UNITF,D STATES DISTRTCI COURTSOUTHERN UIMUCT OF jj()RK , k

:1 k r.

New Jeremy Carpenters Health Fund, OnBehalf ofItself. and All Others SimilarlySituat ,

PhdrItit

V.

BALI Series 2006-QO I Trust RALI Series2006-QO2 Trust, RAM Series 2006-Q03Trust, BALI Series 2006-QO4 Trust, RALISeries 2006-QO5 Trust, RALI Series 2006-QO6 Tnist, E ALI Series 2006-Q07 Tntst,.BALI Series 2006-QOIO Trust, RALI Series ;2007-QO1 Trust, RAM Series 2007-QO2Trust, RALI Series 2007-QO3 Trust RALISeries 2007-QO4 Trust and RALI Series 2007-Q05 Trust, Deutsche Bank Trust ComfyAmericas, US. Bank National Association,Residential Accredit Loans, Inc., Bruceparadis, Davee L. Olsen, Kenneth M. Duncan,Ralph T. Flees, Lisa. R. Lundsten, James G,Jones, David M. Bucker,. James X. Young,Goldman, Sachs & Co., RBS GreenwichCapital, UBS Investment Bank, Credit SuisseSecurities (USA), LLC, Deutsche DankSecurities, Ie. and GMAQ RFC, Seorities,

Defendants.

-- - :x

Civil Action No.:

Removed From:

s&S COPY

Supreme Court ofthe State ofNew YorkIndex No. 0502727

1LOTICE.OF UMOVAL

Defendants RAM Series 2006-QO1 Tr , BALI Series 2006-Q02 Trust, RALI

Series 2006-Q03 Trust BALI Series 2®6-QO4 Trust, BALI Series 2006-QO5 Trust,. RALI

Series 2006-Q06 Trust, RALI Series 2005-QO7 Trust, BALI Sines 2006-QO 1 D Trust, RALI

Series 2007-QOI Trust, BALI Series 2007-QO2 Trust, MALI Series 2007-QO3 Trust, RALI

Series 2007-Q04 Trust, RALI Series 2007-Q05 Trusts Residential Accredit Loans, Inc., Bruce

Paradis, Davee L. Olsen, Rtxmeth M. Duncan, Ralph T. Flees, LisaR Lundsten, James G. Jones,

David M. Bricker., and James N.Young (collectively, the `BALI I3cfeudants"), by and through

their undersigned counsel, Sbearman 8 Sterling LLP, hereby remove this action from the

Supreme Court ofthe State ofNew York, County ofNew York to the United States District

Court for the Southern District ofNew York pursuant to 28 U.S.C;.§ 1332,. as amended by the

Class Action Fairness Act of2005, 28 U.S.C.- § 1446, and '28 U.S.C. § 1453.' In support oftheir

Notice ofRemoval, the RALI Defendants state as follows:

L On or about September 22, 2008, plaintiffNew Jersey Carpenters . Health

Fund ("Plaintiff') filed this . putative class actson.in the Supreme Court ofthe State ofNew York,

County ofNew York, Index No. 0602727, on behalf ofitself and all others who purchased

certificates -pursuant or traceable to thirteen offerings ofRALI Mortgage AssetBacked Pass-

Through Certificates.

2. The Complaint alleges, among other things, that certain registration

statements and prospectuses filed inconnection with the offerings ofthe certi$cates . contained

misrepresentations and omissions in violation ofSecion. 11, Section 12(a)(2), and Section 15 of

the Securities Act of 1933, 15 U.S.C. § 77k, 771(a)(2), 77o. (Complaint'" 107-138.)

3. This Notice ofR=oyal is timely -under 28 U.S.C. § 1446(x) and (b). It is

being tiled within thirty days ofthe filing and service ofthe Summons and Complaint. The

Complaint was filed on September22, 2008, and none ofthe RALI Defendants was served

before October 1, 2008.

I By removing tb4s matter, the BALI I]c'cn&ats do not wive, and =pr=91y preerve, any and all, defenses thattheymay have including, but not limited to, lack ofpersonal juu risd ion and =vice ofprocess.

2

Class Action Riess Act

4. This Corot has jurisdiction over this action pursuant to the Class Action

Fairness .Act of2005 ("CAFA"). A putative class action filled air Februarys 18, 2005 may be

removed under 28 U.S.C. § 1332(d)(2) and. 1453 if (a) the amount in controversy exceeds the

sum. or value of $5,.000,000, exclusive ofutmsts and costs; (b) any member ofthe putative

class is a citizen of a state different, from any defendant; and (c) no specified exceptions apply.

Consent ofall defendants is not required to remove an action under CAFA. 28 U.S.C. § 1453(b).

Additionally, ` AFA overrides the Securities Act's anti uavat provision." See N.J.

Carpenters Vacation Fund v. JiarborView Mortgage Loan Trust 2006-4, No. 08 Civ. 5093 (RB),

2008 VAT:, 4369840, at *6 (S]:N.Y. Sept. 24, 2008).

5. CAFA applies in this action because the state court action was

commenced on or about September 22, 2008,1 e,, after the effective date of CAFA_

6. The state court action is a "class action" within the meaning ofCAFA.

(Complaint 143 C`Plaintiff brings this action as a class action pursuant to Article 9 ofthe.New

Pork. Civil Practice Law and. Rules ("CPLR") on behalfof a class consisting ofall persons who

p=hased or acquired the Certificates (the "Class") pursuant to and/or traceable to the

Registration Statement and Prospectus issued in connection with the Offering from the effective

date through the dale ofthe filing ofthis act')

T. The state court action satisfies CAFA:' s a untin-controversy

requirem ent Under 28 U.S.C. § 1332(d)(6), the amount in controversy, in a putative class action

is determined by aggregating the amount at issue in the claims of all members ofthe putative

class. Here, the Complaint alleges that the Defendants made false anti misleading statements in

connection with certificate offerings ofover $8 billion and that the value of Plaintiffs holdings

3

declined by over 95%. (Complaint IN I, 106.) Although the RALJ Defendants deny that

Plaintiff or any putative class member is entitled to recover any amount or to any relief, these

allegations show that the amount in controversy exceeds $5,000,000, exclusive of interest and

costs.

$. The state court action satisfies, CAFA's diversity-of-citizenship

requirement. 28 U.S.C. § 1332(d)(2}(A). Under CAFA, itis sufficient that any one member of

the putative class is a citizen of a state. different from any one defendant; complete diversity is

not required. Plaintiff asserts that it is a benefit fund with offices located in the State ofNew

Jersey. (Complaint ¶ 7.) Allofthe RALI Defendants are citizens of a dif ent state as they

maintain offices in Minnesota and are organized under the laws of the State ofNew York or the

State of Delaware . (Complaint In 82Q, 23, 33

9. No exceptions to CAFA's -applicability apply in this case.

Other Procedural R Yemenis

10. In accordance with 28 U.S.C. § 144.5(a), attached hereto as Exhibit A is a:

file-stamped copy ofall process, pleadings and orders served on'the RALI:Defendanta, namely

the Summons and Complaint

11. The BALI Defence will promptly serve a copy ofthe Notice of

Removal on Piainti ' s counsel and file with the Clerk ofthe Supreme Court of the State ofNew

York, County ofNewYork, a Notice ofFibbg of Notice of Removal, pursuant to 28 U.S.C.

§ 1446(d).

12. This Notice ofRemoval is signed pursuant . to Rule 1 1 ofthe Federal Rules

of Civil Procedure.

4

WHE EFOEE, this action should proceed in the United States District Cowt for

the Southern District ofNew York, as an action properly removed theta.

Dated: New York, blew YorkOctober 14, 2008

HEA;RMA;N & STERLING LLP

By: I /( V'Swart-J. Baskin5ba$ki,n@Shearman.com

Richatd F. Schwed

rschwed@shearman.rom599 Lexington AvenueNew York, NY 10022Telephone. (212).848-4000Facsimile: (212) 848-7179

Attorneysfar Defendants RALI Series2006Qo1 Tom, k4LISevier 2006Q02Trust, RALi Series 2006Q03 Trust, RALISeries 2006:Q04 Tram RAil series2006-Q05 Trust, RAMSeries 2006-QO6Trust,, RALISeries 2006-Q07 Titer, RAm,Series2006-QOJO Trust, RALISenes2007QOI Trust RALiSeries 2007-Q02That, R4Llseries 2007Q03 Ti usr, R,4LIseries2007Qa4 Trust, RAil Series,2007-Q05 T is , ResdentiaiAccreditLooms, Inc., Bruce Paradls, Davee L.Olsen, KennaM Duncan, Ralph T.Flees, Lisa R. Lundsten, James G. Jones,DavidM Bric1er; and James 1V. Young

5

E IT A

}

sw

SUPREME COURT OF TEE STATE OFNEW YORKCOUNTY OF NEWYOB

New Jersey Carpenters Health Fund, On BehalfofItselfand All Others Si=lady Si d.,.

PJa tif.

Index No.

SUMMONS

V.

RALI Series 2006-QO } Trust, RATI Series

2006-QD2 Trust, RALI Sys 2.006-Q03 Trust,

RALI Series 2006-QD4 Trust, RALI Series2006-Q05 Trust, RALI Series 2006-Q06 Tn t,

RALI Series 2006-Q07 Trust, RM Series2006-Q0I O Trust, RALI Sexies 2007-QO1 Trust,

RALI Series 2007-Q02 Trust, RALI Series

2007-QD3 Trost, RA,LY Series 2007-Q04 Trust

and RALI Series 2007-QD5 Tmst, Deatw* BankTrust Company Americas, U.S. Bank National

.Inc,awn&Association, Res4entil Accredit LoBnace Patadis, Davee L. Olsen, Kwne:Ch M.

Duncan, Ralph T Flees, Lisa RLimdsren,

Jars. G. Jones, David M. Bricker,

James N. Yomg, Goldman, Sachs & Co, RBSGreenwich Qapital, tJBS Invent BankCredit Suisse Securities (USA), LLC, DeutscheBank Securities, I c. and GMAC BFC. S ities,

Defendants.

To the above named Defends rd:

L3µ3Y CLERICSOFOM

omppFIED

CC)pY FILEDWITVA

YOU ARE EEREBY SUMMONED and required to serve upon Plaintiff's attorneys aVeried Answer to the Veiafied Complaint.in this action within twenty (20) days after the

vice of t1us summons, exclusive of the day of service, or within thirty 00) days after serviceis complete if this moons is not personally delivered to you within the State of-Now York. Incase of your failure to answer, judgment will be taken :against you by default for tbr- reliefdemanded in the complaint

V

Dated: September 22, 2O0r

rack Scbiaipa, Esq-^old Sporn Libman& LomeW, PC1.9 Puixon Street Suite 406NowYork, New York 10036Tel: (212) 964-0046Aitorneyx or?Iai & Proposed Class

Trial is desired in the County ofNew YThe basis ofvenire designated above is that Defendants maintain aadfor conduct their business inthe County ofNew York-

S[PREM COURT DFTHE STATE OF NEWYORKCO `Y OFNEW YORK

New: Jersey Carpenters Health Fund, On BehalfofItself and All Others Similady Situated.,

Plaintiff;

V.

RALI Series 6-QOl Trust, RALI Series2006-QO2 Trust, RALI Series 200"03 Trust,

RALT Series 2006-Q04.Tri RALT Series2006-QD5 Trish RALI Saes 2006-QO6 Trust,

BALI Series 2006-QO7 Trust, RAU Series2006-QOIO Trust. RALI Series 2007-QOI Trust,

1RALI Series 2007QOZ Trust, RALI Series2007-QO3 Trust,. RALI Series 2007-Q04 Trustand RALF Series 2007-QD5 Trust, Deutsche BankTrust Company Americas,.US. Bark NatiAssociiatio, Residential Accredit Loans, Inc.,Bruce Paradis , Davee L Olsen, Kenneth M.Duncan? Ralph T. Flees, Lisa R. L en,James a Jones, David M. Bricker,James N.'Young, Goldman, Sachs & Co., RBS.Greenwich Capital, UBS Investment Sank,Credit Suisse Securities (USA), LLC, DeutscheBank Securities, Inc_ and GNJAC RFC Securities,

Index No. - [pba11

CLASS ACTON

VERIFMDCO PLAINT FORVIOLATION OF SECTIONS Ii,I2 AND 15 OF T$E ;SECURITIESACT OF 1933

YORKCOURV Q-01es OWN

NOT COMPARE^WITH CCFY.h`!

Defdants.x

Plaintiff alleges the fallowing based upon the investigation of counsel, Schoengold Spom

Laitman & Lometti, P.C., which eluded a review of United St :s Securities and Exchange

C .ission ("SEC') filings by Residential Accredit Loans. Inc. '`BALI") and BALI Series

2006-QUI Trust,. BALI des 2006-QO2 Trust, BALI Series 2006-QO3 Trus, RALI Series

2005-Q04 Trust, BALI Series. 2006-QO5 Trust, RALT Series 2006-Q06 Trust, RALI Series

2006-Q.07 Trust, RALI Series 2006-QOIO Trust, RAIN .Series 2007-QO3 Trust, RA3. Series

2007-Q04 Trust and BALI Series 2007-QO5 Trust (collectively the -Issuers" or the "BALI

Trust'), as, well as regulatory flings and reports and advisories about RAU and the RALI

Trnsts,, press releases and- other public statements issued by ratings agencies aboutRAU and the

RALI Trusts, and their own internal investigatiom Plaintiff believes that substantial additional

evidentiary support will-exist for the allegations set forth herein after reasonable opportunity for

discovery. The claims asserted herein do not sound in or arise from allegations offraud.

NAT= OFIMACTION

1, This is a class action, brought by New Jersey Carpenters Health Fund (the

"Carpenters Health-Fund") alleging violations of Sections 11, 12 and 15 of the Securities Act of

1933;. 15 U.S.G. § 77a et seq. ("Securities Act"), on behalf of purchasers of RALI Mortgage

AssetBacked Pass-Through Certificates, Series 2006-QD1, Series 2406-Q02, Series 2406-Qfa3,

Series 2006-Q04, Series 200&,QO$, Buries 20WQ06, Series 2006-Q07, Series 2006-QO IQ,

Series 2007-QOl, Series 20072, Series 2007-Q03, S ies.2007-Q04 and Series 2007-QOS

(the "Certificates" or the `%ALI Certtfioates") who purchased the Certificates, tacked by pools

of one- to fourEmily residential, paymentoption, as justable-rate first lien mortgage loans

with a negative amortization feature, pursuant to or traceable to the following Offerings:

.e: $881,346,100 Offering of Series 2406-QOl Certificates on or about

January 26, 2006 issued by Defendant BALI Series 2006-QO1 Trust (the `2006-.QO1

.b. $665,496,000 Offering of Series 2006-QU2 Certificates on or about

February 24, 2006 issucd by Defendant RALI Series 2006-QQ2 Trust (the 006-Q02

2

c $664,812,000 Offering of des 2006-Q03 Ce cafes on or about

March 28; 2006 issued by Defendant RALI Series 2006-Q03 Trust (the "20 03

Offering"};

d. $843,226,000 Offering of Series 2006-Q04 Certificates on or about April

26, 2006 issued by Defendant EALI Series 2006-Q04 Th at (the "2006 04 Offering);

C. $1,071,587,0000 Offering of Series 2006-Q05 Certificates on or about May

26, 2006 issued by Defendant RALU Series 7006-Q05 Trust (the "2006-QOS Offering");

f. $1,290;297,000 Offering of Series 7006-Q06 Certificates on or about June

.2.8, 2006 issued by Defendant RAM Series . 2006-Q06 Trust (the "2006-QC6 Offering");

g. $1,542,440 ,000 Offering of Series 2006-Q07 Certificates on or about

September 29, 2006 issued by Defendant RAIX Series 2006 -Q07 Trust (1he "2006-QC7

Offering");

h. $889,857,00.1) Ding. of Series 2006-Qa1O Certificates on or about

December 27, 2006 issued by Defendant BALI Series 2006-QCI6 Trust (the "2W&

Q010 Offering'"`);

i. 1,930,000 Offeaing of Series 20D7-QO1 Certificates on or about

7anuuy 29, 2007 issued by Defendant BALI Series 2007-QO1 TWst (the "2007-QOI

offering*);

j. $ 7, 32,000 Olftaixg, of Series 2007-Q02 Certificates on or about

Febbruaty 26, 2007 issued by Defendant RALI Series 2007-Q02 Trust (the "2007-QO2

Offer');

3

Defendant RBS Greenwich Capital M".RBS") was the Underwriter for the 20.05-Q04 Offering

Defendant UBS Investment Bank ("UBS"} was the Underwriter for the 2006-QD5 and 2006-

Q07 Offerings; Defendant Credit Suisse Securities (USA). LLC ("CSS"} was the Underwriter

for the 2007-QO i Ofexing; Defendant Deutsche Bank Securities, Inc. (-DBS1 was the

Underwriter for the 2007-QO2 Offering; and, Defendant GMAG RFC Seem ties ("OMAC-

RFC") was the Underwriter for the 2007-Qt7W, 2007-Q04 and 2007 ]5 Offerings (Defendants

GSC, RBS, UBS, CSS, DBS and GMACRFC are calleclively referred to herein as the

"Underwriter Defendants' or "Undexwrit+eer-ss"). The Underwriters were obligated to conduct

meaningful, due diligence to ensure that the Registration Statements and Prospectuses contai

no material misstatements or omissions, including the slated manner in which the. mortgages had

been originated.. The Underwriters received massive fees for titer work in connection with the

Offerings. Based on, interallad. the Underwriters' due diligence and The representations in'the

Registration Statements and Pmspacbses relating to the under riting of the Certificate

colla eral, rating agencies such as Moody's.Investors Service, Inc. ("Moody's"), Stands &

Poor's ``S&P") and DBRS, Inc. ("DBRS'1) (collectively, the "Ratings Agencies') assigned the

Certificates among the highm ratite applicable to such debt issue. At the time of the [ring,

the Certificates were issued at apporoxiarately gar or $1000.00 fie value per Certificate.

3. Folio . the issrnee of the Certificates, discio 'began to emerge revealing

HFl routinely disregarded the underwriting guidelines in its mortgage lom origination. These

disclosures were confirmed by sibsbmtially higher rates of delinquencies and foreclosures on

collateral for such highly-rate. debt issues. These disclosures, and the poor performance of the

collateral, caused the Rig Agencies to review and revise the ratings assigned to the

Certificates due to the fact that the true nature of the collateral had not been properly-assesses at

5

k. $295,a5,0oo Bering of series 2007-Q03 Certificates on or about

March 28, 2007 issued by Defindant RALI Series 2007-Q03 Trust (the `2007-Q03

");

1. $502,8370000 Offering of Series 2007-QO4 Certificates on or about May

30, 20007 imed by Defendant RALI Series 2007-QD4 Trust (the "2007-Q04 Offering");

and,

m. $231,1$7,000 Offering of Seines 2047-QOS Certificates on or about

August 29, 2007 issued by Defendant RALI Series 2007-Q05 Trust (the "2007-Q05

offer").

Z. The Certificates were issued Pursuant to a Form.S-3 Registration went

filed with . the Securities Exchange Commission on or about January 23, 2006, thereafter

amended by the filing of a Form 5-31A on March 3, 2006 and a subsequent Form 8-3/A on April

3, 2007 (collectively the "Registtation. Statements"). The Offerings occu=d in ibis venue. The

Certificates herein are Mortgage Asset-Backed Pass-Through Certificates collateralized by

mortgages originated by Hom wings Financial, LLC f]kla Home .inggs Financial Network

(`Homecomings" or `°HFN"), which, at all relevant times, was a comme n ial and residential

lender. The mortgages and liens on the mortgaged properties constituting the Certificates'

collateral we, as set forth in the Registration Statements, to be the principal sou= by which

Certificate purchasers were to obtain repayment of their investmwt plus interest. As also set

forth is the R4sh-afiou State, the Certificate collateral was purportedly originated by HFN

pursuant to specific underwrWmg procedures and guidelines. The Undeswritaers of the Offerings

varied from Offering to ing: Defendant Goldman, Saris & Co. (`GSC") was the

Underwriter for the 2006-Qa1, 2006-Q02, 2006-Q03. 200.6-Q06 and 2005-QQ1 p Offerings;

4

the time of the f ng The rating agencies d ically downed the Certificates is both

April and June of 2009, resulting Pram the revelations regarding the true underwriting practices

used to originate the collateral and. the tie value and quality ofthe Certificate colkgkial, which

subsequently caused the subs antial decline in the value of the Cites. Plaintiff purchased

certifi ates issued by one or more of the RALI Trusts pursuant to a registration statement

described herein. However, as of the dafe the within action was commenced, Plawtif's

iixvesm=t suffered a decline ofover 95peTe L The damns. asserted herein under the Securities

Act do not sound in or arise from allegations of fraud.

J[JEDLCTION AND V1^d^IIE

4. The claims asserted herein arise under and pursuant -to Sections 11, 12(a)(2), and

15 of the Securities Ac% 15 U.S.G: §§ 77k, 771(a)(2) and 770.

5. T$is Court has jurisdiction over the subject mater of this action pursuant to

Section 22 of'the Securities Act`, 15 U.S.G. § l7v.

6. Venue is proper in this County pursuant to Section 22 of the Securities Act.

Many ofthe acts and transactions alley herein, including the preparation and dissemination of

many of the material misstatements and omissions contained in the- Registration Statement and

Prospectus filed . in con tion with the Offering, Occurred in sub al part in this County.

Additionally, the Certificates were actively marketed and sold in this County. In addition,

Defendants Deutsche Bank Trust. Company Americas ('DBCTA' ,, GSC, UBS, CSS , DB S and

GMAC-R'C maintain offices in this County.

7. Plaintiff, the New Jersey Carpenters Health Fund, is a Taft-Hartley benefit fund

with offices located in M=4 New Jersey. The New Jersey Carpenters Health Fund purchased

6

certain of the RALI Certifictess described! previously at par value an the Offering. Plaintiff and

the Clays purchased pursuant to the Registration Statements and Prospectuses wixith contained

tat ial Vie= and ions. of &cts essaly to make the facts stated t in not

misleading. Plaintiff and the Class relied on the misstatements and omissions in the

Pro cesses and have s ered damages pursuant to Sections 11, 12 and 15 Of the Securities.

Act.

8. Defendant RAM Series 2006-QC I Trust was the issuing entity for the 2006-QOI

Offs. Per its filings with the SEC, BALI Series 2006-QO 1 Trust has listed 8400 Norm&le

Lake Boulevard, Suite 600, Mi nneapolis, Minnesota 55437 as its principal office location.

Defendant R.ALI Seziies 2006-QOI Trust is. a trot formed under the laws of the State of New

York.

9. Defendant RAM Series 2005-Q02 Trust was the issuing entity for the 2006-Q02

Offering, Per its filings with the SECI BALI Series 2006-QC2 Trust has listed *400 NormWale

Lake Boulevard, Suite 60Minneapolis, Minnesota 5 437 as its principal office location.

Defendant 1AU Series 2006-Q02 Trust. is a trust ,formed under the laws of the State of New

York.

10. Defendant BALI Series 2006-QO3 Trust was the iss g entity for the 200 03

O ring . Per its filings with the SEC, RAL1 Series 2006-Q01 Trust has listed 8400 Nonadede

Lake Utmievard, suite 600, Vameapolis, Minnesota .55437 as its pa ipal office location.

Defendant BALI Series 2006-Q03 Trust is a test . fanned under the laws of the State of Now

York.

11. Defendant RALI Series 2006-Q04 Trust was the issuing entity for the 2006-Q04

Offering . Per its filings with the SEC, RALI Series 2006-Q04 Trust has listed 8400 Nomu dale

7

Lake Boulevard , Suite 600, Minneapolis, Minnesota 55437 as its principal office loeatiom-

Defendant RALI Series 2006-QO4 Trust is a trust formed under the laws of the State of New

York.

12. De ,dant .I Series 2006-QOS Tryst was the issuing entity for the 2006-QO5

Offering. Per its cgs with the SEC, RALX Series 2006-QO1. Trust has listed $4400 Normadale

Lake Boulevard, Suite 600, Minneapolis, Minnesota, 55437 as its principal office location.

Defendant RALI Series 200 - QOI Trust is a trust formed under the laws of the State of New

York.

13. Defendant BALI Series 2006-QO6 Trust was the issuing entity for the 2006-QO6

Offering. Per its filings with the SEC, RA.LI Series 2006-QO6 Trust has listed 9400 Ni rmadale

Ike Boulev , Suite 600, Min teapolis, Innesata 55437 as its principal office loc on.

Defendant RALI Series 2006-QO6 Trust is a trust formed under the laws of the State of New

Yom

14. De ndant RAM Series 2006-QO7 Trust was the issuing entity for the 2006-QO7

Ofking, Per its filings with the SEC, BALI Series 2005-QO7 Trust has listed 8400 Normadale

Lake Boulevard, Suite 6m Minneapolis, Minnesota 55437 as its ipal office - location.

Defendant RALI Series 2006-QO7 Trust is a trust ftmed under the laws of the State of New

York.

15. Defendant . fALI Wes :006-QO10 Trust was the issuing entity for the 2006-

Q010 Offering. Per its filings with the SEC, BALI Series 2006-QO i 0 Trust has lisp 8400

No®aadale Lake Boulavard, Suite 600, Minneapolis, MI ota 55437 as its prindipal office

location. Defendant RAU Series 2006-Q(}10 Trust is a trust .fanned under the laws of the State

ofNew York.

8

16. Defendant R.ALI Series 2007-Qol Trust was the issuing entity for the 2D07QO1

Ofibring. Per its firings with the SEC, BALI Series 2007-QOI Trust has listed 8400 Nn ie

Lake Boulevard, Suite 600, Minneapolis, i sota 55437 as its principal office location.

Defendant BALI Series 2007-QOl Trust is a trust formed -under the laws of the State ofNew

York,

17. Defendant RALI Series 2007-Q02 Trust was the issuing entity for the 2007-Q02

Offering. Per its filings with the SEC, BALI Series 2007-Q02 Trzast.has listed 8400 Nonnadale

Lake Boulevard, Suite 500, 1 eapolis, Minnesota 55437 as its principal office location.

De dant RALI Series 2007-QD2 Trust is a trust formed under the laws of the State oINew

York.

18. Defendant BALI Series 2007-Q03 Trust was the issuing entity for the 2007-Q03

Ofeting, Per its flings with the SEC, RALI Series 2007-Q03 Trust has listed 8400 Normad^le

Lake Boulevard, Suite 600, Minneapafis, Minnesota 55437 as its prineipal office location.

Defendant BALI Scrin 2007-Q03 Trust is a trust wed under the laws of the State of New

York.

19. Defendant BALI Series 2007-Q04 Trust was the issuing entity for the 2007-Q04

Offering . Per its filings with the SEC, RAU Series 2007-Q04 Trust has listed 8400 Nommdale

Lake Boulevard, Suite 600, Minneapolis, Nfiim=wta 55437 as its principal office location.

Defendant BALI Series 2007-Q04 Trust is a fiat . funned under the laws of the State of New

York.

20. Defendant RALI Series 2007-QD5 Trust was the issuing entity for the 2007-Q05

Offering. Per its flings with the SEC, BALI Series 2007-QO5 Trust has listed 840D Narnnadale

Lake Boulevard;. Suite 600, Minneapolis, Minnesota 55437 as its pincipal office location.

9

Defendant RALI Series 2007-QO5 Trust is a trust farmed under the laws of the State of New

York.

21. Deft Deutsche Bank Trust Company Americas {"DBTCA"} is the Trustee of

the 2006-QOI, 2006-Q03, 2006-Q04, 2006-Q05, .20D6-Q06, 2005-QU7, 2006-Q08, 2006-Q0.9,

2006-Q010, 2007-QO1., 2007-QOZ,: 2007-QO3, 2007AQ04 and 2007-Q05 Certificates and

maintains offices in New York County at 60 Wall Street New York New York .10.005.

22. Defendant US, Bank National Association ("USBNA"), a wholly owned

subsidiary of U.S. Bancorp, is the Trustee for the 2006-Q02 Certificates and maiptains its

principal saes att 425 Wab=Sth Ste. FRNT, Cinchmati, Ohio 452 3933.

23.. Defendant Residential Accredit Loans, Inc. is the Depositor for the Offerings, and

the Parent Company of suers. RALI is a wholly owned operating subsidiary of Residential

Capital Corporation ("ResCap") . Acw ding to its SEC filings, RALX maxim its principal

offices located at 8400 Nomiadale Lake Boulev , Suite 600, Minneapolis, Mint ota 55437.

24. RAI3 is a wholly owned operating subsidiary of Residential Capital Corporation

('"ResCap") ResCap is also the Parent Company of Residential Funding Corporation ("RFCI,

the Sponsor and Nfitster Services of the Certificates. Moreover, N is a wholly owned

subsidiary ofRFC.

25. Defendant Bruce Faradis (Turadis") was, dmiag the relevant period, a Dire#ar,

the President and Chief Executive Officer (Principal Executive Off=) ofR.AU Pm-adis signed

the January 23, 2005 .Registration Statement. Form. 9-3 pursuant to which the 2006-QO1 and

2006 QO2 Certificates were offered, and Ihe March 3, 2006 Amendment to the Registration

Statement Form S-3/A pursuant to which the 2006 QO3r 2006-QO4, 2006-QO5,, 2006-QD6,

10

1

2006-QO7, 2006-QO70, 2007-Qol, 2007-Q02 and 2007-Q03 Cerdficates were offered, either

on behalf ofhimself or by the authori Attorney-In-Fact.

26. Defendant Kenneth M Dwwaa ("Duncan") was, during the relevant pecriod, the

Acting Chief Financial Officer (Principal Financial Officer) of RALT. Duncan signed the

January 23, 2006 Registration Statement Form S-3 pursuant to which the 2006-QOl and 2006-

Q02 C;rtificates were off, and March 3,, 2006 Ar eudnient to the Ramon St ent

Form 8-3/A pursuant to which the 2006-Q03, 2006-QD4, 2006-QO5, 2006-Q06, 2006-QD7,

2006-QO10, 2007-QO1, 2007-Q02 and 2007-Q03 C cates were off, either on behalf of

himself or by the wAhmized Attorney-Fn-Fast

27, Defendant Davee L. Olsen (Olsen") was, du ing the relevant period, a Director

ofRALT. Olsen signed the January 23, 2006 Registration StmtForm S-3 pursuant to which

the 2006-WI and 2006-Q02 Certificates wCre offered, and the March 3, 2006 Amendment to

the Regist ion. State=t Form- 5.3/A pursuant to which the 2006-QD3, 7006-Q04, 2006-QO5,

2006-Q06, 2006-QD7, 2006-QOlO. 2007-QQI, 2007-Q02 and 2007-Qo3 C dficates were

offered, either on behalf ofhimself or by the authorized Attorney-In Fact.

28. Defendant Ralph T. Flees ("Flees') was, at all times during the relent period,

the controller (Principal Accounfing officer) of RA ;I. Flees signed the January 23, 2006

Registration Statement Four. 8-3 pint to which the 2006-QOl. and 2006-Q02 Ccrtific s

were offered, the Marcia 3, 2006 Amendment to the R ion Statement Form S-31A pursuant

to which dw 2006-Q03, 2006-Q04, 2006-Q05 , 2006-Q06,.2006.QO7, 2006-QOI0, 2007-Q01 f

2007-Q02 and 2007-Q03 Certificates vmm offerei and the April 3, 2007 Amendment to the

Registration Statement Form S-3/A pursuant to which the 2007-Q04 and 2007- Q05 Certificates

were offered, eitheron behalfof t if or by the authorized Attorney-1;-Fad..

11.

29, Defendant Lisa R. Lundstesn (``Luadstenl was, at all times during the relevant

mod, the authorized Attorney-:in-Fact forRALL The Power ofAttorney sib by Defendants

Paradis, Duncan, Fees an. Olsen is annexed as an Exhibit to the ranuaiy 23, 2006 Form S-3,

Lundsten the March 3, 2006 Amendment to the Regi^n Statement FO= S-31A Pursuant- to

which the 2006-QQ3, 20064M, 2006-QOM, =6_Q%, 2006-QO7, 2006-QOI0, 2007-Qol,

2007-Q02 : and 2007QO3 Ce cates were ofI rcd and the April 3, 2007 Amendment to the

Registration Statement Farm S-3/A putsuant`to which.the 2007-Q04 and 2007-QO5 C cates

were offered, as Attorney-inFact.

30. Defendant James G. runes ("Jones") was, during the relevant period, the

President, Chief Executive Officer (Principal Executive Officer) and a .Director ofRALL Tomes

igz d the Apci13, 2007 Am=dnuzt to the Registration Statement Fora S-31A purest to

which't a 2007-Q04 and 2007-Q0:5. Cedi1 s were offcrcd , ei on behalf of himself or by

the authorized Atozney-ln-Fact..

3I. Defendant David M. Bricker ("Bricker") was, during the relevant period, the

Chief Financial off= (Pane l Financial Officer) and a Director ofRALL Bucker signed the

April 3., 2007 Amendment to the Registration Statement Form S-3/A pursuant to which the. 2007-

and 2007-QOS C.ertif tes r offered, either on behalf ofhimself or by the audwrized

At omey-TnFact

32. Defendant lames N. Young (``3 oung) was, during the relevant period, a Director

ofRALL Young signed the April 3, 2007 Amendment to the Registration Statement } omi 5-3/A

pursuant to which the.2007-Q04 and 2007-Q05 ' Certific s were offered, either on behalf of

himselfof by the authorized Attorney-In-Fat.

12

33. Dent Ps, Duncan, Olsen, Flees, Lundsten, Jones, Bricker and Young

are collectively referred to herein as the "Individual Defer." The Individual Deftdmits,

because . oftheir positions with RAL :possessed the power and authority to control the contents

of RALPa submissions to the SEC and the nxsrket, and. participated in the dtafliug and iting of

the Registration Statements and Pr tuses. The Individual Defence all conducted business

and had business residences at 84010 NQ inadale Lake Boulevard, Suite 600, Minneapolis,

Minnesb& 55437.

34. The Individual Defendants w= officers and/or directors of RAM at the times

the Registration Statements and Prospectuses for the Offerizigs became effective, and with their

consent, were identified as such in the Regiis on Statement In addition, they each signed one.

or more ofthe relevant Registration Statements or authorized them to be signed on tt e r behaI£

35. The Individual Defendants, as officers and/or directors each had a dirty to

promptly disseminate accurate and truthful information with respect to RALI and the RALI

Trusts, and to correct any Previously issued statements issued by, or on behalfof RALI andlor

the BALI Trusts that had become materially misleading. The Individual De&ridants'

misrepresentations and omissions in the Prospectus violated. these specific r quirements and

obligations. The Individual Defimdants we signatories to the Registration Statements filed

with the SEC and incorp by nfereum in the Prospectuses.

36. The D dants are all liable, jointly and severalty, as, participants in the issnence

of the.-RALI Certificates, i ing issuing, causing, or making materially misleading statements

in the Prospectus and omitting material facts necessary to rn the sW=ents contained therein

not misleading.

37. Defendant Goldman, S c-hs a Co. is an investment bolting firm prmG y

13

located at 85 Broad Scree, New York, New York 10004. Defendant GSC served as the

Underwriter for the 20.06 1, 2006-QO2, 2006-QO3, 2006-Q06 and 20(16-QOI0 Offerings.

Defendant GSC was intimakly involved in the aforementioned Ofterings and iled to perform

the requisite level of due diligence in connection with these Offerings. The Prospectuses

disseminated in comiection with the 2006. QOl, 2006-QO2, 2006-QO3, 2006Q06 and 2006-

Q010 Offerings c ntai ned material misstatements .and omisSxons of material fact relating to the

-Underwriting Practices" employed in originating the underlying subprime: mortgagee loans.

GSC is one of the leading.ors in mortgage- and assethacked securities in the United

States. According to industry researb, Goldman Sachs was one of the tog ten sellers of U.S.-

collateral zed mortgage backed securities betvmen 2005 and 207, selling. over $100 billion of

such securities duuring that time period. Moreover, in the midst of the U.S. mortgage crisis that

has plagued the county since early 20O7, GSC grafted over $4 billion by bang on the collapse

of the U.S. subpcime maw and short selling billions :of dollars of mortgage backed sec irities.

GSC, as an essential pwt of its investment banking business, maintains its principal offices in

New York County,

38. De&ndant RIBS Greenwich Capital, a subsidiary of Greenwich Capital Markets.

Tue., is an inert wing firm principally located at 600 Steamboat Road, Greenwich

Connecticut 0683.0. Dot RBS served as the Underwriter for the 2006-Q04 Offering.

Defendant RBS was intimately involved in the Wined Offering and failed to Pebrm

the requisite level of due diligence in connectiori with the Offering. Ilia Prospectus

disseminated in counectim with the 2006.:QO4 Offering contained m rial miffs and

omissions : of mamial fact relating to the "Undmw6ting Practices" employed. in originating the

underlying subprime mortgage: loans. RBS is one of the leading underwriters in mortgage- and

14

assetlacked securities is the United States. Since 1987. EBS has helped mortgage lenders issue

more than $400 billion in asset-backed semoiti . RBR, as an essential part of its indent

banking business, has substantial cpnt3ds with New York City and regularly and continually

transacts business in New York - specifically in New York County (Le., Wall Street and the

financial acts),

39. Defendant UBS. Investment Bank is an in vent banking firm principally

located at 12&5 Avenue ofthe Americas, 19th Floor, New York.; New York 10019. Defendant

UB'S served as the Underwriter for the 2006-Q05 and 2006-QC7 Offerings. Defendant USS

was intimately involved in the aforementioned Offerings and Bed to perform, the requisite level

of due diligence in connection with these Offerings. The Prnqvxbx= di n ted in

connection with the 2006-Q05 and 20.06-QO7 Offerings contained material misstatements and

omissions ofmate iai fa, t relating to the "Underwriting Practices" employed in originating the

underlying subprime mortgage loans. UBS is one of the leading underwriters in mortgage- and

asset-backed securities in the United Sties. According-to industry research for 20053. UBS was

the number five U.$.-coI1a^llzed mortgage backed securities loan underwriter and master

services UBS, as an essential part of its -investment banking business, maintains its principal

offices in New York County.

40. Defendant Credit Suisse Securities (USA), LLC ["CSS"), formerly Credit Suisse

First Boston,. LLC, is.an investment bemking firm pfincipally. located at. 11 Madison Avenue, 7ffi

Floor, Now York, New York 10010. Defendant CSS served as the Underwriter for the 2007-

Q01 Offering. Defendant CSS was intimately involved in the 2007`QO t Offmimg. Defendant

CSS failed to perform to requisite level of due diligence in connection with the 2007-Qol

Offring complained of'herein. The Prospeews disseminated in connection with the 2007-Qol

1S

Offering contained Material s and omissions of material fact relating to the

"Under iting Practices" employed in originating the underlying subprime mortgage loans.

CSS is one of the leading underwriters in mortgage- and asset-backed securities in the United

St According to industry research for 2004-2005, Credit Suisse was the number three U S.-

collateralized mortgage backed securities loom contributor and master servicer_ CSS, as an

essential. part of its investment banking business, maintains its principal acs in New York

County.

41. Defendant Deutsche Bank Securities, Inc. is an investment banking firm

principally located at 60 Wall Sirtet, New York, New York 14005. Defendant DBS served as

he Underwriter for the 2007-Q02 Offering, Defendant UBS was !Wmately involved 'in the

aforementioned Offering: and failed to. perform the requisite level of dtw diligence in connection

with the Offering The Prospectus disseminated in connection with the 2007-QO2 wing

contained material misstatement s and omissions ofdal fact relating to the "Underwriting

Practices" employed in on a'ting tho underlying subprime mortgage loans. DB5 is one of the

leading underwriters in mort and asset-backed Mies in the United States. DB S. as an

es ntial pad of its inert baWdng business, maintains its principal offices in New York

County.

42. De dant GMAC-RPC Securities is an invesirnent banking firm principally

located at 7501 Wisconsin Awe, Suite 900, Bc esda, Maryland 20814. Defendant GMAC-

RFC served as the Undue for the 2007-QO3, 2007-QO4 and 2007-Q05 Offerings,

Defendant GMAC-RFC was i imately involved in the afoznentioned Offerings and failed to

pert the requisite level of due diligence in connection with these Ofkdngs. The

Prosper dish in connection with the 2047-.QO3, 2007-Q.044 and. 2007-QO5

16

Offerings contained material misstatements and omissions of material fact , relating to the

-underwriting Practices" employed in originating the underlying subptne mortgage loans-

GMAC-RFC is one of the leading underwriters in wrtg - and assetbacked securities in the

United States, and in fact is the largest non-ageucy mortgage backed securities underwriter and

dealer in the United States.

CAS ACTXON AI.EGATIONS

43. Plaintiff brings this won as a class lion pursuant to ale 9 of the Now York

Civil Practice Law and Rules ("CPL ") on behalf of a class consisting of all persons who

purch or acquired the Catificatw (the "Class") pursuant and/or traceable to the Registration

Statement and Pros tus issued in connection with the Offering from the effective date throu&

the date of the filing of this action. Excluded from the Class am Defendants their respective

officers and directors at all relevant times, members of their immediate families: and their legal

representat ves, heirs, successors or a3signs and any entity in which Duets have or had a

controlling interest

44. The menus of the Clays are so numerous that joinder of all members is

impmlicable. While the exact number of Class members is pr ntly unknown to Plaintiff and

can only be ash through appprapbti.t: discovery, Plaintiff reasonably believes that there

we thousands of members m the proposed Class. Record owners and other members ofthe Class

may be identified from records matnt by Defendants andlor the Trustee for the Certificates

and may be notified of the pendency of this action 'by mail, the internet or publication using the

m of notice similar to thatanyused in securities class actions,

45. PIaintifrs claims are typical of the claims of the members of the Class as all

members of the Class are simdarty affected by Defendants' w=gfid conduct in violation of

17

statutory law complained ofIercin.

46. Plaintiff will fairty and adequately protect the interests of the members . of the

Class and has retained Sch, old, Sporn, Laitman & Lometti, P.C., counsel competent and

sE enced in class and securities litigaLion.

47. Common questions of law and fact exist as to all members of the Class and

predominate over any questions solely erecting individual members of the Class. Among the

questions of law and fact common to the Class are.

a) whether the provisions ofthe Securities Act of 1933 were violated by the

Defendants as alleged herein;

b) whether the Registration Statements and Prospectuses contained

materially untrue statements or omitted statements of material fact; and

c) to what extent the members ofthe Class have sustained, damages pursuant

to the statutory mewofdamages.

4S. A .class action is superior to all other available methods for the fair and efficient

adjudication of this controversy since joinder of all members is impracticable. P eimore, as

the damages suffered by individual Class members may be relatively small, the Mpense and

burden of individual. litigation make it impossible for members of the Class to individually

r ess the wrongs done to them, There will be no di$icu ly in the dement ofthis action as

a class action.

MBSIASMA LEGATX. • S

49. C tly, the United Sties is ensuated in a Enancial crisis arising, in matmdal

part; from the gmed which drove financial firms to issue billons of dollars of debt securities

"collateralized" or saenritiwl with mortgages . which only recently have been revealed to have

I8

been recklessly underwritten and originated : The Plaintiff and Clays as purchasers of Ihi

Cerfificates have been the victims of just such negligent pxactires, big p

Certificates p ct to Registration Statements which contained misstatements and omissions

concerni the mortgage collate-al "securi ing" the Ceriific s. The R.ALI Trusts and other

entities relied to the Offering, £ e,, the Depositor and Underwriter Defendants, had enormous

financial incentive to consummate the Offerings of Om Certifies as quicldy as possible since

they were paid upon completion a P=Mtfige of the total dollar amount of the Offerings sold to

investors Since the risk of thr, z lying collateral tiling was not. assumed by either ItALI the

RA,LT Trusts, the Trustees or the Underwriters, there was also enormous incentive not to conduct

#`ull, complete and meaningful due diligence of the s naer is in the Registration tents

including those relating to the underlying mortgage- collateral.

50. The structure of each Of Ling was.. gerenay identical : RALI fled aRegisUation

Statement with the SEC, initially on January 23, 2006, and thm amending it once on March 3,

2006 and again on April 3, 2007, in connection with the ice t f vazicus series and classes of

debt securities which would be governedby said Ramon Stateme t and Amendments. At

some time at or subsequent to each Offering, the "Issuing Entity" Trust was then fanned under..

the laws of the. State of New York, Le., RALI Series 2006-QC1 Trust, for which a Prospectus

was ffled on behalf of as entity responsible for issuing the Certificates at issue berein.

51. Typic a ly, the loans ace originated by the Sponsor, or in this case a subsidiary of

the Sponsor= HFN, who then. disposes of its loans primarily by selling them to third pa hies and

through securitizations. The Sponsor works with the Underwrit and the rating agencies to

select the pool of mortgage loans and structure the seuritiz Lion transaction. The Sponsor or

subsidiary reof also services the mortgage loans. On the. closing date. of any given Offering,

19

the Sponsor conveys the initial mortgage loans and the related mortgage insurance policies to the

Depositor, who will in term convey the initial mortgage loans-and the related mom insurance

policies to the Tnist, by way of the Trustee. The Certificates are backed by the der, and

consist of, inter alai, the: mortgage loans; collections in rtopect of principal and interest of the

mortgage loans received; and the amounts on deposit in the collection accoma, including the

payment account in which amounts ate deposited prior to peLyment to the certificate holders. On

the payment date, the certificate hotdeZS receime payments from the Trustee based on the

particular tranche purchased; typically, available funds for each distribution date will equal the

amount received by the trustee and available in the. payment account on that distribution date,

ineIuding interest which differs depending upon the't the held.

52. In connection with the. RAIL Offerings, RALI, the Tests and the various

ilnderwxiter :Defendants prepared and disseminated Registration tents and prate

that contained materialitsoffact and omitted fact's necessary to maim the its stated

therein not misleading that were reasonably retied upon by Plaintiff and the Class to their own

detriment.

The Registraion Statement and Prospers ContainedMaterial Misstatements and Omissions ofFact

53. Ibr, Registration SW=eut represented that all of the loans which made up the

pool of residential, subptime mortZaM used to support the Certificates. were subject to cettam

underwriting guidelines which assessed the. borrower's creditworthiness, including multi-level

reviews of loan applications and appraisals with only "case by case" exceptions to guidelines.

54. The, Registration Statements disclosed that the underlying. loans were . originexed

and/or acquired by HFN. Tice Registration. Statement represented that all the underlying loans

were subject to underwriting guidelines which varied in the levels sc my depending on the

20

burrower, yet all of which stressed homeowner credit-w thiness and in most cares, fall

documentation would berequiredfrom-tlie borrowerprior to bedapprovedfor a loan:

The depositor effects that the originator of each of the mortgage loans will haveapplied, consistent with applicable federal and state laws and regulations,underwriting procedures intended to evaluate the borrower's credit standing andrepayment ability and/or the value and adequacy of the related property ascollateral. All oftbe mortgage loans constituting the mortgage pool for a series ofcertificates will have been acquired either directly or irdirmtly by the depositorthrough the Expanded Criteria Program, which is described below under 't-TheExpanded Criteria Mortgage Program."

The mortgage loans in any mortgage pool may be underwritten by ResidentialFunding Corpora, a seller or a designated third party t ugh. the use of an

automated underwriting system In the case of a Designated Seller T=ansacfion,the mortgage loans may be u dcomitten by the designated seller or a designated

third party through the use of an automated under ring system For additional

information regarding automated underwriting systems that are used. byResidential Fu g Corporation to review some of the mortgage loans that it

purchases and that may be included in any mortgage pawl, see "AutomatedUnderwritin " below.

General Standards

In most cases, under a #radth na1 '7u1 documentation program eachmo gagor will leave been requireed to complete an application designed toprovide to the original lender p rf credit arnsation. conwern ng the

mortgagor. As part ofThe description of the mortgagor's financial conditiun, themortgagor will have furnished information, which may be supplied solely in theapplication, with respect to its assets, liabilities, i== (except as described

bellow), cry bis employment history and personal infomatiion, andfurnished an authorization to apply for a wit report that summarizes theborrowers it histoy with local al merchants and lenders and any turd ofbankruptcy. The mortgW may also have i required to authorize verifications

of deposits at. financial institutions where the mortgagor bad demand or savings

ac unts. Iu the case of investment properties and two- to fourunit dwellings,income derived from the mortgaged property may have been considered. forunderwriting purposes;, in addition to the income of the mortgagor from other

sources. With. re t to mortgaged pro ty' consisting of vacation or second

homes, no income derived fiom the property will have been considered forunderwriting purpose . In the case of min bormwer s with a ptable paymenthistories no income will be required to be stated,,. or verified, in. connection with

the loan application,

21

If specified in the accompanying prospectus supplement, a mortgage pool mayinclude mortgage loans that have been underwritten pint to a streamlineddocumentation refinancing program:, Such program permits some mortgage loansto be refinanced with only limited verification or updating of the underwritinginformation that was obtained at the time that. the original mortgage lam wasoriginated . For ammple, a new appraisal, of a mortgaged property may not berequired if the related original mortgage low was on d up to 24 monthsprior to the refinance. In addition, a mortgagor's income may not be verified,although continued employment is required to be verified . In certaincircumstances a mortgagor may be permitted to borrow up to 100°!0 of theoutstanding principal amount of the original mortgage loan. Each mortgage loanmenpursuant to this program will be treated as having been underwrittenpursuant to the same un&xwriting documentation prim as the mortgage loanthat it refinanced, including for pmpnses of the disclosure. in the accompanying

pro's supplement.

If specified in the accompanying prospectus suppled sore mortgage Roansmay h : been on ted under limited docwn on," "scatted documentation"or "no documentation ' programs that require less documentation and verificationthan do traditional "full docum entation" programs. Under a Fnnitaddamson, stated documentation or no documentation program, minimalinvestigation into the mortgages credit history and income profile is undertakenby the originator and theOngmay be based primarily or entirely on anappraisal ofthe mortgaged property and the LTG' ratio at origination.

The adequacy of a-mom: property as set ity for repayment of the related

mortgage loan will typically have been determined by an appraisal or an

automated valuation, as desedbed above under '=Loan-,to-Value Rafio."

Appraisers may be either staff appraisers employed by the originator orindependent appraisers selected in accordance with pre-etablished guidelinesestablished by or suable to the originator. The appraisal procedure guidelines

will have required the appraiser or no agent on its behalfto personally inspect the

prop y and to verify whether the proparty was in good condition and thatconstruction, if new, had been substantially completed. The appraisal will haveconsidered a mazes data analysis of recent sales of comparable properties and,when deemed applicabIe, an analysis based on income generated from theproperty or replacement cost analysis based on. the cuucat cost of constructing orpingasimilar property.

The underwriting standards applied by an orb typically require that theunderwriting officers of the originator be smeted that the value of the propertybeing financed, as indicated by an appraisal or other accepUble valuation methodas described below, currently supports and is anticipated to support in the # rethe outstanding loan balance. In f some states Where the mortgaged propertiesmay be located have "anti-deficiency" laves requiring, in general, that lendersproviding credit on single wily property look solely to the property for

22

repayment in the event of foreclosure. See "Certain Legal Aspects of Mortgage

Loans and Contact-," Any of these factors could change nationwide or merely

could affect a locality or region in which all or same ,of the mortgaged properties

are located. However, declining values of real fie, as experienced periodically

in certain regions, or increases in the principal balances of some mortgage loans,

such as GPM Loam and negative amortization ARM loans, could cause the

principal balance of some or all ofthese mortgage loans to exceed the value of the

mortgaged p opertxes.

Based on the data provided in the application and certain verificadois, ifrequired;

and the appraisal or other valuation of the mortgaged property, a determination

,Will have been made by the original lender that the mortgagor's monthly income,

if required to be stated, would be sufficient to a Ie the mortgagor to meet ita

monthly obligations on the mortgage loan and other expenses related to the

property. Examples of other expenses include property taxes, utility costs,

standard hazard and primary merge insurance, maintenance fees and other

levies assessed by a Cooperative, .if applicable, and other fixed. obligations other

than housing expels. The originator's guidelines for mortgage loans will, in

most cases, specify that scheduled patents on a mortgage loan during the first

year of its term plus taxes and insurance, including primary mortgage insuranc,

and: all scheduled payments an obligations that extend beyond one year, includ

those mentioned above and meter fixed obligations, would equal no more than

specified percentages ofthe prospective mortgagor's gross income. The originator

may also consider The amount of liquid assets available to the mortgagor after

origination.

The le vet bf review by Residential Funding Corporation, if any, will vary

depending on several factors. Residential Funding Corporation, on behalf of the

depositor, typically will review a sample of the mortgage loans purchased, by

l idential Funding Corporation for conformity with the applicable underwriting

standards and to assess the likelihood ofrepayment ofthe mortgage loan from the

various sources for such repayment, including the mortgagor, the mortgaged

properly, and primary mortgage insuran , if any. Such underwriting reviews will,

get ally not be conducted w th respect to any individual mortgage pool related to

a series of certificates. In reviewing seasoned mortgage loans, or mortgage Ioaas

that have been. outstanding for more than 12 months, Residential Funding

Corporation may also take into consideration the mortgagor's actual payment

history in assessing a mortgagor's current ability to make payments on the

mortgage loan. In addition, Residential. Funding Corporation may conduct

additional procedures to assess the current value of the mortgaged Properties.

Those procedures may consist of drive-by appraisals, automated valuations or real

estate brokees price opinions. The depositor may also consider a specific area's

housing value trees T(rese alternative valuation methods may not be asramble

as the type of agorfinancial information or appraisals that are typicaUy

obtained at Inc is undsrwrilinn analysis, Residential Funding

Corpvratrn may 4so consider the applicable Credit Scare of the reed

23

mortgagor used in av tion with the origination of f mortgage lnrnr, asddermined based on a ereditswring made[ acceptable to the depsitar.

With respect to the depositor's undwwriting standards, as well as any airerw riling studs that may be applicable to any mortgage loans, such

underwriting standards typically include a set of specific criteria by which theunderwriting evaluation is made. However, the application of the underwritingstandards does not imply that each specific criterion was satisfied individually.Romer, a mortgage loan will be, ide red to be originated in accordance with agiven set of underwriting staindards if, based on an overall qualitative evaluation,the loan is in substantial compliance with the underwriting standards. Forexampl,e,.&-mortgzge loan may be considered tQ comply With a set of underwritingstandards, even if one or more specs c criteria included in the underwritingstandards were not sahsfie4 if other factors compensated for the trite .a that werenot satisfied cur if the mortgage loan is considered to be in substantial compliance

with the underwriting standards. In the case of a Designated Seller Transaction,

the applicable underwriting standards will be those of the seller or of theoriginator of the mortgage loans and will be described in the accompanyingprospectus supplement.

Credit Scores are oblairred by some mortgage lenders in co ction withmortgage loan 4q p&ut ans to kelp assess a btrrower's creditworthhtem fistaddffon, Credit ,Scores may be obtained by RUMm Funding Corporation .orthe designated sel, after the origin of a mortgage loan ifthe seller does

not provide to ResMmW ceding Corporation or the designated steer aCredit Score CreditScares obtainedfrom cry reports provided by variocredit reporting orgwdzzdons, each of which may employ ds;ff g computer

mode r andmethodology:

The Credit Scare it designed to assess a borrower 's credit history at a singe

point ire term ringobject information cumonflefar the borrower at aparticular credit reporting drMmidion. Information aseA to create a CreditScore may ire, yang other things, payment history, delinquencies onacoounts^ levels of rn anding indebtedness, length of reedit history, types ofcredit and bankruptcy mgmierice- Credit Scores range from appro i nately 3.50 to

approximately 849, with higher scores indite an individual with a more

f rable credit history compared to an individual with a lower score . However, aCredit Score prints only to be a measurement of the relative degree of risk a

j boirawer represents to a lender, i.e., a borrower with a higher score is stoicallyexpected to. .tie less likely to default in payment than a borrower with a lowerscore. In addiiian, it should be. noted that Credit Scores were developed toindite a level of default probability over a two-year period, which does notcorrespond to the life of a mortg loan. In most cases, mortgage loans generally

amnrfi a over a 15- to 30- year period. Fes, Creclit Scores were notdeveloped specifically for use in connection with mortgage loans,. .but ftconsumer loans in general, and assess only the borrower's past credit history.

24

Therefore, in most cases, a Credit Score does not take into consideration thedi ces between mortgage loans and consumer loans, or the specificcharacteristics ofthe related mortgage loan, including the LTV ratio, the collateralfor the mortgage Ioa , or the debt to income ratio. There can be no assurance thatthe edit Scores of'the mortgagors will be an accurate predictor of the likelihoodof repayment of'the related mortgage loans or that any mortgagor's Credit Scorewould not be lower if obtained as of the date of the accon panying prospectusSUMIMent.

Qnmraff applicable employmer4 ereifif andpmper r informaden is. rece4i4 a

dedenninidlon it made ns to wkether the prospect a hwmwer his sufficientmonthly income awzikble to t the borrower's monthp obligations on .tieproposed mortgage loan. and other £pensex related to the home, i Iudingproperty la and hazard insu once, and other financial obligations and monthlyliving expenses. ARM laws, Buy-Down .Mortgage Loans, graduated paymentmortgage loans and any other mortgage loans will generally be underwritten anthe basis of the borrower's ability to make monthly payments as determined byire to the mortgage rates in effect at origination or the reduced initialmonthly payments, as the .cue may be, and on the basis of an assumption that theborrowers will likely.be able to pay the higher monthly payments that may resultfrom later inks in the mortgage rates or from later increases in the monthpayments, as the case may be, at the time of the in se even though the

borxmwas may not be able to make the higher payments at the time oforigination.The mortgage rate in effect from the origination date of an ARM Iam or otherhypes of loans to the first adjustment date are fly, to be lower, and may, besignificantly lower, than the si mn of the then applicable index and Note Margin.Similarly, the amount ofthe monthly payment on Buy-Dawn Mortgage Loans and

graduated payment mortgage loans will increase periodically. If the borrowers'

Incomes do not in se in an amount commensurate with the increases III

monthly payments, the likelihood of default will increase. In addition,. in the caseof either ARM logs or graduated payment mortgage loans that are subject tonegative amortization, due to the addition of deferred interest the. principalbalances of those mortgage loans are more ley to equal or exceed the value ofthe underlying mortgaged properties, hereby increasing the LkeIihood of moultsand losses. With respect to. BaICDon Loans Payment of the Balloon Amount willdepend on the borrower's ability to obtain refinancing or to sell the mortgaged

proper prior to the maturity of°the Balloon Loan, and there can be no assurancethat refinancing will be available to the borrower or that a sale will be possible.

Generally, each mortgagor will have been required to a maples an applicationdesigned to provide to the original lender pertinent crediit information concerningthe mortgagor .: At, part of the description of the mortg, .gor's financial condition,t e mortgagor will have fatnisbad information with respect to its assets, Iiabilitie;s,income (except as described below), credit 1n-story, employment lsto y andpersonal i arnU#ion, and fu nished an authorization to apply for a chit reportwhich summarizes the mortgagor's credit history with

localI ere S and

25

lenders and any record of b ptcy. The mortgagor may also have beenrequired to authorize verifications of deposits at financial institutions where themortgagor had demand or savings accounts. In the case of invent propertiesand -two to for unit dwe , income derived from 1 mart ed property mayhave been considered for underwriting pmposes, in addition to the income of themortgagor from other somas. With respect to mortgaged property consisting ofvacation or second homes, no income derived from the property generally willhave been considered for underwriting: purposes. Xn the case of certain borrowerswith acceptable payment histories, no income . will be required to be stated (orverified) in co=aection with the loan application.

Based on the data provided in the applipation and certain verification sfrequired)a determ ination is made by the original leader that the mortgagor' s monthlyincome ("ifrequired to be stated) will be su inient to enable the mortgagor to meetits monthly obligations on the mortgage loan and other expenses related to theproperty such as property taxes, utility costs, standard hard insurance and otherfixed obligations other than housing expenses. Generally, scheduled payments ona mortgage loan during the first year of its term plus taxes and insurance and allscheduled payments on obligations that . extend beyond ten months equal no morethan a specified percentage of the prospective mortgagor's gross income. Thepercentage applied varies on a case by case basis depending on a number ofunderwriting criteria, including the LTV ratio of the mortgage loan. Theoriginator- may also consider the amount of liquid oriels available to themortgagor aim' origination.

The mortgage loans have been originated under "full" or "altetiative," `reduceddo +on," "stated imoinclstated assets" or "no inaometho asset"programs. The "alts native,„ "reduced," `tee urcome/stated asset' and "no

income/no asset" prog s geanerally require either alternative or lessdocume [tation and verifitation than do full do station programs whichgenerally require standard Fannie MaefFreddie Mac approved forms forverification of incomelemployment, assets and certain payment histores.

Generally, an "alt ive" docum enntation Program requires informationregarding the mortgagors MICOM (i:e., W 2 fomas, tax retu¢ns and/or pay stubs)and aseu (:e., b tints) as does a "fall doe" loan, howev r, alternative

forms of standard verifications are used, Generally, ureter both *%C' end"alternative" d0 tioa programs at Yeast one year of inwme dommwa1at'k iis provided. Genneally, under a "reduced documentation" prog r oa, either noverification of a mortgagor's stated some is undertaken by the originator or no1 fication ofa mart or's awts is undertaken by the originator. Under a

"slated l momrJs ed 8ssets" program, no verification ofei r a m or's

Mme oI a mozt oi's assets is tnmdertaken by the on tator alt hough bothincome and assets we stated outhe loan application and a" easonableness test" isapplied. Genetaliy, under R"no incomth o asset' program, the mortgagor is notrequired to stile his or her income or.assets and therefize, no vedtcation of suchmortgagor's income or ash is undue by fire originator. The.underwriting

:26

for such mortgage loans may be based primarily or entirely on the estimated valueof the mottgaged pmpetty and. the LTV ratio at origination as. well as on thepayment history and credit scam The adequacy of the mortgaged property as

security for repayment of the related mortgage Joan v gene lly have been

determined by an appraisal in amordance with pre establisbed appraisal pm ureguidelines for appraisals established by or acceptable to the origi r. Allappraisals confoun to the Uniform Standards of Professional Appraisal Practice

adopted by the Appraisal Standards Board of the Appraisal Foundation and mustbe on forms acceptable to Fa nze Mae and/or Freddie Mac. Appraisers may be

staff app isers employed by the originator or independe t appraisers selected in

accordance with pre established appraisal procedure guidelines established by the

originator. The appraisal procedure guidelines generally will have required the

appraiser or an agent on its behalf to personally inspect the property and to verify

wbetter the property was in good condition and that construction, if new, hadbeen substantially co npleted. The appraisal generally will have bow based upona market data analysis ofrecent sales of comparable properties and, when deemedapplicable, an analysis based an income generated from the property or a

replacement cost analysis based on the current cost of constructing or purchasinga similar property. Under some reduced documentation programs, the originator

may rely on the original appraised value of the mortgaged property in connectionwith a refinance by an a fisting mortgagor.

See Residential credit Loans, InC.,, January 23, 2006 Fomi 5-3, at 13-16; see aW, BALI,March : 3, 2006 Form S-3/A, at 12 16; RALI, April 3, 2007 Form 8.3/A, at IS- 21.

55. The stag in the preceding mph contained misstatements and material

omissions including in connection with the underwriting of the collateral mortgages As set forth

below, a material portion of tkhe underlying collateral for the BALI Certi.ficstes originated by

I were not in accordance with the stated credit, appraisal and =derwrit standards.. set

forth above-

56. Specifically, the Registration Statements set forth Expanded Underwriting

Criteria in eoui tion withwed Underwriting guidelines vvbieh the Company claimed to

increase the.probabil ity of approving loans for borrm wars with good credit scores and t who

were more likely to not de&dt on the loans:

27

Thewed Criteria iiortgage Program

Residential Funding Corparatioies Expanded Criteria. Program is designed for

borrowers with pod credit who may have difficulty obtaining traditional 5zanciug

due to loan characteristics, such as LTV ratios higher than 80%, o pancy of the

mortgaged property or type of mortgaged property, or borrower cb .cteristies

such as self-employment. The specific underwriting-standards with respect.-to the

mortgage loans purchased pursuant to the Expanded Criteria Program will in most

cases conform to those published in Residential Funding Corporation's Expanded

Criteria Seller Guide as it applies to the Expanded Criteria Frogmin. or Seller

Guide, as modified from time to time. The applicable undo-writing swindards are in

most cases less stringent than underwriting standards applicable to mortgage loans

utiginated under other first mortgage loan purchase programs such as those rim by

Fannie Mae or Freddie Mac or by the depositor's affiducte, Residential Funding

Corporation. for the purpose of collateralizing securities issued by Residential

Fun g. Mortgage urities I, bac. For example, the Expanded Criteria Program

may include mortgage loans with higher LTV ratios and larger principal balances,

mortgage loans sad by smaller or larger parcels of land or by investment

properties, mortgage loans with LTV ratios in excess of 80%n that do not require

primary mortgage insurance and mortgage. loans made to borrowers who are self-

employed or are not recurred to state their income-Me applk bll under citing

standards .are revived .based on. charging eond tons in the residential ntnrlgsge

market wrd the mark& for the deposdor's mortgage pars.-through ceroftcaWs

and may ulo be wahwd by Raid xtW FUn&ng Corporation from to U

The p> pectus sup*=ntJor each series of c& tes .ceured by mortgage

loans purchased pursuant to the Expanded pia Program will describe the

general. underwriting m7ak appiieable to such mortgage loans, as well as any

material changes to the g ral standard deededabove.

A portion of the.morWge loans typically will be reviewed by Residential Funding

Corporation or by a designate . third party for compliance with applicable

' u derwriting criteria Residential Funding. Corporation may conduct this review

using an automated underwriting systew. Sac "(Automated Undawritbzg" below.

Any determination ofundying eligibility using an automated system Will only

be based on the inform ation "ftnd into the system and the on that the

system is programmed to review. See "Underwriting Policies'' above. A portion of

the mortgage loans will. be purchased in negotiated transactions, which may be

governed by master commitment agreements mlating to ongoing porous of

mortgage loans by Residential Funding Corporation or the designated seller. The

sellers who sell to Residential Funding Corporation or the designated, seller

pursuant to master commi. agreements will represent to Residential Funding

Corporation or the did seller that the nonage laws have been origitated

in accordance with underwriting standards agr=4 to by Residential FmAng

Corporation or the designated seller, as applicable. Some other mortgage loans will

be purchased from F anded Criteria. Program Sellers who will represent to

Residential. Funding. Corpnxation or the designated seller that the mortgage, loans

28

were originated u nder.undarwriting standards determined by a mortgage -ins ncecompany or thud-pay origination system acceptable to Residential FundingCorporation or the designated seller. ResideWal Funding Corporation or thedid seller may accept a cerfiflohon from an insurance company as to themortgage loaifs insurabUity in a mortgage pool as of the date of certification asevidence of the mortgage luau conforming to applicable undmwriting standards.The certifications will likely have been issued before the purchase of the mortgageloan by Residential Funding Corporation, the designated seller, or the depositor:

4utarr ed Underwriting

In recent years, the use of automated undawriting: systems has becomecommonplace in the residential, mortgage market Residential Funding Corpowtion

evaluates many of the mortgage loans that it pi=hases through the use of one ormore automated underwriting systems. In goal,. these systems are programmed

to review most of the information set forth in Residential Funding Corporation's

Seller Guide as the underwriting criteria necessary to satisfy each and itiq

program. In the case of the F deed Criteria Program, the system.may makeadjustments for some c prating factors, which could result in a mortgage loan

being approved even if all of the speei.fied.nnderwriting criteria in the Sella ' Guide

fnr that underwriting program are not satisfied.

In some asses Residential Funding Corporation enters iufozmation into the.automated underwriting system using documentation delivered to Residential

Funding Corporation by the mortgage collateral seller. In this situation, each

automated review will either generate an approval ora recommendation for Anther

review. Most apgmved mortgage loans will not receive .any additional review of

their credit compon ts. Iu the cue of a recommendation for further view,

and ting pasonnel may perform a xnamal review of the mortgage Icondocumentation before Residential Funding Corporation will accept. or reject themortgage loan. For most mortgagee collateral seller Residential Funding

Corporation will conduct a limited review of the mortgage loan do on. If

that united review does not detect any material deviations from the applicable

tmderwriting crit a, Residential Funding Corporation wilt prove that mortgage

loan -for purchase.

In other cases, the mortgage corral seller enters the information directly into theautomated underwriting system. Mortgage loans that have been approved by the

womated , g. system, and submitted to Reside2dial Funding Corporation

for purchase may be revii to verify that the infommation entered by the

mortgage caHawal seller accurately reflects information wed in theunderwriting domuatiffion. For most mortgage collateral sell, ResidentialFunding Corporation will verify the accuracy of the information with respect to a

sample ofthatmortgage collateral seller`s mortgage looms.

29

Because an automated underwriting system will only consider the information thatit. is programmed to review, which may be .mare limited than the information thatcould be consider in the course of a manual review, the results of an automatedunderwriting review may not :be consistent with ' results ofa manual view In

addition, there could be propm=ing inconsistencies between an automatedunderwriting system and the u nderwriiing cxiteda set forth in Residential FinadangCorporation's Seller Guide, which could, in turn, be applied to numerous mortgageloans the system reviews; We cannot assure you that an automated underwritingreview will in all cases result in the same d uination as a manual review withrespect to whet s' a mortgage loam satisfies Residential Funding Corporation's

de°rwriting criteria.

See Residential Accredit Loans, Inc., Janus y 23, 2006 Farm 5:3, at 16-18; see also RALI,March 3, 2006 For= 5-31A, at 16-17; RALL April 3, 2007 Form S-3/A, at 2.1-23.

57. The statements in the preceding paragraph cmUined. misstatements and material

omissions including that "credit risk" and "quality Contol"we materially disregarded, whether

m anualIy or via mod fjring:ta criteria of the automated syslern, in favor of generating stf'icient

loan volume to complete the massive Certificate securitizations as alleged herein and as set forth

below.

58. Each l ing Pros sus, which ineogo ate the language of the Registration

Stat^ set forth the applicable policy for granting ` exceptions" to certain I wers that did

not meet the applicable underwriting standards,.

. ,ceplions. As. described above, the foregoing. categories and criteria areguidelines only. on a case by c basis, it may be d ined that an applicantwarrants a debt se iicee-to-incomeratio exception, a pricing exception, a loan-to.-value ratio a eption, an exception 1 certain requires of a part r riskc ryr etc. An exception may be allowed if the -application reflectscompensatig factors, such as: low loan to-value ratio; pride of ownership; ainaximuum of one 30 day late payment on all mortgage loans during the last 12months; and stable employment or ownership ofcurrent residence offour or moreyears. An exception may also be allowed if the applicant places a down paymentthrough escrow of at; least 20% ofthe purchase price ofthemortgaged property orif the new loan reduces the ap icsnfa monthly aggregate mortgage payment by25% or more, Accordingly, a mortgagor may qualify in a more favorable risk

category than, in the absence of compensating f`actors,, would satisfy only thecriteria of a. less favorable risk category. It is expected that a substantial portion of

the New Centurymortgage lows. will represent these kinds of exceptions.

30

(1d, at 5-32-33).

59. The statemcnis. in the preceding pauragraph contained miss, •e,ts and mate

onions, including that the ".guidelines" for teeing eptions ww a tedafly disregarded

in favor of gmerating s f do nt loan volume to complete the massive Cerhfcate. securitizatons

as. alleged berein and as set forth below.

The Prospectus Stated That The Price ofThe Bonds Wre Tied To Credit R.atnu s

60. The Certificates were rated . by the Eating Agencies, which purported to take into

accmint, Titer al u, the mzdmwri ing .standards used in oriemfing the imdearlying mortgages to

address the likelihood of the .receipt of all dlstribufiona on the mode loans by the

Certifitcateholdezs:

RAThi GS

It is a condition of the issuance of the Class A. Certificates and Class XGar Ifi that they berated "AAA" by Standard & Poor's, a division of. TheMcGraw-Hill Companies, Inc., Standard.. Poor's or S&P, and "Aar" by

Moody's Investors Sex-vim Inc. or Moody's. It is a catzdi1ion ofthe issuance ofthe Class M-1, Class U-2, Class M-3, Class M-4, Class M-5 and Class M-6

Cerrtifeates that they be ram not to nr than "AA+," "AA.'O"AA ,f7 "Al"

` E+" and "EBB-" by Standard & Pool's and "Mi,"'a2,"

'Aa3, "AZ,W

"Baal" and by Moody`s, respectively.

standard & Foor's ratings an mortgage pass-through eertifirates address thelikelihood of t e receipt by mfiffiWxholders of payments required under thepooling and dicing agreement Sundarid & Poor's ratings time intoconsideration the credit quality of the mortgage pooL st ructmal and legal aspectsassocia#gd with the certificates, and the extent to which the payment dam in themortgage pool is ate to make. payments required under the Bert es. .Standard & Poor's rating on the certificates does not binder, constitute astatement regarding frequency of prepayments on he mortgwge See "CertainYield and Prepayment Considerations" in this prospectus supplant The ratingsassigned by S&P's to the Class X Certificates do not address the likelihood ofcollection of prepayment charges. The rating on the -Residual Certificates onlyaddresses the retarn of its Cep"icate Principal Bala= and interest on theResidual Ce eates at the relatedpass through raft.

31

The rating signed by Moody's to the offered certificates address the likeihood

of the receipt by the offered certificatehoIdexs of all distributions to which they

are entitled tinder the pooling and servicing agreement.Moody's raUngs reflect its

analysis .ofthe riskiness of the mortgage IQ= and the stru=e of the transaction

as described in the pooling and servicing agmement The ratings assigned by

M.oody's to the Class X Certificates do not address the likelihood of collection of

prepayment charges. Moody' s ratings do not address the effect on the certificates'

yield attributable to prepayments or recoveries on the mortgage loans.

61. Ac2cordingly, the Certificates were assigned the following initial Ratings:

k

RALI 2606.4 001 Cer caterImCiai Cerkific.ate Ratm

Gds. S&P mood 'sIAI AAA Ana1A2 AAA Aa1A1 AAA AM2A22A

AAA Ada

2A3 AAA Ana3AI AAA Aaa

3A2 AAA Aaa3A3 AAA Ada

MlM1 AA+ Aal

AA A

M33M

AA-

a3Aa3

A AZMS BBB+ Baal

M6 BB-S Baa3

RALI 2006-QO2 Certificates

clan S&P MODIVSAl AAA Aar.A2 AAA AgraA3 AAA AaaM1 AA+ Aal,M AA Aa2M3 AA- Aa'

M4 A+ AlM5 A A2M6 A- A3

M7 BBB Baa2

W BBB- Baa3

32

RAU2006-Q03 Ca .satesinitialmate Raft

Class Mood 'xAl AAA AgaA2 AAA AaaA3 AAA AaaMl AA+ AaiM2 AA Aa2M3 AA- Aa3M4 A+ AlM5 A+ A2X16M6

A A3

MBBB+ B

7 BBB+ Ba_

RALI200 04 Ca-fificafesIi itial Certificate Ra "

Class. S&P Moo 'sIAI A AsaI2A

AAA Aar1 1 AAA Aaa

AAA Am2A3 AAA AarMI AA+ AalM2 AA AW2M3 AA. Aa2M4 AA- Aa3M5 A+ AlM6 A+ A2M7 A A3M8 BBB+ BaalM9 BBB BaalMID BBB- Bal

Ri 2006-WS CertificatesWI CertifeateRL -

C s S&P Mop 'sCAA AAA Aaa1A2 AAA AsaIA3 AAA Aas2A I AAA A2A2 AAA A23 AAA

saAaa

33

r'

V

v ^ ^--e L'r1

5l

MU IV I

m rnMrn M.

kid

2 IN

4

GMAC, rating agencies dramatically downgraded many of the RALI Cekti&ates whose value

was based on leans originated and serviced by t T. In addition, one rating agency wwned that

ResCap would be a candidate . for immediate bankruptcy without a Massive ikon of cash or

completion ofan CxCbW a offs.

69. Fier, ResCap, in early May 2008, offered investors as tittle as $0.Z0 on the

dollar'to exchange or buy-back X14 billion in bonds in order to further stave offbankruptcy.

70. Ilerfter, still in dir, iced of capita) and still hemorrhaging . cash as a result of

their subgrime expo, GMAC announced a $60 billion ragitalization of ResCap and its

subsidiaries, inchiding HTN. In reVonse to this news, Moody's downgraded GMAC's edit

rating and the ratings on manynfthe RALI Cedifictes, citing that the "outlook is negative." As

set forth below, this ledto addiliona. downgrades by the rating agencies.

71. Most recently, a rding industry news reports, GMAC has disclosed its plans to

shut dow its retail mortgage loan origination business, cutting over.-5,000 jobs at Res.Cap and its

snbsidiaiies. Moreover, GMAC announced that all OM.AC Mortgage retail o1fices were being

closed, and that Homecomings will "amse all loan originations through brokers." E tially,

the only retail mortgage origination that would continue to operate vier ResCap would be its

phoneirinternet lending platform known as "Di'Tech." Up to 3,0DO jobs weiv, to be cut

immediately and the Company expected to incur up to $120 million in charges relating to. the

changes.

GSC Cores Under Iavestization By' The VBI And SEC

72_ GSC played a preminent role in rife and fall of the U.S. subprime mortgage

market. According to industry rewftrJ4 Goldman Sachs was one of the top ten sellers ofU.S,

collateralized mortgage banked securities between .20.05 and 2007, selling over $100 billion of

39

suc i securities during that time, period. Moreover, is the midst of the U.S. mortgage crisis that

has plagued the country since early 2007, USC profited over $4 billion by betting on the. collapse

ofthe U.S. subprirue market and short selling billions of dollars ofmortgage backed securities.

73. On January 30, 2008, the FBI announced a joint investigation into 14 companies

.in the vestuent Wig, undmwiting and mor+ P_ loan industry. GSC was nwed as one of

the companies in the investigaflcra that was responding to subpoenas sued by sous

governmental agencies regarding its origination, underwriting and servicing. practices in

connection with the U.S. subprinae housing market. The investigation centers amp whether

GSC; as a seller ofsecurities backed by subprime mortgage loans, failed to disclose to investors

and rating agencies that some loam did not meet minimum underwriting standards.

74. In cannecti with the 2006-Q0I, 2006-QO2, 2006-QO3,, 2006--Q.O6 and 2006-

QO10 Offerings GSC failed to conduct meaningful due. diligence, including in co on with

the undenwriting standards used to originate the Certificate -doIlateral.

RBS Comes UnderInvestigation For Its RoleIn The Collapse of The8ubprime Market

75. RB S CCree ¢ich Capital played a prominent role in rise and fall of the U.S.

subptime mortgage market Siren 1987, IBS Greenwich Capital has-helped mortgage leaders

issue more than $400 billion in assetbacked securities As an underwriter on transactions

involving more than $193 billion ofsecurities issued in MN, RBS Greenwich Capital ranked as

the industry's No. 1 underwriter of sub-prime mortgages and the top asset-backed sales

orgaairation.. In. 2005, IBS Greenwich Capital ranked No. 2 in the top ten subprime MISS

un tars. In both 2OD4 and.: 2005, RBS Crcee twit h Capital ranked No. 3 in the top ten non-

agcy MBS underwiiters.

40

76. On March 8, 2008, it was reported in a Stamford Tribune article entitled "RBS

Arm Involved in SEC Fnquiry,°" t RB5 carifirmed that its Greenwich Cap ttal unit is part of a

SEC. probe into the collapse of the subpriue market and has been order to lum over financial

documents to. the SEC regudung, inter alia, odginations ofmortgages. accozmtur , due diligence,

sales and insider trading:

Feb 08, 2008 (The Stamford Advocate - McClatchy-Tribune Lufonnatian Services

via CQMTM The Royal Salk of Scotland has confirmed its Greenwich

Capital rust is part of a. Secures Exchange Commission probe into the

collapse ofThe srrbpr mortgage market-

The SEC has opened about tba'ee dozen inquiries, -including . those that involve

major investment banks, ar ming to recent published reports.

Greenwich Cpita1 a top &suer ofmortgagebacked securities in the subprime

marl're is.basedL.on Steamboat Road in Greenwich. unit was ar *ed by the

SEC to hand over some of 1/sfinancial documents, but RBS officials would not

comment on the probe beyond that

"We will fully coops ate with the SEC or-any regulators,- said Carolyn McAdam,

a spokeswoman for RBS global headquarters in the UnitedKingdom.

The . SEC will not cones or deny any of the companies it is investigating, a

spokesman for the fission said this weed,..

The SEC. opened its investigation in Tune, launching a dozen investigations into

collateralized debt obligations linked to the plummeting value of subprime

mortgages.

The SEC is said to be looking at or atlow of mortgages, acconnft, due

di gence sales ofsecurities and inslifer trading.

Recent published reports cite sources claiming the SEC investigation now is

moving at a mom vigorous pare.

(Emphasis added).

77. Further, in connection with the SEC probe into the collapse of the subpdine

market; as set forth above, on March 8, 2008, RBS con med that its Greenwich Capital unit

41

had been ordered to turn over fin irwial documents to the SEC regarding on shone of

mortgages, accoiu , due diligence, sales and insider iding.

78. In connection with the offerings, RBS failed: to conduct meaningful due

diligence, including in connection . with the underwriting staudaxds used to originate the

Cetti$cate collateral.

UBS Cores Under LXLVest[aatfcm

79. On December 10, 2007, UBS announced that it had incurred massive losses in

connection with the ailing subprhne markets in the United States,. resulting in it taking a $10

billion write-down in its mo ,ge:backed related invostnaents, and selling over $11 billion ofits

mortgage-backed invesirncndts to the Govt of Singapore and Afiddle-Faster investors

with the hopes ofrecapitalizing.

84. Qn. December 24, 2007, as reported on 1ht Dow Jones N swire, Swiss

regulators announced that the Swiss banking department charged with oversight of the Country's

investment hanks, would be inida6bg a.full investigation into how UBS incurred Such massive

losses in connection,with risky U.S_ subprime and alt-A home loans.

8L By as early as the middle of January 2008, VHS was already disclosing to

investors that it expected additional losses in the fim quarter of 2008 due to the Bb's -U.S.

subprime mortgage exposure, mainly due to an additional $43 billion in write-downs of

mortgage-hacked and related secure'ties.

8. On April 25, 2008,. UBS pressed Swiss banking regulators with a detailed and

explicit 5.0-page repot rich was censored for public release, detailing how the l3ank lost such

massive amounts of shareholder value and money so quWy by investing in U.S. subprine

mortgage product-, One of fhe many conclusions the report reached was that UBS, just like

42

i

RALI 20072 CertificatesInitial Certificate Rating

Class S&P mood 's

Al AAA AmA2- Aaa

A3 AAA Ami. AA+ AaaM2 AA Aal

3 AA- Aal

M44 A+ Aa2M A Ate.

M6M6 A

BBB±Al

A3

mg BBB± Baal

M9 -B313- Baal

RAM 2007-003 CertificatesInitial Certificate Rating

mss S&P Moa 's

Al AAA Aaa

A2 AAA AnaA3 AAA Ana

M1 AA+ AaaAA Aal

1113 :AA Aa1.M4 A+ Aar

M5 A Al

M66

A AZM BBB+ A3

mg BBB Baa2

to BBB- Baa3

RALI 2007 O4 CertificatesXuitW CutMeate Rating.

Class S&' Mao 's.

Al AAA Aaa

Ala AAA Ana

A2. AAA Aa4

A3 AAA Aft9

1^1l1 A+ Aaa

!2 AA Aa1

M3 AA- AalM4. A+ Aa2

36

M5 A Aa3M6M

A- Al7 BBB+ ,A2

-Mg BBB A3M9 BBB- Baal

R x 297-205 Certificate&Initial RatIM9

CIEs S&P Moc s

A AAA AaaM3 AA AaZM2M

A3 BfB+ Baal

M4 BBB BaalMs BOB- Baa3

62. The statements contained the preceding paragraphs - and the initial ratings

t selves - contained material misstatements of fact and:omitted facts necessary to make the

facts s'tee'd t rein not mist ng Since the RWwg Agencies issued the Iatings based on an

outdated credit rating methodology designed in or about 2002 and because the Rating Agencies

presumed that loans were of high credit quality issued in compliance with the stated

unnerv ing guidelines when, in fact, RALI and HFN had systematically disregarded its stated.

Underwriting (3uidelines, as set forth herein.

Disclosures Relates To N s Deficient Lending Fraefim

63. HN is a wholly owned subsidi of Residential Capital Corporation

e7twCap"). Rest is the Iargest privately held U.S. home lender, and. is owned and operated

by GMAC Financial Services. ResCap is one of the top U& lenders which offers home loans

through several businesses, the largest of which is HEN. H1 ope ed as one of the moon's

largest and most successful mortgage 5naace companies until its massive exposure to subprime

37

and alt-A mortgage loans placed the company in the midst ofthe growing crisis in United States

mortgage lending in 2007 and 2008.

64. As the real estate market in this icau ry softened and interest rates increased,

ResCap, through its subsidiary HFN, kept pushing everincreasing sub-prime mortgage loan

volume through its system by loosening the Company's underwriting praeti.cesand intmducing a

growing percentage. of higher risk mort products, including adjustable-rate, inter--only

lows and "stated income" Joao, where aven, W-2 wage == did not have to bvther'v ing.

their stated income levels.

65. Sim the Offerings were consummated. P.PsCap's and ms's true deficient

lending practices have come to light, which loo t ResCap to the brink of defaulting on its

obligations and declaring bankruptcy by May 2008,. only to be- rescued by its Parent Company,

GMAC to the tune of a $60 billion refinancing initiative announced June 4, 2008.

66. In early 2008, IIFN was named as a De ant in a nafion wide class action law

suit alleg among other things, that 19N violated state and federal laws in charging borrowers

various unwanted fees, costs and premiums connection with HFN's loan servicing.

67. Moreover, despite three separate major cash infusions by GMAC into ResCap and

N prior to April 20G8,. ResCaq), as the largest private loan origination company in the Country,

was on the brink of banbmVtcy as a result of six strcdght quarters ofrecording Ames, totaling

over $53 billion- Such losses vme bringingR sCap dangerously close to violating several of its

loan agreements. -- which included $4.4 billion in obligations and a $1.7 billion tern loan coming

due in 2008, in addition to a minimsiwow covenant requirement of$5.4 billion.

68. On the release of this news regarding Romp's state of capital reserves, and

baying come less than a month since ResCap received a $750 million r, t line from its parent

38

many of the other Underwriter Defendant banjo herein, was that UBS. was acquu ng huge

portfolios of U.S_ subprime assets fxom failing businesses that t .e Bank was .acquiring in early

2007. Such portfolios vA= being acquired by investment banks such as UPS who did not have

the-proper risk controls to monitor and equate the actual risk and benefits involved,

83. la response to the release of the report, mortgage-rel ated securities that had been

under wriften and/or issued by UBS were downgraded by U.S. rating agencies, specifically the

2006-QU5 and 2006 Q07 series:

84. On May 7, 7,008; just after the release ofthe report . to the Swiss regulators, UBS

announced a first quarter 2008 loss of $11 billion, and its plan to cut over 5,000 jobs at t Bank.

Having; incurred over $37 billion in U.S. mortgage related write-downs, UBS arm unwed that it

was exiting the U.S. housingma*A complewly.

85. N erWess, in August 2008,,. UBS uaced significaotllosses in the second

quarter of2008, resulting from $5.1 bill ian. in U.S. mortgage related write-downs.

86. In connection with the 2005-Q05 and 2006-QO7 Offerings, UBS failed to

r duct meaningful due d. lgence, including in connection with the underwriting standards used

to Originate the Certificate collateral and Wed to maj^ the proper risk controls to do so.

Cam' Failure To Adhere To UnderwritingGuidelines Result In Massive Warite-Dowwns

87. CSS played a key role in the subpxirae mortgage market and its v cc llapse_.

According to. industry research for 2004-2005, CSS was the number three U.S. coltat izod

mortgage-hacked securities loan contnln r and master servicer; among. the top five partitipcats

in leveraged loan syndications and U.S. collateralized debt obligations; and one of the foremast

U.S. assetbased lending lead arranggene

43

88, CSS' good fortune in the mortgage backed securities bu ess didn't Last long.

CSS, beginning in 2006, kVU to experience an exponential increase in their mortgage default

rate. Tellingly, a large percentage ofthe defaults were occwT*ng, not after rates: were ratcheted

up by way of an adjustable mortgage, but instead within or around thirty days after the

mortgages were approved - on either Ent or second payments and long before any adjustable

.kicked up the rates on t mortgages.

89. Having recognized the gross inadequacy of the mortgage eolla etal that they had

pe h d from various leaders around the country, CSS, through its wholly owned subsidiary

DLJ Mortgage ("DLI") filed several lawsuits in New York Federal District Court, Southern

District. throughout 2007, against the lenders from which CSS had purchased the des;

DLJ Mortgage Capita4 Inc. Y. Sunset Direct Lendin& LAC, at a!., Civ. No. 07-01418, filed February 27,2007;

DLJ Mortgage Copitaa Loin v )Jght-e way Mortgage, Ina. Civ. No: 07-02791,filed April 6, 2007;

DLI Afiwrgap Cupitat, Inc v. Sea Breeze Financial Services, Inc., Civ. No. 07-

03747, filed May 11, 2007;

DII Mortgage Capful Inc. Y. Cann Frnancial Group, Inc-, fir. No. 07-03746, filed May 11, 2007;

DL.T Mortgage Capital inc. v Horne . Loan Co poratim Civ. No. 07-04167, filedMay 29, 2007;

DLJ Mov i e C,apitaC Inc. v Eastern American M ge Compw y, Civ. No.07-07933, filed September 10, 2007.

90. These lawsuits asseited by CSS alleged breach of contract for failure to

repurchase looms due to early Payment defaults; failing to repurchase loans arising out of

breaches ofdoss and v unties; and failing to reimburse CSS, or DLI, for losses

incurred due to early payment defaults,

44

91. Each agreement that DLI entered into with the respective mortgage lenders

contained clauses which required the lenders to repurchase: the mortgage obligations or

reimburse DLI for losses in the event that defaults occurred within a certain time pear"od afkr

DLPs original purchases.

92. By way of example, according to the Complaint filed by DLT against Sunset

Direct Leading, LLC, UL] incurred over $20,000,000 in losses due to defaults on loans

purcha from Sunset Direct between late July 2006 and early January 2007.

93., As the mortgage crisis in the United Smites grew over the fast half of 2007, the

problems facing DLJ spread throughout CSS and its affiliates, ultimately resulting in massive

write-downs and losses onihe company ' s underwriting. leading and investing arms, all ofwhich

were intricately involved in the mortgage backed securities Wsiness.

94. On October 1 ? 2007, CSS annvanced that its financial results . have been "hurt by

rat market events" ink the U.S. housing market Analysts immediately took this

announcement as a `profit warning for the Company's third quarter results.

95. On or about November 1, 2007, tae. Associated Press reported that CSS suffered a

33 percent decline in earnings due to writ owns related to the U. S. housing market.

96. " *e-after, the Associated Press, on or about February 12, 2009, reported that

CSS had announced that the Company's ftmth quarter profit declined 72 percent due to write-

downs of $130 billion on debt and leveraged looms.

97. On or about February 20, 2008, an article published in the Now York Post

rted that CSS was forced to take an additional $2.85 billion te-down resulting from the

use ofoutdated pricing Mmnation in connection with the valuation of their US. mortgage

45

securities. On the same day, CSS anno nced that the additional write-downs and use ofoutdated

pricing . models resulted in an internal investigation of a handful of its tsnders.

98. In an April 24, 2008 Associated Press article, it was reported that CSS was forced

to incur write-downs due to the U.S. mortgage crisis of over $5.30 billion, resulting in a net loss

for the first quarter 2008 of over $2.D billion.

99. Not long after, in an article published by the Amexican Banker, it was disclosed

that CSS' losses in the first quarter of 2008 were maixily* due to CSS' losses resulting from

massive write-downs related to the U.S. mortgage meltdown.

100. In conaaection with t 2407-QO1 Offering, CSS failed to conduct meaningful due

diligence; including in connection with the underwriting standards used to originate the

Certificate collaterai.

Deutsche Bank Securities' Failure To Adhere To Underwriting

Guidelines Result In Massive Write-Downs aid Federal Inyestimafions

101. DBS also played a key role in the subprime m ap mkt and its ultimate

collapse. DBS, in its 2005 Mtnuaal Review, stated that it had "coxmlidated its position as a Top

3 player in the global. Commercial, Mortgage Backed Securities market and in Real Estate CDOs.

Deutsche Bank was the No. 1 Commercial Real Estate Bank in Euromoney's ix al Real

Estate: pall." However, like Wachovia and RBS, DBS played a role in the downf of those

markets. DBS r forced to write down $3.1 billion in subpirime-related investments in the third

quarter of 2007. In late April 2008, DBS marked down EUR 2.7 billion (apprnx;^y $6

billion) in connection with. "levee loans and loan commitments, commercial real estate and

residential mortgage-backed s cities."

102. Furthermore, DBS also was caught up in governmental investigations of the

collapse of the subprime market. On December 7, 2007, as reported in The Wall Street Journal,

46

the office of the New York State Attorney General served subpoenas to several Wall Street finns

- including DBS -- s icing infotmalion related to the packaging and selling of debt tied. to high

risk mortgages. According. to the toumal, "Tf a review ... is. examining how adequately the

invest ent banks reviewed the quality of mortgages before packaging them into products that

were then sold to investors... The subpoenas also requested infoimaticn about how the debt was

pooled into securities, including the bates'. relationship with creditnatWg fem."

103. In connection with the 2007-Q02. O .g, DBS conducted substandkd and

deficient due diligence, including in connection with. the underwriting standards used to originate

the Certificate collateral.

Disclosures of True Deficient Lending PracticesUnderwriter Lapses and High Certificate CollateralDelinquency Rates Remelt in Certificates Collateral ])awn2a-ades

104. As set forth above, throughout early 2004, O AC in an attempt to bolster

outlook on ResCap's financial condition, provided three massive capital infusions its subsidiary

in order to quell doubts as to its viabiliity. Such infusions did not slow.the decline of the large t

privately held U.S. ho= lender, w.}d on April 18, 2008, IRrsCap borrowed an additiotm . $468

million from the Company's credit line from GI C. On April 24, 2008, S&P lowered its

nongs on ResCap by two. not from. B to CCC+. In motion, Moody's expressed its concern

that ResCap would falter On a $1.75 billion bank loan due to mature in July 2008 and an $875

million revolving: credit facility that umtures in June 2008. Prior to April 24, 2008, Moody's

rating on kesCap was Caal, vylicb coiamctes debt that is -subject to very high credit risk."

K,.105 . Over these concerns, between Apes and August 2008, Mvody's and S&P, and

Fitch in regards to the 2006-Q07 Certificates, revised . their ratings on the BALI Certificate

4asm over the concern dat due to the massive writedowns and exposure to subprime mortgage

41

markets, I Cap would not be able to satisfy its financial obligations as they come due dm g

mmuner of 2009. TICSC down eS Were as fol.OWS;

RALI 2006-QOICertified"

Initial Certificate Rating Revised Certificate RatingClass 5&I Mood 's S&P Moots 'sIAi AAA Asp. AAA- n/c1A2 AAA Area BBB- Am-2A1 AAA Aaa AAA- nl'c2A2 AAA Aaa AAA- U102A3 AAA Aaa BBB- Aaa3AI AAA Ana AAA- n/c3A2 AAA An BBB- n/c

3A3 AAA Aaa BBB- Aga-Ml AA+ Aal BB Baa3

M2 AA Aa2 B BaZM3 AA- Aa3 CCC B2-M4 A AZ CCC B3-

M5 BBB+ Baal CC CaM6 BBB Bas3. CG Ca

RALI2006-Q02Certificates

Initial Certificate Eatta Rid Certificate RainClass S&P Moody's S&P Moo 'sAl AAA Aaa n/c n!c

AZ AAA Aaa n/c n/cA3 AAA Aaa n/G n/c

MI AA+ Aal n/C nfc

M2 AA Aa2 nlc A3M3 AA- A%3 nic 13=3M4 A+ Al n/c Ba3MS A AZ n/c B2_M6 A- A3 n/c - B2-MT EBB Baal BB B3_Mg EBB- Baa3 B Ca

R.ALL2006-Q03Certificates

Initial C"ficate.Ra'iu Revised Certificate RainCIass S Moody's 5&P Mood IS

Al AAA Aga n/c n/c

48

L 3 U Cy N ^.yi^ y4Q eg V Ca . ti G] C] ^+1 r^s N tn MV t^ V

v i^ Z] [3 U U' !] U V ("y V e) t] ..C3 U E^ i I ^]opol

oz m

^ ^^^ ^r m d b t^DO ^

Ll III LP III ... 11,

-LA

V Y1Ir

1

M4 A+ Al A+ CCC Ceal- B-

M5 BBB+ A3 BBB- CC Ca CCC

M6 EBB- Baal BBB CC Ca. CC

M7 BB &a2 BBB- CC Ca CC

r,

BALI 2006-QO1OCitieat

Initial Cer iI cate Rating Revised Certibcate RatiClass S&P Moody 's S&P Maud 'sAl AAA Aga AAA- nlcA2 AAA, Ma AAA- WeA3 AAA Aga AAA- n/c

Ml AA+ Aaa BBB Aa2

M2 AA Aal BB BaaIM3 AA- Aa2 B Baa3

M4 A+ Asa B Ba3M5 A Al B BI-M6 A- A2 B B2-M7 BBB+ A3 B B3-MS BBB Baal CCC Caa]-

NID BBB- BaO CC Ca

RAI1l 2007-QOl

Certificates

Initial Certificate Rati Revised Certificate Ratio

Clasp 5&P Moody's S&P Mood 's

Al AAA Aga nic a/cA2 AAA Aaa nlc a/cA3 AAA Aaa n/c WeMi AA+ Aaa n/c nlcM AA Aal n'c Aa2M3 AA- Ail AA- AlM4 A+ Aa2 A+ BaalM5 A+ Aa3 A Baa3M6 A- Al BBB- Ba3M7 BBR+ A3 B BI-M8 BBB+ Baal CCC. B2M9 EBB- Baal CCC B3-

RALU 2007-Q02Certificaf^

buiifial Cerd{icate Ratin: Revised Certificate RatingClass &P Moo 7s S&P moo 15Al AAA Aax n/c n/c

51

!Q0

CS la ^7 G7 Z] W i] O . ^] t] !7 +

lu0 %

L] i] i? U U iJ C7 t] ^ tY '^'^

M i i i

a^.

.!Q 544

fA

M8 BBB A3 BB 132-M9 BBB- Baal $B- $3-

RALI2007-QOSCertificates

Initial Certificate Rating Revised Certificate RatingGds S&P Moo s S&P M 'sA AAA Asa nlc ticM1 AA Aa2 n/c A2NU A A2 n/c BaalM3 BBB+ Baal n!c BalM4 BBB Baal nlc Ba3M5 BBB- Baa3 nlc $1-

106. As a result of these disclosures and the Rating: Agencies' reassessment of the

appropriate ratings to be assigned to the Certificates, . the value of the Certificates has

substantially collapsed. The Carpenters Health Fund's investment in BALI Certificates has

declined by over 95% - from $180,156.60 at t e time ofthe Oft erm8 to $9,072.00 at the time this

action was commend.

COUNT I

Violaion of Section 11 ofThe Securities Act(Against AU Deffendauts

107. Plaintiff repeats and realieges each and every all tioxx eontaused_abovc.

198. This claim is brought by PIaintiffpmsuantto ration 11 oftheSecurities Act and

asserted nn behalf of all other members of the Class who purchased or acquired BALI.

Certificates on or traceable to the Offe4ng.

109. Defendant RA :I is the registrant for the pigs and filed the Registration

St ems and Pmspe ses as the Ler of the RALI. Certificate s„ as. defined in Section

11(.a)(1) ofthe Securities Act.

110. The Individual Defendants were officers au/or directors of RALI at the: time the

Registration Statements filed in connection with the Offerings became effective, and at the time

53

0

cifthe issuance of the Prospectuses, and with their consent were iderdified as such therein. The

Individual Defendants are liable for the misstatements and omissions in the Registration

Statements alleged herein under Section 11(x)(1) ofthe Securities Act

t 111. 1> dants GSC, RBS, UBS, CSS DBS and GMAC:RPC served as the

Underwriters for the G$et'sngs and each qualify as such according to the .defiunition in Section

2(a)(I1) of the Securities Act, 15 U.S.C. § 77b[a)(11). As such, the Underwriter Defendants

participated in the solicitation, o€fering, and sale of the RA l Certify to the investing public

pursuant to the registration Statements and the Prbsgechses,

112. The Regis r tion Statements and the Pr s ses, at the time they became

effective, contairzed material misstatements of fact and. omitted facts necessary to make the facts

stated therein not misleading, as set forth above. The facts misstated and omitted would have

been material to a reasonable person reviewing the Registration Statements and the Fropecb=&

I13_ The Defendants did, not nnke a reasonable investigation and perfori due

diligence and did. not possess reasmable grounds for believing that the stag contained in

the Region Statements and P ospectuses were truer did not omit any material fact, and were

not materially misleading.

114. Plaintiff and the other Class members did not know, and in the seise of

reasonable di1'igence, could not have known of the misstatements and omissions contained in the

Registration Statements and the Pros ctusess.

115. Pleiri and other Class members sustained damages asa result of misstatements

and omissions -inn the Registration Statements and the Prospectise s, fi rwhich they are entitled to

compensation.

54

116. Plaintiff brought this action. within one year after the. discovery of the untrue

statzments omissions, and within tree years air the Offering-

COu NT II

Violation of Section 1Z(a)(2) of the Securities Act(%2ainst AD Defendant

117. P1_ intiff repeals and realleges. each a nd :every allegation contained above.

118. This Count is brought pursuant to won 12($)(Z) ofthe Securities Acton behalf'

ofthe Class, against all Defendants.

119. By means of the Registration Stat ne and Prospectuses, and by using means

and instruments of transportation amd communication, in irate ice and of the trails,

the Defendants Hugh the Offerings sold BALI Certificates to Plaintiff and other members of

the Class,

120. Defendants RALI, the RALI Trusts, the Individual Defer and the

Underwriter Defendants each suecessfiIIy solicited these purchases , motivated at ],eft in part by

their own fvmCwl ix rest. The Defendants each reviewed and. participated in drafting the

Prospeciuses . Through ensuring -the successM completion of the Offerings, the Underwriter

De&ndots obtained sub al underwriting fem.

121_ The Registration temp and the Prospectuses. at the time they became

effective, contained material misstatements offact and omitted facts necessary to make the its

stated therein not misleading, as set forth above. The facts misstated and omitted would have

been material to a reasonable person =viewing the stration Statements and the Prospeefiises.

122. tents as 'sellers,' owed to the purchasers of the RAALI Certificates.

including Plaintiff and other Class members, the duty to porn due diligence and make a

reasonable and diligent investigation of the statements conbbed in to Registration Statements

55

and the Prospectuses, to ensure that such statements were true and that there was no omission to.

state a material fact required to be stated in order to make the statemexfs contained therein not.

misleading. Defendants knew of, or in the exercise ofreasonable care should have known of, the

misstatements and emissions contained in the IPO materials as set forth above.

123. Plaintiff and other members of the Class pumhas4d or otherwise acquired

RALT Certificates pmuant to the defective Regs ration Statements and Prospectuses. Plaintiff

did notknow, or in the exercise of reasonable diligence could not'have known, of the untruths

and omissions contained. in tie Registration Statements and the Prospectusea

124. Plaintif, individually and rpresentatively, hereby offers to tender to Defendants

those se cities which Plaintiff and other Class members continue to own, on behalf of an

members of the Class who continue: to oven such securities, in return for the consideration paid

for those securities together with interest thereon. Class members who have sold their RAU

Certificates are entitled to resclssiona*y damages.

125. By reason of the conduct alleged herein, these Defendants violated, and/or

contgLled a person who violated Section 12(a)(2) of the des Act. Accordingly, Plaintifff

and Members ofthe Class who holdRA ,U C fcatea pn based pursuant and/or traceable to the

offerings have the right to rescind and recover the consideration paid for their RALI Certificates

and hereby elect to rescind and tender their MI Certificates to the Defendants sued herein.

Plaintiff and Class members who have sold their RAU C cates a entitled to msc onary

damages.

COUNTm

Violation of Section 15 of The Securities Act(Against Defendants RAU the R i1Trusts and the ndjv d al Defendants)

126. Plaintiffrepeats and realleges each and every allegation contained above.

56

127. This claim is Iron t by Plaintiffpixrsu to Section 15.ofthe Securities Act and

asserted on behalf of all Class members who. purchased or acquired RALI Certificates M" the

Offerings.

128. The Individual Defendants at all relevant times participated in. the operation and

management of BALI and the BALI Trusts, and conducted and participated, directly and

indirectly, in the conduct ofRALI and the RALI mists' business affairs.

129. As officers and/or directors of RALI, the Individual Dekndants had a dirty to

diss irate arose and truthful information in the Remotion Statements and, the

Prospscttses.

130. Defendant RALI is the Parent Corporation and sole owner of the ,I Trusts,

and a4 all relevant times participated in the operation and m ent ofthe RA.T I Trusts, and

conducted and participated, directly and indirectly, in-the conduct ofthe Trusts' business affairs.

131. As set- forth above, it is alleged that the Re on Statements and Prospeetrtses

issued in connection with the BALI Offerings contained . rial misstatements of fact, and

omitted facts necessary to make the facts contained therein not misleading, in violation of

Sections I laud 12 ofthe. Securities:Ant.

132. , Because oftheir positions .of control and au hority as senior officers and directors

ofRAU the Individ a1. Defendants were able to, and did, control the contents ofthe Registration

Statements and Pr tuses which coati d extol misstatements of t and omitted fixts

necessary to make the fizft sited therein not misleading . T Individual Defendants were

fber re "controlling peons" ofRALI within the meaning of Section 15 ofthe Securities Act.

133. In addition, bey of its sole ownership of the BALI Trusts and its control and

authority as Parent Corporation,. Defendant RALI was able to, and did, control the contents ofthe

57

Registration Statement and the Prospectus which contained material misstatmients of fact and

omitted facts necessary to nWm the facts stated theme not misleading . Defendant BALI was

therefore a "controlling person" of the RALI Tnusts within the meaning of won 15 of the

Securities Act.

134, Plaintiff and other Clans members puiehased BALI CeEtificat s issued pumutnt to

the Offerings. The Offerings was conducted pursuant to the Registration Statements and the

plospe cti]ses:

135. The Ran Statements and Prospectuses, at the time they became efrmtive,

co ined material misstatements of hwt and omitted f necessary to make the facts slated

therein not misleading. The fad misstated and. omitted would have been material to a

reasonable person reviewing the Region Statements and, the Pro. aes.

136. Plaintiff and the Class did not know, and in the excise of reasonable diligenee,

could not have known of the misstatements and omissions in the Registration Stets and the

Prospectuses.

137. Plaintiff and the Class have sustained . d sages as a result of the misstatements

and omissions of the Registration St rents. and the Prospectuses, for which they are entitled to

compensation.

138. Plainfiff trot this action within one year after the 'discovery of the untrue

statements and omissions,. and within three yeas after the Offerings.

5.

WIfEREFORE, Plaintiff prays for relief and jud nt, as follows:

(a) Determining that- this action is a proper clays action under CPLE Article 9;

(b) Awarding comp atory damages in favor of Plaintiff and the other

Class members against all Defmdants, ,jointly and severally, for all images sustained as a result

ofDefer' wrongdoing in an amount to be.proven at trial, including interest thin;

(c) Awarding Plaintiff and the Class their reasonable costs and expenses

incurred in this action, including counsel fees and a tpe t fees; and

(d) Such other and further relief as the Court mayAcm just and proper:

JURY TRIAL DEMAND

Plaintiff hereby demands a trial by jury.

Date.: September 22, 2008New York, New York

Respectfully submitted,

Joel. P. LammnuChristopher LomettiFrm*R SchirripaDaniel B. Reims

SCf10ENGOLD SPURNLAITMAN &LOOMEm , F.C.19 Fulton Street, Suite 406New York, New York 10038Telephone: (212) 964-0046Facsimile: (212) 267-8137

CowzreIfor Plaintiffcmdthe Proposed Cures

59

STJ REME COURT OF THE STATE OF NEWYORKCOUN'T'Y OF NEW YORK

New Jersey Carpe itexs He IIh Fund,. On Behalfof Itself and AU Others Similmdy Situated, I dex No.

Plaintiff,

Y.

Csreenwicn Cantai, un i InVestz enL Ban ,Credit Suisse Securities (USA), LLC, DeutscheBanc St=ties, Inc. and GMAC RFC Securities,

Defendants,x

RALY Series 2006-QOl Tvust^ RALI Series200&Q02 Tint, BALI Series 2006-Q03 Trust,RALI Series 2006-Q04 Try RALI Series2OO6-QO5 Trust, RAU Series 2006-QO6 Trash

BALI Series 2006-Q07 Trust, BALI Series

2006-QOIO Trust, BALI Series 2007-QUITrust BALI Series 2007-QO2 Tnist, BALISeries 2007-Q03 Try, RAT Series 2007-Q04Trust and RALI Series 2007-Q05 Trus.Deutsche Bank Trust Company Americas, U.S.

BankNa ivnal Association, Residential AccreditLoam Inc.. Bx es. P adi95 Da e.L. Olsen,Kenneth M. Dm=u% Ralph T. Flees, Lisa R.Lug , James G.. Jones, David M. Thicker,

James A Yon& Gotdmaon, SwIs & Co., RBS

VERIFICATION

60

(STATE OF NEW YORK )( OF NEW YORK }(COUNTYOF NEW YORK )

Frank Schirripa, being duly sworn, states that he is one of the attorneys for Plaintiff inthis action and that the foregoing complaint is trite to his own nowledge, except as to matterstherein stated onwon and bei and as to those matte he believes to . true; that theground of his belief as to A matters not stated upon his knowledge ate upon review of publiclyavailable infrmation filed with the United States Secuarities and F. rouge Commission, mediaand newspaper articles and in ation contained on the inteme't and that the reason vdiy theverification is not .madc by Plaintiff is that; PlaintiffNew Jersey Carpenters Health Fund is not inthe county where rlaintiwsattor ey has their office.

Prank Schinipa, Esq.

47 ^-No Public JAYP, SALIZ)M r

fir. ^ssJSwo;n to me before thisAZ &y of 7FCIt .2008

61

SLEP$EME COURT OFTHE STATE OFNEWYORKCOUNTY OFNEW YORK

xNew Jersey Carpenters Health Fwmdy On Behalfof Itself and All Others Similarly Situated, 1ndexNo.

Plaintiff ,

v.

RALI Series 2006-QO1 Trust, RALI Series2006-Q02 Trust, RAT. Series 2006-Q03 Trust,RALL Series 2006-QO4 Trust,. BALI Series2006-QO5 Trust, RALI Series 2006-QO6 Trust,BALI Series.2006-QO7 Trust, BALI Series2006-QOI O Trust, RALI Series 20071 Trust,RALI Series 2007-QO2 Tnast,1RAU Series2007-QO3 Trust, RALI Series 2007-QO4 Trustand BALI Series 2007.Q05 Trust, Deutsche BaneTrust Company Arnericas, .U .S. Banlc .NationalAssoc att n,.Ressidential Accredit Loans, Inc.,Bruce Parades, Davee L Olsen, Kenneth MDuncan, Ralph T, Flees, Lisa R. Lundsten,James G. Jones, David M. Bricker,James N. Yourkg, Goldman, Sachs & Co, BBSGreenwich Capital, UBS Investment Bank,Credit Suisse Securities (USA), LLC, DeutscheBank Securities; Iac- and OMAC RFC Securities;

Defendants.X

VERIFIED CONTLAINT

CERTIFICATION: I, Frank R Sohin ipa,. Esq. hereby certify that all of the pass that I have served,wed or submitted to the court in this drvoree action at not frivolous as defined in subsection (c) ofSection 130-1.1 ofthe Rulesofthe ChiefAdminerror of the

Dated: September 22, 20086 HOENCOLD SPORN LAI MAN &

L?MEM, P:C.19 Fulton Street Suite 406New York, New York 1003.8.Telephone: (212) 90-0045Facsimile: (212) 267-8137

Counselfor the Plaintiffand Proposed Class

MC-1

4UEDIrfIITIU SERVICE 69MPA.MY'

Notice of Service of Process

Primary Conti Kate HartmannResiderft Funding Company, LLCOne Meridian CrossingSufte 100Minneapolis , MN 55423

Copy of transmittal only provided to: Skylar Hanson

viii /ALLTransmittal Number..6088527Date Processed: 1 0103/2008

Entity: Residential Accredit Loans, inc..Entity Io Number 2600685

Entity Served: Residential Accredit Loans, Inc.

The of action: New Jersey Carpenters Health Fund vs. FIALI Series 2406-001 Trust

Document(s) Type; Summons/Complaint

Nature of Action: Other

Court: New York Courtly Supreme Court New York

Case Number : 08-602727

Jurisdiction served: Minnesota

Date Served on CSC: 10/02/2008

Answer or.A rance Due: 20 Days

Originally Served On: CSC

How Served: Personal. Service

PlanbWs Atloorner Frank R. Schilripa212-9"4046

Informailon cor1ained on this trartsn-taf 4arm is for record keeping, nett cation and forward ' the attached document(s). I t sloes not

con toa legal opinion . The recipient is responsible for interpreting the documents and ^g appropriate n.

To avoid pgtential delay, please do not send your response to CSC

CSC is SAS Type 1! certified for ifs L11igafiion Management System.

2711 Centerville F Wilmington, DE 19808 (888).690.2882 : 1 sop@csoinfo.com

SVPR E COURT OF THE STATE OF NEWYORKCOUNTY OF NEWYORK

xNew Jersey Carpenters Health . Fund, On Behalfofitselfand All Ohs Sim laxly Situated, Index ATo. U) 2.1

PlafhtA SUMMONS

V.

RALI Series 2006-QOI Tmst, I AJ1 Series2006-Q02Trust, RALI Series 2006-Q TryRAID Sew2006-Q0 4 Tr s4 RAIl Smies2006-Q05 Trust RALI Series 200&Q06 TnRALI Series207 Tzust, IULZSew2006-QOla Trr RALI Series 20&7-QOI TrustRALI es 2OO7-QO Trust RALI Series2007-QG3 Trust RALI Series 2007-Q04 Trust

. Bank National

( ^'K CLEFTS QM

140;

Bruce Peis, Da^vee L.. }lsen, Kenneth M.Duncan, Ralph T. Flees, L^ R. Ln sten,James G. Jam, 'd M. Bri

es N. Youu Goldman, & Ca., RBSx ], UBS I`n^Bank,

Credit Su se Sys.(USAF, LLC, DeuceBank S ices, Inc. and GMAC RFC Sectaities,

Defendants.x

To the above named Defents:

YOU ARE EWREBY SUMMONED and required to serve upon Plaintifi's attorneys aVerified Answer to the Verged Complaint in this action within twenty (20) days after theservice of this summons, exclusive, of the day of service, or whin thirty (30) days aft serviceis ronmplete if this sunumm is not personally delivered to you within the State ofNew York Inme of your lure to answer, judgment will be taken against you by default for the reliefdemanded in the complaint.