424B5 1 a42800.htm WASHINGTON MUTUAL WMALT 2006-8

Prospectus Supplement to Prospectus Dated January 6, 2006

Washington Mutual Mortgage Pass-Through
Certificates, WMALT Series 2006-8

WaMu Asset Acceptance Corp.

Depositor

Washington Mutual Mortgage Securities Corp.

Sponsor

Washington Mutual Bank

Servicer

$519,473,579

(Approximate)

                                                       The Washington Mutual Mortgage Pass-Through Certificates WMALT Series 2006-8 Trust will issue seventeen classes of offered certificates and one class of non-offered certificates. Each class of offered certificates (other than the Class PPP Certificates) will be entitled to receive monthly distributions of interest, principal or both, beginning on October 25, 2006. The certificate interest rate for some classes of offered certificates will be variable. The table on page S-6 of this prospectus supplement contains a list of the classes of offered certificates, including the initial class principal balance, certificate interest rate and special characteristics of each class.

                                                       The primary asset of the Trust will be a pool of first lien single-family residential fixed-rate mortgage loans. The Trust will also contain other assets, which are described on page S-31 of this prospectus supplement.

                                                       Offered Certificates

                                   

Total principal amount (approximate)      $519,473,579

First payment date      October 25, 2006                              

Interest and/or principal paid      Monthly

Last payment date      October 25, 2036

                                                       Credit enhancement for the offered certificates is being provided by one class of non-offered certificates, which has a principal balance of approximately $4,453,380.

   Consider carefully the risk factors beginning on page S-14 in this prospectus supplement and page 5 in the accompanying prospectus.  
     
   The certificates will represent interests only in the issuing entity which is the Washington Mutual Mortgage Pass-Through Certificates WMALT Series 2006-8 Trust and will not represent interests in or obligations of Washington Mutual Bank, Washington Mutual Mortgage Securities Corp., WaMu Asset Acceptance Corp., Washington Mutual, Inc. or any of their affiliates.  
     
   Neither these certificates nor the underlying mortgage loans are guaranteed by any agency or instrumentality of the United States.  
     
   This prospectus supplement may be used to offer and sell the offered certificates only if accompanied by the prospectus.  

The underwriter listed below will offer the offered certificates at varying prices to be determined at the time of sale. The proceeds to WaMu Asset Acceptance Corp. from the sale of the offered certificates will be approximately 99.85% of the principal balance of the offered certificates plus accrued interest, before deducting expenses. The underwriter's commission will be the difference between the price it pays to WaMu Asset Acceptance Corp. for the offered certificates and the amount it receives from the sale of the offered certificates to the public.

Neither the SEC nor any state securities commission has approved or disapproved of the offered certificates or determined that this prospectus supplement or the prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

Underwriter

WaMu Capital Corp.

September 26, 2006


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

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

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

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

      You can find a listing of the pages where some of the capitalized terms used in this prospectus supplement and the accompanying prospectus are defined under the caption “Index of Terms” on page S-95 in this prospectus supplement and under the caption “Glossary” beginning on page 142 in the accompanying prospectus. Capitalized terms used in this prospectus supplement and not otherwise defined in this prospectus supplement have the meanings assigned in the accompanying prospectus.

European Economic Area

      In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”), the Underwriter has represented and agreed that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the “Relevant Implementation Date”) it has not made and will not make an offer of certificates to the public in that Relevant Member State prior to the publication of a prospectus in relation to the certificates which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of certificates to the public in that Relevant Member State at any time:

       (a)   to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;
       
       (b)   to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €  43,000,000 and (3) an annual net turnover of more than €  50,000,000, as shown in its last annual or consolidated accounts; or
       
       (c)   in any other circumstances which do not require the publication by the issuer of a prospectus pursuant to Article 3 of the Prospectus Directive.

      For the purposes of this provision, the expression an “offer of certificates to the public” in relation to any certificates in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the certificates to be offered so as to enable an investor to decide to purchase or subscribe to the certificates, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression “Prospectus Directive” means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.

United Kingdom

      The underwriter has represented and agreed that:

       (a)   it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act) received by it in connection with the issue or sale of the certificates in circumstances in which Section 21(1) of the Financial Services and Markets Act does not apply to the issuer; and
       
       (b)   it has complied and will comply with all applicable provisions of the Financial Services and Markets Act with respect to anything done by it in relation to the certificates in, from or otherwise involving the United Kingdom.

S-2


TABLE OF CONTENTS

    Page

SUMMARY INFORMATION

      S-5  

Transaction Participants

      S-5  

What You Own

      S-5  

Information About the Mortgage Pool

      S-5  

The Certificates

      S-6  

The Offered Certificates

      S-6  

The Non-Offered Certificates

      S-8  

Initial Principal Balance of the Certificates

      S-8  

Last Scheduled Distribution Date

      S-8  

Distributions on the Certificates

      S-8  

Monthly Distributions

      S-8  

Distributions of Interest

      S-9  

Compensating Interest and Interest Shortfalls

      S-10  

Distributions of Principal

      S-10  

Class R Certificates

      S-10  

Credit Enhancements

      S-11  

Allocation of Losses

      S-11  

Optional Termination

      S-11  

Yield Considerations

      S-11  

Book-Entry Registration

      S-11  

Denominations

      S-12  

Legal Investment

      S-12  

ERISA Considerations

      S-12  

Federal Income Tax Consequences

      S-12  

Ratings

      S-12  

Recent Accounting Development

      S-13  

RISK FACTORS

      S-14  

THE SPONSOR

      S-25  

General

      S-25  

The Sponsor's Origination Channels

      S-25  

STATIC POOL INFORMATION

      S-26  

UNDERWRITING OF THE MORTGAGE LOANS

      S-26  

General

      S-26  

Evaluation of the Borrower's Credit Standing

      S-27  

Evaluation of the Borrower's Repayment Ability

      S-27  

Evaluation of the Adequacy of the Collateral

      S-27  

Documentation Programs

      S-28  

Exceptions to Program Parameters

      S-28  

Automated Underwriting System

      S-29  

Due Diligence

      S-29  

THE ORIGINATORS

      S-29  

American Home

      S-29  

GreenPoint

      S-30  

THE DEPOSITOR

      S-31  

THE TRUST

      S-31  

General

      S-31  

Assignment of the Mortgage Loans and Other Assets to the Trust

      S-31  

Restrictions on Activities of the Trust

      S-32  

Discretionary Activities With Respect to the Trust

      S-32  

THE TRUSTEES

      S-33  

The Trustee

      S-33  

General

      S-33  

Material Duties of the Trustee

      S-33  

Events of Default Under the Pooling Agreement

      S-34  

The Delaware Trustee

      S-34  

Limitations on the Trustees' Liability

      S-34  

Resignation and Removal of the Trustees

      S-35  

THE SERVICERS

      S-35  

General

      S-35  

The Servicer

      S-35  

The Servicer's Servicing Experience

      S-35  

Servicing Procedures

      S-36  

The Servicer's Quality Control Procedures

      S-41  

Interim Servicing

      S-42  

The Administrative Agent

      S-42  

The Administrative Agent's Servicing Experience

      S-42  

Services Performed by the Administrative Agent

      S-43  

The Administrative Agent's Quality Control Procedures

      S-43  

The Custodian

      S-44  

Special Servicing Agreements

      S-44  

AFFILIATIONS AND RELATED TRANSACTIONS

      S-44  

DESCRIPTION OF THE MORTGAGE POOL

      S-45  

Additional Information

      S-47  

Representations and Warranties Regarding the Mortgage Loans

      S-48  

Criteria for Selection of Mortgage Loans

      S-49  

DESCRIPTION OF THE CERTIFICATES

      S-50  

General

      S-50  

Book-Entry Registration

      S-51  

Definitive Certificates

      S-51  

Calculations of Interest

      S-52  

Calculation of LIBOR

      S-52  

The Class A-1 Yield Maintenance Agreement

      S-54  

Distributions

      S-55  

General

      S-55  

Distributions of Interest

      S-59  

S-3


    Page

Distributions of Principal

      S-60  

Allocation of Net Monthly Excess Cashflow

      S-62  

Subordination and Allocation of Losses

      S-62  

Distributions to the Class PPP Certificates

      S-63  

The Class R Certificates

      S-65  

Available Distribution Amount

      S-65  

Last Scheduled Distribution Date

      S-66  

Optional Termination

      S-66  

Amendment of the Pooling Agreement

      S-67  

Payment of Fees and Expenses

      S-67  

Reports and Other Information

      S-69  

YIELD AND PREPAYMENT CONSIDERATIONS

      S-70  

General

      S-70  

Principal Prepayments and Compensating Interest

      S-70  

LIBOR Certificates

      S-70  

Lockout Certificates

      S-71  

Rate of Payments

      S-71  

Prepayment Assumptions

      S-71  

Lack of Historical Prepayment Data

      S-73  

Yield Considerations with Respect to the Class PPP Certificates

      S-73  

Yield Considerations with Respect to the Senior Subordinate Certificates

      S-73  

Additional Yield Considerations Applicable Solely to the Class R Certificates

      S-76  

CREDIT ENHANCEMENTS

      S-77  

Overcollateralization

      S-77  

Excess Spread

      S-77  

Subordination

      S-77  

MATERIAL FEDERAL INCOME TAX CONSEQUENCES

      S-77  

Special Tax Considerations Applicable to the Certificates other than the Class R, Class C and Class PPP Certificates

      S-78  

Taxation of Owners of the Class PPP Certificates

      S-79  

Special Tax Considerations Applicable to the Residual Certificates

      S-81  

CERTAIN LEGAL INVESTMENT ASPECTS

      S-82  

ERISA CONSIDERATIONS

      S-83  

METHOD OF DISTRIBUTION

      S-85  

LEGAL MATTERS

      S-85  

CERTIFICATE RATINGS

      S-85  

APPENDIX A: DECREMENT TABLES

      S-87  

APPENDIX B: MORTGAGE LOAN TABLES

      S-91  

SCHEDULE 1: CLASS A-1 YIELD MAINTENANCE NOTIONAL BALANCES AND STRIKE RATES

      S-94  

INDEX OF TERMS

      S-95  

       

S-4


SUMMARY INFORMATION

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

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

TRANSACTION PARTICIPANTS

On September 28, 2006, which is the closing date, the mortgage loans that support the certificates will be sold by Washington Mutual Mortgage Securities Corp., the sponsor of the securitization transaction, to WaMu Asset Acceptance Corp., the depositor. On the closing date, the depositor will sell the mortgage loans and related assets to the Washington Mutual Mortgage Pass-Through Certificates WMALT Series 2006-8 Trust. In exchange for the mortgage loans and related assets, the Trust will issue the certificates pursuant to the order of the depositor.

The sponsor purchased the mortgage loans directly or indirectly from affiliated or unaffiliated third parties who either originated the mortgage loans or purchased the mortgage loans through correspondent or broker lending. The following entities originated at least 10% of the mortgage loans (by principal balance as of September 1, 2006): American Home Mortgage Corp., approximately 35.7%; GreenPoint Mortgage Funding, Inc., approximately 28.1; and Washington Mutual Bank, approximately 12.7%. No other entity originated more than 10% of the mortgage loans.

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

The trustee of the Trust will be LaSalle Bank National Association, and the Delaware trustee will be Christiana Bank & Trust Company. Washington Mutual Bank fsb will have possession of and will review the mortgage notes, mortgages and other legal documents related to some of the mortgage loans as custodian for the Trust.

WHAT YOU OWN

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

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

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

Information About the Mortgage Pool

The mortgage pool consists of 2,060 mortgage loans with an aggregate principal balance as of September 1, 2006 of approximately $523,926,859. All of the mortgage loans are secured by residential properties or shares of cooperative apartments, and each is set to mature within 30 years of the date it was originated.

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

S-5


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

THE CERTIFICATES

The Offered Certificates

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

Class   Approximate
Initial Class
Principal
Balance
      Annual
Certificate
Interest
Rate
      Type

A-1       $ 191,000,000         Variable(1)       Senior/LIBOR
A-2         83,051,399         Variable(2)       Senior
A-3A         40,000,000         Variable(3)       Senior
A-3B         34,986,242         Variable(4)       Senior
A-3C         4,000,000         Variable(5)       Senior
A-4         29,411,072         Variable(6)       Senior
A-5         62,443,690         Variable(7)       Senior
A-6         49,432,489         Variable(8)       Senior/Lockout
M-1         9,430,683         Variable(9)       Subordinate
M-2         2,619,634         Variable(10)       Subordinate
M-3         2,619,634         Variable(11)       Subordinate
M-4         2,619,634         Variable(12)       Subordinate
B-1         2,619,634         Variable(13)       Subordinate/LIBOR
B-2         2,619,634         Variable(14)       Subordinate/LIBOR
B-3         2,619,634         Variable(15)       Subordinate/LIBOR
R         100         6.500%       Senior/Residual
PPP         100         (16)       Prepayment Penalty
(1)   For each distribution date, the annual certificate interest rate on the Class A-1 Certificates will equal the least of (x) 11.000%, (y) the weighted average of the mortgage interest rates on the mortgage loans as of the second preceding due date less the per annum rate at which the servicing fee (as described in “Description of the Certificates—Payment of Fees and Expenses” in this prospectus supplement) is calculated (the Weighted Average Pass-Through Rate”) multiplied by a fraction, the numerator of which is 30 and the denominator of which is the actual number of days in the related certificate accrual period (the “Adjusted Weighted Average Pass-Through Rate”) and (z) LIBOR (the London Interbank Offered Rate, as described in this prospectus supplement) plus 0.120% (plus an additional 0.120% after the first distribution date on which the aggregate principal balance of the mortgage loans has been reduced to less than 10% of that balance as of September 1, 2006 (the “Clean-Up Call Option Date”)). In addition, until the distribution date in July 2010, if the certificate interest rate on the Class A-1 Certificates is equal to the Adjusted Weighted Average Pass-Through Rate, these certificates may be entitled to receive, as interest, amounts, if any, paid under a yield maintenance agreement. See “Description of the Certificates—Calculations of Interest, Description of the Certificates—The Class A-1 Yield Maintenance Agreement” and “Description of the Certificates—Distributions—General” in this prospectus supplement.
     
(2)   For each distribution date, the annual certificate interest rate on the Class A-2 Certificates will equal the lesser of (x) the Weighted Average Pass-Through Rate and (y) 5.874% (plus 0.500% after the Clean-Up Call Option Date). See “Description of the Certificates—Calculations of Interest” and “Description of the Certificates—Distributions—General” in this prospectus supplement.
     
(3)   For each distribution date, the annual certificate interest rate on the Class A-3A Certificates will equal the lesser of (x) the Weighted Average Pass-Through Rate and (y) 5.764% (plus 0.500% after the Clean-Up Call Option Date). See “Description of the Certificates—Calculations of Interest” and “Description of the Certificates—Distributions—General” in this prospectus supplement.
     
(4)   For each distribution date, the annual certificate interest rate on the Class A-3B Certificates will equal the lesser of (x) the Weighted Average Pass-Through Rate and (y) 5.784% (plus 0.500% after the Clean-Up Call Option Date). See “Description of the Certificates—Calculations of Interest” and “Description of the Certificates—Distributions—General” in this prospectus supplement.
     
(5)   For each distribution date, the annual certificate interest rate on the Class A-3C Certificates will equal the lesser of (x) the Weighted Average Pass-Through Rate and (y) 5.814% (plus 0.500% after the Clean-Up Call Option Date). See “Description of the Certificates—Calculations of Interest” and “Description of the Certificates—Distributions—General” in this prospectus supplement.

S-6


(6)   For each distribution date, the annual certificate interest rate on the Class A-4 Certificates will equal the lesser of (x) the Weighted Average Pass-Through Rate and (y) 6.000% (plus 0.500% after the Clean-Up Call Option Date). See “Description of the Certificates—Calculations of Interest” and “Description of the Certificates—Distributions—General” in this prospectus supplement.
     
(7)   For each distribution date, the annual certificate interest rate on the Class A-5 Certificates will equal the lesser of (x) the Weighted Average Pass-Through Rate and (y) 6.126% (plus 0.500% after the Clean-Up Call Option Date). See “Description of the Certificates—Calculations of Interest” and “Description of the Certificates—Distributions—General” in this prospectus supplement.
     
(8)   For each distribution date, the annual certificate interest rate on the Class A-6 Certificates will equal the lesser of (x) the Weighted Average Pass-Through Rate and (y) 5.768% (plus 0.500% after the Clean-Up Call Option Date). See “Description of the Certificates—Calculations of Interest” and “Description of the Certificates—Distributions—General” in this prospectus supplement.
     
(9)   For each distribution date, the annual certificate interest rate on the Class M-1 Certificates will equal the lesser of (x) the Weighted Average Pass-Through Rate and (y) 5.963% (plus 0.500% after the Clean-Up Call Option Date). See “Description of the Certificates—Calculations of Interest” and “Description of the Certificates—Distributions—General” in this prospectus supplement.
     
(10)   For each distribution date, the annual certificate interest rate on the Class M-2 Certificates will equal the lesser of (x) the Weighted Average Pass-Through Rate and (y) 6.096% (plus 0.500% after the Clean-Up Call Option Date). See “Description of the Certificates—Calculations of Interest” and “Description of the Certificates—Distributions—General” in this prospectus supplement.
     
(11)   For each distribution date, the annual certificate interest rate on the Class M-3 Certificates will equal the lesser of (x) the Weighted Average Pass-Through Rate and (y) 6.165% (plus 0.500% after the Clean-Up Call Option Date). See “Description of the Certificates—Calculations of Interest” and “Description of the Certificates—Distributions—General” in this prospectus supplement.
     
(12)   For each distribution date, the annual certificate interest rate on the Class M-4 Certificates will equal the lesser of (x) the Weighted Average Pass-Through Rate and (y) 6.244% (plus 0.500% after the Clean-Up Call Option Date). See “Description of the Certificates—Calculations of Interest” and “Description of the Certificates—Distributions—General” in this prospectus supplement.
     
(13)   For each distribution date, the annual certificate interest rate on the Class B-1 Certificates will equal the least of (x) 11.000%, (y) the Adjusted Weighted Average Pass-Through Rate and (z) LIBOR plus 1.000% (plus an additional 0.500% after the Clean-Up Call Option Date). See “Description of the Certificates—Calculations of Interest” and “Description of the Certificates—Distributions—General” in this prospectus supplement.
     
(14)   For each distribution date, the annual certificate interest rate on the Class B-2 Certificates will equal the least of (x) 11.000%, (y) the Adjusted Weighted Average Pass-Through Rate and (z) LIBOR plus 1.300% (plus an additional 0.650% after the Clean-Up Call Option Date). See “Description of the Certificates—Calculations of Interest” and “Description of the Certificates—Distributions—General” in this prospectus supplement.
     
(15)   For each distribution date, the annual certificate interest rate on the Class B-3 Certificates will equal the least of (x) 11.000%, (y) the Adjusted Weighted Average Pass-Through Rate and (z) LIBOR plus 2.000% (plus an additional 1.000% after the Clean-Up Call Option Date). See “Description of the Certificates—Calculations of Interest” and “Description of the Certificates—Distributions—General” in this prospectus supplement.

S-7


(16)   The Class PPP Certificates will receive $100 of principal on the distribution date in September 2010 from the Class PPP Reserve Fund. The Class PPP Certificates will not receive any distributions of interest, nor will they receive distributions of principal on any other distribution date. The Class PPP Certificates will also have a notional balance, the “Class PPP Notional Amount,” which will equal $523,926,859.86, the aggregate principal balance of the mortgage loans as of the Cut-Off Date. The Class PPP Certificates will be entitled to receive prepayment penalties paid by borrowers upon voluntary full prepayment of certain mortgage loans if those mortgage loans are prepaid during certain periods. Accordingly, these amounts will not be available for distribution to other classes of certificates. See “Description of the Mortgage Pool” and “Description of the Certificates—Distributions to the Class PPP Certificates” in this prospectus supplement for more information regarding the Class PPP Certificates and prepayment penalties.

The Non-Offered Certificates

In addition to the offered certificates, the Trust will also issue the Class C Certificates, which are the junior subordinate certificates. The Class C Certificates are not being offered by this prospectus supplement.

The Class C Certificates will have an approximate initial class principal balance of $4,453,380 and will receive no distributions of interest. On each distribution date, the principal balance of the Class C Certificates will be the overcollateralization amount, which is the difference between the aggregate principal balance of the mortgage loans and the aggregate class principal balance of the other certificates (other than the Class PPP Certificates).

Initial Principal Balance of the Certificates

The initial aggregate principal balance of the certificates issued by the Trust is approximately $523,926,959, subject to an upward or downward variance of no more than 5%.

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

the senior certificates comprise approximately 94.35% of the principal balance of the mortgage loans;
 
the Class M-1, Class M-2, Class M-3, Class M-4, Class B-1, Class B-2 and Class B-3 Certificates comprise approximately 4.80% of the principal balance of the mortgage loans; and
 
the non-offered Class C Certificates, which represent the initial overcollateralization amount, comprise approximately 0.85% of the principal balance of the mortgage loans.

Last Scheduled Distribution Date

The last scheduled distribution date for each class of certificates is the distribution date in the month after the scheduled maturity date for the latest maturing mortgage loan; provided, however, that the last scheduled distribution date for the Class PPP Certificates will be the distribution date in September 2010.

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

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

DISTRIBUTIONS ON THE CERTIFICATES

Monthly Distributions

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

Source of Payments. The mortgagors pay their interest and principal during the month to the servicer. Each month, the servicer subtracts its servicing fee and sends the remainder to the trustee. On the distribution date for that month, the trustee distributes that remaining amount to the holders of the certificates in the order described in “Description of the Certificates—Distributions” in this prospectus supplement in

S-8


accordance with a written statement prepared by the servicer. The servicing fee will be calculated as a per annum percentage for each mortgage loan. The servicing fee for each mortgage loan will range from 0.250% to 1.500%, with a weighted average of approximately 0.479%.

Advances. For any month, if the servicer receives a payment on a mortgage loan that is less than the full scheduled payment or if no payment is received at all, the servicer will advance funds held by the servicer for future distribution, or its own funds, to cover that shortfall. However, the servicer will not be required to make advances if it determines that those advances will not be recoverable from future payments or collections on that mortgage loan. See “The Servicers—The Servicer—Servicing Procedures—Advances” in this prospectus supplement.

Distributions of Interest

Each class of offered certificates entitled to interest will accrue interest each month. On each distribution date interest will be distributed to these classes of certificates in the order described in “Description of the Certificates—Distributions—Distributions of Interest” in this prospectus supplement.

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

The amount of interest each class of certificates (other than the LIBOR Certificates) accrues each month will equal 1/12 of the annual interest rate for that class, and the amount of interest each class of LIBOR Certificates accrue each month will equal a ratio, the numerator of which is the actual number of days in the related accrual period and the denominator of which is 360, multiplied by the annual interest rate for that class, in each case multiplied by the related class principal balance. The principal balance used for this calculation on the first distribution date will be the applicable balance as of September 28, 2006, which is the closing date. The principal balance used for this calculation on any other distribution date will be the applicable balance immediately after the preceding distribution date. The annual interest rate for each class of offered certificates entitled to interest is described on pages S-6 through S-8 of this prospectus supplement.

For any distribution date and each certificate (other than the LIBOR Certificates) interest accrues during the preceding calendar month. Interest to be distributed on the certificates (other than the LIBOR Certificates) will be calculated based on a year consisting of twelve thirty-day months. For any distribution date, the LIBOR Certificates accrue interest during the period beginning on the 25th day of the preceding calendar month (or, in the case of the first distribution date, September 28th ) and ending on the 24th day of the month of that distribution date. Interest to be distributed on the LIBOR Certificates will be calculated based on the actual number of days in the certificate accrual period and assuming a 360 day year.

The Class PPP Certificates will not receive any distributions of interest.

LIBOR Certificates. The certificate interest rate for the Class A-1, Class B-1, Class B-2 and Class B-3 Certificates adjusts monthly based on the average of quotations of the London Interbank Offered Rate for one-month U.S. dollar deposits, or LIBOR, as described in “Description of the Certificates—Calculation of LIBOR” in this prospectus supplement. The formula for the calculation of the certificate interest rate for these LIBOR Certificates appears in the notes to the table on page S-6 of this prospectus supplement. The certificate interest rate on the LIBOR Certificates may not exceed the lesser of (x) the Adjusted Weighted Average Pass-Through Rate and (y) 11.000%.

Class A-1 Yield Maintenance Agreement. On each distribution date on or before the distribution date in July 2010, the Class A-1 Certificates will have the benefit of a yield maintenance agreement. The Class A-1 yield maintenance agreement is intended to partially mitigate the risk to the Class A-1 Certificates that the lesser of (i) LIBOR plus the related margin and (ii) 11.000% will exceed

S-9


the Adjusted Weighted Average Pass-Through Rate. For a description of the Class A-1 yield maintenance agreement, see “Description of the Certificates—The Class A-1 Yield Maintenance Agreement” in this prospectus supplement.

Compensating Interest and Interest Shortfalls

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

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

Distributions of Principal

General. As the mortgagors pay principal on the mortgage loans, that principal is passed on to the holders of certificates. However, not every class of certificates will receive principal on each distribution date.

On each distribution date, a portion of the principal received or advanced on all of the mortgage loans will be distributed to the Class A-1 through Class A-6 Certificates, the Class M-1, Class M-2, Class M-3, Class M-4, Class B-1, Class B-2 and Class B-3 Certificates in the order of priority described in “Description of the Certificates—Distributions—Distributions of Principal” in this prospectus supplement. However, not all of these certificates will receive principal on each distribution date. See Appendix A for a table showing, for each class of certificates, the expected rate of return of principal at different rates of prepayments on the mortgage loans. The manner of distributing principal among the certificates will differ, as described in this prospectus supplement, depending upon whether a distribution date occurs on or before the distribution date in October 2009 or after that date, and depending upon the performance of the mortgage loans. In addition, if there are no subordinate certificates outstanding, the Class A-1 through Class A-6 Certificates will generally receive principal pro rata according to their respective class principal balances.

The Class M-1, Class M-2, Class M-3, Class M-4, Class B-1, Class B-2 and Class B-3 Certificates are not expected to receive any distributions of principal until the distribution date in October 2009. Thereafter, assuming certain conditions are met, they will begin to receive principal distributions. See “Description of the Certificates—Distributions—Distributions of Principal” in this prospectus supplement.

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

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

The Class R Certificates

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

S-10


Special Tax Considerations Applicable to the Residual Certificates” in this prospectus supplement.

CREDIT ENHANCEMENTS

Overcollateralization. The initial principal balance of the mortgage loans is expected to exceed the aggregate class principal balance of the certificates (other than the Class PPP and Class C Certificates) by 0.85% of the initial principal balance of the mortgage loans. This overcollateralization will be available to absorb losses on the mortgage loans. The level of overcollateralization may increase or decrease over time. We cannot assure you that sufficient interest will be generated by the mortgage loans to create and maintain the required level of overcollateralization.

Excess Spread. The mortgage loans bear interest each month in an amount that in the aggregate, and after deducting related servicing fees, is expected to exceed the amount needed to pay monthly interest on the certificates. This excess interest will be applied to pay principal on the certificates entitled to principal in order to, among other things, create and maintain the required level of overcollateralization.

Subordination. The senior certificates will have a payment priority over the subordinate certificates. Each class of subordinate certificates will be subordinate to each other class of subordinate certificates with a higher payment priority.

ALLOCATION OF LOSSES

A loss is realized on a mortgage loan when the servicer determines that it has received all amounts it expects to recover for that mortgage loan and the amounts are less than the outstanding principal balance of the mortgage loan and its accrued and unpaid interest. Losses will be allocated to the subordinate certificates by deducting the losses from the principal balance of these certificates without making any payments to the related certificateholders.

Realized Losses. Losses on the mortgage loans will first reduce the available excess interest and then reduce the overcollateralization amount. If there is no overcollateralization at that time, losses on the mortgage loans will be allocated first, to the Class B-3 Certificates, second, to the Class B-2 Certificates, third, to the Class B-1 Certificates, fourth, to the Class M-4 Certificates, fifth, to the Class M-3 Certificates, sixth, to the Class M-2 Certificates and seventh, to the Class M-1 Certificates, in each case, until the principal amount of such class of subordinate certificates has been reduced to zero.

If the excess interest, the overcollateralization amount and the subordination of the subordinate certificates are insufficient to absorb all of the losses on the mortgage loans, then holders of the senior certificates may not receive their full principal amount.

For a more detailed description of the allocation of realized losses on the certificates, see “Description of the Certificates—Subordination and Allocation of Losses” in this prospectus supplement.

OPTIONAL TERMINATION

When the aggregate principal balance of the mortgage loans has been reduced to less than 10% of that balance as of September 1, 2006, Washington Mutual Bank may purchase all of the mortgage loans, which will cause the retirement of the certificates. See “Description of the Certificates—Optional Termination” in this prospectus supplement.

YIELD CONSIDERATIONS

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

the price at which the certificates are purchased;
 
the applicable certificate interest rate, if any;
 
whether an optional termination occurs;
 
the rate of prepayments (including liquidations) on the mortgage loans; and
 
with respect to the Class A-1 Certificates, whether any required payments under the Class A-1 yield maintenance agreement are received and are sufficient.

BOOK-ENTRY REGISTRATION

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

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DENOMINATIONS

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

The Class PPP Certificates will be offered in minimum denominations of $200,000,000 initial class notional amount each and multiples of $1 in excess of $200,000,000.

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

LEGAL INVESTMENT

As of the date of their issuance, all of the offered certificates, other than the Class M-3, Class M-4, Class B-1, Class B-2, Class B-3 and Class PPP Certificates, will be “mortgage related securities” for purposes of the Secondary Mortgage Market Enhancement Act of 1984. See “Certain Legal Investment Aspects” in this prospectus supplement for important information concerning possible restrictions on ownership of the offered certificates by regulated institutions. You should consult with your own legal advisors in determining whether and to what extent the offered certificates constitute legal investments for you.

ERISA CONSIDERATIONS

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

FEDERAL INCOME TAX CONSEQUENCES

For federal income tax purposes, multiple REMIC elections will be made with respect to the Trust (exclusive of the Class A-1 yield maintenance agreement). The offered certificates, other than the Class R and Class PPP Certificates, will represent ownership of regular interests, coupled with a right to receive certain payments in respect of Basis Risk Carry Forward Amounts under a cap agreement, and additionally, in the case of the Class A-1 Certificates, with an interest in a yield maintenance agreement, and will generally be treated as representing ownership of debt for federal income tax purposes to the extent of the REMIC regular interest portion of the certificates. You will be required to include in income all interest and original issue discount on these certificates in accordance with the accrual method of accounting regardless of your usual methods of accounting. For federal income tax purposes, the Class R Certificates will represent ownership of residual interests. The Class PPP Certificates will not represent an interest in any REMIC.

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

RATINGS

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

    Rating Agency

Class   S&P   Moody's

A-1                       AAA                         Aaa  

A-2

                      AAA                         Aaa  

A-3A

                      AAA                         Aaa  

A-3B

                      AAA                         Aaa  

A-3C

                      AAA                         Aaa  

A-4

                      AAA                         Aaa  

A-5

                      AAA                         Aaa  

A-6

                      AAA                         Aaa  

M-1

                      AA                         Aa2  

M-2

                      A+                         Aa3  

M-3

                      A                         A1  

M-4

                      A–                         A2  

B-1

                      BBB+                         Baa1  

B-2

                      BBB                         Baa2  

B-3

                      BBB–                         Baa3  

R

                      AAA                         Aaa  

PPP

                      AAA                         Aaa  

The ratings on the offered certificates address the likelihood of the receipt by holders of the offered certificates of all distributions on the underlying mortgage loans to which they are entitled. They do not address the likely actual rate of prepayments. The rate of prepayments, if different than originally anticipated, could adversely affect

S-12


the yield realized by holders of the offered certificates.

The ratings assigned to the Class PPP Certificates do not address any assessment of the likelihood or frequency of prepayments on the related mortgage loans or the likelihood of receipt of prepayment penalty payments and only address the return of the Class PPP principal balance of $100.

Recent Accounting Development

Recently issued Statement of Financial Accounting Standards (“SFAS”) No. 155, Accounting for Certain Hybrid Financial Instruments—an Amendment of FASB Statements No. 133 and 140, may require an investor to determine whether an interest in securitized financial assets such as the offered certificates contains an embedded derivative, which may affect the investor's accounting treatment for such interest. Prospective investors should consult their own accountants for advice on the appropriate accounting treatment for the offered certificates in light of SFAS No. 155 and other accounting standards.

S-13


RISK FACTORS

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

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

There is No Guarantee That You Will Receive Principal Payments on Your Certificates at any Specific Rate or on any Specific Dates   As the mortgagors make payments of interest and principal on their mortgage loans, you will receive payments. Because the mortgagors are free to make those payments faster than scheduled, you may receive distributions faster than you expected. There is no guarantee that you will receive principal payments on your certificates at any specific rate or on any specific dates.
     
The Lack of Secondary Markets May Make it Difficult for You to Resell Your Certificates   The offered certificates will not be listed on any securities exchange. A secondary market for the offered certificates may not develop. If a secondary market does develop, it might not continue or it might not be sufficiently liquid to allow you to resell any of your certificates. You should not expect to be able to obtain a published quotation to sell any of the offered certificates.
     
The Yield on Your Certificates is Directly Related to the Prepayment Rate on the Mortgage Loans   The yield to maturity on your certificates is directly related to the rate at which the mortgagors pay principal on the mortgage loans. Principal payments on the mortgage loans may be in the following forms:
     
     scheduled principal payments; and
     
     principal prepayments, which consist of:
           
        prepayments in full on a mortgage loan;
           
        partial prepayments on a mortgage loan; and
           
        liquidation principal, which is the principal recovered after foreclosing on or otherwise liquidating a defaulted mortgage loan.
     

  In general, if prevailing mortgage interest rates decline significantly below the mortgage interest rates on the mortgage loans in the mortgage pool, the prepayment rate may increase. Penalties for early prepayment may also affect the prepayment rate, as they may discourage mortgagors from prepaying their mortgage loans during the period such prepayment penalties are in effect, even in a declining interest rate environment. See “Description of the Mortgage Pool” in this prospectus supplement for a description of prepayment penalties imposed on the mortgage loans. General economic conditions and homeowner mobility will also affect the prepayment rate. Most of the mortgage loans contain “due-on-sale” clauses. Therefore, the sale of any mortgaged property may cause a prepayment in full on the related mortgage loan. See “Yield and Prepayment Considerations” in this prospectus supplement and “Yield and Maturity Considerations” in the accompanying prospectus. The prepayment rate may affect the yield on all of the offered certificates. However, if you have purchased a certificate that receives only distributions of interest or only distributions of principal, the prepayment rate will be especially important to you.

S-14


  From time to time, the servicer may implement programs to solicit mortgagors of qualifying mortgage loans that it services for refinance, including mortgage loans underlying the certificates. While those programs will not specifically target the mortgage loans underlying the certificates for refinance, they may have the effect of accelerating the prepayment rate of those mortgage loans, which would adversely affect the yield on all classes of certificates purchased at a premium, particularly those certificates only entitled to interest.
     
An Optional Termination Would Adversely Affect the Certificates That Were Purchased at a Premium   When the aggregate principal balance of the mortgage loans has been reduced to less than 10% of that balance as of September 1, 2006, the servicer may purchase all of the mortgage loans, which will result in the retirement of the certificates. See “Description of the Certificates—Optional Termination” in this prospectus supplement. If this happens, the purchase price paid by the servicer will be passed through to the certificateholders. This would have the same effect as if all of the remaining mortgagors made prepayments in full. Any class of certificates purchased at a premium could be adversely affected by an optional purchase of the mortgage loans.
     
The LIBOR Certificates Will be Sensitive to Changes in LIBOR   The LIBOR Certificates will receive interest at a certificate interest rate equal to the least of (x) the Adjusted Weighted Average Pass-Through Rate, (y) LIBOR plus the related margin and (z) 11.000%. Accordingly, the LIBOR Certificates will be sensitive to changes in LIBOR, unless the certificate interest rate for such certificates is limited to the Adjusted Weighted Average Pass-Through Rate. No prediction can be made as to future levels of LIBOR. See “Description of the Certificates—Calculations of Interest” and “—Calculation of LIBOR” in this prospectus supplement.
     
The LIBOR Certificates May Receive Interest at a Certificate Interest Rate Lower than the Lesser of LIBOR Plus the Related Margin and 11.000%   The LIBOR Certificates will receive interest at a certificate interest rate equal to the least of (x) the Adjusted Weighted Average Pass-Through Rate, (y) LIBOR plus the related margin and (z) 11.000%. For any class of these certificates, the prepayment of mortgage loans with relatively higher pass-through rates may cause the Adjusted Weighted Average Pass-Through Rate to be lower than LIBOR plus the related margin, in which case the certificate interest rate for these certificates will be limited to the lesser of (i) the Adjusted Weighted Average Pass-Through Rate and (ii) 11.000%.
     

  If on any distribution date the certificate interest rate for any class of the LIBOR Certificates is limited to the Adjusted Weighted Average Pass-Through Rate, a carryover shortfall amount, equal to the excess, if any, of (i) the amount of interest that would have accrued on such class at a certificate interest rate equal to the lesser of (a) LIBOR plus the related margin and (b) 11.000%, over (ii) the actual amount of interest accrued on such class for such distribution date, will be payable to such certificates, to the extent of available funds on that distribution date or future distribution dates.

S-15


  However, any such carryover shortfall amount will be paid on any distribution date only to the extent that there are amounts on deposit to pay such shortfalls, funded, in the case of the Class A-1 Certificates, first, from payments made under the Class A-1 yield maintenance agreement and, second, from amounts otherwise distributable to the Class C Certificates, and in the case of the other LIBOR Certificates, from amounts otherwise distributable to the Class C Certificates to the extent remaining after such interest has been applied to pay carryover shortfall amounts to the Class A Certificates. Furthermore, on any distribution date the amounts available to pay such carryover shortfall amount will be paid first, to the Class A Certificates, pro rata based on unpaid carryover shortfall amounts and second, sequentially to the subordinate certificates, in order of seniority. Accordingly, these carryover shortfall amounts may remain unpaid on the date of the optional termination or the final distribution date. Therefore, the holders of these certificates will be subject to the risk that interest distributable to those classes will equal the lesser of (i) the Adjusted Weighted Average Pass-Through Rate and (ii) 11.000%. See “Description of the Certificates—Distributions” in this prospectus supplement.
     
The Certificates (other than the LIBOR, Class PPP, Class R and Class C Certificates) May Receive Interest at a Certificate Interest Rate Lower than the Fixed Amount   The Certificates (other than the LIBOR, Class PPP, Class R and Class C Certificates) will receive interest at a certificate interest rate equal to the lesser of (x) the Weighted Average Pass-Through Rate and (y) a fixed amount. For any class of these certificates, the prepayment of mortgage loans with relatively higher pass-through rates may cause the Weighted Average Pass-Through Rate to be lower than the related fixed amount, in which case the certificate interest rate for these certificates will be limited to the Weighted Average Pass-Through Rate.
     

  If on any distribution date the certificate interest rate for any class of these certificates is limited to the Weighted Average Pass-Through Rate, a carryover shortfall amount, equal to the excess, if any, of (i) the amount of interest that would have accrued on such class at a certificate interest rate equal to the related fixed amount over (ii) the actual amount of interest accrued on such class for such distribution date, will be payable to such certificates, to the extent of available funds on that distribution date or future distribution dates.

S-16


  However, any such carryover shortfall amount will be paid on any distribution date only to the extent that there are amounts on deposit to pay such shortfalls, funded from amounts otherwise distributable to the Class C Certificates. Furthermore, on any distribution date the amounts available to pay such carryover shortfall amount will be paid first, to the Class A Certificates, pro rata based on unpaid carryover shortfall amounts and second, sequentially to the subordinate certificates, in order of seniority. Accordingly, these carryover shortfall amounts may remain unpaid on the date of any optional termination or the final distribution date. Therefore, the holders of these certificates will be subject to the risk that interest distributable to those classes will equal the Weighted Average Pass-Through Rate. See “Description of the Certificates—Distributions” in this prospectus supplement.
     
Payments Made Pursuant to the Class A-1 Yield Maintenance Agreement May Not be Sufficient to Cover Carryover Shortfall Amounts on the Class A-1 Certificates   For any distribution date until July 2010 on which the certificate interest rate on the Class A-1 Certificates is limited to the Adjusted Weighted Average Pass-Through Rate, the Class A-1 Certificates may be entitled to receive, as interest, payments pursuant to a yield maintenance agreement. Payments under the Class A-1 yield maintenance agreement on any distribution date will generally equal the product of (i) a fraction, the numerator of which is the actual number of days in the certificate accrual period and the denominator of which is 360, (ii) the excess, if any, of (x) LIBOR, subject to a maximum of 10.880%, over (y) the related strike rate specified on Schedule 1 to this prospectus supplement and (iii) the lesser of (x) the principal balance of the Class A-1 Certificates immediately prior to such distribution date and (y) the related yield maintenance notional balance specified on Schedule 1 to this prospectus supplement. The yield maintenance notional balances were calculated assuming a prepayment rate of 75% BPA, as described under “Yield and Prepayment Considerations—Prepayment Assumptions” in this prospectus. If the actual prepayment rate on the mortgage loans is slower than the prepayment rate assumed for purposes of determining the yield maintenance notional balance, if the Adjusted Weighted Average Pass-Through Rate is less than the related strike rate, or if LIBOR exceeds certain levels, payments pursuant to the Class A-1 yield maintenance agreement may not be sufficient to cover carryover shortfall amounts.
     

  The Class A-1 yield maintenance agreement will terminate after the distribution date in July 2010.
     

  For a description of the Class A-1 yield maintenance agreement, see “Description of the CertificatesThe Class A-1 Yield Maintenance Agreement” in this prospectus supplement.

S-17


Payments Under the Class A-1 Yield Maintenance Agreement to the Class A-1 Certificates are Subject to the Risk of Non-Payment by the Counterparty to That Agreement   To the extent that distributions on the Class A-1 Certificates depend on payments to be received by the trustee under the Class A-1 yield maintenance agreement, the ability of the trustee to make those distributions will be subject to the credit risk of the counterparty to that agreement. Although there is a mechanism in place to facilitate the replacement of the agreement upon the default or credit impairment of the counterparty, there can be no assurance that any such mechanism will result in the ability of the trustee to obtain a suitable replacement agreement.
     
Certificates Bought at Premiums and Discounts May Receive a Lower Yield Than Expected   If you purchase a certificate at a discount from its original principal balance and the rate of principal payments is slower than you expect, your yield may be lower than you anticipate. If you purchase a certificate at a premium over its original principal balance and the rate of principal payments is faster than you expect, your yield may be lower than you anticipate.
     
Losses on the Mortgage Loans Will Reduce the Yield on the Certificates   The yield to maturity on the Class M-1, Class M-2, Class M-3, Class M-4, Class B-1, Class B-2 and Class B-3 Certificates will be extremely sensitive to losses on the mortgage loans. After the principal balance of the Class C Certificates (which represents the overcollateralization amount) has been reduced to zero, and if there is not enough excess interest generated, losses on the mortgage loans will be allocated exclusively to the Class B-3, Class B-2, Class B-1, Class M-4, Class M-3, Class M-2 and Class M-1 Certificates, in that order.
     

  The Class M-1, Class M-2, Class M-3, Class M-4, Class B-1, Class B-2 and Class B-3 Certificates are not expected to receive principal distributions until, at the earliest, the distribution date occurring in October 2009, unless the aggregate class principal balance of the senior certificates has been reduced to zero before that date. Because these certificates may be outstanding for a relatively long period of time, they may be more susceptible to losses on the mortgage loans.
     

  See “Description of the Certificates—Subordination and Allocation of Losses” in this prospectus supplement.
     
Certain Factors May Limit the Amount of Excess Interest on the Mortgage Loans Reducing Overcollateralization   In order to increase the initial overcollateralization amount and to maintain that amount against losses on the mortgage loans, it will be necessary that the mortgage loans generate more interest than is needed to pay interest on the certificates and the related servicing fee. We expect that the mortgage loans will generate more interest than is needed to pay those amounts, at least during certain periods, so long as the weighted average mortgage rate on the mortgage loans is higher than the weighted average certificate interest rate of the certificates. We cannot assure you, however, that enough excess interest will be generated to maintain the targeted overcollateralization level. The following factors will affect the amount of excess interest that the mortgage loans will generate:

S-18


       Prepayments. Each time a mortgage loan is prepaid, total excess interest after the date of prepayment will be reduced because that mortgage loan will no longer be outstanding and contributing to excess interest. Prepayment of a disproportionately high number of mortgage loans with high mortgage rates would have a greater adverse effect on future excess interest.
       
       Defaults. The actual rate of defaults on the mortgage loans may be higher than expected. Defaulted mortgage loans may be liquidated, and liquidated mortgage loans will no longer be outstanding and contributing to excess interest.
     
The Interest Only Loans Have a Greater Degree of Risk if a Default Occurs Because They do not Provide for any Payments of Scheduled Principal Until the Tenth Anniversary of their First Due Dates   Approximately 40.4% of the mortgage loans (by principal balance as of September 1, 2006) do not provide for any payments of scheduled principal until the tenth anniversary of the date on which their initial monthly payment is due. Until that date, monthly payments on these mortgage loans will be comprised solely of interest accrued on the outstanding principal balance of the mortgage loan during the preceding calendar month. Since the mortgagors are not required to make scheduled principal payments on these mortgage loans during this ten year period, the principal balance of the mortgage loan will likely be higher than the principal balance of a similar mortgage loan which requires the payment of both principal and interest throughout the entire term of the mortgage loan. A higher principal balance may result in a greater loss upon the liquidation of the mortgage loan due to a default.
     
Mortgage Loans with a History of Delinquencies Have a Greater Degree of Risk of Default   Approximately 0.12% of the mortgage loans (by principal balance as of September 1, 2006) were current but during the twelve months preceding September 1, 2006 (or during such shorter period as had elapsed from the date of acquisition of the mortgage loan by the sponsor) had been either (i) delinquent (that is, more than 30 days past due) more than once during such period or (ii) delinquent at least once during such period and such delinquency lasted for more than 30 days.
     

  Because of the past performance of these mortgage loans, there may be an increased risk of default on these mortgage loans that, in turn, could adversely affect the certificates.
     
The Balloon Loans Have a Greater Degree of Risk of Default   Approximately 2.0% of the mortgage loans (by principal balance as of September 1, 2006) will not fully amortize over their terms to maturity and, thus, will require principal payments at their stated maturity, which may be substantially greater than the monthly payments otherwise due on such mortgage loans (i.e., balloon payments). Each balloon loan amortizes over 40 years, but requires payment in full 360 months after the origination of such balloon loan. Mortgage loans with balloon payments involve a greater degree of risk because the ability of a mortgagor to make a balloon payment typically will depend on the mortgagor's ability either to timely refinance the loan or to timely sell the related mortgaged property. The ability of a mortgagor to refinance the loan or sell the related mortgaged property will be affected by a number of factors, including:

S-19


       the level of available mortgage interest rates at the time of refinancing or sale;
       
       the mortgagor's equity in the related mortgaged property;
       
       prevailing general economic conditions; and
       
       the availability of credit for one- to four-family residential properties generally.
     
The Geographic Concentration of the Mortgaged Properties Relating to the Mortgage Loans Increases Your Exposure to Adverse Conditions in California and Other States   The geographic concentration of mortgaged properties can expose the related mortgage loans to a higher incidence of losses due to a greater susceptibility to hazards not covered by standard hazard insurance, such as hurricanes, floods, mudslides and earthquakes, than properties located in other parts of the country. Also, the geographic concentration of mortgaged properties can expose the related mortgage loans to a higher incidence of losses due to economic conditions in states that have higher concentrations of businesses in particular economic segments than the nation as a whole.
     

  Consequently, the high concentration of mortgaged properties in California and other states may adversely affect losses and prepayments on the mortgage loans which, in turn, would adversely affect the certificates. See Appendix B for a table showing the geographic distribution by state of the mortgaged properties.
     
A Loss or Delinquency on a Mortgage Loan May Have a Disproportionate Impact on the Performance of the Mortgage Pool Because the Mortgage Loans Have High Principal Balances   As of September 1, 2006, the highest principal balance of any mortgage loan was approximately $1,454,121, and approximately 2.3% of the mortgage loans (by principal balance as of September 1, 2006) had original principal balances greater than or equal to $1,000,000.
     

  You should consider the risk that the loss and delinquency experience on the higher balance mortgage loans may have a disproportionate effect on the mortgage loans as a whole. A loss of the entire principal balance of one of these mortgage loans may result in a substantial realized loss, which may be allocated to the offered certificates. See Appendix B for a table showing the range of original principal balances of the mortgaged properties.
     
Hurricanes May Have Affected Mortgaged Properties   Hurricanes, which have recently struck the Gulf Coast and other regions of the United States, may have adversely affected mortgaged properties located in those areas. With respect to each mortgage loan, Washington Mutual Mortgage Securities Corp. will represent and warrant that, as of September 28, 2006, each mortgaged property is free of any material damage and in good repair. Washington Mutual Mortgage Securities Corp. will be required to repurchase or substitute for any mortgage loan that breaches this representation and warranty. However, we do not know how many mortgaged properties have been or may be affected by the recent hurricanes. No assurance can be given as to the impact of these hurricanes on the rate of delinquencies and losses on the mortgage loans secured by mortgaged properties that were or may be affected by the hurricanes.

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  In addition, we are unable to predict the effect of the hurricanes on the economy in the affected regions. The full economic impact of the hurricanes is uncertain but may be severe, and may affect the ability of borrowers to make payments on their mortgage loans and the ability of the servicer to make collections on mortgage loans.
     

  See Appendix B for a table showing the geographic distribution by state of the mortgaged properties.
     
Not All Mortgage Loans Impose Prepayment Penalties, and Those That Do Impose Them for Only a Limited Period of Time   As of September 1, 2006, certain of the mortgage loans impose penalties for early prepayments in full (but do not impose penalties for partial prepayments) received on or before the fifth anniversary, as stated in the related mortgage note, of the origination of the mortgage loan. As of September 1, 2006, certain of the mortgage loans impose penalties for early prepayments in full, and for partial prepayments in the event that aggregate partial prepayments made during a 12-month period exceed a certain percentage of the original principal balance. The amount of the applicable prepayment penalty, to the extent permitted by applicable law, is as provided in the related mortgage note. Such prepayment penalty may discourage mortgagors from prepaying their mortgage loans during the period such prepayment penalties are in effect and, accordingly, thereby affect the rate of prepayment of such mortgage loans even in a declining interest rate environment. See the “Prepayment Penalty Terms” table in Appendix B for information regarding the number and percentage of mortgage loans that contain prepayment penalties, broken out for each of the various prepayment penalty terms.
     
Only Penalties on Voluntary Prepayments in Full Will Be Paid to the Class PPP Certificateholders   The Class PPP Certificates will receive $100 of principal on the distribution date in September 2010 from the Class PPP Reserve Fund. These certificates will not receive any distributions of interest, nor will they receive distributions of principal on any other distribution date. The only other payments the Class PPP Certificates are entitled to receive are the Assigned Prepayment Penalties.
     

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

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  The holders of the Class PPP Certificates will not receive any prepayment penalty payments collected by the servicer with respect to voluntary partial prepayments; each such payment will be retained by the servicer as additional servicing compensation. The servicer will also not collect prepayment penalties due to involuntary prepayments such as foreclosures.
     

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

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

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

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

  Investors should conduct their own analysis of the effect that the payment of penalties for voluntary full prepayment of the related mortgage loans, or decisions by the servicer with respect to waiver thereof, may have on the performance of the Class PPP certificates. See also “Description of the Mortgage Pool” and “Description of the Certificates—Distributions to the Class PPP Certificates” in this prospectus supplement for a description of prepayment penalties imposed on the related mortgage loans.
     
The Lack of Physical Certificates for Certain Classes of Certificates May Cause Delays in Payment and Cause Difficulties in Pledging or Selling Your Certificates   You will not have a physical certificate if you own an offered certificate, other than a Class R Certificate. As a result, you will be able to transfer your certificates only through The Depository Trust Company, participating organizations, including Euroclear and Clearstream, indirect participants and certain banks. In addition, you may experience some delay in receiving distributions on these certificates because the trustee will not send distributions directly to you. Instead, the trustee will send all distributions to The Depository Trust Company, which will then credit those distributions to the participating organizations. Those organizations will in turn credit accounts you have either directly with them or indirectly with them through indirect participants.
     
The Return on Your Certificates Could be Reduced due to the Application of the Servicemembers Civil Relief Act or any Comparable State Legislation   Following the terrorist attacks in the United States on September 11, 2001, the United States has increased its active military operations (including, most recently, significant military actions in Iraq) and has placed a substantial number of military reservists and members of the National Guard on active duty status. It is possible that the number of reservists and members of the National Guard placed on active duty status in the near future may increase. Calling reservists, members of the National Guard and civilians to active military duty may adversely affect the performance of your certificates. Under the Servicemembers Civil Relief Act, as amended (the “Relief Act”), formerly known as the Soldiers' and Sailors' Civil Relief Act of 1940, persons in active military service are provided relief from the performance of some payment obligations. The relief includes a 6.000% per annum interest rate cap on each mortgage loan, provided that the mortgage loan was obtained before the commencement of active military service. In addition, all civil court actions, such as bankruptcy and foreclosure proceedings, are delayed. Furthermore, the servicer may be required to waive all or part of any prepayment penalty that would otherwise be due during the time that any mortgage loans is subject to the Relief Act.

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

  The application of the interest rate cap to any mortgage loan underlying the certificates would result in certificateholders receiving less interest than they would otherwise be entitled to. The interest shortfall on any distribution date arising out of each of these mortgage loans would be equal to one month of interest on the principal balance of the mortgage loan at a rate equal to the difference between the interest rate payable by the borrower under the terms of the applicable mortgage note and 6.000%. The interest shortfall would be deducted from the interest payable to each class of certificates, pro rata, in accordance with interest accrued on each class of certificates for the applicable distribution date. This interest shortfall is not covered by compensating interest.
     

  The effect of a delay in foreclosure proceedings with respect to any mortgage loan underlying the certificates would be to cause a loss, or increase the severity of any loss that would have otherwise occurred, upon the final liquidation of the mortgage loan. These losses would be applied to the certificates in the order described in “Description of the Certificates—Subordination and Allocation of Losses” in this prospectus supplement.
     

  Neither the depositor nor the servicer is able to determine how many of the mortgage loans underlying the certificates are or may be affected by application of the Relief Act in the future.

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THE SPONSOR

General

      Washington Mutual Mortgage Securities Corp., the sponsor of the securitization transaction, is a Delaware corporation and a wholly-owned subsidiary of Washington Mutual Bank and an indirect wholly-owned subsidiary of Washington Mutual, Inc. At June 30, 2006, Washington Mutual, Inc. and its subsidiaries had assets of $350.9 billion. The sponsor engages in the business of (i) purchasing mortgage loans on a servicing retained and servicing released basis, (ii) selling mortgage loans in whole loan transactions and securitizing mortgage loans through affiliated and unaffiliated depositors, (iii) master servicing mortgage loans, (iv) acting as administrative agent of Washington Mutual Bank and its affiliates with respect to mortgage loans serviced by Washington Mutual Bank and its affiliates and (v) providing securitization services. The sponsor generally acts as master servicer or administrative agent with respect to all mortgage loans securitized by the sponsor.

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

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

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

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

    Year Ended
December 31, 2004

  Year Ended
December 31, 2005

  Six Months Ended
June 30, 2006

    (Dollar Amounts in Millions)

Aggregate Principal Balance of Mortgage Loans Purchased by Sponsor

     $ 10,803        $ 11,265        $ 11,753  

Aggregate Principal Balance of Mortgage Loans Securitized

     $ 1,045        $ 7,149        $ 9,306  

                       

The Sponsor's Origination Channels

      All of the mortgage loans owned by the Trust have been purchased by the sponsor either from Washington Mutual Bank or from approved mortgage loan sellers. Approximately 12.7% of the mortgage loans were purchases by the sponsor from Washington Mutual Bank, and therefore for these mortgage loans, Washington Mutual Bank is a mortgage loan seller as used in this prospectus supplement and the accompanying prospectus. Through the sponsor's conduit program, the sponsor purchases mortgage loans in bulk from approved mortgage loan sellers on both a servicing retained and servicing released basis. In initially approving a mortgage loan seller, the sponsor takes into account the following: annual origination volume, tenure of business and key staff in originating loans, policies and procedures for originating loans including quality control and appraisal review, review audits performed on mortgage loan seller by rating agencies, regulatory agencies and government sponsored entities, the mortgage loan seller's financial statements, errors and omissions insurance coverage and fidelity bond and liability insurance coverage. Approved mortgage loan sellers' financial statements, insurance coverage and new review audits are reviewed on an annual basis. Additionally, the sponsor performs a monthly ongoing performance review of previously purchased mortgage loans for trends in delinquencies, losses and repurchases. The mortgage loan sellers' underwriting guidelines are reviewed for consistency with the sponsor's credit parameters and conformity with the underwriting standards described under “Underwriting of the Mortgage Loans” below and are either approved or approved with exceptions. The mortgage loan sellers represent to the sponsor upon sale that the mortgage loans have been underwritten in accordance with the approved underwriting guidelines.

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

STATIC POOL INFORMATION

      On August 11, 2006, the depositor filed with the Securities and Exchange Commission, as Exhibits 99.1, 99.2, 99.3 and 99.4 to a Current Report on Form 8-K, static pool information about prior securitized pools and vintage pools of fixed-rate residential mortgage loans (non-traditional or “alternative A” underwriting standards) of the sponsor. The static pool information includes (i) information about the original characteristics of each prior securitized pool and vintage pool as of the cut-off date for that pool and (ii) delinquency, loss and prepayment information about each prior securitized pool and vintage pool in quarterly increments from the related cut-off date through June 30, 2006. The static pool information about prior securitized pools and vintage pools of fixed-rate residential mortgage loans of the sponsor that were established before January 1, 2006 will not be deemed to be a part of this prospectus supplement, the accompanying prospectus or the related registration statement.

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

UNDERWRITING OF THE MORTGAGE LOANS

General

      All of the mortgage loans owned by the Trust have been originated in accordance with the underwriting standards of the sponsor or the underwriting guidelines of Washington Mutual Bank as described in this section.

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

      Prospective borrowers are required to complete a standard loan application in which they may provide financial information regarding such factors as their assets, liabilities and related monthly payments, income, employment history and credit history. Each borrower also provides an authorization to access a credit report that summarizes the borrower's credit history.

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Evaluation of the Borrower's Credit Standing

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

Evaluation of the Borrower's Repayment Ability

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

Evaluation of the Adequacy of the Collateral

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

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Documentation Programs

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

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

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

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

Exceptions to Program Parameters

      Exceptions to the underwriting standards described above may be made on a case-by-case basis if compensating factors are present. In those cases, the basis for the exception is documented. Compensating factors may include, but are not limited to, low loan-to-value ratio, low debt-to-income ratio, good credit standing, the availability of other liquid assets, stable employment and time in residence at the prospective borrower's current address.

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Automated Underwriting System

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

Due Diligence

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

THE ORIGINATORS

      The sponsor purchased the mortgage loans directly or indirectly from affiliated or unaffiliated third parties who either originated the mortgage loans or purchased the mortgage loans through correspondent or broker lending. The following entities originated at least 10% of the mortgage loans (by principal balance as of September 1, 2006): American Home Mortgage Corp., approximately 35.7%; GreenPoint Mortgage Funding, Inc., approximately 28.1%; and Washington Mutual Bank, approximately 12.7%. No other entity originated more than 10% of the mortgage loans.

American Home

      American Home Mortgage Corp. (“American Home’’) is a New York corporation. American Home conducts lending through retail and wholesale loan production offices and its correspondent channel as well as its direct-to-consumer channel supported by American Home's call center. American Home operates more than 600 retail and wholesale loan production offices located in 45 states and the District of Columbia and makes loans throughout all 50 states and the District of Columbia. American Home has been originating mortgage loans since its incorporation in 1988, and has been originating fixed-rate mortgage loans since such date. The principal executive offices of American Home are located at 538 Broadhollow Road, Melville, New York 11747.

      The following table reflects American Home's originations of first-lien, fixed-rate mortgage loans for the past three years and for the six months ended June 30, 2006:

    Year Ended
December 31, 2003

  Year Ended
December 31, 2004

  Year Ended
December 31, 2005

  Six Months Ended
June 30, 2006

Number of Loans

       74,462          59,576          97,645          58,847  

Principal Balance

     $ 12,969,494,087        $ 10,586,364,298        $ 19,633,708,424        $ 11,900,231,912  

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GreenPoint

      GreenPoint Mortgage Funding, Inc., a New York corporation (“GreenPoint”), is an indirect, wholly-owned subsidiary of North Fork Bancorporation, Inc., a Delaware corporation and bank holding company (“North Fork”). North Fork's other subsidiaries include North Fork Bank, a New York commercial bank. North Fork is listed on the New York Stock Exchange under the symbol “NFB”. GreenPoint was formerly an indirect, wholly-owned subsidiary of GreenPoint Financial Corp., a Delaware corporation (“GPF”). GPF was acquired by North Fork in October 2004. On March 12, 2006, North Fork and Capital One Financial Corporation (“Capital One”) announced that they signed a definitive agreement in which Capital One will acquire North Fork. Shareholders of both companies approved the transaction. Capital One and North Fork expect the transaction to close in the fourth quarter of 2006 pending the receipt of regulatory approvals and the expiration of regulatory waiting periods.

      GreenPoint is engaged in the mortgage banking business, and as part of that business, originates, acquires, sells and services mortgage loans. GreenPoint originates loans primarily through its wholesale division, which works with a nationwide network of independent mortgage brokers, each of which must be approved by GreenPoint. GreenPoint also originates loans through its retail and correspondent lending divisions. Mortgage loans originated by GreenPoint are secured primarily by one-to-four family residences. GreenPoint's executive offices are located at 100 Wood Hollow Drive, Novato, California, 94945.

      GreenPoint has originated residential mortgage loans of substantially the same type as the mortgage loans since its formation in October 1999, when it acquired the assets and liabilities of Headlands Mortgage Company.

      During 2005, GreenPoint originated mortgage loans in the aggregate principal amount of $42,245,681,792. Of this amount, approximately $9,657,051,800 consisted of fixed-rate first-lien mortgage loans. During the first six months of 2006, GreenPoint originated mortgage loans in the aggregate principal amount of $17,661,447,812. Of this amount approximately $3,062,362,114 consisted of fixed-rate first-lien mortgage loans.

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THE DEPOSITOR

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

THE TRUST

General

      The issuer of the certificates, the Washington Mutual Mortgage Pass-Through Certificates WMALT Series 2006-8 Trust (the “Trust”), will be a statutory trust formed under the laws of the State of Delaware pursuant to a trust agreement between WaMu Asset Acceptance Corp., as depositor, and Christiana Bank & Trust Company, as Delaware trustee. The pooling agreement among the depositor, Washington Mutual Bank, as servicer, the Delaware trustee and LaSalle Bank National Association, as trustee, will restate the trust agreement and will be the governing instrument of the Trust.

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

Assignment of the Mortgage Loans and Other Assets to the Trust

      A pool of mortgage loans, as described in this prospectus supplement, will be sold to the Trust on September 28, 2006 (the “Closing Date”). The Trust will own the right to receive all payments of principal and interest on the mortgage loans due after September 1, 2006 (the “Cut-Off Date”). A schedule to the pooling agreement will include information about each mortgage loan, including:

the outstanding principal balance as of the close of business on the Cut-Off Date;
 
the term of the mortgage loan; and
 
the mortgage interest rate.

      With respect to approximately 12.7% of the mortgage loans, the mortgage notes will not be endorsed to the Trust and no assignment of the mortgages to the Trust will be prepared. Washington Mutual Bank fsb, a wholly-owned subsidiary of the servicer, will have possession of and will review the mortgage notes and mortgages related to those mortgage loans as custodian for the Trust and financing statements will be filed evidencing the Trust's interest in those mortgage loans.

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

insurance policies related to individual mortgage loans, if applicable;
 
any property that secured a mortgage loan that the Trust acquires after the Cut-Off Date by foreclosure or deed in lieu of foreclosure;
 
the rights of the Trust under the Class A-1 yield maintenance agreement;
 
the amounts in the Class PPP Reserve Fund; and
 
amounts held in the certificate account.

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

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

Restrictions on Activities of the Trust

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

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

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

Discretionary Activities With Respect to the Trust

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

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

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Holders of certificates evidencing more than 50% of the voting rights will have the right at any time to remove the trustee or the Delaware trustee and to appoint an eligible successor trustee.

THE TRUSTEES

The Trustee

General

      LaSalle Bank National Association (“LaSalle”) will be the trustee under the pooling agreement. LaSalle Bank National Association is a national banking association formed under the federal laws of the United States of America. Its parent company, LaSalle Bank Corporation, is an indirect subsidiary of ABN AMRO Bank N.V., a Netherlands banking corporation. LaSalle has extensive experience serving as trustee on securitizations of residential mortgage loans. Since January 1994, LaSalle has served as trustee or paying agent on over 450 residential mortgage-backed security transactions involving assets similar to the mortgage loans. As of July 31, 2006, LaSalle serves as trustee or paying agent on over 375 residential mortgage-backed security transactions. The depositor and servicer may maintain other banking relationships in the ordinary course of business with the trustee. The trustee's corporate trust office is located at 135 South LaSalle Street, Suite 1511, Chicago, Illinois, 60603, Attention: Global Securities and Trust Services—Washington Mutual Mortgage Pass-Through Certificates WMALT Series 2006-8, or at such other address as the trustee may designate from time to time.

Material Duties of the Trustee

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

to hold the mortgage notes, mortgages and other legal documents in the mortgage files (other than the mortgage files held by the custodian);
 
with respect to all or some of the mortgage loans, to review each mortgage file (other than the mortgage files held by the custodian) and deliver a certification to the effect that, except as noted in the certification, all required documents have been executed and received;
 
to authenticate and deliver the certificates, pursuant to the order of the depositor;
 
to maintain a certificate register and, upon surrender of certificates for registration of transfer or exchange, to authenticate and deliver new certificates;
 
to make the required distributions to certificateholders on each Distribution Date, in accordance with the monthly distribution report prepared by the administrative agent (and without any independent review or verification of the information provided in the report);
 
to deliver or make available to certificateholders the monthly distribution reports and any other reports required to be delivered by the trustee under the pooling agreement;
 
in the event that the trustee has received notice from the servicer that the remaining Class Principal Balance of a class of certificates is to be paid on a specified Distribution Date, to send a notice to that effect to the holders of that class of certificates; and
 
upon the termination or resignation of the servicer, to act as successor servicer, or to appoint a successor servicer, to the extent described under “—Events of Default Under the Pooling Agreement” below.

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

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

Events of Default Under the Pooling Agreement

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

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

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

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

The Delaware Trustee

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

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

Limitations on the Trustees' Liability

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

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

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

Resignation and Removal of the Trustees

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

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

THE SERVICERS

General

      All of the mortgage loans owned by the Trust will be serviced by Washington Mutual Bank, as servicer, pursuant to the pooling agreement. Washington Mutual Mortgage Securities Corp. will act as administrative agent of the servicer with respect to the mortgage loans, pursuant to an administrative agent agreement between the administrative agent and the servicer. The administrative agent will be responsible for calculating monthly distributions on the certificates, preparing monthly distribution reports and other functions, as described under “—The Administrative Agent” below. Washington Mutual Bank fsb, a wholly-owned subsidiary of the servicer, will have possession of the mortgage files with respect to some of the mortgage loans as custodian for the Trust. The trustee will have possession of all mortgage files other than those in the possession of the custodian.

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

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

The Servicer

The Servicer's Servicing Experience

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

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

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

    12/31/2004

  12/31/2005

  6/30/2006

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

       965,841          964,940          971,049  

Aggregate Principal Balance

     $ 238,360        $ 259,466        $ 270,106  

Number of Mortgage Loans Serviced for Unaffiliated Third Parties

       3,832,119          3,568,487          3,468,856  

Aggregate Principal Balance

     $ 445,272        $ 436,293        $ 433,205  

                       

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

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

    12/31/2004

  12/31/2005

  6/30/2006

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

       798,269          766,384          717,570  

Aggregate Principal Balance

     $ 213,525        $ 226,334        $ 227,345  

Number of Mortgage Loans Serviced for Unaffiliated Third Parties

       3,820,696          3,527,670          3,467,592  

Aggregate Principal Balance

     $ 444,595        $ 429,944        $ 433,025  

                       

Servicing Procedures

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

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

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

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

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to July 2004, the servicer serviced some mortgage loans using a proprietary mortgage loan servicing system; in July 2004, the servicer consolidated servicing into a single servicing platform by converting approximately 1.2 million loan records from the proprietary mortgage loan servicing system to the Fidelity System.

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

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

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

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

      Payments under a yield maintenance agreement will be deposited into the related yield maintenance account maintained by the trustee.

      On each Distribution Date, the trustee will (i) transfer the amounts on deposit in the yield maintenance account into the certificate account and (ii) after making such transfer, withdraw from the certificate account the funds required to be distributed to certificateholders on that date, in each case, in accordance with the monthly distribution report prepared by the administrative agent.

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

      Funds held in the lockbox accounts and the payment clearing accounts may be commingled with collections on other mortgage loans serviced by the servicer. Funds held in the investment account may be commingled with funds related to series of pass-through certificates with one or more classes of certificates that have ratings equal to the highest of the ratings of the certificates. Funds held in the

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custodial account, the escrow account, the yield maintenance accounts, and the certificate account will not be commingled with collections on mortgage loans or payments under a yield maintenance agreement that are not owned by the Trust.

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

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

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

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Flow of Payments

Flow of Payments

Mortgagor
Payments

Other
Mortgage
Loan
Collections

Servicer
Advances of
Principal and
Interest and
Repurchase
Proceeds

Payments by
Cap
Counterparty

Lockbox Accounts

Payment Clearing
Accounts

Yield Maintenance
Account

Escrow

Account

Custodial Account

Investment

Account

Certificate Account

Distributions to
Certificateholders

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

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

      Procedures for Applying Additional Payments. If the servicer receives a payment on a non-delinquent mortgage loan in addition to the scheduled monthly payment, the servicer generally will apply the additional payment as a Curtailment (unless the mortgagor instructs the servicer to apply the payment in another manner).

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

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

      If, at the time a mortgage loan becomes a Liquidated Mortgage Loan, an advance previously made by the servicer with respect to that mortgage loan has not been recovered from late payments, Insurance Proceeds, Liquidation Proceeds or other amounts received for that mortgage loan (a “Nonrecoverable

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Advance”), the servicer will be entitled to be reimbursed for such advance from collections on other mortgage loans owned by the Trust prior to any payments being made to the certificateholders.

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

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

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

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

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

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

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

The Servicer's Quality Control Procedures

      The servicer uses a combination of management controls and technology controls to ensure the accuracy and integrity of servicing records. Management controls include the use of approval levels, the segregation of duties, and reconciliations of servicing data and accounts, among others. Technology controls include the use of data security controls and interface controls to ensure that only authorized persons have the ability to access and change system data or to submit data to or receive data from vendors and investors. Specific security profiles for each job function include a predetermined set of data security controls that are appropriate for that job function. The data center for the Fidelity System, which

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is located in Jacksonville, Florida, is kept in a fire protected environment, and commercial electrical power is backed up by generators.

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

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

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

Interim Servicing

      While Washington Mutual Bank will act as servicer for all of the mortgage loans, as of the Cut-Off Date, some of the mortgage loans had not yet had their servicing transferred to Washington Mutual Bank. Those mortgage loans will be serviced by the respective originators or mortgage loan sellers of those mortgage loans on an interim basis until the servicing is transferred to Washington Mutual Bank. Approximately 28.0% of the mortgage loans (by principal balance as of the Cut-Off Date) will be serviced on an interim basis by GreenPoint. As of the Cut-Off Date, no other entity will act as interim servicer for more than 10% of the mortgage loans. As of November 1, 2006, all of the mortgage loans will be serviced by Washington Mutual Bank. Servicing transfers can result in a temporary increase in delinquencies.

The Administrative Agent

The Administrative Agent's Servicing Experience

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

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

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

    12/31/2004

  12/31/2005

  6/30/2006

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

       110,940          191,332          213,223  

Aggregate Principal Balance

     $ 42,500        $ 79,420        $ 87,796  

Number of Mortgage Loans Serviced for Unaffiliated Third Parties

       257,060          233,181          221,066  

Aggregate Principal Balance

     $ 47,635        $ 42,325        $ 39,929  

                       

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Services Performed by the Administrative Agent

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

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

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

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

The Administrative Agent's Quality Control Procedures

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

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

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

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

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The Custodian

      Washington Mutual Bank fsb, a wholly owned subsidiary of the servicer, will act as custodian for the Trust pursuant to a custodial agreement among the trustee, the servicer and the custodian, with respect to approximately 12.7% of the mortgage loans. The custodian will hold the mortgage notes, mortgages and other legal documents in the mortgage files with respect to those mortgage loans for the benefit of the Trust. The custodian will maintain the mortgage files in secure and fireproof facilities. The mortgage files will not be physically segregated from other mortgage files in the custodian's custody but will be kept in shared facilities. However, the custodian's computerized document tracking system will show the location within the custodian's facilities of each mortgage file and will show that the mortgage loan documents are held by the custodian on behalf of the Trust. The custodian will review each mortgage file and deliver a certification to the effect that, except as noted in the certification, all required documents have been executed and received. See “Risk Factors” in the accompanying prospectus for a description of certain risks relating to the custodian's possession of the mortgage notes and mortgages.

      In the event of the termination of the custodial agreement, the custodian will be required to deliver all mortgage files in the custodian's custody to the trustee or any successor custodian appointed by the trustee.

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

Special Servicing Agreements

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

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

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

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

AFFILIATIONS AND RELATED TRANSACTIONS

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

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

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DESCRIPTION OF THE MORTGAGE POOL*

      The mortgage pool will consist of 2,060 fixed-rate mortgage loans that will have an aggregate principal balance as of the Cut-Off Date, after deducting payments due on or before that date, of approximately $523,926,859. Certain of the risks of loss on some mortgage loans will be covered up to specified limits by primary insurance policies.

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

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

      Mortgagors may elect to participate in the servicer's Auto Pay program, under which monthly payments are electronically debited from the mortgagor's checking or savings account and credited to the mortgage loan on a monthly payment date. The mortgagor may select as the monthly payment date any date from the first through the 15th day of the month. In order to enroll in the Auto Pay program, the mortgagor's bank account must be with a financial institution that is a member of the Automated Clearing House processing system.

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

      The servicer will send monthly statements to mortgagors in the month prior to the month in which the payment is due. The servicer generally will assess a late fee if the servicer has not received the monthly payments on the 15th day after the date on which the payment was due. In addition to assessing late fees for late monthly payments, the servicer may assess nonsufficient funds fees, payoff statement fees (in connection with Payoffs) and, if applicable, prepayment penalties for early Payoffs.

      In addition, for any month, if the servicer receives a payment on a mortgage loan that is less than the monthly payment scheduled to be received or if no payment is received at all, the servicer will advance funds held by the servicer for future distribution, or its own funds, to cover the difference


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

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between the scheduled monthly payment and the amount actually received with respect to that mortgage loan. However, the servicer will not be required to make such advances if it determines that those advances will not be recoverable from future payments or collections on that mortgage loan.

      As of the Cut-Off Date, approximately 1.5% of the borrowers are obligated on more than one mortgage loan underlying the certificates. As of the Cut-Off Date, the maximum number of mortgage loans related to a single borrower is four, and the maximum aggregate principal balance of mortgage loans related to a single borrower obligated on more than one mortgage loan represents approximately 0.1% of the mortgage loans by principal balance. As of the Cut-Off Date, the maximum aggregate principal balance of mortgage loans related to any single borrower (which in this case is a borrower obligated on only one mortgage loan underlying the certificates) represents approximately 0.3% of the mortgage loans by principal balance.

      Each mortgage loan will have a first payment date during the period from December 2005 through October 2006, inclusive, and will have an original term to maturity of not more than 30 years. All mortgage loans will have principal and interest payable on the first day of each month (the “Due Date”), except for those loans which will have only interest payable on each Due Date until the tenth anniversary of their first Due Date (the “Interest Only Loans”). After the tenth anniversary, as applicable, the Interest Only Loans will have interest and principal payable on each Due Date in amounts sufficient to fully amortize those mortgage loans on their respective maturity dates.

      As of the Cut-Off Date, approximately 40.4% of the mortgage loans were Interest Only Loans with interest only payments for 10 years.

      As of the Cut-Off Date, approximately 1.3% of the mortgage loans were covered by a primary insurance policy. Each mortgage loan with both (i) an original loan-to-value ratio and (ii) a loan-to-value ratio as of the Cut-Off Date in excess of 80% was covered, as of the Cut-Off Date, by a primary insurance policy. For purposes of determining whether a primary insurance policy is required, the loan-to-value ratio is generally calculated as follows: (1) with respect to mortgage loans not secured by property located in the State of New York, the original principal amount of such loan divided by the lesser of (x) the original appraised value of the related mortgaged property and (y) the purchase price of such loan; and (2) with respect to mortgage loans secured by property in the State of New York, the original principal amount of such loan divided by the original appraised value of the related mortgaged property.

      None of the mortgage loans are “Buydown Loans,” which are mortgage loans for which scheduled payments of principal and/or interest have been subsidized for a period of time through a fund provided by the originator or another person at the time of origination.

      As of the Cut-Off Date, approximately 2.0% of the mortgage loans will not, by the terms of the related mortgages, fully amortize by their stated maturity dates (each, a “Balloon Loan”). Each Balloon Loan amortizes over 40 years, but requires payment in full 360 months after the origination of that Balloon Loan.

      As of the Cut-Off Date, approximately 12.1% of the mortgage loans impose prepayment penalties for certain prepayments of principal. See Appendix B for a table showing prepayment penalty terms of the mortgage loans. Generally, the mortgage loans with prepayment penalties provide for the payment of a penalty in connection with certain voluntary, full or partial prepayments made within a period of time specified in the related mortgage note and generally ranging from four months to five years from the date of origination of such mortgage loan. The amount of the applicable prepayment penalty, to the extent permitted under applicable law, is as provided in the related mortgage note. As of the Cut-Off Date, approximately 1.1% of the mortgage loans impose penalties for early prepayments but contain an exception for prepayments in full made in connection with a bona fide and arm's length sale of the related mortgaged property during a certain period following origination, or after a certain period following origination, as specified in the mortgage note. Under certain circumstances described in the pooling agreement, the servicer may waive a prepayment penalty. Circumstances under which the servicer may waive a prepayment penalty include (i) some cases, for mortgage loans originated by the servicer or an affiliate thereof, in which the mortgagor sells the mortgaged property and obtains a new mortgage loan originated and serviced by Washington Mutual Bank to purchase another property, provided that the prepayment is made no earlier than one year after origination or (ii) some cases, for mortgage loans

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originated by the servicer or an affiliate thereof, with prepayment penalty terms longer than one year, where the mortgagor refinances the mortgage loan with a new mortgage loan originated and serviced by Washington Mutual Bank, provided that 90 days or less remain in the prepayment penalty term. Regardless of the terms of the mortgage note, the servicer will not collect any prepayment penalties required to be paid more than three years after the origination of the mortgage loan. All prepayment penalty payments remitted to the Trust with respect to voluntary full prepayments will be distributed to the holders of the Class PPP Certificates. The holders of the Class PPP Certificates will not receive any prepayment penalty payments with respect to voluntary partial prepayments; each such payment will be retained by the servicer as additional servicing compensation. No prepayment penalty payments will be available for distribution to holders of the other classes of certificates.

      See Appendix B for a detailed description of the mortgage loans.

Additional Information

      Appendix B contains important information about the mortgage loans including:

the mortgage interest rates, the Pass-Through Rates and the original principal balances of the mortgage loans;
 
the years in which initial monthly payments on the mortgage loans are due;
 
the loan-to-value ratios of the mortgage loans as of the Cut-Off Date;
 
the types of mortgaged properties;
 
the geographic distribution by state of the mortgaged properties;
 
the scheduled maturity years of the mortgage loans and the weighted average remaining term to maturity of the mortgage loans;
 
the original terms to maturity of the mortgage loans;
 
the number of mortgage loans originated under reduced documentation or no documentation programs, if any;
 
the stated owner occupancy status of the mortgaged properties when the mortgage loans were originated;
 
the mortgagor's purpose of financing;
 
the credit score ranges;
 
the prepayment penalty terms;
 
the monthly debt-to-income ratio of all debt;
 
combined loan-to-value ratios of the mortgage loans; and
 
current and past delinquencies of the mortgage loans.

      The credit score tables appearing in Appendix B show the credit scores, if any, that the originators or underwriters of the mortgage loans collected for the mortgagors. The credit scores shown were collected from a variety of sources over a period of weeks, months or longer, and the credit scores do not necessarily reflect the credit scores that would be reported as of the date of this prospectus supplement. Credit scores should not be considered as an accurate predictor of the likelihood of repayment of the related mortgage loans. See “Underwriting of the Mortgage Loans—Evaluation of the Borrower's Credit Standing” in this prospectus supplement.

      The material terms of the pooling agreement are described in this prospectus supplement, and the pooling agreement will be available to purchasers of the certificates through a Current Report on Form 8-K that will be filed with the Securities and Exchange Commission within fifteen days after the initial issuance of the certificates. If mortgage loans are removed from or added to the mortgage pool as described in the footnote on page S-45, that removal or addition will be noted in a Distribution Report on Form 10-D or a Current Report on Form 8-K.

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Representations and Warranties Regarding the Mortgage Loans

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

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

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

      In the event of a material breach of the representations and warranties made by the sponsor or the depositor, the breaching party will be required to either cure the breach in all material respects, repurchase the affected mortgage loan or substitute for the affected mortgage loan. In the event that a required loan document is not included in the mortgage files for the mortgage loans, the sponsor generally will also be

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required to either cure the defect or repurchase or substitute for the affected mortgage loan. See “Description of the Securities—Representations and Warranties Regarding the Mortgage Loans; Remedies for Breach” in the accompanying prospectus for a description of the purchase price for each repurchased mortgage loan and the requirements with respect to substitutions of mortgage loans.

Criteria for Selection of Mortgage Loans

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

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DESCRIPTION OF THE CERTIFICATES

General

      The certificates will be issued pursuant to the pooling agreement to be dated as of the Cut-Off Date among WaMu Asset Acceptance Corp., as depositor, Washington Mutual Bank, as servicer, LaSalle Bank National Association, as trustee, and Christiana Bank & Trust Company, as Delaware trustee. A form of the pooling agreement is filed as an exhibit to the registration statement relating to the certificates. The accompanying prospectus contains important additional information regarding the terms and conditions of the pooling agreement and the certificates. The offered certificates will not be issued unless they receive the ratings from Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. (“S&P”), and Moody's Investors Service (“Moody's) indicated under “Certificate Ratings” in this prospectus supplement. As of the Closing Date, the offered certificates, other than the Class M-3, Class M-4, Class B-1, Class B-2, Class B-3 and Class PPP Certificates, will qualify as “mortgage related securities” within the meaning of the Secondary Mortgage Market Enhancement Act of 1984.

      The pooling agreement obligates the servicer to make advances when payments on the mortgage loans are delinquent and other conditions are met, as described in this prospectus supplement under “The Servicers—The Servicer—Servicing ProceduresAdvances.”

      The Washington Mutual Mortgage Pass-Through Certificates, WMALT Series 2006-8 will consist of the following classes:

                

Class A-1

                             Class A-5                              Class B-1
           
                

Class A-2

                             Class A-6                              Class B-2
           
                

Class A-3A

                             Class M-1                              Class B-3
           
                

Class A-3B

                             Class M-2                              Class C
           
                

Class A-3C

                             Class M-3                              Class R
           
                

Class A-4

                             Class M-4                              Class PPP

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

      

Class A Certificates

     Class A-1, Class A-2, Class A-3A, Class A-3B, Class A-3C, Class A-4, Class A-5 and Class A-6 Certificates.
       
      

Residual Certificates

     Class R Certificates.
       
      

Regular Certificates

     All classes of certificates other than the Class PPP and Class R Certificates.
       
      

Senior Certificates

     Class A and Class R Certificates.
       
      

Senior Subordinate Certificates

     Class M-1, Class M-2, Class M-3, Class M-4, Class B-1, Class B-2 and Class B-3 Certificates.
       
      

Junior Subordinate Certificates

     Class C Certificates.
       
      

Subordinate Certificates

     The Senior Subordinate and Junior Subordinate Certificates.
       
      

Lockout Certificates

     Class A-6 Certificates.
       
      

LIBOR Certificates

     Class A-1, Class B-1, Class B-2 and Class B-3 Certificates.
       
      

Physical Certificates

     Class R and Class C Certificates.
       
      

Book-Entry Certificates

     All classes of certificates other than the Physical Certificates.

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

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      The “Class Principal Balance” for any Distribution Date and for any class of certificates will equal the aggregate amount of principal to which it is entitled on the Closing Date, reduced by all distributions of principal to that class and all allocations of losses required to be borne by that class before that Distribution Date.

      The “Certificate Principal Balance” for any certificate will be the portion of the corresponding Class Principal Balance that it represents.

      The Senior Certificates will comprise approximately 94.35%, the Senior Subordinate Certificates will comprise approximately 4.80%, and the Class C Certificates (which represent the initial overcollateralization amount) will comprise approximately 0.85%, of the aggregate principal balance of the mortgage loans as of the Cut-Off Date.

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

      The Class PPP Certificates are offered in minimum denominations equivalent to not less than $200,000,000 initial Class Notional Amount each and multiples of $1 in excess of that amount.

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

Book-Entry Registration

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

Definitive Certificates

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

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

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

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Calculations of Interest

      For each class of certificates entitled to interest, interest will be passed through monthly on each Distribution Date, beginning in October 2006. The amount of interest each class of certificates (other than the LIBOR Certificates) accrues during each certificate accrual period will equal 1/12 of the annual certificate interest rate in effect for that accrual period for that class of certificates, multiplied by the related Class Principal Balance, less any prepayment interest shortfalls not covered by compensating interest (as described below in “—Compensating Interest”) and less any interest shortfalls relating to the Relief Act. The amount of interest the LIBOR Certificates accrue during each certificate accrual period will equal a ratio, the numerator of which is the actual number of days in the related accrual period and the denominator of which is 360, multiplied by the annual certificate interest rate in effect for that accrual period for those certificates, multiplied by the related Class Principal Balance, less any prepayment interest shortfalls not covered by compensating interest (as described below in “—Compensating Interest”) and less any interest shortfalls relating to the Relief Act.

      For any Distribution Date and each certificate (other than the LIBOR Certificates) interest accrues during the preceding calendar month. Interest to be distributed on the certificates (other than the LIBOR Certificates) will be calculated based on a year consisting of twelve thirty-day months.

      For any Distribution Date, the LIBOR Certificates accrue interest during the period beginning on the 25th day of the preceding calendar month (or, in the case of the first Distribution Date, September 28th) and ending on the 24th day of the month of that Distribution Date. Interest to be distributed on the LIBOR Certificates will be calculated based on the actual number of days in the certificate accrual period and assuming a 360 day year.

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

      The Class PPP Certificates will not be entitled to receive any distributions of interest.

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

      Any remaining shortfall in interest collections resulting from Curtailments, the timing of Payoffs and the Relief Act will be allocated to the certificates pro rata according to the amount of interest to which each such class would otherwise be entitled in reduction of that amount.

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

Calculation of LIBOR

      The annual certificate interest rates of the LIBOR Certificates are based on the London Interbank Offered Rate for one-month United States dollar deposits (“LIBOR”) as determined by the administrative agent on behalf of the servicer on the basis of quotations as described below. The administrative agent will determine LIBOR for each certificate accrual period on the second business day prior to the day on which that accrual period begins (each, a “LIBOR Determination Date”), except that for the initial accrual period LIBOR has been set at 5.32375%. For this purpose a “business day” is any day on which banks in London and New York City are open for conducting transactions in foreign currency and exchange.

      On each LIBOR Determination Date, the administrative agent will determine LIBOR based on the “Interest Settlement Rate” for United States dollar deposits of one-month maturity set by the British Bankers' Association (the “BBA”) as of 11:00 a.m. (London time) on such LIBOR Determination Date. Interest Settlement Rates currently are based on rates quoted by sixteen BBA designated banks as being,

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in the view of such banks, the offered rate at which deposits are being quoted to prime banks in the London interbank market. Such Interest Settlement Rates are calculated by eliminating the four highest rates and the four lowest rates, averaging the eight remaining rates, carrying the result (expressed as a percentage) out to six decimal places, and rounding to five decimal places.

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

      If on any LIBOR Determination Date, such Interest Settlement Rates are not available from any Designated Rate Page, LIBOR for the related accrual period will be the most recently published Interest Settlement Rate. In the event that the BBA no longer sets an Interest Settlement Rate, the administrative agent will calculate LIBOR for the immediately following accrual period as follows: the administrative agent will determine LIBOR by reference to the quotations offered by the principal London office of each of the designated reference banks meeting the criteria set forth below for making one-month United States dollar deposits in leading banks in the London Interbank market, as of 11:00 a.m. (London time) on the LIBOR Determination Date.

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

              (a)   If on any LIBOR Determination Date two or more reference banks provide offered quotations, LIBOR for the next interest accrual period will be the arithmetic mean of the offered quotations, carrying the result (expressed as a percentage) out to six decimal places, and rounding to five decimal places.
       
              (b)   If on any LIBOR Determination Date only one or none of the reference banks provides offered quotations, LIBOR for the next interest accrual period will be the greater of:
           
          LIBOR as determined on the previous LIBOR Determination Date or
           
          the reserve interest rate.

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

          the arithmetic mean, (expressed as a percentage) carried out to six decimal places, and rounded to five decimal places, of the one-month United States dollar lending rates that New York City banks selected by the administrative agent are quoting, on the relevant LIBOR Determination Date, to the principal London offices of at least two of the reference banks to which the quotations are, in the opinion of the administrative agent, being so made, or
           
          if the administrative agent cannot determine the arithmetic mean, the lowest one-month United States dollar lending rate which New York City banks selected by the administrative agent are quoting on the LIBOR Determination Date to leading European banks.
       
              (c)   If on any LIBOR Determination Date the administrative agent is required but is unable to determine the reserve interest rate in the manner provided in paragraph (b) above, LIBOR for the next interest accrual period will be LIBOR as determined on the preceding LIBOR Determination Date, or, in the case of the first LIBOR Determination Date, LIBOR will be considered to be the per annum rate specified as such herein, if so specified.

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

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

The Class A-1 Yield Maintenance Agreement

      The Class A-1 Certificates will have the benefit of a yield maintenance agreement (the “Class A-1 Yield Maintenance Agreement”) between the Trust and Wachovia Bank, N.A., (the “Cap Counterparty”), entered into on or before the Closing Date. The Class A-1 Yield Maintenance Agreement is intended to partially mitigate the risk to the Class A-1 Certificates that LIBOR plus the related margin (subject to a cap of 11.000%) will exceed the Adjusted Weighted Average Pass-Through Rate.

      On each Distribution Date on or before the Distribution Date in July 2010, payments under the Class A-1 Yield Maintenance Agreement will equal the product of:

             (i) the excess, if any, of (x) LIBOR (as determined on the LIBOR Determination Date by the Cap Counterparty), subject to a maximum of 10.880%, over (y) the related strike rate, as set forth in Schedule 1 to this prospectus supplement;

             (ii) the lesser of (x) the Class A-1 Principal Balance and (y) the Class A-1 Yield Maintenance Notional Balance, as set forth in Schedule 1 to this prospectus supplement; and

             (iii) a fraction, the numerator of which is the actual number of days in the accrual period and the denominator of which is 360.

      The related “Yield Maintenance Notional Balance” and the related strike rate on each Distribution Date is as described in Schedule 1 to this prospectus supplement. Payments, if any, made pursuant to the Class A-1 Yield Maintenance Agreement will start on the Distribution Date in October 2006. The Class A-1 Yield Maintenance Notional Balances after the Distribution Date in July 2010 will be equal to zero and the Class A-1 Yield Maintenance Agreement will be terminated.

      The Class A-1 Yield Maintenance Notional Balances were calculated assuming 75% of the BPA, as defined under “Yield and Prepayment Considerations—Prepayment Assumptions” in this prospectus supplement. No representation is made that the mortgage loans will prepay at that rate or any other rate. If prepayments are slower than the assumption made for the Class A-1 Yield Maintenance Notional Balances, then the Class A-1 Yield Maintenance Notional Balance will be less than the actual Class A-1 Principal Balance.

      The Cap Counterparty will be obligated to make payments under the Class A-1 Yield Maintenance Agreement to the Trust, for the benefit of the Class A-1 Certificates in the amounts described in the formula above. On each Distribution Date on which a payment is made to the Trust under the Class A-1 Yield Maintenance Agreement, the trustee will withdraw from funds available on deposit in the certificate account on such Distribution Date an amount constituting funds received under the Class A-1 Yield Maintenance Agreement not in excess of amounts actually received from the Cap Counterparty for such Distribution Date for payment to the Class A-1 Certificates in accordance with the servicer's payment instructions. There can be no assurance, however, that funds will be available to pay any amounts.

      Unless terminated earlier, the Class A-1 Yield Maintenance Agreement will terminate after the Distribution Date in July 2010. Both the Trust and the Cap Counterparty will have the right to terminate the Class A-1 Yield Maintenance Agreement for certain reasons set forth in the documentation associated with that agreement, including, without limitation, an ISDA Master Agreement, the Schedule thereto and a Confirmation thereunder.

      The ratings by S&P and Moody's on the Class A-1 Certificates do not address whether any payments will be made pursuant to the Class A-1 Yield Maintenance Agreement.

      The “significance percentage,” as calculated in accordance with Item 1115 of Regulation AB, 17 CFR 229.1100 et seq., for each Yield Maintenance Agreement is less than 10%.

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      The Cap Counterparty

      Wachovia Bank, N.A. (“Wachovia”), is a national banking association that has, as of the date of this prospectus supplement, long-term debt ratings from S&P, Fitch Ratings and Moody's of “AA–”, “AA–” and “Aa2”, respectively, and short-term debt ratings from S&P, Fitch Ratings and Moody's of “A-1+”, “F1+” and “P-1”, respectively. The ratings reflect the respective rating agency's current assessment of the creditworthiness of Wachovia and may be subject to revision or withdrawal at any time by the rating agencies. Wachovia will provide upon request, without charge, to each person to whom this prospectus supplement is delivered, a copy of the most recent audited annual financial statements of the Wachovia Corporation, the parent company of Wachovia. Requests for such information should be directed to Wachovia Corporation—Investor Relations, (704) 374-6782 or in writing at Wachovia Corporation, Investor Relations, 301 South College Street, Charlotte, NC 28288-0206.

Distributions

General

      “Payoffs” are prepayments in full on a mortgage loan and “Curtailments” are partial prepayments on a mortgage loan.

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

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

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

      Distributions to certificateholders on each Distribution Date will include any Subsequent Recoveries received by the servicer during the calendar month preceding the month of the Distribution Date. “Subsequent Recoveries” are amounts received by the servicer in connection with the liquidation of defaulted mortgage loans after those mortgage loans became Liquidated Mortgage Loans, up to the amount of losses previously allocated in respect of those mortgage loans. On each Distribution Date on which Subsequent Recoveries are distributed to certificateholders, the Class Principal Balance of the class of Subordinate Certificates with the lowest priority outstanding generally will be increased by the amount of those Subsequent Recoveries, up to the amount of cumulative losses previously allocated to that class on previous Distribution Dates and not previously reimbursed.

      The “Stated Principal Balance” of any mortgage loan as of any date of determination is equal to its principal balance as of the Cut-Off Date, after application of all scheduled principal payments due on or before the Cut-Off Date, whether or not received, reduced by all amounts allocable to principal that have been distributed to certificateholders with respect to that mortgage loan on or before that date of determination, and as further reduced to the extent that any realized loss on that mortgage loan has been or will be allocated to one or more classes of certificates on or before that date of determination.

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

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      The “Weighted Average Pass-Through Rate” for any Distribution Date will equal the weighted average of the mortgage interest rates on the mortgage loans as of the second preceding Due Date (after giving effect to (a) the payments due on those mortgage loans on that Due Date and (b) except for the first Distribution Date, any Payoffs on those mortgage loans received on or before the 14th day of the calendar month of that Due Date) less the per annum rate at which the servicing fee (as described in footnote (1) to the table under “Description of the Certificates—Payment of Fees and Expenses” in this prospectus supplement) is calculated.

      The “Adjusted Weighted Average Pass-Through Rate” for any Distribution Date will equal the Weighted Average Pass-Through Rate multiplied by a fraction, the numerator of which is 30 and the denominator of which is the actual number of days in the related certificate accrual period.

      The “Basis Risk Carry Forward Amount” is the supplemental interest amount for the certificates, and for any Distribution Date and for the Class A-2, Class A-3A, Class A-3B, Class A-3C, Class A-4, Class A-5, Class A-6, Class M-1, Class M-2, Class M-3 and Class M-4 Certificates, will equal the sum of: (i) the excess, if any, of interest that the applicable class of certificates would have accrued on such class at the related certificate interest rate (without regard to the Weighted Average Pass-Through Rate) over interest on such class at a rate equal to the Weighted Average Pass-Through Rate, (ii) any Basis Risk Carry Forward Amount for such class remaining unpaid from prior Distribution Dates, and (iii) interest on the amount in clause (ii) at the related certificate interest rate (without regard to the Weighted Average Pass-Through Rate).

      The “Basis Risk Carry Forward Amount” is the supplemental interest amount for the certificates, and for any Distribution Date and for the Class A-1, Class B-1, Class B-2 and Class B-3 Certificates, will equal the sum of: (i) the excess, if any, of interest that the applicable class of certificates would have accrued on such class at the related certificate interest rate (without regard to the Adjusted Weighted Average Pass-Through Rate, but subject to a maximum of 11.000%) over interest on such class at a rate equal to the Adjusted Weighted Average Pass-Through Rate; provided, however, that in the case of the Class A-1 Certificates, such excess to be reduced by any amounts received from the Class A-1 Yield Maintenance Agreement, (ii) any Basis Risk Carry Forward Amount for such class remaining unpaid from prior Distribution Dates, and (iii) interest on the amount in clause (ii) at the related certificate interest rate (without regard to the Adjusted Weighted Average Pass-Through Rate, but subject to a maximum of 11.000%).

      The “Interest Remittance Amount” for any Distribution Date will equal the portion of the Available Distribution Amount attributable to interest received or advanced (or paid as compensating interest) on the mortgage loans.

      The “Principal Remittance Amount” for any Distribution Date will equal the Available Distribution Amount less the Interest Remittance Amount.

      The “Basic Principal Distribution Amount” for any Distribution Date will equal the excess of (i) the aggregate Principal Remittance Amount over (ii) the Excess Subordinated Amount, if any.

      The “Extra Principal Distribution Amount” for any Distribution Date will equal the lesser of (i) the excess of (x) the Interest Remittance Amount over (y) the sum of interest payable on the certificates (other than the Class C Certificates) from the Interest Remittance Amount on such Distribution Date pursuant to the interest waterfall described below in “—Distributions of Interest” and (ii) the Overcollateralization Deficiency Amount for such Distribution Date.

      The “Overcollateralization Deficiency Amount” for any Distribution Date will equal the amount, if any, by which (x) the Targeted Overcollateralization Amount for such Distribution Date exceeds (y) the Overcollateralization Amount for such Distribution Date, in each case calculated for this purpose after giving effect to the reduction on such Distribution Date of the aggregate Class Principal Balance of the certificates (other than the Class C Certificates) resulting from the payment of the Basic Principal Distribution Amount on such Distribution Date, and after giving effect to the reduction of the principal balances of the mortgage loans as a result of losses incurred in the prior calendar month, but prior to giving effect to the allocation of any losses to the certificates on such Distribution Date.

      The “Excess Subordinated Amount” for any Distribution Date will equal the excess, if any of (i) the Overcollateralization Amount over (ii) Targeted Overcollateralization Amount for such Distribution

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Date, in each case calculated for this purpose after giving effect to the reduction on such Distribution Date of the aggregate Class Principal Balance of the certificates (other than the Class C Certificates) that would result if 100% of the Principal Remittance Amount were applied as a principal payment on such Distribution Date to the certificates (other than the Class C Certificates), and after giving effect to the reduction of the principal balances of the mortgage loans as a result of losses incurred in the prior calendar month, but prior to giving effect to the allocation of any losses to the certificates on such Distribution Date.

      The “Targeted Overcollateralization Amount” will equal (i) for any Distribution Date prior to the Stepdown Date, 0.85% of the aggregate principal balance of the mortgage loans as of the Cut-Off Date, (ii) for any Distribution Date on or after the Stepdown Date and for which a Trigger Event has not occurred, the greater of (a) 1.70% of the aggregate Stated Principal Balance of the mortgage loans for such Distribution Date, or (b) 0.35% of the aggregate principal balance of the mortgage loans as of the Cut-Off Date, and (iii) for any Distribution Date on or after the Stepdown Date for which a Trigger Event has occurred and is continuing, the Targeted Overcollateralization Amount for the Distribution Date immediately preceding such Distribution Date.

      The “Net Monthly Excess Cashflow” for any Distribution Date will equal the portion of the Available Distribution Amount for such Distribution Date remaining after making all payments of interest and principal to the certificates (other than the Class C Certificates) pursuant to the interest and principal waterfalls described below in “—Distributions of Interest” and “—Distributions of Principal.”

      The “Overcollateralization Amount” for any Distribution Date will equal the excess of (i) the aggregate Stated Principal Balance of the mortgage loans over (ii) the aggregate Class Principal Balance of the certificates (other than the Class C and Class PPP Certificates). As of the Closing Date, the Overcollateralization Amount will be equal to 0.85% of the aggregate principal balance of the mortgage loans as of the Cut-Off Date.

      The “Stepdown Date” is the earlier to occur of

             (i) the Distribution Date on which the aggregate Class Principal Balance of the Class A Certificates has been reduced to zero; and

             (ii) the later to occur of (a) the Distribution Date in October 2009 and (b) the first Distribution Date on which the Credit Enhancement Percentage for the Class A Certificates is greater than or equal to 11.30%.

      The “Credit Enhancement Percentage” for the Class A Certificates for any Distribution Date is equal to (i) the sum of (a) the aggregate Class Principal Balance of the Subordinate Certificates (other than the Class C Certificates) and (b) the Overcollateralization Amount, divided by (ii) the aggregate Stated Principal Balance of the mortgage loans, in each case immediately before such Distribution Date.

      The “Trigger Event” is in effect on any Distribution Date if (i) the average percentage as of the Distribution Date in each of the immediately preceding three calendar months of the mortgage loans which were 60 or more days delinquent as of such date (including mortgage loans in bankruptcy or foreclosure and mortgaged properties held by REMIC I) is greater than 50.0% of the Credit Enhancement Percentage for the Class A Certificates or (ii) the cumulative realized losses on the mortgage loans incurred since the Cut-Off Date through the last day of the related Prepayment Period, divided by the aggregate principal balance of the mortgage loans as of the Cut-Off Date exceeds the percentages set forth below:

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DISTRIBUTION DATE OCCURRING IN

     PERCENTAGE

     

October 2009 through September 2010

     0.50% for the first month plus an additional 1/12th of 0.35% for each month thereafter
     

October 2010 through September 2011

     0.85% for the first month plus an additional 1/12th of 0.35% for each month thereafter
     

October 2011 through September 2012

     1.20% for the first month plus an additional 1/12th of 0.20% for each month thereafter
     

October 2012 and thereafter

     1.40%

   

      The “Class A Principal Distribution Amount” for any Distribution Date will equal the excess of (x) the aggregate Class Principal Balance of the Class A Certificates immediately prior to such Distribution Date over (y) the lesser of (A) the product of (i) 88.7% and (ii) the aggregate Stated Principal Balance of the mortgage loans on that Distribution Date and (B) the aggregate Stated Principal Balance of the mortgage loans on that Distribution Date less 0.35% of the aggregate principal balance of the mortgage loans as of the Cut-Off Date.

      The “Class M-1 Principal Distribution Amount” for any Distribution Date will equal the excess of (x) the sum of (A) the aggregate Class Principal Balance of the Class A Certificates (after taking into account any payment of the Class A Principal Distribution Amount on such Distribution Date) and (B) the Class M-1 Principal Balance immediately prior to such Distribution Date, over (y) the lesser of (A) the product of (i) 92.3% and (ii) the aggregate Stated Principal Balance of the mortgage loans for such Distribution Date, and (B) the excess, if any, of the aggregate Stated Principal Balance of the mortgage loans for such Distribution Date over 0.35% of the aggregate principal balance of the mortgage loans as of the Cut-Off Date.

      The “Class M-2 Principal Distribution Amount” for any Distribution Date will equal the excess of (x) the sum of (A) the aggregate Class Principal Balance of the Class A and Class M-1 Certificates (after taking into account any payment of the Class A and Class M-1 Principal Distribution Amounts on such Distribution Date) and (B) the Class M-2 Principal Balance immediately prior to such Distribution Date, over (y) the lesser of (A) the product of (i) 93.3% and (ii) the aggregate Stated Principal Balance of the mortgage loans for such Distribution Date, and (B) the excess, if any, of the aggregate Stated Principal Balance of the mortgage loans for such Distribution Date over 0.35% of the aggregate principal balance of the mortgage loans as of the Cut-Off Date.

      The “Class M-3 Principal Distribution Amount” for any Distribution Date will equal the excess of (x) the sum of (A) the aggregate Class Principal Balance of the Class A, Class M-1 and Class M-2 Certificates (after taking into account any payment of the Class A, Class M-1 and Class M-2 Principal Distribution Amounts on such Distribution Date) and (B) the Class M-3 Principal Balance immediately prior to such Distribution Date, over (y) the lesser of (A) the product of (i) 94.3% and (ii) the aggregate Stated Principal Balance of the mortgage loans for such Distribution Date, and (B) the excess, if any, of the aggregate Stated Principal Balance of the mortgage loans for such Distribution Date over 0.35% of the aggregate principal balance of the mortgage loans as of the Cut-Off Date.

      The “Class M-4 Principal Distribution Amount” for any Distribution Date will equal the excess of (x) the sum of (A) the aggregate Class Principal Balance of the Class A, Class M-1, Class M-2 and Class M-3 Certificates (after taking into account any payment of the Class A, Class M-1, Class M-2 and Class M-3 Principal Distribution Amounts on such Distribution Date) and (B) the Class M-4 Principal Balance immediately prior to such Distribution Date, over (y) the lesser of (A) the product of (i) 95.3% and (ii) the aggregate Stated Principal Balance of the mortgage loans for such Distribution Date, and (B) the excess, if any, of the aggregate Stated Principal Balance of the mortgage loans for such Distribution Date over 0.35% of the aggregate principal balance of the mortgage loans as of the Cut-Off Date.

      The “Class B-1 Principal Distribution Amount” for any Distribution Date will equal the excess of (x) the sum of (A) the aggregate Class Principal Balance of the Class A, Class M-1, Class M-2, Class M-3 and Class M-4 Certificates (after taking into account any payment of the Class A, Class M-1, Class M-2, Class M-3 and Class M-4 Principal Distribution Amounts on such Distribution Date) and

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(B) the Class B-1 Principal Balance immediately prior to such Distribution Date, over (y) the lesser of (A) the product of (i) 96.3% and (ii) the aggregate Stated Principal Balance of the mortgage loans for such Distribution Date, and (B) the excess, if any, of the aggregate Stated Principal Balance of the mortgage loans for such Distribution Date over 0.35% of the aggregate principal balance of the mortgage loans as of the Cut-Off Date.

      The “Class B-2 Principal Distribution Amount” for any Distribution Date will equal the excess of (x) the sum of (A) the aggregate Class Principal Balance of the Class A, Class M-1, Class M-2, Class M-3, Class M-4 and Class B-1 Certificates (after taking into account any payment of the Class A, Class M-1, Class M-2, Class M-3, Class M-4 and Class B-1 Principal Distribution Amounts on such Distribution Date) and (B) the Class B-2 Principal Balance immediately prior to such Distribution Date, over (y) the lesser of (A) the product of (i) 97.3% and (ii) the aggregate Stated Principal Balance of the mortgage loans for such Distribution Date, and (B) the excess, if any, of the aggregate Stated Principal Balance of the mortgage loans for such Distribution Date over 0.35% of the aggregate principal balance of the mortgage loans as of the Cut-Off Date.

      The “Class B-3 Principal Distribution Amount” for any Distribution Date will equal the excess of (x) the sum of (A) the aggregate Class Principal Balance of the Class A, Class M-1, Class M-2, Class M-3, Class M-4, Class B-1 and Class B-2 Certificates (after taking into account any payment of the Class A, Class M-1, Class M-2, Class M-3, Class M-4, Class B-1 and Class B-2 Principal Distribution Amounts on such Distribution Date) and (B) the Class B-3 Principal Balance immediately prior to such Distribution Date, over (y) the lesser of (A) the product of (i) 98.3% and (ii) the aggregate Stated Principal Balance of the mortgage loans for such Distribution Date, and (B) the excess, if any, of the aggregate Stated Principal Balance of the mortgage loans for such Distribution Date over 0.35% of the aggregate principal balance of the mortgage loans as of the Cut-Off Date.

      The “Lockout Priority Amount” for any Distribution Date will equal the lesser of (x) the Class A-6 Principal Balance on such Distribution Date and (y) the Lockout Distribution Percentage for such Distribution Date multiplied by the product of (A) a fraction, the numerator of which is the aggregate Class A-6 Principal Balance, and the denominator of which is the aggregate Class Principal Balance of the Class A Certificates (in each case immediately prior to such Distribution Date) and (B) the Class A Principal Distribution Amount for such Distribution Date.

      The “Lockout Distribution Percentage” for any Distribution Date will be the percentage indicated below:

       DISTRIBUTION DATE OCCURRING IN

  PERCENTAGE

           
      

October 2006 through September 2009

       0 %
           
      

October 2009 through September 2011

       45 %
           
      

October 2011 through September 2012

       80 %
           
      

October 2012 through September 2013

       100 %
           
      

October 2013 and thereafter

       300 %

Distributions of Interest

      Beginning in October 2006, on the 25th day of each month, or if the 25th day is not a business day, on the immediately following business day (each, a “Distribution Date”), interest distributions will be made from the Interest Remittance Amount (and, with respect to paragraph (ii), amounts available from the Class A-1 Yield Maintenance Agreement) in the order and priority as follows:

             (i) first, to the Class A and Class R Certificates, pro rata, interest accrued during the related interest accrual period at their respective certificate interest rates on their respective Class Principal Balance;

             (ii) second, to the Class A-1 Certificates, payments, if any, received under the Class A-1 Yield Maintenance Agreement;

             (iii) third, to the Class A Certificates, pro rata, previously unpaid accrued interest;

             (iv) fourth, to the Class M-1 Certificates, interest accrued during the related interest accrual period at their certificate interest rate on their Class Principal Balance;

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             (v) fifth, to the Class M-2 Certificates, interest accrued during the related interest accrual period at their certificate interest rate on their Class Principal Balance;

             (vi) sixth, to the Class M-3 Certificates, interest accrued during the related interest accrual period at their certificate interest rate on their Class Principal Balance;

             (vii) seventh, to the Class M-4 Certificates, interest accrued during the related interest accrual period at their certificate interest rate on their Class Principal Balance;

             (viii) eighth, to the Class B-1 Certificates, interest accrued during the related interest accrual period at their certificate interest rate on their Class Principal Balance;

             (ix) ninth, to the Class B-2 Certificates, interest accrued during the related interest accrual period at their certificate interest rate on their Class Principal Balance; and

             (x) tenth, to the Class B-3 Certificates, interest accrued during the related interest accrual period at their certificate interest rate on their Class Principal Balance.

Distributions of Principal

      Beginning in October 2006, on each Distribution Date (a) prior to the applicable Stepdown Date or (b) on or after the applicable Stepdown Date and on which a Trigger Event is in effect, an amount, up to the Basic Principal Distribution Amount, will be distributed as principal, sequentially, as follows:

             (i) first, to the Class R Certificates, until the Class R Principal Balance has been reduced to zero;

             (ii) second, until the aggregate Class Principal Balance of the Class A Certificates has been reduced to zero, sequentially, as follows:

                    (A) first, to the Class A-6 Certificates, an amount (which will equal zero until the Distribution Date in October 2009), up to the amount of the Lockout Priority Amount (as defined above) for that Distribution Date, until the Class A-6 Principal Balance has been reduced to zero;

                    (B) second, concurrently, until the Class A-2 Principal Balance has been reduced to zero, as follows:

                           (1) 40.5967645369% to the Class A-2 Certificates; and

                           (2) 59.4032354631% to the Class A-1 Certificates;

                    (C) third, to the Class A-1 Certificates, until the Class A-1 Principal Balance has been reduced to zero;

                    (D) fourth, concurrently, until the aggregate Class Principal Balance of the Class A-3A, Class A-3B and Class A-3C Certificates has been reduced to zero, as follows:

                           (1) 55.7059038206% to the Class A-3A and Class A-3C Certificates, as follows: either (1) if a Trigger Event is not in effect on that Distribution Date, pro rata, until the Class A-3A and Class A-3C Principal Balances have each been reduced to zero, or (2) if a Trigger Event is in effect on that Distribution Date, sequentially, first, to the Class A-3A Certificates, until the Class A-3A Principal Balance has been reduced to zero and, second, to the Class A-3C Certificates, until the Class A-3C Principal Balance has been reduced to zero; and

                           (2) 44.2940961794% to the Class A-3B Certificates, until the Class A-3B Principal Balance has been reduced to zero;

                    (E) fifth, to the Class A-4 Certificates, until the Class A-4 Principal Balance has been reduced to zero;

                    (F) sixth, to the Class A-5 Certificates, until the Class A-5 Principal Balance has been reduced to zero; and

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

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             (iii) third, to the Class M-1 Certificates, until the Class M-1 Principal Balance has been reduced to zero;

             (iv) fourth, to the Class M-2 Certificates, until the Class M-2 Principal Balance has been reduced to zero;

             (v) fifth, to the Class M-3 Certificates, until the Class M-3 Principal Balance has been reduced to zero;

             (vi) sixth, to the Class M-4 Certificates, until the Class M-4 Principal Balance has been reduced to zero;

             (vii) seventh, to the Class B-1 Certificates, until the Class B-1 Principal Balance has been reduced to zero;

             (viii) eighth, to the Class B-2 Certificates, until the Class B-2 Principal Balance has been reduced to zero; and

             (ix) ninth, to the Class B-3 Certificates, until the Class B-3 Principal Balance has been reduced to zero.

      Beginning in October 2006, on each Distribution Date (a) on or after the applicable Stepdown Date and (b) on which a Trigger Event is not in effect, an amount, up to the Basic Principal Distribution Amount, will be distributed as principal, sequentially, as follows:

             (i) first, an amount, up to the Class A Principal Distribution Amount, until the aggregate Class Principal Balance of the Class A Certificates has been reduced to zero, sequentially, as follows:

                    (A) first, to the Class A-6 Certificates, an amount (which will equal zero until the Distribution Date in October 2009), up to the amount of the Lockout Priority Amount (as defined above) for that Distribution Date, until the Class A-6 Principal Balance has been reduced to zero;

                    (B) second, concurrently, until the Class A-2 Principal Balance has been reduced to zero, as follows:

                           (1) 40.5967645369% to the Class A-2 Certificates; and

                           (2) 59.4032354631% to the Class A-1 Certificates;

                    (C) third, to the Class A-1 Certificates, until the Class A-1 Principal Balance has been reduced to zero;

                    (D) fourth, to the Class A-3A, Class A-3B and Class A-3C Certificates, pro rata, until the aggregate Class Principal Balance of the Class A-3A, Class A-3B and Class A-3C Certificates has been reduced to zero;

                    (E) fifth, to the Class A-4 Certificates, until the Class A-4 Principal Balance has been reduced to zero;

                    (F) sixth, to the Class A-5 Certificates, until the Class A-5 Principal Balance has been reduced to zero; and

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

             (ii) second, an amount, up to the Class M-1 Principal Distribution Amount, to the Class M-1 Certificates, until the Class M-1 Principal Balance has been reduced to zero;

             (iii) third, an amount, up to the Class M-2 Principal Distribution Amount, to the Class M-2 Certificates, until the Class M-2 Principal Balance has been reduced to zero;

             (iv) fourth, an amount, up to the Class M-3 Principal Distribution Amount, to the Class M-3 Certificates, until the Class M-3 Principal Balance has been reduced to zero;

             (v) fifth, an amount, up to the Class M-4 Principal Distribution Amount, to the Class M-4 Certificates, until the Class M-4 Principal Balance has been reduced to zero;

             (vi) sixth, an amount, up to the Class B-1 Principal Distribution Amount, to the Class B-1 Certificates, until the Class B-1 Principal Balance has been reduced to zero;

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             (vii) seventh, an amount, up to the Class B-2 Principal Distribution Amount, to the Class B-2 Certificates, until the Class B-2 Principal Balance has been reduced to zero; and

             (viii) eighth, an amount, up to the Class B-3 Principal Distribution Amount, to the Class B-3 Certificates, until the Class B-3 Principal Balance has been reduced to zero.

      Notwithstanding the allocation of principal to the Class A Certificates described above, on and after the Distribution Date on which the aggregate Class Principal Balance of the Subordinate Certificates has been or will be reduced to zero, any principal distributions allocated to the Class A Certificates will be allocated to the Class A Certificates, pro rata, based on their respective Class Principal Balances; provided, however, that the aggregate allocations to the Class A-3A and Class A-3C Certificates will not be paid pro rata, but instead will be paid sequentially, first, to the Class A-3A Certificates, until the Class A-3A Principal Balance has been reduced to zero and, second, to the Class A-3C Certificates, until the Class A-3C Principal Balance has been reduced to zero.

Allocation of Net Monthly Excess Cashflow

      On each Distribution Date, any Net Monthly Excess Cashflow will be distributed, sequentially, as follows:

             (i) first, to the certificates, as principal, the Extra Principal Distribution Amount, in the priority described above under “—Distributions of Principal,” until the Targeted Overcollateralization Amount has been achieved;

             (ii) second, to the Class M-1 Certificates, previously unpaid accrued interest;

             (iii) third, to the Class M-2 Certificates, previously unpaid accrued interest;

             (iv) fourth, to the Class M-3 Certificates, previously unpaid accrued interest;

             (v) fifth, to the Class M-4 Certificates, previously unpaid accrued interest;

             (vi) sixth, to the Class B-1 Certificates, previously unpaid accrued interest;

             (vii) seventh, to the Class B-2 Certificates, previously unpaid accrued interest;

             (viii) eighth, to the Class B-3 Certificates, previously unpaid accrued interest;

             (ix) ninth, to each class of Subordinate Certificates (other than the Class C Certificates) in order of seniority, up to the amount of unreimbursed realized principal losses previously allocated to that class, if any; provided, however, that any amounts distributed pursuant to this clause will not cause a further reduction in the Class Principal Balances of any of the certificates;

             (x) tenth, to the Class A Certificates, pro rata, any Basis Risk Carry Forward Amount for such Distribution Date;

             (xi) eleventh, sequentially, to the Class M-1, Class M-2, Class M-3, Class M-4, Class B-1, Class B-2 and Class B-3 Certificates, up to their respective Basis Risk Carry Forward Amounts for such Distribution Date;

             (xii) twelfth, to the Class C Certificates; and

             (xiii) thirteenth, to the Class R Certificates.

Subordination and Allocation of Losses

      The rights of holders of the Subordinate Certificates to receive payments with respect to the mortgage loans will be subordinated to such rights of holders of each class of certificates having a higher priority of payment, as described under “—Distributions—Distributions of Interest,” “—Distributions—Distributions of Principal” and “—Distributions—Allocation of Net Monthly Excess Cashflow” in this prospectus supplement. This subordination is intended to enhance the likelihood of regular receipt by holders of certificates having a higher priority of payment of the full amount of interest and principal distributable thereon, and to afford such certificateholders limited protection against realized losses incurred with respect to the mortgage loans.

      The protection afforded to holders of the certificates with a higher priority of payment by means of the subordination of certain classes of certificates having a lower priority of payment will be accomplished by the preferential right of holders of such classes with a higher priority of payment to receive

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distributions of interest or principal on any distribution date prior to classes with a lower priority of payment.

      Losses on the mortgage loans will first reduce the portion of the Net Monthly Excess Cashflow available for distribution after giving effect to the distribution under clause (i) under “—Allocation of Net Monthly Excess Cashflow” in this prospectus supplement, and then will reduce the Overcollateralization Amount. If the Overcollateralization Amount has been reduced to zero, then losses will be allocated to the Subordinate Certificates in reverse order of priority, in each case, until their Class Principal Balances have been reduced to zero.

      On each Distribution Date, if the aggregate Class Principal Balance of all outstanding classes of certificates (other than the Class C and Class PPP Certificates) exceeds the aggregate Stated Principal Balance of the mortgage loans (after giving effect to distributions of principal and the allocation of all losses to those certificates on that Distribution Date), that excess will be deemed a principal loss and will be allocated to the Subordinate Certificates in reverse order of priority, in each case, until their Class Principal Balances have been reduced to zero.

Distributions to the Class PPP Certificates

      On the Closing Date, a reserve fund will be established by a deposit by WaMu Capital Corp., as underwriter, of $100 into a separate account maintained by the trustee solely for the benefit of the Class PPP Certificates (the “Class PPP Reserve Fund”). The Class PPP Reserve Fund will not be an asset of any REMIC. On the Distribution Date in September 2010, the Class PPP Certificates will receive $100 of principal from the Class PPP Reserve Fund. These certificates will not receive any distributions of interest, nor will they receive distributions of principal on any other Distribution Date. The only other payments the Class PPP Certificates are entitled to receive are the Assigned Prepayment Penalties.

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

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

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

      However, if the servicer waives a penalty on a voluntary full prepayment other than in accordance with the standards set forth in the pooling agreement, the servicer will be obligated to pay, or if Washington Mutual Mortgage Securities Corp. breaches certain representations and warranties in the mortgage loan sale agreement with respect to mortgage loans that require payment of a penalty on

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voluntary full prepayment, Washington Mutual Mortgage Securities Corp. will be obligated to pay, to the Trust an amount equal to the amount of the penalty on such voluntary full prepayment, for distribution to the holders of the Class PPP Certificates.

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

      Investors should conduct their own analysis of the effect that the payment of penalties for voluntary full prepayment of the related mortgage loans, or decisions by the servicer with respect to waiver thereof, may have on the performance of the Class PPP Certificates. For additional information concerning the servicer's ability to waive penalties for voluntary full prepayment, see the pooling agreement. No prepayment penalty payments will be available for distribution to holders of the other classes of certificates.

      As of the Cut-Off Date, approximately 12.13% (by aggregate principal balance) of the mortgage loans impose penalties for early prepayments. The amount of the applicable prepayment penalty, to the extent permitted by applicable law, is as provided in the related mortgage note.

      As of the Cut-Off Date, approximately 0.08% (by aggregate principal balance) of the mortgage loans impose penalties for early prepayments in full (and in some cases for partial prepayments) received on or before the four month anniversary of the origination of the mortgage loan. The amount of the prepayment penalty for these mortgage loans is 6 months of interest on the amount of the prepayment exceeding 20% of the original loan amount.

      As of the Cut-Off Date, approximately 3.12% (by aggregate principal balance) of the mortgage loans impose penalties for early prepayments in full (and in some cases for partial prepayments) received on or before the first anniversary of the origination of the mortgage loan. The amount of the prepayment penalty (i) for 56.57% of these mortgage loans is 4% of the original loan amount, (ii) for 37.37% of these mortgage loans is 6 months of interest on the amount of the prepayment exceeding 20% of the original loan amount, (iii) for 2.75% of these mortgage loans is 2% of the amount of the prepayment, (iv) for 1.23% of these mortgage loans is 1% of the original loan amount, (v) for 1.05% of these mortgage loans is 6 months of interest on 80% of the amount of the prepayment and (vi) for 1.03% of these mortgage loans is 6 months of interest on 80 % of the original loan amount.

      As of the Cut-Off Date, approximately 2.36% (by aggregate principal balance) of the mortgage loans impose penalties for early prepayments in full (and in some cases for partial prepayments) received on or before the second anniversary of the origination of the mortgage loan. The amount of the prepayment penalty (i) for 82.86% of these mortgage loans is 6 months of interest on the amount of the prepayment exceeding 20% of the original loan amount, (ii) for 10.59% of these mortgage loans is 2 months of interest on the amount of the prepayment exceeding 33% of the original loan amount, (iii) for 5.29% of these mortgage loans is the lesser of (a) six months of interest on the amount of the prepayment exceeding 20% of the original loan amount and (b) a specific amount as defined in the mortgage note, (iv) for 0.80% of these mortgage loans is 1% of the amount of the prepayment and (v) for 0.47% of these mortgage loans is 2% of the amount of the prepayment.

      As of the Cut-Off Date, approximately 5.28% (by aggregate principal balance) of the mortgage loans impose penalties for early prepayments in full (and in some cases for partial prepayments) received on or before the third anniversary of the origination of the mortgage loan. The amount of the prepayment penalty (i) for 84.84% of these mortgage loans is 6 months of interest on the amount of the prepayment exceeding 20% of the original loan amount, (ii) for 2.83% of these mortgage loans is 1% of the original loan amount, (iii) for 1.88% of these mortgage loans is 1% of the amount of the prepayment, (iv) for 1.84% of these mortgage loans is 1% of the amount of the prepayment exceeding 20% of the original loan amount, (v) for 1.53% of these mortgage loans is 2% of the amount of the prepayment, (vi) for 1.48% of these mortgage loans is 6 months of interest on 80% of the amount of the prepayment, (vii) for 1.37% of these mortgage loans is the lesser of (a) 2% of the amount of the prepayment and (b) 60 days of interest on the amount of the prepayment, (viii) for 1.32% of these mortgage loans is 2 months of interest on the amount of the prepayment exceeding 33% of the original loan amount, (ix) for 1.25% of these mortgage loans is 3% of the original loan amount if the prepayment occurs during the first year, 2% of the original loan amount if the prepayment occurs during the second year and 1% of the original loan amount if the prepayment occurs during the third year, (x) for 0.86% of these mortgage loans is the lesser

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of (a) six months of interest on the amount of the prepayment exceeding 20% of the original loan amount and (b) a specific amount as defined in the mortgage note, (xi) for 0.43% of these mortgage loans is 5% of the amount of the prepayment if the prepayment occurs during the first year, 4% of the amount of the prepayment if the prepayment occurs during the second year and 3% of the amount of the prepayment if the prepayment occurs during the third year and (xii) for 0.36% of these mortgage loans is 6 months of interest on 80% of the prepayment amount.

      As of the Cut-Off Date, approximately 1.29% (by aggregate principal balance) of the mortgage loans impose penalties for early prepayments in full (and in some cases for partial prepayments) received on or before the fifth anniversary of the origination of the mortgage loan. The amount of the prepayment penalty (i) for 82.23% of these mortgage loans is 6 months of interest on the amount of the prepayment exceeding 20% of the original loan amount, (ii) for 6.17% of these mortgage loans is 2% of the amount of the prepayment, (iii) for 5.44% of these mortgage loans is the lesser of (a) six months of interest on the amount of the prepayment exceeding 20% of the original loan amount and (b) a specific amount as defined in the mortgage note, (iv) for 3.10% of these mortgage loans is 1% of the amount of the prepayment, (v) for 1.62% of these mortgage loans is 1% of the original loan amount and (vi) for 1.45% of these mortgage loans is 60 days of interest on the amount of the prepayment exceeding 20% of the original loan amount.

      Although the previous paragraph describes mortgage loans with prepayment penalties for prepayments received on or before the fifth anniversary of the origination of the related mortgage loan, investors should note that, regardless of the terms of the mortgage note, the servicer will not collect prepayment penalties required to be paid more than three years after the origination of the mortgage loan.

      The previous paragraphs that describe penalties for partial prepayments are intended only to give investors a better understanding of the prepayment penalties imposed on the mortgagors. However, the holders of the Class PPP Certificates will not receive any prepayment penalty payment remitted to the Trust with respect to voluntary partial prepayments; each such payment will be retained by the servicer as additional servicing compensation.

The Class R Certificates

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

Available Distribution Amount

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

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

             (1) the total amount of all cash received by or on behalf of the servicer for the mortgage loans by the determination date (which will be not earlier than the 14th day and not later than the 18th day of the calendar month of that Distribution Date) and not previously distributed (including

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proceeds of mortgage loans that are liquidated and scheduled amounts of distributions from buydown funds respecting Buydown Loans, if any), except:

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

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

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

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

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

                    (f) the servicing fee for each mortgage loan;

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

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

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

                    (a) all advances made by the servicer for that Distribution Date in respect of delinquent monthly payments; and

                    (b) any amounts payable as compensating interest by the servicer on that Distribution Date; and

             (3) any Repurchase Proceeds received during the calendar month before that Distribution Date.

Last Scheduled Distribution Date

      The Last Scheduled Distribution Date for the certificates (other than the Class PPP Certificates) is the Distribution Date in October 2036, which is the Distribution Date in the month after the scheduled maturity date for the latest maturing mortgage loan.

      The Last Scheduled Distribution Date for the Class PPP Certificates is the Distribution Date in September 2010.

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

Optional Termination

      On any Distribution Date after the first date on which the aggregate outstanding principal balance of the mortgage loans is less than 10% of the aggregate principal balance of the mortgage loans as of the Cut-Off Date (the “Clean-Up Call Option Date”), the servicer may purchase the mortgage loans and all property acquired in respect of any mortgage loan still owned by the Trust, which will cause the retirement of the certificates. In addition, if this occurs prior to the Distribution Date in September 2010, the Class PPP Certificates will be paid $100 from the Class PPP Reserve Fund.

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

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

Amendment of the Pooling Agreement

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

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

                 with respect to any certificate (other than the Class PPP and Residual Certificates), its Certificate Principal Balance divided by the aggregate Certificate Principal Balance of all the certificates, such product expressed as a percentage; and
       
                 with respect to any Class PPP or Residual Certificate, zero.

Payment of Fees and Expenses

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

Fee or Expense

     General Purpose
of Fee or Expense

     Party
Receiving Fee
or Expense

     Source of Funds
for Payment of Fee
or Expense

     Distribution
Priority of Fee
or Expense

servicing fee (1)      compensation of the servicer for services provided under the pooling agreement      servicer      all collections on the mortgage loans      prior to distributions to certificateholders
                 
all prepayment penalties (except certain prepayment penalties paid by borrowers upon voluntary full prepayment of certain mortgage loans, which will be paid to the Class PPP Certificates), late charges, nonsufficient funds fees and other fees and charges collected on the mortgage loans      compensation of the servicer for services provided under the pooling agreement      servicer      all prepayment penalties, late charges, nonsufficient funds fees and other fees and charges collected on the mortgage loans      prior to distributions to certificateholders
                 
all interest payments on Payoffs received from the first day through the 14th day of any calendar month      compensation of the servicer for services provided under the pooling agreement      servicer      all interest payments on Payoffs received from the first day through the 14th day of any calendar month      prior to distributions to certificateholders

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Fee or Expense

     General Purpose
of Fee or Expense

     Party
Receiving Fee
or Expense

     Source of Funds
for Payment of Fee
or Expense

     Distribution
Priority of Fee
or Expense

all investment earnings earned on funds held in the investment account and the certificate account      compensation of the servicer for services provided under the pooling agreement      servicer      all investment earnings earned on funds held in the investment account and the certificate account      prior to distributions to certificateholders
                 
reimbursement for advances made under the pooling agreement, other than Nonrecoverable Advances (2)      reimbursement of the servicer for advances made under the pooling agreement      servicer      collections on the mortgage loans with respect to which the advances were made      prior to distributions to certificateholders
                 
reimbursement for Nonrecoverable Advances (2)      reimbursement of the servicer for advances made under the pooling agreement      servicer      all collections on the mortgage loans      prior to distributions to certificateholders
                 
reimbursement for certain expenses, costs and liabilities incurred by the servicer or the depositor in connection with any legal action relating to the pooling agreement or the certificates (3)      reimbursement of the servicer or the depositor for certain expenses, costs and liabilities      servicer or depositor      all collections on the mortgage loans      prior to distributions to certificateholders
                 
any penalty tax imposed under the Internal Revenue Code on a REMIC formed under the pooling agreement in the event the REMIC engages in a prohibited transaction (4)      compliance with Internal Revenue Code      United States Treasury      all collections on the mortgage loans      prior to distributions to certificateholders


(1) The servicing fee will be calculated as a per annum percentage for each mortgage loan. The servicing fee with respect to each mortgage loan will range from 0.250% to 1.500%, with a weighted average of approximately 0.479%.

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

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

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

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

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

      In the event of any resignation or termination of the servicer pursuant to the pooling agreement, the trustee, if acting as successor servicer, will be entitled to the same compensation as that to which the servicer would have been entitled. If another successor servicer is appointed, the trustee will be permitted to make arrangements for the compensation of such successor servicer out of collections on the mortgage

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loans, subject to the limitation that such compensation, together with the compensation to the trustee, may not exceed the compensation to which the servicer would have been entitled.

Reports and Other Information

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

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

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

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

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

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YIELD AND PREPAYMENT CONSIDERATIONS

General

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

Principal Prepayments and Compensating Interest

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

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

      To the extent that the amount allocated to pay compensating interest is insufficient to cover the deficiency in interest payable as a result of the timing of a Payoff, or to the extent that there is an interest deficiency from a Curtailment or the application of the Relief Act, that remaining deficiency will be allocated to the certificates pro rata according to the amount of interest to which each class of certificates would otherwise be entitled in reduction of that amount.

LIBOR Certificates

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

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which would be expected to result in slower prepayments, could occur concurrently with a lower level of LIBOR.

Lockout Certificates

      Because the Class A-6 Certificates will generally not be entitled to receive any principal distributions before the Distribution Date in October 2009, the weighted average lives of these Lockout Certificates will be longer than would otherwise be the case, and the effect on the market value of these Lockout Certificates due to changes in market interest rates or market yields for similar securities will be greater than for other certificates.

Rate of Payments

      The rate of principal payments on the certificates entitled to receive principal generally is directly related to the rate of principal payments on the mortgage loans, which may be in the form of scheduled payments, principal prepayments or liquidations. See “Risk Factors” in this prospectus supplement and “Yield and Maturity Considerations” in the accompanying prospectus. Except for approximately 12.1% (by principal balance) of the mortgage loans, which according to the related mortgage note have prepayment penalties if mortgagors make certain prepayments during a period ranging from four months to five years after origination, mortgagors may prepay the mortgage loans at any time without penalty.

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

Prepayment Assumptions

      Prepayments on mortgage loans are commonly measured relative to a prepayment standard or model. The prepayment model used in this prospectus supplement (the “Basic Prepayment Assumption” or “BPA”) represents an assumed rate of prepayment each month relative to the then outstanding principal balance of a pool of mortgage loans.

      A 100% Basic Prepayment Assumption assumes (i) a per annum prepayment rate of 10% of the then outstanding principal balance of the mortgage loans in the first month of the life of the mortgage loans, (ii) an additional 15/11% per annum in each month thereafter through the eleventh month and (iii) a constant prepayment rate of 25% per annum beginning in the twelfth month and in each month thereafter during the life of the mortgage loans.

      As used in the tables below, a 50% BPA assumes prepayment rates equal to one-half of 100% of the applicable BPA, a 200% BPA assumes prepayment rates equal to two times 100% of the applicable BPA, and so forth.

      The BPA does not purport to be either an historical description of the prepayment experience of any pool of mortgage loans or a prediction of the anticipated rate of prepayment of any pool of mortgage loans, including the mortgage pool underlying the certificates. Furthermore, there is no assurance that the mortgage loans will prepay at any given percentage of the BPA. The actual rate of prepayments on the mortgage loans may be influenced by a variety of economic, geographic, social and other factors. In general, if prevailing mortgage interest rates fall significantly below the mortgage interest rates on the mortgage loans underlying the certificates, those mortgage loans are likely to be subject to higher prepayment rates than if prevailing mortgage interest rates remain at or above the mortgage interest rates on the mortgage loans underlying the certificates. Conversely, if prevailing mortgage interest rates rise

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above the mortgage interest rates on the mortgage loans underlying the certificates, the rate of prepayment would be expected to decrease. A comparatively low interest-rate environment may result in a higher than expected rate of prepayments on the mortgage loans and, correspondingly, an earlier than expected retirement of the certificates.

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

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

Groups of Hypothetical Mortgage Loans

    Unpaid
Principal
Balance

  Remaining
Term
(Months)

  Amortized
Remaining
Term
(Months)

  Age
(Months)

     Interest-Only
Remaining
Term
(Months)

  Mortgage
Interest Rate

  Pass-Through
Rate

     $ 1,544,919.50          238          238          2        N/A        7.1435201284%          6.6739754029%  

     $ 300,323,382.33          358          358          2        N/A        7.1000800916%          6.6288692625%  

     $ 10,464,897.03          359          479          1        N/A        7.0916258660%          6.6053562495%  

     $ 211,593,661.00          358          358          2        118        7.3931113191%          6.9041084812%  

and that:

scheduled payments on all mortgage loans are received on the first day of each month beginning October 1, 2006;
 
any Payoffs on the mortgage loans are received on the last day of each month beginning in September 2006 and include 30 days of interest;
 
there are no defaults or delinquencies on the mortgage loans;
 
optional termination does not occur;
 
there are no partial prepayments on the mortgage loans and prepayments are computed after giving effect to scheduled payments received on the following day;
 
the mortgage loans prepay at the indicated constant percentages of the BPA;
 
LIBOR remains constant at 5.330%;
 
the date of issuance for the certificates is the Closing Date;
 
cash distributions are received by the certificateholders on the 25th day of each month when due; and
 
the scheduled monthly payments for each hypothetical mortgage loan are computed based upon its unpaid principal balance, mortgage interest rate and amortized remaining term such that each hypothetical mortgage loan will fully amortize on its maturity date (except that with respect to each Balloon Loan, it is assumed that any unpaid principal balance as of its maturity date will be paid in full on its maturity date).

      Any discrepancy between the actual characteristics of the mortgage loans underlying the certificates and the characteristics of the hypothetical mortgage loans shown above may affect the percentages of the initial Class Principal Balances shown in the tables in Appendix A and the weighted average lives of the offered certificates. In addition, to the extent that the characteristics of the actual mortgage loans and the initial Class Principal Balances differ from those assumed in preparing the tables in Appendix A, the outstanding Class Principal Balance of any class of offered certificates may be reduced to zero earlier or later than indicated by the tables.

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      Variations in actual prepayment experience may increase or decrease the percentages of the original outstanding Class Principal Balances and the weighted average lives shown in the tables in Appendix A. Variations may occur even if the average prepayment experience of all the mortgage loans equals the indicated percentage of the BPA. There is no assurance, however, that prepayments of the mortgage loans will conform to any given percentage of the BPA.

      Based on the assumptions described above, the tables in Appendix A (which is incorporated by reference into this prospectus supplement) indicate the projected weighted average lives of the Class A and Subordinate Certificates and provide the percentages of the initial outstanding Class Principal Balance of those classes of certificates that would be outstanding after each of the dates shown at various constant percentages of the BPA.

Lack of Historical Prepayment Data

      There are no historical prepayment data available for the mortgage pool underlying the certificates. In addition, the historical prepayment data about prior securitized pools and vintage pools of fixed-rate residential mortgage loans of the sponsor included in static pool information filed by the depositor with the Securities and Exchange Commission as exhibits to a Current Report on Form 8-K may not be comparable to prepayments expected to be experienced by the mortgage pool.

      No representation is made that the mortgage loans will prepay in the manner or at any of the rates assumed in the tables in Appendix A or below in “—Yield Considerations with Respect to the Senior Subordinate Certificates.” Each investor must make its own decision as to the appropriate prepayment assumptions to be used in deciding whether or not to purchase any of the offered certificates. Since the rate of principal payments (including prepayments) on, and repurchases of, the mortgage loans will significantly affect the yields to maturity on the offered certificates (and especially the yields to maturity on the Senior Subordinate Certificates), prospective investors are urged to consult their investment advisors as to both the anticipated rate of future principal payments (including prepayments) on the mortgage loans and the suitability of the offered certificates to their investment objectives.

Yield Considerations with Respect to the Class PPP Certificates

      The amount available for distribution to the holders of the Class PPP Certificates on any Distribution Date in respect of penalties for voluntary full prepayment of the related mortgage loans is dependent on the amount of the related penalties for voluntary full prepayment collected and remitted to the Trust for the related Prepayment Penalty Period. The amount of penalties for voluntary full prepayment collected and remitted to the Trust is dependent on several factors, including (i) the rate at which mortgagors, whose mortgage loans impose such prepayment penalties, make voluntary prepayments in full, (ii) whether mortgagors make voluntary prepayments in full during the applicable term of the prepayment penalty, (iii) whether the mortgage loan contains an exception to the payment of the prepayment penalty, (iv) whether the prepayment penalty may be waived by the servicer and (v) the amount of the prepayment penalty.

      Investors should conduct their own analysis of the effect that the payment of penalties for voluntary full prepayment of the related mortgage loans, or decisions by the servicer with respect to waiver thereof, may have on the performance of the Class PPP Certificates.

Yield Considerations with Respect to the Senior Subordinate Certificates

      If the aggregate Class Principal Balance of the Junior Subordinate Certificates is reduced to zero, the yield to maturity on the Senior Subordinate Certificates will become extremely sensitive to losses on the mortgage loans and the timing of those losses, because the entire amount of those losses will generally be allocated to the Senior Subordinate Certificates in reverse numerical order. The aggregate initial Certificate Principal Balance of the Junior Subordinate Certificates is equal to approximately 0.85% of the aggregate principal balance of the mortgage loans as of the Cut-Off Date.

      For the Senior Subordinate Certificates, this prospectus supplement uses a constant default rate, or CDR, that represents an assumed default rate, which is a percentage of the outstanding principal balance

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of a hypothetical pool of mortgage loans. The CDR does not describe historical default experience or predict future default rates of any pool of mortgage loans, including the mortgage loans in the trust.

      The tables below assume that there is a twelve-month delay between the default and the liquidation of the mortgage loans. In the tables below, a CDR of 0% assumes no defaults, and a CDR of 0.75% and 1.50% assumes default in the payment of the then outstanding performing balance of a pool of mortgage loans at an annual rate of 0.75% and 1.50%, respectively, which remains in effect through the remaining life of the mortgage loans. However, it is highly unlikely that the prepayments or realized losses on the mortgage loans will occur as the following tables assume, and, as a result, the actual pre-tax yields to maturity on the Senior Subordinate Certificates are highly likely to differ from those shown in the tables.

      The following tables show the sensitivity of the yield to maturity on the Senior Subordinate Certificates to different prepayment rates and levels of defaults based on the Modeling Assumptions, except that it has been assumed that:

mortgage loan defaults occur on the last day of each month at the CDR percentages in the tables, and defaulted mortgage loans are liquidated twelve months following the month of default;
 
no mortgage loan defaults occur within twelve months prior to the maturity of each mortgage loan;
 
each liquidation of a defaulted mortgage loan results in a realized loss allocable to principal equal to the percentage indicated, the loss severity percentage, multiplied by the principal balances of the mortgage loans assumed to be liquidated;
 
there are no delinquencies on the mortgage loans, and principal payments on the mortgage loans, other than those on mortgage loans assumed to be liquidated, will be timely received together with prepayments, if any, at the respective constant percentages of the BPA shown in the table;
 
the purchase prices of the Class M-1, Class M-2, Class M-3, Class M-4, Class B-1, Class B-2 and Class B-3 Certificates will be approximately 99.812500%, 99.625000%, 99.625000%, 99.625000%, 99.781250%, 99.781250% and 98.828125%, respectively, of their Class Principal Balance plus, in the case of the Class M-1, Class M-2, Class M-3 and Class M-4 Certificates, accrued interest from the Cut-Off Date;
 
realized losses on liquidation of the mortgage loans occur at a rate of 20% and 40% (as indicated in the table under the column “Loss Severity Percentage”) of the outstanding principal balance of defaulted mortgage loans at the time of default twelve months following the month in which the mortgage loans first default; and
 
all scheduled payments on mortgage loans are advanced by the servicer whether or not received from the related mortgagors.

      The rate of distributions in reduction of the Class Principal Balance of any class of Senior Subordinate Certificates will be related to the actual amortization schedule of the mortgage loans; accordingly, the interest distributions and distributions in reduction of the Class Principal Balances of the Senior Subordinate Certificates may result in yields to maturity that differ from those reflected below.

      The tables below are for illustrative purposes only, and this prospectus supplement does not represent that the actual rates of prepayment and liquidation and loss severity experience of the mortgage loans will correspond to any of the assumptions made in this prospectus supplement. No assurance can be given as to the appropriateness of the tables in any particular context, nor as to whether the tables or the assumptions upon which they are based reflect present market conditions or future market performance. It is possible that those mortgage loans that are more likely to default are also less likely to experience prepayments, which means that higher prepayment speeds would not necessarily reduce the expected amount of realized losses. In addition, it is unlikely that liquidations will occur exactly twelve months following the month of default, and the timing of liquidations may cause the pre-tax yield to maturity of the Senior Subordinate Certificates to differ from those shown below.

      Differences between the assumptions in the tables and the actual characteristics and performance of the mortgage loans will likely result in different yields from those shown in the tables. Because

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differences between assumed and actual characteristics can affect the performance of the certificates, investors should understand the hypothetical nature of the tables, which give only a general sense of the sensitivity of yields to maturity under varying, but not all, realized loss and prepayment scenarios.

Sensitivity of Pre-Tax Yield to Maturity
of the Senior Subordinate Certificates to
Prepayments and Realized Losses

Class M-1 Certificates

  Percentage
of CDR

  50% BPA

  100% BPA

  200% BPA

  Loss
Severity
Percentage

        

0%

                     6.0%                      6.0%                      6.0%                      N/A  
        

0.75%

                     6.0%                      6.0%                      6.0%                      20%  
        

0.75%

                     6.1%                      6.0%                      6.0%                      40%  
        

1.50%

                     6.1%                      6.0%                      6.0%                      20%  
        

1.50%

                     6.1%                      6.1%                      6.2%                      40%  
        

                                 

Class M-2 Certificates

  Percentage
of CDR

  50% BPA

  100% BPA

  200% BPA

  Loss
Severity
Percentage

        

0%

                     6.2%                      6.2%                      6.2%                      N/A  
        

0.75%

                     6.2%                      6.2%                      6.2%                      20%  
        

0.75%

                     6.2%                      6.2%                      6.2%                      40%  
        

1.50%

                     6.2%                      6.2%                      6.2%                      20%  
        

1.50%

                     6.3%                      6.3%                      6.3%                      40%  
        

                                 

Class M-3 Certificates

  Percentage
of CDR

  50% BPA

  100% BPA

  200% BPA

  Loss
Severity
Percentage

        

0%

                     6.3%                      6.3%                      6.2%                      N/A  
        

0.75%

                     6.3%                      6.3%                      6.2%                      20%  
        

0.75%

                     6.3%                      6.3%                      6.2%                      40%  
        

1.50%

                     6.3%                      6.3%                      6.2%                      20%  
        

1.50%

                     6.3%                      6.4%                      6.4%                      40%  
        

                                 

Class M-4 Certificates

  Percentage
of CDR

  50% BPA

  100% BPA

  200% BPA

  Loss
Severity
Percentage

        

0%

                     6.3%                      6.3%                      6.3%                      N/A  
        

0.75%

                     6.3%                      6.3%                      6.3%                      20%  
        

0.75%

                     6.4%                      6.3%                      6.3%                      40%  
        

1.50%

                     6.4%                      6.3%                      6.3%                      20%  
        

1.50%

                     6.4%                      6.5%                      6.4%                      40%  
        

                                 

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Class B-1 Certificates

  Percentage
of CDR

  50% BPA

  100% BPA

  200% BPA

  Loss
Severity
Percentage

        

0%

                     6.4%                      6.5%                      6.5%                      N/A  
        

0.75%

                     6.4%                      6.5%                      6.5%                      20%  
        

0.75%

                     6.5%                      6.5%                      6.5%                      40%  
        

1.50%

                     6.5%                      6.5%                      6.5%                      20%  
        

1.50%

                     6.5%                      6.6%                      6.6%                      40%  
        

                                 

Class B-2 Certificates

  Percentage
of CDR

  50% BPA

  100% BPA

  200% BPA

  Loss
Severity
Percentage

        

0%

                     6.8%                      6.8%                      6.8%                      N/A  
        

0.75%

                     6.8%                      6.8%                      6.8%                      20%  
        

0.75%

                     6.9%                      6.8%                      6.8%                      40%  
        

1.50%

                     6.9%                      6.8%                      6.8%                      20%  
        

1.50%

                     6.9%                      7.0%                      6.9%                      40%  
        

                                 

Class B-3 Certificates

  Percentage
of CDR

  50% BPA

  100% BPA

  200% BPA

  Loss
Severity
Percentage

        

0%

                     7.6%                      7.7%                      7.9%                      N/A  
        

0.75%

                     7.6%                      7.7%                      7.9%                      20%  
        

0.75%

                     7.7%                      7.7%                      7.9%                      40%  
        

1.50%

                     7.8%                      7.7%                      7.9%                      20%  
        

1.50%

                     7.8%                      7.9%                      7.9%                      40%  
        

                                 

      The following table sets forth the amount of realized losses that would be incurred with respect to the Subordinate Certificates in the aggregate under each of the scenarios in the preceding tables, expressed as a percentage of the aggregate outstanding principal balance of the mortgage loans as of the Cut-Off Date.

Aggregate Realized Losses

  Percentage
of CDR

  50% BPA

  100% BPA

  200% BPA

  Loss
Severity
Percentage

        

0.75%

                     1.00%                      0.53%                      0.25%                      20%  
        

0.75%

                     1.99%                      1.06%                      0.51%                      40%  
        

1.50%

                     1.92%                      1.04%                      0.50%                      20%  
        

1.50%

                     3.83%                      2.08%                      1.00%                      40%  
        

                                 

      The characteristics of the mortgage loans underlying the certificates will not correspond exactly to those assumed in preparing the tables above. The yield to maturity of each class of the Senior Subordinate Certificates therefore will differ even if all the mortgage loans prepay monthly at the related assumed prepayment rate. In addition, it is not likely that the mortgage loans will prepay at the same percentage of the BPA, and the timing of changes in the rate of prepayments may affect significantly the yield to maturity received by a holder of a class of Senior Subordinate Certificates.

Additional Yield Considerations Applicable Solely to the Class R Certificates

      The Class R Certificateholders' after-tax rate of return on their certificates will reflect their pre-tax rate of return, reduced by the taxes required to be paid with respect to the Class R Certificates. Holders

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of the Class R Certificates may have tax liabilities with respect to their certificates during the early years of the REMICs' terms that substantially exceed any distributions payable during those years. In addition, holders of the Class R Certificates may have tax liabilities with respect to their certificates the present value of which substantially exceeds the present value of distributions payable thereon and of any tax benefits that may arise with respect thereto. Accordingly, the after-tax rate of return on the Class R Certificates may be negative or may otherwise be significantly adversely affected. The timing and amount of taxable income attributable to the Class R Certificates will depend on, among other things, the timing and amounts of prepayments and losses experienced by the mortgage pool.

      The Class R Certificateholders should consult their own tax advisors as to the effect of taxes and the receipt of any payments received in connection with the purchase of the Class R Certificates on after-tax rates of return on the Class R Certificates. See “Material Federal Income Tax Consequences” in this prospectus supplement and in the accompanying prospectus.

CREDIT ENHANCEMENTS

Overcollateralization

      As of the Cut-Off Date, the Overcollateralization Amount (the excess of (i) the aggregate principal balance of the mortgage loans over (ii) the aggregate Class Principal Balance of the certificates (other than the Class C and Class PPP Certificates)) will be equal to approximately 0.85% of the aggregate principal balance of the mortgage loans. The overcollateralization amount will be available to absorb losses on the mortgage loans. The level of overcollateralization may increase or decrease over time. We cannot assure you that sufficient interest will be generated by the mortgage loans to create and maintain the required level of overcollateralization.

Excess Spread

      The mortgage loans bear interest each month in an amount that (after subtracting the related servicing fees) in the aggregate is expected to exceed the amount needed to pay monthly interest on the certificates. This excess interest will be applied to pay principal on the certificates entitled to principal in order to cover losses and create and maintain the required level of overcollateralization, as well as to cover basis risk interest shortfalls.

Subordination

      Losses on mortgage loans will first reduce the portion of the Net Monthly Excess Cashflow available for distribution after giving effect to the distribution under clause (i) under “Description of the Certificates—Distributions—Allocation of Net Monthly Excess Cashflow” in this prospectus supplement, and then will reduce the Overcollateralization Amount. If the Overcollateralization Amount has been reduced to zero, then any remaining losses will be allocated to the Senior Subordinate Certificates in reverse order of priority, in each case, until their Class Principal Balances have been reduced to zero.

MATERIAL FEDERAL INCOME TAX CONSEQUENCES

      For federal income tax purposes, the servicer will cause two REMIC elections to be made with respect to the Trust exclusive of the prepayment penalties to which the Class PPP Certificates are entitled. The offered certificates, other than the Class R and Class PPP Certificates, will represent ownership of REMIC regular interests, coupled with rights to receive payments under a cap agreement, and will generally represent ownership of debt for federal income tax purposes, to the extent of the REMIC regular interest portion thereof. For federal income tax purposes the Class R Certificates will represent ownership of the residual interests in each of the two REMICs. The Class PPP Certificates will represent stripped interest in the mortgage loans to which they relate.

      All interest and original issue discount (“OID”) on the Regular Certificates will be includable in certificateholders' income using the accrual method of accounting regardless of the certificateholders' usual methods of accounting. In preparing federal income tax reports to certificateholders and the Internal Revenue Service, Washington Mutual Bank, as servicer, may, depending on the issue prices, treat the Offered Certificates (other than the Class R and Class PPP Certificates), as having been issued with OID. The prepayment assumption that will be used in determining the rate of accrual of OID and market

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discount, if any, for federal income tax purposes is 100% BPA. No representation is made that the mortgage loans will prepay at any given percentage of the BPA. Holders of the offered certificates should see “—Special Tax Considerations Applicable to the Certificates Other Than the Class R, Class C and Class PPP Certificates” in this prospectus supplement.

      In certain circumstances, OID regulations (as described under “Material Federal Income Tax Consequences” in the accompanying prospectus) permit the holder of a debt instrument to recognize OID under a method that differs from that used by the issuer. Accordingly, it is possible that the holder of a certificate may be able to select a method for recognizing OID that differs from that used by Washington Mutual Bank in preparing reports to the certificateholders and the Internal Revenue Service.

      If actual prepayments differ sufficiently from the prepayment assumption, the calculation of OID for certain classes of offered certificates might produce a negative number for certain accrual periods. If that happens, certificateholders will not be entitled to a deduction for that amount, but will be required to carry that amount forward as an offset to OID, if any, accruing in future accrual periods.

      Certain classes of certificates may be treated for federal income tax purposes as having been issued at a premium. Whether any holder of a certificate will be treated as holding a certificate with amortizable bond premium will depend on the certificateholder's purchase price and the distributions remaining to be made on the certificate when the certificateholder acquires it. The use of an assumption that there will be no prepayments might be required in calculating the amount of premium to be amortized in each period. Holders of those classes of certificates are encouraged to consult their own tax advisors regarding the possibility of making an election to amortize any premium. See “Material Federal Income Tax Consequences—Taxation of Owners of REMIC Regular Certificates—Original Issue Discount” and “—Taxation of Owners of REMIC Regular Certificates—Premium” in the accompanying prospectus.

      The offered certificates, to the extent they represent ownership of REMIC regular interests, will generally be treated as “qualifying real property loans” for mutual savings banks and domestic building and loan associations, “loans secured by an interest in real property” for domestic building and loan associations, and “real estate assets” for real estate investment trusts, or REITs, in the same proportion that the REMIC assets would be so treated. In addition, interest on the offered certificates, exclusive of any interest payable to the Class A-1 Certificates in respect of amounts received pursuant to the Class A-1 Yield Maintenance Agreement, will generally be treated as “interest on obligations secured by mortgages on real property” for REITs in the same proportion that the REMIC income would be so treated. No representation is made concerning whether the certificates or any portion of any certificate will be treated as a “qualified mortgage loan” for purposes of including such certificate or portion thereof in a transaction with respect to which an election to be treated as a REMIC might be made. See “Material Federal Income Tax Consequences” in the accompanying prospectus.

Special Tax Considerations Applicable to the Certificates Other Than the Class R, Class C and Class PPP Certificates

      Each holder of a Class A-1 Certificate is deemed to own an undivided beneficial ownership interest in two assets, a REMIC regular interest and an interest in (a) payments to be made under the Class A-1 Yield Maintenance Agreement and (b) payments required to be made in reduction of Basis Risk Carry Forward Amounts that reduce the entitlement of the Class C Certificates to payments of interest (the “Class C Cap Amount”). Each holder of a Class A-2, Class A-3A, Class A-3B, Class A-3C, Class A-4, Class A-5, Class A-6, Class M-1, Class M-2, Class M-3, Class M-4, Class B-1, Class B-2 or Class B-3 Certificate (together with the Class A-1 Certificates, each, a “P&I Certificate”) is deemed to own an undivided beneficial ownership interest in two assets, a REMIC regular interest and an interest in the Class C Cap Amount. The treatment of amounts received by the holder of a P&I Certificate under such certificateholder's right to receive payments under a Yield Maintenance Agreement or the Class C Cap Amount will depend on the portion, if any, of such holder's purchase price allocable thereto. Under the REMIC regulations, each holder of a P&I Certificate must allocate its purchase price for that certificate between its undivided interest in the REMIC regular interest and its undivided interest in the right to receive payments under the Class A-1 Yield Maintenance Agreement or the Class C Cap Amount in accordance with the relative fair market values of each property right. The Trust intends to treat payments made to the holders of the P&I Certificates with respect to the payments under the Class A-1 Yield

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Maintenance Agreement and the Class C Cap Amount as includible in income based on the tax regulations relating to notional principal contracts. The OID regulations provide that the Trust's allocation of the issue price is binding on all holders unless the holder explicitly discloses on its tax return that its allocation is different from the Trust's allocation. Under the REMIC regulations, the Trust is required to account for the REMIC regular interest and the right to receive payments under the Class A-1 Yield Maintenance Agreement and the Class C Cap Amount as discrete property rights. It is possible that the right to receive payments under the Class A-1 Yield Maintenance Agreement or the Class C Cap Amount could be treated as a partnership among the holders of the P&I Certificates, in which case holders of the P&I Certificates would be subject to potentially different timing of income and foreign holders of the offered certificates could be subject to withholding in respect of any payments under those agreements. Holders of the P&I Certificates are advised to consult their own tax advisors regarding the allocation of issue price, timing, character and source of income and deductions resulting from the ownership of their certificates. Treasury regulations have been promulgated under Section 1275 of the Internal Revenue Code generally providing for the integration of a “qualifying debt instrument” with a hedge if the combined cash flows of the components are substantially equivalent to the cash flows on a variable rate debt instrument. However, such regulations specifically disallow integration of debt instruments subject to Section 1272(a)(6) of the Internal Revenue Code. Therefore, holders of the P&I Certificates will be unable to use the integration method provided for under such regulations with respect to such certificates. If this treatment of payments under the Class A-1 Yield Maintenance Agreement and the Class C Cap Amount is respected, ownership of the rights to the payments under the Class A-1 Yield Maintenance Agreement and the Class C Cap Amount will nevertheless entitle the owner to amortize the separate price paid for the right to the payments under the Class A-1 Yield Maintenance Agreement, if applicable, and the Class C Cap Amount under the notional principal contract regulations.

      In the event that the right to receive the payments under the Class A-1 Yield Maintenance Agreement and the Class C Cap Amount is characterized as a “notional principal contract” for federal income tax purposes, upon the sale of a P&I Certificate, the amount of the sale allocated to the selling certificateholder's right to receive payments under the Class A-1 Yield Maintenance Agreement or the Class C Cap Amount would be considered a “termination payment” under the notional principal contract regulations allocable to the related certificate. A holder of a P&I Certificate would have gain or loss from such a termination of the right to receive payments in respect of the payments under the Class A-1 Yield Maintenance Agreement or the Class C Cap Amount equal to (i) any termination payment it received or is deemed to have received minus (ii) the unamortized portion of any amount paid, or deemed paid, by the certificateholder upon entering into or acquiring its interest in the right to receive payments under the Class A-1 Yield Maintenance Agreement or the Class C Cap Amount.

      Gain or loss realized upon the termination of the right to receive payments under the Class A-1 Yield Maintenance Agreement or the Class C Cap Amounts will generally be treated as capital gain or loss. Moreover, in the case of a bank or thrift institution, Internal Revenue Code Section 582(c) would likely not apply to treat such gain or loss as ordinary.

Taxation of Owners of Class PPP Certificates

      Although there is no authority addressing the taxation of securities like the Class PPP Certificates, the stripped coupon rules of Section 1286 of the Code should apply to the Class PPP Certificates. No regulations under Section 1286 of the Code have been issued and uncertainty exists as to how it will be applied to securities like the Class PPP Certificates. Accordingly, it is suggested that holders of Class PPP Certificates consult their own tax advisors concerning the method to be used in reporting income or loss with respect to the certificates.

      The OID Regulations (as defined in the Prospectus) do not apply to stripped coupons, although they provide general guidance as to how the original issue discount sections of the Code will be applied. In addition, the discussion below is subject to the discussion under “—Possible Application of Contingent Payment Rules” herein.

      Under the stripped coupon rules, it appears that original issue discount will be required to be accrued in each month on the Class PPP Certificates based on a constant yield method. In effect, each holder of Class PPP Certificates would include as interest income in each month an amount equal to the product of

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the holder's adjusted basis in the Class PPP Certificate at the beginning of that month and the yield of the Class PPP Certificate to the holder. The yield would be calculated based on the price paid for that Class PPP Certificate by its holder and the payments remaining to be made thereon at the time of the purchase, plus an allocable portion of the servicing fees and expenses to be paid with respect to the related mortgage loans.

      Section 1272(a)(6) of the Code requires that a prepayment assumption be used in computing the accrual of original issue discount with respect to some categories of debt instruments, and that adjustments be made in the amount and rate of accrual of the discount when prepayments do not conform to the prepayment assumption. Those provisions should apply to Class PPP Certificates. It is uncertain whether the assumed prepayment rate would be determined based on conditions at the time of the first sale of the Class PPP Certificate or, with respect to any subsequent holder, at the time of purchase of the Class PPP Certificate by that holder.

      It currently is intended to base information returns or reports to the IRS and certificateholders on 100% of the BPA for the Class PPP Certificates, as described under “Yield and Prepayment Considerations” in this Prospectus Supplement and on a constant yield computed using a representative initial offering price for the certificates. However, no representation is made that the related mortgage loans will in fact prepay at a rate conforming to 100% BPA, or at any other rate, and certificateholders should bear in mind that the use of a representative initial offering price will mean that the information returns or reports, even if otherwise accepted as accurate by the IRS, will in any event be accurate only as to the initial certificateholders of each series who bought at that price. Prospective purchasers of the Class PPP Certificates should consult their own tax advisors regarding the use of the prepayment assumption.

      As the effect of prepayments is taken into account in computing yield with respect to the Class PPP Certificate, it appears that no loss may be available as a result of slower than expected prepayments until such time as the prepayment of all remaining loans bearing prepayment penalties would not produce sufficient payments to the Class PPP Certificate to cover its remaining basis or until no prepayment premiums remain.

      POSSIBLE APPLICATION OF CONTINGENT PAYMENT RULES. The coupon stripping rules' general treatment of stripped coupons is to regard them as newly issued debt instruments in the hands of each purchaser. As payments on the Class PPP Certificates will not occur if the mortgage loans to which prepayment penalties apply do not prepay during the period where prepayment penalties apply, the Class PPP Certificates could be considered to be debt instruments providing for contingent payments. Under the OID Regulations, debt instruments providing for contingent payments are not subject to the same rules as debt instruments providing for noncontingent payments. Regulations were promulgated in 1996 regarding contingent payment debt instruments, the “Contingent Payment Regulations,” but it appears that Class PPP Certificates, to the extent subject to Section 1272(a)(6) of the Code as described above, or due to their similarity to other mortgage-backed securities (such as REMIC regular interests and debt instruments subject to Section 1272(a)(6) of the Code) that are expressly excepted from the application of the Contingent Payment Regulations, are or may be excepted from these regulations. Like the OID Regulations, the Contingent Payment Regulations do not specifically address securities, like the Class PPP Certificates, that are subject to the stripped bond rules of Section 1286 of the Code. Certificateholders should consult their tax advisors concerning the possible application of the contingent payment rules to the Class PPP Certificates.

      SALES OF CLASS PPP CERTIFICATES. Any gain or loss (equal to the difference between the amount realized and adjusted basis) recognized on the sale or exchange of a Class PPP Certificate by an investor who holds the Class PPP Certificate as a capital asset will be capital gain or loss, except in the case of banks and other financial institutions, as provided under Section 582(c) of the Code, and subject to any application of the Contingent Payment Regulations. The adjusted basis of a Class PPP Certificate generally will equal its cost, increased by any income reported by the seller, including original issue discount, and reduced, but not below zero, by any previously reported losses and any distributions with respect to the Class PPP Certificate.

      Gain or loss from the sale of a Class PPP Certificate may be partially or wholly ordinary and not capital in some circumstances. Gain or loss recognized by banks and other financial institutions subject to

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Section 582(c) of the Code will be treated as ordinary income. Furthermore, a portion of any gain that might otherwise be capital gain may be treated as ordinary income to the extent that the Class PPP Certificate is held as part of a conversion transaction within the meaning of Section 1258 of the Code. A conversion transaction generally is one in which the taxpayer has taken two or more positions in the same or similar property that reduce or eliminate market risk, if substantially all of the taxpayer's return is attributable to the time value of the taxpayer's net investment in the transaction. The amount of gain realized in a conversion transaction that is recharacterized as ordinary income generally will not exceed the amount of interest that would have accrued on the taxpayer's net investment at 120% of the appropriate applicable Federal rate at the time the taxpayer enters into the conversion transaction, subject to appropriate reduction for prior inclusion of interest and other ordinary income items from the transaction. Additionally, to the extent a Class PPP Certificate were subject to the Contingent Payment Regulations, gain or loss could be ordinary, in whole or in part. Finally, a taxpayer may elect to have net capital gain taxed at ordinary income rates rather than capital gains rates in order to include the net capital gain in total net investment income for that taxable year, for purposes of the rule that limits the deduction of interest on indebtedness incurred to purchase or carry property held for investment to a taxpayer's net investment income.

      BACKUP WITHHOLDING. In general, the rules described in “Material Federal Income Tax Consequences—Matters Relevant to Holders of All REMIC Certificates—Backup Withholding with Respect to REMIC Certificates” in the Prospectus will also apply to Class PPP Certificates.

      FOREIGN INVESTORS. In general, the discussion with respect to REMIC Regular Certificates in “Material Federal Income Tax Consequences—Matters Relevant to Holders of All REMIC Certificates—Foreign Investors in REMIC Certificates” in the Prospectus applies to Class PPP Certificates except that Class PPP Certificates will be eligible for exemption from U.S. withholding tax, subject to the conditions described in the discussion, only to the extent the related mortgage loans were originated after July 18, 1984 and only to the extent such mortgage loans have not been converted to real property. Further, should a Class PPP Certificate be subject to the Contingent Payment Regulations, gain treated as interest would be exempt from withholding only to the extent actual interest or OID would be exempt.

Special Tax Considerations Applicable to the Residual Certificates

      The Internal Revenue Service has issued regulations under the provisions of the Internal Revenue Code related to REMICs that significantly affect holders of the Residual Certificates. The REMIC regulations impose restrictions on the transfer or acquisition of certain residual interests, including the Residual Certificates. In addition, the REMIC regulations contain restrictions that apply to the transfer of “noneconomic” residual interests to U.S. Persons. Pursuant to the pooling agreement, the Residual Certificates may not be transferred to non-U.S. Persons.

      The REMIC Regulations provide that a transfer to a U.S. Person of “noneconomic” residual interests will be disregarded for all federal income tax purposes, and that the purported transferor of “noneconomic” residual interests will continue to remain liable for any taxes due with respect to the income on those residual interests, unless “no significant purpose of the transfer was to impede the assessment or collection of tax.” Based on the REMIC Regulations, the Residual Certificates may constitute noneconomic residual interests during some or all of their terms for purposes of the REMIC Regulations and, accordingly, unless no significant purpose of a transfer is to impede the assessment or collection of tax, transfers of the Residual Certificates may be disregarded and purported transferors may remain liable for any taxes due with respect to the income on the Residual Certificates. All transfers of the Residual Certificates will be subject to certain restrictions under the terms of the pooling agreement that are intended to reduce the possibility of any transfer being disregarded to the extent that the Residual Certificates constitute noneconomic residual interests. The Internal Revenue Service has issued final REMIC regulations that add to the conditions necessary to assure that a transfer of a noneconomic residual interest would be respected. The additional conditions require that the transferee represent that it will not cause the income to be “attributable to a foreign permanent establishment or fixed base (within the meaning of an applicable income tax treaty) of the transferee or another U.S. taxpayer” and either (i) the amount received by the transferee be no less on a present value basis than the present value of the net tax detriment attributable to holding the residual interest reduced by the present value of the projected payments to be received on the residual interest or (ii) the transfer is to a domestic taxable corporation

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with specified large amounts of gross and net assets and that meets certain other requirements where agreement is made that all future transfers will be to taxable domestic corporations in transactions that qualify for the same “safe harbor” provision. Eligibility for this safe harbor requires, among other things, that the facts and circumstances known to the transferor at the time of transfer not indicate to a reasonable person that the taxes with respect to the residual interest will not be paid, with an unreasonably low cost for the transfer specifically mentioned as negating eligibility. See “Material Federal Income Tax Consequences—Taxation of Owners of REMIC Residual Certificates—Noneconomic REMIC Residual Certificates” in the accompanying prospectus.

      The Residual Certificateholders may be required to report an amount of taxable income with respect to the earlier accrual periods of the REMICs' terms that significantly exceeds the amount of cash distributions received by the Residual Certificateholders from the REMIC with respect to those periods. Consequently, the Residual Certificateholders should have other sources of funds sufficient to pay any federal income taxes due in the earlier years of the REMIC as a result of their ownership of Residual Certificates. In addition, the required inclusion of this amount of taxable income during the REMICs' earlier accrual periods and the deferral of corresponding tax losses or deductions until later accrual periods or until the ultimate sale or disposition of a Residual Certificate (or possibly later under the “wash sale” rules of Section 1091 of the Internal Revenue Code) may cause the Residual Certificateholders' after-tax rate of return to be zero or negative even if the Residual Certificateholders' pre-tax rate of return is positive. That is, on a present value basis, the Residual Certificateholders' resulting tax liabilities could substantially exceed the sum of any tax benefits and the amount of any cash distributions on the Residual Certificates over their life.

      As discussed above, the rules for accrual of OID with respect to certain classes of certificates are subject to significant complexity and uncertainty. Because OID on the certificates will be deducted by the related REMIC in determining its taxable income, any changes required by the Internal Revenue Service in the application of those rules to the certificates may significantly affect the timing of OID deductions to the related REMIC and therefore the amount of the related REMIC's taxable income allocable to holders of the Residual Certificates.

      Purchasers of the Residual Certificates are strongly advised to consult their own tax advisors as to the economic and tax consequences of investment in the Residual Certificates.

      For further information regarding the federal income tax consequences of investing in the Residual Certificates, see “Yield and Prepayment Considerations—Additional Yield Considerations Applicable Solely to the Residual Certificates” in this prospectus supplement and “Material Federal Income Tax Consequences—Taxation of Owners of REMIC Residual Certificates” in the accompanying prospectus.

      An individual, trust or estate that holds (whether directly or indirectly through certain pass-through entities) a Residual Certificate may have significant additional gross income with respect to, but may be subject to limitations on the deductibility of, servicing and trustee's fees and other administrative expenses properly allocable to the REMICs in computing that certificateholder's regular tax liability and will not be able to deduct those fees or expenses to any extent in computing that certificateholder's alternative minimum tax liability. See “Material Federal Income Tax Consequences—Taxation of Owners of REMIC Residual Certificates” in the accompanying prospectus.

      The servicer will be designated as the “tax matters persons” for the Trust as defined in the REMIC Regulations, and in connection therewith will be required to hold not less than 0.01% of the Residual Certificates.

      The Internal Revenue Service has issued proposed regulations that, if adopted as final regulations, would cause the question of whether a transfer of residual interests will be respected for federal income tax purposes to be determined in the audits of the transferee and transferor rather than an item to be determined as a partnership item in the audit of the REMIC's return.

      For further information regarding the federal income tax consequences of investing in the certificates, see “Material Federal Income Tax Consequences” in the accompanying prospectus.

CERTAIN LEGAL INVESTMENT ASPECTS

      For purposes of the Secondary Mortgage Market Enhancement Act of 1984, or SMMEA, the offered certificates, other than the Class M-3, Class M-4, Class B-1, Class B-2, Class B-3 and Class PPP

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Certificates, will constitute “mortgage related securities” when they are issued. These mortgage related securities, or SMMEA Certificates, will be legal investments for persons, trusts, corporations, partnerships, associations, business trusts and business entities (including depository institutions, life insurance companies, and pension funds) created pursuant to or existing under the laws of the United States, or of any state, whose authorized investments are subject to state regulation to the same extent that, under applicable law, obligations issued by or guaranteed as to principal and interest by the United States or any agency or instrumentality of the United States constitute legal investments for such entities. Under SMMEA, if a state enacted legislation before October 4, 1991 specifically limiting the legal investment authority of any type of those entities in “mortgage related securities,” the SMMEA Certificates will constitute legal investments for those types of entities only to the extent provided by the legislation. Certain states have enacted such legislation. Investors should consult their own legal advisors in determining whether and to what extent the offered certificates, constitute legal investments for them.

      SMMEA also amended the legal investment authority of federally-chartered depository institutions as follows: federal savings and loan associations and federal savings banks may invest in, sell or otherwise deal with the SMMEA Certificates without limitation as to the percentage of their assets represented by the SMMEA Certificates, federal credit unions may invest in the SMMEA Certificates and national banks may purchase the SMMEA Certificates for their own accounts without regard to the limitations generally applicable to investment securities prescribed by 12 U.S.C. 24 (Seventh), in each case subject to such regulations as the applicable federal regulatory authority may adopt.

      Institutions whose investment activities are subject to review by certain regulatory authorities may be or may become subject to restrictions on investment in the offered certificates, which could be retroactively imposed. The Federal Financial Institutions Examination Council, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Office of Thrift Supervision and the National Credit Union Administration have adopted guidelines, and have proposed policies, regarding the suitability of investments in various types of derivative mortgage-backed securities, including securities such as the offered certificates. In addition, several states have adopted or are considering regulations that would prohibit regulated institutions subject to their jurisdiction from holding mortgage-backed securities such as the offered certificates. When adopted, the regulations could apply to the offered certificates retroactively. Investors should consult their own legal advisors in determining whether and to what extent the offered certificates constitute legal investments for them.

      There may be other restrictions on the ability of certain investors, including depository institutions, either to purchase the offered certificates or to purchase the offered certificates representing more than a specified percentage of the investor's assets. Investors should consult their own legal advisors in determining whether and to what extent the offered certificates constitute legal investments for them.

ERISA CONSIDERATIONS

      ERISA and Section 4975 of the Internal Revenue Code contain provisions that may affect a fiduciary of an employee benefit plan or other plan or arrangement, such as an individual retirement account. Plans, insurance companies or other persons investing Plan Assets (see “ERISA Considerations—Plan Asset Regulation” in the accompanying prospectus) should carefully review with their legal counsel whether owning offered certificates is permitted under ERISA or Section 4975 of the Internal Revenue Code. The Underwriter's Exemption or the WCC Exemption, as described under “ERISA Considerations—Underwriter's and WCC Exemption” in the accompanying prospectus, may provide an exemption from restrictions imposed by ERISA or Section 4975 of the Internal Revenue Code and may permit a Plan to own, or Plan Assets to be used to purchase, the offered certificates other than the Class PPP and Class R Certificates. However, both the Underwriter's Exemption and the WCC Exemption contain several conditions, including the requirement that an affected Plan must be an “accredited investor” as defined in Rule 501(a)(1) of Regulation D of the Securities and Exchange Commission under the Securities Act of 1933, as amended. In addition, in order to assure the inapplicability of certain restrictions imposed by Section 406(b)(1) and (2) of ERISA and Section 4975(c)(1)(E) of the Code in connection with the initial issuance of the certificates, each Plan or person using Plan Assets of any Plan that acquires offered certificates from the underwriter named in this prospectus supplement or from Washington Mutual Bank or any of its affiliates shall be deemed to represent and warrant that (i) no person who has discretionary

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authority or renders investment advice with respect to such acquisition of such offered certificates (and no affiliate of such person) is a mortgagor with respect to more than 5% of the mortgage loans, (ii) such Plan's investment in any class of offered certificates does not and will not exceed 25% of all of the offered certificates of that class at the time such investment is made, and (iii) immediately after such investment is made, no more than 25% of the assets of such Plan is invested in securities representing an interest in a trust or other issuer containing assets sold or serviced by the same entity (provided that an entity will not be considered to service assets contained in a trust or other issuer if it is merely a subservicer with respect to such trust or issuer).

      The Underwriter's Exemption, the WCC Exemption or any similar exemption that might be available, will not likely apply to the purchase, sale or holding of the Class PPP or Class R Certificates. Therefore, unless a transferee of the Class PPP Certificates delivers an opinion of counsel (as described below), any transferee of the Class PPP Certificates will be deemed to have represented by virtue of its purchase or holding of such Class PPP Certificates (or interest therein) that such transferee is not a Plan nor a person using Plan Assets of any Plan to effect such purchase or holding. The trustee will not register transfers of the Class R Certificates to a Plan, a trustee or other person acting on behalf of any Plan or any other person using Plan Assets to purchase the Class R Certificates without first receiving an opinion of counsel. The opinion of counsel delivered by a transferee of the Class PPP or Class R Certificates must:

be satisfactory to the depositor and the trustee;
 
not be at the expense of the depositor, the Trust, the trustee, the Delaware trustee or the servicer; and
 
conclude that the purchase of the certificates by or on behalf of the Plan:
 
is permissible under applicable law;
 
will not constitute or result in a non-exempt prohibited transaction under ERISA or Section 4975 of the Internal Revenue Code; and
 
will not subject the depositor, the Trust, the trustee, the Delaware trustee or the servicer to any obligation in addition to those undertaken in the pooling agreement.

      Pursuant to the Underwriter's Exemption or the WCC Exemption, Plans may purchase and hold subordinate certificates such as the Senior Subordinate Certificates if they are rated “BBB–” or better at the time of purchase. See “ERISA Considerations—Underwriter's and WCC Exemption” in the accompanying prospectus. A Plan, or other purchaser acting on its behalf or with Plan Assets, that purchases the Senior Subordinate Certificates will be deemed to have represented that:

the rating condition was satisfied at the time of purchase; or
 
the following conditions are satisfied:
 
it is an insurance company;
 
the source of funds used to acquire or hold the certificates is an “insurance company general account” as that term is defined in PTCE 95-60; and
 
the conditions in Sections I and III of PTCE 95-60 have been satisfied.

      The pooling agreement will require that if neither condition is satisfied the Plan, or other purchaser acting on its behalf or with Plan Assets, will:

indemnify and hold harmless the depositor, the trustee, the Delaware trustee, the servicer, the underwriter and the Trust from and against all liabilities, claims, costs or expenses incurred by them as a result of the purchase; and
 
be disregarded as purchaser and the immediately preceding permitted beneficial owner will be treated as the beneficial owner of that certificate.

      Any fiduciary or other investor of Plan Assets that proposes to own the offered certificates on behalf of or with Plan Assets of any Plan should consult with legal counsel about: (i) whether the specific and general conditions and the other requirements in the Underwriter's Exemption or the WCC Exemption would be satisfied, or whether any other prohibited transaction exemption would apply, and (ii) the application of the general fiduciary responsibility provisions of ERISA and the prohibited transaction

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provisions of ERISA and Section 4975 of the Internal Revenue Code to the proposed investment. See “ERISA Considerations” in the accompanying prospectus.

      No representation is made that the sale of any of the offered certificates to a Plan or other purchaser acting on its behalf meets any relevant legal requirement for investments by Plans generally or any particular Plan, or that the investment is appropriate for Plans generally or any particular Plan.

METHOD OF DISTRIBUTION

      The depositor has agreed to sell to the underwriter, and the underwriter has agreed to purchase, all of the offered certificates other than the 0.01% percentage interest of the Class R Certificates that Washington Mutual Bank will purchase. An underwriting agreement between the depositor and the underwriter governs the sale of the offered certificates. The aggregate proceeds (excluding accrued interest) to the depositor from the sale of the offered certificates, before deducting expenses estimated to be $469,000, will be approximately 99.85% of the initial aggregate principal balance of the offered certificates. Under the underwriting agreement, the underwriter has agreed to take and pay for all of the offered certificates, if any are taken. The underwriter will distribute the offered certificates from time to time in negotiated transactions or otherwise at varying prices to be determined at the time of sale. The difference between the purchase price for the offered certificates paid to the depositor and the proceeds from the sale of the offered certificates realized by the underwriter will constitute underwriting discounts and commissions.

      WaMu Capital Corp., the underwriter, is a wholly owned subsidiary of Washington Mutual Bank, the servicer, and an affiliate of the depositor.

      The depositor has agreed to indemnify the underwriter against some civil liabilities, including liabilities under the Securities Act of 1933, as amended, that are based on a claim that the prospectus, this prospectus supplement or the related registration statement, as from time to time amended or supplemented, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading (unless such statement or omission was made in reliance upon, and in conformity with, written information furnished to the depositor or the sponsor by the underwriter).

LEGAL MATTERS

      The depositor's counsel, Orrick, Herrington & Sutcliffe LLP, San Francisco, California, and its Delaware counsel, Richards, Layton & Finger, P.A., Wilmington, Delaware, will deliver legal opinions required by the underwriting agreement.

CERTIFICATE RATINGS

      It is a condition to the issuance of the offered certificates that they receive ratings from S&P and Moody's as indicated:

    Rating Agency

Class

  S&P

  Moody's

A-1        AAA          Aaa  
A-2        AAA          Aaa  
A-3A        AAA          Aaa  
A-3B        AAA          Aaa  
A-3C        AAA          Aaa  
A-4        AAA          Aaa  
A-5        AAA          Aaa  
A-6        AAA          Aaa  
M-1        AA          Aa2  
M-2        A+          Aa3  
M-3        A          A1  
M-4        A–          A2  
B-1        BBB+          Baa1  
B-2        BBB          Baa2  
B-3        BBB–          Baa3  
PPP        AAA          Aaa  
R        AAA          Aaa  

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      A security rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time by the assigning rating agency. The rating assigned to each class of offered certificates by each rating agency is based on that rating agency's independent evaluation of that class of certificates. The rating assigned to a class of offered certificates by one rating agency may not correspond to any rating assigned to that class by any other rating agency.

      The ratings assigned to this issue do not constitute a recommendation to purchase or sell these securities. Rather, they are an indication of the likelihood of the payment of principal and interest as set forth in the transaction documentation. The ratings do not address the effect on the certificates' yield attributable to prepayments or recoveries on the underlying mortgage loans. Further, the ratings on the Class R Certificates address only the return of the Class R Principal Balance and interest on that balance at the stated rate. The ratings on the Class A-1 Certificates do not address any payments made pursuant to the Class A-1 Yield Maintenance Agreement. The ratings on the Class PPP Certificates address only the return of the applicable Class PPP Principal Balance.

      The ratings on the offered certificates address the likelihood of the receipt by certificateholders of all distributions with respect to the underlying mortgage loans to which they are entitled. The ratings do not represent any assessment of the likelihood that the rate of principal prepayments by mortgagors might differ from those originally anticipated. As a result of differences in the rate of principal prepayments, certificateholders might suffer a lower than anticipated yield to maturity. See “Risk Factors” and “Yield and Prepayment Considerations” in this prospectus supplement.

      The depositor has not requested a rating on the offered certificates by any rating agency other than S&P and Moody's. However, there can be no assurance as to whether any other rating agency will rate the offered certificates, or, if it does, what rating would be assigned by any other rating agency. A rating on the offered certificates by another rating agency, if assigned at all, may be lower than the rating assigned to the offered certificates by S&P or Moody's.

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APPENDIX A†

Percent of Initial Class Principal Balance Outstanding
At Various Percentages of the Basic Prepayment Assumption

    Class A-1

  Class A-2

  Class A-3A, Class A-3B and Class A-3C

  Class A-4

Distribution Date

  0%

  50%

  100%

  150%

  200%

  0%

  50%

  100%

  150%

  200%

  0%

  50%

  100%

  150%

  200%

  0%

  50%

  100%

  150%

  200%

Initial Percentage

     100          100          100          100          100          100          100          100          100          100          100          100          100          100          100          100          100          100          100          100  

September 25, 2007

     99          83          67          50          32          98          73          48          22          0          100          100          100          100          100          100          100          100          100          100  

September 25, 2008

     98          64          32          0          0          97          43          0          0          0          100          100          100          70          0          100          100          100          100          44  

September 25, 2009

     97          47          0          0          0          95          17          0          0          0          100          100          76          0          0          100          100          100          0          0  

September 25, 2010

     96          32          0          0          0          93          0          0          0          0          100          100          22          0          0          100          100          100          0          0  

September 25, 2011

     95          12          0          0          0          91          0          0          0          0          100          100          0          0          0          100          100          44          0          0  

September 25, 2012

     93          0          0          0          0          89          0          0          0          0          100          95          0          0          0          100          100          0          0          0  

September 25, 2013

     92          0          0          0          0          87          0          0          0          0          100          67          0          0          0          100          100          0          0          0  

September 25, 2014

     91          0          0          0          0          86          0          0          0          0          100          52          0          0          0          100          100          0          0          0  

September 25, 2015

     90          0          0          0          0          84          0          0          0          0          100          35          0          0          0          100          100          0          0          0  

September 25, 2016

     88          0          0          0          0          81          0          0          0          0          100          18          0          0          0          100          100          0          0          0  

September 25, 2017

     86          0          0          0          0          77          0          0          0          0          100          1          0          0          0          100          100          0          0          0  

September 25, 2018

     83          0          0          0          0          73          0          0          0          0          100          0          0          0          0          100          61          0          0          0  

September 25, 2019

     80          0          0          0          0          68          0          0          0          0          100          0          0          0          0          100          23          0          0          0  

September 25, 2020

     77          0          0          0          0          63          0          0          0          0          100          0          0          0          0          100          0          0          0          0  

September 25, 2021

     73          0          0          0          0          57          0          0          0          0          100          0          0          0          0          100          0          0          0          0  

September 25, 2022

     69          0          0          0          0          51          0          0          0          0          100          0          0          0          0          100          0          0          0          0  

September 25, 2023

     65          0          0          0          0          44          0          0          0          0          100          0          0          0          0          100          0          0          0          0  

September 25, 2024

     60          0          0          0          0          37          0          0          0          0          100          0          0          0          0          100          0          0          0          0  

September 25, 2025

     54          0          0          0          0          28          0          0          0          0          100          0          0          0          0          100          0          0          0          0  

September 25, 2026

     49          0          0          0          0          19          0          0          0          0          100          0          0          0          0          100          0          0          0          0  

September 25, 2027

     42          0          0          0          0          9          0          0          0          0          100          0          0          0          0          100          0          0          0          0  

September 25, 2028

     35          0          0          0          0          0          0          0          0          0          100          0          0          0          0          100          0          0          0          0  

September 25, 2029

     23          0          0          0          0          0          0          0          0          0          100          0          0          0          0          100          0          0          0          0  

September 25, 2030

     10          0          0          0          0          0          0          0          0          0          100          0          0          0          0          100          0          0          0          0  

September 25, 2031

     0          0          0          0          0          0          0          0          0          0          93          0          0          0          0          100          0          0          0          0  

September 25, 2032

     0          0          0          0          0          0          0          0          0          0          57          0          0          0          0          100          0          0          0          0  

September 25, 2033

     0          0          0          0          0          0          0          0          0          0          18          0          0          0          0          100          0          0          0          0  

September 25, 2034

     0          0          0          0          0          0          0          0          0          0          0          0          0          0          0          36          0          0          0          0  

September 25, 2035

     0          0          0          0          0          0          0          0          0          0          0          0          0          0          0          0          0          0          0          0  

September 25, 2036

     0          0          0          0          0          0          0          0          0          0          0          0          0          0          0          0          0          0          0          0  

Weighted Average
Life (in years)(1)

     17.96          2.91          1.49          1.02          0.77          14.85          1.86          1.00          0.71          0.55          26.20          8.23          3.55          2.20          1.60          27.91          12.35          5.00          2.81          2.02  

Weighted Average Life to the Clean-Up Call Option Date (in years)(1)(2)

     17.96          2.91          1.49          1.02          0.77          14.85          1.86          1.00          0.71          0.55          26.20          8.23          3.55          2.20          1.60          27.91          12.35          5.00          2.81          2.02  

                                                                                                                                                               

                                                                                                                                                               


The following tables have been prepared based on the assumptions described in this prospectus supplement under “Yield and Prepayment Considerations” (including the assumptions regarding the characteristics and performance of the mortgage loans which differ from their actual characteristics and performance) and should be read in conjunction with that section.
   
* Indicates an amount above zero and less than 0.5% of the original principal balance outstanding.
   
(1) The weighted average life of any class of certificates is determined by (i) multiplying the assumed net reduction, if any, in the principal amount on each Distribution Date on such class of certificates by the number of years from the date of issuance of the certificate to the related Distribution Date, (ii) summing the results, and (iii) dividing the sum by the aggregate amount of the assumed net reductions in principal amount on such class of certificates.
   
(2) The weighted average lives to the Clean-Up Call Option Date have been prepared based on an additional assumption that the Certificates are sold immediately on the Clean-Up Call Option Date.

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Percent of Initial Class Principal Balance Outstanding
At Various Percentages of the Basic Prepayment Assumption

    Class A-5

  Class A-6

  Class M-1

  Class M-2

Distribution Date

  0%

  50%

  100%

  150%

  200%

  0%

  50%

  100%

  150%

  200%

  0%

  50%

  100%

  150%

  200%

  0%

  50%

  100%

  150%

  200%

Initial Percentage

     100        100        100        100        100        100        100        100        100        100        100        100        100        100        100        100        100        100        100        100  

September 25, 2007

     100        100        100        100        100        100        100        100        100        100        100        100        100        100        100        100        100        100        100        100  

September 25, 2008

     100        100        100        100        100        100        100        100        100        100        100        100        100        100        100        100        100        100        100        100  

September 25, 2009

     100        100        100        98        0        100        100        100        100        95        100        100        100        100        100        100        100        100        100        100  

September 25, 2010

     100        100        100        56        0        100        93        88        85        68        100        100        66        33        15        100        100        66        33        15  

September 25, 2011

     100        100        100        22        0        99        87        77        69        34        100        100        49        21        3        100        100        49        21        0  

September 25, 2012

     100        100        87        10        0        99        77        61        47        15        100        88        36        13        0        100        88        36        13        0  

September 25, 2013

     100        100        65        6        0        98        67        45        29        6        100        77        27        5        0        100        77        27        0        0  

September 25, 2014

     100        100        60        6        0        94        43        18        14        1        100        66        20        0        0        100        66        20        0        0  

September 25, 2015

     100        100        50        6        0        91        28        7        4        0        100        57        15        0        0        100        57        15        0        0  

September 25, 2016

     100        100        39        5        0        87        18        3        *        0        100        50        11        0        0        100        50        11        0        0  

September 25, 2017

     100        100        29        2        0        81        11        1        *        0        100        42        6        0        0        100        42        0        0        0  

September 25, 2018

     100        100        21        0        0        74        7        *        0        0        100        36        0        0        0        100        36        0        0        0  

September 25, 2019

     100        100        15        0        0        68        4        *        0        0        100        31        0        0        0        100        31        0        0        0  

September 25, 2020

     100        95        10        0        0        61        3        *        0        0        100        26        0        0        0        100        26        0        0        0  

September 25, 2021

     100        81        7        0        0        54        2        *        0        0        100        22        0        0        0        100        22        0        0        0  

September 25, 2022

     100        68        4        0        0        48        1        *        0        0        100        18        0        0        0        100        18        0        0        0  

September 25, 2023

     100        57        2        0        0        41        1        *        0        0        100        15        0        0        0        100        15        0        0        0  

September 25, 2024

     100        48        1        0        0        35        *        *        0        0        100        13        0        0        0        100        13        0        0        0  

September 25, 2025

     100        39        0        0        0        29        *        0        0        0        100        11        0        0        0        100        11        0        0        0  

September 25, 2026

     100        32        0        0        0        24        *        0        0        0        100        8        0        0        0        100        0        0        0        0  

September 25, 2027

     100        26        0        0        0        18        *        0        0        0        100        3        0        0        0        100        0        0        0        0  

September 25, 2028

     100        21        0        0        0        14        *        0        0        0        100        0        0        0        0        100        0        0        0        0  

September 25, 2029

     100        16        0        0        0        10        *        0        0        0        94        0        0        0        0        94        0        0        0        0  

September 25, 2030

     100        12        0        0        0        7        *        0        0        0        84        0        0        0        0        84        0        0        0        0  

September 25, 2031

     100        8        0        0        0        4        *        0        0        0        72        0        0        0        0        72        0        0        0        0  

September 25, 2032

     100        5        0        0        0        2        *        0        0        0        59        0        0        0        0        59        0        0        0        0  

September 25, 2033

     100        2        0        0        0        1        *        0        0        0        46        0        0        0        0        46        0        0        0        0  

September 25, 2034

     100        *        0        0        0        *        0        0        0        0        32        0        0        0        0        32        0        0        0        0  

September 25, 2035

     59        0        0        0        0        *        0        0        0        0        16        0        0        0        0        16        0        0        0        0  

September 25, 2036

     0        0        0        0        0        0        0        0        0        0        0        0        0        0        0        0        0        0        0        0  

Weighted Average
Life (in years)(1)

     29.18        18.65        9.45        4.68        2.53        15.93        7.93        6.52        6.01        4.77        26.56        11.16        5.76        4.10        3.66        26.55        11.05        5.69        4.01        3.53  

Weighted Average Life to the Clean-Up Call Option Date (in years)(1)(2)

     28.70        15.32        7.41        4.23        2.53        15.93        7.90        6.33        4.77        3.55        26.45        10.49        5.35        3.83        3.48        26.45        10.49        5.35        3.79        3.38  

                                                                                                                                                               


* Indicates an amount above zero and less than 0.5% of the original principal balance outstanding.
   
(1) The weighted average life of any class of certificates is determined by (i) multiplying the assumed net reduction, if any, in the principal amount on each Distribution Date on such class of certificates by the number of years from the date of issuance of the certificate to the related Distribution Date, (ii) summing the results, and (iii) dividing the sum by the aggregate amount of the assumed net reductions in principal amount on such class of certificates.
   
(2) The weighted average lives to the Clean-Up Call Option Date have been prepared based on an additional assumption that the Certificates are sold immediately on the Clean-Up Call Option Date.

S-88


Percent of Initial Class Principal Balance Outstanding
At Various Percentages of the Basic Prepayment Assumption

    Class M-3

  Class M-4

  Class B-1

  Class B-2

Distribution Date

  0%

  50%

  100%

  150%

  200%

  0%

  50%

  100%

  150%

  200%

  0%

  50%

  100%

  150%

  200%

  0%

  50%

  100%

  150%

  200%

Initial Percentage

     100        100        100        100        100        100        100        100        100        100        100        100        100        100        100        100        100        100        100        100  

September 25, 2007

     100        100        100        100        100        100        100        100        100        100        100        100        100        100        100        100        100        100        100        100  

September 25, 2008

     100        100        100        100        100        100        100        100        100        100        100        100        100        100        100        100        100        100        100        100  

September 25, 2009

     100        100        100        100        100        100        100        100        100        100        100        100        100        100        100        100        100        100        100        100  

September 25, 2010

     100        100        66        33        15        100        100        66        33        13        100        100        66        33        0        100        100        66        33        0  

September 25, 2011

     100        100        49        21        0        100        100        49        21        0        100        100        49        21        0        100        100        49        6        0  

September 25, 2012

     100        88        36        13        0        100        88        36        3        0        100        88        36        0        0        100        88        36        0        0  

September 25, 2013

     100        77        27        0        0        100        77        27        0        0        100        77        27        0        0        100        77        27        0        0  

September 25, 2014

     100        66        20        0        0        100        66        20        0        0        100        66        20        0        0        100        66        4        0        0  

September 25, 2015

     100        57        15        0        0        100        57        15        0        0        100        57        0        0        0        100        57        0        0        0  

September 25, 2016

     100        50        4        0        0        100        50        0        0        0        100        50        0        0        0        100        50        0        0        0  

September 25, 2017

     100        42        0        0        0        100        42        0        0        0        100        42        0        0        0        100        42        0        0        0  

September 25, 2018

     100        36        0        0        0        100        36        0        0        0        100        36        0        0        0        100        36        0        0        0  

September 25, 2019

     100        31        0