Yield Maintenance Agreement between RALI Series 2006-QS16 Trust and The Royal Bank of Scotland plc

To:

RALI Series 2006-QS16 Trust

Deutsche Bank Trust Company Americas

not in its individual capacity but solely in its capacity as Trustee for the

benefit of RALI Series 2006-QS16 Trust

1761 East St. Andrew Place

Santa Ana, California 92705

Attn:

Trust Administration – RF06QG

Telephone:

714 ###-###-####

Fax:

714 ###-###-####

cc:

Greenwich Capital Markets, Inc.

600 Steamboat Road

Greenwich, CT 06830

Attn:

Melizza Stotler

Telephone

203 ###-###-####

Fax:

203 ###-###-####

From:

The Royal Bank of Scotland plc

Our Reference Number:

IRG16110715.2A/.2B

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.

(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. Notwithstanding the foregoing, in the case of Party B, it has entered into this Transaction pursuant to the direction received by it pursuant to the Pooling and Servicing Agreement.

(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 and, in the case of Party B, the Trustee has been directed pursuant to the Pooling and Servicing Agreement to enter into 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:

With respect to any Calculation Period, the amount as set forth on Schedule A attached hereto.

Trade Date:

October 18, 2006

Effective Date:

November 29, 2006

Termination Date:

July 25, 2010

Fixed Amounts:

Fixed Rate Payer:

Party B

Fixed Rate Payer Payment Dates:

November 29, 2006

Fixed Amount:

USD 299,000

Floating Amounts:

To be determined in accordance with the following formula: Greater of (i) (Floating Rate minus Strike Rate) *Notional Amount* Floating Rate Day Count Fraction, and (ii) zero.

Floating Rate Payer:

Party A

Strike Rate:

5.45%

Floating Rate Payer Period End Dates:

The 25th of each Month, commencing on December 25, 2006 and ending on the Termination Date subject to adjustment in accordance with the Following Business Day Convention.

Floating Rate Payer Payment Dates:

Early Payment shall be applicable. The Floating Rate Payer Payment Dates shall be 1 Business Day prior to each Floating Rate Payer Period End Date.

Floating Rate Option:

USD-LIBOR-BBA, provided, however, that if the Floating Rate Option for any Calculation Period is greater than 8.95%, then the Floating Rate Option for such Calculation Period shall be deemed to be 8.95%.

Designated Maturity:

1 Month

Spread:

None

Floating Rate Day Count Fraction:

30/360

Reset Dates:

First day of each Calculation Period.

Business Days:

New York

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): Not Applicable.

(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): 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)

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)

For the purpose of Section 6(e) of the Form Master Agreement, Market Quotation and Second Method will apply.

(i)

The Events of Default specified under Sections 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 A or to Party B. With respect to Party B only, the provisions of Section 5(a)(vii) clause 2 will not be applicable.

4

Recording of Conversations

5

Credit Support Document

6

Credit Support Provider

7

Account Details

8

Offices

The Office of Party A for this Transaction is:

London

The Office of Party B for this Transaction is:

Santa Ana, California

9

Additional Provisions

(a)

Fully-Paid Transactions Notwithstanding the terms of Sections 5 and 6 of the Form Master Agreement, if at any time and so long as one of the parties to the Form Master Agreement (“X”) shall have satisfied in full all its payment and delivery obligations under Section 2(a)(i) of the Form Master Agreement and shall at the time have no future payment or delivery obligations, whether absolute or contingent, under such Section, then unless the other party (“Y”) is required pursuant to appropriate proceedings to return to X or otherwise returns to X (upon demand of X, or otherwise) any portion of any such payment or delivery: (i) the occurrence of an event described in Section 5(a), excluding Section 5(a)(vii), of the Form Master Agreement with respect to X shall not constitute an Event of Default or a Potential Event of Default with respect to X as the Defaulting Party; and (ii) Y shall be entitled to designate an Early Termination Date (a) pursuant to Section 10 below and/or (b) pursuant to Section 6 of the Form Master Agreement only as a result of the occurrence of a Termination Event set forth in Sections 5(b)(i), 5(b)(ii) and 5(b)(iii) of the Form Master Agreement with respect to Y as the Affected Party.

(b)

If a Ratings Event (as defined below) occurs with respect to Party A (or any applicable credit support provider), then Party A shall, within (30) days of such Ratings Event subject to the Rating Agency Condition (as hereinafter defined) at its own expense (unless, within 30 days of such Ratings Event, each of Standard and Poor’s, a Division of McGraw-Hill Companies, Inc. (“S&P”), Moody’s Investors Service, Inc. (“Moody’s”) and Fitch Ratings (“Fitch”) (each a “Rating Agency”) has reconfirmed the rating of the Certificates which was in effect immediately prior to such Ratings Event), (i) assign this

10

Additional Termination Event

11

Waiver of Right to Trial by Jury

12

Eligible Contract Participant

13

Notice by Facsimile Transmission

14

Representations

15

Multibranch Party

16

USA Patriot Act Notice

17

Other Provisions

(a)

Calculation Agent If applicable, the Calculation Agent is Party A.

(b)

Addresses for notices

With respect to Party A:

Address:

The Royal Bank of Scotland plc

c/o RBS Financial Markets

Level 7, 135 Bishopsgate

London EC2M 3UR

Attn: Head of Legal, Financial Markets

Telephone: 44-207-085-5000

Fax: 44-207-085-8411

With a copy to:

Greenwich Capital Markets, Inc.

600 Steamboat Road

Greenwich, CT 06830

Attn: Legal Department–Derivatives Documentation

Telephone: 203 ###-###-####

Fax: 203 ###-###-####/34

With respect to Party B:

Address:

Deutsche Bank Trust Company Americas

1761 East St. Andrew Place

Santa Ana, California

Attention: Trust Administration - RF06QG

(c)

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.

(d)

Section 12(a)(ii) of the Form Master Agreement is deleted in its entirety.

(e)

This Transaction shall not be amended or modified pursuant to Section 9(b) of the Form Master Agreement unless the Rating Agency Condition is satisfied.

(f)

Payer Representations For the purpose of Section 3(e) of the Form Master Agreement, Party A and Party B make the following representation:

(g)

Payee Representations For the purpose of Section 3(f) of the Form Master Agreement, Party A and Party B make the following representations:

(i)

It is a tax resident of the United Kingdom.

(ii)

It is a “foreign person” within the meaning of the applicable U.S. Treasury Regulations concerning information reporting and backup withholding tax (as in effect on January 1, 2001), unless Party A provides written notice to Party B that it is no longer a foreign person.

(iii)

In respect of each Transaction it enters into through an office or discretionary agent in the United States or which otherwise is allocated (in whole or part) for United States federal income tax purposes to such United States trade or business, each payment received or to be received by it under such Transaction (or portion thereof, if applicable) will be effectively connected with its conduct of a trade or business in the United States; and

(iv)

In respect of all other Transactions or portions thereof, no such payment received or to be received by it in connection with this Agreement is attributable to a trade or business carried on by it through a permanent establishment in the United States.

(i)

Deutsche Bank Trust Company Americas is the Trustee under the Pooling and Servicing Agreement.

(ii)

Party B is a domestic trust and not a foreign trust for United States tax purposes.

(h)

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:

(a)

Tax forms, documents or certificates to be delivered are:

Party Required to deliver Document

Form/Document/Certificate

Date by which to be Delivered

Party B

An executed U.S. Internal Revenue Service Form W-9 (or any successor thereto).

Promptly after the earlier of (i) reasonable demand by Party A or (ii) upon actual knowledge that any such form is required or that such form previously provided to Party A has become obsolete or incorrect.

(b)

Other documents to be delivered are:

Party Required to deliver Document

Form/Document/ Certificate

Date by which to be Delivered

Covered by Section 3(d) Representation

Party A and Party B.

Incumbency certificate or other documents evidencing the authority of the party entering into this agreement or any other document executed in connection with this agreement.

Concurrently with the execution of this agreement or of any other documents executed in connection with this agreement

Yes.

Party A.

Legal opinion from counsel to Party A concerning due authorization, enforceability and related matters, addressed to Party B and acceptable to Party B.

Concurrently with the execution of this agreement, or within 2 New York Business Days of the execution of this agreement.

No.

Party A, RFC and RALI.

Indemnification agreement executed by Party A, RFC and RALI with respect to information included in any prospectus supplement related to the Class A-3 Certificates.

Concurrently with printing of any prospectus supplement related to the Class A-3 Certificates.

No.

Party A

Any document required to be delivered pursuant to section 18 of this Confirmation within the Response Period set forth in section 18

As provided for in section 18

Yes.

(i)

“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.

(j)

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.

(k)

Notwithstanding anything herein to the contrary, it is expressly understood and agreed by the parties hereto that (i) this Confirmation is executed and delivered by Deutsche Bank Trust Company Americas, not individually or personally but solely as trustee (“Trustee”), in the exercise of the powers and authority conferred and vested in it and that Trustee shall perform its duties and obligations hereunder in accordance with the standard of care set forth in Article VIII of the Pooling and Servicing Agreement, (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 Trustee 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 Trustee, individually or personally, to perform any covenant either expressed or implied contained herein, all such liability, if any, being expressly waived by the parties hereto and by any Person claiming by, through or under the parties hereto; provided that nothing in this paragraph shall relieve Trustee from performing its duties and obligations under the Pooling and Servicing Agreement in accordance with the standard of care set forth therein, and (iv) under no circumstances shall Trustee 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.

(l)

The Form Master Agreement is hereby amended as follows:

(m)

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

(n)

Notwithstanding anything to the contrary contained herein, none of Party B or any of its officers, directors, or shareholders (the “Non-recourse Parties”) shall be personally liable for the payment by or on behalf of RALI 2006-QS16 Trust 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 RALI 2006-QS16 Trust 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.

18

Compliance with Regulation AB

(a)

Party A has been advised that RFC and RALI are required under Regulation AB under the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended (“Regulation AB”), to disclose certain financial information regarding Party A depending on the applicable “significance percentage” of this Confirmation, as calculated from time to time in accordance with Item 1115 of Regulation AB.

(b)

It shall be a Cap Disclosure event (“Cap Disclosure Event”) if, at any time after the date hereof while RFC and RALI have reporting obligations with respect to this Transaction pursuant to Regulation AB, RFC or RALI notifies Party A that the aggregate “significance percentage” (calculated in accordance with the provisions of Item 1115 of Regulation AB) of all derivative instruments provided by Party A and any of its affiliates to Party B (collectively, the “Aggregate Significance Percentage”) is 9% or more.

(c)

Upon the occurrence of a Cap Disclosure Event while RFC or RALI have reporting obligations with respect to this Transaction pursuant to Regulation AB, Party A, at its own cost and expense (and without any expense or liability to RFC or RALI) shall take one of the following actions:

(i)

provide to RFC and RALI: (x) if the Aggregate Significance Percentage is 9% or more, but less than 10%, within twenty-five (25) Business Days, either, at the sole discretion of Party A, the information required under Item 1115(b)(1) or Item 1115(b)(2) of Regulation AB, (y) if the Aggregate Significance Percentage is 10% or more, but less than 20%, within five (5) Business Days, either, at the sole discretion of Party A, the information required under Item 1115(b)(1) or Item 1115(b)(2) of Regulation AB or (z) if the Aggregate Significance Percentage is 20% or more, within five (5) Business Days, the information required under Item 1115(b)(2) of Regulation AB; or

(ii)

assign its rights and delegate its obligations under this Transaction to a counterparty with the Approved Ratings Thresholds (or which satisfies the Rating Agency Condition), that (x) provides the information specified in clause (c)(i) above to RFC and RALI and (y) enters into documentation substantially similar to the documentation then in place between Party A and Party B.

(d)

For so long as the Aggregate Significance Percentage is 10% or more RFC and RALI have reporting obligations with respect to this Transaction, Party A shall provide any updates to the information provided pursuant to clause (c)(i) above to RFC and RALI within ten (10) Business Days following the availability thereof (but in no event more than 60 days after the end of each of Party A’s fiscal quarter for any quarterly update, and in no event more than 90 days after the end of Party A’s fiscal year for any annual update).

(e)

All information provided pursuant to clause (c) shall be in a form suitable for conversion to the format required for filing by the Depositor with the Commission via the Electronic Data Gathering and Retrieval System (EDGAR). The parties hereto acknowledge that electronic files in Adobe Acrobat format will be deemed to satisfy the requirements of this Paragraph 19. In addition, any such information, if audited, shall be accompanied by any necessary auditor’s consents or, if such information is unaudited, shall be accompanied by an appropriate agreed-upon procedures letter from Party A’s Accountants. If permitted by Regulation AB, any such information may be provided by reference to or incorporation by reference from reports filed pursuant to the Exchange Act.

By:  /s/  Deborah Pleiter               

Name: Deborah Pleiter

Title: Vice President

By:  /s/  Melissa Wilman                 

Name: Melissa Wilman

Title: Vice President

From and Including

To but excluding

Notional Amount (USD)

Cap Rate (%)

25-Nov-06

25-Dec-06

100,000,000.00

5.45

25-Dec-06

25-Jan-07

98,367,109.28

5.45

25-Jan-07

25-Feb-07

96,567,109.28

5.45

25-Feb-07

25-Mar-07

94,767,109.28

5.45

25-Mar-07

25-Apr-07

92,967,109.28

5.45

25-Apr-07

25-May-07

91,167,109.28

5.45

25-May-07

25-Jun-07

89,367,109.28

5.45

25-Jun-07

25-Jul-07

87,567,109.28

5.45

25-Jul-07

25-Aug-07

85,767,109.28

5.45

25-Aug-07

25-Sep-07

83,967,109.28

5.45

25-Sep-07

25-Oct-07

82,167,109.28

5.45

25-Oct-07

25-Nov-07

80,367,109.28

5.45

25-Nov-07

25-Dec-07

78,567,109.28

5.45

25-Dec-07

25-Jan-08

76,767,109.28

5.45

25-Jan-08

25-Feb-08

74,967,109.28

5.45

25-Feb-08

25-Mar-08

72,748,870.10

5.45

25-Mar-08

25-Apr-08

68,870,802.24

5.45

25-Apr-08

25-May-08

65,104,939.72

5.45

25-May-08

25-Jun-08

61,449,194.72

5.45

25-Jun-08

25-Jul-08

57,901,518.17

5.45

25-Jul-08

25-Aug-08

54,459,899.04

5.45

25-Aug-08

25-Sep-08

51,122,363.66

5.45

25-Sep-08

25-Oct-08

47,886,974.97

5.45

25-Oct-08

25-Nov-08

44,751,831.88

5.45

25-Nov-08

25-Dec-08

41,715,068.63

5.45

25-Dec-08

25-Jan-09

38,774,854.08

5.45

25-Jan-09

25-Feb-09

35,929,391.10

5.45

25-Feb-09

25-Mar-09

33,176,915.94

5.45

25-Mar-09

25-Apr-09

30,515,697.59

5.45

25-Apr-09

25-May-09

27,944,037.22

5.45

25-May-09

25-Jun-09

25,460,267.53

5.45

25-Jun-09

25-Jul-09

23,062,752.20

5.45

25-Jul-09

25-Aug-09

20,749,885.31

5.45

25-Aug-09

25-Sep-09

18,520,090.77

5.45

25-Sep-09

25-Oct-09

16,371,821.76

5.45

25-Oct-09

25-Nov-09

14,303,560.24

5.45

25-Nov-09

25-Dec-09

12,313,816.32

5.45

25-Dec-09

25-Jan-10

10,401,127.83

5.45

25-Jan-10

25-Feb-10

8,564,059.78

5.45

25-Feb-10

25-Mar-10

6,801,203.81

5.45

25-Mar-10

25-Apr-10

5,111,177.77

5.45

25-Apr-10

25-May-10

3,492,625.19

5.45

25-May-10

25-Jun-10

1,944,214.80

5.45

25-Jun-10

25-Jul-10

464,640.09

5.45