Modular Mortgage Loans in respect of which the rate of interest has been switched from floating in the Collection Period preceding such Payment Date to a fixed rate. For each such sub-portfolio of Italian Modular Mortgage Loans in respect of which a switch of interest has happened in any given month during the relevant Collection Period, the fixed rate amounts payable by the Issuer under such Italian Swap will be calculated on the basis of the Notional Amount (as defined in the confirmation for such Italian Swap) and a fixed rate based on the published 3 year Euro swap rate as observed on a selected date during such month. Notional Adjustment Payments The Notional Amount of each German Interest Rate Swap will be set out in the relevant confirmation. The Issuer may be obliged to pay an amount to the German Swap Provider in respect of breakage costs (such amount, a Notional Adjustment Payment) on the next Payment Date thereafter. Notional Adjustment Payments in respect of German Interest Rate Swaps will be paid for exclusively from the Reinvestment Losses on German Mortgage Early Repayment Charges received by the Issuer. German Mortgage Early Repayment Charges in respect of Reinvestment Losses received by the Issuer will be used only to make Notional Adjustment Payments in respect of German Interest Rate Swaps relating to the German Assets. Withholding Tax In the event that the Issuer is required to withhold or deduct an amount in respect of tax from payments due from it to a Swap Provider, the Issuer will not be required pursuant to the terms of the Interest Rate Swap Agreements to pay such Swap Provider such amounts as would otherwise have been required to ensure that such Swap Provider received the same amounts that it would have received had such withholding or deduction not been made. Page 98

In the event that a Swap Provider is required to withhold or deduct an amount in respect of tax from payments due from it to the Issuer, such Swap Provider will be required pursuant to the terms of the Interest Rate Swap Agreements to pay to the Issuer such additional amounts as are required to ensure that the Issuer receives the same amounts that it would have received had such withholding or deduction not been made. In either event, the relevant Swap Provider will, if it is unable to transfer its rights and obligations under the relevant Interest Rate Swap Agreement to another office with the effect of avoiding the liability on either party to withhold or deduct amounts in respect of tax (which it will be obliged to do at its own cost), have the right to terminate such Interest Rate Swap Agreement. Upon such termination, the Issuer or the relevant Swap Provider may be liable to make a termination payment to the other party. Termination of the Interest Rate Swap Agreements Both the Interest Rate Swap Agreements will be documented under a single ISDA Master Agreement and will govern the over-the-counter swap transactions negotiated at arm's length between the Issuer and the relevant Swap Provider. The Interest Rate Swap Agreements may be terminated in accordance with Events of Default and Termination Events (each as defined in the relevant ISDA Master Agreement) commonly found in standard ISDA documentation. The Interest Rate Swap Agreements will be terminable by one party if (i) an applicable Event of Default or Termination Event (as defined therein) occurs in relation to the other party, (ii) it becomes unlawful for either party to perform its obligations under the relevant Interest Rate Swap Agreement or (iii) an Enforcement Notice is served. Events of Default under the relevant Interest Rate Swap Agreements in relation to the Issuer will be limited to (i) nonpayment under the relevant Interest Rate Swap Agreement and (ii) certain insolvency events. In addition, the Interest Rate Swap Agreements will become subject to early termination if the Issuer exercises its option to redeem the Notes in full before the Final Payment Date. Upon the simultaneous early termination of both Interest Rate Swap Agreements, the Issuer or the applicable Swap Provider may be liable to make a termination payment to the other party. In the event the Italian Interest Rate Swap Agreement is terminated early due to a specific additional termination event which does not affect the German Interest Rate Swap Agreement, a termination payment based on market quotations may also be payable. The amount of any termination payment will be based on the market value of such Interest Rate Swap Agreement (and payable under the netting terms of the single ISDA Master Agreement governing both Interest Rate Swap Agreements). The market value will be based on market quotations of the cost of entering into replacement transactions with the same terms and conditions and that would have the effect of preserving the respective full payment obligations of the parties (or based upon loss in the event that no market quotation can be obtained). Swap Provider Downgrade If the short-term, unsecured and unsubordinated debt obligations of a Swap Provider cease to be rated as high as "F1" by Fitch or "P1" by Moody's or the long-term, unsecured, unsubordinated debt obligations of such Swap Provider cease to be rated as high as "A2" by Moody's or "A" by Fitch (the Minimum Swap Provider Ratings) or any such rating is withdrawn by Fitch or Moody's, the relevant Interest Rate Swap Agreement will require the relevant Swap Provider, within 30 days of the occurrence of such downgrade at the cost of such Swap Provider, to: (a) procure a replacement swap provider with the applicable Minimum Swap Provider Ratings or, in certain circumstances, such other rating as is commensurate with the ratings assigned to the Notes by the Rating Agencies from time to time; or

Page 99

(b) procure another person with the applicable Minimum Swap Provider Ratings to become co-obligor or guarantor in respect of its obligations under the applicable Interest Rate Swap Agreement; or (c) take such other action as the relevant Swap Provider may agree with the Rating Agencies; or (d) provide collateral for its obligations under the relevant Interest Rate Swap Agreement in accordance with the terms of the Interest Rate Swap Agreements and the applicable Swap Agreement Credit Support Document (as defined below). If at any time the rating of certain debt obligations of a Swap Provider, falls below a further rating level specified in the relevant Interest Rate Swap Agreement (as applicable), the remedial measures available to such Swap Provider may be more limited. If a Swap Provider fails to take one of the actions described above within the specified periods referred to in the relevant Interest Rate Swap Agreement, then the Issuer will be entitled to terminate such Interest Rate Swap Agreement. The Interest Rate Swap Agreements will be governed by English law. Swap Agreement Credit Support Document The Swap Providers will agree a 1995 ISDA Credit Support Annex (Bilateral Form – Transfer) with the Issuer (a Swap Agreement Credit Support Document) on or around the Issue Date in support of such Swap Provider's obligations under the applicable Interest Rate Swap Agreement. The obligations in respect of the Swap Agreement Credit Support Document shall only apply in the event that a Swap Provider ceases to have the Minimum Swap Provider Rating. The Swap Agreement Credit Support Document will form part of the ISDA Master Agreement. Pursuant to the terms of the applicable Swap Agreement Credit Support Document, if at any time the relevant Swap Provider is required to provide collateral in respect of any of its obligations under the applicable Interest Rate Swap Agreement, the Swap Agreement Credit Support Document will provide that, from time to time and subject to the conditions specified in the Swap Agreement Credit Support Document and the applicable Interest Rate Swap Agreement, such Swap Provider will make transfers of cash or securities by way of collateral to the Issuer in support of its obligations under the applicable Interest Rate Swap Agreement and the Issuer will be obliged to return such collateral in accordance with the terms of the relevant Swap Agreement Credit Support Document. Where a Swap Provider provides collateral for its obligations under the applicable Interest Rate Swap Agreement in accordance with the terms of the applicable Swap Agreement Credit Support Document, such collateral will, upon receipt by the Issuer, be credited to a separate ledger created to record the amount of collateral received under the Interest Rate Swap Agreements (the Collateral Ledger) and transferred (if in cash form) to the Issuer Transaction Account or such other account established for such purpose. Any collateral provided by a Swap Provider will not form part of the Available Revenue Funds or the Actual Redemption Funds other than collateral amounts applied in satisfaction of termination payments due to the Issuer following the designation of an early termination date under an Interest Rate Swap. Permitted Withdrawals from the Issuer Transaction Account On any date (except in respect of item (e) below as described therein), the Cash Manager, on the basis of information provided to it by the Issuer or the German Servicer, shall be permitted to make the following withdrawals and corresponding payments from amounts on Page 100

deposit in the Issuer Transaction Account by transferring sufficient funds from the Issuer Transaction Account: (a)

if any amount has been received from a German Borrower for the express purpose of payment being made to a third party for the provision of a service;

(b)

to pay to any person (including the German Originator and the German Servicer) any amounts due arising from any overpayment by any person to the Issuer in respect of the German Mortgage Loans or arising from any reimbursement by any person of any such overpayment;

(c)

to pay to the Irish taxation authorities or the German taxation authorities or the Italian taxation authorities any amount due;

(d)

other than on a Payment Date, to pay when due and payable any amounts due and payable by the Issuer to third parties and incurred without breach by the Issuer of the Trust Deed and not provided for payment elsewhere in items (a) to (c) above or (e) to (h) below;

(e)

to make payments to the German Servicer or the German Originator pursuant to the German MRTSA;

(f)

to refund any amounts due arising from the rejection of any direct debit payments in respect of a German Mortgage Loan;

(g)

to refund any other overpayments made by a German Borrower and all other amounts not relating to the German Mortgage Loans owned by the Issuer or in respect of which the Issuer has no entitlement pursuant to the German MRTSA, or amounts credited to the Issuer Transaction Account in error; and

(h)

to refund to the German Originator any amounts which represent amounts received from German Borrowers and which are amounts owed by such German Borrowers in respect of any period prior to the Cut-Off Date as and when identified by the German Servicer and if a German Borrower fails to pay the full amount that it owes, the German Servicer shall be obliged to refund to the German Originator only such portion of the amount received which relates to any period prior to the Cut-Off Date.

To the extent that any of the above permitted withdrawals are made by the Cash Manager from and including the last Transaction Business Day of the month preceding a relevant Determination Date to and including a Payment Date (or in the case of a payment described in (d) to but excluding such Payment Date), any such withdrawals in respect of items (a) through (h), inclusive only shall be made prior to the Pre-Enforcement Revenue Priority of Payments and, therefore, shall not be included in Available Revenue Funds for such Payment Date. Permitted Withdrawals from the Further Disbursement Account Following the receipt of confirmation from the German Servicer that a Further Disbursement has been made and that the corresponding Further Disbursement Receivable has been transferred effectively to the Issuer, the Cash Manager shall transfer the amount of the relevant Further Disbursement from the Further Disbursement Account to the German Originator. Any Accrued Interest and Commitment Fees in respect of a Partially Disbursed Loan which has accrued prior to the Cut-Off Date will be transferred from the Further Disbursement Account and paid to the German Originator on the Purchase Date that such Partially Disbursed Loan is assigned to the Issuer as part of the Purchase Price. Thereafter, Accrued Interest and Commitment Fees on Disbursed Amount Receivables in respect of each Partially Disbursed Loan will be netted from the applicable Further Disbursements and such Accrued Page 101

Interest and Commitment Fees will be transferred from the Further Disbursement Account to the Issuer Transaction Account and shall constitute Available Revenue Funds to be applied in accordance with the Pre-Enforcement Revenue Priority of Payments. Until the Payment Date falling in November 2008, an amount equal to the interest earned on the balance of the Further Disbursement Account during the applicable Collection Period will be withdrawn from the Further Disbursement Account and deposited into the Issuer Transaction Account as Available Revenue Funds and applied in accordance with the PreEnforcement Revenue Priority of Payments. On the Payment Date falling in November 2008, any residual amounts standing to the credit of the Further Disbursement Account which do not constitute interest, Accrued Interest or Commitment Fees, will constitute a Principal Rebate and will be applied in accordance with the Pre-Enforcement Principal Priority of Payments. Permitted Withdrawals from the Reserve Account Following a reduction to the Reserve Account Required Amount, on or prior to each Payment Date, an amount equal to the Reserve Account Excess will be withdrawn from the Reserve Account and deposited into the Issuer Transaction Account as Available Revenue Funds and applied in accordance with the Pre-Enforcement Revenue Priority of Payments. Pre-Enforcement Revenue Priority of Payments Prior to enforcement of the Security, the Issuer is required to apply the monies (the Available Revenue Funds) available for distribution as at the date which falls five Transaction Business Days prior to each Payment Date (each such date a Determination Date) as determined in accordance with the Cash Management Agreement, calculated as the aggregate of: (a)

for payment of items (i) to (xvi) of the Pre-Enforcement Revenue Priority of Payments only, on any Payment Date, all monies standing to the credit of the Reserve Account;

(b)

for payment of all items in the Pre-Enforcement Revenue Priority of Payments, on any Payment Date, the Reserve Account Excess;

(c)

for payment of all items in the Pre-Enforcement Revenue Priority of Payments, on any Payment Date on which the Notes (excluding the X Notes) are redeemed in full only, all amounts standing to the credit of the Reserve Account;

(d)

(i) payments of interest received by the Issuer in the Collection Period immediately preceding the relevant Payment Date from the German Borrowers in respect of the German Assets and (ii) amounts of interest received by the Italian Purchaser from the Italian Borrowers in respect of interest and received as interest by the Issuer under the Italian Notes;

(e)

any amounts in respect of Accrued Interest and Commitment Fees allocated to the Issuer from the Further Disbursement Account on the payment of Further Disbursement Amounts to the German Originator in the Collection Period immediately preceding the relevant Payment Date;

(f)

interest received (or to be received) by the Issuer in respect of the Issuer Accounts by reference to the Collection Period immediately preceding the relevant Payment Date;

(g)

Liquidity Drawings to be made on the Payment Date (to the extent that they are able to be made under the Liquidity Facility Agreement);

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(h)

any amounts in respect of interest recovered on enforcement, sale or repurchase of German Assets in the Collection Period immediately preceding the relevant Payment Date;

(i)

any amounts (other than those referred to at d(ii) above) recovered by the Italian Purchaser on enforcement, sale or repurchase of Italian Mortgage Loans in the Collection Period immediately preceding the relevant Payment Date and received by the Issuer as interest under the Italian Notes on or prior to such Determination Date;

(j)

amounts representing interest received (or to be received on the applicable Payment Date) from the Swap Providers under the Interest Rate Swap Agreements (if any) and any Swap Termination Amounts and any payment received (or to be received on the applicable Payment Date) by the Issuer from a replacement fixed/floating rate swap provider in consideration for the Issuer entering into a replacement fixed/floating rate swap agreement with such provider; and

(k)

all further amounts held by the Issuer excluding any (i) Principal Funds, (ii) amounts in respect of German Mortgage Early Repayment Charges, (iii) amounts in respect of the IMERC Interest Component, (iv) any monies standing to the credit of the Further Disbursement Account (other than as detailed in (e) above), (v) all amounts standing to the credit of the Collateral Ledger (if any) (other than as detailed in (j) above), (vi) all amounts standing to the credit of the Standby Account (if any) (other than as detailed in (g) above) and (vii) any termination payment received from a Swap Provider (which shall first be applied in payment of any replacement swap provider),

in or towards the satisfaction of the following payments or provisions in the following order of priority (the Pre-Enforcement Revenue Priority of Payments) (and in each case only to the extent that the payments or provisions of a higher priority have been made in full)): (i)

first, to pay pari passu and pro rata the remuneration due and payable to the Note Trustee and Security Trustee (plus Value Added Tax, if any) and any costs, charges, liabilities and expenses incurred by the Note Trustee and the Security Trustee under the provisions of or in connection with the Trust Deed and/or the Deed of Charge as the case may be together with interest as provided in the Trust Deed and/or the Deed of Charge as the case may be;

(ii)

second, to pay pari passu and pro rata amounts, including audit fees and company secretarial expenses (plus Value Added Tax, if any), which are due and payable by the Issuer to third parties and incurred without breach by the Issuer of the Trust Deed, the Deed of Charge or any other Transaction Documents and not provided for payment elsewhere and to provide for any such amounts expected to become due and payable by the Issuer after that Payment Date and prior to the next Payment Date and to provide for the Issuer's liability or possible liability for corporation tax;

(iii)

third, to pay pari passu and pro rata: (A)

the administration fee due and payable to the German Servicer under the German MRTSA on each Payment Date, or if the appointment of the German Servicer is terminated and a substitute German Servicer, which is not an affiliate of the original German Originator, is appointed, such fee as shall be agreed with such substitute German Servicer in accordance with the procedures set out in the German MRTSA (such fee already including Value Added Tax or the German equivalent thereof, if any); and

(B)

amounts due and payable to the Principal Paying Agent, the Paying Agent and the Agent Bank under the Paying Agency Agreement, the Page 103

Account Bank under the Bank Account Agreement, the Cash Manager under the Cash Management Agreement, the Data Trustee under the Data Protection Trust Agreement and the Corporate Services Provider under the Corporate Services Agreement; (iv)

fourth, to pay all fees, costs, expenses, principal, interest and any other amounts due and payable to the Liquidity Provider in accordance with the Liquidity Facility Agreement;

(v)

fifth, to pay when due, pari passu and pro rata: (A)

amounts due and payable to the German Swap Provider in respect of any payment and any termination payment each under the terms of the German Interest Rate Swap Agreement (except for (a) any Notional Adjustment Payment and (b) any relevant Swap Provider Default Payment in relation to the German Interest Rate Swap Agreement, where Swap Provider Default Payment means any termination payment due and payable under the relevant Interest Rate Swap Agreement as a result of the occurrence of a Swap Event of Default where the relevant Swap Provider is the Defaulting Party or an Additional Termination Event relating to the credit rating of the relevant Swap Provider); and

(B)

amounts due and payable to the Italian Swap Provider in respect of any payment (including Notional Adjustment Payments) and any termination payment under the terms of the Italian Interest Rate Swap Agreement (except in each case for the relevant Swap Provider Default Payment in respect of the Italian Interest Rate Swap Agreement);

(vi)

sixth, to pay all amounts (other than in respect of principal) due and payable in respect of the A Notes;

(vii)

seventh, to credit amounts to the A Principal Deficiency Sub-Ledger (such amounts to be applied in redemption of the Notes in accordance with Condition 5) until the balance of the A Principal Deficiency Sub-Ledger has reached zero;

(viii)

eighth, to pay all amounts (other than in respect of principal) due and payable in respect of the B Notes;

(ix)

ninth, to credit amounts to the B Principal Deficiency Sub-Ledger (such amounts to be applied in redemption of the Notes in accordance with Condition 5) until the balance of the B Principal Deficiency Sub-Ledger has reached zero;

(x)

tenth, to pay all amounts (other than in respect of principal) due and payable in respect of the C Notes;

(xi)

eleventh, to credit amounts to the C Principal Deficiency Sub-Ledger (such amounts to be applied in redemption of the Notes in accordance with Condition 5) until the balance of the C Principal Deficiency Sub-Ledger has reached zero;

(xii)

twelfth, to pay all amounts (other than in respect of principal) due and payable in respect of the D Notes;

(xiii)

thirteenth, to credit amounts to the D Principal Deficiency Sub-Ledger (such amounts to be applied in redemption of the Notes in accordance with Condition 5) until the balance of the D Principal Deficiency Sub-Ledger has reached zero; Page 104

(xiv)

fourteenth, to pay all amounts (other than in respect of principal) due and payable in respect of the E Notes;

(xv)

fifteenth, to credit amounts to the E Principal Deficiency Sub-Ledger (such amounts to be applied in redemption of the Notes in accordance with Condition 5) until the balance of the E Principal Deficiency Sub-Ledger has reached zero;

(xvi)

sixteenth, to pay all amounts (other than in respect of principal) due and payable in respect of the X Notes;

(xvii)

seventeenth, to credit amounts to the Reserve Account, until the amount standing to the credit of the Reserve Account is equal to the Reserve Account Required Amount;

(xviii) eighteenth, to retain in the Issuer Transaction Account, an amount (the Issuer Profit) equal to €2,000 per annum (or such lesser amount as may be determined from time to time by the directors of the Issuer acting in good faith (pursuant to their obligation to review such amount) and certified by them to the Note Trustee with a copy to the Rating Agencies); (xix)

nineteenth, to pay all amounts due and payable in respect of principal of the X Notes until the X Notes are redeemed in full;

(xx)

twentieth to pay, pari passu and pro rata: (A)

amounts due and payable to the German Swap Provider in respect of any Swap Provider Default Payment in relation to the German Interest Rate Swap Agreement; and

(B)

amounts due and payable to the Italian Swap Provider in respect of any Swap Provider Default Payment in relation to the Italian Interest Rate Swap Agreement;

(xxi)

twenty first, on the Payment Date on which the Residuals are subject to redemption in full, to pay all amounts of principal due and payable in respect of the Residuals; and

(xxii)

twenty second, to pay all remaining amounts to the Residual Holders by way of interest payable in respect of the Residuals.

Principal Priority of Payments Prior to the enforcement of the Security, on each Payment Date, on which the Mandatory Pro Rata Redemption Requirement does not apply, the Issuer is required to apply the Actual Redemption Funds as at such Payment Date as determined on the Determination Date immediately preceding such Payment Date in or towards satisfaction of the following payments in the following order of priority (the Principal Priority of Payments) (and in each case only to the extent that payments or provisions of a higher priority have been made in full): (i)

first, to pay all amounts due and payable in respect of principal of the A Notes until the A Notes are redeemed in full;

(ii)

second, to pay all amounts due and payable in respect of principal of the B Notes until the B Notes are redeemed in full;

(iii)

third, to pay all amounts due and payable in respect of principal of the C Notes until the C Notes are redeemed in full;

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(iv)

fourth, to pay all amounts due and payable in respect of principal of the D Notes until the D Notes are redeemed in full; and

(v)

fifth, to pay all amounts due and payable in respect of principal of the E Notes until the E Notes are redeemed in full.

Pro Rata Principal Payment Prior to the enforcement of the Security, on each Payment Date on which the Mandatory Pro Rata Redemption Requirement (as defined below) does apply, the Actual Redemption Funds shall not be applied in the order set out in the Principal Priority of Payments but shall instead be applied pari passu and pro rata amongst the Notes other than the X Notes in an amount calculated for the A Notes, the B Notes, the C Notes, the D Notes and the E Notes equal to the amount of the Actual Redemption Funds multiplied by a fraction; (i)

the numerator of which is the Principal Amount Outstanding of such class of Note as at such Payment Date; and

(ii)

the denominator of which is the aggregate Principal Amount Outstanding of the A Notes, the B Notes, the C Notes, the D Notes and the E Notes as at such Payment Date,

(such pro rata application of the Actual Redemption Funds, the Pro Rata Principal Payment). Actual Redemption Funds The amount of Actual Redemption Funds as at any Determination Date preceding a Payment Date is an amount calculated as the aggregate of: (a)

the amount standing to the credit of the Principal Ledger as at the last day of the immediately preceding Collection Period;

(b)

the amount (if any) calculated on the relevant Determination Date pursuant to the PreEnforcement Revenue Priority of Payments to be the amount by which the debit balance on any Principal Deficiency Sub- Ledger is expected to be reduced by the application of Available Revenue Funds on the immediately succeeding Payment Date;

(c)

Principal Rebates consisting of any undisbursed Further Disbursement Amounts held by the Issuer on the Payment Date falling in November 2008 (other than, for the avoidance of doubt, any amounts representing interest on such account); and

(d)

Principal Rebates consisting of Further Disbursement Amounts in relation to Partially Disbursed Loans which will not be disbursed (including where the applicable Partially Disbursed Loan has been substituted by a German Mortgage Loan which is not a Partially Disbursed Loan).

The Cash Manager is responsible, pursuant to the Cash Management Agreement, for determining the amount of the Actual Redemption Funds as at any Determination Date and each determination so made shall (in the absence of negligence, wilful default, bad faith or manifest error) be final and binding on the Issuer, the Note Trustee and all Noteholders and no liability to the Noteholders shall attach to the Issuer, the Note Trustee or (in such absence as aforesaid) the Cash Manager in connection therewith. Such Actual Redemption Funds will be applied in accordance with the Principal Priority of Payments as set out in Condition 2(d). On each Payment Date other than a Payment Date on which the Notes are to be redeemed under Condition 5 (a), (e) or (f) on which the Mandatory Pro Rata Redemption Requirement Page 106

applies, the Issuer shall redeem the Notes (excluding the X Notes) in accordance with the Pro Rata Principal Payment. Mandatory Pro Rata Redemption Requirement The Mandatory Pro Rata Redemption Requirement applies on any Payment Date occurring prior to the enforcement of the Security if the following conditions are satisfied: (i)

after the immediately preceding Payment Date, the result produced by the fraction (B+C+D+E)/(A+B+C+D+E) is greater than or equal to twice the result produced by that fraction as at the Issue Date;

(ii)

as at the Determination Date preceding such Payment Date all balances on each of the Principal Deficiency Sub-Ledgers are zero;

(iii)

as at the Determination Date preceding such Payment Date the amount standing to the credit of the Reserve Account is equal to the Reserve Account Required Amount;

(iv)

as at the Determination Date preceding such Payment Date no Liquidity Drawings or withdrawals from the Standby Account have been made (or made and not repaid);

(v)

as at the immediately preceding Payment Date, the aggregate balance of all the German Mortgage Loans in the Mortgage Pool in relation to which the relevant Borrowers are three or more monthly instalments in arrears is equal to or lower than 4.0 per cent. of the sum of (i) the aggregate balance of all the German Loan Receivables in the Mortgage Pool, and (ii) the Further Disbursement Amount;

(vi)

as at the immediately preceding Payment Date, the aggregate balance of all the Italian Mortgage Loans in the Mortgage Pool in relation to which the relevant Borrowers are three or more monthly instalments in arrears (excluding, for the avoidance of doubt, any Defaulted Italian Loan Receivables) is equal to or lower than 4.0 per cent. of the aggregate balance of all the Italian Loan Receivables in the Mortgage Pool; and

(vii)

the cumulative Realised Loss in respect of the Mortgage Pool does not exceed 6.0 per cent.,

unless on such Payment Date, the aggregate Principal Amount Outstanding of the Notes would be equal to or less than 10 per cent. of the initial aggregate Principal Amount Outstanding of the Notes if the Actual Redemption Funds were to be applied pari passu and pro rata among the Notes (excluding the X Notes) in which case the Actual Redemption Funds shall instead be applied in the order set out in the Principal Priority of Payments. For the purposes of this paragraph, as at any date: A = the aggregate Principal Amount Outstanding of the A Notes on such date; B = the aggregate Principal Amount Outstanding of the B Notes on such date; C = the aggregate Principal Amount Outstanding of the C Notes on such date; D = the aggregate Principal Amount Outstanding of the D Notes on such date; and E = the aggregate Principal Amount Outstanding of the E Notes on such date. Page 107

Payments on the MERCs On each Payment Date, all Mortgage Early Repayment Charges in relation to the Italian Portfolio and all Mortgage Early Repayment Charges corresponding to Margin Loss in relation to the German Assets received by the Issuer in the preceding Collection Period calculated on the preceding Determination Date will be applied in payment to the MERC Holders. IMERC Interest Component received by the Issuer in respect of the Italian Mortgage Early Repayment Charges arising in relation to the Italian Loan Receivables and paid to the Issuer pursuant to the Italian Notes and Mortgage Early Repayment Charges in respect of the German Mortgage Loans received by the Issuer shall be allocated to the IMERC Ledger and the GMERC Ledger respectively by the Cash Manager as described above and do not constitute revenue or principal for the purposes of the Notes or the Residuals. IMERC Interest Component received by the Issuer in respect of the Italian Mortgage Early Repayment Charges arising in relation to the Italian Loan Receivables and paid to the Issuer pursuant to the Italian Notes will be paid exclusively and without deduction for expenses to the IMERC Holders. Mortgage Early Repayment Charges corresponding to Margin Loss received in respect of the German Mortgage Loans will be paid exclusively and without deduction for expenses to the GMERC Holders. The Mortgage Early Repayment Charges corresponding to Reinvestment Loss will be paid exclusively and without deduction for expenses to the German Swap Provider. Eligible Investments From time to time, in accordance with and subject to the terms of the Cash Management Agreement, the Cash Manager may invest certain of the funds of the Issuer in Eligible Investments.

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CASH MANAGEMENT

The Cash Manager The Cash Manager will be appointed under the terms of the Cash Management Agreement dated on or about the Issue Date between, inter alios, the Issuer and the Security Trustee to provide certain cash management services in respect of the Notes, the MERCs and the Residuals on behalf of, and as agent for, the Issuer. The appointment of Deutsche Bank AG, London Branch as Cash Manager may be terminated by the Issuer (with the consent of the Security Trustee) or by the Security Trustee acting on behalf of the Noteholders and other secured creditors on the occurrence of certain events of default, including non-performance of its obligations under the Cash Management Agreement or if insolvency or similar events occur in relation to Deutsche Bank AG, London Branch. Following any such termination, a substitute cash manger will assume the cash management functions under the terms of the Cash Management Agreement. The Cash Manager will be permitted in specified circumstances, or with the prior written consent of the Issuer and the Security Trustee, to sub-contract or delegate its functions under the Cash Management Agreement subject to the proposed arrangement not adversely affecting the current ratings of the Notes assigned by the Rating Agencies. Notwithstanding any sub-contracting or delegation of the performance of any of its obligations under the Cash Management Agreement, the Cash Manager will remain primarily responsible to the Issuer and the Security Trustee for the performance of its obligations under the Cash Management Agreement. Cash Management Fees The Cash Management Agreement makes provision for payments including fees to be made to the Cash Manager. If the appointment of the Cash Manager is terminated and a substitute Cash Manager which is not an affiliate of the Cash Manager is appointed, the substitute Cash Manager will receive a fee agreed with such substitute Cash Manager in accordance with the procedures set out in the Cash Management Agreement, subject always to the consent of the Security Trustee. The Cash Management Fee and certain costs and expenses of the Cash Manager or any substitute Cash Manager are to be paid as provided in the Pre-Enforcement Revenue Priority of Payments. This order of priority has been agreed with a view to procuring the continuing performance by the Cash Manager of its duties in relation to the Issuer, the German Assets, the Italian Notes, the Notes, the MERCs and the Residuals. Information and Reporting The Cash Manager shall deliver to the Issuer, the Rating Agencies and the Security Trustee the form of quarterly report required pursuant to the Cash Management Agreement, such report which will also be available to Noteholders, MERC Holders and Residual Holders from the website of the Security Trustee at https://www.tss.db.com/invr.

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THE ISSUER The Issuer, Eurohome Mortgages 2007-1 p.l.c., was incorporated in Ireland on 23 March 2007 as a public company with limited liability under the Companies Acts 1963 to 2006 of Ireland with company registration number 436765. The registered office of the Issuer is at First Floor, 7 Exchange Place, International Financial Services Centre, Dublin 1, Ireland. The telephone number of the Issuer's registered office is +353 1 612 55 55. The Issuer has no subsidiaries. Principal Activities The principal activities of the Issuer are set out in clause 3(a) of its memorandum of association and are, amongst other things, to purchase, take transfer of, invest in and acquire loans or notes and any security given or provided by any person in connection with such loans or notes, to hold and manage and deal with, sell or alienate such loans or notes and related security, to borrow, raise and secure the payment of money by the creation and issue of bonds, debentures, notes or other securities and to charge or grant security over the Issuer's property or assets to secure its obligations. Since the date of its incorporation, the Issuer has not commenced operations and no accounts have been made up as at the date of this Offering Circular. The activities in which the Issuer has engaged are those incidental to its incorporation and registration as a public limited company under the Companies Acts 1963 to 2006 of Ireland, the authorisation of the issue of the Notes, the MERCs or the Residuals the matters referred to or contemplated in this Offering Circular and the authorisation, execution, delivery and performance of the other documents referred to in this Offering Circular to which it is a party and matters which are incidental or ancillary to the foregoing. The Issuer will covenant to observe certain restrictions on its activities which are detailed in Condition 3 of the Notes and in Clause 16 of the Trust Deed and, as such, the Issuer is a special purpose vehicle. In addition, the Issuer will covenant in the Note Trust Deed to provide written confirmation to the Note Trustee, on an annual basis, that no Event of Default, or an event which will become an Event of Default with the giving of notice or the passage of time shall not be treated as such (or other matter which is required to be brought to the Note Trustee's attention), has occurred in respect of the Notes. Directors and Secretary

(a)

The Directors of the Issuer and their other principal activities are: Name Ruth Samson Roger McGreal Alan Geraghty

Principal Activities Company Director Company Director Company Director

(b)

The business address for each of Alan Geraghty and Roger McGreal is First Floor, 7 Exchange Place, International Financial Services Centre, Dublin 1, Ireland. The business address for Ruth Samson is Level 11, Tower 42, International Financial Services Centre, 25 Old Broad Street, London EC2N 1HQ, England. The company secretary of the Issuer is Wilmington Trust SP Services (Dublin) Limited, whose principal address is at First Floor, 7 Exchange Place, International Financial Services Centre, Dublin 1, Ireland.

(c)

The Directors do not, and it is not proposed that they will, have service contracts with the Issuer or with the Arranger or any of its affiliates. No Director has entered into any transaction on behalf of the Issuer which is or Page 110

was unusual in its nature of conditions or is or was significant to the business of the Issuer since its incorporation. At the date of this Offering Circular there were no loans granted or guarantees provided by the Issuer to any Director. (a)

The articles of association of the Issuer provide that: Any Director may vote on any proposal, arrangement or contract in which he is interested provided he has disclosed the nature of his interest. Subject to the provisions of the articles of association, a Director shall hold office until such time as he is removed from office by resolution of the Issuer in general meeting or is otherwise removed or becomes ineligible to act as a Director in accordance with the articles of association.

(b)

The Corporate Services Provider will, under the terms of the Corporate Services Agreement provide certain corporate services to the Issuer and certain related corporate administrative services. The Corporate Services Agreement may be terminated by either the Issuer or the Corporate Services Provider upon notice. Such termination shall not take effect, however, until a replacement corporate services provider has been appointed.

Since the date of incorporation of the Issuer, the Issuer has not traded, no profits or losses have been made or incurred and no dividends have been paid. The authorised share capital of the Issuer is €40,000 divided into 40,000 ordinary shares of €1 each, all of which have been issued at par and are paid up to €0.25 each. All of the Issuer's issued share capital is held, directly or through its nominees, by Wilmington Trust SP Services (London) Limited (in such capacity, the Share Trustee) under the terms of a trust established under English law by a declaration of trust dated 10 July 2007 and made by the Share Trustee for the benefit of such charities as the Share Trustee may determine from time to time at its discretion.

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USE OF PROCEEDS The net proceeds of the issue of the Notes (excluding the X Notes), the MERCs and Residuals on the Issue Date are expected to amount to approximately €300,140,000 and will be applied in the purchase by the Issuer of the German Assets from the German Originator and the Italian Notes from the Italian Purchaser on the Issue Date and in making payments into the Further Disbursement Account. The net proceeds of the issue of the X Notes are expected to amount to €2,700,000 and will be used to fund: (a) the expenses of the issue of the Notes, the MERCs and the Residuals, being start-up costs (including the underwriting and selling commissions payable in respect of the Notes, expenses incurred in connection with the offering of the Notes, the MERCs and the Residuals and any fees payable to the Swap Providers under the Interest Rate Swap Agreements); and (b) the deposit into the Reserve Account.

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DEUTSCHE BANK AKTIENGESELLSCHAFT Deutsche Bank Aktiengesellschaft ("Deutsche Bank" or the "Bank") originated from the reunification of Norddeutsche Bank Aktiengesellschaft, Hamburg, Rheinisch-Westfälische Bank Aktiengesellschaft, Duesseldorf and Süddeutsche Bank Aktiengesellschaft, Munich; pursuant to the Law on the Regional Scope of Credit Institutions, these had been disincorporated in 1952 from Deutsche Bank which was founded in 1870. The merger and the name were entered in the Commercial Register of the District Court Frankfurt am Main on 2 May 1957. Deutsche Bank is a banking institution and a stock corporation incorporated under the laws of Germany under registration number HRB 30 000. The Bank has its registered office in Frankfurt am Main, Germany. It maintains its head office at Taunusanlage 12, 60325 Frankfurt am Main and branch offices in Germany and abroad including in London, New York, Sydney, Tokyo and an Asia-Pacific Head Office in Singapore which serve as hubs for its operations in the respective regions. The Bank is the parent company of a group consisting of banks, capital market companies, fund management companies, a real estate finance company, instalment financing companies, research and consultancy companies and other domestic and foreign companies (the "Deutsche Bank Group"). As of 31 March 2007, Deutsche Bank's issued share capital amounted to Euro 1,345,160,819.20 consisting of 525,453,445 ordinary shares without par value. The shares are fully paid up and in registered form. The shares are listed for trading and official quotation on all the German Stock Exchanges. They are also listed on the New York Stock Exchange. The consolidated financial statements for fiscal years starting 1 January 2007 are prepared in compliance with International Financial Reporting Standards (IFRS). As of 31 March 2007, Deutsche Bank Group had total assets of EUR 1,747,031 million, total liabilities of EUR 1,710,177 million and total equity of EUR 36,854 million on the basis of IFRS (unaudited). Deutsche Bank's long-term senior debt has been assigned a rating of AA- (outlook positive) by Standard & Poor’s, Aa1 (outlook stable) by Moody's Investors Services and AA- (outlook stable) by Fitch Ratings.

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DEUTSCHE BANK MUTUI S.P.A.

History Deutsche Bank Mutui S.p.A. has been carrying on the activity of specialised mortgage lending for over 25 years. The key corporate events in its history are as follows: •

1973: established under the name of Caboto S.p.A.;

•

1979: acquired by Milano Centrale S.p.A.;

•

1984: becomes known as Caboto-Milano Centrale S.p.A.;

•

1986: Pirelli & C became 100% owner and the name was changed to Milano Centrale Mutui S.p.A.. It is registered in the elenco generale degli Intermediari Finanziari (list of financial intermediaries kept by the Bank of Italy);

•

1997: sold to Deutsche Bank S.p.A. (DB S.p.A.);

•

1998: name changed to Deutsche Bank Mutui S.p.A..

Officially constituted as a bank on 3 July 2000, DB Mutui is registered with the Italian register of banks as a fully licensed bank. It is part of the Deutsche Bank group operating within the Private and Business Client division, under the management and coordination of Deutsche Bank S.p.A.. The registered office of DB Mutui is at Via Santa Sofia n.10, Milan, Italy and its Tax Code and VAT number is 08226630153. Its share capital is euro 48,000,000 and it is a member of the Deposit Protection Interbank Fund. DB Mutui operates within the Italian consumer finance market focusing on two different segments: •

real estate mortgages (which is its core business); and

•

personal loans backed by the assignment of one fifth of the salary of the borrower (cessione del quinto dello stipendio).

As regards the distribution of mortgages, DB Mutui is part of the DB S.p.A. mortgage distribution platform, together with Deutsche Bank's network of retail branches and Prestitempo, a specialised consumer finance company and division of DB S.p.A.. Within Deutsche Bank S.p.A., DB Mutui has established itself as a mortgage boutique targeting selected high networth clients offering a tailored service and innovative mortgage products. In September 2006, the DB Mutui Board of Directors approved a new strategic plan which contemplated, inter alia: •

creating a specific division within DB Mutui (the Sofia Division) with an independent administrative structure;

•

broadening its client base by targeting new customer segments (not only high networth clients), including employed, self employed, atypical workers and non-EU citizens;

•

expanding the range of products on offer, by adding cash-out, refinancing and consolidation mortgages; and

•

diversifying the distribution channels while originating exclusively through internal and external selected partners.

Operational Structure Page 114

The management of DB Mutui is overseen by a Board of Directors and a Board of Statutory Auditors. The Board of Directors comprises the following persons: Giulio Cesare Monarca Franco di Pinto Pier Paolo Cellerino Jochen Kloepper

Chairman Chief Executive Director Director Director

The Board of Statutory Auditors (Collegio Sindacale) is composed of the following: Achille Frattini Adriano Angeli Ugo Rock Claudio Diamante Francesca Meneghel

Chairman Auditor Auditor Deputy Auditor Deputy Auditor

Page 115

SOFIA MORTGAGES S.R.L.

Sofia Mortgages S.r.l. (the Italian Purchaser), was incorporated on 27 April 2006 under the name of Sea Finance S.r.l., as a limited liability company (società a responsabilità limitata) organised under the laws of the Republic of Italy and pursuant to the Italian Securitisation Law. The Italian Purchaser was established as a special purpose vehicle for the purpose of issuing asset backed securities. The Italian Purchaser has been dormant since it was incorporated and has not commenced operations, although it has produced financial statements as required to do so. The Italian Purchaser has no employees. The Italian Purchaser's registered office is at Via Eleonora Duse 53, Rome, tax code and registration with the Register of Enterprises of Rome, Italy, No. 08986081001. The telephone number of the Italian Purchaser is +39 06 8091531. The by-laws (statuto) of the Italian Purchaser provide that the present life of the company ends on 31 December, 2050. The Italian Purchaser is registered in the general register of the financial intermediaries held by the Ufficio Italiano Cambi pursuant to Article 106 of the Italian Banking Act with no. 38154 and in the special register of the financial intermediaries held by the Bank of Italy pursuant to Article 107 of the Italian Banking Act, having as its sole corporate object the realisation of one or more securitisation transactions pursuant to Article 3 of the Italian Securitisation Law. The constitutional documents and the financial statements of the Italian Purchaser will be available for inspection in physical form at its registered office during normal office hours. The quota capital of the Italian Purchaser is Euro 10,000 (fully paid-up). As at the date of this document the sole quotaholder of the Italian Purchaser is Stichting Mauritsburg, with registered office at Amsteldijk 166, 1079LH Amsterdam. Sole Director The sole director of the Italian Purchaser and his respective business addresses is: Name Gordon Edwin BURROWS

Charles

Business Address (Rome)

Role

Vial Eleonora Duse, 53

Sole Director

The principal activity performed by the sole director when not acting as such in relation to the Italian Purchaser is that of company director of other companies. No statutory auditors (sindaci) have been appointed. External Auditors The external auditors of the Italian Purchaser are PKF Italia S.p.A., with registered office at Viale Vittorio Veneto, 10 - 20124 Milano (MI), whose partners are members of the Consiglio Nazionale dei Dottori Commercialisti and registered in the Registro dei Revisori Contabili. Administration Pursuant to the Italian Purchaser Corporate Services agreement entered into on or prior to the Italian Issue Date between the Italian Purchaser, the Italian Corporate Servicer (the Italian Corporate Services Agreement), the Italian Corporate Servicer has agreed to provide certain Page 116

corporate administration, management accounting and administrative services to the Italian Purchaser including, inter alia, the safekeeping of documentation pertaining to meetings of the Italian Purchaser's quotaholders and directors, maintaining the quotaholders' register, preparing VAT and other tax and accounting records, preparing the Italian Purchaser's annual financial statements and administering all matters relating to the taxation of the Italian Purchaser. The Italian Corporate Services Agreement contains provisions requiring that no resignation by or termination of the appointment of the Italian Corporate Servicer shall take effect unless and until a new entity is appointed as Italian Corporate Servicer. Financial Statements and Report of the Auditors The financial statements prepared on behalf of the Italian Purchaser as at 31 December 2006 and the audit report are set out in Appendix 1 to this Offering Circular. Since 31 December 2006, there has been no significant adverse change in the financial position or prospects, nor in the trading or financial position, of the Italian Purchaser. The financial statements set out in Appendix 1 to this Offering Circular comprise the Italian Purchaser's statutory accounts prepared in accordance to Italian accounting principles. The financial statements for the year ending on 31 December 2007 will be available no later than the end of April 2008.

Page 117

THIRD PARTY INFORMATION The information contained in this Offering Circular with respect to the Originators, the Account Bank, the Cash Manager, the Agent Bank, the Share Trustee, the Paying Agents, the Security Trustee, the Note Trustee, the Liquidity Provider, the Swap Providers, the Servicers, the Data Trustee and the Italian Purchaser relates to and has been obtained from each of them and has been accurately reproduced. As far as the Issuer is aware and is able to ascertain from the information provided by the above mentioned third parties, no facts have been omitted which would render the reproduced information inaccurate or misleading. The delivery of this Offering Circular shall not create any implication that there has been no change in the affairs of the Originators, the Account Bank, the Cash Manager, the Agent Bank, the Share Trustee, the Paying Agents, the Liquidity Provider, the Swap Providers, the Servicers, the Data Trustee, the Note Trustee, the Security Trustee or the Italian Purchaser since the date stated in respect of the relevant information in this Offering Circular, or that the information contained or referred to in this Offering Circular is correct as of any time subsequent to its date. None of the Noteholders, MERC Holders or the Residual Holders will have any right to proceed directly against the Originators, the Account Bank, the Cash Manager, the Agent Bank, the Liquidity Provider, the Swap Providers, the Servicers, the Security Trustee, the Note Trustee, the Data Trustee or the Italian Purchaser in respect of their respective obligations under any of the agreements to which they are party.

Page 118

CHARACTERISTICS OF THE MORTGAGE POOL The Mortgage Pool has the aggregate characteristics indicated in the tables below (Columns of percentages may not add up to 100 per cent. due to rounding). The information tables set out below have been prepared on the basis of information available on the Mortgage Pool as of 31 May 2007. Summary Total Balance €300,000,317 Number of Loans 2,187 Number of Loan Parts 2,247 Average Current Loan Balance €137,174 Weighted Average Current LTV 83.28% Weighted Average Interest Rate 5.97% Weighted Average Remaining Term 357 months Weighted Average Seasoning 3 months

Country Number of Loans

%

Current Balance €

%

Germany Italy

788 1,399

36.03 63.97

106,052,020 193,948,297

35.35 64.65

Total:

2,187

100.00

300,000,317

100.00

Number of Loan Parts

%

Current Balance €

%

2006 2007

515 1,732

22.92 77.08

67,039,825 232,960,493

22.35 77.65

Total:

2,247

100.00

300,000,317

100.00

Country

Year of Origination

Year

Page 119

Original Balance Original Balance €

0.01—50,000.00 50,000.01—100,000.00 100,000.01—150,000.00 150,000.01—200,000.00 200,000.01—250,000.00 250,000.01—300,000.00 300,000.01—350,000.00 350,000.01—400,000.00 400,000.01—450,000.00 450,000.01—500,000.00 500,000.01—550,000.00 600,000.01—650,000.00 650,000.01—700,000.00 850,000.01—900,000.00 900,000.01—950,000.00 950,000.01—1,000,000.00 1,000,000.01 >= Total:

Minimum: Maximum: Average:

Number of Loans

%

Current Balance €

%

122 617 746 420 144 69 36 13 9 3 1 1 2 1 1 1 1

5.58 28.21 34.11 19.20 6.58 3.16 1.65 0.59 0.41 0.14 0.05 0.05 0.09 0.05 0.05 0.05 0.05

4,676,056 49,453,102 94,221,788 72,159,568 32,037,096 18,925,973 11,791,159 4,858,782 3,822,011 1,454,434 548,942 650,000 1,384,136 899,392 921,052 996,826 1,200,000

1.56 16.48 31.41 24.05 10.68 6.31 3.93 1.62 1.27 0.48 0.18 0.22 0.46 0.30 0.31 0.33 0.40

2,187

100.00

300,000,317

100.00

Number of Loans

%

Current Balance €

%

125 617 744 422 141 69 37 13 8 3 1 1 2 1 1 1 1

5.72 28.21 34.02 19.30 6.45 3.16 1.69 0.59 0.37 0.14 0.05 0.05 0.09 0.05 0.05 0.05 0.05

4,825,678 49,602,969 94,072,188 72,608,155 31,438,620 18,925,973 12,140,303 4,907,964 3,423,686 1,454,434 548,942 650,000 1,384,136 899,392 921,052 996,826 1,200,000

1.61 16.53 31.36 24.20 10.48 6.31 4.05 1.64 1.14 0.48 0.18 0.22 0.46 0.30 0.31 0.33 0.40

2,187

100.00

300,000,317

100.00

€10,000 €1,200,000 €137,563

Current Balance Current Balance €

0.01—50,000.00 50,000.01—100,000.00 100,000.01—150,000.00 150,000.01—200,000.00 200,000.01—250,000.00 250,000.01—300,000.00 300,000.01—350,000.00 350,000.01—400,000.00 400,000.01—450,000.00 450,000.01—500,000.00 500,000.01—550,000.00 600,000.01—650,000.00 650,000.01—700,000.00 850,000.01—900,000.00 900,000.01—950,000.00 950,000.01—1,000,000.00 1,000,000.01 >= Total:

Minimum: Maximum: Average:

€9,958 €1,200,000 €137,174 Page 120

Original Term Number of Loan Parts

%

Current Balance €

%

19 69 220 357 527 855 200

0.85 3.07 9.79 15.89 23.45 38.05 8.90

1,486,945 6,634,613 25,727,106 48,479,226 77,427,486 112,013,255 28,231,687

0.50 2.21 8.58 16.16 25.81 37.34 9.41

2,247

100.00

300,000,317

100.00

Number of Loan Parts

%

Current Balance €

%

21 68 221 369 513 887 168

0.93 3.03 9.84 16.42 22.83 39.47 7.48

1,706,945 6,489,613 25,861,106 49,805,892 75,891,819 116,592,944 23,651,999

0.57 2.16 8.62 16.60 25.30 38.86 7.88

2,247

100.00

300,000,317

100.00

Number of Loan Parts

%

Current Balance €

%

0 1—6 7—12

251 1,881 115

11.17 83.71 5.12

34,718,268 250,385,792 14,896,258

11.57 83.46 4.97

Total:

2,247

100.00

300,000,317

100.00

Months

60.01—120.00 120.01—180.00 180.01—240.00 240.01—300.00 300.01—360.00 360.01—420.00 420.01—480.00 Total:

Minimum: Maximum: Weighted Average:

115 months 476 months 359 months

Remaining Term

Months

60.01—120.00 120.01—180.00 180.01—240.00 240.01—300.00 300.01—360.00 360.01—420.00 420.01—480.00 Total:

Minimum: Maximum: Weighted Average:

113 months 474 months 357 months

Loan Seasoning

Months

Minimum: Maximum: Weighted Average:

0 months 10 months 3 months

Page 121

Current Interest Rate Current Interest Rate %

=

22 264 244 153 58 27 11 5 2 2

2.79 33.50 30.96 19.42 7.36 3.43 1.40 0.63 0.25 0.25

1,038,253 20,818,872 30,317,354 26,181,146 12,689,032 7,305,567 3,639,928 1,885,735 841,362 1,334,772

0.98 19.63 28.59 24.69 11.96 6.89 3.43 1.78 0.79 1.26

Total:

788

100.00

106,052,020

100.00

Year

Original Balance Original Balance €

Minimum: Maximum: Average:

€40,000 €685,000 €134,839

Page 123

Current Balance Number of Loans

%

Current Balance €

%

0.01—50,000.00 50,000.01—100,000.00 100,000.01—150,000.00 150,000.01—200,000.00 200,000.01—250,000.00 250,000.01—300,000.00 300,000.01—350,000.00 350,000.01—400,000.00 400,000.01—450,000.00 500,000.01 >=

23 263 244 154 57 27 11 5 2 2

2.92 33.38 30.96 19.54 7.23 3.43 1.40 0.63 0.25 0.25

1,088,218 20,768,907 30,317,354 26,380,595 12,489,583 7,305,567 3,639,928 1,885,735 841,362 1,334,772

1.03 19.58 28.59 24.88 11.78 6.89 3.43 1.78 0.79 1.26

Total:

788

100.00

106,052,020

100.00

Number of Loan Parts

%

Current Balance €

%

60.01—120.00 120.01—180.00 180.01—240.00 240.01—300.00 300.01—360.00 360.01—420.00 420.01—480.00

16 12 42 116 19 443 200

1.89 1.42 4.95 13.68 2.24 52.24 23.58

1,277,490 1,102,118 4,389,274 13,930,422 2,161,219 54,959,810 28,231,687

1.20 1.04 4.14 13.14 2.04 51.82 26.62

Total:

848

100.00

106,052,020

100.00

Number of Loan Parts

%

Current Balance €

%

60.01—120.00 120.01—180.00 180.01—240.00 240.01—300.00 300.01—360.00 360.01—420.00 420.01—480.00

18 11 43 128 5 475 168

2.12 1.30 5.07 15.09 0.59 56.01 19.81

1,497,490 957,118 4,523,274 15,257,088 625,553 59,539,498 23,651,999

1.41 0.90 4.27 14.39 0.59 56.14 22.30

Total:

848

100.00

106,052,020

100.00

Current Balance €

Minimum: Maximum: Average:

€39,963 €684,772 €134,584

Original Term

Months

Minimum: Maximum: Weighted Average:

115 months 476 months 382 months

Remaining Term

Months

Minimum: Maximum: Weighted Average:

113 months 474 months 379 months Page 124

Loan Seasoning Number of Loan Parts

%

Current Balance €

%

0 1—6 7—12

134 639 75

15.80 75.35 8.84

18,214,698 79,014,256 8,823,067

17.18 74.51 8.32

Total:

848

100.00

106,052,020

100.00

Number of Loan Parts

%

Current Balance €

%

Annuity Bullet

789 59

93.04 6.96

101,068,963 4,983,057

95.30 4.70

Total:

848

100.00

106,052,020

100.00

Number of Loan Parts

%

Current Balance €

%

4.51—4.75 4.76—5.00 5.01—5.25 5.26—5.50 5.51—5.75 5.76—6.00 6.01—6.25 6.26—6.50

2 115 184 206 212 102 21 6

0.24 13.56 21.70 24.29 25.00 12.03 2.48 0.71

267,000 14,406,250 24,528,864 27,523,353 24,458,016 11,477,344 2,856,091 535,104

0.25 13.58 23.13 25.95 23.06 10.82 2.69 0.50

Total:

848

100.00

106,052,020

100.00

Months

Minimum: Maximum: Weighted Average:

0 months 10 months 3 months

Redemption Type

Redemption Type

Current Interest Rate Current Interest Rate %

Minimum: Maximum: Weighted Average:

4.75% 6.35% 5.39%

Page 125

Months until next interest rate reset Number of Loan Parts

%

Current Balance €

%

49—60 73—84 109—120 169—180 229—240

11 5 816 14 2

1.30 0.59 96.23 1.65 0.24

1,508,346 686,597 101,359,083 1,998,216 499,778

1.42 0.65 95.57 1.88 0.47

Total:

848

100.00

106,052,020

100.00

Number of Loans

%

Current Balance €

%

0.01—25.00 25.01—50.00 50.01—55.00 55.01—60.00 60.01—65.00 65.01—70.00 70.01—75.00 75.01—80.00 80.01—85.00 85.01—90.00 90.01—95.00 95.01—100.00 100.01—105.00 105.01—110.00 110.01—115.00 115.01—121.00

1 10 3 14 15 10 18 28 35 36 58 86 83 90 98 203

0.13 1.27 0.38 1.78 1.90 1.27 2.28 3.55 4.44 4.57 7.36 10.91 10.53 11.42 12.44 25.76

130,000 916,327 237,285 1,644,480 1,984,654 945,228 1,972,082 3,501,100 4,497,053 3,898,680 8,181,359 12,576,365 11,342,360 14,085,706 13,238,424 26,900,917

0.12 0.86 0.22 1.55 1.87 0.89 1.86 3.30 4.24 3.68 7.71 11.86 10.70 13.28 12.48 25.37

Total:

788

100.00

106,052,020

100.00

Number of Loans

%

Current Balance €

%

Freehold flat Multi-family house Semi-detached house Single family house Terraced house Two-family house

378 21 19 277 38 55

47.97 2.66 2.41 35.15 4.82 6.98

39,454,703 3,978,162 4,159,471 42,705,412 5,899,855 9,854,417

37.20 3.75 3.92 40.27 5.56 9.29

Total:

788

100.00

106,052,020

100.00

Months

Minimum: Maximum: Weighted Average:

53 months 238 months 116 months

Current Adjusted LTV Ratio Current Adjusted LTV

Minimum: Maximum: Weighted Average:

24.53% 121.00% 102.01%

Property Type Property Type

Page 126

Owner Occupied Number of Loans

%

Current Balance €

%

Investment Owner Occupied

204 584

25.89 74.11

22,890,994 83,161,026

21.58 78.42

Total:

788

100.00

106,052,020

100.00

Federal State

Number of Loans

%

Current Balance €

%

Baden-Wuerttemberg Bayern Berlin Brandenburg Bremen Hamburg Hessen Mecklenburg-Vorpommern Niedersachsen Nordrhein-Westfalen Rheinland-Pfalz Saarland Sachsen Sachsen-Anhalt Schleswig-Holstein Thueringen

119 110 12 21 6 9 48 4 81 200 56 36 23 19 27 17

15.10 13.96 1.52 2.66 0.76 1.14 6.09 0.51 10.28 25.38 7.11 4.57 2.92 2.41 3.43 2.16

16,679,160 16,443,860 1,241,266 2,925,560 829,564 1,420,529 7,423,804 678,735 9,425,173 26,535,893 7,699,527 4,447,271 2,526,584 2,067,932 3,737,278 1,969,884

15.73 15.51 1.17 2.76 0.78 1.34 7.00 0.64 8.89 25.02 7.26 4.19 2.38 1.95 3.52 1.86

Total:

788

100.00

106,052,020

100.00

Number of Loans

%

Current Balance €

%

East West

96 692

12.18 87.82

11,409,962 94,642,058

10.76 89.24

Total:

788

100.00

106,052,020

100.00

Number of Loan Parts

%

Current Balance €

%

New Construction Other Purchase Rate & Term Refinance

61 4 698 85

7.19 0.47 82.31 10.02

11,246,151 278,116 81,377,465 13,150,288

10.60 0.26 76.73 12.40

Total:

848

100.00

106,052,020

100.00

Number of Loans

%

Current Balance €

%

Employed Self-employed

744 44

94.42 5.58

98,140,698 7,911,322

92.54 7.46

Total:

788

100.00

106,052,020

100.00

Occupancy

Federal State

Geographic Region Geographic Region

Loan Purpose

Loan Purpose

Employment Type Borrower Employment

Page 127

Arrears Multiple Number of Loan Parts

%

Current Balance €

%

0.00—0.99 1.00—1.99 2.00—2.99

823 19 6

97.05 2.24 0.71

103,756,241 1,798,843 496,936

97.84 1.70 0.47

Total:

848

100.00

106,052,020

100.00

Arrears Multiple

Page 128

CHARACTERISTICS OF THE ITALIAN PORTFOLIO The Italian Portfolio has the aggregate characteristics indicated in the tables below (Columns of percentages may not add up to 100 per cent. due to rounding). The information tables set out below have been prepared on the basis of information available on the Mortgage Pool as of 31 May 2007. Summary Total Balance Number of Loans Average Loan Current Balance Largest Loan Current Balance Weighted Average Current LTV Weighted Average Coupon Weighted Average Margin for floating rate loans Weighted Average Remaining Term Weighted Average Seasoning

€193,948,297 1,399 €138,634 €1,200,000 73.04% 6.28% 2.30% 344 months 3 months

Year of Origination Number of Loans

%

Current Balance €

%

2006 2007

304 1,095

21.73 78.27

41,669,844 152,278,454

21.49 78.51

Total:

1,399

100.00

193,948,297

100.00

Number of Loans

%

Current Balance €

%

100 353 502 267 86 42 25 8 7 3 1 1 1 1 1 1

7.15 25.23 35.88 19.09 6.15 3.00 1.79 0.57 0.50 0.21 0.07 0.07 0.07 0.07 0.07 0.07

3,637,802 28,634,230 63,904,435 45,978,422 19,348,064 11,620,406 8,151,232 2,973,047 2,980,649 1,454,434 548,942 699,365 899,392 921,052 996,826 1,200,000

1.88 14.76 32.95 23.71 9.98 5.99 4.20 1.53 1.54 0.75 0.28 0.36 0.46 0.47 0.51 0.62

1,399

100.00

193,948,297

100.00

Year

Original Balance Original Balance €

0.01—50,000.00 50,000.01—100,000.00 100,000.01—150,000.00 150,000.01—200,000.00 200,000.01—250,000.00 250,000.01—300,000.00 300,000.01—350,000.00 350,000.01—400,000.00 400,000.01—450,000.00 450,000.01—500,000.00 500,000.01—550,000.00 650,000.01—700,000.00 850,000.01—900,000.00 900,000.01—950,000.00 950,000.01—1,000,000.00 1,000,000.01 >= Total:

Minimum: Maximum: Average:

€10,000 €1,200,000 €139,097 Page 129

Current Balance

Current Balance €

0.01—50,000.00 50,000.01—100,000.00 100,000.01—150,000.00 150,000.01—200,000.00 200,000.01—250,000.00 250,000.01—300,000.00 300,000.01—350,000.00 350,000.01—400,000.00 400,000.01—450,000.00 450,000.01—500,000.00 500,000.01—550,000.00 650,000.01—700,000.00 850,000.01—900,000.00 900,000.01—950,000.00 950,000.01—1,000,000.00 1,000,000.01 >= Total:

Minimum: Maximum: Average:

Number of Loans

%

Current Balance €

%

102 354 500 268 84 42 26 8 6 3 1 1 1 1 1 1

7.29 25.30 35.74 19.16 6.00 3.00 1.86 0.57 0.43 0.21 0.07 0.07 0.07 0.07 0.07 0.07

3,737,460 28,834,061 63,754,835 46,227,560 18,949,037 11,620,406 8,500,375 3,022,228 2,582,324 1,454,434 548,942 699,365 899,392 921,052 996,826 1,200,000

1.93 14.87 32.87 23.83 9.77 5.99 4.38 1.56 1.33 0.75 0.28 0.36 0.46 0.47 0.51 0.62

1,399

100.00

193,948,297

100.00

Number of Loans

%

Current Balance €

%

3 57 178 241 508 412

0.21 4.07 12.72 17.23 36.31 29.45

209,455 5,532,495 21,337,832 34,548,803 75,266,267 57,053,446

0.11 2.85 11.00 17.81 38.81 29.42

1,399

100.00

193,948,297

100.00

€9,958 €1,200,000 €138,634

Original Term

Months

61—120 121—180 181—240 241—300 301—360 361—420 Total:

Minimum: Maximum: Weighted Average:

120 months 420 months 347 months

Page 130

Remaining Term Number of Loans

%

Current Balance €

%

3 57 178 241 508 412

0.21 4.07 12.72 17.23 36.31 29.45

209,455 5,532,495 21,337,832 34,548,803 75,266,267 57,053,446

0.11 2.85 11.00 17.81 38.81 29.42

1,399

100.00

193,948,297

100.00

Number of Loans

%

Current Balance €

%

0 1—6 7—12

117 1,242 40

8.36 88.78 2.86

16,503,570 171,371,536 6,073,191

8.51 88.36 3.13

Total:

1,399

100.00

193,948,297

100.00

Number of Loans

%

Current Balance €

%

Annuity

1,399

100.00

193,948,297

100.00

Total:

1,399

100.00

193,948,297

100.00

Number of Loans

%

Current Balance €

%

53 577 769

3.79 41.24 54.97

7,422,774 87,154,509 99,371,014

3.83 44.94 51.24

1,399

100.00

193,948,297

100.00

Months

61—120 121—180 181—240 241—300 301—360 361—420 Total:

Minimum: Maximum: Weighted Average:

118 months 420 months 344 months

Loan Seasoning

Months

Minimum: Maximum: Weighted Average:

0 months 8 months 3 months

Redemption Type

Redemption Type

Interest Rate Type

Rate Type

Fixed Rate Floating Rate Modular Total:

Page 131

Current Interest Rate Current Interest Rate %