ISDA Confirmation Agreement between Wells Fargo Bank, N.A. (as Trustee for Carrington Mortgage Loan Trust, Series 2006-OPT1) and Swiss Re Financial Products Corporation

  CONFIRMATION TO: Wells Fargo Bank, N.A., not individually but solely as trustee for Carrington Mortgage Loan Trust, Series 2006-OPT1 9062 Old Anapolis Road Columbia, Maryland 21045 Attention: Client Manager-Carrington Mortgage Loan Trust, 2006-OPT1 Telephone: (410) 884-2000 Facsimile: (410) 715-2380 FROM: Swiss Re Financial Products Corporation 55 East 52nd Street New York, New York 10055 Attention: Head of Operations Facsimile. (212) 317-5335 CC: Attention: Head of Legal Facsimile: (212) 317-5474 DATE: March 14, 2006 Transaction Reference Number: 820278 Dear Sir/Madam, The purpose of this letter agreement is to confirm the terms and conditions of the transaction entered into between Wells Fargo Bank, N.A., not individually but solely as trustee for Carrington Mortgage Loan Trust, Series 2006-OPT1, and Swiss Re Financial Products Corporation, a corporation organized under the laws of the State of Delaware (each a "party" and together "the parties") on the Trade Date specified below (the "Transaction"). This letter agreement constitutes a "Confirmation" as referred to in the ISDA Master Agreement specified in paragraph 1 below. In this Confirmation, "Party A" means Swiss Re Financial Products Corporation, and "Party B" means Carrington Mortgage Loan Trust, Series 2006-OPT1, by Wells Fargo Bank, N.A., not individually but solely as trustee for Carrington Mortgage Loan Trust, Series 2006-OPT1. The definitions and provisions contained in the 2000 ISDA Definitions, as published by the International Swaps and Derivatives Association, Inc. (the "Definitions"), are incorporated into this Confirmation. In the event of any inconsistency between the Definitions and this Confirmation, this Confirmation will govern. Other capitalized terms used herein (but not otherwise defined) shall have the meaning specified in that certain Pooling and Servicing Agreement, dated as of March 1, 2006 (the "Pooling and Servicing Agreement"), among Stanwich Asset Acceptance Company, L.L.C., as Depositor, Option One Mortgage Corporation, as Servicer, and Wells Fargo Bank, N.A., as Trustee (the "Trustee). S-1 ISDA Confirmation/Class M Cap Contract  1. This Confirmation evidences a complete binding agreement between the parties as to the terms of the Transaction to which this Confirmation relates. In addition, the parties agree that for the purposes of this Transaction, this Confirmation will supplement, form a part of, and be subject to an agreement in the form of the 1992 ISDA Master Agreement (Multicurrency-Cross Border) as if the parties had executed an agreement in such form (but without any Schedule except for the elections noted below) on the Trade Date of the Transaction (such agreement, the "Form Master Agreement"). In the event of any inconsistency between the provisions of the Form Master Agreement and this Confirmation, this Confirmation will prevail for the purpose of this Transaction. Each party represents to the other party and will be deemed to represent to the other party on the date on which it enters into this Transaction that (absent a written agreement between the parties that expressly imposes affirmative obligations to the contrary for that Transaction): (a) NON-RELIANCE. Each party has made its own independent decisions to enter into this Transaction and as to whether this Transaction is appropriate or proper for it based upon its own judgment and upon advice from such advisors as it has deemed necessary. It is not relying on any communication (written or oral) of the other party as investment advice or as a recommendation to enter into this Transaction; it being understood that information and explanations related to the terms and conditions of this Transaction shall not be considered investment advice or a recommendation to enter into this Transaction. Further, such party has not received from the other party any assurance or guarantee as to the expected results of this Transaction. (b) EVALUATION AND UNDERSTANDING. It is capable of evaluating and understanding (on its own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks of this Transaction. It is also capable of assuming, and assumes, the financial and other risks of this Transaction. (c) STATUS OF PARTIES. The other party is not acting as an agent, fiduciary or advisor for it in respect of this Transaction. 2. The terms of the particular Transaction to which this Confirmation relates are as follows: - -------------------------------------------------------------------------------- Notional Amount: For each Calculation Period, the lesser of (i) USD 193,318,000 and (ii) the aggregate Certificate Principal Balance of the Class A Certificates as of the related Floating Rate Payment Date. - -------------------------------------------------------------------------------- Trade Date: March 9, 2006 - -------------------------------------------------------------------------------- Effective Date: March 14, 2006 - -------------------------------------------------------------------------------- Termination Date: May 25, 2009 subject to adjustment in accordance with the Following Business Day Convention. - -------------------------------------------------------------------------------- FIXED AMOUNTS: - -------------------------------------------------------------------------------- ISDA Confirmation/Class M Cap Contract  - -------------------------------------------------------------------------------- Fixed Rate Payer: Party B - -------------------------------------------------------------------------------- Payment Date: March 14, 2006 - -------------------------------------------------------------------------------- Fixed Amount: USD 95,000 - -------------------------------------------------------------------------------- FLOATING AMOUNTS: - -------------------------------------------------------------------------------- Floating Rate Payer: Party A - -------------------------------------------------------------------------------- Cap Rate I: See attached Schedule A under the Column "Cap Rate I (%)". - -------------------------------------------------------------------------------- Floating Rate Payer The 25th of each month, commencing on April 25, 2006 Period End Dates: in accordance with the Following Business Day Convention. - -------------------------------------------------------------------------------- Floating Rate Payer Early Payment shall be applicable. The Floating Rate Payment Dates: Payer Payment Dates shall be two Business Days prior to each Floating Rate Payer Period End Date, commencing on April 21, 2006 to and including the date which is two Business Days prior to the Termination Date. - -------------------------------------------------------------------------------- Floating Rate Option: USD-LIBOR-BBA, provided, however, for any Calculation Period, if the Floating Rate Option is greater than the rate set forth opposite such Calculation Period as set forth in Schedule A under the heading Cap Rate II (%), then the Floating Rate for such Calculation Period shall be deemed to be such rate. - -------------------------------------------------------------------------------- Designated Maturity: One month - -------------------------------------------------------------------------------- Spread: None - -------------------------------------------------------------------------------- Floating Rate Day Actual/360 Count Fraction: - -------------------------------------------------------------------------------- Reset Date: First day of each Calculation Period - -------------------------------------------------------------------------------- Compounding: Inapplicable - -------------------------------------------------------------------------------- BUSINESS DAYS: New York - -------------------------------------------------------------------------------- CALCULATION AGENT: Party A; provided, however, if an Event of Default has occurred with respect to Party A, a Reference Market-maker, as designated by Party B, shall be the Calculation Agent. - -------------------------------------------------------------------------------- 3. FORM MASTER AGREEMENT. (a) "SPECIFIED ENTITY" means, in relation to Party A, for the purpose of Section 5(a)(v), Section 5(a)(vi), Section 5(a)(vii) and Section 5(b)(iv) of the Form Master Agreement: Not Applicable. ISDA Confirmation/Class M Cap Contract  (b) "SPECIFIED ENTITY" means, in relation to Party B, for the purpose of Section 5(a)(v), Section 5(a)(vi), Section 5(a)(vii) and Section 5(b)(iv) of the Form Master Agreement: Not Applicable. (c) "SPECIFIED TRANSACTION" will have the meaning specified in Section 14 of the Form Master Agreement. (d) The "CREDIT EVENT UPON MERGER" provisions of Section 5(b)(iv) of the Form Master Agreement will not apply to Party A or to Party B. (e) The "AUTOMATIC EARLY TERMINATION" provision of Section 6(a) of the Form Master Agreement will not apply to Party A or to Party B. (f) GOVERNING LAW. The Form Master Agreement will be governed by, and construed in accordance with, the laws of the State of New York without reference to its conflict of laws provisions (except for Sections 5-1401 and 5-1402 of the New York General Obligations Law). (g) The phrase "TERMINATION CURRENCY" means United States Dollars. (h) PAYMENTS ON EARLY TERMINATION. For the purpose of Section 6(e) of the Form Master Agreement, Market Quotation and Second Method will apply. (i) EVENTS OF DEFAULT. The Events of Default specified under Sections 5(a)(ii), 5(a)(iv), 5(a)(v) and 5(a)(vi) of the Form Master Agreement will not apply to Party A; 5(a)(ii), 5(a)(iii), 5(a)(iv), 5(a)(v) and 5(a)(vi) of the Form Master Agreement will not apply to Party B. With respect to Party B only, the provisions of Section 5(a)(vii) clause 2 will not be applicable. (j) TAX EVENT. The provisions of Section 2(d)(i)(4) and 2(d)(ii) of the printed Form Master Agreement shall not apply to Party B and Party B shall not be required to pay any additional amounts referred to therein. (k) NO SET-OFF. Without affecting the provisions of the Form Master Agreement requiring the calculation of certain net payment amounts, as a result of an Event of Default or Additional Termination Event or otherwise, all payments will be made without setoff or counterclaim. 4. RECORDING OF CONVERSATIONS. Each party to this Transaction acknowledges and agrees to the tape (and/or other electronic) recording of conversations between the parties to this Transaction whether by one or other or both of the parties or their agents, and that any such recordings may be submitted in evidence in any Proceedings relating to the Form Master Agreement and/or this Transaction. ISDA Confirmation/Class M Cap Contract  5. CREDIT SUPPORT DOCUMENT. In relation to Party A: A Guaranty of Swiss Re dated as of the date hereof, in a form acceptable to Party B and, if Party A is required pursuant to Paragraph 8 of this Confirmation to post collateral, an ISDA Credit Support Annex. In relation to Party B: The Pooling and Servicing Agreement. Party B agrees that the security interests in collateral granted to Party A under the foregoing Credit Support Document shall secure the obligations of Party B to Party A hereunder. 6. CREDIT SUPPORT PROVIDER. In relation to Party A: Swiss Reinsurance Company ("Swiss Re"). In relation to Party B: Not Applicable. 7. ACCOUNT DETAILS. Account for payments to Party A: PAYMENT INSTRUCTION: JP Morgan Chase Bank Swift: CHASUS33 For the Account of Swiss Re Financial Products ACCT #: 066911184 Account for payments to Party B: NAME: Wells Fargo Bank, National Association ABA#: 121-000-248 ACCT #: 3970771416 ACCT NAME: Corporate Trust Clearing For further credit to ACCT #: 50890801 REF: Client Manager - Carrington Mortgage Loan Trust 2006-OPT1 8. ADDITIONAL TERMINATION EVENTS. Downgrade of Party A. For the purpose of this section, a "Ratings Event" shall occur with respect to Party A (or its Credit Support Provider) if the long-term and short-term senior unsecured deposit ratings of Party A (or its Credit Support Provider) cease to be at least A and A-1 by Standard & Poor's Ratings Service or any successor thereto ("S&P") or at least A1 and P-1 by Moody's Investors Service, Inc. or any successor thereto ("Moody's") or at least A and F1 by Fitch, Inc. or any successor thereto ("Fitch"), to the extent such obligations are rated by S&P or Moody's or Fitch. The failure by Party A to comply with the provisions of Section 15 hereof shall constitute an Additional Termination Event for which Party A shall be the sole Affected Party. Swap Disclosure Event. Upon the occurrence of a Swap Disclosure Event (as defined below), if Party A has not, within 10 days after such Swap Disclosure Event (the "Response ISDA Confirmation/Class M Cap Contract  Period") complied with one of the solutions listed below, then an Additional Termination Event shall have occurred with respect to Party A and Party A shall be the sole Affected Party with respect to such Additional Termination Event. It shall be a swap disclosure event ("Swap Disclosure Event") if at any time after the date hereof Carrington Securities, LP ("Carrington Securities") and Stanwich Asset Acceptance Company, L.L.C. ("Stanwich") notify Party A that in the reasonable discretion of Carrington Securities or Stanwich acting in good faith, the "aggregate significance percentage" of all derivative instruments (as such term is defined in Item 1115(b)(2) of Regulation AB (as defined below)) provided by Party A and any of its affiliates to Carrington Mortgage Loan Trust, Series 2006-OPT1 (the "Significance Percentage") is 10% or more. Following a Swap Disclosure Event, Party A shall take one of the following actions at its own expense: either (I) (a) if the Significance Percentage is 10% or more, Party A provide the information set forth in Item 1115(b)(1) of Regulation AB for Party A (or for the group of affiliated entities, if applicable) or (b) if the Significance Percentage is 20% or more, Party A provide the information set forth in Item 1115(b)(2) of Regulation AB for Party A (or for the group of affiliated entities, if applicable) (collectively, the "Reg AB Information"), to Carrington Securities or Stanwich or (II) cause a Reg AB Approved Entity (as defined below) to replace Party A as party to this Agreement on terms similar to this Agreement prior to the expiration of the Response Period and cause such Reg AB Approved Entity to provide the Reg AB Information prior to the expiration of the Response Period; provided however, that no such transfer to a Reg AB Approved Entity pursuant to (II) above shall occur unless the Reg AB Approved entity agrees to terms identical to those contained in Paragraph 16 of this Agreement. "Reg AB Approved Entity" means any entity that (i) has the ability to provide the Reg AB Information and (ii) meets or exceeds the Approved Rating Threshold. "Regulation AB" means Subpart ###-###-#### - Asset Backed Securities (Regulation AB), 17 C.F.R. ss.ss ###-###-#### ###-###-####, as such may be amended from time to time, and subject to such clarification and interpretation as have been provided by the Securities and Exchange Commission ("SEC") in the adopting release (Asset-Backed Securities, Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the staff of the SEC, or as may be provided by the SEC or its staff from time to time. ISDA Confirmation/Class M Cap Contract  9. LIMITATION ON EVENTS OF DEFAULT. Notwithstanding the terms of Sections 5 and 6 of the Form Master Agreement, if at any time and so long as Party B has satisfied in full all its payment obligations under Section 2(a)(i) of the Form Master Agreement and has at the time no future payment obligations, whether absolute or contingent, under such Section, then unless Party A is required pursuant to appropriate proceedings to return to Party B or otherwise returns to Party B upon demand of Party B any portion of any such payment, (a) the occurrence of an event described in Section 5(a) of the Form Master Agreement with respect to Party B shall not constitute an Event of Default or Potential Event of Default with respect to Party B as Defaulting Party and (b) Party A shall be entitled to designate an Early Termination Date pursuant to Section 6 of the Form Master Agreement only as a result of the occurrence of a Termination Event set forth in either Section 5(b)(i) with respect to either Party A or Party B as the Affected Party. 10. WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS TRANSACTION. 11. ELIGIBLE CONTRACT PARTICIPANT. Each party represents to the other party that it is an "eligible contract participant" as defined in Section 1a(12) of the U.S. Commodity Exchange Act, as amended. 12. NOTICE BY FACSIMILE TRANSMISSION. Section 12(a) of the Form Master Agreement is hereby amended by deleting the parenthetical "(except that a notice or other communication under Section 5 or 6 may not be given by facsimile transmission or electronic messaging system)." 13. MULTIBRANCH PARTY. For purpose of Section 10(c) of the Form Master Agreement: (a) Party A is not a Multibranch Party; and (b) Party B is not a Multibranch Party. 14. OTHER PROVISIONS. (a) Addresses for notices. As set forth on page 1 hereof. (b) For the purpose of Section 13(c) of the Form Master Agreement: (i) Party A appoints as its Process Agent, not applicable; and (ii) Party B appoints as its Process Agent, not applicable. (c) No transfer, amendment, waiver, supplement, assignment or other modification of this Transaction shall be permitted by either party unless (i) each of S&P, Fitch and Moody's have been provided notice of the same and (ii) S&P, Fitch and Moody's confirm in writing (including by facsimile transmission) within five Business Days after such notice is ISDA Confirmation/Class M Cap Contract  given that they will not downgrade, qualify, withdraw or otherwise modify their then-current rating of the Certificates. (d) PAYER REPRESENTATIONS. For the purpose of Section 3(e) of the Form Master Agreement, Party A and Party B make the following representation: It is not required by any applicable law, as modified by the practice of any relevant governmental revenue authority, of any relevant jurisdiction to make any deduction or withholding for or on account of any tax from any payment (other than interest under Section 2(e), 6(d)(ii), or 6(e) of the Form Master Agreement) to be made by it to the other party under the Form Master Agreement. In making this representation, it may rely on (i) the accuracy of any representations made by the other party pursuant to Section 3(f) of the Form Master Agreement, (ii) the satisfaction of the agreement contained in Section 4(a)(i) or 4(a)(iii) of the Form Master Agreement, and the accuracy and effectiveness of any document provided by the other party pursuant to Section 4(a)(i) or 4(a)(iii) of the Form Master Agreement, and (iii) the satisfaction of the agreement of the other party contained in Section 4(d) of the Form Master Agreement, provided that it shall not be a breach of this representation where reliance is placed on clause (ii) and the other party does not deliver a form or document under Section 4(a)(iii) by reason of material prejudice to its legal or commercial position. (e) PAYEE REPRESENTATIONS. For the purpose of Section 3(f) of the Form Master Agreement, Party A and Party B make the following representations: (i) The following representation applies to Party A: Party A is a corporation organized under the laws of the State of Delaware. (ii) The following representation applies to Party B: Party B is a "U.S. person" as that term is used in section 1.1441-4(a)(3)(ii) of the United States Treasury Regulations (the "Regulations") for United States federal income tax purposes. (f) For the purpose of Section 4(a)(i) and (ii) of the Form Master Agreement, each Party agrees to deliver the following documents as applicable: (i) Tax forms, documents or certificates to be delivered are: - -------------------------------------------------------------------------------------------------------- PARTY REQUIRED TO DELIVER DOCUMENT FORM/DOCUMENT/CERTIFICATE DATE BY WHICH TO DELIVERED ======================================================================================================== Party A and Party B An executed U.S. Internal (i) Before the first Payment Date Revenue Service Form W-9 (or hereunder, (ii) promptly upon any successor thereto). reasonable demand by the other party and (iii) promptly upon learning that any such form previously provided to the other party has become obsolete or incorrect. - -------------------------------------------------------------------------------------------------------- (ii) Other documents to be delivered are: ISDA Confirmation/Class M Cap Contract  - --------------------------------------------------------------------------------------------------------------------------- PARTY REQUIRED TO DELIVER FORM/DOCUMENT/ DATE BY WHICH TO BE COVERED BY SECTION 3(D) DOCUMENT CERTIFICATE DELIVERED REPRESENTATION =========================================================================================================================== Party A and Party B Credit Support Document, if any, Concurrently with the Yes specified herein, such Credit execution of this Support Document being duly agreement. executed if required. - --------------------------------------------------------------------------------------------------------------------------- Party A and Party B Incumbency certificate or other Concurrently with the Yes documents evidencing the execution of this authority of the party entering into agreement or of any this agreement or any other other documents document executed in connection executed in connection with this agreement. with this agreement. - --------------------------------------------------------------------------------------------------------------------------- Party B Copy of each report delivered Upon availability. Yes under the Pooling and Servicing Agreement and/or any other Transaction Document. - --------------------------------------------------------------------------------------------------------------------------- Party A and Party B Legal opinion from counsel for Concurrently with the No each party concerning due execution of this authorization, enforceability and agreement. related matters, addressed to the other party and acceptable to the other party. - --------------------------------------------------------------------------------------------------------------------------- Party A Certified copies of all corporate, Upon execution and Yes partnership, trust or membership delivery of this authorizations, as the case may be, agreement and any other documents with respect to the execution, delivery and performance of this agreement and any Credit Support Document - --------------------------------------------------------------------------------------------------------------------------- (g) "Affiliate" will have the meaning specified in Section 14 of the Form Master Agreement; provided, however, that Party B shall be deemed not to have any Affiliates for purposes of this Transaction. (h) NON PETITION. Party A hereby agrees that it will not, prior to the date that is one year and one day (or, if longer, the applicable preference period) after all Certificates (as such term is defined in the Pooling and Servicing Agreement) issued by Party B pursuant to the Pooling and Servicing Agreement have been paid in full, acquiesce, petition or otherwise invoke or cause Party B to invoke the process of any court or governmental authority for the purpose of commencing or sustaining a case against Party B under any federal or state bankruptcy, insolvency or similar law or for the purpose of appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official for Party B or any substantial part of the property of Party B, or for the purpose of ordering the winding up or liquidation of the affairs of Party B. Nothing herein shall prevent Party A from participating in any such proceeding once commenced. The provisions of this paragraph shall survive the termination of this Agreement. ISDA Confirmation/Class M Cap Contract  (i) NON-RECOURSE PROVISIONS. Notwithstanding anything to the contrary contained herein, none of Wells Fargo Bank, N.A. or any of its officers, directors, or shareholders (the "Non-recourse Parties") shall be personally liable for the payment by or on behalf of the Issuer hereunder, and Party A shall be limited to a proceeding against the Collateral or against any other third party other than the Non-recourse Parties, and Party A shall not have the right to proceed directly against the Issuer for the satisfaction of any monetary claim against the Non-recourse Parties or for any deficiency judgment remaining after foreclosure of any property included in such Collateral and following the realization of the Collateral, any claims of Party A shall be extinguished. The provisions of this paragraph shall survive the termination of this Agreement. (j) TRUSTEE LIABILITY LIMITATION. It is expressly understood and agreed by the parties hereto that (i) this confirmation is executed and delivered by Wells Fargo Bank, N.A. ("Wells Fargo"), not individually or personally but solely as trustee, (ii) each of the representations, undertakings and agreements herein made on the part of Party B is made and intended not as personal representations, undertakings and agreements by Wells Fargo but is made and intended for the purpose of binding only Party B, (iii) nothing herein contained shall be construed as creating any liability on Wells Fargo, individually or personally, to perform any covenant either expressed or implied contained herein, and (iv) under no circumstances shall Wells Fargo be personally liable for the payment of any indebtedness or expenses of Party B or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by Party B hereunder or any other related documents. Any resignation or removal of Wells Fargo as trustee under the Pooling and Servicing Agreement shall require the assignment of this confirmation to Wells Fargo's replacement. (k) The Form Master Agreement is hereby amended as follows: The word "third" shall be replaced by the word "second" in the third line of Section 5(a)(i) of the Form Master Agreement. (l) SEVERABILITY. If any term, provision, covenant, or condition of this Agreement, or the application thereof to any party or circumstance, shall be held to be invalid or unenforceable (in whole or in part) for any reason, the remaining terms, provisions, covenants, and conditions hereof shall continue in full force and effect as if this Agreement had been executed with the invalid or unenforceable portion eliminated, so long as this Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject matter of this Agreement and the deletion of such portion of this Agreement will not substantially impair the respective benefits or expectations of the parties. The parties shall endeavor to engage in good faith negotiations to replace any invalid or unenforceable term, provision, covenant or condition with a valid or enforceable term, provision, covenant or condition, the economic effect of which comes as close as possible to that of the invalid or unenforceable term, provision, covenant or condition. (m) Party A hereby agrees that, notwithstanding any provision of this agreement to the contrary, Party B's obligations to pay any amounts owing under this Agreement shall be subject to Sections 4.01 and 4.07 of the Pooling and Servicing Agreement and Party A's ISDA Confirmation/Class M Cap Contract  right to receive payment of such amounts shall be subject to Sections 4.01 and 4.07 of the Pooling and Servicing Agreement. 15. DOWNGRADE OF PARTY A. If a Ratings Event (as defined in Section 8 hereof) shall occur and be continuing with respect to Party A, then Party A shall (A) within 5 Business Days of such Ratings Event, give notice to Party B of the occurrence of such Ratings Event, and (B) use reasonable efforts to transfer (at its own cost) Party A's rights and obligations hereunder to another party, subject to satisfaction of the Rating Agency Condition (as defined below). Unless such a transfer by Party A has occurred within 20 Business Days after the occurrence of a Ratings Event, Party A shall no later than the end of such 20 Business Day period, post eligible collateral at its own cost and satisfactory to Party B ("Eligible Collateral"), to secure Party B's exposure or potential exposure to Party A, and such Eligible Collateral shall be provided in accordance with a Credit Support Annex to be attached hereto and made a part hereof. The Eligible Collateral to be posted and the Credit Support Annex to be executed and delivered shall be subject to the Rating Agency Condition. Valuation and Posting of Eligible Collateral shall occur weekly. Notwithstanding the addition of the Credit Support Annex and the posting of Eligible Collateral, Party A shall continue to use reasonable efforts to transfer its rights and obligations hereunder to an acceptable third party; provided, however, that Party A's obligations to find a transferee and to post Eligible Collateral under such Credit Support Annex shall remain in effect only for so long as a Ratings Event is continuing with respect to Party A. "Rating Agency Condition" means, with respect to any action to be taken, a condition that is satisfied when S&P, Moody's and Fitch have confirmed that such action would not result in the downgrade, qualification (if applicable) or withdrawal of the rating then assigned by such Rating Agency to the applicable class of Certificates. 16. COMPLIANCE WITH REGULATION AB. (a) Party A agrees and acknowledges that Carrington Securities and Stanwich may be required under Regulation AB, to disclose certain financial information regarding Party A and Swiss Re depending on the applicable "significance percentage" of this Agreement, as calculated from time to time in accordance with Item 1115 of Regulation AB. (b) Party A, or a Reg AB Approved Entity after a Swap Disclosure Event pursuant to Paragraph 8, as applicable, shall indemnify and hold harmless Carrington Securities, Stanwich, their respective directors or officers and any person controlling Carrington Securities or Stanwich, from and against any and all losses, claims, damages and liabilities caused by any untrue statement or alleged untrue statement of a material fact contained in the Reg AB Information that Party A or such Reg AB Approved Entity, as applicable, provides to Carrington Securities or Stanwich pursuant to Paragraph 8 (the "Party A Information") or caused by any omission or alleged omission to state in the Party A Information by Party A or the Reg AB Approved Entity, as applicable, a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. For the avoidance of doubt, Party A shall provide the indemnity described above with respect to any Party A Information it is required to provide pursuant to Paragraph 8 and any Reg AB Approved Entity which has replaced Party A pursuant to Paragraph 8 shall provide the ISDA Confirmation/Class M Cap Contract  indemnity described above with respect to any Party A Information it is required to provide from pursuant to Paragraph 8. ISDA Confirmation/Class M Cap Contract  Please confirm that the foregoing correctly sets forth the terms and conditions of our agreement by returning within three (3) Business Days via telecopier an executed copy of this Confirmation. Failure to respond within such period shall not affect the validity or enforceability of this Transaction. Yours sincerely, SWISS RE FINANCIAL PRODUCTS CORPORATION By: /s/ Shaun Lyunch --------------------------------- Name: Shaun Lyunch Title: Authorized Signatary Confirmed as of the date above: By: WELLS FARGO BANK, N.A., NOT INDIVIDUALLY BUT SOLELY AS TRUSTEE FOR CARRINGTON MORTGAGE LOAN TRUST, SERIES 2006-OPT1 By: /s/ Darron C. Woodus --------------------------------- Name: Darron C. Woodus Title: Assistant Vice President ISDA Confirmation/Class M Cap Contract  SCHEDULE A to the Confirmation dated as of March 14, 2006, Re: Reference Number 820278 AMORTIZATION SCHEDULE, Floating Rate Payer Period End Dates shall be subject to adjustment in accordance with the Following Business Day Convention, however, Fixed Rate Payer Period End Dates will use No Adjustment. - -------------------------------------------------------------------------------------------------- Cap Rate II From and including To but excluding Cap Rate I (%) (%) - -------------------------------------------------------------------------------------------------- March 14, 2006 April 25, 2006 6.513 10.05 April 25, 2006 May 25, 2006 6.762 10.05 May 25, 2006 June 25, 2006 6.513 10.05 June 25, 2006 July 25, 2006 6.762 10.05 July 25, 2006 August 25, 2006 6.513 10.05 August 25, 2006 September 25, 2006 6.513 10.05 September 25, 2006 October 25, 2006 6.762 10.05 October 25, 2006 November 25, 2006 6.513 10.05 November 25, 2006 December 25, 2006 6.761 10.05 December 25, 2006 January 25, 2007 6.513 10.05 January 25, 2007 February 25, 2007 6.416 10.05 February 25, 2007 March 25, 2007 7.205 10.05 March 25, 2007 April 25, 2007 6.416 10.05 April 25, 2007 May 25, 2007 6.661 10.05 May 25, 2007 June 25, 2007 6.415 10.05 June 25, 2007 July 25, 2007 6.661 10.05 July 25, 2007 August 25, 2007 6.415 10.05 August 25, 2007 September 25, 2007 6.415 10.05 September 25, 2007 October 25, 2007 6.66 10.05 October 25, 2007 November 25, 2007 6.414 10.05 November 25, 2007 December 25, 2007 6.659 10.05 December 25, 2007 January 25, 2008 8.471 10.05 January 25, 2008 February 25, 2008 8.453 10.05 February 25, 2008 March 25, 2008 9.065 10.05 March 25, 2008 April 25, 2008 8.385 10.05 April 25, 2008 May 25, 2008 8.688 10.05 May 25, 2008 June 25, 2008 8.37 10.05 June 25, 2008 July 25, 2008 8.807 10.05 July 25, 2008 August 25, 2008 8.485 10.05 August 25, 2008 September 25, 2008 8.477 10.05 September 25, 2008 October 25, 2008 8.532 10.05 October 25, 2008 November 25, 2008 8.218 10.05 November 25, 2008 December 25, 2008 8.533 10.05 December 25, 2008 January 25, 2009 8.29 10.05 January 25, 2009 February 25, 2009 8.296 10.05 February 25, 2009 March 25, 2009 9.284 10.05 March 25, 2009 April 25, 2009 8.29 10.05 April 25, 2009 May 25, 2009 8.59 10.05 - --------------------------------------------------------------------------------------------------