MOSCOW STARS B.V. (Incorporated with limited liability in The Netherlands)

US$159,000,000 Class A Mortgage-Backed Floating Rate Notes Due 2034 (the Class A Notes) Issue Price 100% US$16,200,000 Class B Mortgage-Backed Floating Rate Notes Due 2034 (the Class B Notes) Issue Price 100%

US$4,484,220 7.00 per cent. Class C Mortgage-Backed Fixed Rate Notes Due 2034 (the Class C Notes) Issue Price 100%

The Class A Notes, the Class B Notes and the Class C Notes (the Notes) will be issued by Moscow Stars B.V. (the Issuer) on the terms and conditions of the Notes set out in this Prospectus (the Conditions).

Ability to Pay The only means by which the Issuer will be able to make payments under the Notes will be (a) the revenue and principal income from a portfolio (the Mortgage Portfolio) of mortgage certificates (zakladniye) relating to fixed-rate Dollar denominated mortgage loans originated by Commercial Bank "Moskommertsbank" LLC (the Originator) and secured by residential properties located in the Russian Federation (the Mortgaged Properties), (b) the Reserve Fund (which is required to be (i) established from the proceeds of the Subordinated Reserve Advance to be provided by the Originator to the Issuer on the Issue Date at an amount at equal to US$9,882,632 (the Initial Reserve Fund Required Amount) and (ii) subject to any reduction or increase pursuant to the determination of the Reserve Fund Base Case Amount and the application of the Reserve Fund Multiplication Factor, to be maintained at a prescribed level from time to time (the Reserve Fund Required Amount) pursuant to the application of Revenue Receipts on a subordinated basis on each Note Payment Date under the Pre-Enforcement Revenue Payment Priorities, (c) the net receipts under the Swap Agreements (if any) and (d) peripheral income of the Issuer from cash held on deposit.

Interest Payments and Interest Rate Interest on the Notes will accrue from the Issue Date by reference to successive monthly interest periods (each, an Interest Period) and will be payable on the 15th day of each calendar month (each, a Note Payment Date) commencing on the Note Payment Date falling in August 2007 (subject to and in accordance with (a) the Day Count Fraction and (b) adjustments as to duration in respect of each initial Interest Period and non-business days, as set out in the Conditions). The interest rate applicable from time to time on:

1. the Class A Notes will be an annual rate equal to (i) the London Interbank Offered Rate for deposits in Dollars (USD LIBOR) for a period of one month, except in relation to the first Floating Interest Period where USD LIBOR will be calculated on the basis of linear interpolation on 2-week and 1-month USD LIBOR, plus (ii) 1.75 per cent. per annum;

2. the Class B Notes will be an annual rate equal to (i) USD LIBOR for a period of one month, except in relation to the first Floating Interest Period where USD LIBOR will be calculated on the basis of linear interpolation on 2-week and 1-month USD LIBOR, plus (ii) 5.25 per cent. per annum; and

3. the Class C Notes will be an annual rate equal to 7.00 per cent. per annum.

Security and Ranking The Notes will be issued simultaneously and all Notes will be secured by the same security, subject to the priority described below. The Notes will constitute direct, secured and unconditional obligations of the Issuer. The Notes in each class of Notes will rank pari passu without preference or priority amongst themselves. All payments of interest due on the Class A Notes will rank in priority to payments of interest due on the Class B Notes and all payments of interest due on the Class B Notes will rank in priority to payments of interest due on the Class C Notes. All payments of principal due on the Class A Notes will rank in priority to payments of principal due on the Class B Notes and all payments of principal due on the Class B Notes will rank in priority to payments of principal due on the Class C Notes.

Ratings The Class A Notes are expected, on issue, to be assigned a Baa2 rating by Moody's Investors Service Limited (Moody's) and a BBB rating by Fitch Ratings Limited (Fitch and together with Moody's, the Rating Agencies). The Class B Notes are expected, on issue, to be assigned a Ba2 rating by Moody's and a BB rating by Fitch. The Rating Agencies have not been requested to assign a rating to the Class C Notes. A security rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at any time by the assigning rating organisation.

Admission to ISE Application has been made to the Irish Financial Services Regulatory Authority (IFSRA), as competent authority under Directive 2003/71/EC (the Prospectus Directive), for this Prospectus to be approved. Application has been made to the Irish Stock Exchange Limited (the ISE) for the Notes to be admitted to the official list of the ISE (the Official List) and to trading on its regulated market. This document constitutes the "Prospectus" relating to the Notes for the purposes of the Prospectus Directive.

THE NOTES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT), OR ANY STATE SECURITIES LAWS AND ARE SUBJECT TO U.S. TAX LAW REQUIREMENTS. SUBJECT TO CERTAIN EXCEPTIONS, THE NOTES MAY NOT BE OFFERED, SOLD OR DELIVERED DIRECTLY OR INDIRECTLY WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT).

SEE RISK FACTORS FOR A DISCUSSION OF CERTAIN FACTORS TO BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE NOTES.

HSBC RAIFFEISEN ZENTRALBANK ÖSTERREICH AG

(Lead Managers, Joint Book Runners and Joint Arrangers)

ZAO RAIFFEISENBANK AUSTRIA (Joint Arranger)

This Prospectus is dated 16 July 2007.

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THE NOTES WILL BE OBLIGATIONS OF THE ISSUER ONLY. THE NOTES WILL NOT BE OBLIGATIONS OF, OR THE RESPONSIBILITY OF, OR GUARANTEED BY, ANY PERSON OTHER THAN THE ISSUER. IN PARTICULAR, THE NOTES WILL NOT BE OBLIGATIONS OF, OR THE RESPONSIBILITY OF, OR GUARANTEED BY, THE ORIGINATOR, THE LEAD MANAGERS, THE AGENTS, THE NOTE TRUSTEE, THE SECURITY TRUSTEE, THE SWAP COUNTERPARTIES OR ANY OF THEM (EACH AS DEFINED HEREIN), ANY COMPANY IN THE SAME GROUP OF COMPANIES AS ANY SUCH ENTITIES OR ANY OTHER PARTY TO THE TRANSACTION DOCUMENTS (OTHER THAN THE ISSUER). NO LIABILITY WHATSOEVER IN RESPECT OF ANY FAILURE BY THE ISSUER TO PAY ANY AMOUNT DUE UNDER THE NOTES SHALL BE ACCEPTED BY THE ORIGINATOR, THE LEAD MANAGERS, THE AGENTS, THE NOTE TRUSTEE, THE SECURITY TRUSTEE, THE SWAP COUNTERPARTIES OR ANY OF THEM (EACH AS DEFINED HEREIN) OR BY ANY OTHER PERSON (OTHER THAN THE ISSUER).

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CONTENTS PAGE Structure Diagram 8 Overview of the Transaction 9 The Transaction Parties 10 The Notes 12 The Accounts 19 The Transaction Documents 20 Risk Factors 23

Risks Relating to the Notes and the Mortgage Portfolio 23 Risks Related to the Russian Federation 42 Risks Relating to Russian Taxation 45

Credit Enhancement 48 Liquidity Support 50 Cash Management 51 The Residential Mortgage Market in the Russian Federation 60 The Mortgage Portfolio 62 Eligibility Criteria Applicable to the Mortgage Portfolio 82 Lending Criteria Applicable to the Mortgage Portfolio 87 Estimated Weighted Average Lives of the Notes 93 Title to the Mortgage Portfolio 96 Description of Principal Transaction Documents 98

The Master Purchase Agreement 98 The Swap Agreements 101 The Servicing Agreement 104 The Enforcement Services Agreement 113 The Back-up Servicing Agreement 114 The Pledge Agreement 116 The Deed of Charge 118 The Custodian Agreement 119 The Subordinated Loan Agreement 120 The Note Trust Deed 121 The Distribution Account Agreement 122

Principal Transaction Parties 124 The Originator – Commercial Bank "Moskommertsbank" LLC 124 The Issuer – Moscow Stars B.V. 134 The Back-up Servicer – ZAO Raiffeisenbank Austria 137 The International Account Bank – The Bank of New York 138 The Issuer Collection Account Bank - Commercial Bank "Moskommertsbank" LLC 138 The Note Trustee and the Security Trustee – TMF Trustee Limited 139 The Swap Counterparties 140 The Custodian – ZAO "Depository Company "REGION" 142

Terms and Conditions of the Notes 143 The Global Note Certificates 193 Taxation 195 Clearing and Settlement Arrangements 202 Subscription and Sale 204 General Information 206 Index of Defined Terms 208

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Index of Defined Terms and Construction

See Index of Defined Terms for an index of certain capitalised terms used in this Prospectus and, in each case, the page numbers at which the relevant definition appears. Capitalised terms used in the Conditions have the meanings given to them in the Conditions. Capitalised terms used elsewhere in this Prospectus (except as otherwise defined) have the meanings given to them in the Conditions. In this Prospectus, the singular includes the plural and vice versa.

Form of the Notes

The Notes of each Class will be represented on issue by a global note certificate in registered form (collectively, the Global Note Certificates).

Clearing Systems

The Issuer will maintain a register, to be kept by the Registrar, in which it will register the Global Note Certificates in the name of The Bank of New York Depository (Nominees) Limited, as nominee for The Bank of New York as common depositary (the Common Depositary) for Euroclear Bank S.A./N.V. (Euroclear) and Clearstream Banking, société anonyme (Clearstream, Luxembourg), as owner of the Global Note Certificates. Transfers of all, or any portion of, the interests in a Global Note Certificate may be made only through the register maintained by the Issuer. Each of Euroclear and Clearstream, Luxembourg will record beneficial interests in the Global Note Certificates. Book-entry interests in the Global Note Certificates will be shown on, and transfers thereof will be effected only through, records maintained in book-entry form by Euroclear or Clearstream, Luxembourg, and their respective participants. Except in the limited circumstances described under The Global Note Certificates – Exchange for Definitive Note Certificates, the Notes will not be available in definitive form (Definitive Note Certificates). Definitive Note Certificates will be issued in registered form only.

Responsibility for this Prospectus

The Originator accepts responsibility for the information contained in this Prospectus relating to itself (including in its capacity as the Servicer and as Issuer Collection Account Bank) and the Mortgage Portfolio in the sections headed Risk Factors – Risks Relating to the Notes and the Mortgage Portfolio, The Residential Mortgage Market in the Russian Federation, The Mortgage Portfolio, Eligibility Criteria Applicable to the Mortgage Portfolio, Lending Criteria Applicable to the Mortgage Portfolio, Estimated Weighted Average Lives of the Notes, Title to the Mortgage Portfolio, Description of the Principal Transaction Documents – The Master Purchase Agreement, Principal Transaction Parties – The Issuer Collection Account Bank – Commercial Bank "Moskommertsbank" LLC and The Originator – Commercial Bank "Moskommertsbank" LLC and to the best of the knowledge and belief of the Originator (having taken all reasonable care to ensure that such is the case) such information is in accordance with the facts and does not omit anything likely to affect the import of such information. Specifically, the Originator confirms that, to the best of its knowledge and belief (having taken all reasonable care to ensure that such is the case), the information obtained from the Originator in relation to the business and organisation of the Originator (including in its capacity as the Servicer), the market in which it conducts business and the Mortgage Portfolio has been accurately reproduced and that no facts have been omitted which would render the information inaccurate or misleading.

The information obtained by the Originator from the Central Bank of the Russian Federation (CBR), the Russian Bank Association, RBC RosBusinessConsulting journal, online internet resources (www.rbc.ru) and the analytic business magazine "Finance" , issue number 5 2007, in each case, for the purposes of the section headed The Residential Mortgage Market in the Russian Federation has been accurately reproduced and no facts or figures have been omitted which would render such information inaccurate or misleading.

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The Back-up Servicer accepts responsibility for the information contained in this Prospectus relating to itself in the section headed Principal Transaction Parties – The Back-up Servicer – ZAO Raiffeisenbank Austria and, to the best of the knowledge and belief of the Back-up Servicer (having taken all reasonable care to ensure that such is the case), such information is in accordance with the facts and does not omit anything likely to affect the import of such information. The information obtained by the Back-up Servicer from CEA Interfax and RBC Rating for the purposes of the section headed Principal Transaction Parties - The Back-up Servicer – ZAO Raiffeisenbank Austria has been accurately reproduced and no facts or figures have been omitted which would render such information inaccurate or misleading.

Each Swap Counterparty accepts responsibility for the information contained in this Prospectus relating to itself in the section headed Principal Transaction Parties – The Swap Counterparties and, to the best of the knowledge and belief of each Swap Counterparty (having taken all reasonable care to ensure that such is the case), such information is in accordance with the facts and does not omit anything likely to affect the import of such information.

The Custodian accepts responsibility for the information contained in this Prospectus relating to itself in the section headed Principal Transaction Parties – The Custodian – ZAO "Depository Company REGION" and, to the best of the knowledge and belief of the Custodian (having taken all reasonable care to ensure that such is the case), such information is in accordance with the facts and does not omit anything likely to affect the import of such information.

The Note Trustee and the Security Trustee each accepts responsibility for the information contained in this Prospectus relating to itself in the section headed Principal Transaction Parties – The Note Trustee and the Security Trustee – TMF Trustee Limited and, to the best of the knowledge and belief of the Note Trustee and the Security Trustee (having taken all reasonable care to ensure that such is the case), such information is in accordance with the facts and does not omit anything likely to affect the import of such information.

The International Account Bank accepts responsibility for the information contained in this Prospectus relating to itself in the section headed Principal Transaction Parties – The International Account Bank – The Bank of New York and, to the best of the knowledge and belief of the International Account Bank (having taken all reasonable care to ensure that such is the case), such information is in accordance with the facts and does not omit anything likely to affect the import of such information.

The Issuer accepts responsibility for the information contained in this Prospectus, other than the information for which other persons accept responsibility, as set out in the foregoing paragraphs. To the best of the knowledge and belief of the Issuer (having taken all reasonable care to ensure that such is the case), the information contained in this Prospectus, other than the information for which the other persons accept responsibility, as set out in the foregoing paragraphs, is in accordance with the facts and does not omit anything likely to affect the import of such information.

Except as expressly provided otherwise, the Lead Managers, the Note Trustee, the Security Trustee, the Cash Manager and the Agents (or any of them) have not separately verified the information contained in this Prospectus. Accordingly, no representation, warranty or undertaking, express or implied, is made and no responsibility or liability is accepted by the Lead Managers, the Note Trustee, the Security Trustee, the Cash Manager or the Agents (or any of them) as to the accuracy or completeness of the information contained in this Prospectus.

Representations about the Notes

No person has been authorised to give any information or to make any representations, other than those contained in this Prospectus, in connection with the issue and sale of the Notes and, if given or if made, such information or representations must not be relied upon as having been authorised by the Issuer, the Originator, the Lead Managers or any other party to the Transaction Documents. Neither the delivery of this Prospectus nor any sale made pursuant to this Prospectus, under any

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circumstances, creates any implication that the information contained in this Prospectus is correct as at any time after the date of this Prospectus.

Financial Condition of the Issuer

Neither the delivery of this Prospectus nor the offering, sale or delivery of any Note shall in any circumstances create any implication that there has been no adverse change, or any event reasonably likely to involve any adverse change, in the condition (financial or otherwise) of the Issuer since the date of this Prospectus.

Stabilisation

In connection with the issue of the Notes, the Lead Managers (as the Stabilising Managers) or persons acting on their behalf may over-allot Notes or effect transactions with a view to supporting the market price of the Notes at a level higher than that which might otherwise prevail. However, there is no assurance that either of the Stabilising Managers (or persons acting on behalf of a Stabilising Manager) will undertake stabilisation action. Any stabilisation action may begin on or after the date on which adequate public disclosure of the terms of the Notes is made and, if begun, may be ended at any time, but it must end no later than the earlier of 30 days after the Issue Date and 60 days after the date of the allotment of the relevant Notes. Any stabilisation action or over-allotment may be conducted by the relevant Stabilisation Managers subject to all applicable laws and other rules.

Subscription and Sale

Each purchaser or holder of interests in the Notes will be deemed, by its acceptance or purchase of any such Notes, to have made certain representations and agreements as set out in Subscription and Sale.

The distribution of this Prospectus and the offering, sale or delivery of any Notes in certain jurisdictions may be restricted by law. This Prospectus does not constitute, and may not be used for the purposes of, an offer or solicitation by any person in any jurisdiction in which such offer or solicitation is not authorised or to any person to whom it is unlawful to make such offer or solicitation and no action is being taken to permit an offering of the Notes or the distribution of this Prospectus in any jurisdiction where such action is required.

Persons into whose hands this Prospectus comes are required by the Issuer and the Lead Managers to comply with all applicable laws and regulations in each country or jurisdiction in which they purchase, offer, sell or deliver any Note or have in their possession, distribute or publish this Prospectus or any other offering material relating to the Notes, in all cases, at their own expense.

Neither the Issuer nor the Lead Managers (or either of them) makes any representation to any investor in the Notes regarding the legality of its investment under any applicable laws. The contents of this Prospectus should not be construed as providing legal, business, accounting or tax advice. Each prospective investor should consult its own legal, business, accounting and tax advisers prior to making a decision to invest in the Notes.

Each person contemplating making an investment in the Notes must make its own investigation and analysis of the Issuer and the terms of the offering, including the merits and risks involved, and its own determination of the suitability of any such investment, with particular reference to its own investment objectives and experience and any other factors which may be relevant to it in connection with such investment. Any investor in the Notes should be able to bear the economic risk of an investment in the Notes for an indefinite period of time.

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Regulation S

The Notes have not been and will not be registered under the Securities Act or any state securities laws and are subject to U.S. tax law requirements. Subject to certain exceptions, the Notes may not be offered, sold or delivered directly or indirectly within the United States or to, or for the account or benefit of, U.S. Persons (as defined in Regulation S under the Securities Act).

Presentation of Financial and Other Information

The Issuer maintains its financial books and records and is to prepare its financial statements in euro in accordance with generally accepted accounting principles in The Netherlands (Netherlands GAAP).

All references in this Prospectus to (a) Dollars or US$ refer to the currency of the United States of America or (b) euro or € refer to the currency introduced at the start of the third stage of European economic and monetary union pursuant to the Treaty establishing the European Community signed in Rome on 25 March 1957 (as amended) or (c) Roubles and RUR refer to the currency of the Russian Federation or (d) £ refer to the currency of the United Kingdom.

Certain figures included in this Prospectus have been subject to rounding adjustments. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures which precede them.

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STRUCTURE DIAGRAM

Customers

Reserve Fund (Initially

US$9,882,632)

Subordinated Loan Provider (Moskommertsbank)

ZAO Raiffeisen bank Austria

Class B Notes (BB / Ba2)

Class A Notes (BBB / Baa2)

Class A Noteholders

Class C Noteholders

Class B Noteholders

Region Moskommerts bank

TMF Amsterdam TMF London The Bank of New York RZB Barclays

Account Bank Cash Manager Swap Counterparties

Security Trustee Principal Paying Agent

RUSSIAN FEDERATION THE NETHERLANDS

Moskommertsbank The Issuer

Mortgage Loan Payments

Custodian Subordinated Loan Provider

Back-up Servicer

Managing Director Note Trustee

Subordinated Loan

Warehouse Obligations

Subordinated Loan Scheduled Interest and Subordinated Loan

Additional Interest (Express Spread)

Discharge (Issue Date)

Servicer / Issuer Collection Account Bank / Originator

Mortgage Portfolio

US$179,684,220

Sale Proceeds (Pre- Issue Date)

Mortgage Certificates (Fixed rate)

LIBOR 1m +1.75%

LIBOR 1m +5.25%

7.00% Class C Notes

(unrated)

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OVERVIEW OF THE TRANSACTION

The following summary is an introduction to this Prospectus, does not purport to be complete and should be read in conjunction with, and is qualified in its entirety by, the more detailed information contained elsewhere in this Prospectus (including in the Conditions). Any decision to invest in the Notes should be based on consideration of this Prospectus as a whole by the investor. No civil liability in respect of this summary will arise in any member state of the European Union or a state of the European Economic Area (a Member State) unless this summary is misleading, inaccurate or inconsistent when read together with the other parts of this Prospectus. Where a claim relating to the information contained in this Prospectus is brought before a court by an investor, that investor might, under the national legislation of the relevant Member State, have to bear the costs of translating this Prospectus before the legal proceedings are initiated.

Class of Notes Class A Class B Class C

Initial Principal

Amount Outstanding

US$159,000,000 US$16,200,000 US$4,484,220

Anticipated Ratings Baa2 from Moody's, BBB from Fitch Ba2 from Moody's, BB from Fitch N/A

Credit Enhancement Sequential amortisation of the Class A

Notes, the Class B Notes and the Class C

Notes reflecting the subordination in right

of payment and for other purposes of the

Class B Notes and the Class C Notes,

scheduled accrual of interest income under

the mortgage portfolio in excess of

scheduled interest obligations under the

Class A Notes, cash drawings from a

reserve fund maintained by the Issuer for

credit and liquidity purposes, which is

subject to enhancement by the reallocation

of revenue receipts in priority to payments

of interest under the Class C Notes, if the

excess spread payable under a subordinated

loan falls below a prescribed threshold, but

is otherwise subject to an amortisation

formula.

Sequential amortisation of the Class B Notes

and the Class C Notes reflecting the

subordination in right of payment and for

other purposes of the Class C Notes,

scheduled accrual of interest income under the

mortgage portfolio in excess of scheduled

interest obligations under the Class A Notes

and the Class B Notes, cash drawings from a

reserve fund maintained by the Issuer for

credit and liquidity purposes, which is subject

to enhancement by the reallocation of revenue

receipts in priority to payments of interest

under the Class C Notes, if the excess spread

payable under a subordinated loan falls below

a prescribed threshold, but is otherwise

subject to an amortisation formula.

Scheduled accrual of interest under the

mortgage portfolio in excess of scheduled

interest obligations under the Notes, to the

extent that such excess interest income is

not required to be applied instead to

increase the amount held under a reserve

fund maintained by the Issuer for credit and

liquidity purposes.

Interest Rate

Benchmark

1-month USD LIBOR 1-month USD LIBOR Fixed

Rate of Interest 1-month 1-month 7.00%

USD LIBOR plus 1.75% USD LIBOR plus 5.25%

Interest Accrual

Method / Note Payment

Dates

Actual/360 15th of each calendar month,

subject to adjustment for non-business days

and in respect of first interest period.

Actual/360 15th of each calendar month,

subject to adjustment for non-business days

and in respect of first interest period.

Actual/360 15th of each calendar month,

subject to adjustment for non-business days

and in respect of first interest period.

First Note Payment

Date

16 August 2007 16 August 2007 16 August 2007

Final Maturity Date Note Payment Date in December 2034 Note Payment Date in December 2034 Note Payment Date in December 2034

Minimum

Denominations

US$100,000 (increments of US$1.00) US$100,000 (increments of US$1.00) US$100,000 (increments of US$1.00)

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THE TRANSACTION PARTIES

Issuer Moscow Stars B.V., a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) incorporated in The Netherlands, in its capacity as issuer of the Notes (the Issuer).

Originator Commercial Bank "Moskommertsbank" LLC, a bank incorporated under the laws of the Russian Federation, in its capacity as originator of the Mortgage Portfolio (the Originator).

Managing Director TMF Management B.V., a private company with limited liability incorporated in The Netherlands, in its capacity as managing director of the Issuer (the Managing Director). The Managing Director is neither owned nor controlled by the Originator, or any other party to the Transaction, or any of their respective affiliates.

Cash Manager The Bank of New York, a New York banking corporation incorporated under the laws of the State of New York, in its capacity as cash manager (the Cash Manager). The Cash Manager is neither owned nor controlled by the Originator or an affiliate of the Originator.

Note Trustee TMF Trustee Limited (TMF Trustee), a company incorporated under the laws of England and Wales, in its capacity as trustee for the Noteholders (the Note Trustee). The Note Trustee is neither owned nor controlled by the Originator or an affiliate of the Originator.

Security Trustee TMF Trustee, in its capacity as security trustee and collateral agent for the Secured Parties (respectively, the Security Trustee and the Collateral Agent).

In relation to the Russian Security, any references in this Prospectus to the Security Trustee are to be construed to mean the Security Trustee in its capacity as the Collateral Agent.

The Security Trustee is neither owned nor controlled by the Originator or an affiliate of the Originator.

Agent Bank The Bank of New York in its capacity as the agent bank in respect of the Notes (the Agent Bank). The Agent Bank is neither owned nor controlled by the Originator or an affiliate of the Originator.

Principal Paying Agent The Bank of New York in its capacity as principal paying agent in respect of the Notes (the Principal Paying Agent). The Principal Paying Agent is neither owned nor controlled by the Originator or an affiliate of the Originator.

Irish Paying Agent BNY Financial Services PLC, a public company incorporated with limited liability under the laws of Ireland and having its registered office at 70 Sir John Rogerson's Quay, Dublin 2, Republic of Ireland, in its capacity as Irish paying agent in respect of the Notes (the Irish Paying Agent). The Irish Paying Agent is neither owned nor controlled by the Originator or an

THE TRANSACTION PARTIES

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affiliate of the Originator.

Registrar The Bank of New York (Luxembourg), S.A. in its capacity as registrar in relation to the Notes (the Registrar).

Swap Counterparties Barclays Bank PLC (Barclays), a public limited company incorporated under the laws of England and Wales and Raiffeisen Zentralbank Österreich AG (RZB), a company incorporated under the laws of Austria, each in its capacity as a swap counterparty (together, the Swap Counterparties). Neither of the Swap Counterparties is owned or controlled by the Originator or an affiliate of the Originator.

Servicer The Originator in its capacity as servicer of the Mortgage Portfolio (the Servicer).

Back-up Servicer ZAO Raiffeisenbank Austria (RBRU), a bank incorporated under the laws of the Russian Federation in its capacity as back-up servicer (the Back-up Servicer). The Back-up Servicer is neither owned nor controlled by the Originator or an affiliate of the Originator.

Custodian ZAO "Depository Company REGION" in its capacity as custodian in respect of the Mortgage Loan Documents (the Custodian).

International Account Bank The Bank of New York in its capacity as the bank at which the Issuer Distribution Account is held (the International Account Bank). The International Account Bank is neither owned nor controlled by the Originator or an affiliate of the Originator.

Issuer Collection Account Bank The Originator in its capacity as issuer collection account bank (the Issuer Collection Account Bank).

Subordinated Loan Provider The Originator in its capacity as the provider of the Subordinated Loan (the Subordinated Loan Provider).

Listing Agent The Bank of New York in its capacity as the listing agent (the Listing Agent). The Listing Agent is neither owned nor controlled by the Originator or an affiliate of the Originator.

Lead Managers HSBC Bank plc and RZB in their capacity as lead managers and joint bookrunners for the offering of the Notes (the Lead Managers).

Rating Agencies Moody's Investors Service Limited and Fitch Ratings Limited (respectively, Moody's and Fitch, and together the Rating Agencies). The Rating Agencies are neither owned nor controlled by the Originator, or any other party to the Transaction, or any of their respective affiliates.

Common Depositary The Bank of New York in its capacity as the common depositary for Euroclear and Clearstream, Luxembourg (the Common Depositary). The Common Depositary is neither owned nor controlled by the Originator or an affiliate of the Originator.

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THE NOTES

Notes US$159,000,000 Class A Mortgage-Backed Floating Rate Notes Due 2034 (the Class A Notes)

US$16,200,000 Class B Mortgage-Backed Floating Rate Notes Due 2034 (the Class B Notes)

US$4,484,220 7.00 per cent. Class C Mortgage-Backed Fixed Rate Notes Due 2034 (the Class C Notes)

Ratings The Class A Notes are expected to be rated Baa2 by Moody's and BBB by Fitch.

The Class B Notes are expected to be rated Ba2 by Moody's and BB by Fitch.

The Rating Agencies have not been requested to assign a rating to the Class C Notes.

A rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at any time by the Rating Agencies. A suspension, reduction or withdrawal of any rating assigned to the Notes may adversely affect the market price of the Notes.

Issue Date The Notes are to be issued on 18 July 2007, or such other date as may be agreed between the Issuer, the Joint Lead Managers and the Note Trustee (the Issue Date).

Statistical Cut Off Date The statistical information contained under The Mortgage Portfolio – Characteristics of the Mortgage Portfolio and Estimated Weighted Average Lives of the Notes was current as at 30 June 2007 (the Statistical Cut Off Date), save that three defaulting or potentially defaulting mortgage loans originated by the Originator and owned by the Issuer on the Statistical Cut Off Date (the Repurchased Mortgage Loans), having an aggregate outstanding principal balance of US$789,817, were repurchased from the Issuer by the Originator following the Statistical Cut Off Date and were notionally excluded for the purposes of such statistical information.

Portfolio Cut Off Date The cut off date for the determination of the aggregate Outstanding Principal Balance of the Mortgage Portfolio, by reference to which the initial Principal Amount Outstanding of the Notes has also been determined, is 30 June 2007 (the Portfolio Cut Off Date), save that the Repurchased Mortgage Loans were notionally excluded for the purposes of such determination.

Final Maturity Date The final maturity date of the Notes (the Final Maturity Date) is the Note Payment Date falling in December 2034.

Interest Rate Interest will be payable on the Principal Amount Outstanding of the Class A Notes at an annual rate equal to the sum of (a) 1-month USD LIBOR, except for the first Interest Period, where USD LIBOR will be calculated on the basis of linear

THE NOTES

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interpolation on 2-week and 1-month USD LIBOR, plus (b) 1.75 per cent. per annum.

Interest will be payable on the Principal Amount Outstanding of the Class B Notes at an annual rate equal to the sum of (i) 1-month USD LIBOR, except for the first Interest Period, where USD LIBOR will be calculated on the basis of linear interpolation on 2-week and 1-month USD LIBOR, plus (ii) 5.25 per cent. per annum.

Interest will be payable on the Principal Amount Outstanding of the Class C Notes at an annual rate equal to 7.00 per cent. per annum.

Floating Interest Period Interest on the Rated Notes is payable by reference to interest periods (each, a Floating Interest Period). The first Floating Interest Period will commence on (and include) the Issue Date and end on (but exclude) the 15th day of the calendar month following the calendar month in which the Issue Date occurred (or if such 15th day is not a Business Day, on the Business Day immediately following such day). Each successive Floating Interest Period will commence on (and include) the last day of the immediately preceding Floating Interest Period and will end on (but exclude) the 15th day of the calendar month following the calendar month in which such Floating Interest Period commenced (or if such 15th day is not a Business Day, on the Business Day immediately following such day).

Fixed Interest Period Interest on the Class C Notes is payable by reference to interest periods (each, a Fixed Interest Period). The first Fixed Interest Period will commence on (and include) the Issue Date and end on (but exclude) the 15th day of the calendar month following the calendar month in which the Issue Date occurred. Each successive Fixed Interest Period will commence on (and include) the day immediately following the expiry of the preceding Fixed Interest Period and will end on (but exclude) the 15th day of the calendar month immediately following the calendar month in which such Fixed Interest Period commenced.

Pursuant to the Conditions, if any such 15th day of a calendar month is not a Business Day, the applicable Fixed Interest Period will nevertheless expire on such day but the corresponding Fixed Interest Payment Date will fall on the immediately following Business Day.

Note Payment Dates Interest will be paid on the Notes on the 15th day of each month in each year provided that, if such day is not a Business Day, interest will be paid on the immediately following Business Day.

First Note Payment Date The first Note Payment Date is to fall on 16 August 2007.

Form, Registration and Transfer of Notes

Each Class of Notes will initially be represented by a global note certificate in registered form (collectively, the Global Note Certificates), each of which will be registered in the name of the Common Depositary.

Each Global Note Certificate will be subject to certain

THE NOTES

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restrictions on transfer. Except in limited circumstances, owners of beneficial interests in a Global Note Certificate will not be entitled to receive physical delivery of Definitive Note Certificates representing such interests.

Denomination of Notes A minimum denomination of US$100,000 and thereafter in minimum increments of US$1.00.

Withholding Tax All payments of principal and interest in respect of the Notes by, or on behalf of, the Issuer will be made in full without deduction or withholding for or on account of any present or future taxes or duties of whatever nature imposed or levied by, or on behalf of, The Netherlands or any authority thereof or therein having the power to tax, unless such deduction is required by law. In the event of any deduction or withholding on account of tax becoming required by law, the Issuer shall make the required deduction or withholding and shall not pay any additional amounts to the Noteholders.

Status and Ranking The Notes will constitute direct, secured and unconditional obligations of the Issuer. The Notes of each Class will rank pari passu without preference or priority amongst themselves.

The Notes represent the right to receive interest and principal payments from the Issuer in accordance with the Conditions and the Note Trust Deed.

All payments of interest due on the Class A Notes will rank in priority to payments of interest due on the Class B Notes and all payments of interest due on the Class B Notes will rank in priority to payments of interest due on the Class C Notes.

The Class A Notes, the Class B Notes and the Class C Notes, respectively, are to be redeemed sequentially on each Note Payment Date, in accordance with the Pre-Enforcement Principal Payment Priorities. Accordingly, all payments of principal due on the Class A Notes will rank in priority to payments of principal due on the Class B Notes and all payments of principal due on the Class B Notes will rank in priority to payments of principal due on the Class C Notes.

Use of Proceeds On the Issue Date, the Issuer will use the proceeds of the issuance of the Notes to refinance the acquisition of the Mortgage Certificates comprising the Mortgage Portfolio and to pay certain costs, expenses and fees relating to the entry into the Transaction and the issuance of the Notes.

See General Information – Warehouse Documents.

Security for Notes The obligations of the Issuer to the Noteholders and the other Secured Parties under the Transaction Documents are secured under (a) the Pledge Agreement, which creates a Russian law pledge over the Mortgage Portfolio in favour of the Collateral Agent for the Noteholders and the other Secured Parties and (b) the Deed of Charge, which creates a fixed charge over the International Issuer Accounts, an assignment of the rights of the Issuer under the Secured Transaction Documents and a floating

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charge over all the assets of the Issuer (other than (i) any and all assets, property or rights which are located in, or governed by the laws of, The Netherlands (except for contractual rights or receivables (rechten of vorderingen op naam), which are to be assigned to the Security Trustee under the Deed of Charge), (ii) any Dutch Ineligible Securities, (iii) the Issuer's rights under the Corporate Services Agreement and (iv) amounts standing to the credit of the Issuer Dutch Account), in each case, in favour of the Security Trustee for the Noteholders and the other Secured Parties.

Pursuant to the terms of the Deed of Charge, the Security Trustee (including in its capacity as Collateral Agent) will, following delivery of a notice to the Issuer and the other Secured Parties (where a Default or a potential compromise of the Security has occurred and is continuing), provided that it has not revoked such notice (a Security Protection Notice), be entitled to take protective measures in connection with the assets of the Issuer being subject to the Security, other than enforcement action.

Hedging Arrangements The Issuer will enter into interest rate hedging arrangements with the Swap Counterparties (each individual arrangement being a Swap), pursuant to two hedging agreements (the Swap Agreements). The Swap Agreements will each be documented in the form of the International Swaps and Derivatives Association's 1992 Master Agreement (Multicurrency – Cross Border) (ISDA Master), together with certain schedules and confirmations thereto. Under each Swap, the Issuer will agree to pay on each Note Payment Date amounts calculated by reference to a fixed rate of interest (provided that in the event that, on such Note Payment Date, there is insufficient Issuer income receipts to make full payment of all amounts due on such date to the Swap Counterparties (pursuant to the Pre-Enforcement Revenue Payment Priorities), all payments made by the Swap Counterparties to the Issuer shall be reduced by the same percentage as any payments by the Issuer to the Swap Counterparties are reduced) and the Swap Counterparties will agree to pay to the Issuer on each Note Payment Date amounts calculated by reference to the rate of USD LIBOR used in determining the rate of interest applicable to the Class A Notes and the Class B Notes for the applicable period (which shall correspond to the Floating Interest Period relating to the Class A Notes and the Class B Notes respectively), as specified in the Swap Agreements, on a notional amount equal to the aggregate Principal Amount Outstanding of the Class A Notes and the Class B Notes, after deduction of the amount of any debit balance on the Class A PDL or (as the case may be) the Class B PDL respectively (such adjusted Principal Amount Outstanding, in each case, being that which applies on the first day of such applicable period).

Post-Issuance Reporting On the second Moscow Business Day following each Collection

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Period End Date (the Information Date), the Servicer will provide the Issuer, the Note Trustee, the Security Trustee, the Cash Manager, the Custodian, the Swap Counterparties, the Lead Managers and the Rating Agencies with a written report in a prescribed form on the performance of the underlying Mortgage Portfolio during the related Collection Period (the Monthly Servicer Report). The Monthly Servicer Report will specify, inter alia, the amounts received from Obligors during the applicable Collection Period, allocated between revenue (interest, late fees and other amounts in the nature of revenue) and principal (prepaid, scheduled, late and recovered) as well as delinquencies and losses.

Collection Period means the period corresponding to each calendar month following the Portfolio Cut Off Date.

Collection Period End Date means the last calendar day of each Collection Period.

The Cash Manager will prepare a written report in respect of each Collection Period and shall deliver this report to the Note Trustee, the Security Trustee, the Issuer, the Originator, the Lead Managers, the Swap Counterparties and the Rating Agencies not later than the second Business Day immediately following the Note Payment Date to which such report relates (the Cash Management Report).

Each Cash Management Report will be available for inspection at the office of the Cash Manager and on the website of the Cash Manager at www.bnyinvestorreporting.com.

Relationship between Noteholders

The Note Trust Deed contains provisions requiring the Note Trustee, with respect to the exercise of its rights, powers, trusts, authorities, duties or discretions, to act in the general interests of the Noteholders as a whole and to have regard to the interests of the holders of all Classes of Notes equally, except where expressly provided or if there is a conflict between the holders of one Class of Notes and the holders of another Class of Notes.

The Note Trust Deed also contains provisions limiting the powers of (a) the Class B Noteholders and/or the Class C Noteholders to request or direct the Note Trustee to take action or to pass an Extraordinary Resolution which is binding upon the Class A Noteholders and (b) the Class C Noteholders to request or direct the Note Trustee to take action or to pass an Extraordinary Resolution which is binding upon the Class B Noteholders.

See Risk Factors – Risks Relating to the Notes and the Mortgage Portfolio – Note Trustee may be required to act to the detriment of a Class of Noteholders where the interests of different Classes conflict and Risk Factors – Risks Relating to the Notes and the Mortgage Portfolio Interests of Noteholders within Senior Outstanding Class prevail in relation to any directions given to Note Trustee or any Extraordinary Resolution.

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Optional Redemption and Related Call Option

The Issuer may at its option redeem all (but not only some) of the Notes in each class at their Principal Amount Outstanding, together with accrued but unpaid interest thereon, on any Note Payment Date:

(a) in the event of certain tax changes affecting the Notes or the Mortgage Portfolio; or

(b) in the event that the Principal Amount Outstanding of the Notes is less than 10 per cent. of the initial Principal Amount Outstanding of the Notes applicable on the Issue Date (the Clean-up Call Threshold),

subject to the requirements specified in Condition 8.3 (Optional redemption in whole for Taxation Reasons), including the requirement that the Issuer must give not more than 60 days' and not less than 20 days' notice to the Note Trustee and the Noteholders of its intention to effect any such redemption.

The Issuer will grant to the Originator a call option (the Call Option) in relation to each of the Mortgage Certificates comprising the Mortgage Portfolio. The Call Option is exercisable by the Originator at its option in relation to all (and not some only) of the Mortgage Certificates, in the event that the Principal Amount Outstanding of the Notes is less than the Clean-up Call Threshold. Following an exercise of the Call Option, the Originator will be required to purchase the Mortgage Certificates from the Issuer at the Option Price.

Mandatory Redemption in Part On each Note Payment Date prior to the delivery of an Enforcement Notice by the Security Trustee, the Issuer shall apply an amount equal to the Available Redemption Funds, as at the relevant Collection Period End Date, in accordance with the following priority:

(a) in redeeming, pari passu and pro rata, the Class A Notes until the Class A Notes have been redeemed in full;

(b) after the Class A Notes have been redeemed in full, in redeeming, pari passu and pro rata, the Class B Notes until the Class B Notes have been redeemed in full; and

(c) after the Class B Notes have been redeemed in full, in redeeming, pari passu and pro rata, the Class C Notes.

Purchases The Issuer will not be entitled to purchase any of the Notes.

Final Maturity Unless the Notes have previously been redeemed in full, as described in the Conditions, the Notes will be redeemed by the Issuer on the Final Maturity Date.

Put Option The Originator will grant to the Issuer a put option (the Put Option) in relation to each of the Mortgage Certificates comprising the Mortgage Portfolio. The Put Option is exercisable by the Issuer (in consultation with the Servicer and, following delivery of a Security Protection Notice or an

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Enforcement Notice, at the direction of the Security Trustee) in relation to a Non-Conforming Loan (as defined below) upon receipt of a notice from the Originator that any Mortgage Certificate was in breach of the Lending Criteria or Eligibility Criteria on the Issue Date, where such breach is not capable of remedy or, if such breach is capable of remedy, is not remedied on or before the 15th day following the Issue Date (a Non-Conforming Loan).

Following an exercise of the Put Option, the Originator will be required to purchase the relevant Non-Conforming Loan from the Issuer at the Option Price.

The Option Price for the purposes of the Call Option and the Put Option will be equal to the aggregate of (a) the Outstanding Principal Balance of the relevant Mortgage Loan and (b) the interest and other amounts (excluding any principal amounts) accrued on such Mortgage Loan which remain unpaid on the date such purchase is to occur (Accrued Interest).

No Enforcement and Limited Recourse

The Conditions and other Transaction Documents contain restrictions on the ability of individual Noteholders and other Secured Parties to take enforcement action against the Issuer (other than, in the case of Noteholders, if the Note Trustee or the Security Trustee (including in its capacity as Collateral Agent), having become obliged to do so in accordance with the Transaction Documents, fails to take such action as it is entitled to take within a reasonable period and such failure is continuing) and provide for any outstanding claims of the Noteholders and other Secured Parties to extinguish, to the extent of any shortfall, if, following a realisation in respect of the Secured Assets and the application of all amounts resulting from such realisation under the Post-Enforcement Payment Priorities, the Security Trustee determines that there is no reasonable likelihood of there being any further realisation in respect of the Secured Assets.

See Conditions 13.3 (Enforcement Action by Individual Noteholders) and 20 (No Enforcement and Limited Recourse).

Listing Application has been made to the IFSRA, as competent authority under the Prospective Directive, for this Prospectus to be approved. Application has been made to the ISE for the Notes to be admitted to the Official List and to be eligible for trading on its regulated market.

Governing Law The Notes will be governed by the laws of England and Wales.

ISIN Class A Notes: XS0307297225

Class B Notes: XS0307297811

Class C Notes: XS0307298207

Common Code Class A Notes: 030729722

Class B Notes: 030729781

Class C Notes: 030729820

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THE ACCOUNTS

Issuer Distribution Account The Issuer has established the Issuer Distribution Account in its own name at the International Account Bank. The Issuer Distribution Account is to be operated and maintained in accordance with the terms of the Distribution Account Agreement.

The Issuer will use amounts credited to the Issuer Distribution Account to satisfy, inter alia, all payment obligations arising under the Notes on each Note Payment Date, in accordance with the Pre-Enforcement Payment Priorities.

Issuer Collection Account The Issuer has established the Issuer Collection Account in its own name at the Issuer Collection Account Bank. The Issuer Collection Account will be operated and maintained in accordance with the terms of the Issuer Collection Account Agreement.

Issuer Rouble Administrative Account

The Issuer has established the Issuer Rouble Administrative Account in its own name at the Issuer Collection Account Bank. The Issuer Rouble Administrative Account will be operated and maintained in accordance with the terms of the Rouble Administrative Account Agreement.

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THE TRANSACTION DOCUMENTS

Master Purchase Agreement Prior to the Issue Date, the Issuer entered into the Master Purchase Agreement with the Originator (including the Purchase Amendment Agreements, which form part of such Master Purchase Agreement) pursuant to which it acquired the Mortgage Portfolio.

Servicing Agreement On or before the Issue Date, the Issuer will enter into the Servicing Agreement with the Servicer, the Originator, the Cash Manager and the Security Trustee, pursuant to which the Servicer will agree to perform certain administrative functions in respect of the Mortgage Portfolio and act in accordance with the instructions of the Security Trustee following the delivery of (a) a Security Protection Notice or (b) an Enforcement Notice, in each case, pursuant to the Deed of Charge.

Enforcement Services Agreement On or before the Issue Date, the Issuer will enter into the Enforcement Services Agreement with the Servicer, the Originator, the Cash Manager and the Security Trustee, pursuant to which the Servicer will agree to perform certain enforcement functions in respect of the Mortgage Portfolio and to act in accordance with the instructions of the Security Trustee following the delivery of (a) a Security Protection Notice or (b) an Enforcement Notice, in each case, pursuant to the Deed of Charge (the Enforcement Services).

Back-up Servicing Agreement On or before the Issue Date, the Issuer will enter into the Back-up Servicing Agreement with the Back-up Servicer, the Originator, the Servicer, the Cash Manager and the Security Trustee, pursuant to which the Back-up Servicer will agree to assume the Servicer's administrative functions in respect of the Mortgage Loans should the appointment of the Servicer be terminated and act in accordance with the instructions of the Security Trustee following the delivery of a Security Protection Notice or an Enforcement Notice.

Corporate Services Agreement The Issuer has entered into the Corporate Services Agreement with the Managing Director and Stichting, pursuant to which the Managing Director will agree to act as managing director of the Issuer and to carry out certain administrative tasks on behalf of the Issuer.

Master Framework Agreement On or before the Issue Date, the Issuer will enter into the Master Framework Agreement with each of the other Transaction Parties, pursuant to which certain defined terms, principles of construction and other terms common to the Transaction Documents will be prescribed.

Deed of Charge On or before the Issue Date, the Issuer will enter into the Deed of Charge with the Security Trustee, the Collateral Agent, the Note Trustee (for itself and on behalf of the Noteholders) and the other Secured Parties (other than the Noteholders), pursuant to which the Issuer will create in favour of the Security Trustee

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on its own behalf and as trustee and Collateral Agent for the Noteholders and the other Secured Parties security in respect of the Secured Liabilities.

Pledge Agreement On or before the Issue Date, the Issuer will enter into the Pledge Agreement with the Collateral Agent, pursuant to which it will create in favour of the Collateral Agent on its own behalf and as agent for the Noteholders and the other Secured Parties a Russian law pledge over the Mortgage Portfolio.

Custodian Agreement On or before the Issue Date, the Issuer will enter into the Custodian Agreement with the Custodian, the Collateral Agent and the Servicer, pursuant to which the Custodian will agree, inter alia, to provide safe custody in respect of certain documents required in relation to the servicing of the Mortgage Portfolio and to release such documents to the Back-up Servicer in the event that the Back-up Servicer is required to assume the role of a Successor Servicer under the Back-up Servicing Agreement.

Subscription Agreement On or before the date of this Prospectus, the Issuer will enter into the Subscription Agreement with the Lead Managers and the Originator, pursuant to which, inter alia, the Lead Managers will agree to subscribe or procure subscribers for the Notes on the Issue Date.

Note Trust Deed On or before the Issue Date, the Issuer will enter into the Note Trust Deed with the Note Trustee, pursuant to which the Issuer will agree to issue the Notes and the Note Trustee will agree to represent the rights of the Noteholders in respect of the Notes.

Agency Agreement On or before the Issue Date, the Issuer will enter into the Agency Agreement with the Principal Paying Agent, the Registrar, the Agent Bank, the Irish Paying Agent, the Cash Manager, the Note Trustee and the Security Trustee, pursuant to which the Principal Paying Agent and the Irish Paying Agent will each agree to act as paying agent for the Notes, the Agent Bank will agree to operate and maintain the paying agency accounts and to make each Agent Bank Determination and the Registrar will agree to operate and maintain the Register recording the holders of the Notes from time to time.

Cash Management Agreement On or before the Issue Date, the Issuer will enter into the Cash Management Agreement with the Cash Manager and the Security Trustee, pursuant to which the Cash Manager will provide the Cash Management Services including, inter alia, the operation of the International Issuer Accounts (including the application of funds on each Note Payment Date under the Pre-Enforcement Payment Priorities) and the maintenance of certain ledgers in the books of the Issuer.

Distribution Account Agreement On or before the Issue Date, the Issuer will enter into the Distribution Account Agreement with the Cash Manager, the Security Trustee and the International Account Bank, pursuant to which the International Account Bank will agree to maintain

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the International Issuer Accounts.

Issuer Collection Account Agreement

On or before the Issue Date, the Issuer will enter into the Issuer Collection Account Agreement with the Issuer Collection Account Bank, the Servicer, the Cash Manager and the Collateral Agent, pursuant to which the Issuer Collection Account Bank will agree to maintain the Issuer Collection Account.

Rouble Administrative Account Agreement

On or before the Issue Date, the Issuer will enter into the Rouble Administrative Account Agreement with the Issuer Collection Account Bank, the Servicer, the Cash Manager and the Collateral Agent, pursuant to which the Issuer Collection Account Bank will agree to maintain the Issuer Rouble Administrative Account.

The principal purpose of the Issuer Rouble Administrative Account is to enable the Issuer to receive Rouble payments in respect of the Related Security (which, for the avoidance of doubt, excludes all interest and principal payable under the Mortgage Loans) and to receive (from the Issuer Distribution Account) and pay any amounts required to settle State Duties. The Rouble proceeds received into the Issuer Rouble Administrative Account (except where such proceeds are to be applied to settle State Duties) will be transferred to the Issuer Collection Account at the rate of exchange of the Issuer Collection Account Bank (being such rate as is reasonably determined by the Issuer Collection Account Bank, in accordance with its usual practice) on the day of the receipt of the respective Rouble amounts.

Swap Agreements On or before the Issue Date, the Issuer and the Security Trustee will enter into a Swap Agreement with each of the Swap Counterparties, pursuant to which the Issuer will hedge its exposure to fluctuations in interest rates under the Class A Notes and the Class B Notes.

Subordinated Loan Agreement On or before the Issue Date, the Issuer will enter into the Subordinated Loan Agreement with the Subordinated Loan Provider and the Security Trustee, pursuant to which the Subordinated Loan Provider will agree to make available to the Issuer a committed term loan facility (the Subordinated Loan). The Subordinated Loan will comprise two tranches, namely (a) an expenses tranche (the Subordinated Expenses Advance) and (b) a reserve fund tranche (the Subordinated Reserve Advance), which are to be drawn and applied by the Issuer (i) in the case of the Subordinated Expenses Advance, in or towards the discharge of any Transaction Closing Expenses and (ii) in the case of the Subordinated Reserve Advance, to establish the Reserve Fund at the Initial Reserve Fund Required Amount.

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RISK FACTORS

An investment in the Notes involves a number of risks. Prospective investors should consider carefully the following risks and uncertainties in addition to the other information presented in this Prospectus. The risks and uncertainties described below are not necessarily the only risks relating to an investment in the Notes. Additional risks and uncertainties not presently known to the Issuer or the Originator or that the Issuer and the Originator currently deem immaterial may also impair the performance of the Mortgage Portfolio and affect the price of the Notes or the ability of the Issuer to make payments of interest and principal due under the Notes. If any of the following risks actually occurs, the business, results of operations or financial condition of the Issuer could be materially adversely affected. In that event, the value of the Notes could decline, and investors may lose part or all of their investment.

RISKS RELATING TO THE NOTES AND THE MORTGAGE PORTFOLIO

Limited liability under the Notes means Noteholders are relying solely on the Issuer to fund payments due under the Notes

The Notes will be solely obligations of the Issuer and will not be obligations or responsibilities of, or guaranteed by, any other entity. In particular, the Notes will not be the obligations or responsibilities of, and will not be guaranteed by, the Note Trustee, the Security Trustee, the Lead Managers, the Originator, the Servicer, the Back-up Servicer, the Subordinated Loan Provider, the International Account Bank, the Cash Manager, the Agents, the Swap Counterparties, the Custodian or the Obligors. Furthermore, none of such persons accepts any liability whatsoever in respect of any failure by the Issuer to make any payment of any amount due on the Notes.

Limited resources of the Issuer may impact its ability to make payments due under the Notes

The only means by which the Issuer will be able to make payments under the Notes will be:

• interest, other revenue and principal received under the Mortgage Portfolio;

• the Reserve Fund Drawings;

• the net receipts under the Swap Agreements (if any);

• peripheral income of the Issuer from cash held in the Issuer Distribution Account; and

• if applicable, the proceeds of any enforcement of the Security.

The Issuer will not have any other funds available to it to meet its obligations under the Notes or any other payments ranking in priority to, or pari passu with, the Notes.

The Class A Notes are to be senior in right of payment of interest and principal to the Class B Notes and the Class C Notes, and the Class B Notes are to be senior in right of payment of interest and principal to the Class C Notes. Due to their subordination, the Class 䄠 Notes and the Class C Notes bear a greater credit risk than the Class A Notes, and the Class C Notes bear a greater credit risk than the Class B Notes.

The Issuer's ability to make full and timely payments on the Notes will be dependent upon the Servicer performing its obligations under the Servicing Agreement and, where applicable, the Enforcement Services Agreement to procure that amounts due and payable by the Obligors are paid into the Issuer Collection Account (or, if applicable, the Issuer Rouble Administrative Account) and to ensure that amounts so collected are remitted to the Issuer Distribution Account.

Limited secondary market for the Mortgage Certificates may limit the ability of the Issuer to redeem the Notes in full

The ability of the Issuer to redeem the Notes in full, including on an enforcement of the Security, while any amounts payable under the Mortgage Portfolio are still outstanding, may depend upon whether the

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Mortgage Certificates can be realised to obtain an amount sufficient to redeem the Notes. There is currently only a limited and relatively illiquid secondary market for loans secured by residential mortgages in the Russian Federation and the Issuer or, following the delivery of an Enforcement Notice, the Security Trustee may not be able to sell the Mortgage Certificates on payment terms sufficient to redeem the Notes in full should it be required to do so. This may negatively impact the Noteholders' ability to receive a full redemption of the Notes.

In relation to an enforcement of the Security, the Security Trustee shall not be responsible or in any way liable for any failure to sell any Mortgage Certificate or for any sale of a Mortgage Certificate at a price below the par value of the relevant Mortgage Loan.

Reliance on other Transaction Parties may lead to incomplete performance of obligations under the Transaction Documents required to be carried out on the Issuer's behalf

The Issuer has engaged the Servicer to administer the Mortgage Portfolio pursuant to the Servicing Agreement. While the Servicer is under contract to perform certain services under the Servicing Agreement, there can be no assurance that it will be willing or able to perform those services in the future. Although the Back-up Servicer has been engaged to provide equivalent services under the Back-up Servicing Agreement, in the event that the appointment of the Servicer is terminated under the Servicing Agreement, there can be no assurance that the servicing will occur without an adverse effect on the Noteholders, or that an equivalent level of performance on collections and administration of the Mortgage Loans can be maintained by the Back-up Servicer. The ability of the Back-up Servicer to fully perform the required services would depend, inter alia, on the information software and records available at the time of the relevant appointment.

Absence of a secondary market for the Notes may impact their value

Although an application has been made to list and admit to trading each Class of Notes on the ISE, there can be no assurance that such a listing or admission to trading will be obtained. If a market for the Notes develops, there can be no assurances as to its liquidity, the ability of the Noteholders to sell their Notes or the price at which the Noteholders will be able to sell their Notes. The market price of the Notes could be subject to fluctuations due to, among other things, variations in the value of the Mortgage Certificates, the market for similar securities, prevailing interest rates, changes in regulation and general market and economic conditions. There can be no guarantee as to the price of the Notes on any secondary market if such a secondary market for the Notes develops.

If Definitive Note Certificates are required to be issued, Noteholders may not receive a Definitive Note Certificate if their current holding is less than the minimum denomination of the Notes and certain of the Notes represented by Definitive Note Certificates may be illiquid and difficult to trade

The Notes have a denomination consisting of a minimum authorised denomination of US$100,000 plus higher integral multiples of US$1.00. Accordingly, it is possible that Notes may be traded in amounts in excess of the minimum authorised denomination that are not integral multiples of such minimum authorised denomination. In such a case, if Definitive Note Certificates are required to be issued, a Noteholder who holds a principal amount which is less than the minimum authorised denomination at the relevant time may not receive a Definitive Note Certificate in respect of such holding and may need to purchase additional Notes such that their holding is at least equal to the minimum authorised denomination. If Definitive Note Certificates are issued, any Notes represented by such Definitive Note Certificates which have a denomination that is not an integral multiple of the minimum authorised denomination may be illiquid and difficult to trade.

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Ratings of the Rated Notes may decline and "unsolicited ratings" that are detrimental to the value of the Notes may emerge

The ratings assigned to the Rated Notes upon their issuance by the Rating Agencies are based upon, among other things, the projected revenues from the Mortgage Portfolio and other relevant structural features of the Transaction, which only reflect the Rating Agencies' current views. These ratings address the likelihood of full receipt by any of the Noteholders of interest and principal on the Rated Notes. There is no assurance that such ratings will continue for any period of time or that they will not be reviewed, revised, suspended or withdrawn entirely by the Rating Agencies as a result of, among other things, changes in, or the unavailability of, information or if, in the Rating Agencies' judgement, circumstances so warrant. Rating agencies other than Moody's or Fitch could seek to rate the Rated Notes and if such "unsolicited ratings" are lower than the equivalent ratings assigned to the Rated Notes by Moody's or Fitch, such ratings could have an adverse effect on the market value of the Notes.

Failure by a Swap Counterparty or the Issuer to perform its obligations under an applicable Swap Agreement or termination of a Swap Agreement may be detrimental to the value of the Notes

Payment Defaults under the Swap Agreements

The Mortgage Loans contained in the Mortgage Portfolio are denominated in Dollars and pay a fixed interest rate. The Notes will also be denominated in Dollars, but the Rated Notes will pay a floating interest rate. To hedge the Issuer's interest rate exposure (given the mismatch between the fixed rate Mortgage Loans and such floating rate Notes), the Issuer will enter into a Swap Agreement with each Swap Counterparty. Each Swap Counterparty is only obliged to make payments to the Issuer under the applicable Swap Agreement to the extent that the Issuer complies with its payment obligations to such Swap Counterparty under the applicable Swap Agreement. If that Swap Counterparty is not obliged to make payments, or if it defaults in its obligations to make payments, of amounts in Dollars equal to the full amount to be paid to the Issuer on the payment date under the relevant Swap Agreement (in each case, being the same date on which the Note Payment Date for the Notes falls), the Issuer will be exposed to changes in interest rates. Unless a replacement swap agreement is entered into in such circumstances, the Issuer may have insufficient funds to make interest payments due on the Notes.

Termination Payments under the Swap Agreements

If a Swap Agreement terminates, the Issuer may be obliged to make a termination payment to the Swap Counterparties. The amount of the termination payment will be based on the cost of entering into a replacement swap agreement. There can be no assurance that the Issuer will have sufficient funds available to make any termination payment under a Swap Agreement. Nor can any assurance be given that the Issuer will be able to enter into a replacement swap agreement or, if a replacement swap agreement is entered into, that the credit rating of the replacement swap counterparty will be sufficiently high to prevent a downgrade of the then current ratings of the Rated Notes by the Rating Agencies (or either of them).

Except where a Swap Counterparty has caused the relevant Swap Agreement to terminate by its own default, any termination payment due from the Issuer following termination of such Swap Agreement (including any extra costs incurred if the Issuer cannot immediately enter into a replacement swap agreement) will rank senior to the Notes under the applicable Payment Priorities.

Therefore, if the Issuer is obliged to make a termination payment to a Swap Counterparty or to pay any other additional amount as a result of the termination of a Swap Agreement, this could reduce the Issuer's ability to make payments of interest on the Notes.

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Substitution of the Servicer may be delayed, leading to losses in collections under the Mortgage Portfolio

In the event of the termination of the appointment of the Servicer by reason of the occurrence of certain events set out in the Servicing Agreement (each, a Servicer Event), the Back-up Servicer will be appointed as Successor Servicer of the Mortgage Portfolio pursuant to the terms of the Back-up Servicing Agreement.

The Servicer relies on its specially trained staff to maintain efficient collection procedures. If the Servicer is removed, the processing of payments on the Mortgage Portfolio may be delayed and there may be losses in collections as the Back-up Servicer assumes its responsibilities and replaces arrangements operated by the Servicer with alternative payment procedures implemented by the Back-up Servicer. Under the Mortgage Loan Agreements, repayment is generally effected by direct debit from an account that each Customer has opened with the Originator. The Back-up Servicer would not be able to benefit from the existing direct debit procedures and would need to ask each Customer to open an account with the Back-up Servicer for the purpose of making payments under the Mortgage Loans via direct debit.

The ability of the Back-up Servicer (or any Successor Servicer) to fully perform its duties (including duties in relation to any Defaulted Mortgage Certificate) would depend upon the information and records available to it, and it is possible that there could be an interruption in the administration during the course of the Servicer substitution (for instance, due to the necessity for the Back-up Servicer to deliver payment instruction notices to all of the Customers, notwithstanding that such notices are required to be delivered by courier) which may cause losses or delays in payments due under the Notes.

Furthermore, if the Back-up Servicer is not appointed as Successor Servicer following a Servicer Event or the appointment of the Back-up Servicer as Successor Servicer is terminated due to the occurrence of certain events set out in the Servicing Agreement or because it fails to meet or maintain the criteria set out in the Back-up Servicing Agreement (each, a Back-up Servicer Event), it would be necessary for the Issuer to appoint another Successor Servicer. There is no guarantee that a Successor Servicer could be found who would be willing to administer the Mortgage Portfolio in accordance with the terms of the Servicing Agreement and the Enforcement Services Agreement.

Any delays or other adverse effects caused by a Servicer substitution may adversely affect the ability of the Issuer to make payments of interest or principal due under the Notes.

This risk may be mitigated by the availability of the Reserve Fund. See Liquidity Support.

The Security Trustee shall have no liability or responsibility for monitoring the activities and obligations of the Servicer and shall assume, unless it has actual knowledge to the contrary, that the Servicer is properly carrying out its responsibilities and obligations. The Security Trustee will not, at any time, carry out any of the responsibilities or obligations of the Servicer itself.

Effective enforcement of Security may be difficult and the subordination under the Post-Enforcement Payment Priorities may reduce the recovery on enforcement of the Class B Noteholders or the Class C Noteholders

Upon enforcement of the Security for the Notes, the Security Trustee will have recourse only to the Mortgage Certificates and the other assets of the Issuer then in existence which are subject to the Security (see Description of Principal Transaction Documents – The Pledge Agreement and Description of Principal Transaction Documents – The Deed of Charge). The terms on which the Security will be held will provide that, upon enforcement, certain payments will be made in priority to payments in respect of interest on, and principal of, the Notes, as set out in the Post-Enforcement Payment Priorities.

Upon such enforcement (a) amounts of interest and principal payable on the Class A Notes will rank in priority to all amounts to be paid to the holders of the Class 䄠 Notes and the Class C Notes, (b)

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amounts of principal and interest payable on the Class 䄠 Notes will rank in priority to all amounts to be paid to the holders of the Class C Notes, (c) no amounts will be paid to the holders of the Class B Notes or the Class C Notes until all amounts to be paid to the holders of the Class A Notes have been paid in full and (d) no amounts will be paid to the holders of the Class C Notes until all amounts to be paid to the holders of the Class 䄠 Notes have been paid in full.

This subordination may reduce the recovery of the holders of the Notes of a particular Class upon an enforcement of the Security. For a description of the Post-Enforcement Payment Priorities, see Condition 9.3 (Post-Enforcement Payment Priorities).

Given the nature of the Mortgage Certificates and the other risks relating to the Mortgage Portfolio and the Russian Federation, it may be difficult for the Security Trustee to take enforcement action in relation to the Security and it may not be possible to realise sufficient funds from the Security to make payments due in respect of the Notes.

Responsibilities of the Security Trustee to protect the value of the Security are limited

The Security Trustee (including in its capacity as Collateral Agent) will not, and will not be bound to, take any steps, institute any proceedings, exercise its rights and/or take any other action under or in connection with any of the Transaction Documents (including, without limitation, enforcing the Security but excluding any such right, power or discretion which is personal to the Security Trustee or is to preserve or protect the Security Trustee's position or is of a purely administrative nature) unless the Security Trustee is directed to do so by the Note Trustee, and has been indemnified and/or secured to its satisfaction against all Liabilities which may attach to it or which it may incur by so doing (and such action is legal in all relevant jurisdictions).

Notwithstanding the foregoing paragraph, the Security Trustee is obliged to appoint an administrative receiver (to the extent permitted or not prohibited by law) if it has actual notice of an intention to appoint an administrator in respect of the Issuer; however, the Security Trustee will not be liable for any failure to appoint an administrative receiver in respect of the Issuer, save in the case of its own negligence, wilful default or fraud, or, if having used its reasonable endeavours, it is unable to find a person who is willing to be appointed as an administrative receiver on the terms that it shall only be indemnified by the Security Trustee from amounts for the time being held by the Security Trustee on the terms of the Deed of Charge and available for such purpose. In the Deed of Charge, the Issuer waives any claims against the Security Trustee in respect of any appointment of an administrative receiver made in order to block the appointment of an administrator.

In relation to an enforcement of the Security, the Security Trustee will not be responsible, or in any way liable, for any failure to sell any Mortgage Certificate or for any sale of a Mortgage Certificate at a price below the par value of the relevant Mortgage Loan, and will not be liable, whether by reason of the Security or entering into possession of a Secured Asset, to account as a mortgagee in possession or for any loss on realisation or for any default or omission for which a mortgagee in possession might be liable. The Security Trustee has no obligation to insure any of the Secured Assets or to procure that these are insured.

Under the Deed of Charge, the Security Trustee expressly does not assume, and will not be obliged to perform, the obligations of the Issuer or the Note Trustee.

The Deed of Charge provides that certain provisions of the Note Trust Deed, as they apply to the Note Trustee, also apply to the Security Trustee. These include the following:

• the Security Trustee may at its discretion and pending payment invest monies at any time available for the payment against any Notes in some or any investments authorised under the Note Trust Deed, for such periods as it may consider expedient and may convert any deposited monies into any other currency. The Security Trustee shall not be responsible for any loss

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resulting from any such investments or deposits, whether due to depreciation in value, fluctuations in exchange rates or otherwise;

• the Issuer agrees to indemnify the Security Trustee against all Liabilities to which it may be or become subject in the execution, or purported execution, or exercise of its trusts, duties, rights, powers, authorities and discretions under the Transaction Documents or in respect of any other matter or thing done or omitted in any way relating to a Transaction Document;

• the extensive powers, discretions and limitations on liability relating to the Note Trustee as set out in Clause 16 of the Note Trust Deed (Supplement to Trustee Acts) apply equally to the Security Trustee; and

• in the event of negligence, wilful default or fraud on the part of either the Note Trustee or the Security Trustee, none of the provisions of the Note Trust Deed or the Deed of Charge will act as an exemption from, or indemnification for, liability arising from such negligence, wilful default or fraud in relation to its duties under the Note Trust Deed and the Deed of Charge respectively and any right to indemnification or limitation on liability of the Note Trustee or Security Trustee should be read subject to this paragraph.

In every case where the Security Trustee is party to a Transaction Document, it shall only be liable for obligations under those documents, or responsible for the obligations of other Transaction Parties, where it is expressly provided that this is the case.

Application of Dutch insolvency law on an insolvency of the Issuer may restrict ability of Secured Parties to recover amounts due to them from the Issuer

The Issuer is a private company with limited liability incorporated under the laws of The Netherlands, having its registered office in Amsterdam, The Netherlands, and is managed by TMF Management B.V. Accordingly, insolvency proceedings with respect to the Issuer would be likely to proceed under, and be governed by, Dutch insolvency law.

Subject to provisions of any applicable bankruptcy, insolvency, liquidation, reorganisation or moratorium, and other similar laws of general application relating to or affecting generally the enforcement of creditors' rights and remedies from time to time in effect (including the doctrine of voidable preference within the meaning of Section 3:45 of The Netherlands Civil Code and/or section 42 et seq. of The Netherlands Bankruptcy Act), if the Issuer were to be declared insolvent in The Netherlands, the Secured Parties would need to rely on the security rights created to their benefit. Since these security rights are not governed by Dutch law, these rights will first need to be recognised in The Netherlands. If recognised, the foreign security right will be enforced, and have the same ranking as the Dutch security right which, in its context and purpose, most closely resembles it. The Issuer has been advised that it is likely that the foreign security rights most closely resemble the Dutch rights of pledge (pandrecht). In such event, the following mandatory rules of Dutch insolvency law may affect the enforcement of Secured Parties' rights or the enforcement of the Security:

• a statutory stay of execution period (two months with a possible extension by at most two further months), which applies both in the case of a moratorium of payments (surseance van betaling) and in case of a bankruptcy (faillissement), which may be imposed by court order, although such statutory stay does not affect the validity of the right of pledge over such rights and receivables;

• if (in accordance with the laws governing the receivables concerned) the debtors of these receivables have validly discharged their debts by paying to the liquidator (curator) in the Issuer's bankruptcy rather than to the relevant Secured Party, the latter will have a highly preferred claim in respect of the monies so paid, but will not be able to enforce its rights as if there were no bankruptcy and the secured creditor will have to share in the bankruptcy costs and will only receive such net proceeds at the end of the bankruptcy;

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• if (in accordance with the laws governing the receivables concerned) the debtors of these receivables have validly discharged their debts by payment to the Issuer prior to its bankruptcy or moratorium of payments, and if the Issuer has not transferred such payments to the relevant Secured Party, that Secured Party has, both before and after such insolvency of the Issuer, a non-preferred claim (concurrente vordering) against the Issuer or the estate (as the case may be) in respect of such amounts;

• a liquidator in bankruptcy can force the holder of the pledge to enforce its security interest within a reasonable period of time, failing which the liquidator will be entitled to sell the pledged assets, if any, and the holder of the pledge will have to share in the bankruptcy costs;

• excess proceeds of enforcement must be returned to the Issuer in its insolvency; they may not be set off against an unsecured claim of any Secured Party against the Issuer. Such set-off is allowed prior to the Issuer's insolvency;

• simultaneously with the adjudication of the Issuer's bankruptcy, a Dutch liquidator or, in case of a moratorium of payments (surséance van betaling), an administrator (bewindvoerder) will be appointed. Such appointment will have an overriding effect on the appointment of a receiver as set out in the relevant security documents. The appointment of such receiver cannot prevent the Issuer from being declared bankrupt in The Netherlands. A receiver appointed under foreign (i.e. non-Dutch) law cannot represent the Issuer other than by power of attorney. As far as the appointment of such receiver could be considered a power of attorney to represent the Issuer, such power of attorney will terminate by operation of law and without notice upon the Issuer's bankruptcy; and

• any future rights or assets acquired by the Issuer after it has been declared bankrupt (failliet) or after it has been granted a moratorium of payments will not be subject to the security previously granted by the Issuer.

Any of the above rules or measures may impair the ability of the Noteholders or the Security Trustee to exercise their rights with respect to the Issuer or the Security, which may affect the ability of the Noteholders to receive all amounts due and payable to them under the Notes in case of an insolvency of the Issuer.

"True Sale" of the Mortgage Portfolio to the Issuer may be challenged by Russian courts on an insolvency of the Originator

If pre-bankruptcy measures are instituted against the Originator (such as the appointment of temporary administrative managers) or the Originator becomes insolvent or becomes subject to bankruptcy or equivalent proceedings, then the relevant pre-bankruptcy or bankruptcy officer (or, in certain cases, creditors) may seek to challenge the sale of the Mortgage Portfolio to the Issuer. The sale could be challenged on the following grounds:

• the sale was made on terms "materially worse" than the terms of analogous transactions, provided that the sale of the relevant Mortgage Certificates and the transfer of related rights and obligations occurred not earlier than three years prior to the appointment of temporary administrative managers;

• there was "preferential satisfaction" of the claim of one creditor over those of other creditors, provided that the sale of the relevant Mortgage Certificates and the transfer of related rights and obligations occurred not earlier than six months prior to commencement of insolvency proceedings;

• it was a transaction with certain "interested parties", if a court views the Issuer as a related party of the Originator for bankruptcy law purposes and if, at the same time, the transaction has resulted or may result in losses to the debtor or its creditors; or

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• it was invalid under the Civil Code of the Russian Federation (the Russian Civil Code). This would include transactions contradicting the law, transactions having a goal obviously conflicting with fundamental principles of legal order and morality, fictitious or sham transactions, certain ultra vires transactions and transactions made without due authorisation.

There is little court practice or guidance under Russian law on the interpretation of "materially worse", "preferential satisfaction" or "interested party" transactions. There would seem to be no grounds for a challenge of the sale of the Mortgage Portfolio to the Issuer as a transaction with an "interested party", as the Issuer is an orphan special purpose vehicle and neither its management nor shareholders are affiliated with the Originator.

If a Russian court were to determine that the transfer of the Mortgage Portfolio to the Issuer was not a "true sale", the court could choose to invalidate and unwind the entire transaction, which would force the return of the Mortgage Portfolio to the Originator in exchange for the purchase price (whether or not the Originator has sufficient funds to pay such purchase price). If the Originator does not have sufficient funds, then the Issuer would be an unsecured creditor of the Originator. This could result in the Issuer having insufficient funds to make required payments of interest or principal under the Notes.

However, although the Russian law legal opinion issued by counsel in relation to the Transactions is given subject to the foregoing, such opinion does support the characterisation of the transfer of the Mortgage Portfolio as a "true sale", noting that a mortgage certificate (zakladnaya) is a special instrument created by Russian law to facilitate, inter alia, the transfer of rights under a mortgage loan from an existing lender to a new lender.

On an insolvency of the Servicer, funds of the Issuer held by the Servicer would be susceptible to commingling risk

Collections from Customers will initially be credited to the Issuer Collection Account and certain peripheral payments made or received by the Issuer in Roubles not comprising interest or principal due under any Mortgage Loan will initially be credited to the Issuer Rouble Administrative Account. The Issuer Collection Account and the Issuer Rouble Administrative Account are Russian bank accounts of the Issuer opened with the Servicer.

Under Russian law, within three months following an appointment of temporary administrative managers or a bankruptcy manager in respect of the Originator, such temporary administrative managers or bankruptcy manager may repudiate certain contracts of the Originator which have not been performed either in part or in full by their parties. More specifically, a contract could be repudiated if it can be characterised as either:

• a contract preventing the recovery of the Originator's solvency; or

• a contract which, when compared to transactions entered into in similar circumstances, is disadvantageous to the Originator and whose performance would cause losses for the Originator.

To repudiate a contract, it is sufficient for a temporary administrative manager or a bankruptcy manager of the Originator (as the case may be) to send a notice of repudiation to all parties to such contract. Each party receiving such notice would be entitled to claim damages against the Originator. It is unlikely that a temporary administrative manager or bankruptcy manager of the Originator would be able to repudiate any sales and transfers of rights under the Mortgage Certificates which have been completed by the Issue Date. However, this risk may be relevant in respect of the transfers by the Servicer of collections received by the Servicer from Customers to the Issuer pursuant to the Issuer Collection Account Agreement.

Further, under Federal Law No. 40-FZ dated 25 February 1999 "On Insolvency of Credit Organisations", as amended, if temporary administrative managers are appointed in respect of the Servicer, the CBR may impose a moratorium for up to three months after the date of such appointment

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in respect of payment obligations of the Servicer towards its creditors. The moratorium would extend to payment obligations which arose prior to the appointment of the Servicer's temporary administrative managers irrespective of the time such payment obligations become due. The moratorium, if imposed against the creditors of the Servicer, would prevent the Servicer from making transfers of collections on the Mortgage Loans received from the Obligors to the Issuer.

The Issuer will face a transfer risk in relation to such collections because on a bankruptcy of the Servicer, it is likely that a Russian court will refuse to segregate money in the Issuer Collection Account or, as the case may be, the Issuer Rouble Administrative Account, due to the Issuer from the Servicer's estate. It is likely that all money in the Issuer Collection Account and, if applicable, the Issuer Rouble Administrative Account will be included in the estate of the Servicer, and the Issuer would rank as an unsecured creditor in respect of its claim. This could result in the Issuer having insufficient funds to make required payments of interest or principal under the Notes.

This risk is mitigated by the provisions of the Issuer Collection Account Agreement and the Rouble Administrative Account Agreement which require amounts standing to the credit of the Issuer Rouble Administrative Account to be converted into Dollars and promptly credited to the Issuer Collection Account, and for amounts standing to the credit of the Issuer Collection Account to be regularly transferred to the Issuer Distribution Account maintained with the International Account Bank.

Performance of Mortgage Loans may be adversely affected by a number of factors

The performance of the Mortgage Loans when due is subject to credit, liquidity and interest rate risks and will generally fluctuate in response to, among other things, market interest rates, general economic conditions, the financial standing of Customers and other similar factors. Other factors (which may not affect real estate values) may have an impact on the ability of Customers to repay the Mortgage Loans. Loss of earnings, illness, divorce and other similar factors may lead to an increase in delinquencies and bankruptcy filings by the Customers and could ultimately have an adverse impact on the ability of the Customers to repay the Mortgage Loans.

In addition, in the event of enforcement against a Customer, the ability of the Issuer to dispose of the relevant Mortgaged Property at a price sufficient to repay the amounts outstanding under the relevant Mortgage Loan will depend upon a number of factors including the availability of buyers for that Mortgaged Property and property values in general at that time.

The Servicer's right to collect payment through the direct debit process may be questioned which may delay receipt of payments under the Mortgage Loans

Under the Mortgage Loan Agreements, repayment is generally effected by direct debit from an account each Customer has opened with the Originator. According to the Russian law regulations, where the direct debit is to be made for the benefit of a third party, such third party should be properly identified by the obligor in the underlying documentation establishing the direct debit. In the absence of such identification (as will be the case following the assignment to the Issuer), the Servicer's right to collect payment through the direct debit process may be questioned. After the transfer of the Mortgage Certificates to the Issuer, the Servicer will continue debiting the Customers' accounts with the Servicer for the purposes of discharging their obligations under the Mortgage Loans. Russian law regulations relating to direct debit procedures are not entirely clear on whether the Servicer would be properly authorised to use the direct debit rights if it ceases to be the creditor of the Customers. Therefore, no assurance can be given that the Servicer will be able to utilise the direct debit process for the duration of the term of the Notes. Although the Servicer's inability to effect direct debit payments does not affect the transfer of the Mortgage Certificates and rights of the Issuer under the Mortgage Loans, it may cause delays in payments on the Notes.

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Note Trustee may be required to act to the detriment of a Class of Noteholders where the interests of different Classes conflict

The Note Trust Deed contains provisions requiring the Note Trustee, with respect to the rights, powers, trusts, authorities, duties or discretions of the Note Trustee, to act in the general interests of the Noteholders. Where, in the opinion of the Note Trustee, there is a conflict between the interests of the holders of the Class A Notes and the interests of the holders of the Class 䄠 Notes and/or the holders of the Class C Notes, the Note Trustee shall give priority to the interests of the holders of the Class A Notes, whose interests shall prevail.

Where, subject to the paragraph above, on or after the Class A Notes have been redeemed in full, in the opinion of the Note Trustee, there is a conflict between the interests of the holders of the Class B Notes and the interests of the holders of the Class C Notes, the Note Trustee shall give priority to the interests of the holders of the Class 䄠 Notes, whose interests shall prevail.

These conflicts of interest may adversely affect the ability of the Noteholders of a particular Class to receive payments of interest or principal due under their Notes.

Interests of Noteholders within the Senior Outstanding Class prevail in relation to any directions given to Note Trustee or any Extraordinary Resolution

The Note Trust Deed contains provisions limiting the powers of the Class B Noteholders and/or the Class C Noteholders to request or direct the Note Trustee to take any action or to pass an effective Extraordinary Resolution according to the effect thereof on the interests of the holders of the Senior Outstanding Class. Except in certain circumstances, the Note Trust Deed contains no such limitation on the powers of the Senior Outstanding Class, by reference to the effect on the interests of the Class B Noteholders and/or the Class C Noteholders, as the case may be, the exercise of which will be binding on the Class B Noteholders and/or the Class C Noteholders, as applicable, irrespective of the effect thereof on their interests.

The operation of these limitations may adversely affect the value of the Class B Notes or Class C Notes or the ability of the Class B Noteholders or Class C Noteholders to recover interest or principal due under their Notes.

Credit enhancement applicable to the Notes of any Class may be insufficient to prevent credit losses arising under the Mortgage Portfolio from affecting the value of such Notes

The Notes are to benefit from certain credit enhancement mechanisms and features, as described under Credit Enhancement. These only provide a finite amount of credit support for the Notes and it is possible that credit losses under the Mortgage Portfolio will exhaust some or all of the support afforded by these mechanisms and features. If such credit enhancement is depleted or exhausted in relation to the Notes of any Class, this would have an adverse effect on the value of the Notes of that Class.

Restrictions on transfer of Notes may affect their value

The Notes have not been, and will not be, registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States of America. The offering of the Notes will be made pursuant to exemptions from the registration provisions of the Securities Act and from state securities laws. No person is obliged to register the Notes under the Securities Act or any state securities laws. Accordingly, and pursuant also to applicable legislation of other jurisdictions, offers and sales of the Notes are subject to certain restrictions, some of which are described under Subscription and Sale. These restrictions may hinder the Noteholders' ability to sell the Notes.

Conflicts of Interest among Transaction Parties may adversely affect ability of Issuer to make payments of principal and interest in respect of the Notes

Certain of the Transaction Parties act in more than one capacity. For example, The Bank of New York acts as International Account Bank, Cash Manager, Agent Bank and Principal Paying Agent, Raiffeisen

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Zentralbank Österreich AG acts as a Lead Manager and as a Swap Counterparty and Commercial Bank "Moskommertsbank" LLC acts as the Originator, Servicer, Subordinated Loan Provider and Issuer Collection Account Bank. The fact that these entities fulfil more than one role could lead to a conflict between the rights and obligations of these entities in one capacity and the rights and obligations of these entities in another capacity. In addition, this could also lead to a conflict between the interests of these entities and the interests of the Noteholders. These factors may adversely affect the ability of the Issuer to make payments of principal and interest in respect of the Notes.

The Lead Managers and their respective affiliates shall not by virtue of acting in such capacity be deemed to have other duties or responsibilities other than as expressly provided in the documents with respect to such capacity. Any Lead Manager may have entered into or may enter into business dealings with the Originator or any other party to the transaction from which they may derive revenues and profits in addition to fees stated in the documents without any duty to account therefor and may from time to time be in possession of information (confidential or otherwise) or opinions, which information or opinions might, if known by other parties or Noteholders, affect decisions made by it or them. Notwithstanding this, neither Lead Manager shall have any duty or obligation to provide such information or opinions to the Issuer, the Note Trustee, any Noteholder or any other Transaction Party. The Lead Managers and their affiliates and other parties to the transaction may also have ongoing relationships with each other and may own securities or other obligations issued by them or deal in any obligation and may make loans or otherwise extend credit to, and generally engage in any kind of commercial or investment banking, investment management or other business transaction with, the Originator or each other and may act with respect to any such business transaction in the same manner as if the Notes did not exist. Either Lead Manager may purchase Notes from time to time and their interests may conflict with those of other Noteholders.

Lack of information relating to Mortgage Portfolio renders future performance of Mortgage Portfolio more difficult to predict

The Originator has been originating mortgage loans since December 2005. Therefore, the information on the Mortgage Portfolio and the mortgage loan business of the Originator presented in this Prospectus is necessarily limited in scope and duration. The Originator does not have any other information which would be useful in evaluating this transaction, as this is its first sustained mortgage lending programme. Nor is much information available on the Russian mortgage loan industry, as it has only recently emerged on a material scale, and no trade organisations yet exist which compile such data. To date, the delinquency and default rates for the Mortgage Portfolio have been low, although there can be no assurance that these rates will reflect the actual experience of the Mortgage Portfolio in the future and therefore the ability of the Issuer to make payments of interest and principal due under the Notes.

The Issuer's rights as mortgagee evidenced by the Mortgage Certificates are not registered with the State Register

The Issuer, as the holder of each Mortgage Certificate, is entitled to request the relevant state registration authority to register it as a mortgagee with the State Register. Such registration brings certain practical benefits for the Issuer. In particular, when the rights of the new holder are registered with the State Register and the Customer is notified of such registration (by provision to the Customer of the properly certified extract from the State Register), the Customer must make payments to the Issuer without requiring that the relevant Mortgage Certificate be presented each time the Customer is required to make a payment as a condition to such obligation. In contrast, if the rights of the Issuer are not registered with the State Register, the Customer under the relevant Mortgage Loan may require the Issuer to present the Mortgage Certificate each time that the Customer makes a payment under the relevant Mortgage Loan. Further, in case of the loss of a Mortgage Certificate, if the rights of the Issuer are properly registered with the State Register, the recovery of such Mortgage Certificate becomes

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easier, because the Issuer would not need to go to a Russian court to prove it was the owner of the lost Mortgage Certificate.

If the Customer requests the Servicer to produce the original Mortgage Certificate and the transfer of that Mortgage Certificate to the Issuer has not been registered with the State Register, the Servicer would have to request the Custodian to temporarily release the original Mortgage Certificate from its custody in order that the Servicer may present it to the Customer, which may delay the receipt by the Issuer of the relevant funds from the Customer.

The Issuer's rights as a new holder of the Mortgage Certificates will not be registered with the State Register. However, pursuant to the Master Purchase Agreement, the Servicer has undertaken to procure the registration of the Mortgage Certificates, if required to do so by the Issuer.

Pursuant to Article 48 of Federal Law No. 102-FZ dated 16 July 1998 "On Mortgage (Pledge of Immovables)" as amended (the Mortgage Law), the transfer of rights under each Mortgage Certificate is effected upon completion of each of (a) the execution of a written contract in respect of the transfer of rights under the Mortgage Certificate and (b) the endorsement of a transfer note by the transferor on the Mortgage Certificate indicating the name of the new holder of the Mortgage Certificate and the grounds for the transfer of the rights under the Mortgage Certificate. The absence of state registration of a transfer of a Mortgage Certificate to a new owner (as long as the requirements set forth in (a) and (b) above are met) does not affect the validity of the transfer. The Mortgage Law does not provide that a transfer of the rights of a holder of a Mortgage Certificate is perfected upon the registration of the new holder of a Mortgage Certificate as a mortgagee with the State Register. Consequently, such state registration is not required to enable the holder of a Mortgage Certificate to acquire the rights under such Mortgage Certificate.

Under Russian law, the benefit of Insurance Policies is transferable by a Customer, not by the beneficiary, which could limit the ability of the Issuer to recover any proceeds under such Insurance Policies

Under the terms of the Mortgage Loan Agreements, the Customers must ensure that a creditor under a Mortgage Loan is the primary beneficiary under the Insurance Policy relating to the Mortgaged Property. In addition, Customers are required to take out life, title and permanent disability insurance contracts, with the creditor under a Mortgage Loan as the primary beneficiary, to secure their obligations under the relevant Mortgage Loan. Since under the Insurance Policies the identity of the beneficiary (the Originator) is currently specified, the relevant Customer needs to give instruction to the relevant Insurer to replace such beneficiary with the Issuer. Otherwise, the Insurer would be entitled to pay to the Originator specified as a beneficiary under the relevant Insurance Policy. However, under Russian law, the Issuer as mortgagee is entitled to the proceeds of insurance payments under the Insurance Policies relating to loss and damage to the Mortgaged Property in an amount not less than the amount due and payable by the Customer under the Mortgage Loan, although this rule does not extend to the life, title and permanent disability coverage under the Insurance Policies. The Servicer is under an obligation to make and enforce claims under any Insurance Policy on behalf of the Issuer. Under Russian law, a beneficiary under an insurance contract could be replaced at any time before it has performed any obligation under that insurance contract or has demanded an insurance payment. Pursuant to the Master Purchase Agreement, the Originator has agreed to procure that the Customers name the Issuer as beneficiary in respect of the relevant insurance policies within six months of the Issue Date. If a Customer does not replace the beneficiary under such Insurance Policies with the Issuer, the receipt of proceeds from Insurance Policies by the Issuer may not be possible, which may adversely affect the Issuer's ability to make payments of interest or principal due under the Notes.

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Compliance of the Mortgage Portfolio with the Lending Criteria or Eligibility Criteria has not been and will not be verified by the Issuer or the Security Trustee and the Originator may not be able or willing to perform the Put Option in relation to such non-compliance

Neither the Issuer nor the Security Trustee has undertaken or will undertake any investigations, searches or other actions in respect of the Mortgage Portfolio, and each will rely instead on the obligation of the Originator under the Master Purchase Agreement and under the Servicing Agreement to comply with the Lending Criteria or Eligibility Criteria in connection with the sale of the Mortgage Portfolio and (pursuant to the Servicing Agreement) to confirm that the Mortgage Portfolio complies with the Lending Criteria and Eligibility Criteria as at the Issue Date.

The contractual remedy of each of the Issuer and the Security Trustee in respect of a breach by the Originator of any of the Lending Criteria or Eligibility Criteria shall be the requirement that where such breach is not capable of remedy, or, if such breach is capable of remedy, is not remedied within a 15-day grace period, the Originator is required to purchase the relevant Non-Conforming Loan from the Issuer at a purchase price equal to the aggregate of (a) the Outstanding Principal Balance of such Non-Conforming Loan and (b) the interest accrued on such Outstanding Principal Balance which remains unpaid on the date such purchase is to occur. This shall not limit any other remedies available to the Issuer and/or the Security Trustee if the Originator fails to remedy a breach or to repurchase any Mortgage Certificate when obliged to do so. There can be no assurance that the Servicer will notify the Issuer and the Security Trustee if any breach by the Originator of the Lending Criteria or Eligibility Criteria is discovered, although the Servicer is contractually obliged to do so in the Servicing Agreement. Further, there can be no assurance that the Originator will have the financial resources to honour its obligations to repurchase any Mortgage Certificate in respect of which such a breach of any of the Lending Criteria or Eligibility Criteria arises, which may negatively impact the ability of the Issuer to make payments of interest or principal on the Notes. See also Put Option likely to be undermined following a Servicer Event relating to the Originator below.

Put Option likely to be undermined following a Servicer Event relating to the Originator

The Put Option is an obligation of the Originator in its capacity as the seller of the Mortgage Portfolio rather than as the Servicer. Consequently, following a Servicer Event relating to the Originator and notwithstanding the appointment of a Successor Servicer, it is likely that the Originator will be unable to perform some or all of its obligations, if any, arising pursuant to an exercise of the Put Option. If, in relation to any such Mortgage Loan, the Originator does not perform its obligations, if any, arising under the Put Option, this may negatively impact the ability of the Issuer to make any payments of interest or principal under the Notes.

Prepayments on the Mortgage Portfolio may undermine the value of the Notes

Under the terms of the Mortgage Loans, a Customer may prepay a Mortgage Loan, either partially or fully, after the Mortgage Loan has been granted. Customers' defaults may also result in acceleration of the Mortgage Loans. The rate of prepayment of the Mortgage Loans, which is affected by a wide variety of social, economic, and other factors, cannot be accurately predicted.

There is currently no developed Russian market for the refinancing of mortgage loans. However, as the Russian mortgage loan market matures and the Russian government undertakes certain measures to promote mortgage lending in the Russian Federation, banks or other mortgage lenders may begin to refinance mortgage loans, which may increase the prepayment rate applicable to the Mortgage Portfolio.

With respect to the relationship between the rate of prepayment on the Mortgage Portfolio and the weighted average life of the Notes, see Estimated Weighted Average Lives of the Notes.

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Weaknesses in underwriting standards may have led to inappropriate lending decisions relating to the Mortgage Portfolio

The Originator has put in place a set of procedures for determining the credit quality of potential borrowers, including examinations of maximum liabilities to net family income ratios, employment and credit histories. For more information, see The Mortgage Portfolio. However, the emergence of the Russian mortgage loan market is a recent phenomenon, and Russian lenders currently lack the credit scoring tools available in more mature markets. A system of credit bureaus operating in the Russian Federation has only recently started to evolve and therefore, as at the date of this Prospectus, lenders do not have sufficient sources to assess the creditworthiness of potential borrowers. There is a substantial "grey economy" in the Russian Federation, which may lead to over- or under-reporting of actual salaries on loan applications. Although the Originator undertakes detailed investigations before approving Mortgage Loans, including, where applicable, contacting the Customer's employer, these may lack the precision of practices in more developed mortgage loan markets.

The absence of more sophisticated credit security may result in more defaults by the Customers, which could adversely affect the ability of the Issuer to make payments of interest or principal on the Notes.

Currency control laws may be introduced which negatively impact the ability of the Issuer to recover amounts due under the Mortgage Portfolio

Although currently there are no currency control restrictions in the Russian Federation which would affect the Dollar payments under the Mortgage Loans and under the Servicing Agreement, there is no guarantee that the currency control regime will not change during the term of the Notes. Such changes:

• may potentially cause delays in receiving payments on the Notes;

• may restrict the ability of the Issuer to receive payments under the Mortgage Loans in Dollars;

• may not allow the Issuer to convert Rouble proceeds into foreign currency; and

• may otherwise adversely affect the ability of the Issuer to make payments of interest or principal on the Notes.

Geographic concentration of the Mortgage Portfolio may increase the risk of multiple defaults under the Mortgage Portfolio or a significant devaluation of a proportion of the Mortgaged Properties

The Mortgaged Properties are concentrated in the city of Moscow and in the Moscow region of the Russian Federation (at least 50 per cent. of the Mortgaged Properties are located in the city of Moscow and 100 per cent. of the Mortgaged Properties are located in the city of Moscow or the Moscow region). These areas are currently among the most developed and prosperous areas in the Russian Federation. However, any deterioration in the economic condition of these areas or any deterioration in the economic condition of other areas in the Russian Federation that causes an adverse effect on the ability of the Customers to repay the Mortgage Loans could increase the risk of losses on the Mortgage Portfolio. A concentration of the Customers in such areas may therefore result in a greater risk of loss than would be the case if such concentration had not been present. Further, the Mortgage Portfolio may be affected by, among other things, a decline in the value of the related Mortgaged Properties. No assurance can be given that such values have remained or will remain at the level at which they were on the date on which the Mortgage Loans were originated. If the residential property market in the Russian Federation should experience an overall decline in property values, such a decline could in certain circumstances result in the value of the Mortgage Certificates being significantly reduced and, ultimately, may result in losses to the Issuer if the rights under any such Mortgage Certificate are required to be enforced. Such losses, if they occur, could have an adverse effect on the ability of the Issuer to make payments of interest or principal due under the Notes.

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Enforcement Procedures for Defaulted Mortgage Certificates may be weakened by the legal process relating to foreclosure or practical constraints arising during foreclosure on the Mortgaged Property

Each Mortgage Certificate evidences the mortgage over the Mortgaged Property which is security for the obligations of the relevant Customer in respect of the timely performance of its obligations under the relevant Mortgage Loan. Under Russian law, a mortgage evidenced by a Mortgage Certificate is a secondary obligation of the Customer and the validity of a Mortgage Certificate depends on the validity of the relevant Mortgage Loan. Under Russian law, a mortgage created over the Mortgaged Property is subject to registration with the State Register. The Issuer as the holder of the Mortgage Certificates is entitled to satisfy its claims under the Mortgage Loans from the proceeds of the sale of the relevant Mortgaged Properties ahead of other creditors of the Customers, subject to exceptions provided by mandatory rules of Russian law.

If a Customer defaults under the relevant Mortgage Loan, foreclosure on the Mortgaged Property must be effected through judicial proceedings. As an exception to this rule, the Issuer and the relevant Customer may enter into an agreement on satisfaction of the Issuer's claims in the presence of a Russian notary after a default under a Mortgage Loan. This extrajudicial procedure for effecting foreclosure therefore requires cooperation of the relevant Customer which is unlikely in a default situation and if the Issuer's rights are required to be enforced, the Issuer is likely to be involved in lengthy judicial proceedings in a Russian court. Even if the above-mentioned notarised agreement to settle the Issuer's claim without recourse to judicial proceedings is concluded, such agreement may be invalidated by a court at the request of a third party whose rights have been infringed by it (such as any member of the relevant Customer's family).

As a general rule, a court case must be held within two months of the relevant enforcement claim being filed. However, as a matter of Russian law and practice, this timing can be extended by a court if the court proceedings were postponed or suspended on grounds provided by Russian law. A Customer may delay court proceedings by failing to appear in court for "good" reasons (such as illness), filing a counterclaim against the Issuer or appealing a decision before a court of a higher instance or otherwise. In practice, a Customer may also have a number of opportunities to delay an attempt to foreclose on the relevant Mortgaged Property by contesting the order for payment and/or compliance with the procedure for enforcement, which in turn will delay the receipt of proceeds from an enforcement against that Mortgaged Property by the Issuer.

A court has discretionary powers to reject an enforcement claim if a Customer's default is minor and the value of the Issuer's claim is insignificant in relation to the value of the Mortgaged Property. After the Issuer obtains a court decision ordering the levy of execution, the Issuer would need to initiate the execution proceedings with court bailiffs who would arrange for the sale of the Mortgaged Property at a public auction.

The sale of the Mortgaged Property through court bailiffs may take two to four months or even longer. Also, under the decision ordering the levy of execution, a court may delay the public auction for a period of up to one year upon a Customer's application.

In practice, the lack of transparency of the system of public sales of mortgaged property may result in the proceeds of sale of a Mortgaged Property being lower than the market value of such Mortgaged Property.

If the Customer and his family do not voluntarily vacate the Mortgaged Property, the expulsion of the Customer and his family through court proceedings may be required.

According to Article 78 of the Mortgage Law, the levy of execution upon mortgaged residential property and sale of such property terminate the rights of use of such property by the mortgagor and any other persons residing in such property if such property was mortgaged as security for a loan granted for the purpose of:

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• the acquisition or capital repair of such property or the making of other improvements which become fixtures to such property; or

• the repayment of another loan provided for the purpose of the acquisition of another residential property.

If either of the above criteria is met, termination of the Customer's title to the premises constitutes grounds for the eviction of the Customer and cohabiting members (or former members) of his family, even if such Mortgaged Property is their sole dwelling fit for their permanent habitation. However, in practice, if the Customer does not have another dwelling where he can reside, this may cause delays to his eviction from the Mortgaged Property.

The eviction proceedings could be carried out either by the Issuer or by a purchaser of the Mortgaged Property. It could be possible for the Issuer to sell the Mortgaged Property through public auction even if such Mortgaged Property is occupied by the Customer and his family. In this scenario, the realisable value of the Mortgaged Property could be lower than its market value.

The procedure for enforcement and eviction is more complicated when a member of the family of the Customer is under the protection of the agency of guardianship and curatorship (which is applicable where the relevant member of the Customer's family has a limited legal capacity or is a minor without parents). The agency may hinder the disposal of the Mortgaged Property and/or eviction if the authorities believe it is contrary to the interests of the protected individual.

There is therefore a risk that the recovery process relating to a Defaulted Mortgage Certificate would not proceed smoothly, which, in turn, could adversely affect the ability of the Issuer to make payments of interest or principal due under the Notes.

Enforceability of the pledge over the Mortgage Certificates under Russian law is unclear due to the lack of proper regulation and relevant court practice

If the pledge under the Pledge Agreement becomes enforceable, under the Mortgage Law, the Security Trustee is entitled to, inter alia, request that the Issuer make a transfer note on the Mortgage Certificates in favour of the Security Trustee. Once a valid transfer note has been made on each Mortgage Certificate in favour of the Security Trustee, the Security Trustee should be able either to dispose of, or to retain and collect payments under, the Mortgage Certificates. The Security Trustee (in its capacity as Collateral Agent) is required to represent the interests of the Secured Parties and to act on behalf of the Secured Parties as agent for the purposes of the Russian law pledge. As a matter of Russian law and practice, it is not clear whether it is sufficient for the transfer note on each Mortgage Certificate to mention only the Security Trustee rather than listing the names of all the Secured Parties. Moreover, it would likely be impracticable to further annotate each Mortgage Certificate so that it is stated to be in favour of all the Secured Parties, since the Noteholders may comprise a regularly evolving class of persons.

The foregoing risks are arguably mitigated, given that:

• the Issuer is an orphan special purpose entity under the management control of an international corporate services provider and is prohibited from entering into financing arrangements, other than as contemplated under the Transaction Documents (including, without limitation, unforeseen secured financings with third parties that could escalate the significance of establishing the Security Trustee's priority interest in the Mortgage Portfolio under the Pledge Agreement);

• pursuant to the Deed of Charge, the Issuer must comply with the instructions of the Security Trustee under the Deed of Charge; and

• the Deed of Charge provides for an English law floating charge over all the assets of the Issuer (other than (a) any and all assets, property or rights which are located in, or governed by the

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laws of, The Netherlands (except for contractual rights or receivables (rechten of vorderingen op naam), which are to be assigned to the Security Trustee under the Deed of Charge), (b) any Dutch Ineligible Securities, (c) the Issuer's rights under the Corporate Services Agreement and (d) amounts standing to the credit of the Issuer Dutch Account), pursuant to which the Security Trustee should be entitled to give the necessary directions to the Issuer requesting that the Issuer comply with its obligations under the Transaction Documents.

Consequently, enforcement under the Pledge Agreement in respect of the Mortgage Certificates or any of them may not be required in the event that the Security Trustee is able to effect a sale of the Mortgage Portfolio or part of it.

Notwithstanding the foregoing, if enforcement of the Pledge Agreement is sought by the Security Trustee, it may be difficult for it to take such enforcement action due to uncertainties under Russian law and practice that could complicate or limit such enforcement action. Therefore it may not be possible for the Security Trustee to realise sufficient funds from the sale of the Mortgage Certificates in order to make payments of interest or principal due and payable in respect of the Notes.

Russian bank secrecy and personal data protection rules may adversely impact the structure of the Transaction and thus affect the ability to collect payments under the Mortgage Loans

The Transaction requires information on the Customers and the Mortgage Certificates to be disclosed to numerous parties involved in the Transaction. It is unclear under Russian law how bank secrecy and personal data protection rules interact with the general right of the Originator to transfer the Mortgage Certificates to the Issuer. While the disclosure of bank secrecy and personal data information should not affect the validity of the transfers of the Mortgage Certificates to the Issuer, this issue is not entirely clear and there is conflicting court practice reflecting this uncertainty.

The significance of this issue is mitigated to a certain extent by the terms of the Mortgage Loans which expressly permit, without additional consent being sought from the Customers, the Originator to disclose to a purchaser of the Mortgage Certificates, as well as to a new custodian and servicer appointed by the purchaser, information enabling such purchaser to use and enforce its rights under the Mortgage Loans. However, it is not entirely clear whether such information may be disclosed to the other Transaction Parties. If these confidentiality provisions were interpreted by a Russian court narrowly as not allowing the disclosure of the confidential information and personal data of the Customer to the other Transaction Parties, then the Customers would be entitled to make claims for damages against the Originator if such damages are proven in court.

Furthermore, according to the newly adopted Federal Law No. 152-FZ dated 27 July 2006 "On Personal Data" (the Law on Personal Data), which came into effect on 27 January 2007, the export of confidential information may be subject to certain restrictions. Article 12 (Cross-border Transfer of Personal Data) of the Law on Personal Data sets forth certain pre-conditions for the cross-border transfer of personal data, including but not limited to a requirement for adequate protection of individuals' rights with regard to their personal data within the territory of the country to which such data is to be transferred. Article 12 will apply to any cross-border transfers of personal data in respect of the Customers in relation to the Transaction, except for those cross-border transfers of personal data to which the Customers have consented in writing.

The Law on Personal Data also provides for certain obligations of an "operator of personal data". The Servicer and some other Transaction Parties which are Russian entities are likely to be deemed "operators of personal data" in terms of the Law on Personal Data and thus subject to such obligations. For example, an "operator of personal data" must obtain the prior written consent of a Customer in order to collect, store, process or disclose personal data of such Customer. Furthermore, the Law on Personal Data provides for certain requirements as to the form and content of such consent.

The Law on Personal Date is relatively new and at this stage, it is not entirely clear to what extent it may affect business operations of the Servicer and other Transaction Parties. However, the Law on

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Personal Data should not prevent any Transaction Party from performing its obligations under such documents, although it may lead to an increased regulatory burden on some Transaction Parties, if those parties are considered to be "operators of personal data". In any case, it is unlikely that operations of the Issuer and other Transaction Parties which are non-Russian entities without any presence in the Russian Federation will be affected by the Law on Personal Data. In addition, the Law on Personal Data expressly provides that no consent is required for an operation with personal data of an individual if such operation is required for the purposes of the performance by such individual of a contract to which it is a party, which could arguably permit the disclosure of personal data of the Customers to the Issuer as the new creditor under the Mortgage Loans. If any sanctions for improper processing were applied to the Issuer, this could adversely affect the ability of the Issuer to make payments of interest or principal due under the Notes.

Information technology disruptions may adversely affect the ability of the Servicer to service the Mortgage Portfolio

The Servicer's ability to service the Mortgage Portfolio efficiently will depend to a significant extent upon the effective operation of its information technology systems. There can be no assurance that a disruption, even of a short-term nature, to the operation of such systems or the incurring by the Servicer of increased costs associated with operating such systems will not have an adverse effect on the Servicer's ability to service the Mortgage Portfolio and therefore the ability of the Issuer to make payments of interest or principal due under the Notes.

Russian consumer protection laws may be introduced which adversely impact the ability to recover unpaid amounts under the Mortgage Portfolio, and high interest rates and heavy penalties under Mortgage Loans could be challenged

Russian consumer protection laws provide general protection for consumers, although it remains unclear how this law may be applied to residential mortgage loans. Currently, the Russian Federation has no consumer protection laws specifically concerning mortgage loans or their collection. However, there is no guarantee that such laws will not be enacted in the future, that certain regulatory agencies will not start to regulate such loans (in particular, the Federal Anti-Monopoly Service is planning to introduce rules regarding consumer lending) or that Russian courts will not apply such consumer protection laws to residential mortgage loans in an unexpected manner, as, for example, in a recent dispute between Home Credit and Finance Bank and the Federal Consumer Protection Service (Rospotrebnadzor) where the Federal Arbitrazh Court of the Urals District, with reference to the consumer protection laws, held that a bank may not (i) require a borrower to open any accounts with the bank, as a pre-requisite for providing a loan or (ii) charge any prepayment penalties. Although this approach has not yet been tested by the Higher Arbitrazh Court, it may potentially affect the validity of the fees or commissions for opening Customers' accounts or prepayment penalties (if any). Such laws, regulations or interpretations may make the process of recovery in respect of Defaulted Mortgage Certificates more difficult, which in turn may adversely affect the ability of the Issuer to make payments of interest or principal due under the Notes.

In addition, the Mortgage Loan Agreements are so-called "contracts of adhesion" (being contracts that the Customers may execute only in accordance with the Originator's standard form and whose terms they may not negotiate). According to the Russian Civil Code, Customers may demand termination or amendment of any Mortgage Loan Agreements containing terms that the Customers would not have accepted if they had the ability to negotiate them. There is a lack of court practice in relation to such "contracts of adhesion". The Mortgage Loans carry high interest rates and penalties for late and defaulted payments. Challenges by Customers of these provisions could have a material adverse effect on the ability of the Issuer to make payments of interest or principal due under the Notes.

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Offering contained in this Prospectus could be disrupted or delayed by certain matters

In March 2007, a Lead Manager received information from a law firm purporting to act for Greenwich Financial Services, L.L.C. (GFS) that proprietary business information belonging to GFS may have been used to assist in the structuring of this offering through the actions of two former employees of GFS acting in their capacity as principals of Russian Mortgage Acceptance Company (RuMAC). RuMAC is a Russian entity which served as an adviser to the Originator.

GFS and its former employees are parties to N.A.S.D. arbitration and court proceedings in the United States concerning the business activities of RuMAC and the former employees' alleged misappropriation of GFS' allegedly confidential business plans. The former employees deny GFS' allegations of wrongdoing and have asserted that none of GFS' allegedly confidential information was used by RuMAC and that RuMAC was never affiliated with or controlled by GFS. A request by GFS to temporarily enjoin the former employees from any further alleged disclosure of its purported confidential information has been deferred by the presiding court. The Originator and Lead Managers are not parties to any of the United States proceedings.

The Originator's ability to proceed with the offering contained in this Prospectus has not been directly or indirectly challenged or raised in the United States proceedings. However, a principal of GFS has orally stated to a Lead Manager that GFS may seek to attempt to enjoin the offering contained in this Prospectus. GFS has not indicated the basis for any possible jurisdictional or legal grounds under which GFS would seek to enjoin this offering or against whom GFS would seek such relief. Although neither the Originator nor either of the Lead Managers are aware of any valid basis for seeking such relief in any jurisdiction, any legal action taken by GFS with respect to the offering contained in this Prospectus could have the effect of disrupting or delaying the offering contained in this Prospectus. The Lead Managers and the Originator each obtained separate legal advice in relation to this matter and were not advised by Allen & Overy LLP or Allen & Overy Legal Services on this particular issue.

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RISKS RELATED TO THE RUSSIAN FEDERATION

Social instability in the Russian Federation

Social conditions in the Russian Federation are unstable. The failure of some Russian companies to pay full salaries on a regular and timely basis, the failure of salaries and benefits to keep pace with the increasing cost of living and the discrepancy between levels of income and social stratification may lead to future social unrest. This may have political, social and economic consequences, such as increased support for a return to a more authoritarian form of government, increased nationalism and increased violence, any of which could have a material adverse effect on the Customers' ability to meet their obligations under the Mortgage Loans and, therefore, the ability of the Issuer to make payments of interest and principal due in respect of the Notes.

Economic instability in the Russian Federation

Since the dissolution of the former Soviet Union in the early 1990s, the Russian Federation has been undergoing a rapid transformation from a one-party state with a centrally planned economy to a pluralist democracy with a market-based economy. This transformation has been marked by periods of significant instability and the Russian economy has at various times experienced:

• significant declines in gross domestic product;

• hyperinflation;

• currency instability;

• significant increases in unemployment;

• the impoverishment of a large portion of the Russian population;

• high levels of state debt relative to gross domestic product;

• a weak banking system providing limited liquidity to Russian enterprises;

• high levels of loss-making enterprises that continue to operate due to the lack of effective bankruptcy proceedings;

• significant use of barter transactions and illiquid promissory notes to settle commercial transactions;

• widespread tax evasion;

• growth of a black and grey market economy;

• pervasive capital flight; and

• high levels of corruption and the penetration of organised crime into the economy.

The Russian economy has also been subject to downturns. In particular, the Russian government's decision to temporarily stop supporting the Rouble in August 1998 caused the currency to collapse. Concurrently, the state defaulted on much of its short-term domestic debt and imposed a 90-day moratorium on foreign debt and other payments by Russian companies. These actions resulted in an immediate and severe devaluation of the Rouble, a near collapse of the Russian banking system, a sharp increase in the rate of inflation, a dramatic decline in the price of Russian debt and equity securities and an inability of Russian issuers to raise funds in the international capital markets.

Although economic conditions in the Russian Federation have been improving since 1999, there can be no assurance that recent positive trends in the Russian economy, such as an increase in the gross domestic product, a relatively stable Rouble and a reduced rate of inflation, will continue. Moreover, the strengthening of the Rouble in real terms relative to the Dollar, the consequences of a relaxation in

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monetary policy and other factors, could have an adverse effect on Russia's economy and/or the Customers' ability to meet their obligations under the Mortgage Loans in the future.

Currency instability in Russia

Currency devaluation in the Russian Federation could have a significant effect on the Issuer's ability to make payments of interest or principal under the Notes, as the income earned by the Customers is generally denominated in Roubles while the Mortgage Loans are denominated in Dollars. Substantial or continued devaluation of the Rouble relative to the Dollar could adversely affect the ability of the Customers to meet Dollar denominated obligations. This may result in delays in payments by the Customers or even defaults.

The risk of devaluation is mitigated by the unofficial pegging of many salaries in the Russian Federation to the Dollar. Since many Customers' salaries are pegged to the Dollar, they will be less sensitive to devaluations, since their Rouble salaries would rise as the value of the Rouble relative to the Dollar fell. However, in the event of a devaluation, these factors may not be sufficient to prevent delays in payments or defaults under the Mortgage Loans.

Unlawful, selective or arbitrary state action

State authorities have a high degree of discretion in the Russian Federation. Arbitrary state actions have included withdrawal of licences, sudden and unexpected tax audits, criminal prosecutions and civil actions. Since 2003, the Russian tax authorities have begun to crack down on certain Russian companies' use of tax optimisation schemes and press reports have speculated that these enforcement actions have been selective. Following the prosecutions and investigations of Yukos Oil Company and its controlling shareholders, some commentators questioned the strength and progress of market and political reforms in the Russian Federation. Similar events may continue to affect the Russian market negatively in the future.

Systemic banking crisis in the Russian Federation and the Russian banking system's undercapitalisation

A systemic banking crisis and the Russian banking system's undercapitalisation (particularly amongst small to medium-sized Russian banks) could adversely affect the operational activity of the Servicer or the Back-up Servicer. The liquidity crisis during May to June 2004 in the Russian banking market demonstrated the vulnerability of the Russian banking system and its dependence on access to liquidity. Russian banking and other financial systems are still in a state of transition when compared with the banking and other financial systems of more developed countries and the Russian banking system is, on occasion, subject to inconsistent regulation and supervision. A crisis in the Russian banking industry may adversely affect the ability of the Issuer to make payments of interest or principal under the Notes.

Lack of independence of the judicial system and the difficulty of enforcing court decisions

The independence of the judicial system and its immunity from economic, political and social influences in the Russian Federation remain uncertain, and the court system is generally under-staffed and under-funded. The Russian Federation is a civil law jurisdiction and, as such, judicial precedents have no binding effect on subsequent decisions and most court decisions are not published. Given these factors, enforcement of court judgments and foreign arbitral awards can in practice be very difficult in the Russian Federation. All of these factors make judicial decisions in the Russian Federation difficult to predict and effective redress uncertain. Additionally, court claims and administrative or criminal proceedings are often used in furtherance of political aims. Furthermore, court judgments are not always enforced or followed by law enforcement agencies. Finally, although the Russian Federation (as successor to the Soviet Union) is a party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards so that an arbitral award obtained in another member state should be recognised by a Russian court, in practice reliance on international treaties may meet with resistance or a lack of understanding in Russian courts and introduces an element of delay and

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unpredictability into the process of enforcing any foreign arbitral award in the Russian Federation. If any redress was sought with Russian legal authorities, any of these factors could adversely affect the ability of the Issuer to make payments of interest or principal under the Notes.

Sale of the Class C Notes may constitute a placement of securities in the Russian Federation

According to Russian law, the placement of securities of non-Russian issuers "in the Russian Federation" is, subject to certain exceptions for international organisations, possible only if there is an international agreement between the Russian Federation and the relevant jurisdiction, or an agreement between the Russian securities regulator (entered into on the instructions of the Russian government) and the securities regulator of the relevant jurisdiction. To the best of the Issuer's knowledge, no such agreements between the Russian Federation and The Netherlands currently exist.

In addition, Federal Law No. 39-FZ dated 22 April 1996 "on the Securities Market", as amended (the Securities Market Law) prohibits the placement of securities of foreign issuers in the Russian Federation, unless the issue or a prospectus in relation to such securities is registered with the Federal Service for the Financial Markets of the Russian Federation.

The term "placement" is not directly defined under the Securities Market Law. However, the term "placement of the issuance securities (emissionnyie tsennyie bumagi)" is defined and means a disposal of the issuance securities (emissionnyie tsennyie bumagi) by an issuer to the first purchasers pursuant to civil transactions. It would be reasonable to conclude from this that the term "placement" means a disposal of securities by an issuer to the first purchasers. Pursuant to the Subscription Agreement, the Class C Notes will be purchased by the Originator on the Issue Date from Raiffeisen Zentralbank Österreich AG as Lead Manager and as initial purchaser of the Class C Notes. Therefore, as the Originator will be acquiring the Class C Notes in the secondary market rather than directly from the Issuer, such acquisition should not be regarded as a placement of securities in the Russian Federation.

Nevertheless, if the validity of the chain of sale and purchase transactions in respect of the Class C Notes is successfully challenged and recognised as a placement of securities in the Russian Federation, the Russian authorities may attempt to unwind the purchase of the Class C Notes, which may adversely affect the value of the Class C Notes as well as the Rated Notes (since the Class C Notes are the most junior Class of Notes and bear the first risk among all Classes of Notes of a credit or liquidity weakness occurring in respect of the Mortgage Portfolio).

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RISKS RELATING TO RUSSIAN TAXATION

Underdevelopment of the Russian Taxation System

The Russian government has initiated reforms of the tax system that have resulted in some improvement in the tax climate. The cornerstone of this reform was a complete redrafting of the Tax Code of the Russian Federation (the Russian Tax Code); this included a reduction of the corporate profits tax rate from 35 per cent. for most companies and 43 per cent. for financial institutions, insurance and intermediary companies to 24 per cent. for all companies and financial institutions from 1 January 2002 and also allowed for a broader range of deductible expenses. Payroll-related taxes have been reduced substantially and for individuals who are tax residents in the Russian Federation, the current personal income tax rate is 13 per cent. The general rate of VAT has been reduced to 18 per cent. and certain minor taxes have been abolished – such as road users' tax (abolished from 1 January 2003) and sales tax (abolished from 1 January 2004).

Russian tax laws, regulations and court practice are subject to frequent change, varying interpretations and inconsistent and selective enforcement. For example, under certain circumstances, the current three-year statute of limitations for the assessment of taxes pursuant to a tax audit can be significantly extended. In accordance with the Constitution of the Russian Federation, laws which introduce new taxes or worsen a taxpayer's position cannot be applied retroactively. However, there have been several instances when such laws were introduced and applied retroactively.

Despite the Russian government taking steps to reduce the overall tax burden in recent years in line with its objectives, Russia's largely ineffective tax collection system and continuing budgetary funding requirements increase the likelihood that the Russian Federation will impose arbitrary or onerous taxes and penalties in the future, which could have a material adverse effect on the Servicer's business, financial condition, results of operations or prospects. Additionally, tax has been utilised as a tool for significant state intervention in certain key industries.

In addition to the usual tax burden imposed on Russian taxpayers, these conditions complicate tax planning and related business decisions. These uncertainties could possibly expose the Servicer to significant fines and penalties and to potentially severe enforcement measures and a greater than expected tax burden, which in turn could have a material adverse effect on the Servicer's business, financial condition, results of operations or prospects.

Transfer pricing legislation became effective in the Russian Federation on 1 January 1999. This legislation allows the tax authorities to make transfer pricing adjustments and impose additional tax liabilities in respect of all "controlled" transactions, provided that the transaction price differs from the market price by more than 20 per cent. "Controlled" transactions include transactions with related parties, barter transactions, foreign trade transactions and transactions with unrelated parties with significant price fluctuations (i.e. if the price of such transactions differs from the prices for similar transactions by more than 20 per cent. within a short period of time). Transfer pricing adjustments are also applicable to the trading of securities and derivatives. There has been no formal guidance (although some court practice is available) as to how these rules will be applied. Moreover, the Ministry of Finance of the Russian Federation is in the process of drafting proposed amendments to the transfer pricing legislation, which may come into force in 2008. Such amendments, if adopted, are expected to result in stricter transfer pricing rules. If the tax authorities were to impose significant additional tax liabilities as a result of transfer pricing adjustments, it could have a material adverse impact on the Servicer's business, financial condition, results of operations or prospects.

It is expected that Russian tax legislation will become more sophisticated, which may result in the introduction of additional revenue raising measures. Although it is unclear how these measures would operate, the introduction of such measures may affect the Servicer's overall tax efficiency and may result in significant additional taxes becoming payable. The Servicer cannot offer prospective investors any assurance that additional tax exposures will not arise while the Notes are outstanding. Additional

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tax exposures could have a material adverse effect on the Servicer's business, financial condition, results of operations or prospects.

Payments on the Mortgage Loans may be subject to Russian withholding tax

In general, interest payments on borrowed funds made by Russian individuals to a non-resident legal entity are not subject to Russian withholding tax. However, if such payments are made by a Russian legal entity, they are subject to Russian withholding tax at a rate of 20 per cent. unless such withholding is reduced or eliminated pursuant to the terms of an applicable double tax treaty.

Repayment of principal on borrowed funds by a Russian individual to a non-resident legal person or organisation generally should not be subject to Russian withholding tax, although there is residual uncertainty regarding the tax treatment of any part of such payment which is in excess of the amount paid for the loan by the non-resident person or organisation if the loan was purchased by it at a discount.

Based on professional advice, the Servicer believes that payments in respect of the Notes will only be subject to deduction or withholding for or on account of Dutch taxes as described in Taxation – The Netherlands. In the event of such a deduction or withholding, the Issuer will only be required to increase payments to the extent that it receives corresponding amounts from the Obligors under the Mortgage Portfolio.

If, notwithstanding the above, any payments under the Mortgage Portfolio are subject to Russian withholding tax, neither the Servicer nor the Obligors will be obliged to increase the amounts payable as may be necessary to ensure that the recipient receives a net amount equal to the amount it would have received in the absence of such withholding taxes. Due to the limited recourse nature of the Notes, in the event of such withholding, the amount payable by the Issuer under the Notes will be correspondingly reduced.

The Issuer has granted security over its rights under the Mortgage Certificates to the Security Trustee in respect of its obligations under the Notes. The Security will become enforceable upon the occurrence of an Event of Default, as further described in Terms and Conditions of the Notes. In these circumstances, payments under the Mortgage Loans would be required to be made to, or to the order of, the Security Trustee. Under Russian tax law, payments of interest and other payments made by the Servicer or the Obligor to the Security Trustee will in general be subject to Russian income tax withholding at a rate of 20 per cent. (or potentially, 30 per cent. in respect of individual Noteholders). It is not expected that the Security Trustee will, or will be able to, claim a withholding tax exemption under any double tax treaty. In addition, while it may be possible for some Noteholders who are eligible for an exemption from Russian withholding tax under double taxation treaties to claim a refund of tax withheld, there would be considerable practical difficulties in doing so.

If, during the life of the Notes, the Issuer ceases to be resident for tax purposes in The Netherlands and becomes resident for tax purposes in another jurisdiction, in the event that such jurisdiction requires the Issuer to effect deduction for or on account of any taxes (other than taxes of The Netherlands) in respect of payments which the Issuer is obliged to make under or in respect of the Notes, under the terms of the Mortgage Loans, the Servicer (or the Obligors, as the case may be) will be under no obligation to increase payments to the Issuer under the Mortgage Loans in respect of such withholding or deduction for or on account of any taxes (other than taxes of The Netherlands). In such circumstances, the Noteholders will receive payments under the Notes net of such withholding or deduction and will have no right to require that their Notes be repaid in full.

RISK FACTORS

47

Tax might be withheld on dispositions of the Notes in the Russian Federation, reducing their value

If a non-resident Noteholder that is a legal person or organisation, which in each case is not organised under Russian law and which holds and disposes of the Notes otherwise than through a permanent establishment in the Russian Federation, sells Notes and receives proceeds from a source within the Russian Federation, there is a risk that any part of the payment that represents accrued interest may be subject to a 20 per cent. Russian withholding tax (even if the relevant disposal occurs at a loss).

Where proceeds from a disposal of the Notes are received from a source within the Russian Federation by a non-resident Noteholder that is an individual, there is a risk that Russian withholding tax would be imposed at a rate of 30 per cent. on the gross proceeds from such disposal of the Notes less any available cost deduction. The imposition or risk of imposition of this withholding tax could adversely affect the value of the Notes.

See Taxation – The Russian Federation.

VAT may be due on the sale of the Receivables by the Originator

Pursuant to the Purchase Agreements, the Issuer has purchased the receivables under the Mortgage Loans (in the form of Mortgage Certificates) from the Originator. The purchase price payable by the Issuer to the Originator in respect of each Mortgage Certificate on each Completion Date (referred to in this Prospectus as the Purchase Price) was equal to the Outstanding Principal Balance of the relevant Mortgage Loan plus any Accrued Interest, in each case, as at the relevant Completion Date.

The transfer of the rights under the Mortgage Certificates from the Originator to the Issuer (and their subsequent transfer by the Issuer to a third party registered as a taxpayer in the Russian Federation or to the Originator pursuant to the exercise of an Option) could be regarded as a disposal of property rights for Russian VAT purposes and, if classified as a transfer of property rights and not as a sale of a security, should be subject to Russian VAT. However, the Russian Tax Code does not provide any clear guidance for determining the VAT taxable base for the disposal of property rights where the underlying assets involve transactions which are themselves exempt from VAT, as in the case of the Mortgage Certificates.

The Originator believes that, based on advice it has received in relation to the laws in effect as at the date of this Prospectus, no VAT should arise if the receivables under the Mortgage Loans are disposed of to the Issuer at their outstanding par value plus interest accrued, but not yet paid, to the Completion Date. The Originator has received no assurance that the tax authorities will not challenge the interpretation that the sale of the Mortgage Certificates should be exempt from VAT.

Nevertheless, if the transfer of the Mortgage Portfolio from the Originator to the Issuer is subject to VAT in the Russian Federation, this should not directly affect the ability of the Issuer to make payments under the Notes, as the Issuer should not be liable for VAT to be payable by the Originator in respect of the Transaction. Consequently, this extra VAT cost should affect the Originator only, save that the respective financial impact on the Originator could be significant and could in principle be relevant to its ability to perform its obligations as the Servicer in respect of the Mortgage Portfolio. The risk of the imposition of VAT on the transfer of the rights under the Mortgage Certificates from the Issuer to a third party registered as a taxpayer in the Russian Federation or to the Originator pursuant to the exercise of an Option could adversely affect the value of the Notes.

48

CREDIT ENHANCEMENT

The Notes of each Class benefit from certain credit enhancement mechanisms and features which are described below. See also Cash Management.

Credit Enhancement of the Class A Notes

Credit enhancement established in respect of the Class A Notes is comprised of:

• the subordination of payments on the Class B Notes and the Class C Notes relative to the payments on the Class A Notes;

• the scheduled monthly accrual of Revenue Receivables under the Mortgage Portfolio, which are due to exceed the monthly interest obligations of the Issuer under the Class A Notes;

• the availability of cash drawings from the Reserve Fund in the form of Reserve Fund Principal Drawings, which are to be credited to the Principal Ledger and the Class A PDL and thereafter applied under the Pre-Enforcement Principal Payment Priorities, to the extent of any debit balance on the Class A PDL;

• the availability of cash drawings from the Reserve Fund in the form of Reserve Fund Revenue Drawings, which are to be credited to the Revenue Ledger in order to discharge any Revenue Shortfall representing, inter alia, interest due on the Class A Notes and which may only be recovered on subsequent Note Payment Dates on a subordinated basis, relative to the payment of interest due under the Class A Notes; and

• the reallocation of excess Revenue Receipts to the Principal Ledger and thereafter the application of such amounts to redeem the Class A Notes, to the extent of any debit balance on the Class A PDL, pursuant to and in accordance with the Pre-Enforcement Revenue Payment Priorities.

Credit Enhancement of the Class B Notes

Credit enhancement established in respect of the Class B Notes is comprised of:

• the subordination of payments on the Class C Notes relative to the payments of the Class B Notes;

• the scheduled monthly accrual of Revenue Receivables under the Mortgage Portfolio, which are due to exceed the monthly interest obligations of the Issuer under the Class A Notes and the Class B Notes;

• to the extent that the Class A Notes have been redeemed in full, the availability of cash drawings from the Reserve Fund in the form of Reserve Fund Principal Drawings, which are to be credited to the Principal Ledger and the Class B PDL and thereafter applied under the Pre-Enforcement Principal Payment Priorities, to the extent of any debit balance on the Class B PDL;

• the availability of cash drawings from the Reserve Fund in the form of Reserve Fund Revenue Drawings, which are to be credited to the Revenue Ledger in order to discharge any Revenue Shortfall representing, inter alia, interest due on the Class B Notes and which may only be recovered on subsequent Note Payment Dates on a subordinated basis, relative to the payment of interest due under the Class A Notes and the Class B Notes; and

• to the extent that the Class A Notes have been redeemed in full, the reallocation of excess Revenue Receipts to the Principal Ledger and thereafter the application of such amounts to redeem the Class B Notes, to the extent of any debit balance on the Class B PDL, pursuant to and in accordance with the Pre-Enforcement Revenue Payment Priorities.

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49

Credit Enhancement of the Class C Notes

Credit enhancement established in respect of the Class C Notes comprises the scheduled monthly accrual of Revenue Receivables under the Mortgage Portfolio, which are due to exceed the monthly interest obligations of the Issuer under the Notes. However, it should be noted that the availability of Revenue Receipts to discharge interest falling due under the Class C Notes is subject to a mechanism under the Pre-Enforcement Revenue Payment Priorities whereby such Revenue Receipts will instead be applied to increase the amount held under the Reserve Fund, to the extent that the current balance of the Reserve Fund falls below the Reserve Fund Required Amount. See also Cash Management – Determination of the Reserve Fund Required Amount.

Credit Enhancement is Limited

These credit enhancement features provide only limited protection to the holders of the relevant Class of Notes against risks assumed by the holders of the Notes of other more junior Classes. Such risks include, inter alia, the risk of prepayments, delinquencies, commingling and defaults on payments with regard to the Mortgage Portfolio.

Although these credit enhancement mechanisms and features are intended to reduce the effect of late payments or losses incurred in respect of the Mortgage Portfolio, the effects of such credit enhancement are limited and the holders of each Class of Notes may fail to recover amounts falling due and payable under their Notes. As a consequence, such credit enhancement mechanisms might not be sufficient in the event of late payments or losses attributable to the Mortgage Portfolio and such risks would be borne by the holders of the Notes of each Class in their relative order of priority.

Payments of interest on the Class B Notes are subordinated to payments of interest on the Class A Notes. Payments of interest on the Class C Notes are subordinated to payments of interest on the Class A Notes and the Class B Notes. Payments of principal on the Class B Notes are subordinated to payments of principal on the Class A Notes. Payments of principal on the Class C Notes are subordinated to payments of principal on the Class A Notes and the Class B Notes. Consequently, if on any Note Payment Date the Issuer does not have sufficient funds to make payments on the Notes in full, the Class B Noteholders will bear any loss arising as a result before the Class A Noteholders are affected and the Class C Noteholders will bear any loss arising as a result before the Class B Noteholders. Consequently, the risk that the Class B Noteholders will suffer losses will be more significant than for the Class A Noteholders and the risk that the Class C Noteholders will suffer losses will be more significant than for the Class A Noteholders and the Class B Noteholders.

50

LIQUIDITY SUPPORT

The Issuer has the benefit of liquidity support measures in the form of a cash reserve fund (the Reserve Fund) and thereafter the use of principal received under the Mortgage Portfolio which would otherwise be applied to redeem the Notes (a Principal Against Revenue Shortfall Reallocation). Such measures are intended to satisfy, inter alia, shortfalls in the Issuer's short-term liquidity position. The measures are structured to protect the Rated Notes only.

The Reserve Fund

The Issuer will establish the Reserve Fund on the Issue Date from the proceeds of the Subordinated Reserve Advance, for the purposes of providing both credit and liquidity support to the Issuer in relation to certain of its obligations under the Notes and, in the case of liquidity support, with a view to ensuring that certain administrative and other expenses necessary for the ongoing operation of the Transaction are paid when due. If the revenue cash flow on the Mortgage Portfolio is weak during any Collection Period such that on the Note Payment Date immediately following the expiry of such Collection Period the Issuer does not have sufficient Revenue Receipts to discharge interest falling due under the Rated Notes as well as all other items under the Pre-Enforcement Revenue Payment Priorities ranking in priority to the payment of interest on the Rated Notes (excluding any transfer to the Class A PDL required to be effected thereunder which is instead to be subject to a Reserve Fund Principal Drawing in accordance with the Credit and Liquidity Enhancement Priorities), it will be required to exhaust the amount under the Reserve Fund to cover such shortfall to the extent possible. This application will be a short-term measure to the extent that, on any subsequent Note Payment Date, the Issuer has available to it excess Revenue Receipts, pursuant to and in accordance with the Pre-Enforcement Revenue Payment Priorities, for the purposes of replenishing the Reserve Fund to the Reserve Fund Required Amount.

The level at which the Issuer is required to maintain the Reserve Fund and therefore the extent to which the Reserve Fund provides liquidity support to the Rated Notes will be subject to adjustment from time to time, as described under Cash Management – Determination of the Reserve Fund Required Amount – The Reserve Fund Required Amount.

Principal Against Revenue Shortfall Reallocations

In the event that a Revenue Shortfall would remain on any Note Payment Date following a Reserve Fund Revenue Drawing, and to the extent that Principal Receipts are available for such purpose, such Principal Receipts will be applied in or towards the discharge of such Revenue Shortfall in substitution for the application of such Principal Receipts under the Pre-Enforcement Principal Payment Priorities (being a Principal Against Revenue Shortfall Reallocation). Each Principal Against Revenue Shortfall Reallocation will create a Principal Deficiency and as such will be debited to the Principal Deficiency Ledgers on the relevant Note Payment Date in accordance with the PDL Application Order. The use of Principal Receipts for this purpose is intended to be a liquidity rather than a credit measure. As such, to the extent that there are sufficient Revenue Receipts to be applied for such purpose on any subsequent Note Payment Date under the Pre-Enforcement Revenue Payment Priorities, such Revenue Receipts will be credited to the applicable Principal Deficiency Ledgers (in accordance with the PDL Rectification Order) and reallocated to the Principal Ledger for further application on such Note Payment Date towards the redemption of the Notes, in accordance with the Pre-Enforcement Principal Payment Priorities.

51

CASH MANAGEMENT

The Cash Management Services

The Cash Management Services will include, but not be limited to:

• the implementation on behalf of the Issuer of the Transactions which are to take place on the Issue Date;

• the creation and maintenance of the Ledgers (see The Ledgers below);

• the determinations to be made on each Cash Flow Determination Date;

• the operation of the Issuer Accounts on behalf of the Issuer;

• the implementation, on behalf of the Issuer, of the swap transactions entered into pursuant to the Swap Agreements (see Description of Principal Transaction Documents – The Swap Agreements);

• the application of the arrangements relating to the Reserve Fund;

• the application of funds on behalf of the Issuer in accordance with the Payment Priorities (See Condition 9 (Payment Priorities));

• the provision of the Cash Management Report each month and the fulfilment of any other reporting requirements provided for in the Cash Management Agreement for which the Cash Manager is responsible; and

• the management of information flows with the Servicer, so that the Servicer provides to the Cash Manager the information required to enable the Cash Manager to make the required notifications, calculations, entries into the Ledgers and payments.

Following the delivery of an Enforcement Notice by the Security Trustee, the Cash Management Services are required to be conducted by (or under the direction of) the Security Trustee, in accordance with the Deed of Charge and the Cash Management Agreement. Consequently, the description of the Cash Management Services under this heading The Cash Management Services would not necessarily apply to the Transaction following the delivery of an Enforcement Notice and in any event, in such circumstance, funds arising from a realisation of the Security would come under the control of the Security Trustee and would be subject to application under the Post-Enforcement Payment Priorities.

The Ledgers

The Cash Manager, on behalf of the Issuer, will be required to maintain certain ledgers (each, a Ledger) as records in the books of the Issuer. The nature and purpose of each of these Ledgers is described below.

The Revenue Ledger

A revenue ledger (the Revenue Ledger) will record cash-flows of the Issuer which are (or are deemed to be) in the nature of revenue, as distinct from principal cash-flows.

Amounts credited by the Cash Manager to the Revenue Ledger will represent one or more of the following (collectively being Revenue Receipts):

• the portion of the subscription proceeds of the Notes which is to be allocated to discharge in full the Issuer's obligations under the Warehouse Documents on the Issue Date, other than Warehouse Principal Obligations (see The Principal Ledger below) (the Warehouse Revenue Obligations);

• the proceeds of the Subordinated Expenses Advance;

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• all revenue collections and revenue recoveries under the Mortgage Portfolio (respectively, Revenue Collections and Revenue Recoveries);

• all amounts received by the Issuer under the Swap Agreements which are in exchange for amounts debited to the Revenue Ledger in respect of such agreements or are otherwise payable to the Issuer pursuant to any Credit Support Annex in relation to a termination of the relevant Swap Agreement;

• in accordance with the Credit and Liquidity Enhancement Priorities, the amount of any drawing to be made from the Reserve Fund Ledger in respect of a Revenue Shortfall (a Reserve Fund Revenue Drawing);

• in accordance with the Credit and Liquidity Enhancement Priorities, the reallocation of amounts standing to the credit of the Principal Ledger to settle a Revenue Shortfall, to the extent that such Revenue Shortfall would not be discharged solely from the proceeds of a Reserve Fund Revenue Drawing (a Principal Against Revenue Shortfall Reallocation);

• interest which has accrued during a Collection Period on the International Issuer Accounts but has not yet been distributed under the Pre-Enforcement Revenue Payment Priorities, excluding Account Interest Sweep Amounts (an Account Interest General Amount);

• interest which has accrued during the period commencing on the Collection Period End Date and ending on the related Note Payment Date (an Account Interest Sweep Amount);

• the portion (if any) of the purchase price of any Mortgage Loan relating to a mortgage certificate sold by the Issuer which is attributable to Accrued Interest on that Mortgage Loan (a Repurchased Pool Revenue Amount); and

• all other amounts in the nature of revenue received by or on behalf of the Issuer from time to time.

Amounts debited by the Cash Manager to the Revenue Ledger will represent one or more of the following:

• the amount applied to discharge the Warehouse Revenue Obligations;

• the application of the Subordinated Expenses Advance to pay the closing costs and fees of the Issuer due and payable on the Issue Date (the Transaction Closing Expenses); and

• applications to be made under the Pre-Enforcement Revenue Payment Priorities.

The Principal Ledger

A principal ledger (the Principal Ledger) will record cash-flows of the Issuer which represent (or are deemed to represent) principal, as distinct from revenue cash-flows.

Amounts credited by the Cash Manager to the Principal Ledger will represent one or more of the following (collectively being Principal Receipts):

• receipt by the Issuer of the portion of the subscription proceeds of the Notes which is to be allocated to discharge in full the principal amount outstanding under the Warehouse Facility on the Issue Date (the Warehouse Principal Obligations, and together with the Warehouse Revenue Obligations, the Warehouse Obligations);

• principal collections or principal recoveries under the Mortgage Portfolio (respectively, Principal Collections and Principal Recoveries);

• in accordance with the Credit and Liquidity Enhancement Priorities, the amount of any drawing required to be made from the Reserve Fund Ledger in respect of a debit balance on the Class A PDL and/or the Class B PDL, as applicable (see The Principal Deficiency Ledgers below) (a Reserve Fund Principal Drawing);

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• the reallocation of amounts standing to the credit of the Revenue Ledger towards the discharge of debit balances on one or more of the Principal Deficiency Ledgers, pursuant to and in accordance with the Pre-Enforcement Revenue Payment Priorities (a Revenue Against Principal Reallocation);

• any Repurchased Pool Principal Amount; and

• the proceeds from a casualty event or otherwise that are applied in reduction of the Outstanding Principal Balance of a Mortgage Loan (including pursuant to any Insurance Policy).

Amounts debited by the Cash Manager to the Principal Ledger will represent either:

• the amount applied to discharge the Warehouse Principal Obligations;

• any Principal Against Revenue Shortfall Reallocation; or

• applications to be made under the Pre-Enforcement Principal Payment Priorities on a Note Payment Date.

The Principal Deficiency Ledgers

Principal deficiency ledgers (the Principal Deficiency Ledgers) will record from time to time the extent to which the aggregate scheduled present and future principal receivables under the Mortgage Portfolio are "deficient", in the sense that the overall outstanding par value of these receivables is less than the principal amount outstanding under the Notes at the relevant time (such deficiency being a Principal Deficiency).

A Principal Deficiency would occur under the Transaction:

• as a result of a default in the repayment of principal falling due under a Mortgage Loan, where either (a) the Servicer (acting reasonably and in good faith) has exhausted the Enforcement Procedures in relation to such default or (b) 90 days have elapsed since such principal first became overdue and (in either case) the relevant amount of principal (or part of it) remains unpaid (such amount remaining unpaid being a Principal Loss), as confirmed by the Servicer in the Monthly Servicer Report for the Collection Period in which such Principal Loss occurred or was recognised by it; or

• in the event that some or all of any credit balance on the Principal Ledger is reallocated to the Revenue Ledger and applied towards the discharge of a Revenue Shortfall by way of a Principal Against Revenue Shortfall Reallocation.

The Principal Deficiency Ledgers will each correspond to a Class of the Notes so as to comprise, respectively, a Class A PDL, a Class B PDL and a Class C PDL.

The purpose of attributing a Principal Deficiency Ledger to each Class of Notes is to reflect the allocation of risk among the Notes of each Class associated with Principal Deficiencies, in terms of the likelihood of Noteholders of such Class receiving a full redemption of their Notes by the Final Maturity Date. Consequently, the order of application of Principal Deficiencies as debit entries under the Principal Deficiency Ledgers reflects the respective seniority of the Notes of each Class under the Pre-Enforcement Principal Payment Priorities.

Accordingly, Principal Deficiencies occurring from time to time will be recorded and maintained by the Cash Manager on each Note Payment Date as debit entries under the relevant Principal Deficiency Ledgers in accordance with the following order of application (the PDL Application Order):

• first, up to the Principal Amount Outstanding of the Class C Notes, as a debit entry under the Class C PDL;

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• secondly, up to the Principal Amount Outstanding of the Class B Notes, as a debit entry under the Class B PDL; and

• thirdly, up to the Principal Amount Outstanding of the Class A Notes, as a debit entry under the Class A PDL.

Any debit balance remaining on a Principal Deficiency Ledger on the Final Maturity Date of the Class of Notes to which such Principal Deficiency Ledger relates is required to be applied by the Principal Paying Agent on such date as a reduction in the Principal Amount Outstanding of the Notes of that Class. Prior to this, on each Note Payment Date, debit balances on the Principal Deficiency Ledgers are to be discharged (as applicable) by Principal Recoveries, Revenue Against Principal Reallocations and Reserve Fund Principal Drawings, which are to be applied as credit entries under the relevant Principal Deficiency Ledgers and under the Principal Ledger, to the extent of any Principal Deficiency recorded thereunder, in accordance with the PDL Rectification Order, for further application (as a Principal Receipt) under the Pre-Enforcement Principal Payment Priorities.

The Reserve Fund Ledger

A reserve fund ledger (the Reserve Fund Ledger) will be used to record the amount of cash available to the Issuer in reserve (the Reserve Fund) for the purposes of mitigating both liquidity and credit risks arising in respect of the obligations of the Issuer under the Notes and the maintenance of the Transaction generally. Accordingly, subject to the Credit and Liquidity Enhancement Priorities, the Issuer will draw amounts from the Reserve Fund to cover:

• shortfalls (Revenue Shortfalls) in other Revenue Receipts, as necessary for the purposes of discharging certain specified senior items on any Note Payment Date under the Pre-Enforcement Revenue Payment Priorities and in priority to any Principal Against Revenue Shortfall Reallocation or Reserve Fund Principal Drawing on such Note Payment Date (a Reserve Fund Revenue Drawing); and

• Principal Deficiencies (a Reserve Fund Principal Drawing), such Reserve Fund Principal Drawings to be applied on any Note Payment Date in or towards the discharge of any debit balance under the Class A PDL and/or the Class B PDL, as applicable.

Amounts credited to the Reserve Fund Ledger will represent:

• the proceeds of the Subordinated Reserve Advance to be received by the Issuer on the Issue Date in an amount equal to the Initial Reserve Fund Required Amount; and

• any amounts transferred to the Reserve Fund Ledger from the Revenue Ledger pursuant to the Pre-Enforcement Revenue Payment Priorities, the determination of the Reserve Fund Base Case Amount and the application of the Reserve Fund Multiplication Factor.

Amounts debited to the Reserve Fund Ledger will represent:

• Reserve Fund Revenue Drawings;

• Reserve Fund Principal Drawings;

• if applicable, Reserve Fund Reimbursement Amounts; and

• if applicable, the amount required to be applied pursuant to Condition 9.6(a) (Reserve Fund Reimbursement Amounts).

Swap Collateral Ledger

A swap collateral ledger (the Swap Collateral Ledger) will be used to record:

• as a credit entry, all amounts of cash (Cash Swap Collateral) or eligible securities (Non-Cash Swap Collateral and, together with the Cash Swap Collateral the Swap Collateral) transferred as collateral by either Swap Counterparty to the Issuer pursuant to the terms of the

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relevant Credit Support Annex, together with any interest or income thereon (and all amounts of Cash Swap Collateral will be transferred to the Issuer Distribution Account and all amounts of Non-Cash Swap Collateral will be transferred to a custody account in the name of the Issuer or transferred according to such custody arrangements as the Servicer deems appropriate); and

• as a debit entry (a) all amounts of Swap Collateral required to be returned to either Swap Counterparty and withdrawn from the Issuer Distribution Account or the relevant custody account, as applicable, in accordance with the terms of the relevant Credit Support Annex (the Swap Collateral Return Payments) (any amounts withdrawn from the Issuer Distribution Account or the relevant custody account, as applicable, representing the amount of Swap Collateral to be set off or otherwise applied in satisfaction of amounts owing to the Issuer by such Swap Counterparty in the event of any termination of the applicable Swap Agreement to be credited to the Revenue Ledger) and (b) any Interest Amounts or Distributions (each as defined in the applicable Swap Agreement) required to be transferred to a Swap Counterparty pursuant to the relevant Credit Support Annex.

See also Description of Principal Transaction Documents – The Swap Agreements.

Determination of the Reserve Fund Required Amount

The Reserve Fund Required Amount

The Reserve Fund Required Amount (RFRAt), as determined on each Cash Flow Determination Date by reference to the applications to be made by the Cash Manager under the Ledgers on the corresponding Note Payment Date (NPDt), is to be calculated as follows:

tRFMFtRFBCAtRFRA ×=

where:

RFBCAt means the Reserve Fund Base Case Amount; and

RFMFt means the Reserve Fund Multiplication Factor,

in each case, as applicable on NPDt.

The Reserve Fund Base Case Amount and the Reserve Fund Multiplication Factor incorporate formulas for determining the amount (if any) by which:

• the Reserve Fund Required Amount will reduce on each Note Payment Date and a Reserve Fund Reimbursement Amount will become payable to the Subordinated Loan Provider on such date; or

• the Reserve Fund Required Amount will increase, causing any Revenue Receipts on each subsequent Note Payment Date that would otherwise be applied to make payments of interest under the Class C Notes and to discharge the other more junior items under the Pre-Enforcement Revenue Payment Priorities (including any Subordinated Loan Scheduled Interest Amount and any Subordinated Loan Additional Interest Amount falling due on such date) to be applied instead to enhance the amount of the Reserve Fund up to the Reserve Fund Required Amount.

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The Reserve Fund Base Case Amount

The Reserve Fund Base Case Amount (RFBCAt), as determined on each Cash Flow Determination Date, is to be calculated as follows:

t1-tt RFRA RFOA and 2

IPAO PAO whenIRFA ≥

≥

t1-ttt

tt1-t RFRA RFOA and

2IPAO PAO whenRFfloor ,

PAOBRARRFBCA Max ≥

<

+−× 1 RFBCAt =

RFBCAt-1 when RFOAt-1 < RFRAt

where:

RFBCAt has the meaning given to it above;

RFRAt has the meaning given to it above;

IRFA means the Initial Reserve Fund Required Amount;

NPDt has the meaning given to it above;

RFOAt-1 means the Reserve Fund Outstanding Amount (if any) at the close of NPDt-1;

PAOt means the aggregate Principal Amount Outstanding of the Notes which will be applicable at the close of NPDt;

IPAO means the initial Principal Amount Outstanding of the Notes, as applicable on the Issue Date;

ARt means the aggregate Principal Receipts (if any) to be applied towards the redemption of the Class A Notes on NPDt;

BRt means the aggregate Principal Receipts (if any) to be applied towards the redemption of the Class B Notes on NPDt; and

RFfloor means US$2,695,263, being the minimum amount at which the Reserve Fund Required Amount will be set prior to the Rated Notes Redemption Date (such amount being equal to 1.50 per cent. of IPAO).

The Reserve Fund Multiplication Factor

The Reserve Fund Multiplication Factor (RFMFt), as determined on each Cash Flow Determination Date, is to be calculated as follows:

1, when PAOAt + PAOBt > 0 and

tPAO

121 1.0% NESL ×

×≥

2, when PAOAt + PAOBt > 0 and

tPAO

121 1.0% NESL ×

×<

RFMFt =

0, when PAOAt + PAOBt = 0

where:

NESL means the Notional Excess Spread Level on NPDt;

RFMFt has the meaning given to it above;

PAOAt means the aggregate Principal Amount Outstanding of the Class A Notes which will be applicable at the close of NPDt;

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PAOBt means the aggregate Principal Amount Outstanding of the Class B Notes which will be applicable at the close of NPDt; and

PAOt has the meaning given to it above.

Description of the Reserve Fund Required Amount Calculation

The following principles apply to the calculation of the Reserve Fund Required Amount on each Cash Flow Determination Date.

• If, on any NPDt, PAOt is equal to or greater than 50 per cent. of IPAO, the Reserve Fund Required Amount will be equal to the Initial Reserve Fund Required Amount (being an amount equal to US$9,882,632 or 5.50 per cent. of IPAO).

• If, on any NPDt, RFOAt is less than RFRAt, the Reserve Fund Base Case Amount (and therefore the Reserve Fund Required Amount) will not be reduced. This will occur if (a) Reserve Fund Drawings have been made (such that RFOAt-1 is less than RFRAt-1, in each case, at the close of NPDt-1) or (b) RFMFt becomes two and the amount (if any) available to be applied to the Reserve Fund Ledger under the Pre-Enforcement Revenue Payment Priorities on NPDt is insufficient, such that RFOAt falls below RFRAt, in each case, at the close of NPDt.

• RFBCAt will only reduce when each of the following conditions are met (a) at least 50 per cent. of IPAO has been redeemed, (b) RFOAt-1 is equal to or greater than RFRAt (c) no Reserve Fund Drawing will occur on NPDt and (d) RFBCAt-1 is greater than RFfloor.

• If, on any NPDt, the Reserve Fund Base Case Amount is to reduce such that RFBCAt falls below RFBCAt-1, the relevant reduction will be in proportion to the amount (if any) by which the Rated Notes are to be redeemed on NPDt.

• Although RFBCAt will not fall below RFfloor, RFRAt will still fall to zero once the Rated Notes Redemption Date (if any) has occurred, since RFMFt on the corresponding NPDt will be zero.

• Pursuant to the Reserve Fund Multiplication Factor, the Reserve Fund Base Case Amount will increase from a factor of one to a factor of two if the level of Revenue Receipts on the relevant Note Payment Date which would otherwise be available to discharge Subordinated Loan Scheduled Interest and all other more junior items under the Pre-Enforcement Revenue Payment Priorities (including any Subordinated Loan Additional Interest) falls below a prescribed threshold, relative to the Principal Amount Outstanding under the Notes on such Note Payment Date (after the application of Principal Receipts on such date to be effected under the Pre-Enforcement Principal Payment Priorities). Such threshold will be equal to:

tPAO121%0.1 ×

×

Accordingly, the Notional Excess Spread Level, as determined on each Cash Flow Determination Date by reference to the corresponding Note Payment Date, means the amount (if any) by which the credit balance of the Revenue Ledger exceeds the amount required to be applied under paragraphs (a) to (n) (inclusive) of the Pre-Enforcement Revenue Payment Priorities on such Note Payment Date.

Reserve Fund Reimbursement Amounts

If, on any Note Payment Date, the amount standing to the credit of the Reserve Fund Ledger exceeds the Reserve Fund Required Amount, after giving effect to the Reserve Fund Base Case Amount and the Reserve Fund Multiplication Factor on such date, such excess amount (a Reserve Fund

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Reimbursement Amount) will be applied by the Cash Manager on such Note Payment Date from the Reserve Fund Ledger in or towards the repayment of the Subordinated Reserve Advance.

Credit and Liquidity Enhancement Priorities

On each Note Payment Date, to the extent that there is a sufficient credit balance on such date for such purpose under the Reserve Fund Ledger and the Principal Ledger respectively, Reserve Fund Drawings and any Principal Against Revenue Shortfall Reallocation will be subject to the following order of applications, which will be effected by the Cash Manager prior to any application on such date under the Pre-Enforcement Payment Priorities (the Credit and Liquidity Enhancement Priorities):

• first, any Reserve Fund Revenue Drawing required to be debited to the Reserve Fund Ledger and credited to the Revenue Ledger;

• secondly, any Reserve Fund Principal Drawing required to be (a) debited to the Reserve Fund Ledger, (b) credited to the Principal Ledger and (c) in accordance with the PDL Rectification Order, credited to the Class A PDL and/or the Class B PDL, as applicable; and

• thirdly, any Principal Against Revenue Shortfall Reallocation required to be debited to the Principal Ledger and credited to the Revenue Ledger.

The PDL Rectification Order, being the order in which credit entries are to be made under the Principal Deficiency Ledgers as applicable pursuant to the Pre-Enforcement Revenue Payment Priorities, Principal Recoveries or (in the case of a debit balance on the Class A PDL and/or the Class B PDL only) any Reserve Fund Principal Drawing, refers to the following order of priorities:

• first, to credit the Class A PDL, up to the amount (if any) necessary to cause the balance of the Class A PDL to be equal to zero;

• secondly, to credit the Class B PDL, up to the amount (if any) necessary to cause the balance of the Class B PDL to be equal to zero; and

• thirdly, to credit the Class C PDL, up to the amount (if any) necessary to cause the balance of the Class C PDL to be equal to zero.

Cash Management Operations on each Cash Flow Determination Date

On each Cash Flow Determination Date, the Cash Manager is required to determine the amount of Revenue Receipts and Principal Receipts which will be available to be applied on the corresponding Note Payment Date under the applicable Pre-Enforcement Payment Priorities (after taking into account, inter alia, the amounts credited and to be credited to each Ledger on such date, the applications to be made under the Pre-Enforcement Payment Priorities, any Revenue Shortfall, any Reserve Fund Drawing, any Reserve Fund Reimbursement Amount, any Principal Against Revenue Shortfall Reallocation (and the related Credit and Liquidity Enhancement Priorities) and any other application to be effected by the Cash Manager from the Issuer Distribution Account and/or the Ledgers, as applicable, on such date).

In determining the amount of such Revenue Receipts, to the extent that it is able, the Cash Manager will include any Account Interest Sweep Amount which will be applicable on such Note Payment Date. Otherwise, any such Account Interest Sweep Amount will be excluded from such determination (including for the purposes of measuring any Revenue Shortfall and the Notional Excess Spread Level applicable to such Note Payment Date) but will in any event be included in the actual application of Revenue Receipts on such Note Payment Date under the Pre-Enforcement Revenue Payment Priorities and reflected in the corresponding Cash Management Report.

Cash Management Operations on Note Payment Dates

On each Note Payment Date, the Cash Manager is required to apply all Revenue Receipts and Principal Receipts standing to the credit of the Revenue Ledger and Principal Ledger (as well as the requisite

CASH MANAGEMENT

59

portion (if any) of the amount standing to the credit of the Reserve Fund Ledger), as the case may be, pursuant to and in accordance with the Pre-Enforcement Payment Priorities, the PDL Rectification Order and the Credit and Liquidity Enhancement Priorities.

See Conditions 9.1 (Pre-Enforcement Revenue Payment Priorities) and 9.2 (Pre-Enforcement Principal Payment Priorities).

Operation of the Issuer Collection Account by Issuer Collection Account Bank

All Principal Receipts and Revenue Receipts received by the Servicer under the Mortgage Portfolio will be credited by the Servicer to the Issuer Collection Account as soon as practicable upon receipt thereof (and in any event within one Moscow Business Day after identification thereof). No other amounts will be paid into the Issuer Collection Account, other than amounts received by the Issuer in respect of the Related Security converted from Roubles pursuant to the Rouble Administrative Account Agreement.

Under the terms of the Issuer Collection Account Agreement, the Issuer Collection Account Bank will be required to transfer all cleared funds standing to the credit of the Issuer Collection Account to the Issuer Distribution Account (save for any nominal amount required to keep the Issuer Collection Account in existence) by 2.00 p.m. (Moscow time) on each Moscow Business Day on which the amount of such cleared funds at 2.00 p.m. (Moscow time) on such Moscow Business Day exceeds US$10,000 (a Daily Settlement Date). The Issuer Collection Account Bank will ensure that all such funds transferred from the Issuer Collection Account are received into the Issuer Distribution Account on the following Moscow Business Day. The Issuer Collection Account Bank will notify the Issuer and the Cash Manager before 4.00 p.m. (Moscow time) on each Daily Settlement Date of the aggregate amount transferred from the Issuer Collection Account to the Issuer Distribution Account on such date. In this Prospectus, Moscow Business Day means a day (other than a Saturday or a Sunday or an official holiday under the laws of the Russian Federation) on which banks are open for general business in Moscow.

No other payments may be made from the Issuer Collection Account.

60

THE RESIDENTIAL MORTGAGE MARKET IN THE RUSSIAN FEDERATION

Market Position

According to the CBR, as of 13 April 2007, there were 1,336 banks and other non-bank credit organisations registered in the Russian Federation.

Strategically, the Originator has developed its retail banking arm with a focus on mortgage lending. As at the date of this Prospectus, residential mortgage lending by volume accounts for approximately 90 per cent. of the lending activity of the Originator's retail banking arm and approximately 50 per cent. of the overall lending activity of the Originator. As of 1 January 2007, the Originator's mortgage loan portfolio amounted to US$598.5 million and the total disbursement amount reached US$620 million in 2006. The Originator was among the top three Russian banks by mortgage loan volume.

The Originator occupied the third position after Sberbank and VTB Group in the ratings of Russian mortgage banks in the fourth quarter of 2006. In the mortgage loan area the Originator's primary competitors are Sberbank, VTB Group, Uralsib, DeltaCredit, Cit Finance, City Mortgage Bank and Gazprombank. The majority of the Originator's competitors are based in Moscow. Another strategic focus of the Originator is the provision of credit to large and medium sized corporate businesses in the Russian Federation. As at the end of 2006, the corporate loan portfolio of the Originator was US$680 million.

Background and Overview of Residential Mortgage Market

During the planned economy of the Soviet Union, housing was generally provided by the government. Therefore the private residential property market and the mortgage market has a very limited history in the Russian Federation. After 1991, the development of the real estate market gained some momentum as the private sector became increasingly important. Due to general economic conditions, the property markets, especially those in the St. Petersburg and Moscow areas, developed with prices being listed in Dollars. In particular, the two regional property markets of Moscow and St. Petersburg have experienced a strong increase in property prices during recent years, which in turn has led to a higher demand for mortgage loans. The property market's reliance on the Dollar, together with the lack of available long-term funding denominated in Roubles, led to the current situation in which the newly developing mortgage markets in Moscow and St. Petersburg are also principally denominated in Dollars. As mortgage loans were rarely available in the Russian Federation during the 1990s, the growth of the mortgage market has only gained significant momentum in recent years but is still small compared to Western European countries, since a very small proportion of real estate transactions are funded by mortgage loans. Since 2004, the size of the Russian mortgage market has significantly increased, particularly during 2006. Market estimates indicate that the total principal amount of outstanding mortgage loans in the Russian Federation was in excess of US$13 billion at the close of 2006 (in comparison to US$3.9 billion at the close of 2005).

As the level of activity in the property markets of Moscow and St. Petersburg is predicted to remain high, the mortgage lending activity is also expected to continue growing rapidly. The Originator expects this growth and the increasing competition between lenders to contribute to the market maturing further. Among the major challenges for the further development of the market will be:

• achieving a more accurate assessment of potential borrowers' creditworthiness;

• the strengthening of risk control systems;

• persistent weaknesses in the disposable income of a large proportion of the population; and

• potentially decreasing margins on mortgage loans over time.

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61

Trends and Challenges

Residential mortgage lending is offered by an increasing number of banks in the Russian Federation. Given the recent legal improvements in the Russian Civil Code and the Mortgage Law, it is therefore expected that mortgage financing will continue to show high growth rates. However, there is still some need for improvement in the regulatory, legal and organisational infrastructure of the mortgage lending business. The planned establishment of a central credit bureau and of a mortgage risk insurance system are further steps that would facilitate the development of the market.

62

THE MORTGAGE PORTFOLIO

The Mortgage Portfolio consists of the Mortgage Certificates, which represent the rights under the Mortgage Loans and the Related Security.

The Mortgage Loans

The Mortgage Loans were advanced by the Originator to the borrowers (each, a Customer). To the extent that there is more than one Customer under a Mortgage Loan, each Customer is required to be jointly and severally liable under that Mortgage Loan. All Mortgage Loans have been selected for inclusion in the Mortgage Portfolio on the basis that they demonstrate the capacity to produce funds in order to service payments due under the Notes and that they meet the Eligibility Criteria and the Lending Criteria. See Eligibility Criteria and Lending Criteria below.

Each Mortgage Loan is made pursuant to a Mortgage Loan Agreement governed by Russian law for the purposes of financing or refinancing the acquisition of residential properties in the Russian Federation and the renovation of any such properties. Each Mortgage Loan is denominated in Dollars and interest is payable at a fixed rate set out in the applicable Mortgage Loan Agreement. Principal and interest under each Mortgage Loan are payable on a scheduled monthly consolidated annuity basis on the dates and in the amounts set out in the relevant Mortgage Loan Agreement. See Material Terms of the Mortgage Loan Agreements below.

The Mortgage Loans (to the extent applicable) are documented in accordance with standard documentation of the Originator (the Standard Documentation).

Related Security

The Related Security consists of rights under (a) Russian law first ranking mortgages in respect of residential properties in the Russian Federation (the Mortgaged Properties) securing the relevant Mortgage Loans (the Mortgages) and (b) Insurance Policies relating to such Mortgage Loans.

Pursuant to the Mortgage Law, a mortgage may arise (i) in accordance with the principle that a mortgage over a property secures the loan provided for the purchase of the property, by operation of law in favour of the relevant mortgage lender or (ii) under a relevant mortgage agreement entered into between the parties which has been registered with the State Register. The Mortgages were, in each case, initially created in favour of the Originator.

It is a condition under each Mortgage Loan that each Mortgaged Property and the title thereto is insured for at least 110 per cent. of the outstanding principal amount of the Mortgage Loan in favour of the legal owner of the relevant Mortgage Certificate. Furthermore, it is a condition of each Mortgage Loan that the Customer's life and risk of disability are insured for at least 110 per cent. of the outstanding principal amount of the Mortgage Loan in favour of the legal owner of the relevant Mortgage Certificate. The insured amount is adjusted by reference to the outstanding principal amount of the Mortgage Loan. The title insurance contract and the loss or damage policy relating to the Mortgaged Property and the life and disability insurance relating to each Customer have been written for the full term of the relevant Mortgage Loan.

Pursuant to Russian law, the Originator is unable to assign to the Issuer its rights as primary beneficiary under the Insurance Policies, unless the Customer instructs the Insurer to change the beneficiary note under such Insurance Policies. However, it is contractually obliged under the Servicing Agreement and the Master Purchase Agreement to remit to the Issuer any proceeds received under the terms of the Insurance Policies. In addition, under Russian law, the Issuer, as a mortgagee, is entitled to the proceeds of any insurance payments under the Insurance Policies relating to loss and damage to the Mortgaged Property in an amount not less than the amount due and payable by the Customer under the Mortgage Loan, although this does not extend to life and disability insurance.

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Pursuant to the Master Purchase Agreement, the Originator will agree to procure that the Customers approve the name of the Issuer as the primary beneficiary in respect of the Insurance Policies within six months of the Issue Date.

Outstanding Principal Balance

As at the Statistical Cut Off Date, the Outstanding Principal Balance under the Mortgage Portfolio was equal to US$180,474,037. Three defaulting or potentially defaulting mortgage loans originated by the Originator and owned by the Issuer on the Statistical Cut Off Date, having an aggregate outstanding principal balance of US$789,817, were repurchased from the Issuer by the Originator following the Statistical Cut Off Date and are excluded for the purposes of the statistical information under The Mortgage Portfolio – Characteristics of the Mortgage Portfolio and Estimated Weighted Average Lives of the Notes.

Revenue and principal received by the Issuer under the Mortgage Portfolio during the first Collection Period (which is to commence on the day immediately following the Portfolio Cut Off Date), excluding the purchase price received by the Issuer in respect of the Repurchased Mortgage Loans (which is an aggregate amount equal to US$789,817 plus certain interest accrued but not yet paid under such loans) is to be credited to the Revenue Ledger and the Principal Ledger respectively, as described under Cash Management, for further application on the first Note Payment Date in accordance with the Pre-Enforcement Payment Priorities.

See General Information – Warehouse Documents.

Eligibility Criteria and Lending Criteria

The Originator will represent to the Issuer, with respect to the Mortgage Portfolio, that (as at the Issue Date) the relevant Mortgage Certificates comply with the Eligibility Criteria and the Lending Criteria. See Eligibility Criteria Applicable to the Mortgage Portfolio and Lending Criteria Applicable to the Mortgage Portfolio.

Sale of Mortgage Portfolio

Pursuant to the Master Purchase Agreement, the Originator has sold the Mortgage Portfolio to the Issuer. The sale of the Mortgage Certificates from the Originator to the Issuer has been effected in three tranches, prior to the Issue Date. The date on which each such tranche was acquired by the Issuer is referred to in this Prospectus as a Completion Date. See also General Information – Warehouse Documents.

The sale of the Mortgage Certificates comprising the Mortgage Portfolio, to the fullest extent possible under applicable law, includes the Related Security for each of the relevant Mortgage Loans.

Material Terms of the Mortgage Loan Agreements

Conditions Precedent

Each of the Mortgage Loan Agreements requires the relevant Customer to satisfy the following conditions precedent before the relevant Mortgage Loan may be advanced:

• the creation of the Mortgage;

• the execution of the Insurance Policy providing for title insurance and loss or damage insurance relating to the Mortgaged Property and life and disability insurance relating to the Customer, as well as the payment of the first instalment of the insurance premium under such Insurance Policies; and

• the payment by the Customer of a one time commission for the opening and maintenance of the special loan account.

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Registration of the Mortgage

Each Mortgage is subject to mandatory registration with the Unified State Register of Rights to Immovable Property and Transactions (the State Register). The State Register was created to include publicly available information on all rights, including mortgage rights, in respect of each item of immovable property located in the Russian Federation. The State Register is maintained by the Federal Registration Service of the Russian Federation. Each mortgage is registered with the State Register in the name of the Originator. See Risk Factors – Risks Relating to the Notes and the Mortgage Portfolio – The Issuer's rights as mortgage, evidenced by the Mortgagee Certificates are not registered with the State Register.

Interest Rate

The Mortgage Loan Agreements provide for a fixed interest rate varying from 9.8 per cent. to 13.5 per cent. (the Mortgage Loan Interest Rate). Interest accrues on the outstanding balance of each Mortgage Loan from the business day immediately following the disbursement date to (and including) the date of final repayment on the basis of the actual number of days elapsed in a 366 day year. Each interest period under a Mortgage Loan runs for one calendar month starting on (and including) the 15th or 25th day of the preceding month and ending on (but excluding) the 15th or 25th day of the following calendar month.

Amount and Currency

As at the Portfolio Cut Off Date, no Mortgage Loan has an Outstanding Principal Balance of more than US$1,000,000. Each Mortgage Loan is denominated in Dollars.

Term

The original term of each Mortgage Loan is up to 300 months.

Commissions and Fees

The Mortgage Loan Agreements do not provide for any commissions or fees to be payable by the Customers, other than a one time commission payable on the disbursement date for the establishment and maintenance of the special loan account, as determined on the basis of the prevailing tariffs of the Originator.

Repayment of principal and interest

The Mortgage Loans are repayable in equal monthly consolidated instalments of principal and interest on an annuity basis. Such payments are required to be made on the 15th or 25th day of each month (each a Mortgage Loan Payment Date). The relevant Mortgage Loan Payment Date is specified in each Mortgage Loan Agreement.

The first payment by a Customer comprises only the interest accrued on the relevant Mortgage Loan from the date of disbursement to the end of the first interest period. The Mortgage Loan Agreements provide for the following formula, pursuant to which all monthly instalments are calculated:

)MIR1()(-1

MIR

iondeterminat

ofdateat as Balance,

PrincipalgOutstandin

InstalmentMonthly+

−×= NM

where:

MIR is the monthly interest rate under the relevant Mortgage Loan (being the annual interest rate/12); and

NM is the number of interest periods (calendar months) remaining until final maturity of the relevant Mortgage Loan.

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The final instalment may be subject to adjustment if its amount exceeds the actual amount of obligations then due from the Customer.

Repayment Arrangements and Late Fees

Payment by the Customers is made by way of direct debit from their account with the Originator. In order to meet its payment obligations, a Customer must ensure that sufficient funds are available in its account with the Originator on the relevant Mortgage Loan Payment Date.

If, for any reason, a Customer does not have sufficient funds in his bank account to make a full payment under the Mortgage Loan on the relevant Mortgage Loan Payment Date, such Customer is obliged to pay a late payment fee of US$3.00 for each calendar day of the delay (the Late Fees).

Having debited the Customer's account for each instalment, the Originator will apply the funds to discharge the Customer's payment obligations in the following priority:

• first, payment of Late Fees;

• secondly, payment of overdue interest;

• thirdly, payment of due interest;

• fourthly, repayment of overdue portion of principal; and

• fifthly, repayment of due portion of principal.

Pursuant to the Mortgage Loan Agreements, the Customer's payment obligations are deemed to be discharged only once the Originator has credited the relevant sums to the special loan account of such Customer.

Voluntary Prepayment

Certain of the Mortgage Loan Agreements contain a prepayment restriction applicable during the three months immediately following the date of disbursement of the relevant Mortgage Loan, after which the principal outstanding amount under the Mortgage Loan is prepayable in whole or in part without any penalty. Where a Mortgage Loan Agreement features a prepayment restriction during the first three months from disbursement of the Mortgage Loan, a prepayment fee of 5 per cent. of the prepaid amount applies.

A prepayment of a Mortgage Loan can be made only on the relevant Mortgage Loan Payment Date and requires 15 days' prior written notice to the Originator. The minimum prepayment amount is set forth in each Mortgage Loan Agreement individually.

No Representations

The Customers do not provide any representations under the Mortgage Loan Agreements. Under Russian law and practice, the concept of "representations" does not have a distinctive meaning and representations are not customarily provided.

Acceleration

The Mortgage Loans may be accelerated in the following circumstances:

• the inability of the Originator to obtain the Mortgage Certificate from the Federal Registration Service of the Russian Federation through the Customer's fault within 10 business days from the date of registration of the Customer's title to the Mortgaged Property;

• if a Customer uses the Mortgage Loan for purposes other than those set out in the relevant Mortgage Loan Agreement;

• if the Customer is more than 15 calendar days late in making a monthly annuity payment;

• if the Customer is more than 10 business days late in making an insurance premium payment;

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66

• if the Customer fails to duly perform its obligations under the Mortgage Certificate, the Mortgage Loan Agreement or the Insurance Policy;

• if the Customer is late in making monthly annuity payments more than three times during any 12 month period, even if such delays are not substantial;

• a partial or complete loss of, or damage to, the Mortgaged Property;

• if the Customer fails to comply, in any material respect, with relevant standards of use and maintenance of the Mortgaged Property, including the duty to repair the Mortgaged Property, if such non-compliance may result in the loss of, or damage to, the Mortgaged Property;

• if the Customer unreasonably prevents the Originator from inspecting the Mortgaged Property and meeting the individuals residing at the Mortgaged Property; or

• in other cases stipulated by the applicable laws of the Russian Federation.

If following a payment default by the Customer the Mortgage Loan is not repaid in full within 15 calendar days from the date of written demand of the Originator for the immediate repayment of all sums outstanding under the Mortgage Loan, the Originator is entitled to enforce the relevant Mortgage.

Notifications

The Mortgage Loan Agreements impose an obligation on the Customers to notify the Originator, inter alia, of the following events not later than 10 days after their occurrence:

• any change in address, employment or marital status and other circumstances which may have an adverse effect on the performance by the Customer of its payment obligations under the Mortgage Loan;

• the registration of new residents at the Mortgaged Property;

• the conclusion, amendment, termination or invalidation of a marriage contract; and

• the opening of a current account or deposit account in any currency with any other bank.

The Customers are also obliged to notify the Originator of the following events not later than five days after they become aware of their occurrence:

• the commencement of any civil legal action brought against the Customer which could have an adverse effect on the performance of the Customer's obligations under the Mortgage Loan Agreement or cause loss or damage to the Mortgaged Property; and

• the commencement of any criminal proceedings against the Customer.

In addition, each Customer is obliged to provide the Originator with information about its financial status and income on a quarterly basis no later than on the fifth day of each quarter. If the Customer fails to perform this obligation, the Originator may charge a penalty in the amount of US$5.00 for each day of the delay.

Covenants and Undertakings of the Customer

Major covenants of the Customer under the Mortgage Loan Agreement include:

• to sign, notarise and register the purchase agreement or the mortgage security agreement relating to the Mortgaged Property and the relevant Mortgage Certificate;

• to set up a current account with the Originator and provide the Originator with direct debit rights thereto;

• to procure life insurance as well as damage and loss of title insurance in relation to the Mortgaged Property, with the Originator named as the first loss payee;

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• at the Originator's request, to procure that all payments with respect to the property (including insurance, utility payments, taxes, etc.) are made through the Customer's accounts with the Originator;

• at the Originator's request, to provide confirmations that all taxes, utility payments and other payments in respect of the Mortgaged Property have been made in a timely manner;

• to notify all other banks with which the Customer has bank accounts of the direct debit right of the Originator under the relevant Mortgage Loan Agreement and to provide copies of such notifications to the Originator within five business days from the date of the relevant Mortgage Loan Agreement; and

• in case of loss of the Mortgage Certificate, to sign, notarise and register a duplicate of such Mortgage Certificate.

Undertakings of the Originator

The ongoing obligations of the Originator under the agreement include, inter alia:

• to notify the Customer of the transfer of the Mortgage Certificate to a third party within 20 calendar days from the date of such transfer (as at the date of this Prospectus, the Originator has discharged this obligation in respect of each Mortgage Certificate comprising the Mortgage Portfolio);

• to provide reports confirming the amount of repayments due from the Customer to the Originator;

• to notify the Customer of the transfer of the servicing of the Mortgage Loan to another bank; and

• to confirm to the Customer the full discharge of the Customer's obligations under the Mortgage Loan within 15 days thereof, by entering a note confirming such discharge on the Mortgage Certificate.

Consent to Transfer

Each Mortgage Loan Agreement contains an express provision permitting the transfer of the Mortgage Certificate to a third party. The Originator is required to notify the Customers of the transfer of the Mortgage Certificate and to provide information on the new holder and any new payment details within 20 calendar days from the date of such transfer (as noted above, as at the date of this Prospectus, the Originator has discharged this obligation in respect of the sale of the Mortgage Certificates to the Issuer).

Confidentiality

All information received in connection with each Mortgage Loan is deemed confidential and may be disclosed to a third party only with the prior consent of the other party to the relevant Mortgage Loan Agreement or as otherwise required by an operation of law. An exemption is available in connection with a new creditor and servicer under the Mortgage Loan as well as in respect of a custodian of the Mortgage Certificate. Such exemption would permit the transfer of all necessary information in relation to the Mortgage Portfolio from the Originator to the Issuer, the Custodian and, following the occurrence of a Servicer Event, the Back-up Servicer.

Governing Law and Dispute Resolution

The Mortgage Loan Agreement is governed by Russian law and provides for dispute resolution in the Russian court having general jurisdiction in the location of the Originator. The transfer of the Mortgage Certificate to the Issuer should not affect this dispute resolution clause and all disputes in relation to the Mortgage Certificate would have to be pursued through the court in the location of the Originator (currently, the Presnensky district court in Moscow).

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Delivery of Sale Notices

The Sale Notices have been executed and delivered to the Customers by the Originator by registered post in accordance with the Master Purchase Agreement. The delivery of such Sale Notices is evidenced by postal delivery receipts or acknowledgements of the Customers and such receipts or acknowledgements are to be deposited with the Custodian prior to the Issue Date.

Characteristics of the Mortgage Portfolio

As at the Statistical Cut Off Date, the Mortgage Loans had the aggregate characteristics indicated in Tables 1 to 14 below. (Please note that, due to rounding differences, percentage columns do not necessarily total 100 per cent.)

Table 1: Mortgage Portfolio Summary

Weighted Average1) Minimum Maximum

Aggregate Outstanding Principal Balance (OPB) of Mortgage Portfolio

US$179,684,220 - -

Number of Mortgage Loans 1,310 - -

Original LTV2) 71.17% 12.48% 90.00%

Current LTV 67.29% 2.68% 84.68%

LTI 48.82% 11.19% 60.00%

Original Mortgage Loan Amount3) US$150,292 US$22,000 US$1,000,000

Current Mortgage Loan Amount3) US$137,164 US$6,976 US$992,850

Fixed Rate 11.47% 9.80% 13.50%

Original Term (Months) 201 122 302

Remaining Term (Months) 191 106 296

Seasoning (Months) 10.26 4.64 16.21

Borrower Age (Years) 37 22 59

1) Weighting based on Current OPB 2) Weighting based on Original OPB 3) Average Mortgage Loan Amount

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Table 2: Distribution of Mortgage Loans by Original OPB

Original OPB (US$) No. of Mortgage

Loans

% of Total Balance (US$mn)

% of Total

> 0 <= 50,000 102 7.79% 4.22 2.15%

> 50,000 <= 100,000 449 34.27% 35.71 18.14%

> 100,000 <= 150,000 361 27.56% 45.38 23.05%

> 150,000 <= 200,000 169 12.90% 29.74 15.11%

> 200,000 <= 250,000 77 5.88% 17.70 8.99%

> 250,000 <= 300,000 54 4.12% 15.25 7.75%

> 300,000 <= 350,000 32 2.44% 10.52 5.34%

> 350,000 <= 400,000 19 1.45% 7.15 3.63%

> 400,000 <= 450,000 9 0.69% 3.93 2.00%

> 450,000 <= 500,000 10 0.76% 4.89 2.48%

> 500,000 <= 600,000 5 0.38% 2.75 1.40%

> 600,000 <= 700,000 4 0.31% 2.73 1.38%

> 700,000 <= 800,000 5 0.38% 3.86 1.96%

> 800,000 <= 900,000 5 0.38% 4.17 2.12%

> 900,000 <= 1,000,000 9 0.69% 8.86 4.50%

Total 1,310 100% 196.88 100.00%

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Table 3: Distribution of Mortgage Loans by Current OPB

Current OPB (US$) No. of Mortgage

Loans

% of Total Balance (US$mn)

% of Total

> 0 <= 50,000 174 13.3% 6.52 3.6%

> 50,000 <= 100,000 456 34.8% 35.44 19.7%

> 100,000 <= 150,000 336 25.6% 41.53 23.1%

> 150,000 <= 200,000 138 10.5% 24.01 13.4%

> 200,000 <= 250,000 69 5.3% 15.51 8.6%

> 250,000 <= 300,000 51 3.9% 14.20 7.9%

> 300,000 <= 350,000 29 2.2% 9.46 5.3%

> 350,000 <= 400,000 15 1.1% 5.63 3.1%

> 400,000 <= 450,000 7 0.5% 3.00 1.7%

> 450,000 <= 500,000 10 0.8% 4.76 2.6%

> 500,000 <= 600,000 5 0.4% 2.77 1.5%

> 600,000 <= 700,000 4 0.3% 2.69 1.5%

> 700,000 <= 800,000 4 0.3% 3.10 1.7%

> 800,000 <= 900,000 5 0.4% 4.18 2.3%

> 900,000 <= 1,000,000 7 0.5% 6.89 3.8%

Total 1,310 100% 179.68 100%

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Table 4: Distribution of Mortgage Loans by Original LTV

LTV Range (%) No. of Mortgage Loans

% of Total Original Balance (US$mn)

% of Total

> 10 <= 20 19 1.5% 1.48 0.75%

> 20 <= 30 44 3.4% 3.35 1.70%

> 30 <= 40 71 5.4% 6.59 3.35%

> 40 <= 50 89 6.8% 10.10 5.13%

> 50 <= 60 108 8.2% 16.60 8.43%

> 60 <= 70 184 14.0% 30.82 15.66%

> 70 <= 75 201 15.3% 37.26 18.92%

> 75 <= 80 96 7.3% 15.73 7.99%

> 80 <= 85 487 37.2% 73.09 37.13%

> 85 <= 90 11 0.8% 1.85 0.94%

Total 1,310 100% 196.88 100%

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Table 5: Distribution of Mortgage Loans by Current LTV

LTV Range (%) No. of Mortgage Loans

% of Total Current Balance (US$mn)

% of Total

> 0 <= 10 12 0.9% 0.21 0.12%

> 10 <= 20 48 3.7% 2.30 1.28%

> 20 <= 30 65 5.0% 4.35 2.42%

> 30 <= 40 86 6.6% 7.78 4.33%

> 40 <= 50 123 9.4% 14.60 8.13%

> 50 <= 60 120 9.2% 16.68 9.28%

> 60 <= 70 214 16.3% 34.21 19.04%

> 70 <= 75 180 13.7% 32.91 18.32%

> 75 <= 80 136 10.4% 18.65 10.38%

> 80 <= 85 326 24.9% 48.00 26.72%

Total 1,310 100% 179.68 100%

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Table 6: Distribution of Mortgage Loans by LTI

LTI Range (%) No. of Mortgage Loans

% of Total Current Balance (US$m)

% of Total

> 10 <= 20 14 1.1% 1.79 1.00%

> 20 <= 30 57 4.4% 10.17 5.66%

> 30 <= 40 174 13.3% 23.75 13.22%

> 40 <= 50 341 26.0% 48.58 27.03%

> 50 <= 60 724 55.3% 95.41 53.10%

Total 1,310 100% 179.68 100%

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74

Table 7: Distribution of Mortgage Loans by Seasoning

Seasoning (Months) No. of Mortgage Loans

% of Total Current Balance (US$mn)

% of Total

> 4 <= 5 2 0.15% 1.03 0.57%

> 5 <= 6 0 0.00% 0.00 0.00%

> 6 <= 7 96 7.33% 14.99 8.34%

> 7 <= 8 109 8.32% 18.89 10.51%

> 8 <= 9 160 12.21% 24.55 13.66%

> 9 <= 10 186 14.20% 26.28 14.63%

> 10 <= 11 211 16.11% 29.24 16.27%

> 11 <= 12 142 10.84% 17.43 9.70%

> 12 <= 13 158 12.06% 19.44 10.82%

> 13 <= 14 115 8.78% 13.83 7.70%

> 14 <= 15 95 7.25% 11.27 6.27%

> 15 <= 16 34 2.59% 2.61 1.46%

> 16 <= 17 2 0.15% 0.13 0.07%

Total 1,310 100% 179.68 100%

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75

Table 8: Distribution of Mortgage Loans by Remaining Term

Remaining Term (Years) No. of Mortgage Loans

% of Total Current Balance (US$mn)

% of Total

> 5 <= 10 374 28.5% 48.12 26.78%

> 10 <= 15 207 15.8% 29.30 16.31%

> 15 <= 20 692 52.8% 97.31 54.15%

> 20 <= 25 37 2.8% 4.96 2.76%

Total 1,310 100% 179.68 100%

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76

Table 9: Distribution of Mortgage Loans by Interest Rate

Interest Rate (%) No. of Mortgage Loans

% of Total Current Balance (US$mn)

% of Total

> 9.8 <= 10.0 19 1.5% 2.51 1.40%

> 10.0 <= 10.5 81 6.2% 9.46 5.27%

> 10.5 <= 11.0 386 29.5% 44.71 24.88%

> 11.0 <= 11.5 560 42.7% 79.51 44.25%

> 11.5 <= 12.0 142 10.8% 20.56 11.44%

> 12.0 <= 12.5 109 8.3% 21.78 12.12%

> 12.5 <= 13.5 13 1.0% 1.15 0.64%

Total 1,310 100% 179.68 100%

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77

Table 10: Distribution of Mortgage Loans by Borrower Age

Borrower Age (Years) No. of Mortgage Loans

% of Total Current Balance (US$mn)

% of Total

> 20 <= 25 38 2.90% 4.29 2.39%

> 25 <= 30 282 21.53% 28.89 16.08%

> 30 <= 35 338 25.80% 41.83 23.28%

> 35 <= 40 272 20.76% 43.74 24.34%

> 40 <= 45 192 14.66% 34.62 19.27%

> 45 <= 50 119 9.08% 17.12 9.53%

> 50 <= 55 57 4.35% 7.42 4.13%

> 55 <= 60 12 0.92% 1.76 0.98%

Total 1,310 100% 179.68 100%

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78

Table 11: Distribution of Mortgage Loans by Arrears

Arrears (Days) No. of Mortgage Loans

% of Total Current Balance (US$mn)

% of Total

Current 1,293 98.70% 177.61 98.85%

> 0 <= 30 17 1.30% 2.07 1.15%

> 30 <= 60 0 0.00% 0.00 0.00%

> 60 <= 90 0 0.00% 0.00 0.00%

Total 1,310 100% 179.68 100%

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79

Table 12: Distribution of Mortgage Loans by Mortgage Loan Purpose

Mortgage Loan Purpose No. of Mortgage Loans

% of Total Current Balance (US$mn)

% of Total

Purchase 1,077 82.2% 138.66 77.17%

Renovation 233 17.8% 41.03 22.83%

Totals 1,310 100% 179.68 100%

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80

Table 13: Distribution of Mortgage Loans by Geographic Area

Geographic Area No. of Mortgage Loans

% of Total Current Balance (US$mn)

% of Total

Moscow 832 63.5% 128.53 71.53%

Moscow Region 478 36.5 % 51.15 28.47%

Totals 1,310 100% 179.68 100%

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81

Table 14: Distribution of Mortgage Loans by Borrower Type

Borrower Type No. of Mortgage Loans

% of Total Current Balance (US$mn)

% of Total

Standard A1 324 24.7% 33.80 18.81%

Standard A2 877 66.9% 132.75 73.88%

Standard A3 75 5.7% 7.03 3.91%

Standard B1 18 1.4% 4.54 2.52%

Standard B2 16 1.2% 1.57 0.87%

Totals 1,310 100% 179.68 100%

82

ELIGIBILITY CRITERIA APPLICABLE TO THE MORTGAGE PORTFOLIO

The Mortgage Loans have been selected for inclusion in the Mortgage Portfolio in accordance with the following criteria:

General

1. Each Mortgage Loan has been originated by or on behalf of the Originator in accordance with the Lending Criteria.

2. Each Mortgage Loan is denominated in Dollars.

3. The maximum individual lifetime of a Mortgage Loan does not exceed 25 years. There is no minimum term in respect of any of the Mortgage Loans.

4. The maximum Outstanding Principal Balance of any Mortgage Loan as at the relevant Portfolio Cut Off Date does not exceed US$1,000,000.

5. On the Portfolio Cut Off Date, the aggregate Outstanding Principal Balance of Large Loans included in the Mortgage Portfolio (being Mortgage Loans with an Outstanding Principal Balance of US$500,000 to US$1,000,000) is not more than 20 per cent. of the aggregate Outstanding Principal Balance of the Mortgage Portfolio.

6. On the Portfolio Cut Off Date, any Mortgage Loan with an Outstanding Principal Balance in excess of US$500,000 relates to a Customer which is a Standard A1, Standard A2 or Standard B1 Customer, as described under the Lending Criteria.

7. No more than one Mortgage Loan in the Mortgage Portfolio relates to any given Customer.

8. On the Portfolio Cut Off Date, the weighted average Loan To Value ratio (LTV) on the Mortgage Portfolio does not exceed 75 per cent., as calculated in accordance with the following formula:

∑= ∑

=

=

N

i N

i iOPB

iOPBxiLTV

11

LTV Average Weighted

where:

N means the number of Mortgage Loans in the portfolio;

LTVi means LTV of the individual Mortgage Loan; and

OPBi means the Outstanding Principal Balance of the relevant Mortgage Loan.

9. The maximum LTV, as further described in the Lending Criteria, for Mortgage Loans which are Large Loans is 80 per cent. and the maximum LTV for any other Mortgage Loan does not exceed 85 per cent. Other Lending Criteria are set out under the Originator's Parameters of Mortgage Loan Products (2006) (the Parameters of Mortgage Loan Products). See Paragraph 8 (The Parameters of Mortgage Loan Products) under Lending Criteria Applicable to the Mortgage Portfolio.

10. At least 50 per cent. of the Mortgaged Properties are located in the city of Moscow and 100 per cent. of the Mortgaged Properties are located either in the city of Moscow or elsewhere in the Moscow region.

11. All Mortgaged Properties are owner occupied and for residential use only. No investment properties (buy-to-let properties) are included in the Mortgage Portfolio.

ELIGIBILITY CRITERIA APPLICABLE TO THE MORTGAGE PORTFOLIO

83

Interest Payments

12. Interest on each Mortgage Loan is payable monthly in arrears, is set at a fixed rate of interest and is not negotiable between the Customer and the Originator until the maturity of the Mortgage Loan, or in the case of the Payment 10 type Mortgage Loans (as described in the Parameters of Mortgage Loan Products), being a Mortgage Loan in respect of which the relevant Customer paid a deposit of 10 per cent. of the value of the Mortgaged Property from funds other than the Mortgage Loan incorporating a one-off interest-rate step down, such step-down has already come into effect and the LTV ratio for such Mortgage Loans is therefore below 80 per cent.

13. The Mortgage Loan Agreements contain no obligations on the part of the Originator to make any further advances.

Customer Requirements

14. Each Customer is a natural person and at the relevant Completion Date is not in bankruptcy under Russian law.

15. On the Portfolio Cut Off Date, a maximum of 20 per cent. of the Mortgage Loans in the Mortgage Portfolio relate to Customers who are aged between 21 and 25. Each Mortgaged Property is located in the city of Moscow or elsewhere in the Moscow region.

16. Any person who has been identified by the Customer to the Originator as residing or about to reside in the relevant Mortgaged Property is named as a joint Customer or is a member of the Customer's family and therefore their rights in relation to the Mortgaged Property shall be terminated if the Customer's title to the Mortgaged Property is terminated.

17. On the Portfolio Cut Off Date, the aggregate Outstanding Principal Balances of Mortgage Loans provided to Standard B1 Customers (as described under the Lending Criteria) does not exceed 10 per cent. of the aggregate Outstanding Principal Balance of the Mortgage Portfolio, provided that the weighted average LTV for such Mortgage Loans does not exceed 70 per cent.

18. On the Portfolio Cut Off Date, the aggregate Outstanding Principal Balances of Mortgage Loans provided to Standard A3 and Standard B2 Customers (collectively) (each as described in the Lending Criteria) does not exceed 5 per cent. of the aggregate Outstanding Principal Balance of the Mortgage Portfolio, provided that the weighted average LTV for such Mortgage Loans does not exceed 60 per cent. and the maximum LTV does not exceed 75 per cent.

Property Requirements

19. Each Customer has good, valid and marketable title to the relevant Mortgaged Property. The Customer's ownership rights to the relevant Mortgaged Property have been duly registered with the State Register, such registration is in full force and effect and no amendments thereto have been registered or are pending.

20. Each Mortgaged Property is free and clear of any and all encumbrances, leases, third party rights or other legal restrictions or impediments, including, without limitation, mortgages, pledges and arrests (except for the Mortgage) and is not subject to any dispute or litigation with or claim by any person with respect thereto. No other agreement, notice, filing or registration with respect to the Mortgaged Property is on file or on record in any public office.

21. Each Mortgaged Property is located in the Russian Federation.

22. Each Mortgaged Property is either an apartment which is an individual residential unit in a multi-family building or a house which is a single family house.

23. Each Mortgaged Property comprises property for residential use and occupation and does not comprise state or municipal or temporary or manufactured housing or office accommodation or land without a dwelling situated thereon or where the relevant dwelling is not completed or is for

ELIGIBILITY CRITERIA APPLICABLE TO THE MORTGAGE PORTFOLIO

84

the purposes of construction, development or conversion of a dwelling. If any of the Mortgaged Properties comprise of cottages which were registered with the State Register as incomplete dwellings, but in fact are fully completed, sufficient proof of such completion has been provided to the Originator.

24. Each Mortgaged Property has been valued by an independent valuer appointed by or satisfactory to the Originator.

Insurance Requirements

25. Each Mortgaged Property is insured (such insurance to include loss or damage insurance and title insurance) at the Customer's cost for at least 110 per cent. of the Outstanding Principal Balance of the relevant Mortgage Loan with an insurance company approved by the Originator.

26. Each Customer's life and disability is insured at the Customer's cost for at least 110 per cent. of the Outstanding Principal Balance of the relevant Mortgage Loan with an insurance company approved by the Originator.

27. The insurance premium on each Insurance Policy is payable at least annually in advance.

28. The interest of the Originator as creditor is noted on the relevant insurance policies from the date of the relevant Mortgage Loan Agreement. The Originator has a right to be notified of any non-payment of insurance premiums and has the right to terminate the relevant Mortgage Loan Agreement if such non-payment is not remedied.

29. All Insurance Policies required in relation to each Mortgage Loan pursuant the Eligibility Criteria and the Lending Criteria are in full force and effect and all premia due thereon have been paid in full. The Originator is not aware of any circumstances giving the insurer under any Insurance Policy the right to avoid or terminate such Insurance Policy.

30. The title insurance policy and the loss or damage policy relating to the Mortgaged Property and the life and disability insurance relating to each Customer have been written for the full term of the relevant Mortgage Loan.

31. None of the terms of any Insurance Policy have been varied, amended, supplemented, replaced or waived in any respect.

Administrative Requirements

32. The particulars of each Mortgage Certificate set out in the Master Purchase Agreement are true and accurate and such particulars are sufficient to identify adequately the relevant Mortgage Certificate for the purposes of the sale and assignment of rights effected pursuant to the Master Purchase Agreement.

33. Each Mortgage Certificate evidences a first-ranking legal mortgage over the relevant Mortgaged Property owned by the relevant Customer.

34. All steps necessary to perfect the Originator's title to each Mortgage Loan and its Related Security have been duly taken, including, inter alia, the registration of the mortgage evidenced by the relevant Mortgage Certificate with the State Register and, if required, the obtaining of a consent of the curatorship and/or guardianship.

35. Each Customer has completed variable direct debit instructions in favour of the Originator in respect of its Mortgage Loan.

36. Each Mortgage Loan and its related Mortgage Certificate have been made on the terms of the Standard Documentation which has been duly completed in the appropriate manner.

37. The Standard Documentation has not been varied, amended, supplemented or waived in any material respect.

ELIGIBILITY CRITERIA APPLICABLE TO THE MORTGAGE PORTFOLIO

85

38. The Standard Documentation includes provisions allowing assignment or transfer of a Mortgage Loan and its related Mortgage Certificate as well as disclosure of confidential or private information to an assignee of the Originator.

39. No Mortgage Loan creates a lien or a right of set-off or any counterclaim which would entitle the Customer to reduce, defer or delay the amount of any payment otherwise due and payable under the Mortgage Loan.

40. Each Mortgage Certificate, Mortgage Loan Agreement and Mortgage Loan, as well as its Related Security, is governed by Russian law.

41. Each Mortgage Loan Agreement is in written form.

42. All related Customer Files and Insurance Policies are held by the Custodian in safe-keeping.

43. The Originator has procured that full and proper accounts, books and records have been kept clearly showing all material transactions, payments, receipts and proceedings relating to each Mortgage Loan and its Mortgage Certificate and all such accounts, books and records are up to date and in the possession of the Issuer or held to its order.

44. Each Mortgage Loan in the Mortgage Portfolio can be segregated and identified in the records of the Originator at any time.

Miscellaneous

45. On the Portfolio Cut Off Date, no Mortgage Loan is in arrears by an amount equal to or greater than the relevant Current Monthly Annuity Payment.

46. For the purposes of paragraph 45 above, Current Monthly Annuity Payment means, in respect of any Mortgage Loan and on any date, the Monthly Annuity Payment applicable in respect of that Mortgage Loan on that date and Monthly Annuity Payment means, in respect of any Mortgage Loan, the monthly payment required to be made by the relevant Customer in repayment of such Mortgage Loan, as determined from time to time in accordance with the following formula:

( )NPAIR

AIROPBx

−+−

=

1211

12 Payment Annuity Monthly

where:

OPB means the Outstanding Principal Balance of the Mortgage Loan as at the relevant determination date;

AIR means the applicable annual interest rate; and

Np means the number of full interest periods remaining to repay the Mortgage Loan in full.

47. No Mortgage Loan contains any provision which may give rise to a liability on the part of the Originator to make further advances, pay money or perform any other onerous act.

48. Each Mortgage Loan is fully drawn and at least one instalment due thereunder was paid prior to the relevant Completion Date.

49. The Originator has not received written notice of any litigation or claim calling into question in any way its title to any Mortgage Loan and its Related Security or the value of any security.

50. All formal approvals, consents and other steps necessary to permit an assignment of each Mortgage Loan and its Related Security have been obtained or taken.

ELIGIBILITY CRITERIA APPLICABLE TO THE MORTGAGE PORTFOLIO

86

51. Each Mortgage Loan Agreement and its related Mortgage Certificate have been duly executed by the relevant parties and constitute valid, legal and binding obligations of the relevant parties, are enforceable in accordance with their terms and may not be held void or set aside, whether as the result of any of the relevant parties' incapacity, mistake, duress or otherwise, and each Mortgage Certificate secures repayment of all advances, interest, costs, expenses and other amounts payable by the Customer in respect of the relevant Mortgage Loan.

52. Except to the extent required under the Principal Transaction Documents, as at the date of this Prospectus, the Issuer is the absolute beneficial and legal owner of each Mortgage Certificate (together with its related Mortgage Loan and Related Security) and it has not assigned in whole or in part (whether by way of absolute assignment or assignation or by way of security only), sold, transferred, discounted, novated, charged, disposed of or dealt with any Mortgage Certificate (or agreed to do any of the same), and has not permitted any of the other rights relating to any Mortgage Certificate (including any rights relating to the related Mortgage Loan or its Related Security) or any of the other property, rights, titles, interests or benefits sold or assigned to the Issuer to be seized, attached or subrogated to the benefit of any Mortgage Loan or its Related Security.

87

LENDING CRITERIA APPLICABLE TO THE MORTGAGE PORTFOLIO

The Mortgage Loans were originated according to the lending policies of the Originator, which are collectively reflected under the following criteria:

1. CREDIT SEARCH

The maximum amount of each Mortgage Loan is determined on the basis of the applicant's net income, existing credit commitments and burden of family expenditure. Where an applicant has a spouse who is to be a joint borrower, the Originator adds the applicable joint incomes together for the purpose of calculating the total income of the Customer. The Originator may exercise discretion within the constraints of its lending criteria in applying the factors applicable to determining the maximum amount of the relevant Mortgage Loan. The Originator may take the following into account when exercising such discretion: credit history, existing customer relationship, loan-to-value ratio, stability of employment and career progression, employer's standing, credit commitments, quality of security (such as type of property, state of repair, location and saleability) and any increase in income needed to support the applicant's payment obligations under the Mortgage Loan.

Credit searches are carried out in respect of all applicants and at the business address of self-employed applicants. Positive proof of the applicant's identity and address must be established and other money laundering regulations must be complied with. The Originator assesses an application on the basis of information from independent sources. Thereafter, the Originator estimates the risk of advancing the relevant loan to the applicant. Applications are to be declined where an adverse credit history (e.g. court judgment, default or bankruptcy) is revealed.

2. THE ORIGINATOR'S CREDIT APPROVAL PROCESS FOR POTENTIAL CUSTOMERS

The Originator's credit approved process for potential Customers incorporates the following steps:

• Collection of all required documents by the sales specialist (depending on the type of Customer). These documents form Part 1 of a Customer's loan profile.

• Analyses of the Customer's loan profile by the underwriting specialist, the decision on the loan limit and the authorisation of the loan.

• Notification by the sales specialist to a potential borrower about the loan limit and the documents required for the loan to be disbursed (including an appraisal report prepared by an accredited appraisal company).

• Analyses by the underwriting specialist of an appraisal report prepared by an accredited appraisal company, determining the acceptability of the property to be mortgaged and preparing Part 2 of a Customer's loan profile.

• Upon receipt of all required documents, execution of the loan documentation and disbursement of the loan.

3. AGE OF APPLICANT

Each Customer is required to be a minimum of 21 years of age. Provided that the relevant insurance company is prepared to insure a Customer for the full term of the relevant loan, the Originator will not decline the application of a Customer solely on the basis that an extension of the relevant loan will extend into the Customer's retirement. The Originator's upper age limit for providing a Mortgage Loan to a Customer is therefore effectively set by the Insurance Company providing the Insurance Policy.

LENDING CRITERIA APPLICABLE TO THE MORTGAGE PORTFOLIO

88

4. AMOUNT OF MORTGAGE LOAN

The Maximum Liabilities to Net Family Income Ratio is 60 per cent.,

where:

Net Family Income means the aggregate monthly income of the borrower and any co-borrower in respect of the relevant Mortgage Loan net of personal tax obligations payable during the relevant month.

Maximum Liabilities means the aggregate monthly service obligations of debt with a maturity greater than one year plus minimum living costs and property expenditures per family and other regular payments,

where:

minimum living costs: are equal to US$100 per person*;

property expenditures: are equal to US$25 per person*; and

other regular payments: alimony, rent and the cost of supporting dependants.

*If family income is above US$1,500 per month, the Originator counts minimum living costs and property expenditures for one person only.

5. CATEGORIES OF CUSTOMERS

A Customer under a Mortgage Loan may be either a resident or a non-resident of the Russian Federation and must fall within the following categories:

Standard A1 means a Customer having permanent employment who is able to provide, and has provided, the Originator with official confirmation of his/her actual monthly income issued by his/her principal employer (i.e. tax form 2-NDFL).

Standard A2 means a Customer having permanent employment who is able to provide, and has provided, the Originator with a document confirming his/her actual monthly income in the form approved by the Originator (i.e. tax form 2-NDFL confirming at least part of the income, and an income report issued by his/her principal employer).

Standard A3 means a Customer having permanent employment who is unable to provide the Originator with any official confirmation of his/her actual monthly income, other than an information letter confirming his/her actual monthly income signed by the Customer.

Standard B1 means a Customer running his/her own business (either solely or as a co-owner of the business) (as an individual entrepreneur carrying out his/her business without establishing a legal entity or otherwise) who is able to provide, and has provided, the Originator with an official confirmation of his/her actual monthly income (i.e. official accounting statements, a balance sheet, a profit and loss calculation, tax declaration or a tax form 3-NDFL).

Standard B2 means a Customer running his/her own business (either solely or as a co-owner of the business) (as an individual entrepreneur carrying out his/her business without establishing a legal entity or otherwise) who is unable to provide the Originator with an official confirmation of his/her actual monthly income (i.e. official accounting statements, balance sheet, profit and loss calculation, tax declaration or a 3-NDFL tax form), but is able to provide, and has provided, the Originator with managerial accounts.

LENDING CRITERIA APPLICABLE TO THE MORTGAGE PORTFOLIO

89

6. LTV

See the Parameters of Mortgage Loan Products, as set out under Paragraph 8 (The Parameters of Mortgage Loan Products) below.

7. LIABILITIES-TO-INCOME RATIO

If a Customer's income is reported in a currency other than Dollars, the denominator of the Customer's liabilities-to-income ratio will be converted into Dollars at an internal rate of the Originator, which will be based on the Originator's average rate for the last three months.

8. THE PARAMETERS OF MORTGAGE LOAN PRODUCTS

Parameters of Mortgage Loan Products (2006)

Property type Apartment Cottage

Purchase Purchase Loan product

Standard Payment 10

"Home Equity Loan"

Standard Payment 10

"Home Equity Loan"

Comments Mortgage Loan for a flat purchase in the secondary market. Initial instalment 15%

Mortgage Loan for a flat purchase in the secondary market. Initial instalment 10%

Home equity loan. Discount

25%

Mortgage Loan for a house purchase in the secondary market. Initial instalment 15%

Mortgage Loan for a house purchase in the secondary market. Initial instalment 15%

House Equity Loan. Discount

25%

Terms and Interest Rate

Loan Maturity – 10 years

Currency of the Loan – Dollars

Type of borrower

"Standard A1" "Standard B1"

10.5% LTV: >80%-11.9%;

<=80% - 9.9%

11.5% 10.5% LTV: >80%- 11.9%;

<=80% - 9.9%

11.5%

"Standard A2" 11.0% LTV: >80%-12.4%;

<=80% - 10.4%

12.0% 11.0% LTV: >80%- 12.4%;

<=80% - 10.4%

12.0%

"Standard A3" "Standard B2"

11.5% not allowed 12.5% 11.5% not allowed 12.5%

LENDING CRITERIA APPLICABLE TO THE MORTGAGE PORTFOLIO

90

Loan Maturity – up to 25 years (with 1 year grace period)

Currency of the Loan US$

"Standard A1" "Standard B1"

11.0% LTV: >80%-12.4%;

<=80% - 10.4%

12.0% 11.0% LTV: >80%- 12.4%;

<=80% - 10.4%

12.0%

"Standard A2" 11.5% LTV: >80%-12.9%;

<=80% - 10.9%

12.5% 11.5% LTV: >80%- 12.9%;

<=80% - 10.9%

12.5%

"Standard A3" "Standard B2"

12.0% not allowed 13.0% 12.0% not allowed 13.0%

LENDING CRITERIA APPLICABLE TO THE MORTGAGE PORTFOLIO

91

Maturity Loan-To-Value

"Standard A1" "Standard B1"

85% 90% 75% 85% 90% 75%

"Standard A2" 85% 90% 75% 85% 90% 75%

"Standard A3" "Standard B2"

75% does not apply 70% 75% does not apply

70%

Loan Amount

The minimal

value of the credit "Standard A1", "Standard A2", "Standard B1"

US$20,000 US$20,000 US$20,000 US$20,000 US$20,000 US$20,000

The minimal value of the credit "Standard A3", "Standard B2"

US$50,000 does not apply US$50,000 US$50,000 does not apply US$50,000

The maximum

value of the credit

US$1,000,000 US$1,000,000 US$1,000,000 US$1,000,000 US$1,000,000 US$1,000,000

Insurance Coverage

Life and

disability insurance

Yes

The property insurance

After property registration

Yes Yes Yes Yes Yes

The title

insurance

Yes Yes Yes Yes Yes Yes

Frequency of premium payments

Annually

LENDING CRITERIA APPLICABLE TO THE MORTGAGE PORTFOLIO

92

Terms of Instalment

Payment Annually

Prohibition of prepayment

No

The minimal amount of partial prepayment (the maturity stays unchanged; instalment is adjusted)

US$1000

Prepayment penalty for partial (or complete) prepayment

5.00% within the

first 3 payment periods

does not apply

5.00% within the

first 3 payment periods

5.00% within the

first 3 payment periods

does not apply

5.00% within the

first 3 payment periods

Payment date 10th, 15th or 25th of each calendar month

Obligations of the Customer

Arrears of principal

Penalty US$3.00 per day of delay

Arrears of interest

Penalty US$3.00 per day of delay

In case of non-payment by the borrower of annual insurance premium within 10 banking days

Bank has the right to terminate the contract and to claim the entire loan amount

In case the borrower fails to provide the bank information about his financial status

Bank may charge a penalty of US$5.00 per day of delay

93

ESTIMATED WEIGHTED AVERAGE LIVES OF THE NOTES

Weighted average life refers to the average amount of time that will elapse from the date of issuance of a security to the date of distribution to the investor of amounts distributed in net reduction of the outstanding principal under such security (assuming no losses). The weighted average lives of the Notes will be influenced by, among other things, the actual rate of repayment and prepayment under the Mortgage Portfolio.

The model used to determine the figures set out in this Prospectus in respect of the Mortgage Loans represents an assumed constant per annum rate of prepayment (CPR) each month relative to the then Outstanding Principal Balance of the Mortgage Loans. CPR does not purport to be either a historical description of the pool of prepayment experience of any pool of loans or a prediction of the expected rate of prepayment of any pool of loans, including the Mortgage Loans.

The following tables were prepared based on the characteristics of the Mortgage Portfolio and the following additional assumptions (the Modelling Assumptions):

• there are no arrears (other than those specified in this Prospectus) or enforcements;

• no Mortgage Certificate is sold by the Issuer on or after the Statistical Cut Off Date;

• no Principal Deficiency occurs;

• no Mortgage Certificate is repurchased by the Originator on or after the Statistical Cut Off Date;

• the interest rate applied to each Mortgage Loan is fixed;

• the Notes are issued on 18 July 2007 and all payments on the Notes are paid on each Note Payment Date commencing on the Note Payment Date falling in August 2007; and

• the scheduled amortisation of each Mortgage Loan is set on an annuity basis.

The actual characteristics and performance of the Mortgage Portfolio are likely to differ from the assumptions used in constructing the tables set forth below. The following tables are hypothetical in nature and are provided only to give a general sense of how the principal cash-flows might behave under varying prepayment scenarios. For example, it is not expected that the Mortgage Loans will prepay at a constant rate until maturity, that all of the Mortgage Loans will prepay at the same rate or that there will be no defaults or delinquencies under the Mortgage Portfolio. Moreover, the diverse remaining terms to maturity of the Mortgage Loans could produce slower or faster principal distributions than indicated in the tables at the various percentages of CPR specified, even if the weighted average remaining term to maturity of the Mortgage Loans is assumed. Any difference between such assumptions and the actual characteristics and performance of the Mortgage Loans will affect the percentage of the initial amount outstanding of the Notes which is applicable over time and cause the weighted average lives of the Notes to differ (which difference could be material) from the corresponding information in the tables below for each indicated percentage of CPR.

ESTIMATED WEIGHTED AVERAGE LIVES OF THE NOTES

94

Dates Assets Class of Notes

% Notional

Tape Date 30 June 2007

Securitized Assets

US$179,684,220.28 Class A Notes

88.5% 159,000,000.00

Issue Date 18

July 2007

Class B Notes

9.0% 16,200,000.00

First Note Payment Date

16 August 2007

Class C Notes

2.5% 4,484,220.00

100% 179,684,220.00

Repline OPB (US$) WA Rem Term

WA Rate

1 49,430,919.75 112 11.250%

2 30,296,647.75 173 11.611%

3 94,994,900.97 231 11.561%

4 4,961,751.81 294 11.731%

Total 179,684,220.28 190 11.489%

CPR (assuming Clean-up Call exercised)

0% 5% 10% 15% 20% 25% 35% 50%

Class A Notes

9.27 6.34 4.57 3.47 2.75 2.24 1.58 1.02

Class B Notes

18.03 15.67 12.67 9.93 8.19 6.86 4.95 3.22

Class C Notes

18.08 15.74 12.74 9.99 8.24 6.91 4.99 3.24

CPR (assuming no Clean-up Call exercised)

0% 5% 10% 15% 20% 25% 35% 50%

Class A Notes

9.27 6.34 4.57 3.47 2.75 2.24 1.58 1.02

Class B Notes

18.43 16.79 14.17 11.54 9.46 7.92 5.76 3.77

Class C Notes

20.80 19.51 18.39 16.71 14.67 12.67 9.44 6.34

ESTIMATED WEIGHTED AVERAGE LIVES OF THE NOTES

95

Principal Payment Window (assuming Clean-up Call exercised)

0% 5% 10% 15% 20% 25% 35% 50%

Class A Notes

1-212 1-181 1-145 1-112 1-93 1-77 1-55 1-36

Class B Notes

212-217 181-189 145-153 112-120 93-99 77-83 55-60 36-39

Class C Notes

217-217 189-189 153-153 120-120 99-99 83-83 60-60 39-39

Principal Payment Window (assuming no Clean-up Call exercised)

0% 5% 10% 15% 20% 25% 35% 50%

Class A Notes

1-212 1-181 1-145 1-112 1-93 1-77 1-55 1-36

Class B Notes

212-230 181-222 145-205 112-175 93-149 77-124 55-91 36-61

Class C Notes

230-294 222-294 205-294 175-294 149-294 124-294 91-294 61-266

96

TITLE TO THE MORTGAGE PORTFOLIO

Nature of a Mortgage Certificate

Under Article 13 of the Mortgage Law, a mortgage certificate is a form of registered security. Like other forms of security (e.g. a share or a promissory note), a mortgage certificate evidences certain property rights, the exercise or transfer of which may be effected if such security is presented to the relevant obligor. In the case of a mortgage certificate, presentation must be made in accordance with Article 142 of the Russian Civil Code. Upon transfer of a mortgage certificate, all rights evidenced by such mortgage certificate are also transferred.

According to Article 13(2) of the Mortgage Law, a mortgage certificate evidences the following rights of its lawful holder:

• the right to receive payments under the monetary obligations secured by the mortgage (e.g. obligations arising under a loan (kredit or zayom) or any other monetary obligations); and

• the right of pledge in respect of the mortgaged immovable property.

Further, the mortgagor and the mortgagee may include in the mortgage certificate information and conditions not expressly provided for in the Mortgage Law (Article 14(2)).

Transfer of Rights under a Mortgage Certificate

A mortgage certificate is an instrument designed to facilitate the transfer of (a) the rights under the obligation secured by the mortgage and (b) the rights of the mortgagee. Under Article 48(1) of the Mortgage Law, a mortgage certificate is transferred by way of (i) execution of an agreement to transfer the rights under the mortgage certificate (e.g. a sale and purchase agreement) and (ii) the entry of a transfer note on the face of a mortgage certificate in favour of its new holder.

The transfer of a mortgage certificate is therefore effected by a specific method prescribed by the Mortgage Law. According to Article 142(1) of the Russian Civil Code and Article 48(2) of the Mortgage Law, the transfer of rights under a mortgage certificate means the transfer of all rights evidenced by such mortgage certificate in aggregate.

Pursuant to Article 146(2) of the Russian Civil Code, rights evidenced by a registered security are transferred pursuant to a procedure established in respect of the assignment of claims (cession). Under Article 48 of the Mortgage Law, the transfer of rights under a mortgage certificate triggers the consequences of the assignment of the related claims (cession). Based on the above, the transfer of rights under a mortgage certificate has the effect of assigning the rights evidenced by such mortgage certificate.

State Registration

The Mortgage Law does not state that the transfer of rights under a mortgage certificate shall only be effective upon registration of the new holder of the mortgage certificate with the State Register. Consequently, a failure to obtain state registration of the transfer of the Mortgage Certificates from the Originator to the Issuer would not affect the validity of that transfer.

In addition, according to Article 16 of the Mortgage Law, any lawful holder of a mortgage certificate has a right to be registered with the State Register as a mortgagee under that mortgage certificate. If applied for, state registration must be performed one day after the application has been filed with the State Register.

Pursuant to the Master Purchase Agreement, the Servicer has undertaken to procure the registration of the Mortgage Certificates in the name of the Issuer, if required to do so by the Issuer.

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Notification to Customers

Each Customer has been notified, by delivery of a sale notice in a prescribed form (together the Sale Notices), of the transfer of the relevant Mortgage Certificate. Under the terms of the Sale Notices, the Customers have also been instructed to continue to make payments under the Mortgage Loans in the manner in which the Customers have previously been required to make payments until they receive notice from the Issuer instructing them to the contrary.

98

DESCRIPTION OF PRINCIPAL TRANSACTION DOCUMENTS

The Master Purchase Agreement

Introduction

The Master Purchase Agreement is made between the Originator and the Issuer and is governed by Russian law.

Purpose

Under the Master Purchase Agreement, the Originator agreed to sell and the Issuer agreed to purchase the Mortgage Certificates in respect of the Mortgage Loans originated by the Originator. The maximum aggregate purchase price payable by the Issuer pursuant to the Master Purchase Agreement (including any related Purchase Amendment Agreement) is US$200,000,000.

Mortgage Portfolio

The Originator warrants to the Issuer that each Mortgage Certificate sold pursuant to the Master Purchase Agreement complies with the Eligibility Criteria and the Originator Warranties (as defined below).

Mechanics of Sale

In order to transfer the Mortgage Certificates from the Originator to the Issuer:

• the Originator and the Issuer execute the Master Purchase Agreement or Purchase Amendment Agreement specifying each Mortgage Certificate to be transferred to the Issuer; and

• the Originator endorses a transfer note on each Mortgage Certificate stating that all rights, title and interest under such Mortgage Certificate have been transferred by the Originator to the Issuer.

On completion of these steps, the Issuer becomes the owner of the Mortgage Certificates.

On or prior to and in certain cases following the completion of the sale of the Mortgage Certificates, the Originator is required to deliver to the Custodian the following documents in respect of each Mortgage Certificate comprising the Customer File:

• an original of the Mortgage Loan Agreement;

• an original and at least one notarised copy of the Mortgage Certificate properly endorsed to the Issuer;

• a copy of the Master Purchase Agreement or any Purchase Amendment Agreement pursuant to which the Mortgage Certificate is transferred to the Issuer;

• an original Insurance Policy;

• an original of each of the Pledge Notices related to the respective Mortgage Loan and the Insurance Policy to be completed by the Issuer or the Servicer as agent of the Issuer pursuant to the Pledge Agreement;

• a copy certified by the Originator of the sale and purchase agreements, or an original of the Mortgage Security Agreement, entered into by the Customer in relation to the Mortgaged Property;

• the original or notarised copies of all independent expert examinations and valuations of the Mortgaged Property;

• a copy of the Customer's passport;

• if required under Clause 9 (Registration) of the Master Purchase Agreement, an original of an extract from the State Register evidencing the registration of the Purchaser as the sole first-

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ranking mortgagee of the relevant Mortgaged Property under such Mortgage Certificate after such extract is obtained pursuant to the Master Purchase Agreement;

• material correspondence between the Originator and the Customer concerning the Mortgage Loan, the Mortgaged Property and the Insurance Policy;

• a summary of any claims brought under the Insurance Policy; and

• other related documents that may be requested by the Issuer from time to time in respect of the relevant Mortgage Loan.

Under the Master Purchase Agreement, the Originator undertakes to execute and deliver the Sale Notices to the Customers and Insurers by registered post, by courier or by hand promptly following each Completion Date, but in no event later than 20 calendar days after such Completion Date. In each case the Originator shall act (a) on its own behalf as the seller under the Master Purchase Agreement and (b) as Servicer on behalf of the Issuer. The delivery of the Sale Notices shall be evidenced by the postal delivery receipt or by acknowledgements of the Customers which are requested in the Sale Notices.

In addition, the Servicer has undertaken to procure the registration of the Issuer as the owner of the Mortgage Certificates if required to do so by the Issuer.

Time of Sale

The sale of each Mortgage Certificate to the Issuer was effected on or before the Portfolio Cut Off Date.

Consideration for Sale

The purchase price for each Mortgage Certificate payable by the Issuer is the sum of the Outstanding Principal Balance and the Accrued Interest under the Mortgage Loan related to the Mortgage Certificate as at the relevant Completion Date. The purchase price is payable immediately following the transfer of the Mortgage Certificates to the Issuer, as described above.

Originator Warranties

The Originator warrants to the Issuer in respect of its corporate status (including its solvency and tax residence), the criteria for originating the Mortgage Loans, the criteria by which the Mortgage Certificates are selected for the Mortgage Portfolio and the Mortgage Loan Agreements, on terms which are generally consistent with the warranties given by originators in rated securitisations in other European jurisdictions (the Originator Warranties). The Originator Warranties are set out in Schedule 4 of the Master Purchase Agreement and can be summarised, inter alia, as follows:

• The Originator is the owner, free and clear of any encumbrance, third-party rights or other legal restriction or impediment, of all rights represented by each Mortgage Certificate to be sold to the Issuer (the relevant Mortgage Certificate) and no security or other interest of any kind has been created (or agreed to be created) over any such rights in favour of any other person.

• Each Mortgage Certificate and related Mortgage Loan and Insurance Policy complies with the Lending Criteria.

• Each Mortgage Certificate and related Mortgage Loan and Insurance Policy complies with the Eligibility Criteria.

• The Originator has duly performed all its obligations which have fallen due under or in connection with the relevant Mortgage Loans and neither the relevant Customer nor the relevant Insurer has threatened or commenced any legal action against the Originator for any failure on the part of the Originator to perform any such obligation which has not been resolved.

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• No Mortgage Certificate has been terminated, repudiated or annulled by the Originator or the relevant Customer.

• No fraud has been perpetrated by the relevant Customers or any other person (whether or not an agent or employee of the Originator) in or in connection with the origination, completion or performance of any Mortgage Loan and none of the documents, reports, forms and applications made, given, drawn up or executed in relation to such origination, completion or performance has been given, made, drawn up or executed in a fraudulent manner.

• Prior to entering into each relevant Mortgage Loan Agreement, the Originator carried out all investigations, searches and other actions as would a Prudent Mortgage Lender and made such enquiries as to the status and creditworthiness of the relevant Customer thereunder as would a Prudent Mortgage Lender (having regard to all the circumstances, including the amount of the credit given under the relevant Mortgage Loan Agreement and the identity of the relevant Customer), and the results thereof would have been acceptable to a Prudent Mortgage Lender.

• Each Mortgage Certificate, related Mortgage Loan Agreement and Related Security is not void or voidable at the instance of the relevant Customer or Insurer by reason of fraud, undue influence, duress, misrepresentation or for any other reason.

• Each Mortgage Certificate, Mortgage Loan Agreement and Related Security constitutes a valid and binding obligation of the relevant Obligor enforceable in accordance with its material terms and each Related Security secures the repayment of all advances, interest, costs, expenses and any other amounts payable by the relevant Customer in respect of such Mortgage Certificate in priority to any other charges or standard securities, as appropriate, affecting or registered against the relevant Mortgaged Property.

• In relation to the relevant Mortgage Certificates and related Mortgage Loans, the Originator and its employees are in compliance with the applicable provisions of any banking secrecy legislation.

• In relation to the relevant Mortgage Certificates and related Mortgage Loans, the Originator and its employees are in compliance with the applicable provisions of any data protection legislation.

• The inclusion of data enabling the relevant Mortgage Certificate and Mortgage Loan to be identified in each Mortgage Loan Agreement does not constitute a breach of the provisions of the banking secrecy legislation and the data protection legislation. The performance by the Originator of its obligations and the exercise of its rights under each Mortgage Loan Agreement do not and will not constitute a breach of the provisions of the banking secrecy legislation and the data protection legislation.

• For the purposes of the entry into each Mortgage Loan Agreement and at all times thereafter, the Originator has acted as a Prudent Mortgage Lender in administering the related Mortgage Loans.

• In this Prospectus, Prudent Mortgage Lender means a prudent lender making loans to borrowers in the Russian Federation secured by means of a mortgage over residential property.

DESCRIPTION OF PRINCIPAL TRANSACTION DOCUMENTS

101

The Swap Agreements

On or before the Issue Date, the Issuer will enter into an interest rate swap agreement, to be documented by a 1992 ISDA Master Agreement (Multicurrency – Cross Border) and Schedule (the ISDA Master) and confirmations (as well as any Credit Support Annexes) thereunder, with the Swap Counterparties (respectively, the Barclays Swap Agreement and the RZB Swap Agreement and together, the Swap Agreements). Under the Swap Agreements, the Issuer will be required to pay to the Swap Counterparties on each Note Payment Date amounts in Dollars calculated by the Swap Counterparties (in each case, as calculation agent) by reference to a fixed rate of interest (provided that in the event that, on such Note Payment Date, there is insufficient Issuer income receipts to make full payment of all amounts due on such date to the Swap Counterparties, all payments made by the Swap Counterparties to the Issuer shall be reduced by the same percentage as any payments by the Issuer to the Swap Counterparties may be reduced) and such Swap Counterparty will pay to the Issuer on each Note Payment Date amounts in Dollars calculated by reference to 1-month USD LIBOR, on a notional amount on aggregate equal to the Principal Amount Outstanding of the Class A Notes and the Class B Notes, after the deduction of any debit balance on the Class A PDL and Class B PDL respectively, as applicable immediately prior to such Note Payment Date.

Each Swap Agreement shall terminate on the Final Maturity Date unless terminated earlier, including, but without limitation, in circumstances where payment of principal and interest on the Notes has been made in full on or before the Final Maturity Date, in which case such Swap Agreement shall terminate on the date on which such payment is made in full.

Early Termination

The following rating events (each, a Rating Event) may cause the early termination of either Swap Agreement:

1. If the relevant Swap Counterparty's or any credit support provider's (a) long-term rating (in the case of such Swap Counterparty, if applicable) is downgraded below BBB+ by Fitch or (b) the short-term rating (in the case of such Swap Counterparty, if applicable) of that Swap Counterparty or of any credit support provider is downgraded below F-2 by Fitch and, as a result of such downgrade, the Rated Notes are placed on credit watch for possible downgrade (in either such case, an Initial Fitch Rating Event), then such Swap Counterparty will be required, on a reasonable efforts basis and within 30 days of such downgrade, to (i) provide collateral to support its obligations under the relevant Swap Agreement in accordance with the Credit Support Annex, or (ii) transfer all of its rights and obligations under the relevant Swap Agreement to a replacement third party whose long-term rating is at least BBB+ by Fitch and whose short-term rating is at least F-2 by Fitch or, in either case, such lower rating as is commensurate with the rating assigned to the Rated Notes by Fitch from time to time, or (iii) procure the provision of a guarantee in respect of the relevant Swap Counterparty's obligations under such Swap Agreement from an appropriately rated guarantor, or (iv) take such other action as may be agreed with Fitch to restore the Notes to their original rating.

2. If the long-term rating or the short-term rating (if any) assigned by Fitch to the relevant Swap Counterparty falls to further specified levels (respectively a First Subsequent Fitch Rating Event and a Second Subsequent Fitch Rating Event), the option of posting collateral applicable following an Initial Fitch Rating Event will be subject to certain conditions or may no longer be available.

3. If the relevant Swap Counterparty's long-term rating is downgraded below A2 by Moody's (or if such Swap Counterparty does not have a short-term rating, below A1 or (if applicable) its short-term rating is downgraded below P-1 by Moody's, then that Swap Counterparty will be required within 30 Business Days of such downgrade, in accordance with the specific terms set out in the relevant Swap Agreement, to post collateral in accordance with the provisions of the relevant

DESCRIPTION OF PRINCIPAL TRANSACTION DOCUMENTS

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Credit Support Annex or (a) to transfer all of its rights and obligations under the relevant Swap Agreement to an appropriately rated replacement third party or (b) to procure another appropriately rated person to become a co-obligor or guarantor in respect of such Swap Counterparty's obligations under the relevant Swap Agreement.

4. If the relevant Swap Counterparty's long-term rating is downgraded below A3 by Moody's or (if applicable) its short-term rating is downgraded below P-2 by Moody's, such Swap Counterparty will be required within 30 Business Days of such downgrade, in accordance with the specific terms set out in the relevant Swap Agreement, to either (a) transfer all of its rights and obligations under the relevant Swap Agreement to an appropriately rated replacement third party or (b) procure another appropriately rated person to become a co-obligor or guarantor in respect of such Swap Counterparty's obligations under the relevant Swap Agreement, and pending compliance with its obligations under either (a) or (b) above, the relevant Swap Counterparty shall post collateral in accordance with the terms of the relevant Credit Support Annex.

Failure by a Swap Counterparty to take the relevant measures described in paragraphs 1 to 4 above shall be an additional termination event which shall be deemed to have occurred on the 30th day following the occurrence of the relevant Rating Event.

Each Swap Agreement may also be terminated early in the following circumstances:

• if withholding taxes are imposed on payments made by the Issuer or the relevant Swap Counterparty under such Swap Agreement or if certain other deductions are required to be made;

• if the additional tax representations given by such Swap Counterparty prove to be incorrect or misleading in any material respect when made or repeated;

• at the option of one party, if there is a failure by the other party to pay any amount due under such Swap Agreement;

• if the Notes become repayable pursuant to the service of a notice of enforcement (as described in Condition 13 (Enforcement)); and

• upon the occurrence of certain other events in respect of either party to such Swap Agreement, including insolvency events or changes in law resulting in illegality.

If a Swap Agreement is terminated prior to repayment in full of the principal of the Notes, the Issuer will become obliged to enter into an agreement on similar terms with a new counterparty.

Rating Events relating to RZB

Fitch does not currently publish a short-term or long-term credit rating in respect of RZB. Consequently, for the purposes of applying the Rating Events to RZB as a Swap Counterparty, Fitch has confirmed that it has conducted and, during the term of the Rated Notes, intends to maintain, an internal credit assessment of RZB, in accordance with its standard procedures for assessing the credit quality of an entity in respect of which Fitch does not currently publish such a rating.

Fitch has confirmed to RZB that, as at the date of this Prospectus, the results of such internal credit assessment are satisfactory for the purposes of the entry into a Swap Agreement by RZB as a Swap Counterparty and for the provision of the Swap to the Issuer thereunder. Fitch has also confirmed its intention to notify RZB, the Issuer and the Security Trustee as soon as reasonably practicable in the event that, during the term of the Rated Notes, based on Fitch's ongoing credit assessment of RZB:

• there is a material deterioration in the credit quality of RZB; and

• as a result of such deterioration, the then current ratings assigned by Fitch in respect of the Rated Notes are downgraded or placed on credit watch for possible downgrade by Fitch.

DESCRIPTION OF PRINCIPAL TRANSACTION DOCUMENTS

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Upon delivery of such a notification by Fitch, an Initial Fitch Rating Event will be deemed to have occurred in respect of RZB as Swap Counterparty and the consequences referred to under the heading Early Termination above at paragraph 1 will apply to RZB as Swap Counterparty. If an Initial Fitch Rating Event is continuing unremedied and, based on Fitch's ongoing credit assessment of RZB, Fitch determines that the credit quality of RZB has materially deteriorated further below a threshold determined internally by Fitch for such purpose and confirms its intention to provide notification of the same to RZB, the Issuer and the Security Trustee, and upon delivery of such a notification, a First Subsequent Fitch Rating Event will be deemed to have occurred and the consequences referred to under the heading Early Termination above at paragraph 2 will apply to RZB as Swap Counterparty.

Pending compliance with such First Subsequent Fitch Rating Event, if Fitch determines that the credit quality of RZB has materially deteriorated further below a threshold determined internally by Fitch for such purpose and confirms its intention to provide notification of the same to RZB, the Issuer and the Security Trustee, and upon delivery of such a notification, a Second Subsequent Fitch Rating Event will be deemed to have occurred and the consequences referred to under the heading Early Termination above at paragraph 2 will apply to RZB as Swap Counterparty.

Taxation

Neither the Issuer nor either Swap Counterparty will in any circumstances be obliged to gross up if withholding taxes are imposed on payments made under a Swap Agreement. If a Swap Counterparty is obliged to make a withholding or deduction for or on account of tax on payments to be made by it under the relevant Swap Agreement, it may transfer its rights and obligations under that Swap Agreement to another office or branch or to an affiliate, provided that the rating of the Notes by both Rating Agencies is not adversely affected. If the Issuer is obliged to make a withholding or deduction for or on account of tax on payments to be made by it under a Swap Agreement, it may, with the consent of the relevant Swap Counterparty, transfer its rights and obligations under that Swap Agreement to a substitute company. Failing such remedy, the relevant Swap Agreement may be terminated.

Credit Support Annex

In the event that the relevant Swap Counterparty is required or elects to transfer Swap Collateral to the Issuer in support of its obligations under the Swap Agreement in one of the circumstances described above, the amount of Swap Collateral will be calculated in accordance with the terms of the relevant Credit Support Annex. Under the terms of the relevant Credit Support Annex, the Issuer may be required to make a Swap Collateral Return Payment to the Swap Counterparty from monies standing to the credit of the Swap Collateral Ledger, following receipt of a demand from the Swap Counterparty.

Swap Collateral Drawing

In the event that any of the Swap Agreements is terminated, any amounts standing to the credit of the Swap Collateral Ledger will be used first to pay any Swap Collateral Return Payments due to the Swap Counterparty or to be set off in satisfaction of amounts owing to the Issuer by the Swap Counterparty, in which case any remaining amount following such termination and set-off will be debited from the Swap Collateral Ledger and credited to the Revenue Ledger to be paid in the order of priority set out in the Pre-Enforcement Revenue Payment Priorities.

DESCRIPTION OF PRINCIPAL TRANSACTION DOCUMENTS

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The Servicing Agreement

The Servicing Agreement will contain provisions setting out the terms and conditions relating to the appointment of the Servicer and the performance of its duties other than in respect of the enforcement of a Mortgage Certificate which is in arrears by an amount in excess of its respective Current Monthly Annuity Payment (a Defaulted Mortgage Certificate), which are provided by the Servicer under the Enforcement Services Agreement. The material aspects of the Servicing Agreement, as they relate to the Servicer, are described below.

The Servicing Fee

The Servicer will receive a monthly fee in an aggregate amount equal to 0.30 per cent. per annum on the Outstanding Principal Balance of the Mortgage Portfolio, as applicable on the first day of each Collection Period, payable in arrears on each Note Payment Date in respect of the related Collection Period in relation to each of the three principal categories of banking and administrative services to be provided by it pursuant to the Servicing Agreement, as summarised below under Servicer's Regular Duties and as designated in the Servicing Agreement.

The payment of these servicing fees is subject to the Payment Priorities.

Servicer's Regular Duties

The duties of the Servicer under the Servicing Agreement will include, but will not be limited to:

• collecting payments due in respect of the Mortgage Loans and Related Security, depositing such payments into the Issuer Collection Account and/or, if required, into the Issuer Rouble Administrative Account and ensuring that they are remitted (and converted if necessary) to the Issuer Distribution Account (see Collections below); maintenance of all relevant direct debit mandates; dealing with servicing and administering the Mortgage Portfolio as it would if it were a beneficial owner of rights under the Mortgage Loans and Related Security; performance of the Issuer's function under the Transaction Documents; ensuring compliance by the Issuer with the terms of each of the Transaction Documents and any regulatory direction or requirement of law as they relate to the Mortgage Loans and Related Security; and ensuring the proper storage of the Mortgage Loan Documents with the Custodian;

• preparing the Monthly Servicer Report, in the format prescribed by the Servicing Agreement, detailing for each Collection Period, inter alia, (a) each Customer (including each co-borrower (if any)) (b) amounts receivable and actually received from such Customer, broken down into current remaining balance, stated interest rate, any interest-only period, scheduled and actual monthly payment amounts, principal and interest paid to date (c) loan details, including the date of origination, term of loan, payment date, method of payment, write-off amount (if any) and recovery amount (if any) and (d) payment history and other miscellaneous details, including the type of property, price and debt to income ratio;

• providing certain further reports and updated information to the extent reasonably practicable and operating and maintaining computer systems to enable it to carry out the services under the Services Agreements (the Services), including maintaining a duplicate set of the Mortgage Records and Servicer Records and all related documents in computer readable form and back-up facilities;

• assisting the Issuer's internal and external auditors, as applicable;

• the provision of notices to the Rating Agencies in accordance with the Transaction Documents; and

• providing, as part of its administrative services, banking services principally comprising of the establishment and maintenance of the Issuer Collection Account and the Issuer Rouble Administrative Account (the Servicing Accounts), accepting and crediting funds to the

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Servicing Accounts, establishing a ledger of the cleared funds added daily to the Servicing Accounts and transferring funds from the Servicing Accounts.

Warranties of the Servicer

Pursuant to the Servicing Agreement, the Servicer will make certain representations and warranties to the Issuer and the Security Trustee, including:

• that the Servicer is validly incorporated and solvent;

• that the Servicer, for tax purposes, is resident only in the Russian Federation, that it has no presence outside the Russian Federation and that it has its "centre of main interest" (as defined in the European Union Insolvency Regulation No. 1346/2000) in the Russian Federation;

• that there is no litigation pending against the Servicer which may result in a Material Adverse Effect;

• that the Servicer's most recent financial statements were prepared in accordance with IFRS, disclose all liabilities and give a true and fair representation of the Servicer's financial condition and confirmation of the Accounting Reference Date of the Servicer (being 31 December);

• that there has been no adverse change in the Servicer's financial condition or prospects;

• that the Servicer has obtained and maintains all consents and authorisations required in connection with its business;

• that no governmental or official investigation or inquiry concerning the Servicer is, so far as the Servicer is aware, progressing or pending or has been threatened which may have a Material Adverse Effect;

• that the Servicer has maintained at all times adequate insurance against risks normally insured against by a Prudent Mortgage Lender;

• that the Servicer has the corporate power to enter into the applicable Transaction Documents;

• that all acts, conditions and things required to be done, fulfilled and performed in order for the Servicer to enter into, perform and comply with the applicable Transaction Documents (and for such documents to be enforceable against it) have been done, fulfilled and performed;

• that the obligations assumed by the Servicer under the applicable Transaction Documents are valid and binding and will create no breaches of any laws, charters or other contracts;

• that under the laws of the Russian Federation it is not necessary that any applicable Transaction Document be filed or recorded with any court or other authority in the Russian Federation;

• that all relevant information supplied by the Servicer in connection with its execution and performance of the applicable Transaction Documents and the preparation of this Prospectus is true and accurate in all respects and is not misleading because of any omission or ambiguity or for any other reason;

• that the Servicer observes certain minimum standards regarding the terms and conditions on which its employees are employed and their related rights of association, organisation and collective bargaining activities;

• that the Servicer is not aware nor has it had any notice of any Event of Default or any Potential Event of Default; and

• certain other warranties and representations generally consistent with those given by other servicers in respect of rated mortgage loan securitisations in Europe.

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Covenants of the Servicer

In the Servicing Agreement, the Servicer will also make positive and negative covenants in favour of the Issuer and the Security Trustee generally consistent with those given by other servicers in respect of rated mortgage loan securitisations in Europe.

Put Option

The Originator will grant to the Issuer a put option (the Put Option) in relation to each of the Mortgage Certificates comprising the Mortgage Portfolio. The Put Option is exercisable by the Issuer (in consultation with the Servicer and following delivery of an Enforcement Notice or a Security Protection Notice, at the direction of the Security Trustee) in relation to a Non-Conforming Loan (as defined below) upon the receipt of a notice from the Originator that any Mortgage Loan was in breach of the Lending Criteria or Eligibility Criteria on the Issue Date, where such breach is not capable of remedy, or, if such breach is capable of remedy, is not remedied on or before the 15th day following the Issue Date (a Non-Conforming Loan).

Following an exercise of the Put Option, the Originator will be required to purchase the relevant Non-Conforming Loan from the Issuer at a purchase price equal to the aggregate of (a) the Outstanding Principal Balance of the relevant Mortgage Loan and (b) the interest accrued on each Mortgage Loan which remains unpaid on the date such purchase is to occur (the Option Price).

Notwithstanding the provisions of the Originator Warranties and any remedies which could potentially be available to the Issuer under Russian law by virtue of a breach of any of the same, it is likely that the Put Option would be the only means by which the Originator could be required by the Issuer to repurchase any of the Mortgage Certificates. In this regard, see also Risk Factors – Risks Relating to the Notes and the Mortgage Portfolio – Put Option likely to be undermined following a Servicer Event relating to the Originator.

Collections

The Servicer will collect all amounts due from the Obligors under the Mortgage Loans and Related Security and will use all reasonable endeavours to procure that each Customer maintains a valid and effective direct debit mandate to effect such collection. The Servicer will use its best efforts to ensure payment of all sums so collected into the Issuer Collection Account or the Issuer Rouble Administrative Account (as the case may be) in accordance with the Servicing Agreement, the Issuer Collection Account Agreement and the Rouble Administrative Account Agreement, in each case on behalf of the Issuer and the Security Trustee in an efficient and timely fashion in accordance with the provisions of the Mortgage Loan Documents and the Operating Procedures (and in any event within one Moscow Business Day of receipt), and shall, in the event of any default on the part of an Obligor, seek to ensure that such default is remedied prior to the commencement of any Enforcement Procedures pursuant to the Enforcement Services Agreement. The Servicer will also undertake that it will pay any amount received by it from an Obligor (where not paid directly by direct debit) into the Issuer Collection Account on the day of receipt if practicable or, if not, the immediately following Moscow Business Day.

All Mortgage Loans are serviced by a direct debit system which requires Customers to ensure they have sufficient amounts in their current accounts with the Servicer at each payment date for their loans. At the payment date, the Servicer debits these accounts and credits the Issuer Collection Account. Customers may credit their current accounts with the Servicer either via wire transfers from their accounts with other banks or directly via the Servicer's cashier office. The Mortgage Portfolio regular servicing and delinquency administration functions are highly standardised and performed by specific, trained and highly experienced personnel of the Servicer.

The Servicer will procure that all payments received from the Obligors (other than those received via direct debit) are paid into the Issuer Collection Account, and at the end of each Moscow Business Day when the aggregate amount of cleared funds in the Issuer Collection Account exceeds a threshold of

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US$10,000, the Servicer will ensure that all cleared funds then in the Issuer Collection Account are remitted to the Issuer Distribution Account. The Servicer shall ensure that such cleared funds are received into the Issuer Distribution Account on the following Moscow Business Day.

Systems and Technology

The Servicer shall operate and maintain computer hardware, software or related intellectual property rights (the Systems) capable of providing data processing, management information and other related information technology facilities to enable it to carry out the Services, including:

• the maintenance of (a) adequate back-up facilities and off-site systems recovery facilities at separate premises and (b) a duplicate set of the Mortgage Records and the Servicer Records in the form of duplicate computer tapes or discs to be delivered to the Custodian, in a format compatible with the systems and procedures of the Back-up Servicer;

• the notification of the Issuer and the Security Trustee of the location of and any change in the location of such back-up facilities; and

• the duplication of all computer tapes or discs, ensuring that the information on such tapes and discs is accessible using a security code assigned by the Servicer and contained in a sealed envelope attached to the relevant duplicate tapes, with discs (a) updated and delivered on each Note Payment Date to the Custodian, (b) held by the Custodian to the order of the Issuer and the Security Trustee in a manner satisfactory to the Servicer, the Issuer and the Security Trustee (the Servicer being responsible for ensuring that such person confirms to the Servicer, the Issuer and the Security Trustee if so required by any of them that he is so holding the same) and (c) stored in conditions appropriate to preserve uncorrupted the information on such tapes or discs and to preserve the retrievability of such information in the event such tapes or discs are required to be used for their intended purpose.

The availability of the Servicer's contingency site will enable it to conduct banking services if its head office becomes non-operational. All duplicate Mortgage Records and Servicer Records as well as related documentation are stored at such contingency site.

Upon any termination of the appointment of the Servicer, the Servicer will be obliged to deliver all the necessary files and information relating to the Mortgage Portfolio to the Back-up Servicer, or to any other Successor Servicer appointed by the Issuer, or if none, to the Issuer.

Access to Mortgage Loan Documents in Safe Custody

Under the Custodian Agreement, the Mortgage Loan Documents will at all times be kept and stored in safe custody. Under the Servicing Agreement, the Servicer shall maintain a record of all Mortgage Loan Documents and other documents contained in such safe custody in a manner so that they can be identified and retrieved (if required), by reference to the name of a particular Customer.

If it becomes necessary to review or retrieve any Mortgage Loan Documents stored with the Custodian, the Custodian will, upon reasonable notice and during regular office hours, permit the Security Trustee or the Issuer or any other person properly authorised in writing access to any Mortgage Loan Document deposited with it. The Servicer, acting reasonably and in good faith in order to perform its duties under the Servicing Agreement and the Enforcement Services Agreement, is permitted to retrieve certain Mortgage Loan Documents from such safe custody provided that (a) at least one notarised copy of any original Mortgage Certificate so released shall remain in such safe custody and (b) such retrieval does not result in the Servicer holding more than 10 per cent. of the original Mortgage Certificates and their related Mortgage Loan Documents evidencing the Mortgage Portfolio at any given time. If it is commercially necessary for the Servicer to retrieve from such safe custody Mortgage Certificates and/or related Mortgage Loan Documents in excess of such 10 per cent. limit, it may do so, provided that it has given notice to the Security Trustee and to the Rating Agencies

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(specifying in each case, as applicable, the type of document and the reason the relevant document is required) and evidence of such notification has been provided to the Custodian.

Any such access shall be provided by the Custodian in a designated viewing room within the Custodian's premises and the Custodian shall execute an act of transfer and acceptance recording the removal (and the subsequent return) or the addition of any document. The Servicer will undertake to return any original documentation obtained in such manner as soon as possible.

Regulation

The Servicer is subject to regulation by various authorities due to its status as a bank, including the CBR. Failure to properly observe these regulations may result in a revocation of its ability to function as a bank and therefore its inability to continue servicing the Mortgage Loans. There are no regulatory proceedings or threatened proceedings or claims currently before the CBR, or any other regulatory body, which are considered to be material and which involve or affect the Servicer or its ability to perform its obligations.

Under Directive 2003/6/EC of 28 January 2003 (and the related Level 2 implementing measures) (the Market Abuse Directive) as implemented in Ireland, the Issuer is required to publicly disclose without delay any "inside information" (which broadly comprises of any non-public information of a precise nature which may have a significant effect on the price of the Notes) which directly concerns the Issuer. Pursuant to the Servicing Agreement, the Servicer will agree to assist the Issuer with the Issuer's obligations under the Market Abuse Directive, including monitoring and assessing all information received by it relating to the Mortgage Portfolio and/or the Mortgaged Properties for the purposes of determining whether such information is or includes inside information. The Servicer will agree to promptly notify the Issuer of any such inside information and, in certain circumstances, to publicly disclose the inside information in accordance with certain requirements.

Ongoing requirements of the Rating Agencies

Pursuant to the Servicing Agreement, the Servicer will agree to comply and/or, as applicable, to ensure compliance by the Issuer, with any ongoing reporting requirements applicable for the purposes of the maintenance of the rating of the Rated Notes, as from time to time notified by either Rating Agency to the Servicer or otherwise published by such Rating Agency, which shall include the provision to each Rating Agency on the date falling three months after the Issue Date and on the last day of each consecutive three month period thereafter until all of the Rated Notes have been redeemed in full (provided that if any such day is not a Moscow Business Day, the relevant date for delivery shall be the immediately following Moscow Business Day) of updated data in respect of the Mortgage Portfolio, in each case, in the format prescribed by the relevant Rating Agency.

Servicer Event

Each of the following circumstances constitutes a Servicer Event:

Non-Payment

• Non-payment by the Servicer of any payment required under the Servicing Agreement and the Enforcement Services Agreement on its due date which remains unpaid for three Business Days following the earlier of either the date the Servicer becomes aware of its default or date of receipt of a written notice from the Security Trustee or Issuer requiring the default to be remedied (a Non-Payment Servicer Event).

Breach of other obligations

Without prejudice to any Non-Payment Servicer Event as described in the paragraph above, the following will also constitute a Servicer Event:

• failure by the Servicer to perform or observe any of the other covenants and obligations of the Servicer under the Servicing Agreement and the Enforcement Services Agreement;

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• any of the servicer warranties as set out in Schedule 2 of the Servicing Agreement proving to be untrue; or

• any certification or statement made by the Servicer in any certificate or other document delivered in accordance with the Servicing Agreement and the Enforcement Services Agreement proving to be untrue, incomplete or inaccurate,

provided that (a) the event itself could reasonably be expected to have a Material Adverse Effect in respect of the Mortgage Certificates and Related Security and (b) such event, if capable of being remedied, remains unremedied for a period of 15 Business Days from the earlier of either the date the Servicer becomes aware of its default or the date of receipt of a written notice from the Security Trustee or Issuer requiring that the default be remedied.

Unlawfulness

• If it has or will become unlawful for the Servicer to perform or comply with any of its obligations under the Servicing Agreement or the Enforcement Services Agreement.

Force Majeure

• If for a period of 15 Business Days or more after the occurrence of an event beyond the reasonable control of the person affected including any strike, lock-out, labour dispute, act of God, war, riot, civil commotion, malicious damage, accident, breakdown of plant or machinery, computer software, hardware or system failure, fire, flood and/or storm (a Force Majeure Event) the Servicer is still being prevented or severely hindered from performing its obligations under the Servicing Agreement and the Enforcement Services Agreement and such Force Majeure Event continues for five Business Days after written notice of such Force Majeure Event has been given to the Issuer or the Security Trustee in accordance with the terms of the Servicing Agreement.

Insolvency Event

• If an Insolvency Event occurs in relation to the Servicer.

Delivery of a Servicer Event Notice

If any Servicer Event occurs, the Issuer may, with the prior written consent of the Security Trustee, or the Security Trustee may itself, deliver a Servicer Event Notice to the Servicer (with a copy to the Issuer or (as applicable) the Security Trustee) immediately or at any time after the occurrence of such a Servicer Event.

Effect of the Receipt of a Servicer Event Notice

After receipt by the Servicer of a Servicer Event Notice but prior to the delivery of a Servicer Termination Notice (both as defined below), the Servicer shall:

• hold on trust for and to the order of the Issuer and the Security Trustee (or such person as the Issuer shall direct) the original and/or any copies of the Mortgage Loan Documents and all documents and records, in whatever form or medium, relating to the Mortgage Loans, including all computer tapes and discs, specifying, among other things, Obligor details and the amounts and dates on which scheduled payments are due and are paid under the Mortgage Loans (the Mortgage Records), the original and/or any copies of all documents and records, in whatever form or medium, relating to the Services, including all computer tapes, files and discs relating to the Services (the Servicer Records) and the Transaction Documents then held by it or to its order and any monies then held by it on behalf of the Issuer together with any other assets of the Issuer then held by it;

• continue to perform all of the Services (unless (a) prevented by any Requirement of Law or any Regulatory Direction or (b) following a request for no further action by the Issuer and

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Security Trustee) until the time and date specified in a Servicer Termination Notice or until the date mutually agreed between the Servicer, the Issuer and the Security Trustee; and

• take such further action in accordance with the terms of the Services Agreements as the Issuer or the Security Trustee may reasonably direct in relation to the Servicer's obligations under the Services Agreements.

Obligation of the Servicer after Termination

From the date of the appointment of a Successor Servicer:

• all authority and power of the Servicer under the Services Agreements, or any successor, whose appointment is terminated pursuant to the Servicing Agreement, other than by virtue of the occurrence of the Final Maturity Date (the Retiring Servicer), shall be terminated and shall be of no further effect;

• the Retiring Servicer shall no longer hold itself out in any way as the agent of any party to either Services Agreements; and

• the rights and obligations of the Retiring Servicer and any obligations of the Issuer, the Originator and the Security Trustee to the Retiring Servicer shall cease but the relevant termination shall be without prejudice to the following (a) any liabilities or obligations of the Retiring Servicer to the Issuer or the Security Trustee or any Successor Servicer incurred or arising up to the date of the appointment of a Successor Servicer, (b) any liabilities or obligations of the Issuer, the Originator or the Security Trustee to the Retiring Servicer incurred or arising up to the date of the appointment of a Successor Servicer, (c) the Retiring Servicer's obligation to deliver documents and materials in accordance with the Services Agreements and (d) the Retiring Servicer remaining solely responsible for the costs of maintaining the Premises, the Servicing Facilities and the Designated Personnel (including any redundancy and other costs incurred by the Retiring Servicer in connection with a termination of the employment of any Designated Personnel).

Except where the Servicer Event was caused by the actions of the Retiring Servicer, the Retiring Servicer shall be entitled to receive all fees and other monies accrued to it under the Services Agreements (whether or not due and payable) pro-rated up to the date on which the Servicer Termination Notice or any other notice which results in the Servicer becoming a Retiring Servicer is served (the Servicer Termination Date) but, notwithstanding any other provisions of the Services Agreements, the Retiring Servicer shall not be entitled to any compensation as the Servicer after the Servicer Termination Date. Any monies so receivable shall be paid by the Issuer at the times on which they would otherwise have fallen due under the Services Agreements, subject always to the provisions of the Services Agreements and the Payment Priorities.

Delivery of Records on Termination

Save as prohibited or required otherwise by any Requirement of Law or any Regulatory Direction, the Retiring Servicer will agree to hold to the order of, and immediately deliver or make available to, any Successor Servicer the Mortgage Records, the Servicer Records and the Transaction Documents then held by it or to its order (including the Mortgage Loan Documents stored with the Custodian, to the extent that the Servicer retains any interest therein or control thereover). The Retiring Servicer will also agree to hold to the order of, and immediately deliver or make available to, any Successor Servicer any monies then held by the Retiring Servicer on behalf of the Issuer and any other Mortgage Loan Documents of the Issuer then held by it (provided that the Retiring Servicer shall have the right to make and retain such copies of any such records as it desires at its own cost).

The Retiring Servicer will agree to take such further action as the Issuer, the Security Trustee or the Successor Servicer appointed to replace the Retiring Servicer may reasonably direct in order to effectively transfer its rights and obligations under the Services Agreements to a Successor Servicer.

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The Retiring Servicer will acknowledge that it shall, at no time, whether before or after termination of its appointment under the Services Agreements, have any lien or other right of retention or possession over the Mortgage Records, the Mortgage Loan Documents, the Servicer Records or the Transaction Documents (other than Principal Transaction Documents to which it is a party delivered to it in original form) held by it from time to time.

The retention of copies of documents and/or records of the Servicer in relation to the Services Agreements, as required in accordance with proper professional practice, is permitted.

Access to the Premises and Servicing Facilities of the Retiring Servicer

During the six month period immediately following the Servicer Termination Date, the Issuer, the Security Trustee and such nominees may reasonably request, in writing, that the Successor Servicer be granted access to (a) the business premises of the Servicer, or the Retiring Servicer, at which the Services are performed (the Premises), (b) the computer facilities and other office equipment located at the Premises and (c) the personnel designated by such Servicer or such Retiring Servicer to carry out the Services. This access is required in order to enable the Retiring Servicer to perform its obligations under the Services Agreements and to allow the Successor Servicer to prepare to perform its duties, provided that such access is not prohibited by a Requirement of Law or Regulatory Direction. If such request is unreasonably denied or hindered, the relevant period will be extended until such time as the request is granted.

Quasi Servicer Event

Following the receipt by the Servicer and the Back-up Servicer of a written notice from Fitch confirming that the internal credit rating assigned to the Originator by Fitch has fallen below B- (a Quasi Servicer Event), the Servicer or, in default, the Back-up Servicer, is obliged (a) to promptly notify the Issuer, the Cash Manager, the Security Trustee, the Note Trustee, the Swap Counterparties, the Custodian and (in accordance with Condition 17 (Notice to Noteholders)) the Noteholders, in each case, of the same and (b) to send to each Obligor a letter (a Quasi Servicer Event Notification Letter) instructing such Obligor to:

• make all payments of interest, principal and any other sums due in connection with the relevant Mortgage Loan into a separate account with the Back-up Servicer, the details of such account to be contained in the Quasi Servicer Event Notification Letter; and

• continue to address all administrative and day to day queries regarding the relevant Mortgage Loans to the Originator until such time as they are informed otherwise by the Servicer, or failing that, the Back-up Servicer.

Further, promptly following the occurrence of a Quasi Servicer Event, the Back-up Servicer will agree to collect from the Custodian (and pursuant to the Custodian Agreement, the Custodian will agree to release) the Duplicate Records, the Back-up Servicer POA, the Payment Instructions Data File and notarised copies of the Mortgage Certificates and (if the Servicer fails promptly to do so) to serve a Quasi Servicer Event Notification Letter on each Customer and thereafter proceed to service the Mortgage Portfolio until such time as Fitch confirms that such Quasi Servicer Event has been remedied, whereupon the Back-up Servicer shall promptly return such documents and files to the Custodian and serve such further notice on each of the Customers as it deems fit in order to facilitate the recommencement of the performance of the Services by the Servicer in accordance with the terms of the Services Agreements.

For the avoidance of doubt, the performance of the Services and the other steps taken by the Back-up Servicer for this purpose will be without prejudice to the obligations of the Servicer under the Services Agreements which shall remain in full force and effect, save that the Servicer's obligations thereunder will be limited only to the extent that the Back-up Servicer has the information and other resources available to it to perform such Services and take such other steps. Moreover, at all times whilst any Quasi Servicer Event is continuing and the Back-up Servicer is taking the steps required to be taken in

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relation thereto, any Servicer Fees which would otherwise accrue from day to day to the Servicer under the Services Agreements will instead be payable to the Back-up Servicer in respect of each day during the continuance of such Quasi Servicer Event, as notified prior to each Note Payment Date by the Back-up Servicer to the Issuer, the Security Trustee, the Cash Manager and the Rating Agencies.

Accordingly, the Obligors will be required to continue to make all payments into the separate designated account specified in the relevant Quasi Servicer Event Notification Letter until such time as the Obligors are informed in writing by the Servicer, or failing that, the Back-up Servicer that the relevant Quasi Servicer Event has been remedied or that a Servicer Termination Event has occurred.

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The Enforcement Services Agreement

Servicer's Duties on Enforcement of Defaulted Mortgage Certificate

The duties of the Servicer under the Enforcement Services Agreement will include, but not be limited to, implementing the Enforcement Procedures in relation to any Mortgage Certificate in respect of which any Obligor is in default.

Enforcement Servicer Fees

The Servicer will receive a fee, payable in arrears on each Note Payment Date in respect of the related Collection Period in an amount equal to 1.00 per cent. per annum of the Outstanding Principal Balance of any Defaulted Mortgage Certificate (a) which, at the start of the relevant Collection Period has been referred to the Servicer's appropriate personnel with a view to the instigation of Enforcement Procedures, (b) in respect of which, at the start of such Collection Period, no Principal Loss has been declared or is required to be declared by the Servicer, and (c) which is identified as a Relevant Defaulted Mortgage Certificate in the Monthly Servicer Report for such Collection Period (a Relevant Defaulted Mortgage Certificate) as designated in the Enforcement Services Agreement.

The payment of these servicing fees is subject to the Payment Priorities.

State Duties

Certain state duties (State Duties) may become payable by the Issuer in respect of Enforcement Procedures (or to settle other administrative obligations in the Russian Federation where, pursuant to Russian law, such amounts can only be settled in Roubles by a wire transfer from an account open in the name of the Issuer). In order to facilitate the timely payment of such State Duties by the Issuer, pursuant to the Rouble Administrative Account Agreement, the Issuer Collection Account Bank will grant to the Issuer an overdraft facility (the State Duty Overdraft), which will enable the Issuer to settle such State Duties becoming payable from time to time. Subject to the Pre-Enforcement Revenue Payment Priorities, any debit balance under the Issuer Rouble Administrative Account representing the State Duty Overdraft on any Note Payment Date will be discharged on such Note Payment Date.

Representation of the Issuer in enforcement proceedings or arbitration

Under the Enforcement Services Agreement, prior to the Issue Date and on each consecutive third anniversary of the date of such power of attorney falling prior to the Final Discharge Date, the Issuer shall deliver to the Servicer an original notarised and apostilled power of attorney substantially in the form prescribed under the Enforcement Services Agreement. This power of attorney will enable authorised signatories of the Servicer to, inter alia, represent the Issuer in any courts of general jurisdiction and arbitration courts of the Russian Federation as well as in commercial arbitration courts.

Amendments to the Mortgage Loan Agreements

Under the Enforcement Services Agreement, prior to the Issue Date and on each consecutive third anniversary of the date of such power of attorney falling prior to the Final Discharge Date, the Issuer will deliver to the Servicer an original notarised and apostilled power of attorney substantially in the form prescribed under the Enforcement Services Agreement. This power of attorney will enable authorised signatories of the Servicer on behalf of the Issuer to effect amendments to Mortgage Certificates and related Mortgage Loan Agreements, in each case, to the extent required by a Russian court in the course of an application of the Enforcement Procedures in respect of the relevant Mortgage Certificate.

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The Back-up Servicing Agreement

In accordance with the Back-Up Servicing Agreement, in the case of a Servicer Event and a subsequent termination of the Servicer's appointment, the Back-up Servicer is to take on the role of Successor Servicer and will assume all the duties of the Servicer as set out in the Services Agreements.

The list of Servicer Events will be contained in the Servicing Agreement and shall include breach of Servicer obligations, covenants and warranties being proven to be untrue, insolvency related events, unlawfulness of performance and force majeure applicable to the Servicer. See also Description of Principal Transaction Documents – The Servicing Agreement.

Following the occurrence of a Servicer Event, the Issuer or the Security Trustee may deliver a notice (the Servicer Event Notice) to the Servicer with a view to remedial or protective measures being taken but without thereby terminating the Servicer's appointment. At any time thereafter, the Issuer or the Security Trustee may terminate the Servicer's appointment by delivering a further notice (a Servicer Termination Notice) and such termination is to take effect on the date specified in such further notice, provided that a Successor Servicer has been appointed.

Pursuant to the Services Agreements, after the delivery of a Servicer Event Notice or the delivery of a written notice pursuant to the Servicing Agreement confirming the future termination of the appointment of the Servicer by consent, the Issuer shall, or, following the service of a Security Protection Notice or an Enforcement Notice, the Security Trustee may serve a notice on the Back-up Servicer (a Commencement Notice) constituting the Back-up Servicer as Successor Servicer and requiring the Back-up Servicer to:

• do all further acts and things and execute all further documents necessary or appropriate or reasonably required by the Issuer or (after service of a Security Protection Notice or an Enforcement Notice) the Security Trustee to give effect to or to evidence the replacement of the Servicer by the Back-up Servicer as provider of the Services as from the date specified in the relevant Commencement Notice (the Successor Servicer Commencement Date);

• arrange for a Dollar bank account and a Rouble bank account to be opened in the name of the Issuer with the Back-up Servicer for the purposes of the servicing of the Mortgage Portfolio;

• obtain from the Custodian the Duplicate Records, the Back-up Servicer POA, the Payment Instructions Data File and notarised copies of the Mortgage Certificates;

• deliver by courier to each Customer who has not at that time discharged in full his or her obligations under the Mortgage Certificates a notice (a Back-up Servicer Payment Instruction Notice) issued by the Back-up Servicer on behalf of the Issuer in the format contained in the Payment Instructions Data File (as updated in accordance with the most recent Monthly Servicer Report and any other information available to the Back-up Servicer at the relevant time which it deems relevant for such purpose) terminating the existing direct debit mandate (if any) (the Direct Debit) relating to the relevant Mortgage Loan and specifying an account into which each Customer is obliged to make payments due under the relevant Mortgage Certificate (being either the new Issuer Collection Account or such other account as the Issuer shall approve at a branch of the Back-up Servicer in the city where the Customer is located (if any) if outside Moscow) and providing for alternative direct debit arrangements on terms no more costly or inconvenient to the Customer than the Direct Debit;

• take such other steps as may be reasonably necessary or reasonably required by the Issuer or (after service of a Security Protection Notice or an Enforcement Notice) the Security Trustee in order to (a) establish payment procedures with each Customer, whereby such Customer will make payment of the Receivables due from him on the due date each month either by a replacement direct debit arrangement as referred to above or by another method as referred to in the Servicing Agreement and (b) ensure that each Obligor recognises and gives effect to the

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role of the Back-up Servicer as successor to the Servicer and to the role of the Issuer as owner of the Mortgage Certificates; and

• procure on behalf of the Issuer compliance on the part of the Servicer with its obligations under the termination and related provisions contained in the Enforcement Services Agreement, following the delivery to the Servicer of a Servicer Termination Notice.

In this Prospectus, the Back-up Servicer POA means the original notarised and apostilled power of attorney to be issued by the Issuer prior to the Issue Date, substantially in the form to be prescribed under the Back-up Servicing Agreement, authorising the Back-up Servicer to administer and service the Mortgage Loans on behalf of the Issuer, and to be deposited with the Custodian pursuant to the Custodian Agreement.

Subject to and in accordance with the Payment Priorities, the Issuer will agree to reimburse the Back-up Servicer for all Liabilities properly incurred by the Back-up Servicer in taking the steps referred to above after the receipt of the notice appointing the Back-up Servicer, during any Collection Period and in the provision of the Services, such reimbursement to be made on the Note Payment Date immediately following the expiry of the relevant Collection Period.

Without prejudice to the scope of the obligations referred to above, following the service of a Security Protection Notice or an Enforcement Notice, the Back-up Servicer will agree that, if a Commencement Notice has also been served (and whether on, before or after the Successor Servicer Commencement Date specified in such Commencement Notice), it will follow the instructions of the Security Trustee and do all such acts as are reasonably required by the Security Trustee.

Pursuant to the Back-up Servicing Agreement, prior to the Issue Date, the Servicer will deliver to the Custodian of a computer file (the Payment Instructions Data File) containing Back-up Servicer Payment Instruction Notice in the format prescribed under the Back-up Servicing Agreement in respect of each Customer.

In consideration for the entry into the Back-up Servicing Agreement, the Back-up Servicer will be entitled to receive a fee from the Issuer in the amount specified under the Back-up Servicing Agreement, such fee being in addition to any fees accruing to the Back-up Servicer in connection with the occurrence of a Quasi Servicer Event (see The Servicing Agreement – Quasi Servicer Event above). The Back-up Servicer in its capacity as Servicer will be entitled to receive the fees which are stated to be payable to the Servicer under The Servicing Agreement – The Servicing Fee above in the event that it takes on the role of a Successor Servicer.

The Back-up Servicer will warrant and covenant as at the date of the Back-up Servicing Agreement on the same terms as the Servicer to the extent applicable to the Back-up Servicer. The Back-up Servicer will be indemnified against liabilities incurred by it in establishing payment arrangements with the Obligors in substitution for those in place between the Obligors and the Originator in its capacity as the Servicer. See also Risk Factors – Risks Relating to the Notes and Mortgage Portfolio – Substitution of the Servicer may be delayed, leading to losses in collections under the Mortgage Portfolio.

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The Pledge Agreement

The Pledge Agreement and Enforcement

On the Issue Date, as continuing security for the payment or discharge of the Secured Liabilities, the Issuer will pledge all Mortgage Certificates in favour of the Security Trustee (in its capacity as the Collateral Agent), as agent for and on behalf of the Secured Parties, pursuant to the Pledge Agreement which is to be governed by Russian law. The pledge created under the Pledge Agreement is to be held by the Security Trustee pursuant to an agency rather than a trust arrangement, since a trust arrangement is not a recognised concept under Russian law.

After the pledge under the Pledge Agreement becomes enforceable, the Security Trustee is entitled to foreclose upon the Mortgage Certificates, without entering into judicial or arbitral proceedings, and at its discretion can choose either of the following options:

• to sell the Mortgage Certificates at a public auction held in the Russian Federation; or

• to make a transfer note on the Mortgage Certificates in favour of the Security Trustee.

However, neither Russian law nor judicial practice gives any guidance as to how the Russian courts would apply the law governing the above options in respect of the Mortgage Certificates. Certain risks connected with the lack of relevant practice are described below. Given those risks, the Security Trustee may need to seek an arbitral award in order to enforce the pledge of the Mortgage Certificates.

Public Auction or Competitive Tender

If enforcement in respect of the Mortgage Certificates is effected through public auction, it is unclear how the rules for a public auction would apply to the sale of the Mortgage Certificates. As a general rule, the transfer of rights to a Mortgage Certificate is effected by the entry of a transfer note on the face of the Mortgage Certificate by the current holder of the Mortgage Certificate and the signing of a sale contract between the transferor and the transferee. If the Issuer refuses to cooperate and make transfer notes in favour of, and sign a sale contract with, a successful bidder, it is not clear whether the minutes of an auction would be sufficient to transfer the title to the Mortgage Certificates to the successful bidder.

Additional Powers of Security Trustee under Deed of Charge

In the Deed of Charge, the Security Trustee is given power to effect, or to direct the Issuer to effect, the disposal of the Mortgage Certificates through a competitive tender process, at its discretion, or to decide if in the opinion of the Security Trustee it is not possible to dispose successfully of any Mortgage Certificates by following the enforcement procedures prescribed by the Pledge Agreement. Such competitive tender process shall be overseen by a merchant bank or investment bank of international repute and shall go to the highest of at least two bids (unless a single bid is received and such bank confirms that the bid price is the best price reasonably achievable in the prevailing market conditions) or to a bidder determined by an independent expert if the creditworthiness of two or more equal highest bids is also equal. The Security Trustee also has the power to appoint such a merchant or investment bank of international repute as its delegate or as its adviser in exercising its powers in connection with the public auction enforcement process set out in the Pledge Agreement, and in all cases the Security Trustee shall not be liable to the Secured Parties for acts or omissions done on the basis of or as a result of the advice of such bank.

Transfer of Rights

As an alternative method of satisfying the obligations secured under the Pledge Agreement, it will be possible under the Pledge Agreement to transfer the Mortgage Certificates to the pledgee by way of making a transfer note on each pledged Mortgage Certificate in favour of the pledgee.

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Once a valid transfer note is made on each Mortgage Certificate in favour of the pledgee, the pledgee should be able either to dispose of, or to retain and collect payments under, the Mortgage Certificates.

The pledgee under the Pledge Agreement is the Security Trustee acting as agent on behalf of the Secured Parties. As a matter of Russian law and practice, it is not entirely clear how the Security Trustee and the Secured Parties could apply the above option.

In particular, it is not clear how the Secured Parties can jointly own the Mortgage Certificates as the owner(s) should be indicated in a transfer note on each Mortgage Certificate. It is not clear whether it is sufficient if a transfer note on each Mortgage Certificate mentions the Security Trustee only.

See Risk Factors – Risks Relating to the Notes and the Mortgage Portfolio – Enforcement Procedures for Defaulted Mortgage Certificates may be weakened by the legal process relating to foreclosure or practical constraints arising during foreclosure on the Mortgaged Property.

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The Deed of Charge

Secured Assets

As continuing security for the payment or discharge of the Secured Liabilities and, subject always to the equitable right of redemption of the Issuer, the Issuer with full title guarantee in favour of the Security Trustee for itself and for the other Secured Parties will create, in accordance with the terms of the Deed of Charge:

• a fixed charge over all its rights in respect of all amounts standing to the credit of the Issuer Distribution Account and any other bank or other accounts in which the Issuer may at any time have or acquire any Benefit, other than the Issuer Dutch Account, all interest paid or payable in relation to those amounts, and all debts represented by those amounts;

• a fixed charge over the benefit of all authorisations held in connection with its use of any of its property charged in favour of the Security Trustee, and any compensation which may be payable to it in respect of those authorisations;

• an absolute assignment of the Benefit of all its rights in respect of the Secured Transaction Documents; and

• a floating charge over the whole of the Issuer’s undertaking and all the Issuer's property, assets and rights whatsoever and wheresoever, present and future,

collectively, the Secured Assets, but on the basis that no assignment, first fixed charge or first floating charge shall be created under the Deed of Charge in respect of (a) any and all assets, property or rights which are located in, or governed by the laws of, The Netherlands (except for contractual rights or receivables (rechten of vorderingen op naam), which are to be assigned or charged to the Security Trustee under the Deed of Charge), (b) any Dutch Ineligible Securities, (c) the Issuer's rights under the Corporate Services Agreement and (d) amounts standing to the credit of the Issuer Dutch Account.

In this Prospectus, Dutch Ineligible Securities means all securities or interests in securities (i) which are bearer instruments (effecten aan toonder) physically located in The Netherlands or registered shares (aandelen op naam) in a Netherlands corporate entity where the Issuer owns such bearer instruments or registered shares directly and in its own name or (ii) the purchase or acquisition of which by or on behalf of the Issuer would cause the breach of applicable selling or transfer restrictions or of applicable Dutch laws relating to the offering of securities or of collective investment schemes.

Post-Enforcement Payment Priorities

After an Enforcement Notice has been provided by the Security Trustee to the Issuer, all proceeds of the relevant enforcement (excluding amounts (if any) standing to the credit of the Swap Collateral Ledger) shall be held by the Security Trustee upon trust to be applied, in the amounts required, in accordance with the Post-Enforcement Payment Priorities (which shall exclude amounts representing (a) any Swap Collateral Return Payment which shall be paid directly to the relevant Swap Counterparty and (b) in respect of each Swap Counterparty, prior to the designation of an Early Termination Date under the relevant Swap Agreement and the resulting application of the relevant collateral by way of netting or set-off, an amount equal to the value of all collateral (other than amounts required to be paid as Swap Collateral Return Payments) provided by such Swap Counterparty to the Issuer pursuant to the relevant Swap Agreement (and any interest or distributions in respect thereof)). See Condition 9.3 (Post-Enforcement Payment Priorities).

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The Custodian Agreement

Pursuant to the terms of the Custodian Agreement, the Custodian provides safe custody of the Mortgage Loan Documents, which include the original Mortgage Certificates. The Servicer and the Custodian each maintain a record of all Mortgage Loan Documents and other documents kept by the Custodian in such a manner that each Mortgage Loan Document can be identified and retrieved (if required) by the name of a particular Customer. The Servicer may request that the Custodian release certain Mortgage Loan Documents required by it in order to perform the Servicer's duties, provided that the criteria for such release set out in the Custodian Agreement are met. Each release and acceptance of the Mortgage Loan Documents is documented by the execution of an act of transfer and acceptance, a copy of which is provided to the Security Trustee.

The Servicer shall maintain and deposit with the Custodian computer records specifying, among other information relating to the Mortgage Loans, the Customers' details and the amounts and dates on which scheduled payments are due and are paid under the Mortgage Loans (the Duplicate Records). The Servicer is under an obligation to update the Duplicate Records by delivering updated Duplicate Records to the Custodian on each Note Payment Date. The Duplicate Records would enable the Back-up Servicer to continue servicing the Mortgage Loans should it take on the role of the Successor Servicer.

If the Custodian receives notice, in writing, from the Security Trustee to the effect that the Issuer or the Security Trustee has served a notice confirming that the Back-up Servicer will take on the role of Successor Servicer or that the appointment of the Originator as the Servicer under the Servicing Agreement has been terminated or that a Quasi Servicer Event has occurred, the Custodian is obliged to release the Duplicate Records (together with the Back-up Servicer POA, the Payment Instructions Data File and notarised copies of the Mortgage Certificates) to the Back-up Servicer.

The Custodian is obliged, under the Custodian Agreement, to render its services on a continuous basis. Even if the Custodian Agreement is terminated for any reason, the Security Trustee may request that the Custodian continues its services until the Mortgage Loan Documents kept by the Custodian have been transferred to a replacement custodian appointed by the Issuer.

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The Subordinated Loan Agreement

The Subordinated Loan

Pursuant to the Subordinated Loan Agreement, the Originator will, on a committed basis, provide a loan (the Subordinated Loan) to the Issuer on the Issue Date comprising two tranches which will be applied by the Issuer in full (a) in the case of the first tranche (the Subordinated Reserve Advance), to establish the Reserve Fund in the Issuer Distribution Account in amount equal to the Initial Reserve Fund Required Amount and (b) in the case of the second tranche (the Subordinated Expenses Advance), to pay the Transaction Closing Expenses on the Issue Date.

Subordinated Loan Scheduled Interest

Interest will accrue in respect of the Subordinated Loan on a daily basis by reference to monthly interest periods corresponding to each Fixed Interest Period (each, a Subordinated Loan Interest Period) at a rate equal to 8 per cent. per annum of the outstanding principal amount of the Subordinated Loan and will become payable on each Note Payment Date (Subordinated Loan Scheduled Interest).

Subordinated Loan Additional Interest

In addition to Subordinated Loan Scheduled Interest, on each Note Payment Date, additional interest (Subordinated Loan Additional Interest) will become due and payable in respect of the Subordinated Loan on an available funds basis in an amount (if any) equal to the funds that remain available to be applied from the Revenue Ledger on such Note Payment Date, after the satisfaction of all amount required to be discharged under paragraphs (a) to (q) (inclusive) of the Pre-Enforcement Revenue Payment Priorities.

Subordinated Loan Scheduled Interest not paid when due to capitalise

Any Subordinated Loan Scheduled Interest which is not paid when due shall capitalise so that it forms part of the principal amount outstanding under the Subordinated Loan.

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The Note Trust Deed

Pursuant to the Note Trust Deed, the Note Trustee will agree to act as trustee for the Noteholders and the Notes of each Class will be constituted.

The Note Trust Deed incorporates:

• the terms and conditions subject to which the Notes are issued by the Issuer (see Terms and Conditions of the Notes); and

• the terms on which the Note Trustee has agreed to act as trustee of the rights, powers and covenants in its favour contained in the Note Trust Deed and the other Transaction Documents, including the benefit of the covenant by the Issuer in the Note Trust Deed to pay principal and interest under the Notes, and the benefit of the representations and warranties and covenants given by the Issuer and the Originator in the Transaction Documents.

The Issuer may appoint new trustees (subject to such appointment being confirmed by an Extraordinary Resolution of (a) the Class A Noteholders, (b) the Class B Noteholders and (c) Class C Noteholders (to the extent that the corresponding Notes remain outstanding)) and more than one trustee may serve at the same time provided that at least one such trustee is a Trust Corporation. The Note Trustee may also (notwithstanding the Issuer's right to appoint a trustee), by giving prior notice to the Issuer (but without the consent of the Issuer, the Noteholders or any other Secured Party), appoint any person established or resident in any jurisdiction (whether a Trust Corporation or not) to act either as a separate trustee or as a co-trustee jointly with the Note Trustee:

• if the Note Trustee considers such appointment to be in the interests of the Noteholders; or

• for the purposes of conforming to any legal requirements, restrictions or conditions in any jurisdiction in which any particular act or acts are to be performed; or

• for the purposes of obtaining a judgment against the Issuer in any jurisdiction or the enforcement in any jurisdiction either of a judgment already obtained or of the Trust Documents or any other Transaction Document against the Issuer or any other person or the Security; or

• for the purposes of appointing a new Note Trustee which is a Trust Corporation, in the event of the retirement or removal of an existing Note Trustee (being the sole Note Trustee which is a Trust Corporation at such time).

In this Prospectus, Trust Corporation means a corporation entitled by rules made under the Public Note Trustee Act 1906 or entitled pursuant to any other comparable legislation applicable to a trustee in any other jurisdiction to carry out the functions of a custodian trustee.

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The Distribution Account Agreement

Pursuant to the Distribution Account Agreement, the Issuer will maintain the Issuer Distribution Account at the International Account Bank. The Issuer Distribution Account will be operated by the Cash Manager pursuant to and in accordance with the terms of the Cash Management Agreement and the Distribution Account Agreement.

The Issuer will use amounts credited to the Issuer Distribution Account to satisfy, inter alia, all payment obligations arising under the Notes on each Note Payment Date, in accordance with the Pre-Enforcement Payment Priorities. Interest shall be credited to the Issuer Distribution Account in accordance with the International Account Bank’s usual procedures for crediting interest to such an account but no less frequently than monthly.

The International Account Bank’s short-term unsecured, unguaranteed and non-subordinated securities or debt is required to be rated at least P-1 by Moody’s and F-2 by Fitch, or the International Account Bank's obligations in respect of the International Issuer Accounts are required to be guaranteed by an entity whose debts are so rated.

If at any time:

• the International Account Bank becomes incapable of acting, or is adjudged bankrupt or insolvent, or files a voluntary petition in bankruptcy or makes an assignment for the benefit of its creditors or consents to the appointment of an administrator, liquidator or administrative or other receiver of all or any substantial part of its property, or if an administrator, liquidator or administrative or other receiver of it or of all or a substantial part of its property is appointed, or it admits in writing its inability to pay or meet its debts as they may mature or suspends payment of its debts, or if an order of any court is entered approving any petition filed by or against it under the provisions of any applicable bankruptcy or insolvency law or if a public officer takes charge or control of the International Account Bank or of its property or affairs for the purpose of rehabilitation, administration or liquidation; or

• the International Account Bank ceases to have a rating of at least the Minimum Short Term Rating,

then the Issuer shall terminate the appointment of the International Account Bank and appoint a Successor International Account Bank in accordance with the Distribution Account Agreement as soon as practicable, provided that, in the case of a rating downgrade described above, the International Account Bank shall be entitled, within 30 calendar days of the relevant downgrade, to take the following remedial steps in order to negate such termination requirement:

• to seek to effect a transfer of the International Account Bank's rights and obligations under the Distribution Account Agreement to another bank suitably rated by each of the Rating Agencies; or

• to procure another suitably rated person to become a guarantor or co-obligor in respect of the obligations of the International Account Bank under the Distribution Account Agreement; or

• to enter into a collateral arrangement on terms, and providing for an amount of collateral, reasonably satisfactory to the Issuer, the Note Trustee, the Security Trustee and the respective Rating Agencies, in support of its obligations under the Distribution Account Agreement; or

• to take such other action as it may agree with the Issuer, the Note Trustee, the Security Trustee and the Rating Agencies.

In this Prospectus, Minimum Short-Term Rating means a short-term debt or issuer (as applicable) credit rating of at least (a) Prime-1 from Moody's and (b) F-2 from Fitch.

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The termination of the appointment of the International Account Bank under this Agreement shall not entitle the International Account Bank whose appointment is concerned to any amount by way of compensation but shall be without prejudice to any amount then accrued which is due to the International Account Bank.

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The Originator – Commercial Bank "Moskommertsbank" LLC

Introduction to the Originator

The Originator is a limited liability company organised under the laws of the Russian Federation. The Originator was registered with the CBR on 11 April 2001 with the registration No. 3365. The Originator was entered into the Unified State Register of Legal Entities (the Unified State Register) on 5 September 2002 under the registration No. 1027739151109, which is evidenced by the Certificate issued by the Unified State Register under Series 77 No. 007808985. The Originator's Tax Identification Number is 7744000711. The Originator was incorporated as Commercial Bank "Interregion Bank for Business Development" (LLC), and in 2002 changed its name to Commercial Bank "Moskommertsbank" LLC.

From its inception, the Originator has acted as both an agent and a strategic partner of JSC "Kazkommertsbank" (KKB). KKB is based in Kazakhstan and is one of Kazakhstan's major private banks, with assets exceeding US$9.8 billion as of 1 July 2006. Since 2003, KKB has consolidated the Originator's financial information into its consolidated financial statements based on the premise of "effective control over its operations" (as per the audit opinion on the consolidated financial statements of KKB for 2003 prepared under IFRS). On 23 May 2005, 60.04 per cent of the Originator's authorised capital was transferred to KKB pursuant to a trust management structure. This trust management structure enabled KKB to participate in the day-to-day management of the Originator and provides KKB with a majority of votes at general meetings of the Originator's shareholders. In February 2007, KKB announced its intention to acquire a direct equity stake of 52.11 per cent. in the Originator. This acquisition was approved by the CBR in May 2007 and is expected to be completed within approximately three months from the date of this Prospectus.

The Originator is regulated by the CBR. The Originator concentrates its primary business on commercial activities, securities trading and foreign currency, and the provision of loan and guarantee facilities.

The Originator's head office is registered at 2 Zvenigorodskaya str., b. 13/43, 123022, Moscow, Russian Federation. Commencing in 2005, the Originator expanded its regional branch network which currently includes six offices in Moscow, three offices in St. Petersburg and one in each of Volgograd and Kaliningrad. Furthermore, there are currently plans to construct additional branches in the areas of Novosibirsk, Rostov-on-Don, Kaliningrad, Chelyabinsk, Nizhny Novogorod, Perm, Omsk, Samara, Tyumen, Yekaterinburg and Sochi.

The Originator launched its residential mortgage lending programme in December 2005. Mortgage loans offered through the Originator include mortgages over residential property (including apartments and single family houses) in the regions of Moscow and St. Petersburg. It is estimated that 91 per cent. of the Originator's current mortgage portfolio (including for this purpose the Mortgage Portfolio) is within the city of Moscow or elsewhere in the Moscow region, whereas the remaining 9 per cent. is within the region of St. Petersburg. The Mortgage Loans in the Mortgage Portfolio relate to Mortgaged Properties located only in the city of Moscow or elsewhere in the Moscow region.

The majority of the Originator's revenues come from loan processing and application fees, interest from mortgage loans and late fees, as well as servicing fees from servicing loans purchased from it by other parties where the Originator has retained the servicing mandate. The Originator reported assets of US$1,205,386,938 in its audited financial statements prepared for the year ended 31 December 2006, with US$111,016,934 in shareholders' equity. The Originator's net income for 2006, as comprised in such financial statements, was US$11,505,406. The Originator's audited financial statements for December 2006 were prepared in accordance with IFRS.

During 2006, the Originator's average individual loan value was US$140,000, with the average monthly Origination income exceeding US$70,000,000. Furthermore, the average number of newly

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originated loans per month during 2006 was equal to 400. In 2006, the Originator was ranked within the top three banks for retail products within the Russian Federation in terms of disbursement and mortgage portfolio size.

The Originator is also now a member of the MasterCard and Visa schemes and is intending to launch a credit card business, targeting existing individual and corporate customers rather than new markets.

Current Senior Executives of the Originator

Alexey Godovanets

Chairman of the Management Board

Albert Khisametdinov

Senior Deputy Chairman of the Management Board

Alexandr Orlov

Deputy Chairman of the Management Board

Askhat Sagdiev

Deputy Chairman of the Management Board

Current Members of the Board of Directors of the Originator

Andrei Saveliev

Chairman of the Board of Directors

Alexey Godovanets

Alexander Barsukov

Sergey Bespalov

Slav Senterev

Participants of the Originator

There are currently nine main registered participants of the Originator. These are: DG – Sistem (19.99 per cent.), Interro – Resurs (19.99 per cent.), Tam'U-N (19.95 per cent.), DIMIRA (12.47 per cent.), Eastern Star (9.15 per cent.), Kazintr (6.32 per cent.), Finteko (5.65 per cent.), Sovter (5.65 per cent.) and LEVSHA (0.83 per cent.). As at the date of this Prospectus, these nine participants own 100 per cent. of the Originator’s share capital. On 28 May 2007, Maklay Company Limited acquired a 4.90 per cent. stake in the Originator from Kazintr, taking the actual holding of Kazintr to 1.42 per cent. The formal registration of this acquisition is pending with the CBR and the Unified State Register.

Regulatory and Litigation

The Originator believes that it is in compliance in all material respects with all banking rules and regulations applicable to it. There are no regulatory proceedings, or threatened proceedings, or claims currently before the CBR or any other regulatory body which are considered by the Originator to be material, and which involve or affect the Originator, or which would have an adverse impact on the Mortgage Portfolio or otherwise affect the Originator's mortgage business as a whole or the Originator's ability to perform its obligations under the Transaction Documents. There is no outstanding or threatened material litigation involving the Originator or any of its directors or officers.

Other than in connection with the Enforcement Procedures or the enforcement procedures relating to the Originator's auto loan portfolio, the Originator is currently not subject to nor is it participating in any litigation on any matter.

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Portfolio Management

Typical borrowers from the Originator include:

• young professionals in their late twenties to early thirties;

• entrepreneurs in their thirties and forties;

• those with a completed university education; and

• those with professional potential and at least 12 months' work experience, at least four months of which is with their current employer.

Customer satisfaction is regularly measured to help identify areas for improvement. Customer feedback is gathered through the website of the Originator and by the call centre (the Call Centre). Every Customer receives a telephone call from the Originator shortly after the loan disbursement with the aim of obtaining the Customer's feedback about its experience of dealing with the Originator. This information is then analysed and can be used to influence changes to the Originator's procedures and products which are aimed at maximising borrower satisfaction.

Mortgage Loan Origination Process

The diagram below, together with the information which follows under the heading Description of the Mortgage Loan Origination Process, shows details of the origination process applicable to the Mortgage Loans:

Description of the Mortgage Loan Origination Process

The mortgage loan origination process at the Originator includes the following steps. Initially, potential borrowers contact the Originator through one of the distribution channels, which may include:

• the Originator's sales associates;

• real estate agents (approximately 200);

• mortgage brokers (approximately 50);

• consultants at the Call Centre; and

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• the Originator's web site.

The Originator's credit manager conducts the first application interview with the client, where a list of all required documents and criteria is provided to the client and a Mortgage Loan application is completed (1). After these documents have been submitted, the Analytic and Underwriting Division will then construct a solvency analysis report, which excludes any consideration of the relevant property (2). The Analytic and Underwriting Division is located in Moscow and analyses all applications from each branch of the Originator.

Using this solvency analysis report, a loan limit is established (3) and a request for any further information required regarding the loan disbursement conditions will be sent to the customer (4).

Once a credit limit has been approved the appraisal company will be supplied with documents regarding the relevant property for preparation of the property value report (5). Upon completion of the property value report all documents regarding the relevant property including the property value report are requested and provided to the insurance company (6). Based on the property value report, the Analytic and Underwriting Division will then prepare the final underwriting process report containing consideration of the relevant collateral, which will determine if the property corresponds to the relevant lending criteria. This report will then be transferred to the Sales Division (7).

The Sales Division collaborating with the Closing Division will agree the disbursement date with the borrower (8). The multi-purpose mortgage insurance agreement will then be arranged for the mortgage loan disbursement (this is coordinated by a specialist of the Closing Division) (9).

At this point, all documents will be prepared for signing, all amounts will be calculated, and drafts of all documents will be sent to both parties. The Originator will then sign the credit agreement, and all necessary bank accounts for the mortgage loan will be opened in the borrower's name (10).

The Closing Division will then organise the signing of the mortgage loan agreement, the mortgage insurance and the payment schedule. Furthermore, receipt of all payments to be made by the Customer as conditions precedent to the loan disbursement will be confirmed by the Originator. Once this process is completed, all loan funds will be transferred to the borrower's bank account with the Originator (11).

Mortgage Products and Mortgage Loan Underwriting

The Originator's mortgage loan underwriting criteria include the following features:

• all mortgage loans are denominated in Dollars;

• the minimum loan amounts are as follows (a) US$20,000 for Standard A1, Standard A2 and Standard B1 Customers and (b) US$50,000 for Standard A3 and Standard B2 Customers;

• the maximum lifetime of the mortgage loan is 25 years;

• the maximum individual outstanding principal balance is US$1,000,000;

• the maximum individual LTV is 85 per cent.;

• fixed interest rates range from 9.8 per cent. to 13.5 per cent.;

• insurance coverage must be obtained on amount of at least 110 per cent. of the outstanding loan amount and must cover the following risks: the Customer's death or disability; property loss or damage; and defects in property title;

• accepted collateral is in the form of apartments or single family houses; and

• an appraisal report is received from an independent appraisal company approved by the Originator.

The Originator's credit product line includes the following products, all of which are denominated in Dollars and correspond to a type of residential property on either the primary or the secondary market:

• Apartment (standard)

• Apartment (Payment 10)

• Single family home (standard)

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• Single family home (Payment 10)

• Home equity loan (for apartments or houses)

None of the mortgaged properties consist of either governmental or public buildings and all mortgaged properties must have a built structure located upon them.

All borrowers are classified into the following categories according to the Originator's underwriting procedure:

Standard A1: a Customer in permanent employment who is able to provide, and has provided, the Originator with a document confirming his/her actual monthly income issued by his/her principal employer.

Standard A2: a Customer in permanent employment who is able to provide, and has provided, the Originator with a document confirming his/her actual monthly income in the form approved by the seller (the tax form 2-NDFL should confirm at least part of the income, and an income report issued by his/her principal employer).

Standard A3: a Customer having permanent employment who is unable to provide the Originator with any official confirmation of his/her actual monthly income other than an information letter confirming his/her actual monthly income signed by the Customer.

Standard B1: a Customer who runs his/her own business, either alone or in co-ownership (as an individual entrepreneur carrying out his/her business without establishing a legal entity or otherwise) and who is able to provide, and has provided, the Originator with an official confirmations of his/her actual monthly income (i.e. official accounting statements, balance sheet, profit and loss calculations, tax declarations or 3-NDFL tax forms).

Standard B2: a Customer who runs his/her own business, either alone or in co-ownership (as an individual entrepreneur carrying out his/her business without establishing a legal entity or otherwise), and who is unable to provide the Originator with an official confirmation of his/her actual monthly income (i.e. official accounting statements, balance sheets, profit and loss calculations, tax declarations or 3-NDFL tax forms).

The application of these categories further influences the nature of the mortgage loan which a Customer is eligible to receive.

Insurance Arrangements

The Originator works exclusively with nine insurance companies in the Russian Federation:

ZAO IFD Kapital Insurance (66. 83per cent.), Renaissance Insurance Company (2.3per cent.), OJSC Insurance "Progress Garant" (0.77per cent.), INGOSSTRAKH Insurance Company (8.85per cent.), ROSGOSSTRAH Stolica (3.2per cent.), Alfa Insurance (5.92per cent.), URALSIB Insurance (0.49per cent.), Military Insurance Company (8.99per cent.) and Stadart Rezerw Insurance (2.58per cent.).

The Originator has concluded referral fee agreements with each of these accredited insurance companies. The Originator requires that insurance coverage in respect of the Mortgage Loans be provided by one of the insurers currently accredited by the Originator. As part of the related accreditation process, the Originator approves the terms of the insurance policies to be provided in relation to the Mortgage Loans and examines recent financial statements of such insurer.

The Originator has been party to three cases of recovery from insurers in relation to mortgage loans (being mortgage loans not included in the Mortgage Portfolio). Two related to the death of the relevant borrower and the third related to property damage. All three cases were processed and settled in a timely manner.

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Changes to the Underwriting Manual and Product Offerings

Changes to the underwriting manual of the Originator incorporating the Lending Criteria (the Underwriting Manual) as well as product offerings are driven by the following factors:

• market developments in the origination practice;

• changes in borrower behaviour in different regions; and

• changes to the target borrower-base.

Changes in the underwriting criteria and product offerings may be initiated by the Originator's Risk Management Department or Sales Department, but in all cases these changes must be approved by the Management Board of the Originator.

Mortgage Loan Administration

Mortgage servicing procedures include the following:

• final sign-off of the Mortgage Loans on the disbursement date;

• establishing current borrower accounts with the Originator in the name of the borrower for all subsequent loan servicing purposes;

• processing all loan repayments (including repayments to third parties where the loans have been sold to third parties with the servicing role retained by the Originator);

• ongoing contact with the borrower;

• processing of all loan pre-payments;

• monitoring borrower and property insurance coverage; and

• delinquency administration.

Pursuant to the Servicing Agreement, the Servicer will collect all amounts due from Obligors under the Mortgage Loans and the Related Security and will use all reasonable endeavours to procure that each Customer maintains a valid and effective direct debit mandate to effect such collection. The Servicer will also undertake that it will pay any amount received by it from an Obligor (where not paid directly by direct debit) into the Issuer Collection Account on the day of receipt, if practicable or, if not, the immediately following Moscow Business Day.

All Mortgage Loans are serviced by a direct debit system which requires Customers to ensure they have sufficient funds in their current accounts with the Originator on or before each payment date for such Mortgage Loan. On such payment date, the Servicer debits these accounts and credits the Issuer Collection Account. Customers may credit their current accounts with the Originator either via wire transfers from their accounts with other banks or by direct payment to the Originator's cashier office. The regular servicing and delinquency administration functions relating to the Mortgage Portfolio are highly standardised and performed by specific, trained and experienced personnel of the Servicer.

The Servicer will procure that all payments received from the Customers into each Customer's loan account relating to the relevant Mortgage Loan are paid into the Issuer Collection Account. Where the aggregate amount of cleared funds in the Issuer Collection Account exceeds a threshold of US$10,000 at 2.00pm (Moscow time) on any Moscow Business Day, the Issuer Collection Account Bank will ensure that all cleared funds then in the Issuer Collection Account are remitted to the Issuer Distribution Account at such time and are received into the Issuer Distribution Account on the following Moscow Business Day.

Monitoring

The Originator has standardised monitoring procedures incorporating ongoing interaction with Customers on loan servicing matters, the processing and administering of loan prepayments and

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curtailments, the monitoring of insurance coverage of Customers and Mortgaged Properties and loan delinquency administration. There is monthly automated reporting showing delinquency levels, regular payments and prepayments, and other relevant loan administration data. The reports are provided by the portfolio servicing and quality control department of the Originator (the Portfolio Servicing and Quality Control Department) to senior executives of the Originator. Delinquency reports are transferred to the Originator's security services department (the Security Services Department). The formats of the reports are incorporated into the IBSO banking system.

The Monthly Servicer Reports prepared for the Transaction will show delinquency levels, regular payments, prepayments and recoveries and other relevant loan administration data.

Also, as required by CBR regulation, there is an internal control unit, which reports directly to the chief executive officer and the board of directors of the Originator. The unit executes regular internal audit inspections of various functions of the bank, with a view to ensuring that these functions operate in accordance with existing regulation and legislation, and in accordance with the Originator's internal processes.

Banking Administration

In order to streamline its mortgage loan origination process, the Originator has an outsourcing system which consists of (a) real estate agencies and developers, who initiate the pre-sale stage, underwriting and the formation of the credit file, (b) various insurance companies and (c) notaries, who assist in the final closing of the loan agreements.

In addition, the Originator has formulated a new IT system, which automates all of the business processes, and includes new multi-regional bank IT systems and multi-regional front office systems, with high data processing speed as well as a flexible reporting system capable of generating data in a range of formats on a spot basis. See also Description of the Principal Transaction Documents – The Servicing Agreement - Systems and Technology.

Arrears Collections

If a payment default under a Mortgage Loan prevails for five consecutive days, a representative of the Portfolio Servicing and Quality Control Department will send information about the delinquency to the Call Centre. A representative of the Call Centre will contact the Customer via telephone to investigate the reason for the default. This phone call is made to determine whether the financial status of the Customer has deteriorated, causing a payment delay, or whether the delay is as a result of technical errors relating to the transfer of funds, business or personal travel or other unforeseen isolated circumstances.

After such delinquency has prevailed for 10 consecutive days, an official letter will be sent to the Customer reminding them of their financial obligations in respect of the relevant Mortgage Loan.

On the 30th day of the relevant delinquency, a second letter will be sent from the Portfolio Servicing and Quality Control Department demanding a full repayment of amounts due in respect of the Mortgage Loan within 15 days of such letter's receipt (this letter will confirm the sum of all overdue credit, accrued but unpaid interest and any fines due in respect of the Mortgage Loan). This letter will also remind the Customer of the potential legal action which will be commenced if the repayment does not occur. Further, a representative of the Portfolio Servicing and Quality Control Department will inform the Originator's arrears management and problem loans department (the Arrears Management and Problem Loans Department) about the non-payment.

If the delay in payment does not result from technical difficulties, and the delinquency prevails for more than 30 days, the Originator will contact the Security Services Department demanding all current information regarding the Customer's:

• place of residence;

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• insurance coverage;

• place of employment; and

• contact information (including telephone numbers and any e-mail address).

On the 61st day of the relevant delinquency and further to the investigation it has conducted in relation to the relevant delinquency, the Arrears Management and Problem Loans Department will report its findings to the senior executives of the Originator. Based on the information contained in this report, the senior executives of the Originator will make the following determination within five days:

• to instruct the Arrears Management and Problem Loans Department to pursue an out of court solution in relation to the delinquency; or

• to transfer the relevant loan file to the Originator's legal department who will prepare a claim against the Customer and initiate the foreclosure process in respect of the Mortgaged Property.

On the 91st day of the relevant delinquency (if the Arrears Management and Problem Loans Department has not resolved the delinquency and the relevant loan file has not already been transferred to the Originator's legal department), the Arrears Management and Problem Loans Department will deliver a second report to the senior executives of the Originator.

Based on the information contained in this report, the senior executives of the Originator will make the following determination within five days:

• to instruct the Arrears Management and Problem Loans Department to pursue an out of court solution in relation to the delinquency; or

• to transfer the relevant loan file to the Originator's legal department who will prepare a claim against the Customer and initiate the foreclosure process in respect of the Mortgaged Property.

The determination as to whether an out of court solution should be pursued in relation to the relevant delinquency in priority to formal foreclosure proceedings will be based on the followings factors:

• the extent to which the Customer has demonstrated a willingness and an ability to discharge all amounts remaining overdue in respect of the Mortgage Loan outside of the court process;

• the characteristics and past performance of the Customer, including the extent to which the Customer has breached other undertakings given to the Originator and has been willing to reach agreements with the Originator during the arrears management process; and

• other credit risk factors.

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Foreclosure

The foreclosure procedure has been developed by the Originator in accordance with the legal process applicable under Russian law. The objective of the foreclosure process is to achieve a full repayment of all amounts due from the Customer under the relevant Mortgage Loan.

After all extrajudicial measures have been taken by the Originator, via the Security Services Department, a credit dossier will be prepared for filing with the Russian courts, along with an application for foreclosure. Included in the application for foreclosure will also be:

• a copy of the signed letter delivered by the Security Services Department; and

• a calculation of all debts, interest and other amounts then due.

The transfer of the above documents will be executed on the 91st day of the relevant delinquency period. Furthermore, a processing fee will be required to initiate the court procedures, which will include payments associated with legal fees, and travel and postal expenses.

As a result of the court procedure, a court order should be obtained, transferred to the Security Services Department and put into legal force. Judicial police officers should then act on behalf of the court and execute the remedy in accordance with the court's decision. If it is decided that foreclosure should be effected by means of an auction, this auction will be held by a specialist organisation entitled to operate in the Russian property market. The auction will be governed by the applicable Russian law.

Summary of the Auction Process

• Unless the relevant mortgage document specifies the value of the mortgaged property, the reserve price of the mortgaged property applicable from the start of the auction is to be determined by the court (during the judicial proceedings, the Originator is required to submit a report on the mortgaged property's market value to the court, which is provided by a professional appraiser included in the list approved by the Originator). The court bailiffs then deliver a request to the organiser of the auction and such request will include the minimum sale price. The organiser of the auction will proceed with the auction on the basis of the request. The auction should be held within two months of such requests.

• Persons wishing to take part in the auction are to enter a down payment, in accordance with the terms indicated in the notification about the auction. The amount of the down payment will not exceed 5 per cent. of the reserve price of the mortgaged property.

• On completion of the auction, the down payment is to be returned to any person taking part in the auction who was unsuccessful. The down payment is also to be returned in the event that the auction does not take place.

• The person who provides the highest bid for the property being sold in the auction is to be recognised as the winner of the auction. This person and the organiser of the auction must sign minutes confirming the result of the auction.

• The winner of the auction should, within five days of the auction, pay the sum equal to his highest bid for the mortgaged property, less the down payment, into the account indicated by the organiser of the auction. If this sum is not paid within such five day period, such down payment will not be returned to the winner of the auction.

• Within five days of the payment of the applicable purchase price by the person who has won the public auction, the organiser of the public auction is to enter into a sale and purchase agreement with him. This agreement and the minutes confirming the results of the auction are considered to be grounds for entering the termination of the relevant mortgage into the State Register.

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• The sum received at the auction, after the settlement of expenses incurred by the organiser of the auction, is forwarded to the Originator for repayment of the borrower's mortgage loan. If the sum received exceeds the amount of the borrower's indebtedness, the residual sum will be remitted to the borrower by the organiser of the auction.

• If the public auction is declared void (for example, if there were fewer than two potential buyers at the auction, or no bid higher than the initial selling price of the mortgaged property was made, or the person who won the public auction did not pay the balance of the applicable purchase price within the required period), then a second auction should be held no later than one month following the previous auction. The initial selling price of the mortgaged property at the second public auction is to be reduced by 15 per cent.

• If the second auction is also declared void, the Originator has the right to acquire the mortgaged property at a designated discount and to set off its claims secured by the mortgaged property against the applicable purchase price. If the Originator does not use its right to acquire the mortgaged property within one month following the announcement that the second auction was void, the relevant mortgage loan is to be terminated.

• An 11 per cent. charge on the value of the mortgaged property is required to be deducted from the proceeds of the auction (comprising 7 per cent. for bailiff services, 2 per cent. for the arrangement of the auction and 2 per cent. for the valuation of the mortgaged property). However, the 2 per cent. charge in respect of the valuation of the mortgaged property does not apply in the case of mortgage loans originated by the Originator, since the relevant mortgage document specifies the value of the mortgaged property.

As a result of the foregoing, to some extent, Customers in default have an incentive to settle enforcement proceedings outside of the auction process if they are financially able to do so. The Originator has been party to 10 foreclosure actions in respect of its mortgage portfolio, all of which settled outside of the auction process. The process of obtaining an initial court hearing to apply for judgment against a defaulting Customer and, thereafter, leave to commence the auction process could take three to six months or longer. Application for, and completion of, the auction process itself could take six to eight months or longer.

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The Issuer – Moscow Stars B.V.

Introduction

The Issuer is a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) incorporated in The Netherlands on 1 December 2006 and registered at the Trade Register of the Chamber of Commerce and Industries for Amsterdam under registration number 34261032. The Issuer was incorporated with the name Moscow Stars B.V.

The registered office of the Issuer is at Locatellikade 1, Parnassustoren, 1076 AZ Amsterdam, The Netherlands. The telephone number of the Issuer is +31 (0)20 5755 600. The Issuer has no subsidiaries and operates under the legislation of The Netherlands.

Principal Activities

The principal objects of the Issuer are set out in article 3 of its Articles of Association and include (a) to acquire, purchase, administer, sell and encumber registered receivables arising from or in connection with loans granted by a third person or third persons and to exercise all rights attaching to such receivables, (b) to purchase bonds, (c) to sell or otherwise dispose of the whole or any part of the property of the Issuer, (d) to lend and to raise funds, including through the issue of bonds, (e) to grant security over its own assets by way of mortgage, charge, pledge, lien, standard security or other, (f) to limit financial risks and risks in respect of fluctuations in interest rate by, inter alia, entering into derivative agreements such as option agreements and swap agreements and (g) to enter into other agreements in connection with the aforementioned and to do all that is connected therewith or may be conducive thereto, all to be interpreted in the broadest sense.

The Issuer has been established as a special purpose company with the aim of purchasing from the Originator the benefit of the Mortgage Portfolio, issuing the Notes and entering into, inter alia, the Transaction Documents to which it is a party. The Issuer will covenant in Condition 5 (Issuer Covenants) to observe certain restrictions on its activities, including a covenant not to carry on any business or enter into any documents other than those contemplated by the Transaction Documents, save to the extent permitted by the Transaction Documents.

Pursuant to the Corporate Services Agreement, the Managing Director will provide certain corporate administration and secretarial services to the Issuer which will include:

• dispatch of shareholder and board meeting notices;

• handling enquiries and making appropriate filings with regulatory bodies including the Dutch tax authorities and the ISE;

• keeping and maintaining books, records and statutory accounts and procuring that the same are distributed to relevant parties; and

• maintaining registrations and licences required by or in relation to the Issuer.

Pursuant to the Corporate Services Agreement, the Managing Director undertakes that it will not resign from its position as Managing Director of the Issuer except in the situation that suitable person(s), entities, trust(s) or administration officer(s) has/have been contracted to act as Managing Director(s) of the Issuer.

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Directors

The Issuer has one director (being the Managing Director) and the Managing Director's business address and other principal activities are: Name Business Address Other Principal Activities

TMF Management B.V. Locatellikade 1, Parnassustoren, 1076 AZ Amsterdam, The Netherlands

The Managing Director of the Issuer may engage in other activities and have other interests which may conflict with the interests of the Issuer.

Managing Director

TMF Management B.V., a private company with limited liability incorporated in The Netherlands and registered at the Trade Register of the Chamber of Commerce and Industries for Amsterdam under registration number 33203015, is appointed as the Managing Director of the Issuer.

Employees

The Issuer has no employees.

Issuer Expenses

The Issuer will use the gross proceeds from the issuance of the Notes solely for the purposes described under The Notes - Use of Proceeds.

Share Capital

The entire issued share capital of the Issuer comprises 20 ordinary shares (the Ordinary Shares) of €1,000 each, all of which are fully paid up.

Capitalisation and Indebtedness

The following table sets forth the capitalisation and indebtedness of the Issuer as at the date of this Prospectus, adjusted for the issuance of the Notes on the Issue Date:

Indebtedness

The Notes ..........................................................................................................€130,289,028

Subordinated Reserve Advance ..........................................................................€7,165,896

Subordinated Expenses Advance €600,000 (estimated)

Share Capital

Issued Shares (20 Ordinary Shares of €1,000 each).............................................€20,000

Total Capitalisation ...........................................................................................€138,074,924

These figures reflect the expected position on the Issue Date, including (a) the Notes in an amount of US$179,684,220 converted into euro at a total amount equal to €130,289,028 and (b) the Subordinated Loan in an aggregate euro equivalent amount of €7,765,896. For information about certain existing obligations of the Issuer which are to be redeemed, released and/or terminated on the Issue Date, see General Information – Warehouse Documents.

Save as referred to above, the Issuer has no loan capital outstanding, has not created shares which have not been allotted and has no term loans and no other borrowings or indebtedness in the nature of borrowings nor any contingent liabilities or guarantees.

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Stichting

Stichting Moscow Stars (Stichting), a foundation established under the laws of The Netherlands, holds all of the Ordinary Shares as sole shareholder of the Issuer.

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The Back-up Servicer – ZAO Raiffeisenbank Austria

ZAO Raiffeisenbank Austria (RBRU) is a Russian bank focussing equally on commercial, retail and investment banking activities.

RBRU is a 100 per cent. subsidiary of the Austrian Raiffeisen Banking Group (the Austrian Raiffeisen Banking Group). RBRU has been operating in the Russian Federation since 1996, offering a full range of services to individual and corporate customers. Currently, RBRU operates a leasing subsidiary, Raiffeisen – Leasing, a non-state pension fund, Raiffeisen, and an asset management company, Raiffeisen Capital Asset Management Company.

RBRU is ranked 7th in terms of assets among the top Russian banks based on Q1 2007 results (Interfax-䈐䅐䄀) and is recognised as one of the most stable and reliable banks in the Russian Federation. Domestically, Moody's currently assigns RBRU a long-term credit rating of Aaa.ru and a short-term rating of RUS-1. Internationally, Moody's currently assigns RBRU the following ratings (a) D Financial Strength Rating and (b) Baa2 long-term and Prime-2 short-term foreign currency deposits.

RBRU entered the retail banking market in 1999 and currently operates 27 branches in Moscow, six branches in St. Petersburg and regional branches in Ekaterinburg, Samara, Novosibirsk, Chelyabinsk, Nizhny Novgorod, Krasnodar, Krasnoyarsk and Perm as well as a representative office and cash collection office in Ufa. RBRU is the 8th largest bank in the Russian Federation in terms of private deposits and the 9th in terms of consumer lending, based on Q1 2007 figures (Interfax-䈐䅐䄀). RBRU is ranked 7th in terms of corporate lending based on Q1 2007 figures (Interfax-䈐䅐䄀).

RBRU is recognised as a leader on the Russian corporate bond market. During 2001 to 2007, RBRU acted as a lead manager or co-manager for 116 corporate bond issues with a total nominal value of RUR 354 billion.

During 2005 and 2006, RBRU acted as a lead arranger of syndicated loans totalling US$6.2 billion for Russian borrowers in the areas of retail trade, fuel and energy, metallurgy, commercial real estate, telecommunications and banking.

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The International Account Bank – The Bank of New York

Pursuant to the Distribution Account Agreement, The Bank of New York will be appointed by the Issuer as the bank at which the Issuer Distribution Account is to be maintained (in such capacity, the International Account Bank).

The International Account Bank was incorporated, with limited liability by charter, under the laws of the State of New York, pursuant to a special act of the New York State Legislature (Chapter 616 of the laws of 1871). The head office of the International Account Bank is situated at One Wall Street, New York, NY 10286, United States of America. The International Account Bank will act through its branch registered in England and Wales with FC No. 005522 and BR No. 000818, having its principal office at One Canada Square, London, E14 5AL. The International Account Bank is a leading provider of corporate trust-agency services, including account bank and cash management functions for structured finance transactions. The International Account Bank, together with its subsidiaries and affiliates, has a portfolio of more than 90,000 trustee and agency appointments, representing approximately US$3 trillion in outstanding securities for more than 30,000 clients around the world.

The Issuer Collection Account Bank - Commercial Bank "Moskommertsbank" LLC

See The Originator – Commercial Bank "Moskommertsbank" LLC above.

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The Note Trustee and the Security Trustee – TMF Trustee Limited

TMF Trustee Limited is a private limited company registered in England and Wales under registration number 03814168. It has its registered office at Pellipar House, First Floor, 9 Cloak Lane, London EC4R 2RU, United Kingdom. TMF Trustee Limited was incorporated on 21 July 1999. TMF Trustee Limited is a wholly owned subsidiary of TMF Management (UK) Limited, a private limited company registered in England and Wales under registration number 03561975 and its registered office is at Pellipar House, First Floor, 9 Cloak Lane, London EC4R 2RU, United Kingdom.

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The Swap Counterparties

Barclays Bank PLC

Barclays Bank PLC is a public limited company registered in England and Wales under registration number 1026167. The liability of the members of Barclays Bank PLC is limited. Its registered head office is at 1 Churchill Place, London, E14 5HP (telephone number +44(0) 20 7116 1000). Barclays Bank PLC was incorporated on 7 August 1925 under the Colonial Bank Act 1925 and on 4 October 1971 was registered as a company limited by shares under the Companies Act 1948 to 1967. Pursuant to The Barclays Bank Act 1984, on 1 January 1985, Barclays Bank was re-registered as a public limited company and its name was changed from "Barclays Bank International Limited" to "Barclays Bank PLC".

Barclays Bank PLC and its subsidiary undertakings (taken together, the Barclays Group) is a major global financial services provider engaged in retail and commercial banking, credit cards, investment banking, wealth management and investment management services. The whole of the issued ordinary share capital of Barclays Bank PLC is beneficially owned by Barclays PLC, which is the ultimate holding company of the Barclays Group and one of the largest financial services companies in the world by market capitalisation.

The short-term unsecured obligations of Barclays Bank PLC are rated A-1+ by Standard & Poor's, P-1 by Moody's and F1+ by Fitch and the long-term obligations of Barclays Bank PLC are rated AA by Standard & Poor's, Aa1 by Moody's and AA+ by Fitch.

Based on the Barclays Group's audited financial information for the year ending 31 December 2006, the Barclays Group had total assets of £996,503 million (2005: £924,170 million), total net loans and advances1 of £313,226 million (2005: £300,001 million), total deposits2 of £336,316 million (2005: £313,811 million), and total shareholders' equity of £27,106 million (2005: £24,243 million) (including minority interests of £1,685 million (2005: £1,578 million)). The profit before tax of the Barclays Group for the year ending 31 December 2006 was £7,197 million (2005: £5,311 million) after impairment charges on loans and advances and other credit provisions of £2,154 million (2005: £1,571 million). The financial information in this paragraph is extracted from the audited financial statements included in the Annual Report of the Barclays Group for the year ending 31 December 2006.

Raiffeisen Zentralbank Österreich AG

Raiffeisen Zentralbank Österreich Aktiengesellschaft (RZB), founded on 16 August 1927 for an indefinite period, is an Aktiengesellschaft (stock corporation) under Austrian law and registered in the Firmenbuch (companies register) at Handelsgericht Wien (Vienna commercial court) under registration number 58,882t. RZB's registered office and the principal place of business is Am Stadtpark 9, A-1030 Vienna, Republic of Austria. RZB is a "credit institution" within the meaning of section 1 of the Austrian Banking Act (Bankwesengesetz).

RZB is the central institution of the Austrian Raiffeisen Banking Group (Raiffeisen Bankengruppe) which includes RZB and other affiliated companies and undertakings (together, RZB Group), one of the country's largest banking groups. In addition to its role as central institution of the Austrian Raiffeisen Banking Group, RZB is the enterprise at the core of the RZB Group (RZB-Konzern). It is a leading corporate and investment bank in Austria and also considers Central and Eastern Europe (CEE) as its home market. RZB is the only Austrian bank with a global network of business units reaching all important finance centres around the globe. It is also present in Asia via its branches and representative offices.

Via its listed subsidiary Raiffeisen International Bank-Holding AG, RZB operates the largest banking network in CEE. 18 markets are covered by subsidiary banks, finance leasing companies and two 1 Total net loans and advances include balances relating to both bank and customer accounts. 2 Total deposits include deposits from bank and customer accounts.

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representative offices. Approximately 12.5 million customers are attended to through more than 2,900 business outlets.

RZB is one of the leading corporate and investment banks in Austria and also considers CEE as its home market. Through its listed subsidiary Raiffeisen International Bank-Holding AG (Raiffeisen International), RZB operates a network of banking entities and finance leasing companies in 16 of the markets in the CEE region.

The short-term unsecured obligations of RZB are rated A-1 by Standard & Poor's and P-1 by Moody's. The long-term obligations of RZB are rated A+ by Standard & Poor's and Aa2 by Moody's. See also Description of Principal Transaction Documents – The Swap Agreements – Rating Events relating to RZB.

The Consolidated Financial Statements for the 2006 financial year and the comparative figures for the 2005 financial year (each, an RZB Consolidated Financial Statement) were prepared in compliance with the International Financial Reporting Standards (IFRS) published by the International Accounting Standards Board and on the basis of the international accounting standards adopted by the EU in IAS Directive (EC) 1606/2002, inclusive of such interpretations by the International Financial Reporting Interpretations Committee (IFRIC/SIC) as were already applicable. The RZB Consolidated Financial Statements satisfy the requirements of § 245a UGB (Austrian Commercial Code) and § 59a BWG (Austrian Banking Act) regarding exempting consolidated financial statements that comply with internationally accepted accounting principles.

Based on RZB Group's audited financial information for the year ending 31 December 2006, the RZB Group had total assets of €115,629 million (2005: €93,863 million), loans and advances3 of €85,112 million (2005: €69,260 million), total deposits4 of €88,856 million (2005: €75,574 million), and total equity of €6,637 million (2005: €4,950 million) (including minority interests of €1,894 million (2005: €1,430 million)). The profit before tax of the RZB Group for the year ending 31 December 2006 was €1,882 million (2005: €930 million) and €1,286 million when adjusted for one-off effects such as the sale of JSC Raiffeisenbank Ukraine and a 10 per cent. stake in Kazakh Bank TuranAlem and after charging an impairment loss on loans and advances and other credit risk provisions of €346 million (2005: €207 million).

RZB will provide on request, without charge, to each person to whom this Prospectus is delivered, a copy of its 2006 annual report. Requests for the annual report or further financial information should be addressed to: Raiffeisen Zentralbank Österreich AG, Am Stadtpark 9, A-1030 Vienna, Austria, attention: Debt Investor Office or via e-mail to investor@rzb.at.

3 Total net loans and advances include balances relating to both bank and customer accounts. 4 Total deposits include deposits from bank and customer accounts.

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The Custodian – ZAO "Depository Company "REGION"

The ZAO "Depository Company "REGION" is a closed joint stock company organised under the laws of the Russian Federation and it was incorporated in 1999 and registered in the Unified State Register under registration number 1037708002144 on 15 January 2003. The Custodian's registered office is at 11 A Verkhnyaya Krasnoselskaya str., bld. 6, Moscow 107140, Russian Federation.

The charter capital of the Custodian amounts to 100,000,000 Roubles, with 100 per cent. of the shares held by Closed Joint Stock Company ZAO "Investment Company "REGION" incorporated in the REGION Company Group. The REGION Company Group has 10 years' experience of doing business in the Russian securities market.

The Custodian offers its clients depositary services and specialised depositary services in accordance with the legislation of the Russian Federation. The Custodian holds two valid licences issued by the Federal Securities Commission of the Russian Federation, one of which provides for carrying out depositary activities and the other for carrying out specialised depositary activities on the securities market. The Custodian is one of the major non-banking depositaries in the Russian Federation and has more than six years' experience in the depositary business.

The Custodian is a member of the Professional Association of Registrars, Transfer Agents and Depositaries (PARTAD), which is one of the largest self-regulatory associations of professional securities market participants in the Russian Federation. The General Director of the Custodian is a member of the board of directors of PARTAD, thus enabling the Custodian to take an active part in developing the infrastructure of the Russian securities market and the market for collective investments.

The Custodian enjoys the highest PARTAD rating, AAA. The Custodian's depositary business has been insured with "Concord" insurance company under the Bankers Blanket Bond policy, and it is also insured against computer crime and fraud committed by third parties. The Custodian's compliance with the requirements of the Standards of Depositary Activity (elaborated jointly by PARTAD, the National Association of Securities Market Participants (NAUFOR) and the National Securities Association (NFA) and approved by the Federal Securities Commission of the Russian Federation on 19 December 2002) is confirmed by the appropriate certificate issued by PARTAD. Eighty per cent. of the Custodian's employees hold qualification certificates as securities market specialists.

The Custodian has three years experience in providing services for mortgage refinancing programmes for such partners as IFC, OPIC, EBRD, DeltaCredit, Moscow Narodny Bank Limited and the RZB Group. In respect of these projects the Custodian acts as an authorised custodian ensuring the safekeeping of the mortgages and mortgage files, verification thereof for completeness and supervision of compliance with the terms and conditions of the loan agreement concerning the relevant mortgaged properties. As at the date of this Prospectus, the outstanding principal value of the mortgage loans in respect of which the Custodian has custody of the underlying mortgage loan documents is in excess of US$685,000,000.

The Mortgage Loan Documents are kept by the Custodian in custody in a vault certified to be in accordance with the requirements of the CBR.

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TERMS AND CONDITIONS OF THE NOTES

The following is the text of the Conditions of the Notes which (subject to modification) will be endorsed on the certificates issued in respect of the Notes.

The US$159,000,000 Class A Mortgage-Backed Floating Rate Notes Due 2034 (the Class A Notes), the US$16,200,000 Class B Mortgage-Backed Floating Rate Notes Due 2034 (the Class B Notes) and the US$4,484,220 7.00 per cent. Class C Mortgage-Backed Fixed Rate Notes Due 2034 (the Class C Notes, and together with the Class A Notes and the Class B Notes, the Notes) in each case of Moscow Stars B.V. (the Issuer) are constituted by a note trust deed (the Note Trust Deed) to be dated 18 July 2007 or such other date as may be agreed between the Issuer, the Lead Managers and the Note Trustee (the Issue Date) and made between the Issuer and TMF Trustee Limited as trustee for the Noteholders (as defined below) (in such capacity, the Note Trustee).

The security for the Notes will be constituted by an English law deed of charge creating an assignment of the rights of the Issuer under the Secured Transaction Documents, a fixed charge over, inter alia, all of the rights of the Issuer in respect of the International Issuer Accounts and a floating charge over all the assets of the Issuer (other than (a) any and all assets, property or rights which are located in, or governed by the laws of, The Netherlands (except for contractual rights or receivables (rechten of vorderingen op naam), which are to be assigned to the Security Trustee under the Deed of Charge), (b) any Dutch Ineligible Securities, (c) the Issuer's rights under the Corporate Services Agreement and (d) amounts standing to the credit of the Issuer Dutch Account) (the Deed of Charge) and a Russian law pledge agreement (the Pledge Agreement) creating a pledge over the Mortgage Certificates (as defined below), in each case, to be entered into by the Issuer and dated on or before the Issue Date.

Pursuant to an agency agreement (the Agency Agreement) dated on or before the Issue Date and made between the Issuer, BNY Financial Services PLC as Irish paying agent (the Irish Paying Agent), The Bank of New York as principal paying agent (the Principal Paying Agent and, together with the Irish Paying Agent and such additional or other paying agents, if any, appointed from time to time pursuant to the Agency Agreement, the Paying Agents), The Bank of New York (Luxembourg), S.A. as registrar (the Registrar), The Bank of New York as cash manager (the Cash Manager), The Bank of New York as agent bank (the Agent Bank), and the Note Trustee and TMF Trustee Limited as security trustee (the Security Trustee), provision is made for the payment of principal, premium (if any) and interest in respect of the Notes of each Class.

Pursuant to two interest rate hedging agreements (the Swap Agreements) to be dated on or before the Issue Date entered into in each case by the Issuer and the Security Trustee with, respectively, Barclays Bank PLC and Raiffeisen Zentralbank Österreich AG (the Swap Counterparties), the Issuer will hedge its exposure to the risk of fluctuations in USD LIBOR arising under the Class A Notes and the Class B Notes.

The terms Issue Date, Note Trustee, Agency Agreement, Irish Paying Agent, Principal Paying Agent, Paying Agents, Registrar, Cash Manager, Agent Bank, Swap Agreement, Swap Counterparties and Security Trustee are more particularly defined in Condition 1 (Definitions and Interpretation).

1. DEFINITIONS AND INTERPRETATION

1.1. In these Conditions, unless otherwise specified, the following terms have the meanings set opposite them:

Account Interest General Amount means the amount of interest (if any) accrued on and remaining credited to any International Issuer Accounts which are maintained by the International Account Bank during the relevant Collection Period, excluding (if applicable) any Account Interest Sweep Amount corresponding to that Collection Period which has already been credited to the Revenue Ledger and applied under the Pre-Enforcement Revenue Payment Priorities.

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Account Interest Sweep Amount means the amount of interest (if any) accrued on and remaining credited to any International Issuer Accounts which are maintained by the International Account Bank for the period commencing on (and including) the relevant Collection Period End Date and ending on (but excluding) the relevant Note Payment Date, provided that, without prejudice to the entitlement of the Issuer to any such interest accruing, an Account Interest Sweep Amount will not be deemed to arise if the roles of International Account Bank and Cash Manager are not, at the relevant time, performed by the same financial institution.

Accrued Interest means, in relation to any Mortgage Loan on any date, the amount (if any) of accrued interest and other amounts (not being principal) which remain unpaid on such date.

Administrative Parties means the Note Trustee, the Security Trustee, the Collateral Agent, the Cash Manager, the Agents, the International Account Bank, BNY and the Issuer Collection Account Bank.

Affected Party, in relation to a Swap Agreement, has the meaning given to it under such agreement.

Agency Agreement means the agency agreement relating to the Notes dated on or around the Issue Date between the Issuer, the Agents, the Cash Manager, the Note Trustee and the Security Trustee (which expression shall include any other agreement for the time being in force appointing any Successor agent in relation to the Notes, or in connection with any of its duties).

Agent Bank means The Bank of New York, acting through its specified office for such purpose (as described in the Schedule to these Conditions), or any Successor agent bank.

Agent Bank Determination means a determination by the Agent Bank of:

(a) the Floating Rate of Interest relating to each Floating Interest Period; and

(b) the date of each Floating Interest Payment Date.

Agents means the Principal Paying Agent, the Irish Paying Agent, any other Paying Agent, the Registrar and the Agent Bank.

Agent Fees has the meaning given to it in Condition 9.1(e)(i) (Pre-Enforcement Revenue Payment Priorities).

Agent Liabilities has the meaning given to it in Condition 9.1(e)(i) (Pre-Enforcement Revenue Payment Priorities).

Ancillary Rights means, in relation to a Right, all ancillary rights, accretions and supplements to such Right, including any guarantees or indemnities in respect of such Right.

Applicable Margin means:

(a) in the case of the Class A Notes, 1.75 per cent. per annum; and

(b) in the case of the Class B Notes, 5.25 per cent. per annum.

Authorised Signatory means, in relation to any Transaction Party, any person who is duly authorised and in respect of whom a certificate has been provided signed by a director or another duly authorised person of such Transaction Party setting out the name and signature of such person and confirming such person's authority to act.

Available Redemption Funds means, in relation to a Note Payment Date, the Principal Receipts (if any) standing to the credit of the Principal Ledger, as determined on the Cash Flow Determination Date immediately prior to such Note Payment Date.

Back-up Servicer means ZAO Raiffeisenbank Austria, in its capacity as Back-up Servicer under the Back-up Servicing Agreement.

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Back-up Servicer Fees has the meaning given to it in Condition 9.1(e)(v) (Pre-Enforcement Revenue Payment Priorities).

Back-up Servicer Liabilities has the meaning given to it in Condition 9.1(e)(v) (Pre-Enforcement Revenue Payment Priorities).

Back-up Servicing Agreement means the back-up servicing agreement dated on or before the Issue Date between the Issuer, the Originator, the Servicer, the Back-up Servicer, the Cash Manager and the Security Trustee.

Barclays Swap Agreement means the ISDA Master, together with the related schedule, confirmations and, if applicable, Credit Support Annex thereunder, to be entered into on or before the Issue Date between the Issuer, Barclays Bank PLC as Swap Counterparty and the Security Trustee.

Benefit, in respect of any Right held, assigned, conveyed, transferred, charged, sold or disposed of by any person, shall be construed so as to include:

(a) all rights, title, interest and benefit, present and future, actual and contingent (and interests arising in respect thereof) of such person in, to, under and in respect of such Right and all Ancillary Rights in respect of such Right;

(b) all monies and proceeds payable or to become payable under, in respect of, or pursuant to such Right or its Ancillary Rights, and the right to receive payment of such monies and proceeds and all payments made including, in respect of any bank account, all sums of money which may at any time be credited to such bank account together with all interest accruing from time to time on such money and the debts represented by such bank account;

(c) the benefit of all covenants, undertakings, representations, warranties and indemnities in favour of such person contained in or relating to such Right or its Ancillary Rights;

(d) the benefit of all powers of and remedies for enforcing or protecting such person's right, title, interest and benefit in, to, under and in respect of such Right or its Ancillary Rights, including the right to demand, sue for, recover, receive and give receipts for proceeds of and amounts due under or in respect of or relating to such Right or its Ancillary Rights; and

(e) all items expressed to be held on trust for such person under or comprised in any such Right or its Ancillary Rights, all rights to deliver notices and/or take such steps as are required to cause payment to become due and payable in respect of such Right and its Ancillary Rights, all rights of action in respect of any breach of or in connection with any such Right and its Ancillary Rights and all rights to receive damages or obtain other relief in respect of such breach.

BNY means The Bank of New York in its capacity as signatory to the BNY Fee Letter (together with each of its successors and assigns, as applicable from time to time).

BNY Fee Letter means the fee letter dated 9 July 2007 between BNY and the Issuer setting out the fees payable to BNY (for itself and for and on behalf of the Irish Paying Agent and the Registrar) in respect of the role of Principal Paying Agent, Irish Paying Agent, Agent Bank, Cash Manager, Listing Agent and common depositary, in each case, in relation to the Notes and/or any of the Transactions, as applicable.

Breach of Duty means, in relation to any person, a wilful default, fraud, illegal dealing, negligence or material breach of any agreement by such person.

Business Day means a day (other than a Saturday or a Sunday or an official holiday in New York, the United Kingdom or Austria) on which banks are open for general business in New York City, London and Vienna.

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Call Option has the meaning given to it in Condition 8.4 (Clean-up Call).

Cash Flow Determination Date, for the purposes of each Collection Period or any obligation or determination arising by reference to a Collection Period, means the fifth London Business Day prior to the Note Payment Date immediately following the related Collection Period End Date.

Cash Management Agreement means the cash management agreement entered into on or before the Issue Date between the Issuer, the Cash Manager and the Security Trustee.

Cash Management Services means the calculation, cash management services and other administrative services to be provided by the Cash Manager pursuant to and in accordance with the Cash Management Agreement.

Cash Manager means The Bank of New York in its capacity as cash manager under the Cash Management Agreement or any Successor cash manager.

Cash Manager Fees has the meaning given to it in Condition 9.1(e)(ii) (Pre-Enforcement Revenue Payment Priorities).

Cash Manager Liabilities has the meaning given to it in Condition 9.1(e)(ii) (Pre-Enforcement Revenue Payment Priorities).

Class means the Notes of a particular class, being (as the case may be) the Class A Notes, the Class B Notes or the Class C Notes.

Class A Interest Arrears means, in respect of the Class A Notes on any Note Payment Date, any Interest Amount in respect of the Class A Notes which is due but not paid on or before such date.

Class A Noteholders means the holders of the Class A Notes.

Class A PDL means the ledger in the books of the Issuer maintained by the Cash Manager so named.

Class B Interest Arrears means, in respect of the Class B Notes on any Note Payment Date, any Interest Amount in respect of the Class B Notes which is due but not paid on or before such date.

Class B Noteholders means the holders of the Class B Notes.

Class B PDL means the ledger in the books of the Issuer maintained by the Cash Manager so named.

Class C Interest Arrears means, in respect of the Class C Notes on any Note Payment Date, any Interest Amount in respect of the Class C Notes which is due but not paid on or before such date.

Class C Noteholders means the holders of the Class C Notes.

Class C PDL means the ledger in the books of the Issuer maintained by the Cash Manager so named.

Clean-up Call Exercise Notice has the meaning given to it in Condition 8.4 (Clean-up Call).

Clean-up Call Payment Date has the meaning given to it in Condition 8.4 (Clean-up Call).

Clean-up Call Threshold means 10 per cent. of the initial Principal Amount Outstanding of the Notes, as applicable on the Issue Date.

Collateral Agent means TMF Trustee Limited, in its capacity as collateral agent in respect of the Russian Security under the Deed of Charge and the Pledge Agreement.

Collection Period means the period corresponding to each complete calendar month following the Portfolio Cut Off Date.

Collection Period End Date means the last calendar day of each Collection Period.

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Conditions means these terms and conditions.

Corporate Services Agreement means the corporate services agreement entered into by the Issuer with the Managing Director and Stichting on 22 December 2006.

Credit and Liquidity Enhancement Priorities has the meaning given to it in Condition 9.4 (Credit and Liquidity Enhancement Priorities).

Credit Support Annex means a credit support annex entered into by a Swap Counterparty in connection with a Swap Agreement.

Custodian means ZAO "Depository Company REGION", a closed joint stock company organised and existing under the laws of the Russian Federation whose registered office is at 11 A Verkhnyaya Krasnoselskaya str., bld. 6, Moscow 107140, Russian Federation, or such other entity providing custody facilities as from time to time appointed by the Issuer (with the prior written consent of the Collateral Agent) or, after the delivery of an Enforcement Notice or a Security Protection Notice, by the Security Trustee.

Custodian Agreement means the agreement so named dated on or before the Issue Date between the Issuer, the Collateral Agent, the Servicer and the Custodian.

Custodian Fees has the meaning given to it in Condition 9.1(e)(vi) (Pre-Enforcement Revenue Payment Priorities).

Custodian Liabilities has the meaning given to it in Condition 9.1(e)(vi) (Pre-Enforcement Revenue Payment Priorities).

Customer means a borrower under a Mortgage Loan Agreement.

Customer Files means the customer files deposited with the Custodian in relation to the Mortgage Portfolio (containing, inter alia, the original Mortgage Certificates), as such term is more particularly defined in the Custodian Agreement.

Day Count Fraction, for the purposes of the calculation of interest falling due under the Notes or (in the case of Subordinated Loan Scheduled Interest) the Subordinated Loan, means actual/360, pursuant to which such interest will accrue from day to day based on the applicable annual interest rate and the actual number of days elapsed for the relevant period during a year of 360 days.

Deed of Charge means the deed so named dated on or before the Issue Date between the Issuer, the Security Trustee, the Note Trustee (for itself and on behalf of the Noteholders) and the other Secured Parties (other than the Noteholders).

Default means an Event of Default or a Potential Event of Default.

Defaulting Party, in relation to a Swap Agreement, has the meaning given to it under such agreement.

Deferred Interest Arrears means any Class A Interest Arrears, Class B Interest Arrears and Class C Interest Arrears outstanding from time to time.

Distribution Account Agreement means the distribution account agreement dated on or before the Issue Date between the Issuer, the Cash Manager, the International Account Bank and the Security Trustee.

Dollars or US$ means the lawful currency for the time being of the United States of America.

Dutch Ineligible Securities means all securities or interests in securities (a) which are bearer instruments (effecten aan toonder) physically located in The Netherlands or registered shares (aandelen op naam) in a Netherlands corporate entity where the Issuer owns such bearer instruments or registered shares directly and in its own name or (b) the purchase or acquisition of which by or on behalf of the Issuer would cause the breach of applicable selling or transfer

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restrictions or of applicable Dutch laws relating to the offering of securities or of collective investment schemes.

Eligibility Criteria means, in respect of the Mortgage Loans and the Related Security, the eligibility criteria set out in Schedule 8 (Eligibility Criteria) to the Servicing Agreement.

Enforcement Action has the meaning given to it in Condition 13.1 (Discretion and direction of Note Trustee).

Enforcement Notice means the notice delivered by the Security Trustee to the Issuer, with a copy to the other Secured Parties confirming the same, following the occurrence of an Event of Default resulting in the exercise of its rights under Clause 8.7 (Consequences of Enforceable Security) of the Deed of Charge.

Enforcement Procedures means the exercise of rights and remedies against a Customer in respect of such Customer's obligations arising from any Mortgage Loan in relation to which such Customer is in default, pursuant to and in accordance with the applicable Operating Procedures.

Enforcement Services Agreement means the agreement so named dated on or before the Issue Date between the Issuer, the Servicer, the Originator, the Cash Manager and the Security Trustee.

English Law Release and Termination Deed means the English law release and termination deed relating to the Warehouse Documents dated on or before the Issue Date between, inter alios, the Issuer, HSBC Bank plc, Raiffeisen Zentralbank Österreich AG and ZAO Raiffeisenbank Austria as mandated lead arrangers and the Note Trustee.

Entitled Persons has the meaning given to it in Condition 9.1(g) (Pre-Enforcement Revenue Payment Priorities).

Event of Default has the meaning given to it in Condition 12 (Events of Default).

Extraordinary Resolution has the meaning set out in paragraph 1 of Schedule 4 (Provisions for Meetings of Noteholders) of the Note Trust Deed.

Fee Letters means (a) the Lead Managers Fee Letter and (b) the BNY Fee Letter.

Final Discharge Date means the date on which all the Secured Liabilities and all other monies and liabilities owing by the Issuer under the Transaction Documents have been paid or discharged in full, as determined by the Security Trustee in consultation with the other Secured Parties.

Final Maturity Date means the Note Payment Date falling in December 2034.

Fitch means Fitch Ratings Limited or such other entity to which it may transfer the whole of its credit rating business or with which it may consolidate.

Fixed Interest Amounts has the meaning given to it in Condition 6.2 (Fixed Rate of Interest and Fixed Interest Payment Dates).

Fixed Interest Payment Date has the meaning given to it in Condition 6.2 (Fixed Rate of Interest and Fixed Interest Payment Dates).

Fixed Interest Period has the meaning given to it in Condition 6.2 (Fixed Rate of Interest and Fixed Interest Payment Dates).

Fixed Rate of Interest has the meaning given to it in Condition 6.2 (Fixed Rate of Interest and Fixed Interest Payment Dates).

Floating Interest Amounts has the meaning given to it in Condition 6.5 (Determination of Floating Rate of Interest and Floating Interest Amounts).

Floating Interest Payment Date has the meaning given to it in Condition 6.3 (Floating Interest Payment Dates).

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Floating Interest Period has the meaning given to it in Condition 6.3 (Floating Interest Payment Dates).

Floating Rate of Interest has the meaning given to it in Condition 6.4 (Floating Rate of Interest).

Governmental Authority means any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

holder has the meaning given to it in Condition 2.4.

IFSRA means the Irish Financial Services Regulatory Authority, being the competent authority under Directive 2003/71/EC for the purposes of the approval of the Prospectus.

Illegality in relation to a Swap Agreement, has the meaning given to it under such agreement.

Inconvertibility Event in relation to a Swap Agreement, has the meaning given to it under such agreement.

Initial Reserve Fund Required Amount means US$9,882,632.

Insolvency Event, in respect of a company, means:

(a) such company is unable or admits its inability to pay its debts as they fall due (after taking into account any grace period or permitted deferral (failliet)) or suspends making payments on any of its debts; or

(b) the value of the assets of such company is less than the amount of its liabilities, taking into account its contingent and prospective liabilities; or

(c) a moratorium (surséance van betaling) is declared in respect of any indebtedness of such company; or

(d) the commencement of negotiations with one or more creditors of such company with a view to rescheduling any indebtedness of such company other than in connection with any refinancing in the ordinary course of business; or

(f) any corporate action, legal proceedings or other procedure or step is taken in relation to:

(i) the appointment of an Insolvency Official in relation to such company or in relation to the whole or any part of the undertaking or assets of such company, except, in the case of the Issuer, the appointment of an administrative receiver by the Security Trustee; or

(ii) an encumbrancer (excluding, in relation to the Issuer, the Security Trustee or any Receiver) taking possession of the whole or any part of the undertaking or assets of such company not being discharged within 30 days; or

(iii) the making of an arrangement, composition, or compromise (whether by way of voluntary arrangement, scheme of arrangement or otherwise) with any creditor of such company, a reorganisation of such company, a conveyance to or assignment for the creditors of such company generally or the making of an application to a court of competent jurisdiction for protection from the creditors of such company generally other than in connection with any refinancing in the ordinary course of business; or

(iv) any distress, execution, attachment or other process being levied or enforced or imposed upon or against the whole or any part of the undertaking or assets of such company (excluding, in relation to the Issuer, by the Security Trustee or any Receiver) not being discharged within 30 days; or

(e) any procedure or step is taken, or any event occurs, analogous to those set out in paragraphs (a) to (e) above, in any jurisdiction including, where relevant, a Russian Insolvency Event.

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Insolvency Official means, in relation to a company, a liquidator (curator) (except, in the case of the Issuer, a liquidator appointed for the purpose of a merger, reorganisation or amalgamation the terms of which have previously been approved in writing by the Security Trustee), provisional liquidator, administrator (bewindvoerder), administrative receiver, receiver, manager, compulsory or interim manager, nominee, supervisor, trustee, conservator, guardian or other similar officer in respect of such company or in respect of any arrangement, compromise or composition with any creditors or any equivalent or analogous officer under the law of any jurisdiction.

Insurance Policy means any insurance agreement entered into by a Customer in relation to title to and/or loss or damage of the relevant Mortgaged Property and/or the Customer's life, health and disability, pursuant to the provisions of the relevant Mortgage Loan Agreement.

Insurers means the relevant insurance provider in respect of any Insurance Policy.

Interest Amount means, in relation to a Note Payment Date:

(a) in respect of a Note, the aggregate of:

(i) in the case of a Class A Note or a Class B Note, the Floating Interest Amount for any related Floating Interest Period;

(ii) in the case of a Class C Note, the Fixed Interest Amount for any related Fixed Interest Period; and

(iii) (where applicable in the case of such Note Payment Date other than the first Note Payment Date) the amount of any Deferred Interest Arrears in respect of such Note on the preceding Note Payment Date, together with accrued interest on such arrears in accordance with Condition 6.10 (Deferral of Interest Arrears); and

(b) in respect of a Class of Notes, the aggregate amount calculated in accordance with paragraph (a) above in respect of such Class of Notes.

Interest Determination Date, for the purposes of each Agent Bank Determination, means the second Business Day prior to the commencement of the related Floating Interest Period.

Interest Period means (a) a Fixed Interest Period or (b) a Floating Interest Period, as the context may require.

International Account Bank means The Bank of New York in its capacity as international account bank under the Distribution Account Agreement or any Successor international account bank.

International Account Bank Fees has the meaning given to it in Condition 9.1(e)(iii) (Pre-Enforcement Revenue Payment Priorities).

International Account Bank Liabilities has the meaning given to it in Condition 9.1(e)(iii) (Pre-Enforcement Revenue Payment Priorities).

International Issuer Accounts means the Issuer Distribution Account and any other account of the Issuer opened and maintained from time to time outside the Russian Federation (excluding the Issuer Dutch Account).

Irish Paying Agent means BNY Financial Services PLC, acting through its specified office for such purpose (as described in the Schedule to these Conditions), or any Successor Irish paying agent.

ISDA means the International Swaps and Derivatives Association Inc.

ISDA Master means the 1992 Master Agreement (Multicurrency - Cross Border) produced by ISDA.

ISE means the Irish Stock Exchange Limited.

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Issue Date means 18 July 2007 or such other date as may be agreed between the Issuer, the Lead Managers and the Note Trustee.

Issuer means Moscow Stars B.V., a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) incorporated in The Netherlands registered at the Trade Register of the Chamber of Commerce and Industries for Amsterdam under registration number 34261032, whose registered office is at Locatellikade 1, Parnassustoren, 1076 AZ Amsterdam, The Netherlands.

Issuer Accounts means (a) the International Issuer Accounts, (b) the Issuer Collection Account, (c) the Issuer Rouble Administrative Account and (d) any other account of the Issuer opened and maintained from time to time in the Russian Federation.

Issuer Collection Account means the account so named (as further defined in the Master Framework Agreement) and maintained pursuant to the Issuer Collection Account Agreement or such other account or accounts as may, with the prior written consent of the Security Trustee, be designated by the Issuer as such account.

Issuer Collection Account Agreement means the issuer collection account agreement dated on or before the Issue Date between the Issuer, the Issuer Collection Account Bank, the Servicer, the Cash Manager and the Collateral Agent.

Issuer Collection Account Bank means the Originator in its capacity as issuer collection account bank under the Issuer Collection Account Agreement and the Rouble Administrative Account Agreement or any successor bank appointed pursuant to the Issuer Collection Account Agreement.

Issuer Collection Account Bank Fees has the meaning given to it in Condition 9.1(e)(iv) (Pre-Enforcement Revenue Payment Priorities).

Issuer Collection Account Bank Liabilities has the meaning given to it in Condition 9.1(e)(iv) (Pre-Enforcement Revenue Payment Priorities).

Issuer Covenants means the covenants of the Issuer set out respectively in:

(a) Clause 14 (Covenants by the Issuer) of the Note Trust Deed;

(b) Clause 19 (Issuer Covenants) of the Deed of Charge; and

(c) Clause 4.3 (Undertakings) of the Pledge Agreement.

Issuer Distribution Account means the account so named (as further defined in the Master Framework Agreement) and maintained pursuant to the Distribution Account Agreement, or such other account or accounts as may, with the prior written consent of the Security Trustee, be designated by the Issuer as such account.

Issuer Dutch Account means the account so named (as specified in the Master Framework Agreement) and maintained for the purposes of Dutch law and/or such other account or accounts as may, with the prior written consent of the Security Trustee, be designated by the Issuer as such account.

Issuer Jurisdiction means The Netherlands or such other jurisdiction in which the Issuer or any substitute Issuer (as contemplated by Condition 8.3(e) (Optional redemption in whole for Taxation Reasons) is incorporated and/or subject to taxation.

Issuer Rouble Administrative Account means the account so named (as further defined in the Master Framework Agreement) and maintained pursuant to the Rouble Administrative Account Agreement, or such other account or accounts as may, with the prior written consent of the Security Trustee, be designated by the Issuer as such account.

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Late Fees means any interest, penalty or other Revenue Receivable which is due from a Customer on an overdue amount under a Mortgage Loan during a Collection Period.

LCIA Rules means the rules of the London Court of International Arbitration as amended from time to time.

Lead Managers means HSBC Bank plc and Raiffeisen Zentralbank Österreich AG.

Lead Managers Fee Letter means the fee letter described as such dated on or before the Issue Date between the Lead Managers and the Issuer setting out certain underwriting and management fees and expenses payable by the Issuer on the Issue Date.

Lending Criteria means, in respect of the Mortgage Loans and the Related Security, the lending criteria set out in Schedule 9 (Lending Criteria) to the Servicing Agreement.

Liabilities means, in respect of any person, any losses, damages, costs, charges, awards, claims, demands, expenses, judgments, actions, proceedings or other liabilities whatsoever including legal fees and any Taxes and penalties incurred by that person, together with any VAT charged or chargeable in respect of any of the sums referred to in this definition.

Listing Agent means The Bank of New York, in its capacity as listing agent in relation to the Notes.

London Business Day means a day (other than a Saturday or a Sunday or an official holiday in the United Kingdom) on which banks are open for general business in London.

Managing Director means TMF Management B.V., a private company with limited liability incorporated in The Netherlands and registered at the Trade Register of the Chamber of Commerce and Industries for Amsterdam under registration number 33203015.

Master Framework Agreement means the master framework agreement dated on or before the Issue Date between, inter alios, the Issuer, the Note Trustee and the Lead Managers.

Master Purchase Agreement means the master sale and purchase agreement dated 27 December 2006 between the Issuer as purchaser and the Originator as seller, as amended pursuant to the Purchase Amendment Agreements.

Material Adverse Effect means a material adverse effect on:

(a) the business or financial condition of the Issuer, the Originator or the Servicer; or

(b) the ability of the Issuer, the Originator or the Servicer to perform its respective obligations under any Transaction Document; or

(c) the validity or enforceability of any Transaction Document; or

(d) any right or remedy of the Issuer or a Transaction Party in respect of a Transaction Document.

Minimum Amount means 0.01 Dollars.

Monthly Servicer Report means the monthly report so named to be delivered under Paragraph 2 (Monthly Servicer Report), Part 5 (Processing of Information and Reporting) of Schedule 1 (Administrative Services to be Provided by the Servicer) to the Servicing Agreement, being substantially in the form of Schedule 6 (Monthly Servicer Report) to the Servicing Agreement.

Moody's means Moody's Investors Service, Inc. or such other entity to which it may transfer the whole of its credit rating business or with which it may consolidate.

Moscow Business Day means a day (other than a Saturday or a Sunday or an official holiday under the laws of the Russian Federation) on which banks are open for general business in Moscow.

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Mortgage Certificate means each mortgage certificate (zakladnaya) issued in compliance with Russian law requirements issued by a Customer to the Originator in respect of a Mortgage Loan purchased by the Issuer from the Originator pursuant to the Master Purchase Agreement.

Mortgaged Property means the immovable residential properties located in the Russian Federation that, in each case, are owned by the relevant Customer and are described in a related Mortgage Certificate.

Mortgage Loan means a loan made by the Originator to one of its Customers pursuant to a Mortgage Loan Agreement for the purposes of financing or refinancing the acquisition of a Mortgaged Property or the renovation of a Mortgaged Property, which is secured by a Mortgaged Property and evidenced by a Mortgage Certificate.

Mortgage Loan Agreement means any credit agreement executed in Moscow, Russian Federation, between a Customer and the Originator in respect of a Mortgage Loan.

Mortgage Loan Documents has the meaning given to such term in Clause 2 (Undertaking of Safe Custody of Documents) of the Custodian Agreement.

Mortgage Portfolio means, at any time, the portfolio of Mortgage Loans and Related Security evidenced by Mortgage Certificates, including all Receivables derived therefrom, which the Issuer has purchased from the Originator pursuant to the Master Purchase Agreement, to the extent that the Issuer remains the owner of such Mortgage Certificates.

Non-Cash Swap Collateral means any assets delivered or to be delivered by a Swap Counterparty to the Issuer as collateral in the form of eligible securities (excluding, for the avoidance of doubt, any cash collateral), pursuant to and in accordance with the related Swap Agreement.

Non-Conforming Loan means a Mortgage Loan which is in breach of the Lending Criteria or the Eligibility Criteria, where such breach is not capable of remedy, or, if such breach is capable of remedy, is not remedied on or before the 15th day following the Issue Date.

Noteholders has the meaning given to it in Condition 2.4.

Note Certificate has the meaning given to it in Condition 2.3.

Note Documents means:

(a) the Agency Agreement;

(b) the Conditions;

(c) the Note Certificates;

(d) the Prospectus;

(e) the Subscription Agreement;

(f) the Note Trust Deed; and

(g) any other document designated as a Note Document from time to time by the Note Trustee and the Issuer.

Note Payment Date means (a) a Fixed Interest Payment Date or (b) a Floating Interest Payment Date, as the context may require.

Note Principal Payment means:

(a) in the case of each Class A Note, an amount equal to the lesser of any Available Redemption Funds and the Principal Amount Outstanding of the Class A Notes, each determined as at the related Cash Flow Determination Date, divided pro rata between the outstanding Class A Notes in accordance with the Principal Amount Outstanding of each such Class A Note;

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(b) in the case of each Class B Note, an amount equal to the lesser of (i) any Available Redemption Funds (minus the amount to be applied in redemption of the Class A Notes (if any) on such Note Payment Date) and (ii) the Principal Amount Outstanding of the Class B Notes, each determined as at the related Cash Flow Determination Date, divided pro rata between the outstanding Class B Notes in accordance with the Principal Amount Outstanding of each such Class B Note; and

(c) in the case of each Class C Note, an amount equal to the lesser of the Available Redemption Funds (minus the aggregate of the amount to be applied in redemption of the Class A Notes (if any) and the amount to be applied in redemption of the Class B Notes (if any) on such Note Payment Date) and the Principal Amount Outstanding of the Class C Notes, each determined as at the related Cash Flow Determination Date, divided pro rata between the outstanding Class C Notes in accordance with the Principal Amount Outstanding of each such Class C Note,

in any such case rounded down to the nearest Dollar.

Note Trust Deed means the note trust deed constituting the Notes entered into on or before the Issue Date between the Note Trustee and the Issuer.

Note Trustee means TMF Trustee Limited in its capacity as note trustee for the Noteholders or any Successor Note Trustee.

Notional Excess Spread Level, as determined on each Cash Flow Determination Date by reference to the corresponding Note Payment Date, means the amount (if any) by which the credit balance of the Revenue Ledger exceeds the amount required to be applied under paragraphs (a) to (n) (inclusive) of the Pre-Enforcement Revenue Payment Priorities on such Note Payment Date.

NPDt for the purposes of the determination of the Reserve Fund Required Amount on each Cash Flow Determination Date, means the Note Payment Date corresponding to such Cash Flow Determination Date.

Obligations means all of the obligations of the Issuer created by or arising under the Transaction Documents.

Obligor means a borrower under a Mortgage Loan, a Customer or an Insurer.

Official List means the official list of the ISE.

Operating Procedures means the Originator's usual policies, procedures and practices relating to the operation of its residential mortgage loan business, as such polices, procedures and practices may be amended or varied from time to time.

Option means either the Call Option or the Put Option, as the context requires.

Option Exercise Notice means an option exercise notice in the form prescribed under the Servicing Agreement, pursuant to which the Call Option or the Put Option is to be exercised.

Option Price, in relation to any Mortgage Certificate being subject to an exercise of an Option, means the Outstanding Principal Balance of the related Mortgage Loan plus Accrued Interest, in each case, as specified in the relevant Option Exercise Notice.

Originator means Commercial Bank "Moskommertsbank" LLC.

Outstanding Principal Balance means:

(a) in relation to any Mortgage Loan and on any day, the aggregate of:

(i) the original principal amount advanced to any relevant Customer pursuant to the related Mortgage Loan Agreement; plus

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(ii) any other disbursement, legal expense, fee, charge or premium capitalised in respect of such Mortgage Loan; minus

(iii) any repayments of the amounts specified in (i) and (ii) above,

but after completion of any Enforcement Procedures in relation to a Mortgage Loan, the Outstanding Principal Balance of such Mortgage Loan will be deemed to be zero; and

(b) in relation to the Mortgage Portfolio and on any day, the aggregate of the Outstanding Principal Balances in respect of the Mortgage Loans which comprise the Mortgage Portfolio,

in each case, excluding for the avoidance of doubt any Accrued Interest.

PAOt means the aggregate Principal Amount Outstanding of the Notes which will be applicable at the close of NPDt.

Paying Agents means the paying agents named in the Agency Agreement any/or any Successor paying agent.

Payment Priorities means the Pre-Enforcement Payment Priorities and the Post-Enforcement Payment Priorities.

PDL Application Order means the order in which any Principal Losses and Principal Against Revenue Shortfall Reallocations are to be debited from time to time to the Principal Deficiency Ledgers and comprises the following order of applications:

(a) first, up to the Principal Amount Outstanding of the Class C Notes, as a debit entry under the Class C PDL;

(b) secondly, up to the Principal Amount Outstanding of the Class B Notes, as a debit entry under the Class B PDL; and

(c) thirdly, up to the Principal Amount Outstanding of the Class A Notes, as a debit entry under the Class A PDL.

PDL Rectification Order, being the order in which credit entries are to be made under the Principal Deficiency Ledgers as applicable pursuant to the Pre-Enforcement Revenue Payment Priorities, Principal Recoveries or (in the case of (a) and (b) only) any Reserve Fund Principal Drawing, means the following order of priorities:

(a) first, to credit the Class A PDL, up to the amount (if any) necessary to cause the balance of the Class A PDL to be equal to zero;

(b) secondly, to credit the Class B PDL, up to the amount (if any) necessary to cause the balance of the Class B PDL to be equal to zero; and

(c) thirdly, to credit the Class C PDL, up to the amount (if any) necessary to cause the balance of the Class C PDL to be equal to zero.

Permitted Issuer Substitution has the meaning given to it in Condition 8.3(d) (Optional redemption in whole for Taxation Reasons).

Pledge Agreement means the agreement so named dated on or before the Issue Date between the Issuer and the Collateral Agent.

Portfolio Cut Off Date means 30 June 2007.

Post-Enforcement Payment Priorities has the meaning given to it in Condition 9.3 (Post-Enforcement Payment Priorities).

Potential Event of Default means any condition, event or act which, with the lapse of time and/or the issue, making or giving of any notice, certification, declaration, demand, determination and/or

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request and/or the taking of any similar action and/or the fulfilment of any similar condition, would constitute an Event of Default.

Pre-Enforcement Payment Priorities means the Pre-Enforcement Principal Payment Priorities and the Pre-Enforcement Revenue Payment Priorities.

Pre-Enforcement Principal Payment Priorities has the meaning given to it in Condition 9.2 (Pre-Enforcement Principal Payment Priorities).

Pre-Enforcement Revenue Payment Priorities has the meaning given to it in Condition 9.1 (Pre-Enforcement Revenue Payment Priorities).

Principal Against Revenue Shortfall Reallocation, on any Note Payment Date, means an allocation of amounts (if any) standing to the credit of the Principal Ledger, as determined on the Cash Flow Determination Date immediately prior to such Note Payment Date, in or towards the discharge of a Revenue Shortfall applicable on such date under the Pre-Enforcement Revenue Payment Priorities (after the application of any Reserve Fund Revenue Drawing available to be applied towards the discharge of such Revenue Shortfall in accordance with the Credit and Liquidity Enhancement Priorities), which would otherwise be applied towards the redemption of the Notes in accordance with the Pre-Enforcement Principal Payment Priorities, as such term is more particularly defined in the Cash Management Agreement.

Principal Amount Outstanding, in relation to a Note on any date, means its original principal amount less the aggregate amount of all Note Principal Payments in respect of such Note which have been paid since the Issue Date, except if and to the extent that any such payment has been improperly withheld or refused.

Principal Collections means all amounts received in respect of Principal Receivables.

Principal Deficiency Ledgers means the ledgers in the books of the Issuer maintained by the Cash Manager pursuant to the Cash Management Agreement, comprising:

(a) the Class A PDL;

(b) the Class B PDL; and

(c) the Class C PDL.

Principal Ledger means the ledger in the books of the Issuer maintained by the Cash Manager so named.

Principal Loss means a principal amount that remains due and payable but unpaid under a Mortgage Loan (a) 90 days after such principal amount first became overdue or (b) if earlier, after the Servicer, acting reasonably and in good faith, has (i) completed the Enforcement Procedures in relation to such Mortgage Loan and (ii) confirmed that such amount is not recoverable in the Monthly Servicer Report for the Collection Period during which such determination was made by the Servicer.

Principal Paying Agent means The Bank of New York, acting through its specified office in London for such purpose (as described in the Schedule to these Conditions), or any Successor principal paying agent.

Principal Receipts means, in relation to a Collection Period or the Note Payment Date immediately following the related Collection Period End Date (or in the case of (a), in relation to the Issue Date or, in the case of (d) and (f), the relevant date of receipt), the aggregate of:

(a) the portion of the Subscription Proceeds which is to be allocated to discharge in full the Warehouse Principal Obligations;

(b) all Principal Collections;

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(c) all Principal Recoveries;

(d) any Repurchased Pool Principal Amount;

(e) any Revenue Against Principal Reallocation; and

(f) the proceeds from a casualty event or otherwise that are applied in reduction of the Outstanding Principal Balance of a Mortgage Loan (including pursuant to any Insurance Policy).

Principal Receivables means, on any day, the principal payments (whether or not then due) which remain to be paid by the relevant Obligors under the Mortgage Loan Documents, but excludes all Principal Recoveries and any interest which has capitalised under a Mortgage Loan.

Principal Recoveries means the principal payments received in respect of a Mortgage Loan after a Principal Loss in respect of such Mortgage Loan has been recognised by the Servicer in the related Monthly Servicer Report.

Principal Transaction Documents means the Transaction Documents other than:

(a) the Corporate Services Agreement;

(b) the Mortgage Loan Documents; and

(c) any Transaction Document designated as such pursuant to paragraph (u) of the definition of Transaction Documents under this Condition.

Prospectus means the final prospectus dated 16 July 2007 relating to the offering of the Notes.

Purchase Amendment Agreements means the agreements entered into for the amendment of the Master Purchase Agreement, respectively dated (a) 29 December 2006, (b) 14 February 2007 and (c) 28 May 2007.

Put Option means the right of the Issuer to require the Originator to repurchase any Mortgage Certificate acquired by the Issuer which was a Non-Conforming Loan on the Issue Date.

Rated Notes means the Class A Notes and the Class B Notes.

Rated Notes Redemption Date means the first date on which the Rated Notes have been redeemed in full.

Rating Agencies means Moody's and Fitch.

Receivables means the Principal Receivables and the Revenue Receivables.

Receiver means any receiver or administrative receiver appointed in respect of the Issuer by the Security Trustee in accordance with the Deed of Charge.

Redemption Notice has the meaning given to it in Condition 8.3(e) (Optional redemption in whole for Taxation Reasons).

Reference Banks means the principal London office of each of four major banks engaged in the London inter-bank market selected by the Agent Bank, provided that, once a Reference Bank has been selected by the Agent Bank, that Reference Bank shall not be changed unless and until it ceases to be capable of acting as such.

Register has the meaning given to it in Clause 11.1 (a) (Duties of the Registrar) of the Agency Agreement.

Registrar) means The Bank of New York (Luxembourg), S.A. acting through its specified office for such purpose in Luxembourg (as described in the Schedule to these Conditions) or any Successor registrar.

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Regulatory Direction means, in relation to any person, a direction or requirement of any Governmental Authority with whose directions or requirements such person is accustomed to comply.

Related Security means, in respect of each Mortgage Loan, the Insurance Policy and any other Security Interest that relates to the relevant Mortgage Loan, the benefit of which is conferred on the Issuer as the owner of the relevant Mortgage Certificate.

Relevant Date has the meaning given to it in Condition 11 (Prescription).

repay, redeem and pay shall each include both the others, and cognate expressions shall be construed accordingly.

Representative Amount means, in relation to any quotation of a rate for which a Representative Amount is relevant, an amount that is representative for a single transaction in the relevant market at the relevant time.

Repurchased Pool Principal Amount means, in relation to a Mortgage Loan that is repurchased by the Originator (pursuant to the exercise of an Option or otherwise) or by any other person, that part of the relevant purchase price attributable to the Outstanding Principal Balance of such Mortgage Loan, as distinct from Accrued Interest under such Mortgage Loan (or if such purchase price is not determined by reference to such Outstanding Principal Balance and Accrued Interest or similar, the full amount of that purchase price).

Repurchased Pool Revenue Amount means, in relation to a Mortgage Loan that is repurchased by the Originator (pursuant to the exercise of an Option or otherwise) or by any other person, that part (if any) of the relevant purchase price attributable to Accrued Interest under such Mortgage Loan.

Requirement of Law, in respect of any person, shall mean:

(a) any law, treaty, rule, requirement or regulation;

(b) a notice by, or an order of, any court having jurisdiction;

(c) a mandatory requirement of any regulatory authority having jurisdiction; or

(d) a determination of an arbitrator or Governmental Authority,

in each case, applicable to or binding upon that person or to which that person is subject or with which it is customary for it to comply.

Reserve Fund means the credit balance (if any) from time to time of the Reserve Fund Ledger.

Reserve Fund Base Case Amount or RFBCAt, as determined on each Cash Flow Determination Date, is to be calculated as follows:

t1-tt RFRA RFOA and

2IPAO PAO whenIRFA ≥

≥

RFBCAt = t1-ttt

tt1-t RFRA RFOA and

2IPAO PAO whenRFfloor ,

PAOBRARRFBCA Max ≥

<

+−× 1

RFBCAt-1 when RFOAt-1 < RFRAt

where:

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RFRAt means the Reserve Fund Required Amount on NPDt;

IRFA means the Initial Reserve Fund Required Amount;

NPDt has the meaning given to it in this Condition 1.1;

RFOAt-1 means the Reserve Fund Outstanding Amount (if any) at the close of NPDt-1;

PAOt means the aggregate Principal Amount Outstanding of the Notes which will be applicable at the close of NPDt;

IPAO means the initial Principal Amount Outstanding of the Notes, as applicable on the Issue Date;

ARt means the aggregate Principal Receipts (if any) to be applied towards the redemption of the Class A Notes on NPDt;

BRt means the aggregate Principal Receipts (if any) to be applied towards the redemption of the Class B Notes on NPDt; and

RFfloor means US$2,695,263, being the minimum amount at which the Reserve Fund Required Amount will be set prior to the Rated Notes Redemption Date (such amount being equal to 1.50 per cent. of IPAO).

Reserve Fund Drawing means (a) a Reserve Fund Revenue Drawing or (b) a Reserve Fund Principal Drawing.

Reserve Fund Ledger means the ledger in the books of the Issuer maintained by the Cash Manager so named.

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Reserve Fund Multiplication Factor or RFMFt, as determined on each Cash Flow Determination Date by reference to the corresponding Note Payment Date, is to be calculated as follows:

1, when PAOAt + PAOBt > 0 and

tPAO 121 1.0% NESL ×

×≥

RFMFt = 2, when PAOAt + PAOBt > 0 and

tPAO 121 1.0% NESL ×

×<

0, when PAOAt + PAOBt = 0

where:

NPDt has the meaning given to it under this Condition 1.1;

NESL means the Notional Excess Spread Level on NPDt;

RFMFt has the meaning given to it above;

PAOAt means the aggregate Principal Amount Outstanding of the Class A Notes which will be applicable at the close of NPDt;

PAOBt means the aggregate Principal Amount Outstanding of the Class B Notes which will be applicable at the close of NPDt; and

PAOt has the meaning given to it under this Condition 1.1.

Reserve Fund Principal Drawing means a drawing from the Reserve Fund which is to be applied in or towards the discharge of any debit balance on the Class A PDL and/or the Class B PDL (as applicable), pursuant to and in accordance with the Cash Management Agreement.

Reserve Fund Reimbursement Amount has the meaning given to it in Condition 9.6(a) (Reserve Fund Reimbursement Amounts).

Reserve Fund Required Amount, as determined on each Cash Flow Determination Date by reference to the corresponding Note Payment Date, is equal to the product of (a) the Reserve Fund Base Case Amount and (b) the Reserve Fund Multiplication Factor, in each case, as applicable on such date.

Reserve Fund Revenue Drawing means a drawing from the Reserve Fund which is to be applied in or towards the discharge of a Revenue Shortfall, pursuant to and in accordance with the Cash Management Agreement.

Revenue Against Principal Reallocation, on any Note Payment Date, means any reallocation of amounts standing to the credit of the Revenue Ledger to the Principal Ledger and one or more Principal Deficiency Ledgers, pursuant to and in accordance with the Pre-Enforcement Revenue Payment Priorities.

Revenue Collections means all amounts received in respect of Revenue Receivables.

Revenue Ledger means the ledger in the books of the Issuer so named maintained by the Cash Manager.

Revenue Loss means an amount of interest that remains due and payable but unpaid under a Mortgage Loan after the Servicer, acting reasonably and in good faith, has (a) completed the

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Enforcement Procedures in relation to such Mortgage Loan and (b) confirmed the occurrence of such Revenue Loss in a Monthly Servicer Report in respect of the Collection Period during which such Revenue Loss was recognised.

Revenue Receipts means, in relation to a Collection Period or the Note Payment Date immediately following the related Collection Period End Date (or in the case of (a) and (b), in relation to the Issue Date, or, in the case of (e), (i) and (l), the relevant date of receipt), the aggregate of:

(a) the portion of the Subscription Proceeds which is to be allocated to discharge in full the Warehouse Revenue Obligations;

(b) the proceeds of the Subordinated Loan;

(c) all Revenue Collections;

(d) all Revenue Recoveries;

(e) all amounts received by the Issuer under the Swap Agreements on such Note Payment Date in exchange for amounts debited to the Revenue Ledger on such Note Payment Date in respect of such agreements and any other amounts which are payable to the Issuer pursuant to any Credit Support Annex in relation to a termination of the related Swap Agreement;

(f) the amount of any Reserve Fund Revenue Drawing to be made on the Note Payment Date following such Calculation Period;

(g) any Account Interest General Amount applicable on such Note Payment Date;

(h) any Account Interest Sweep Amount applicable on such Note Payment Date;

(i) any Repurchased Pool Revenue Amount;

(j) any Principal Against Revenue Shortfall Reallocation;

(k) any amount transferred from the Principal Ledger to the Revenue Ledger pursuant to paragraph (e) of the Pre-Enforcement Principal Payment Priorities; and

(l) all other amounts in the nature of revenue received by or on behalf of the Issuer during such Collection Period or (prior to the application to be made under the Pre-Enforcement Revenue Payment Priorities) on such Note Payment Date.

Revenue Receivables means all payments (whether or not then due) which remain to be paid by the relevant Obligor under the Mortgage Loan Documents for a Mortgage Loan, other than Principal Receivables, Principal Recoveries, and Revenue Recoveries as well as any Late Fees.

Revenue Recoveries means, on any date, an amount (other than any principal payment) received in respect of a Mortgage Loan after a Revenue Loss has been determined in respect of such Mortgage Loan.

Revenue Shortfall, for the purposes of any Reserve Fund Revenue Drawing, means a shortfall in the Revenue Receipts standing to the credit of the Revenue Ledger on a Note Payment Date (excluding, for the avoidance of doubt, any Reserve Fund Revenue Drawing and/or Principal Against Revenue Shortfall Reallocation to be effected on such date), as necessary to discharge paragraphs (a) to (i) (inclusive) of the Pre-Enforcement Revenue Payment Priorities on such date (excluding any amounts required to be transferred to the Principal Ledger and the Class A PDL under paragraph (h) thereunder).

Right means any asset, agreement, property or right.

Rouble Administrative Account Agreement means the Rouble administrative account agreement dated on or before the Issue Date between the Issuer, the Issuer Collection Account Bank, the Servicer, the Cash Manager and the Collateral Agent.

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Russian Insolvency Event means any event which has occurred with respect to the Originator, the Servicer, the Back-up Servicer or a Successor Servicer (in this definition, an applicable Russian entity) which, under the applicable laws of the Russian Federation, has an analogous effect to an Insolvency Event, including, for the avoidance of doubt and without prejudice to the same:

(a) implementation of bankruptcy prevention measures, including but not limited to financial recovery measures and/or reorganisation of an applicable Russian entity; or

(b) the appointment of a liquidation commission (likvidatsionnaya komissiya) or similar officer of an applicable Russian entity; or

(c) its seeking, consenting to, or acquiescing in the introduction of, the proceedings for its liquidation or bankruptcy or the appointment of a liquidation commission (likvidatsionnaya komissiya) or similar officer of an applicable Russian entity; or

(d) the presentation or filing of a petition in respect of the Originator and/or the Servicer in any court, arbitrazh court or before any agency alleging or for the bankruptcy, insolvency, dissolution, liquidation (or any analogous proceeding) of an applicable Russian entity; or

(e) the institution of the liquidation procedure (konkursnoye proizvodstvo) in relation to the Originator and/or the Servicer and/or the appointment of a liquidation manager (konkursniy upravlayushiy) or similar officer of an applicable Russian entity; or

(f) any extra-judicial winding-up, liquidation or analogous act by any legislative, governmental, regulatory or supervisory body in or of the Russian Federation with respect to an applicable Russian entity; or

(g) (i) the establishment by the CBR or any legislative, judicial, governmental, regulatory or supervisory body in or of the Russian Federation of temporary administration proceedings (vremennaya administratsiya) (or any analogous proceedings) with respect to an applicable Russian entity or (ii) the suspension or revocation by the CBR or any legislative, judicial, governmental, regulatory or supervisory body in or of the Russian Federation of the banking licence of an applicable Russian entity; or

(h) (i) the establishment by the CBR or any legislative, judicial, governmental, regulatory or supervisory body in or of the Russian Federation of prohibitions or limitations on the ability of an applicable Russian entity to conduct any of the banking operations contained in its banking licence or (ii) the introduction by the CBR or any legislative, judicial, governmental, regulatory or supervisory body in or of the Russian Federation of any restrictions on the ability of an applicable Russian entity to perform its obligations under any transaction or (iii) the requirement of the CBR or any legislative, judicial, governmental, regulatory or supervisory body in or of the Russian Federation that an applicable Russian entity take any measures for its financial rehabilitation, including, but not limited to, a change in the structure of the Mortgage Loans or the whole or partial replacement of the management or reorganisation of an applicable Russian entity; or

(i) any announcement by the CBR or any legislative, judicial, governmental, regulatory or supervisory body in or of the Russian Federation of its intention to take any steps or of any steps taken in relation to any of the measures specified in paragraphs (f), (g) and (h) above with respect to an applicable Russian entity; or

(j) any act of intervention or analogous act by any legislative, judicial, governmental, regulatory or supervisory body in or of the Russian Federation in the conduct of the operation, affairs or business of an applicable Russian entity; or

(k) the occurrence of any event with respect to an applicable Russian entity which, under the applicable laws of the Russian Federation (as the same may be changed or amended), has an analogous effect to any of the events specified in paragraphs (a) to (j) above.

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Russian Law Release and Termination Agreement means the Russian law release and termination agreement relating to the Warehouse Documents dated on or before the Issue Date between, inter alios, the Issuer, HSBC Bank plc, Raiffeisen Zentralbank Österreich AG and ZAO Raiffeisenbank Austria as mandated lead arrangers and the Note Trustee.

Russian Security means (a) the Security Interests created pursuant to the Pledge Agreement and (b) any other Security Interests created from time to time under Russian law in respect of any assets of the Issuer in favour of the Secured Parties or any of them.

RZB Swap Agreement means the ISDA Master together with the related schedule, confirmations and, if applicable, Credit Support Annex thereunder, to be entered into on or before the Issue Date between the Issuer, Raiffeisen Zentralbank Österreich AG as Swap Counterparty and the Security Trustee.

Screen means, in relation to Dollars, the display designated as the British Bankers Association's Interest Settlement Rate as quoted on the relevant Bloomberg Screen page which, at the Issue Date, is "BBAM<GO>" or (a) such other page as may replace the relevant Bloomberg Screen "BBAM<GO>" on that service for the purpose of displaying such information or (b) if that service ceases to display such information, such page as displays such information on such service (or, if more than one, that one previously approved in writing by the Note Trustee) as may replace such screen.

Secured Assets means all the property of the Issuer which is subject to the Security.

Secured Liabilities means the aggregate of all monies and Liabilities which from time to time are or may become due, owing or payable by the Issuer to each, some or any of the Secured Parties (as the case may be) under the Transaction Documents.

Secured Parties means (subject always to the provisions of Clause 21 (No Enforcement and Limited Recourse) of the Deed of Charge and the equivalent provisions in the other Transaction Documents), the Administrative Parties, any Receiver appointed, the Noteholders, the Swap Counterparties, the Servicer (including any Successor Servicer), the Back-up Servicer, the Managing Director, the Subordinated Loan Provider and the Custodian.

Secured Transaction Documents means the Principal Transaction Documents (other than the Note Documents) and any Transaction Document designated as such pursuant to paragraph (u) of the definition of Transaction Documents under this Condition.

Security means the security created in favour of the Security Trustee and/or the Collateral Agent pursuant to the Security Documents.

Security Documents means:

(a) the Pledge Agreement;

(b) the Deed of Charge; and

(c) any other document designated in writing as a Security Document by the Security Trustee and the Issuer.

Security Interest means any mortgage, pledge, lien, charge, assignment, hypothecation or security interest, or any other agreement or arrangement having a similar effect.

Security Trustee means TMF Trustee Limited in its capacity as security trustee for the Noteholders and the other Secured Parties under the Deed of Charge or any Successor Security Trustee, provided that any reference in these Conditions to the Security Trustee in connection with the Russian Security is to be construed to mean the Security Trustee in its capacity as the Collateral Agent.

Senior Outstanding Class means:

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164

(a) the Class A Notes whilst any amount of principal remains outstanding under the Class A Notes; or

(b) if the Class A Notes have been discharged in full, the Class B Notes whilst any amount of principal remains outstanding under the Class B Notes; or

(c) if the Class A Notes and the Class B Notes have been discharged in full, the Class C Notes.

Servicer means the Originator in its capacity as servicer in accordance with the terms of the Services Agreements.

Servicer Expenses has the meaning given to it in Condition 9.1(e)(i) (Pre-Enforcement Revenue Payment Priorities).

Servicer Fees means the fees payable by the Issuer to the Servicer from time to time pursuant to Clause 14 (Servicer Fees) of the Servicing Agreement and Clause 6 (Servicer Fees) of the Enforcement Services Agreement.

Services Agreements means the Servicing Agreement and the Enforcement Services Agreement.

Servicing Agreement means the agreement so named dated on or before the Issue Date between the Issuer, the Servicer, the Originator, the Cash Manager and the Security Trustee.

State Duty Overdraft means the overdraft facility granted by the Originator to the Issuer in respect of the Issuer Rouble Administrative Account pursuant to the Rouble Administrative Account Agreement.

Stichting means Stichting Moscow Stars.

Subordinated Expenses Advance means the advance to be provided by the Subordinated Loan Provider on or before the Issue Date in the amount of any Transaction Closing Expenses.

Subordinated Loan means the loan or loans made or to be made to the Issuer under the Subordinated Loan Agreement, being (as the case may be) (a) the Subordinated Expenses Advance and (b) the Subordinated Reserve Advance.

Subordinated Loan Additional Interest means any variable interest accruing and becoming due and payable on any Note Payment Date under the Subordinated Loan Agreement, such amounts being determined by reference to the credit balance (if any) remaining on the Revenue Ledger after the discharge in full of all other amounts required to be discharged on such Note Payment Date under the Pre-Enforcement Revenue Payment Priorities.

Subordinated Loan Agreement means the agreement so named dated on or before the Issue Date between the Issuer, the Subordinated Loan Provider and the Security Trustee.

Subordinated Loan Capitalised Outstandings means the aggregate amount of all Subordinated Loan Scheduled Interest and Subordinated Loan Additional Interest which has capitalised, as adjusted by deducting the pro rata share of any principal repayment or prepayment of the Subordinated Loan corresponding to such capitalised amounts, in each case, as applicable from time to time.

Subordinated Loan Provider means the Originator in its capacity as provider of the Subordinated Loan.

Subordinated Loan Scheduled Interest means any scheduled interest accruing (in accordance with the Day Count Fraction) and remaining due and payable as interest under the Subordinated Loan Agreement, such interest to accrue at the Subordinated Loan Scheduled Interest Rate.

Subordinated Loan Scheduled Interest Rate means 8.00 per cent. per annum.

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Subordinated Reserve Advance means the advance to be provided by the Subordinated Loan Provider on or before the Issue Date in the amount of the Initial Reserve Fund Required Amount, such advance to be credited to the Reserve Fund Ledger.

Subscription Agreement means the subscription agreement relating to the Notes entered into on or before the date of the Prospectus between the Issuer, the Lead Managers and the Originator.

Subscription Proceeds means the subscription proceeds of the Notes to be received by the Issuer on the Issue Date.

Successor means in relation to the Agent Bank, the Principal Paying Agent, the other Paying Agents, the Reference Banks or the Registrar, any successor to any one or more of them in relation to the Notes of the relevant series which shall become such pursuant to the provisions of the Note Trust Deed and/or the Agency Agreement (as the case may be) and/or such other or further agent bank, principal paying agent, paying agents, reference banks and registrar (as the case may be) in relation to such Notes as may (with the prior approval of, and on terms previously approved by, the Note Trustee in writing) from time to time be appointed as such and/or, if applicable, such other or further specified offices (in the former case being within the same place as those for which they are substituted) as may from time to time be nominated, in each case by the Issuer, and (except in the case of the initial appointments and specified offices made under and specified in the Schedule to these Conditions and the Agency Agreement) notice of whose appointment or, as the case may be, nomination has been given to the relevant Noteholders pursuant to Clause 14(m) (Covenants by the Issuer) of the Note Trust Deed, in accordance with Condition 17 (Notice to Noteholders).

Successor Cash Manager means any successor cash manager appointed pursuant to the Cash Management Agreement.

Successor International Account Bank means any successor international account bank appointed pursuant to the Distribution Account Agreement.

Successor Note Trustee means any successor note trustee appointed pursuant to the Note Trust Deed.

Successor Security Trustee means any successor security trustee appointed pursuant to the Deed of Charge.

Successor Servicer means the Back-up Servicer following its assumption of the role of Successor Servicer pursuant to the Back-up Servicing Agreement or any other entity identified in accordance with the Servicing Agreement and appointed in accordance with the Servicing Agreement to perform the administrative services and/or the enforcement services required to be performed under the Services Agreements.

Swap Agreements means the Barclays Swap Agreement and the RZB Swap Agreement (or, in each case, any replacement of such agreement).

Swap Collateral Ledger means (if applicable) the ledger in the books of the Issuer maintained by the Cash Manager so named.

Swap Collateral Return Payment means any amount of cash from the Swap Collateral Ledger or any amount of Non-Cash Swap Collateral, in each case, required to be transferred to either Swap Counterparty, pursuant to and in accordance with the applicable Credit Support Annex.

Swap Counterparties means Barclays Bank PLC and Raiffeisen Zentralbank Österreich AG, or any of their successors or assigns under a Swap Agreement.

Swap Event of Default, in relation to a Swap Agreement, means an Event of Default, as defined under such agreement.

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Swap Excluded Termination Payment means an amount due for payment by the Issuer under a Swap Agreement to a Swap Counterparty as a result of the termination of a Swap Agreement following a Swap Event of Default or Termination Event (other than a Swap Tax Event, Illegality or Inconvertibility Event) in respect of which the relevant Swap Counterparty is the Defaulting Party or the sole Affected Party.

Swap Tax Event, in relation to a Swap Agreement, means a Tax Event, as defined under such agreement.

Tax shall be construed so as to include any present or future tax, levy, impost, duty, charge, fee, deduction or withholding of any nature whatsoever (including any penalty or interest payable in connection with any failure to pay or any delay in paying any of the same, but excluding taxes on net income) imposed or levied by or on behalf of any Tax Authority in The Netherlands or the Russian Federation, and Taxes, taxation, taxable and comparable expressions shall be construed accordingly.

Tax Authority means any government, state, municipal, local, federal or other fiscal, revenue, customs or excise authority, body or official anywhere in the world.

Tax Deduction means any deduction or withholding on account of Tax.

Tax Event has the meaning given to it in Condition 8.3 (Optional redemption in whole for Taxation Reasons).

Termination Event, in relation to a Swap Agreement, has the meaning given to it under such agreement.

Transaction means each or any of the transactions contemplated by the Transaction Documents, as the context may require.

Transaction Closing Expenses means the outstanding fees, costs and other expenses (including any outstanding advisers' fees relating to the Transaction) to be discharged by the Issuer on the Issue Date, as agreed among the Issuer, the Lead Managers, the Cash Manager and the Note Trustee.

Transaction Documents means:

(a) the Back-up Servicing Agreement;

(b) the Cash Management Agreement;

(c) the Corporate Services Agreement;

(d) the Custodian Agreement;

(e) the Distribution Account Agreement;

(f) the Enforcement Services Agreement;

(g) the English Law Release and Termination Deed;

(h) the Fee Letters;

(i) the Issuer Collection Account Agreement;

(j) the Master Framework Agreement;

(k) the Master Purchase Agreement;

(l) the Mortgage Loan Documents;

(m) the Note Documents;

(n) the Purchase Amendment Agreements;

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167

(o) the Rouble Administrative Account Agreement;

(p) the Russian Law Release and Termination Agreement;

(q) the Security Documents;

(r) the Servicing Agreement;

(s) the Subordinated Loan Agreement;

(t) the Swap Agreements; and

(u) any other document designated as a Transaction Document by the Security Trustee and the Issuer.

Transaction Party means any person who is a party to a Transaction Document (excluding Stichting and any Noteholder), and Transaction Parties means some or all of them, as the context requires.

Trust Documents means the Note Trust Deed and the Deed of Charge and (unless the context requires otherwise) includes any deed or other document executed in accordance with the provisions of the Note Trust Deed or (as applicable) the Deed of Charge and expressed to be supplemental to the Note Trust Deed or the Deed of Charge (as applicable).

Trustee Liabilities has the meaning given to it in Condition 9.1(b) (Pre-Enforcement Revenue Payment Priorities).

USD LIBOR means, in relation to an Interest Determination Date (or in the case of (c) below, the first day of the relevant Floating Interest Period):

(a) the offered quotations for Dollar deposits for the relevant Floating Interest Period in the London interbank market by reference to the Screen as at or about 11.00 a.m. (London time) on that date; or

(b) if such quotations are unavailable, and at least two of the Reference Banks provide an equivalent quotation (being the rate at which such Reference Bank was offering to prime banks in the London interbank market deposits for a Representative Amount in Dollars for such period at or about 11.00 a.m. (London time) on that date), the arithmetic mean (rounded if necessary to the fifth decimal place, with 0.000005 being rounded upwards) as established by the Agent Bank of such quotations from the Reference Banks; or

(c) if fewer than two rates are provided by the Reference Banks as requested, the arithmetic mean (rounded if necessary to the fifth decimal place, with 0.000005 being rounded upwards) of the rates quoted by major banks in New York City, selected by the Agent Bank, at approximately 11.00 a.m. (New York time) on the first day of the relevant Floating Interest Period for loans in Dollars to leading European banks for a period of one month commencing on the first day of such Floating Interest Period and for a Representative Amount; or

(d) if a determination of such rate is not possible in accordance with any of the above provisions, the rate (if any) applicable on the Interest Determination Date prior to the Interest Determination Date for which such rate is required.

VAT means value added tax and any other tax of a similar fiscal nature (instead of or in addition to value added tax) imposed in any relevant jurisdiction.

Warehouse Documents means the financing, security and related documentation entered into by the Issuer on or around 22 and 27 December 2006 for the purposes of the financing and acquisition of the Mortgage Portfolio and each amendment, restatement, supplement or other variation thereto entered into prior to the Issue Date.

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Warehouse Facility means the loan facility provided to the Issuer pursuant to the relevant Warehouse Documents for the acquisition of the Mortgage Portfolio by ZAO Raiffeisenbank Austria, Raiffeisen Zentralbank Österreich AG and HSBC Bank plc as lenders.

Warehouse Principal Obligations means the principal amount outstanding under the Warehouse Facility, as applicable on the Issue Date immediately prior to the issuance of the Notes.

Warehouse Revenue Obligations means the Issuer's outstanding obligations under the Warehouse Documents, as applicable on the Issue Date immediately prior to the issuance of the Notes, other than Warehouse Principal Obligations.

1.2. The statements in these Conditions include summaries of, and are subject to, the detailed provisions of the Note Trust Deed, the Deed of Charge, the Cash Management Agreement and the Master Framework Agreement.

1.3. Capitalised terms not otherwise defined in these Conditions shall bear the meanings given to them in the Master Framework Agreement available as described above. These Conditions shall be construed in accordance with the principles of construction set out in the Master Framework Agreement.

1.4. Copies of the Note Trust Deed, the Deed of Charge, the Pledge Agreement, the Agency Agreement, the Master Framework Agreement and the other Transaction Documents are available for inspection during normal business hours at the specified office for the time being of each of the Paying Agents (as described in the Schedule to these Conditions). The Noteholders are entitled to the benefit of, are bound by, and are deemed to have notice of, all the provisions of the Transaction Documents applicable to them.

2. FORM, DENOMINATION AND TITLE

2.1. Each Class of the Notes (which will be in the denomination of US$100,000 each or in US$1.00 increments above such amount) will be in registered form in the aggregate principal amount on the Issue Date of:

(a) US$159,000,000 for the Class A Notes;

(b) US$16,200,000 for the Class B Notes; and

(c) US$4,484,220 for the Class C Notes.

2.2. The Notes are not issuable in bearer form.

2.3. Note certificates (each, a Note Certificate will be issued to each Noteholder in respect of its registered holding of Notes. Each Note Certificate will be numbered serially with an identifying number which will be recorded on the relevant Note Certificate and in the register of Noteholders which the Issuer will procure to be kept by the Registrar.

2.4. Title to the Notes passes only by registration in the Register. The holder of any Note will (except as otherwise required by law) be treated as its absolute owner for all purposes (whether or not it is overdue and regardless of any notice of ownership, trust or any interest in or any writing on, or the theft or loss of, the related Note Certificate issued in respect of it) and no person will be liable for so treating the holder. In these Conditions, Noteholder and (in relation to a Note) holder means the person in whose name a Note is registered in the Register.

3. TRANSFERS OF NOTES AND ISSUE OF CERTIFICATES

3.1. Solely for the purposes of this Condition 3, business day shall mean a day on which banks are open for business in the city in which the specified office of the Agent with whom a Note Certificate is deposited in connection with a transfer is located (as described in the Schedule to these Conditions).

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3.2. A Note may be transferred by depositing the Note Certificate issued in respect of that Note, with the form of transfer on the back duly completed and signed, at the specified office of an Agent (as described in the Schedule to these Conditions).

3.3. Each new Note Certificate to be issued upon transfer of Notes will, within five business days of receipt by the relevant Agent of the duly completed form of transfer endorsed on the relevant Note Certificate, be mailed by uninsured mail at the risk of the holder entitled to the Note to the address specified in the form of transfer.

3.4. Where some but not all of the Notes in respect of which a Note Certificate is issued are to be transferred, a new Note Certificate in respect of the Notes not so transferred will, within five business days of receipt by the relevant Agent of the original Note Certificate, be mailed by uninsured mail at the risk of the holder of the Notes not so transferred to the address of such holder appearing in the Register or as specified in the form of transfer.

3.5. Registration of transfer of Notes will be effected without charge by or on behalf of the Issuer but upon payment (or the giving of such indemnity as the Issuer or any Agent may reasonably require) in respect of any tax or other governmental charges which may be imposed in relation to such transfer.

3.6. No Noteholder may require the transfer of a Note to be registered during the period of 15 days ending on the due date for any payment of principal, premium or interest on that Note.

3.7. All transfers of Notes and entries in the Register will be made subject to the detailed regulations concerning the transfer of Notes in Schedule 3 (Register and Transfer of Notes) of the Note Trust Deed. The regulations may be changed by the Issuer with the prior written approval of the Note Trustee (in consultation with the Registrar). A copy of the current regulations will be mailed (free of charge) by the Registrar to any Noteholder who requests one.

4. STATUS AND RANKING

4.1. Status and relationship between the Notes

(a) The Class A Notes constitute direct, secured and unconditional obligations of the Issuer. The Class A Notes rank pari passu without preference or priority amongst themselves.

(b) The Class B Notes constitute direct, secured and unconditional obligations of the Issuer. The Class B Notes rank pari passu without preference or priority amongst themselves but junior to the Class A Notes as provided in these Conditions and the Transaction Documents.

(c) The Class C Notes constitute direct, secured and unconditional obligations of the Issuer. The Class C Notes rank pari passu without preference or priority amongst themselves but junior to the Class A Notes and the Class B Notes as provided in these Conditions and the Transaction Documents.

4.2. Security

(a) The security constituted by (i) the Deed of Charge is granted to the Security Trustee, on trust for itself, and as trustee for the Noteholders and the other Secured Parties and (ii) the Pledge Agreement is granted to the Collateral Agent of the Noteholders and the other Secured Parties, upon and subject to the terms and conditions of the Deed of Charge.

(b) Pursuant to the Deed of Charge, for the purposes of the Security Documents and the other Transaction Documents, the relationship between each Secured Party (other than the Collateral Agent) and the Collateral Agent shall constitute that of principal and agent and the agency so constituted shall be deemed to be a "contract of agency" which is governed by and subject to the Deed of Charge and the Master Framework Agreement.

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(c) Pursuant to the Master Framework Agreement, each Secured Party has or, as the case may be, will, irrevocably authorise the Collateral Agent to:

(i) perform the duties and exercise the rights, powers and discretions that are specifically given to it under the Transaction Documents, together with any incidental rights, powers and discretions; and

(ii) execute each Security Document on its behalf.

(d) Pursuant to the Master Framework Agreement, each Secured Party must promptly provide the Collateral Agent with a duly issued power of attorney authorising the Collateral Agent to act on its behalf if so required by the Collateral Agent.

(e) Pursuant to the Master Framework Agreement, the Secured Parties will share in the benefit of the security constituted by the Deed of Charge, the Pledge Agreement and any other Security Document, upon and subject to the terms and conditions of such Security Documents and in accordance with the Post-Enforcement Payment Priorities.

(f) By its subscription for, or acquisition of, any Note, each Noteholder, in its capacity as a Secured Party, is deemed to make the appointment of the Collateral Agent referred to in paragraph (c) of this Condition 4.2 and acknowledges and agrees to be bound by the foregoing provisions of this Condition 4.2.

5. ISSUER COVENANTS

(a) The Issuer Covenants are covenants given by the Issuer in favour of the Note Trustee, the Security Trustee and the Collateral Agent, as applicable, the provision of such covenants being confirmed under this paragraph (a) and the Master Framework Agreement. The Issuer Covenants, among other things, restrict the ability of the Issuer to create or incur any indebtedness, dispose of assets or change the nature of its business, other than in accordance with the Issuer Covenants. So long as any Note remains outstanding, the Issuer shall comply with the Issuer Covenants.

(b) The Issuer will provide the Paying Agents with copies of each Cash Management Report and any document required to be made available to the Noteholders under the Transaction Documents, which will be available for collection during normal business hours at the specified office for the time being of each of the Paying Agents (as described in the Schedule to these Conditions).

6. INTEREST

6.1. Interest Accrual

Each Note (or, in the case of the redemption of part only of a Note, that part only of such Note) will cease to bear interest from and including the due date for its redemption unless, upon due presentation in accordance with Condition 7 (Payments), payment of the principal in respect of that Note is improperly withheld or refused or default is otherwise made in respect of the payment, in which event interest shall continue to accrue as provided in the Note Trust Deed.

6.2. Fixed Rate of Interest and Fixed Interest Payment Dates

The Class C Notes shall bear interest on their respective Principal Amount Outstanding from and including the Issue Date at the rate of 7.00 per cent. per annum (such rate being the Fixed Rate of Interest) and (subject to the adjustment of the first Fixed Interest Payment Date, as contemplated below) such interest will be payable in arrear on the 15th day of each calendar month (each, a Fixed Interest Payment Date) in respect of the Fixed Interest Period (as defined below) ended immediately prior thereto (such amounts becoming payable being Fixed Interest Amounts). The period from and including the Issue Date to but excluding the first Fixed Interest Payment Date and each successive period from and including a Fixed Interest Payment Date to but excluding the

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next succeeding Fixed Interest Payment Date is called a Fixed Interest Period. The first Fixed Interest Payment Date shall fall on 16 August 2007, but the date on which the related payment will be required to be effected will be subject to adjustment in accordance with Condition 7.4(a) (Payment on Business Days) so that it falls on 16 August 2007.

6.3. Floating Interest Payment Dates

The Class A Notes and the Class B Notes shall bear interest on their respective Principal Amount Outstanding from and including the Issue Date (subject to the adjustment of the first Floating Interest Payment Date, as contemplated below) payable in arrear on the 15th day of each calendar month (each, a Floating Interest Payment Date) in respect of the Floating Interest Period (as defined below) ended immediately prior thereto. If any Floating Interest Payment Date would otherwise fall on a day which is not a Business Day, it shall be postponed to the next day which is a Business Day. The first Floating Interest Payment Date shall be on 16 August 2007. The period from and including the Issue Date to but excluding the first Floating Interest Payment Date and each successive period from and including a Floating Interest Payment Date to but excluding the next succeeding Floating Interest Payment Date is called a Floating Interest Period.

6.4. Floating Rate of Interest

The rate of interest payable from time to time in respect of each Class of the Class A Notes and the Class B Notes (each, a Floating Rate of Interest) will be determined on the basis of the following provisions:

(a) On each Interest Determination Date, the Agent Bank will determine USD LIBOR at approximately 11.00 a.m. (London time) on that Interest Determination Date.

(b) The Floating Rate of Interest for the Floating Interest Period in respect of the Class A Notes and the Class B Notes shall be USD LIBOR plus the Applicable Margin, in each case, per annum, provided that, in respect of the first Floating Interest Period, such rate shall be USD LIBOR calculated on the basis of a linear interpolation on 2-week and 1-month USD LIBOR, plus the Applicable Margin.

6.5. Determination of Floating Rate of Interest and Floating Interest Amounts

(a) The Agent Bank shall, as soon as practicable after 11.00 a.m. (London time) on each Interest Determination Date, but in no event later than the first Business Day thereafter, determine the respective Dollar amounts (the Floating Interest Amounts) payable in respect of interest on the Principal Amount Outstanding of the Class A Notes and the Class B Notes for the relevant Floating Interest Period.

(b) The Floating Interest Amount for the Class A Notes and the Class B Notes will be determined by multiplying the Principal Amount Outstanding of each such Class of Notes which will apply on the first day of the relevant Floating Interest Period by the Floating Rate of Interest for each such Class of Notes, multiplying the resulting amount by the Day Count Fraction and rounding the resulting figure to the nearest Minimum Amount.

(c) For the avoidance of doubt, the Principal Amount Outstanding of the Class A Notes and the Class B Notes on the first day of such Floating Interest Period shall be calculated after deducting any Note Principal Payment in respect of each such Class of Notes made or due to be made on the Note Payment Date falling on (or, as the case may be, on the first Business Day after) the first day of such Floating Interest Period.

6.6. Publication of Agent Bank Determination

The Agent Bank shall cause each Agent Bank Determination to be notified to the Issuer, the Note Trustee and any stock exchange or other relevant authority on which the Notes are at the relevant time listed and to be published in accordance with Condition 17 (Notice to Noteholders) as soon

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as possible after their determination and in no event later than the second Business Day thereafter. The Floating Interest Payment Date may subsequently be amended (or appropriate alternative arrangements made by way of adjustment) without notice in the event of an extension or shortening of the Floating Interest Period.

6.7. Determination by the Note Trustee

The Note Trustee shall, if the Agent Bank defaults at any time in its obligation to make the Agent Bank Determinations in accordance with the above provisions, make the Agent Bank Determinations, being such rates and amounts as, in its absolute discretion (having such regard as it shall think fit to the procedure described above), it shall deem fair and reasonable, but with no liability therefor, in all the circumstances and such determinations shall be deemed to be determinations by the Agent Bank.

6.8. Notifications, etc. to be Final

All notifications, opinions, determinations, certificates, calculations, quotations and decisions given, expressed, made or obtained for the purposes of the provisions of this Condition 6, whether by the Reference Banks (or any of them), the Agent Bank or the Note Trustee, will (in the absence of wilful default, bad faith or manifest error) be binding on the Issuer, the Note Trustee, the Agent Bank, the Paying Agents and all Noteholders and (in the absence of wilful default or bad faith) no liability to the Issuer or the Noteholders shall attach to the Reference Banks (or any of them), the Agent Bank or, if applicable, the Note Trustee in connection with the exercise or non-exercise by any of them of their powers, duties and discretions under this Condition 6.

6.9. Agent Bank

The Issuer shall procure that, so long as any of the Agent Bank Determinations are required to be made, there is at all times an Agent Bank for the purposes of the Agent Bank Determinations and the Issuer may, subject to the prior written approval of the Note Trustee, terminate the appointment of the Agent Bank. In the event of the appointed office of any bank being unable or unwilling to continue to act as the Agent Bank or failing duly to determine the Agent Bank Determinations, the Issuer shall, subject to the prior written approval of the Note Trustee, appoint the London office of another major bank engaged in the London interbank market to act in its place. The Agent Bank may not resign its duties or be removed without a successor having been appointed.

6.10. Deferral of Interest Arrears

If there are any Deferred Interest Arrears on any Note Payment Date (other than the Final Maturity Date), such amounts shall not be regarded as payable on such date and shall accrue interest during the Interest Period in which such Note Payment Date falls in accordance with Condition 6.12 (Default Interest).

6.11. Notification of Deferred Interest Arrears

If, on any Cash Flow Determination Date, the Issuer shall determine that any Deferred Interest Arrears will arise on the immediately succeeding Note Payment Date, notice to this effect shall be given by the Issuer in accordance with Condition 17 (Notice to Noteholders), specifying the amount of Class A Interest Arrears, Class B Interest Arrears and/or Class C Interest Arrears comprising such Deferred Interest Arrears to be deferred on such following Note Payment Date.

6.12. Default Interest

Any Deferred Interest Arrears applicable to any Class of Notes shall bear interest during the period from (and including) the due date therefor. Interest on such Deferred Interest Arrears shall accrue from day to day, in the case of any Class A Notes or Class B Notes, at the Floating Rate of Interest from time to time applicable to such Notes and, in the case of any Class C Notes, at the

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applicable Fixed Rate of Interest, and shall be due and payable in accordance with Condition 6.2 (Fixed Rate of Interest and Fixed Interest Payment Dates) or, as the case may be, Condition 6.3 (Floating Interest Payment Dates) in respect of the relevant amount or on such other date or dates as the Note Trustee may specify by written notice to the Issuer.

6.13. Notification of Availability for Payment

The Issuer shall cause notice of the availability for payment of any Deferred Interest Arrears in respect of a Class of Notes and any interest thereon (and the Note Payment Date on which the Deferred Interest Arrears in respect of such class are to be paid) to be published in accordance with Condition 17 (Notice to Noteholders).

6.14. Priority of Payment of Interest, Deferred Interest and Default Interest

The Issuer shall pay, in the case of a Class A Note or a Class B Note, any Floating Interest Amounts or, in the case of a Class C Note, any Fixed Interest Amounts due and payable on any Note Payment Date prior to any default interest on any Deferred Interest Arrears arising under Condition 6.12 (Default Interest) which is payable on such Note Payment Date, which shall in turn be paid prior to any such Deferred Interest Arrears falling due on such Note Payment Date.

7. PAYMENTS

7.1. Payments in respect of Notes

(a) Payment of principal and interest will be made by transfer to the registered account of the Noteholder or by Dollar cheque drawn on a bank that processes payments in Dollars mailed to the registered address of the Noteholder if it does not have a registered account. Payments of principal and premium (if any) and payments of interest due otherwise than on a Note Payment Date will only be made against surrender of the relevant Note Certificate at the specified office of any of the Agents (as described in the Schedule to these Conditions) or, in the case of part payment only, endorsement. Interest on Notes due on a Note Payment Date will be paid to the holder shown in the Register at the close of business on the date (for the purposes of this Condition 7.1, the record date) being the 15th day before the relevant Note Payment Date.

(b) For the purposes of this Condition 7, a Noteholder's registered account means the Dollar account maintained by or on behalf of it with a bank that processes payments in Dollars, details of which appear in the Register at the close of business, in the case of principal and premium (if any) and interest due otherwise than on a Note Payment Date, on the second Business Day (as defined in Condition 7.4(c) (Payment on Business Days) below) before the due date for payment and, in the case of interest due on a Note Payment Date, on the relevant record date, and a Noteholder's registered address means its address appearing in the Register.

7.2. Payments subject to Applicable Laws

Payments in respect of principal and interest on Notes are subject in all cases to any fiscal or other laws and regulations applicable in the place of payment.

7.3. No commissions

No commissions or expenses shall be charged to the Noteholders in respect of any payments made in accordance with this Condition 7.3.

7.4. Payment on Business Days

(a) Where payment is to be made by transfer to a registered account, payment instructions (for value the due date or, if that is not a Business Day (as defined below), for value the first following day which is a Business Day) will be initiated and, where payment is to be made

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by cheque, the cheque will be mailed on the Business Day preceding the due date for payment or, in the case of a payment of principal and premium (if any) or a payment of interest due otherwise than on a Note Payment Date, if later, on the Business Day on which the relevant Note Certificate is surrendered at the specified office of an Agent (as described in the Schedule to these Conditions).

(b) Noteholders will not be entitled to any interest or other payment for any delay after the due date in receiving the amount due if the due date is not a Business Day, if the Noteholder is late in surrendering its Note Certificate (if required to do so) or if a cheque mailed in accordance with this Condition 7.4 arrives after the due date for payment.

(c) In this Condition 7.4, Business Day means a day (other than a Saturday or Sunday) on which commercial banks are open for business in London, New York City and, Vienna, and, in the case of presentation of a Note Certificate, in the place in which the Note Certificate is presented.

7.5. Partial Payments

If the amount of principal, premium (if any) or interest which is due on the Notes is not paid in full, the Registrar will annotate the Register with a record of the amount of principal, premium (if any) or interest in fact paid.

7.6. Agents

The names of the initial Agents and their initial specified offices are set out in the Schedule to these Conditions. The Issuer reserves the right, subject to the prior written approval of the Note Trustee, at any time to vary or terminate the appointment of any Agent and to appoint additional or other Agents provided that:

(a) there will at all times be a Principal Paying Agent;

(b) there will at all times be a Paying Agent (which may be the Principal Paying Agent) having a specified office in a European city, which, so long as the Notes are admitted to the Official List, shall be Dublin or such other place in Ireland as the ISE and/or IFSRA (as applicable) may approve;

(c) the Issuer undertakes that it will ensure that it maintains a Paying Agent in a Member State of the European Union that is not obliged to withhold or deduct tax pursuant to European Council Directive 2003/48/EC or any law implementing or complying with, or introduced in order to conform to, such Directive;

(d) there will at all times be a registrar and transfer agent discharging the obligations of the Registrar, in accordance with the Agency Agreement; and

(e) there will at all times be an Agent Bank.

Notice of any termination or appointment and of any changes in the specified offices given to the Noteholders promptly by the Issuer in accordance with Condition 17 (Notice to Noteholders).

8. REDEMPTION

8.1. Maturity of Notes

Unless previously redeemed in full or purchased and cancelled as provided below, the Issuer will redeem the Notes at their respective Principal Amount Outstanding on the Final Maturity Date.

8.2. Mandatory redemption

On each Note Payment Date, each Note shall, subject to Condition 8.3 (Optional redemption in whole for Taxation Reasons) and to the Pre-Enforcement Principal Payment Priorities, be subject to mandatory early redemption up to its Principal Amount Outstanding to the extent of the

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Principal Receipts received in the corresponding Collection Period and any other amounts credited to the Principal Ledger during such Collection Period, in each case, in an amount equal to the applicable Note Principal Payment.

8.3. Optional redemption in whole for Taxation Reasons

The Issuer may redeem all (but not some) of the Notes of each Class at their Principal Amount Outstanding on any Note Payment Date:

(a) on or after the date on which the Issuer is to make any payment in respect of the Notes or the Issuer or a Swap Counterparty is to make any payments in respect of a Swap Agreement and either the Issuer or such Swap Counterparty, as the case may be, would be required to make a Tax Deduction in respect of such relevant payment; or

(b) after the date on which the Issuer would, by virtue of a change in the Tax law of the Issuer Jurisdiction (or the application or official interpretation of such Tax law), not be entitled to relief for the purposes of such Tax law for any material amount which it is obliged to pay or is treated as receiving for the purposes of such Tax law under the Principal Transaction Documents; or

(c) after the date of a change in the Tax law of the Issuer Jurisdiction (or the Russian Federation, as applicable) (or the application or official interpretation of such Tax law) which would cause the total amount payable in respect of interest in relation to any of the Mortgage Loans to cease to be receivable by the Issuer, including as a result of any of the Obligors being obliged to make a Tax Deduction in respect of any payment in relation to the relevant Mortgage Loan, subject to the following:

(i) that the Issuer has given not more than 60 nor less than 20 days' irrevocable notice to the Note Trustee and the Noteholders in accordance with Condition 17 (Notice to Noteholders) of its intention to redeem all (but not some only) of the Notes of each Class; and

(ii) that prior to giving any such notice, the Issuer has provided to the Note Trustee:

(A) a legal opinion (in form and substance satisfactory to the Note Trustee) from a firm of lawyers or other tax experts in the Issuer Jurisdiction (or the Russian Federation, as applicable) (approved in writing by the Note Trustee), opining on the relevant change in, or the application or official interpretation of, Tax law; and

(B) a certificate signed by the Managing Director to the effect that the obligation to make a Tax Deduction cannot be avoided; and

(C) a certificate signed by the Managing Director to the effect that it will have the funds on the relevant Note Payment Date, not subject to the interest of any other person, required to redeem the Notes pursuant to this Condition 8.3 and meet its outstanding payment obligations (1) of a higher priority, under the Pre-Enforcement Principal Payments Priorities and (2) referred to under paragraphs (a) to (m) (inclusive) of the Pre-Enforcement Revenue Payment Priorities.

Each of the circumstances referred to in paragraphs (a) to (c) above is a Tax Event.

(d) The Issuer shall, if the same would avoid the effect of a Tax Event (i) appoint a Paying Agent in another jurisdiction or (ii) use its reasonable endeavours to arrange the substitution of a company incorporated and/or tax resident in another jurisdiction approved in writing by the Note Trustee as principal debtor under the Notes, provided that the Note Trustee is satisfied that such substitution will not be materially prejudicial to the interests of the Senior

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Outstanding Class. A substitution of the Issuer in accordance with this Condition 8.3 following the occurrence of a Tax Event is referred to as a Permitted Issuer Substitution.

(e) If the Issuer satisfies the Note Trustee immediately before giving the notice referred to below that a Tax Event is continuing and that the appointment of a Paying Agent or a substitution as referred to above would not avoid the effect of the relevant Tax Event or that, having used its reasonable endeavours, the Issuer is unable to arrange such a substitution, then the Issuer may, on any Note Payment Date and having given not more than 60 nor less than 30 days' notice to the Noteholders in accordance with Condition 17 (Notice to Noteholders) and to the Note Trustee (a Redemption Notice, redeem all, but not some only, of the Notes at their respective Principal Amount Outstanding together with accrued but unpaid interest up to but excluding the date of redemption. A Redemption Notice is irrevocable.

(f) Prior to the publication of any Redemption Notice, the Issuer shall deliver to the Note Trustee:

(i) a certificate signed by the Managing Director stating that:

(A) a Tax Event is continuing and that the appointment of a Paying Agent or a substitution as referred to above would not avoid such Tax Event or that, having used its reasonable endeavours, the Issuer is unable to arrange such a substitution; and

(B) the Issuer will have the necessary funds not subject to the interest of any other person to pay all principal and interest due in respect of the Notes on the relevant Note Payment Date and to discharge all other amounts of a higher priority to be paid by it on the relevant Note Payment Date; and

(ii) a legal opinion in form and substance satisfactory to the Note Trustee from a firm of lawyers approved in writing by the Note Trustee, opining on the Tax Event,

and the Note Trustee shall be entitled to accept the certificate and legal opinion as sufficient evidence of the satisfaction of the conditions precedent set out above and such documents together shall be conclusive and binding on the Noteholders.

(g) No Noteholder shall, in connection with a Permitted Issuer Substitution, be entitled to claim from the Issuer any indemnification or payment in respect of any Tax consequence of any such Permitted Issuer Substitution upon individual Noteholders and the other Secured Parties.

8.4. Clean-up Call

Pursuant to the Servicing Agreement, the Issuer will grant to the Originator a call option (the Call Option) in relation to each of the Mortgage Certificates comprising the Mortgage Portfolio. The Call Option is exercisable by the Originator at its option in relation to all (and not some only) of the Mortgage Certificates in the event that the Principal Amount Outstanding of the Notes is less than the Clean-up Call Threshold, provided that the Originator has given written notice to the Issuer of such exercise (a Clean-up Call Exercise Notice) at least 10 Business Days prior to the immediately following Collection Period End Date (the Clean-up Call Payment Date). Following an exercise of the Call Option in accordance with this Condition, the Originator will be required to repurchase the relevant Mortgage Certificate from the Issuer at the Option Price on or before the last Moscow Business Day of such Collection Period and the Issuer will be required to apply the proceeds of such sale on the immediately following Note Payment Date in accordance with Condition 8.2 (Mandatory redemption).

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8.5. No purchase by the Issuer

The Issuer will not be permitted to purchase any of the Notes.

8.6. Cancellation

Any Notes redeemed in full will be cancelled upon redemption and may not be resold or re-issued.

9. PAYMENT PRIORITIES

9.1. Pre-Enforcement Revenue Payment Priorities

On each Note Payment Date prior to the date (if any) on which an enforcement of the Security or any part of it has commenced, as confirmed by the provision of notice by the Security Trustee to the Issuer in accordance with the Deed of Charge (an Enforcement Notice), an application of all Revenue Receipts standing to the credit of the Revenue Ledger on such Note Payment Date shall be effected by the Issuer, pursuant to and in accordance with the following order of priorities and the Credit and Liquidity Enhancement Priorities, with the portion (if any) of such Revenue Receipts comprising a Reserve Fund Revenue Drawing and/or a Principal Against Revenue Shortfall Reallocation being applied solely towards the discharge of the related Revenue Shortfall in accordance with the Cash Management Agreement (the Pre-Enforcement Revenue Payment Priorities:

(a) to pay any taxes due and payable by the Issuer and amounts due and payable by the Issuer equal to the minimum profit to be retained by the Issuer for Dutch tax purposes;

(b) to pay pari passu and pro rata and any amounts due and payable by the Issuer to the Note Trustee pursuant to the Note Trust Deed, to the Security Trustee and Collateral Agent pursuant to the Security Documents and any Liabilities due and payable by the Issuer to the Note Trustee, the Security Trustee or the Collateral Agent, as the case may be, in accordance with the terms of the Note Trust Deed and/or the Security Documents, together with any interest payable in accordance with the terms of the Note Trust Deed accrued and falling due in the immediately preceding Calculation Period (the Trustee Liabilities);

(c) to pay pari passu and pro rata (i) the Servicer Fees and any amounts payable by the Issuer to the Servicer in connection with the enforcement of the rights of the Issuer under any Mortgage Certificate and/or the protection or enforcement of the Security Trustee's rights and remedies in relation to such enforcement in the immediately preceding Calculation Period and any other Liabilities properly and reasonably incurred by the Servicer in connection with the performance of the Servicer's functions under the Servicing Agreement or the Enforcement Services Agreement (together, the Servicer Expenses and (ii) amounts required to be transferred to the Issuer Rouble Administrative Account to settle the State Duty Overdraft, together with any interest accrued thereon;

(d) to pay pari passu and pro rata any amounts due and payable by the Issuer to any third party (not being a Secured Party), where such obligation is properly incurred without a breach by the Issuer of the Transaction Documents (and such payment is not provided for elsewhere in this order of priority) and is approved by the Managing Director (if applicable, in consultation with the Servicer), including any Liabilities incurred by the Issuer in connection with:

(i) the purchase by the Issuer of the Mortgage Portfolio;

(ii) any filing or registration of any Transaction Documents;

(iii) any provision for and payment of the Issuer's Liability to any Tax Authority for any Tax;

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(iv) any Requirement of Law or any Regulatory Direction with which the Issuer would customarily comply;

(v) any legal, audit or other professional advisory fees;

(vi) any fees of a Rating Agency;

(vii) any advertising, publication, communication and printing expenses including postage, telephone, telex and other communication charges;

(viii) the admission of the Notes to the Official List or to trading on the regulated market of the ISE and the maintenance of the same; and

(ix) any other amounts then due and payable to third parties and incurred without breach by the Issuer of the provisions of the Principal Transaction Documents;

(e) to pay pari passu and pro rata:

(i) any fees payable by the Issuer to the Principal Paying Agent for the account of the Paying Agents and the Agent Bank in accordance with the terms of the Agency Agreement (the Agent Fees) and any Liabilities due and payable by the Issuer to the Agents in accordance with the terms of the Agency Agreement together with interest as provided in the Agency Agreement (the Agent Liabilities);

(ii) any fees payable by the Issuer to the Cash Manager (the Cash Manager Fees) and any Liabilities properly and reasonably incurred by the Cash Manager in connection with the performance of the Cash Management Services (the Cash Manager Liabilities);

(iii) any fees payable by the Issuer to the International Account Bank for the operation of the International Issuer Accounts in accordance with the Distribution Account Agreement (the International Account Bank Fees) and any Liabilities properly and reasonably incurred by the International Account Bank in connection with the performance of the International Account Bank's functions under the Distribution Account Agreement (the International Account Bank Liabilities);

(iv) any fees payable by the Issuer to the Issuer Collection Account Bank for the operation of the Issuer Collection Account and the Issuer Rouble Administrative Account in accordance, as applicable, with the Issuer Collection Account Agreement or the Rouble Administrative Account Agreement (the Issuer Collection Account Bank Fees) and any Liabilities properly and reasonably incurred by the Issuer Collection Account Bank in connection with the performance of the Issuer Collection Account Bank's functions under the Issuer Collection Account Agreement or, as the case may be, the Rouble Administrative Account Agreement (the Issuer Collection Account Bank Liabilities);

(v) any fees payable by the Issuer to the Back-up Servicer pursuant to and in accordance with the Back-up Servicing Agreement (the Back-up Servicer Fees) and any Liabilities properly and reasonably incurred by the Back-up Servicer in connection with the performance by the Back-up Servicer of its obligations under the Back-up Servicing Agreement (the Back-up Servicer Liabilities);

(vi) any fees payable by the Issuer to the Custodian pursuant to and in accordance with the Custodian Agreement (the Custodian Fees) and any Liabilities properly and reasonably incurred by the Custodian in connection with the performance of the Custodian's functions under the Custodian Agreement (the Custodian Liabilities);

(vii) any amounts due and payable by the Issuer to the Managing Director pursuant to the Corporate Services Agreement; and

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(viii) any fees payable by the Issuer to BNY in accordance with the BNY Fee Letter, to the extent that such fees are not provided for elsewhere in this order of priority;

(f) to pay pari passu and pro rata to each Swap Counterparty:

(i) all amounts due for payment by the Issuer to such Swap Counterparty under the relevant Swap Agreement on such Note Payment Date in relation to the Class A Notes and the Class B Notes and which remain outstanding (other than any termination payment or Swap Collateral Return Payment); and

(ii) all amounts in respect of any termination sum due for payment by the Issuer under the relevant Swap Agreement to such Swap Counterparty as a result of the termination of such Swap Agreement (other than any Swap Excluded Termination Payments);

(g) to pay pari passu and pro rata any amount of interest due and payable in respect of the Class A Notes (including any Class A Interest Arrears) to the Class A Noteholders and/or to the extent that any Paying Agent has properly paid any such amounts to the Noteholders of such Class and not been paid by the Issuer pursuant to the Agency Agreement, the Principal Paying Agent for itself and/or the affected Paying Agents (the Entitled Persons);

(h) in or towards the transfer to the Principal Ledger and the Class A PDL respectively of the amount (if any) necessary to cause the balance of the Class A PDL to be equal to zero;

(i) to pay pari passu and pro rata any amount of interest due and payable in respect of the Class B Notes (including any Class B Interest Arrears) to the Class B Noteholders and/or to the extent that any Paying Agent has properly paid any such amounts to the Noteholders of such Class and not been paid by the Issuer pursuant to the Agency Agreement, the Entitled Persons;

(j) in or towards the transfer to the Principal Ledger and the Class B PDL respectively of the amount (if any) necessary to cause the balance of the Class B PDL to be equal to zero;

(k) in or towards the transfer to the Reserve Fund Ledger of the amount (if any) necessary to cause the credit balance on the Reserve Fund Ledger to be equal to the Reserve Fund Required Amount;

(l) to pay pari passu and pro rata any amount of interest due and payable in respect of the Class C Notes (including any Class C Interest Arrears) to the Class C Noteholders and/or to the extent that any Paying Agent has properly paid any such amounts to the Noteholders of such Class and not been paid by the Issuer pursuant to the Agency Agreement, the Entitled Persons;

(m) in or towards the transfer to the Principal Ledger and the Class C PDL respectively of the amount (if any) necessary to cause the balance of the Class C PDL to be equal to zero;

(n) to pay pari passu and pro rata to each Swap Counterparty all Swap Excluded Termination Payments due for payment by the Issuer under the relevant Swap Agreement to such Swap Counterparty as a result of the termination of such Swap Agreement;

(o) in or towards the discharge of any Subordinated Loan Scheduled Interest due and payable on such date under the Subordinated Loan Agreement;

(p) in or towards the repayment of the principal outstanding amount of the Subordinated Loan, up to the amount of any Subordinated Loan Capitalised Outstandings;

(q) in or towards the repayment of the principal outstanding amount of the Subordinated Expenses Advance; and

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(r) the excess (if any) being Subordinated Loan Additional Interest, which is to be paid to the Subordinated Loan Provider pursuant to and in accordance with the Subordinated Loan Agreement.

9.2. Pre-Enforcement Principal Payment Priorities

Prior to the delivery of an Enforcement Notice by the Security Trustee in accordance with the Deed of Charge, the application of amounts credited to the Principal Ledger in respect of each Collection Period are to be made in accordance with the following order of priority, subject (as applicable) to the Credit and Liquidity Enhancement Priorities (the Pre-Enforcement Principal Payment Priorities :

(a) pari passu and pro rata, in or towards the repayment of any principal amounts outstanding in respect of the Class A Notes;

(b) if the Class A Notes have been redeemed in full, pari passu and pro rata, in or towards the repayment of any principal amounts outstanding in respect of the Class B Notes;

(c) if the Class B Notes have been redeemed in full, pari passu and pro rata, in or towards the repayment of any principal amounts outstanding in respect of the Class C Notes;

(d) if the Class C Notes have been redeemed in full, in or towards the repayment of any remaining principal amounts outstanding under the Subordinated Loan, to the extent not already repaid pursuant to a payment to the Subordinated Loan Provider from any credit balance of the Reserve Fund Ledger; and

(e) any remaining amounts being transferred to the Revenue Ledger and applied on the relevant Note Payment Date in accordance with the Pre-Enforcement Revenue Payment Priorities.

9.3. Post-Enforcement Payment Priorities

After an Enforcement Notice has been provided by the Security Trustee in accordance with the Deed of Charge, all proceeds of the relevant enforcement shall be held by the Security Trustee upon trust to be applied in accordance with the Deed of Charge, in the amounts required, in the following order of priority (the Post-Enforcement Payment Priorities (excluding, for the avoidance of doubt, any Swap Collateral Return Payment):

(a) to pay any taxes due and payable by the Issuer and amounts due and payable by the Issuer equal to the minimum profit to be retained by the Issuer for Dutch tax purposes;

(b) to pay pari passu and pro rata (i) any amounts due and payable by the Issuer to the Note Trustee pursuant to the Note Trust Deed and to the Security Trustee and/or the Collateral Agent pursuant to the Security Documents and any Trustee Liabilities and (ii) any Liabilities due and payable by the Issuer to any Receiver in accordance with the Deed of Charge and the terms of its appointment, together with any interest accrued and falling due as provided in the Note Trust Deed;

(c) to pay any amounts due and payable by the Issuer to the Managing Director pursuant to the Corporate Services Agreement;

(d) to pay pari passu and pro rata:

(i) to the relevant Agents, any Agent Fees and any Agent Liabilities;

(ii) to the Cash Manager, any Cash Manager Fees and any Cash Manager Liabilities;

(iii) to the International Account Bank, any International Account Bank Fees and any International Account Bank Liabilities;

(iv) to the Issuer Collection Account Bank, any Issuer Collection Account Bank Fees and any Issuer Collection Account Bank Liabilities;

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(v) to the Servicer, any Servicer Fees and any Servicer Expenses;

(vi) amounts required to be transferred to the Issuer Rouble Administrative Account to settle the State Duty Overdraft, together with any interest accrued thereon;

(vii) to the Back-up Servicer, any Back-up Servicer Fees and any Back-up Servicer Liabilities;

(viii) to the Custodian, any Custodian Fees and any Custodian Liabilities; and

(ix) any fees payable by the Issuer to BNY in accordance with the BNY Fee Letter, to the extent that such fees are not provided for elsewhere in this order of priority;

(e) to pay pari passu and pro rata to each Swap Counterparty all amounts due in respect of the Swap Agreements (other than any Swap Excluded Termination Payments);

(f) to the relevant Entitled Persons, all amounts of interest due but unpaid in respect of the Class A Notes (including any Class A Interest Arrears), pro rata according to the amount of such interest due to be paid to each such Entitled Person;

(g) to the relevant Entitled Persons, all amounts of principal due but unpaid in respect of the Class A Notes, pro rata according to the amount of such principal due to be paid to each such Entitled Person;

(h) to the relevant Entitled Persons, all amounts of interest due but unpaid in respect of the Class B Notes (including any Class B Interest Arrears), pro rata according to the amount of such interest due to be paid to each such Entitled Person;

(i) to the relevant Entitled Persons, all amounts of principal due but unpaid in respect of the Class B Notes, pro rata according to the amount of such principal due to be paid to each such Entitled Person;

(j) to the relevant Entitled Persons, all amounts of interest due but unpaid in respect of the Class C Notes (including any Class C Interest Arrears), pro rata according to the amount of such interest due to be paid to each such Entitled Person;

(k) to the relevant Entitled Persons, all amounts of principal due but unpaid in respect of the Class C Notes, pro rata according to the amount of such principal due to be paid to each such Entitled Person;

(l) to pay pari passu and pro rata to each Swap Counterparty all Swap Excluded Termination Payments due for payment by the Issuer under the relevant Swap Agreement to such Swap Counterparty;

(m) in or towards the payment to the Subordinated Loan Provider of any Subordinated Loan Scheduled Interest accrued but unpaid;

(n) in or towards the repayment of the principal amount outstanding under the Subordinated Loan (including any interest which has capitalised in relation to the Subordinated Loan);

(o) to pay any amounts due and payable by the Issuer to any third party (not being a Secured Party), where such obligation is properly incurred without a breach by the Issuer of the Transaction Documents (and such payment is not provided for elsewhere in this order of priority) and is approved by the Managing Director (if applicable, in consultation with the Servicer), including any Liabilities incurred by the Issuer in connection with:

(i) the purchase by the Issuer of the Mortgage Portfolio;

(ii) any filing or registration of any Transaction Documents;

(iii) any provision for and payment of the Issuer's Liability to any Tax Authority for any Tax;

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(iv) any Requirement of Law or any Regulatory Direction to which the Issuer would customarily comply;

(v) any legal, audit or other professional advisory fees;

(vi) any fees of a Rating Agency;

(vii) any advertising, publication, communication and printing expenses including postage, telephone, telex and other communication charges;

(viii) the admission of the Notes to the Official List or to trading on the regulated market of the ISE and the maintenance of the same; and

(ix) any other amounts then due and payable to third parties and incurred without breach by the Issuer of the provisions of the Principal Transaction Documents; and

(p) in or towards the payment of any other amounts determined by the Managing Director (if applicable, in consultation with the Servicer) to be payable by the Issuer to any person.

9.4. Credit and Liquidity Enhancement Priorities

On each Note Payment Date, to the extent that there is a sufficient credit balance on such date for such purpose under the Reserve Fund Ledger and the Principal Ledger respectively, Reserve Fund Drawings and any Principal Against Revenue Shortfall Reallocation will be subject to the following order of application, which will be effected by the Cash Manager prior to any application on such date under the Pre-Enforcement Payment Priorities (the Credit and Liquidity Enhancement Priorities):

(a) first, any Reserve Fund Revenue Drawing required to be debited to the Reserve Fund Ledger and credited to the Revenue Ledger;

(b) secondly, any Reserve Fund Principal Drawing required to be (i) debited to the Reserve Fund Ledger, (ii) credited to the Principal Ledger and (iii) in accordance with the PDL Rectification Order, credited to the Class A PDL and/or the Class B PDL, as applicable; and

(c) thirdly, any Principal Against Revenue Shortfall Reallocation required to be debited to the Principal Ledger and credited to the Revenue Ledger.

9.5. Principal Deficiency Ledgers

Any debit balance which, pursuant to the PDL Application Order, is remaining on a Principal Deficiency Ledger on the Final Maturity Date of the Class of Notes to which such Principal Deficiency Ledger relates is required to be applied pari passu and pro rata by the Principal Paying Agent on such date as a reduction in the Principal Amount Outstanding of the Notes of that Class. Prior to this, debit balances on the Principal Deficiency Ledgers are to be discharged (as applicable) by Principal Recoveries, Revenue Against Principal Reallocations and Reserve Fund Principal Drawings, which are to be applied as credit entries under the relevant Principal Deficiency Ledgers and to the Principal Ledger, to the extent of any Principal Deficiency recorded thereunder, in accordance with the PDL Rectification Order.

9.6. Reserve Fund Reimbursement Amounts

(a) If, on any Note Payment Date, the amount standing to the credit of the Reserve Fund Ledger exceeds the Reserve Fund Required Amount, after giving effect to the Reserve Fund Base Case Amount and the Reserve Fund Multiplication Factor on such date (such excess amount being a Reserve Fund Reimbursement Amount), the Issuer will apply such Reserve Fund Reimbursement Amount on such Note Payment Date from the Reserve Fund Ledger in or towards the repayment of the Subordinated Reserve Advance.

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(b) On or as soon as practicable after the occurrence of the first date on which all Principal Receipts, Revenue Receipts and any other amounts which will (at any time) be available to be applied under the Payment Priorities have been applied thereunder (whether pursuant to an enforcement of the Security or otherwise), as determined by the Issuer or the Security Trustee in reliance upon a confirmation to this effect given by the Servicer, the amount (if any) standing to the credit of the Reserve Fund Ledger, being an amount not already applied as contemplated by the foregoing provisions of paragraph (a) of this Condition 9.6, will be applied by (i) prior to the delivery of a Security Protection Notice or a Enforcement Notice, the Issuer or (ii) if an Enforcement Notice or a Security Protection Notice has been delivered, the Issuer (on behalf of the Security Trustee) or the Security Trustee in or towards the repayment of the principal outstanding amount of the Subordinated Loan.

10. TAXATION

All payments in respect of the Notes by or on behalf of the Issuer shall be made without withholding or deduction for, or on account of, any present or future Taxes, unless the withholding or deduction of any Taxes is required by applicable law. In that event, the Issuer or, as the case may be, the relevant Paying Agent shall make such payment after the withholding or deduction has been made and shall account to the relevant authorities for the amount required to be withheld or deducted. Neither the Issuer nor any Paying Agent shall be obliged to make any additional payments to Noteholders in respect of such withholding or deduction.

11. PRESCRIPTION

Claims in respect of principal and interest on the Notes will be prescribed after 10 years (in the case of principal) and five years (in the case of interest) from the Relevant Date in respect of the relevant payment. In this Condition 11, the Relevant Date, in respect of a payment, is the date on which such payment first becomes due or (if the full amount of the monies payable on that date has not been duly received by the Principal Paying Agent or the Note Trustee on or prior to such date) the date on which, the full amount of such monies having been received, notice to that effect is duly given to the relevant Noteholders in accordance with Condition 17 (Notice to Noteholders).

12. EVENTS OF DEFAULT

Subject to the other provisions of this Condition 12, each of the following events shall constitute an Event of Default.

12.1. Non-payment

The Issuer fails to pay any amount of interest or principal in respect of any Class of Notes within 10 days of the due date for payment of such interest or principal, provided that no such failure in relation to the Class C Notes prior to the Final Maturity Date shall be treated as an Event of Default to the extent that the Issuer (in the absence of any Breach of Duty) does not have available funds to make such payments in respect of the Class C Notes in accordance with the Pre-Enforcement Payment Priorities.

12.2. Breach of other obligations

The Issuer defaults in the performance or observance of any of its other obligations under or in respect of the Notes or in respect of the Issuer Covenants and such default (a) is, in the opinion of the Note Trustee, incapable of remedy or (b) being a default which is, in the opinion of the Note Trustee, capable of remedy, remains unremedied for 30 days after the Note Trustee has given written notice of such default to the Issuer.

12.3. Insolvency Event

An Insolvency Event occurs in relation to the Issuer.

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12.4. Unlawfulness

It is or will become unlawful for the Issuer to perform or comply with any of its obligations under or in respect of the Notes or the Trust Documents.

13. ENFORCEMENT

13.1. Discretion and direction of Note Trustee

The Note Trustee may, at any time, at its discretion and without notice, take such action under or in connection with any of the Transaction Documents as it may think fit (including, without limitation, directing the Security Trustee to take any action under or in connection with any of the Transaction Documents or, after the occurrence of an Event of Default, to deliver an Enforcement Notice pursuant to the Deed of Charge and to take any other steps necessary to enforce the Security (Enforcement Action)), provided that the Note Trustee shall not exercise its discretion to require the Security Trustee to take any Enforcement Action pursuant to the occurrence of an Event of Default under Condition 12.2 (Breach of other obligations) unless it has determined that the circumstances constituting such Event of Default are materially prejudicial to the Noteholders and provided further that:

(a) the Note Trustee shall not be bound to take any such action unless (subject in all cases to restrictions contained in the Note Trust Deed to protect the interests of any higher ranking Class or Classes of Noteholders) it shall have been so directed by:

(i) other than in relation to any Enforcement Action, an Extraordinary Resolution of the Class A Noteholders, the Class B Noteholders or the Class C Noteholders or so directed in writing by the holders of at least one-fifth in aggregate Principal Amount Outstanding of the Class A Notes, the Class B Notes or the Class C Notes; or

(ii) in relation to any Enforcement Action, an Extraordinary Resolution of the Senior Outstanding Class or so directed in writing by the holders of at least one-fifth in aggregate Principal Amount Outstanding of the Senior Outstanding Class;

(b) the Security Trustee shall not, and shall not be bound to, take any such action unless it shall have been directed to do so by the Note Trustee;

(c) neither the Note Trustee nor the Security Trustee shall be bound to take any such action unless (i) it shall have been indemnified and/or secured to its satisfaction and (ii) such action is lawful in all relevant jurisdictions; and

(d) the Note Trustee shall not be entitled to take any steps or proceedings to procure the winding-up, administration or liquidation of the Issuer.

13.2. Consequences of Delivery of Enforcement Notice by Security Trustee

(a) The Security will become immediately enforceable upon the occurrence of an Event of Default. Upon the delivery of an Enforcement Notice, the Notes of each Class shall become immediately due and payable without further action or formality at their Principal Amount Outstanding, together with any accrued Deferred Interest Arrears and the Security Trustee (including in its capacity as Collateral Agent) shall, subject to and in accordance with the Security Documents, proceed to enforce the Security.

(b) Without prejudice to the generality of paragraph (a) above, the Security Trustee shall, at any time after the delivery of an Enforcement Notice, have the power to dispose (or to direct the Issuer to dispose) of any of the Mortgage Certificates by way of a competitive tender process overseen by a merchant bank or investment bank of international repute, as more particularly detailed in the Deed of Charge.

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(c) The Security Trustee also has the power to appoint such a merchant or investment bank of international repute as its delegate or as its adviser in exercising its powers in connection with the public auction enforcement process set out in the Pledge Agreement, and in all cases the Security Trustee (including in its capacity as Collateral Agent) shall not be liable to the Secured Parties for acts or omissions done on the basis of or as a result of the advice of such bank.

13.3. Enforcement Action by Individual Noteholders

No Noteholder shall be entitled to proceed directly against the Issuer or any other party to any of the Transaction Documents to enforce the performance of any of the provisions of the Transaction Documents and/or to take any other proceedings (including lodging an appeal in any proceedings) in respect of or concerning the Issuer unless the Note Trustee or, as the case may be, the Security Trustee, having become bound so to do, fails to do so within a reasonable period and such failure shall be continuing, provided that no Noteholder shall be entitled to take any steps or proceedings to procure the winding-up, administration or liquidation of the Issuer.

13.4. Appointment of Administrative Receiver

(a) Notwithstanding the foregoing, the Deed of Charge will provide that (to the extent permitted or not prohibited by law) the Security Trustee shall enforce the security constituted by the Deed of Charge by appointing an administrative receiver in respect of the Issuer if it has actual notice of (i) an application for the appointment of an administrator in respect of the Issuer, (ii) the giving of a notice of intention to appoint an administrator in respect of the Issuer or (iii) the filing of a notice of appointment of an administrator in respect of the Issuer with an English court, such appointment of an administrative receiver to take effect not later than the final day by which the appointment must take effect in order to prevent an administration proceeding, unless to do so would, in the opinion of the Issuer and the Security Trustee, be materially prejudicial to the interests of the Noteholders and each of the Rating Agencies has been notified of the decision to not effect such appointment.

(b) The Deed of Charge will further provide that (i) the Security Trustee will not be liable for any failure to appoint an administrative receiver in respect of the Issuer, save in the case of its own negligence, wilful default or fraud and (ii) in the event that the Security Trustee appoints an administrative receiver in respect of the Issuer under the Deed of Charge in the circumstances set out in paragraph (a) above, then the Issuer shall waive any claims against the Security Trustee in respect of the appointment of the administrative receiver.

14. MEETINGS OF NOTEHOLDERS, MODIFICATION AND WAIVER

(a) The Note Trust Deed contains provisions for the convening of meetings (by the Note Trustee or the Issuer) of the Noteholders of each Class and, in certain cases, more than one Class, to consider any matter affecting their interests, including the sanctioning by Extraordinary Resolution of a modification of these Conditions or the provisions of any of the Transaction Documents.

(b) An Extraordinary Resolution passed at any meeting of the Class A Noteholders shall be binding on the Class B Noteholders and the Class C Noteholders irrespective of the effect upon them, except that an Extraordinary Resolution to sanction a modification of these Conditions or the provisions of any of the Transaction Documents or a waiver or authorisation of any breach or proposed breach thereof or certain other matters specified in the Note Trust Deed will not take effect unless (i) either the Note Trustee is of the opinion that it would not be materially prejudicial to the interests of the Class B Noteholders or it is sanctioned by an Extraordinary Resolution of the Class B Noteholders and (ii) either the Note Trustee is of the opinion that it would not be materially prejudicial to the interests of

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the Class C Noteholders or it is sanctioned by an Extraordinary Resolution of the Class C Noteholders.

(c) An Extraordinary Resolution (other than an Extraordinary Resolution referred to in paragraph (b) above) passed at any meeting of the Class B Noteholders shall not be effective for any purpose unless either the Note Trustee is of the opinion that it would not be materially prejudicial to the interests of the Class A Noteholders or it is sanctioned by an Extraordinary Resolution of the Class A Noteholders, but subject also to paragraph (d) below.

(d) An Extraordinary Resolution passed at any meeting of the Class B Noteholders shall be binding on the Class C Noteholders irrespective of the effect upon them, except that an Extraordinary Resolution to sanction a modification of these Conditions or the provisions of any of the Transaction Documents or a waiver or authorisation of any breach or proposed breach thereof or certain other matters specified in the Note Trust Deed will not take effect unless the Note Trustee is of the opinion that it would not be materially prejudicial to the interests of the Class C Noteholders or it is sanctioned by an Extraordinary Resolution of the Class C Noteholders.

(e) An Extraordinary Resolution (other than an Extraordinary Resolution referred to in paragraph (b) or (d) above) passed at any meeting of the Class C Noteholders shall not be effective for any purpose unless:

(i) either the Note Trustee is of the opinion that it would not be materially prejudicial to the interests of the Class A Noteholders or it is sanctioned by an Extraordinary Resolution of the Class A Noteholders; and

(ii) either the Note Trustee is of the opinion that it would not be materially prejudicial to the interests of the Class B Noteholders or it is sanctioned by an Extraordinary Resolution of the Class B Noteholders.

(f) Subject as provided below, the quorum at any meeting of Noteholders of any Class or Classes of Notes for passing an Extraordinary Resolution will be one or more persons holding or representing not less than 50 per cent. of the aggregate Principal Amount Outstanding of such Class or Classes of Notes, or, at any adjourned meeting, one or more persons being or representing a Noteholder of the relevant Class or Classes, whatever the aggregate Principal Amount Outstanding of the Notes of such Class or Classes held or represented by it or them.

(g) The quorum at any meeting of Noteholders of any Class or Classes of Notes for passing an Extraordinary Resolution to sanction a modification of the date of maturity of any Notes or which would have the effect of postponing any day for payment of interest thereon, reducing or cancelling the amount of principal or the rate of interest payable in respect of such Notes, altering the currency of payment of such Notes, altering the quorum or majority required in relation to this exception, this exception itself or sanctioning any scheme or proposal or substitution, as more particularly described in paragraph 19 of Schedule 4 (Provisions for Meetings of Noteholders) to the Note Trust Deed (each, a Basic Terms Modification), shall be one or more persons holding or representing not less than three-quarters or, at any adjourned meeting, not less than one-quarter of the aggregate Principal Amount Outstanding of the Notes of such Class or Classes.

(h) The Note Trustee may agree, and/or may direct the Security Trustee to agree, without the consent or sanction of the Noteholders or any other Secured Parties:

(i) to any modification (save in respect of a Basic Terms Modification or any provision of any Transaction Document referred to in such Basic Terms Modification) of these Conditions or any of the Transaction Documents which, in the opinion of the Note

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Trustee, is not materially prejudicial to the interests of the Noteholders (or any Class thereof, as the case may be); or

(ii) to any modification of the Conditions or the Transaction Documents which, in the opinion of the Note Trustee, is to correct a manifest error or an error which is, in the opinion of the Note Trustee, proven or is of a formal, minor or technical nature.

(i) The Note Trustee may also, or may direct the Security Trustee in the case of (ii) only to, without the consent of the Noteholders or any other Secured Parties and without prejudice to its rights in respect of any subsequent breach or Default (i) determine that a Default shall not, or shall not subject to specified conditions, be treated as such and (ii) waive or authorise a breach or proposed breach (save for in relation to a Basic Terms Modification) by the Issuer or any other person of any of the covenants or provisions contained in these presents or any other Transaction Document provided that it shall not exercise such powers in contravention of an Extraordinary Resolution or a direction under Condition 13.1 (Discretion and direction of Note Trustee) and further that it is satisfied that in its opinion the interests of the Noteholders (or any Class thereof, as the case may be) shall not be materially prejudiced thereby and further that no such direction or request shall affect any waiver, authorisation or determination previously given or made.

(j) Any such modification, waiver, authorisation or determination shall be binding on the Noteholders and, unless the Note Trustee agrees otherwise, any such modification, waiver, authorisation or determination shall be notified to the Noteholders as soon as practicable thereafter in accordance with Condition 17 (Notice to Noteholders).

(k) In connection with any such substitution of principal debtor referred to in Condition 8.3 (Optional redemption in whole for Taxation Reasons), the Note Trustee may also agree, without the consent of the Noteholders or any other Secured Parties, to a change of the laws governing the Notes, these Conditions and/or any of the Transaction Documents, provided that such change would not, in the opinion of the Note Trustee, be materially prejudicial to the interests of the Noteholders.

(l) The Note Trustee shall be entitled to take into account, for the purpose of exercising or performing any right, power, trust, authority, duty or discretion under or in relation to these Conditions or any of the Transaction Documents, among other things, to the extent that it considers, in its sole and absolute discretion, it is necessary and/or appropriate and/or relevant, any confirmation by each of the Rating Agencies (whether or not such confirmation is addressed to, or provides that it may be relied upon by, the Note Trustee and irrespective of the method by which such confirmation is conveyed) (i) that the then current rating by it of the relevant Class of Rated Notes would not be downgraded, withdrawn or qualified by such exercise or performance and/or (ii) if the original rating of the relevant Class of Rated Notes has been downgraded previously, that such exercise or performance will not prevent the restoration of such original rating of such Class of Rated Notes.

(m) Where, in connection with the exercise or performance by each of them of any right, power, trust, authority, duty or discretion under or in relation to these Conditions or any of the Transaction Documents (including, without limitation, in relation to any modification, waiver, authorisation, determination or substitution as referred to above), the Note Trustee is required to have regard to the interests of the Noteholders of any Class, it shall have regard to the general interests of the Noteholders of such Class as a class but shall not have regard to any interests arising from circumstances particular to individual Noteholders (whatever their number) and, in particular but without limitation, shall not have regard to the consequences of any such exercise or performance for individual Noteholders (whatever their number) resulting from their being for any purpose domiciled or resident in, or otherwise connected with, or subject to the jurisdiction of, any particular territory or any

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political sub-division thereof and the Note Trustee shall not be entitled to require, nor shall any Noteholder be entitled to claim from the Issuer, the Note Trustee or the Security Trustee or any other person any indemnification or payment in respect of any tax consequences of any such exercise upon individual Noteholders.

15. INDEMNIFICATION AND EXONERATION OF THE NOTE TRUSTEE AND THE SECURITY TRUSTEE

(a) The Note Trust Deed and the Deed of Charge contain provisions governing the responsibility (and relief from responsibility) of the Note Trustee and the Security Trustee respectively and providing for their indemnification in certain circumstances, including provisions relieving them from taking action or, in the case of the Security Trustee, enforcing the Security unless indemnified and/or secured to their satisfaction.

(b) The Note Trust Deed and the Deed of Charge also contain provisions pursuant to which the Note Trustee and the Security Trustee are entitled, inter alia, (i) to enter into business transactions with the Issuer and/or any other party to any of the Transaction Documents and to act as trustee for the holders of any other securities issued or guaranteed by, or relating to, the Issuer and/or any other party to any of the Transaction Documents, (ii) to exercise and enforce their rights, comply with their obligations and perform their duties under or in relation to any such transactions or, as the case may be, any such trusteeship without regard to the interests of, or consequences for, the Noteholders and (iii) to retain and not be liable to account for any profit made or any other amount or benefit received thereby or in connection therewith.

(c) The Security Trustee and the Note Trustee will not be responsible for any loss, expense or liability which may be suffered as a result of, inter alia, any assets comprised in the Security, or any deeds or documents of title thereto, being uninsured or inadequately insured or being held by or to the order of the Servicer, the Back-up Servicer or any agent of the Servicer or Back-up Servicer.

(d) The Trust Deed and the Deed of Charge provide that the Note Trustee and the Security Trustee shall be under no obligation to monitor or supervise compliance by the Issuer or the Servicer with their respective obligations or to make any searches, enquiries or independent investigations of title in relation to any of the Mortgaged Properties.

(e) Neither the Security Trustee nor the Note Trustee has any obligation (without prejudice to any discretion they may have) to find a Successor Servicer or to become the Servicer and in the event of an enforcement of the Security, to find a purchaser of any of the Mortgage Certificates.

16. REPLACEMENT OF NOTE CERTIFICATE

If any Note Certificate is mutilated, defaced, lost, stolen or destroyed, it may be replaced at the specified office of the Principal Paying Agent or the Irish Paying Agent (as described in the Schedule to these Conditions). Replacement of any mutilated, defaced, lost, stolen or destroyed Note Certificate will only be made on payment of such costs as may be incurred in connection therewith and on such terms as to evidence and indemnity as the Issuer may reasonably require. A mutilated or defaced Note Certificate must be surrendered before a new one will be issued.

17. NOTICE TO NOTEHOLDERS

17.1. Notification by Mail

All notices to the Noteholders will be valid if mailed to them at their respective addresses in the Register. Any such notice shall be deemed to have been given on the date on which it was so delivered.

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17.2. Notification via Companies Announcements Office of ISE

So long as the Notes are admitted to the Official List and the guidelines of the ISE so recommend, copies of all notices given in accordance with this Condition 17 shall also be sent to the Companies Announcements Office of the ISE.

18. GOVERNING LAW AND ENFORCEMENT

18.1. Governing Law

The Trust Documents and the Notes are governed by English law.

18.2. Arbitration

(a) Subject to paragraph (f) below, any dispute, claim or controversy between two or more of the Parties arising out of or in connection with any Trust Document or the Notes, including any question regarding their existence, validity or termination, shall be referred to and finally resolved by arbitration under the LCIA Rules (for the purposes of this Condition 18, the Rules).

(b) The number of arbitrators shall be three. Each Party shall nominate its own arbitrator for appointment by the LCIA Court, provided that, if there are three or more Parties to the relevant dispute, claim or controversy and those Parties do not agree to proceed so that there are only two sides to the arbitration, the LCIA Court shall nominate and appoint two arbitrators instead, provided further that, if the Security Trustee is among those Parties, the Security Trustee shall be entitled to nominate its own arbitrator who shall be appointed by the LCIA Court and the LCIA Court, instead of the remaining Parties (or any of them), shall nominate and appoint the other arbitrator. In each such case, the LCIA Court shall nominate and appoint a third arbitrator who shall act as the chairman.

(c) Each Party (i) expressly agrees and consents to this procedure for nominating and appointing the Arbitral Tribunal and (ii) irrevocably and unconditionally waives any right to choose its own arbitrator, to the extent that it is not required to do so under paragraph (b) above.

(d) The Arbitral Tribunal shall exercise best efforts to reach a final and binding award within six months of the Constitution of the Arbitral Tribunal.

(e) The seat, or legal place of arbitration, shall be London, England. The language used in the arbitral proceedings shall be English.

(f) To the extent allowed by law, the Note Trustee and/or the Security Trustee may take (i) proceedings in any court, English or otherwise and (ii) concurrent proceedings in any number of jurisdictions, in the case of either (i) or (ii), unless a response to a request for arbitration in relation to the relevant dispute, claim or controversy has been served, in which case, the Security Trustee and/or the Note Trustee, as applicable, shall not be permitted to take proceedings in any court in relation to the same, unless such arbitration proceedings have been abandoned by the relevant Parties without a final determination on the matter having been made by the Arbitral Tribunal. For the avoidance of doubt, this paragraph (f) shall not prevent the Note Trustee or the Security Trustee from pursuing any court proceedings in relation to the Transaction Documents where the purpose of such proceedings does not include the adjudication of a dispute, claim or controversy between two or more of the Parties (including, as applicable and without limitation, any proceedings for (A) the protection or enforcement of the Security or any part of it or (B) the mere preservation of the rights of the Noteholders or the other Secured Parties or any of them).

18.3. Waiver of Immunity

The Issuer irrevocably and unconditionally:

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(a) agrees not to claim any immunity from proceedings brought by the Secured Parties or any of them against it in relation to any Transaction Document and to ensure that no such claim is made on its behalf;

(b) consents generally to the giving of any relief or the issue of any process in connection with those proceedings; and

(c) waives all rights of immunity in respect of it or its assets.

19. RIGHTS OF THIRD PARTIES

No rights are conferred on any person under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of the Notes or these Conditions, but this does not affect any right or remedy of any person which exists or is available apart from that Act.

20. NO ENFORCEMENT AND LIMITED RECOURSE

20.1. No Enforcement

(a) Except as provided below, each of the Noteholders and the Note Trustee agrees that:

(i) only the Security Trustee may enforce the Security in accordance with the terms of the Security Documents;

(ii) neither the Note Trustee nor any of the Noteholders will take any steps or proceedings which would cause or are intended to cause the occurrence of an Insolvency Event or the appointment of an Insolvency Official in relation to the Issuer; and

(iii) in the case of each of the Noteholders and excluding for this purpose the Note Trustee, it will not take any other steps or action against the Issuer or the Secured Assets for the purpose of recovering any of the Secured Liabilities (including by exercising any rights of set-off) or enforcing any rights arising out of the Transaction Documents or the Notes against the Issuer or take any other action in respect of or concerning the Issuer or the Secured Assets.

(b) The provisions of paragraph (a) are subject to Condition 13.3 (Enforcement Action by Individual Noteholders).

20.2. Limited Recourse

(a) Each of the Noteholders, the Note Trustee and the Security Trustee agrees that, notwithstanding any other provision of any Transaction Document, all obligations of the Issuer to each Noteholder or, as applicable, to the Note Trustee or the Security Trustee, in respect of the Secured Liabilities owing to each Noteholder or, as the case may be, the Note Trustee or the Security Trustee, are limited in recourse to the Secured Assets and, upon the Security Trustee giving written notice to the Secured Parties that:

(i) it has determined in its sole opinion that there is no reasonable likelihood of there being any further realisations in respect of the Secured Assets (whether arising from enforcement of the Security or otherwise) which would be available to pay amounts outstanding under the Transaction Documents; and

(ii) all amounts available to be applied to pay amounts owing under the Transaction Documents have been so applied in accordance with the provisions of the Deed of Charge,

the Noteholders, the Note Trustee and the Security Trustee shall have no further claim against the Issuer in respect of any amounts owing to them which remain unpaid and such unpaid amounts shall be deemed to be discharged in full.

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(b) The provisions of this Condition 20 shall survive a termination of any of the Note Documents.

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SCHEDULE SPECIFIED OFFICES

PRINCIPAL PAYING AGENT

The Bank of New York One Canada Square

London E14 5AL

United Kingdom

IRISH PAYING AGENT

BNY Financial Services PLC 70 Sir John Rogerson's Quay

Dublin 2 Republic of Ireland

AGENT BANK

The Bank of New York One Canada Square

London E14 5AL

United Kingdom

REGISTRAR

The Bank of New York (Luxembourg), S.A. Aerogolf Center 1A Hoehenhof

L – 1736 Senningerberg Luxembourg

and/or such other or further Principal Paying Agent, other Paying Agents, Agent Bank and/or Registrar and/or specified offices as may from time to time be appointed or nominated by the Issuer with the approval of the Note Trustee, notice of which has also been given to the Noteholders.

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THE GLOBAL NOTE CERTIFICATES

The Global Note Certificates contain the following provisions which apply to the Notes in respect of which they are issued whilst they are represented by the Global Note Certificates, some of which modify the effect of the Conditions.

1. Accountholders

For so long as all of the Notes of any Class are represented by a Global Note Certificate and such Global Note Certificate is held on behalf of a clearing system, each person (other than another clearing system) who is for the time being shown in the records of Euroclear or Clearstream, Luxembourg (as the case may be) as the holder of a particular aggregate principal amount of such Notes (each, an Accountholder), (in which regard any certificate or other document issued by Euroclear or Clearstream, Luxembourg (as the case may be) as to the aggregate principal amount of such Notes standing to the account of any person shall, in the absence of manifest error, be conclusive and binding for all purposes) shall be treated as the holder of such aggregate principal amount of such Notes of that Class (and the expression Noteholders and references to holding of Notes and to holder of Notes shall be construed accordingly) for all purposes other than with respect to payments on such Notes, the right to which shall be vested, as against the Issuer and the Note Trustee, solely in the nominee for the relevant clearing system (the Relevant Nominee) in accordance with and subject to the terms of such Global Note Certificate. Each Accountholder must look solely to Euroclear or Clearstream, Luxembourg, as the case may be, for its share of each payment made to the Relevant Nominee. For the avoidance of doubt, the definition of "holders" and "Noteholders" contained in the Conditions applies solely to the Notes of any Class represented by Definitive Note Certificates.

2. Cancellation

Cancellation of any Note following its redemption will be effected by a reduction in the aggregate principal amount of the Notes in the Register and by the annotation of the appropriate schedule to the relevant Global Note Certificate.

3. Payments

Payments of principal and interest in respect of the Notes of any Class represented by a Global Note Certificate will be made upon presentation or, if no further payment is to be made in respect of the Notes of that Class, against presentation and surrender of such Global Note Certificate to or to the order of the Registrar or such other Agent as shall have been notified to the holder of the Global Note Certificate for such purpose.

Distributions of amounts with respect to the book-entry interests in the Notes of any Class held through Euroclear or Clearstream, Luxembourg will be credited, to the extent received by the Registrar, to the cash accounts of Euroclear or Clearstream, Luxembourg participants in accordance with the relevant system's rules and procedures.

A record of each payment made will be endorsed on the appropriate schedule to the relevant Global Note Certificate by or on behalf of the Registrar and shall be prima facie evidence that payment has been made.

4. Notices

So long as all the Notes of any Class are represented by a Global Note Certificate and such Global Note Certificate is held on behalf of a clearing system, notices to Noteholders may be given by delivery of the relevant notice to that clearing system for communication by it to entitled Accountholders in substitution for notification as required by the Conditions. Any such notice shall be deemed to have been given to the Noteholders on the second day after the day on which such notice is delivered to the relevant clearing system as aforesaid.

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5. Registration of Title

Registration of title to Notes of any Class in a name other than that of the Relevant Nominee will not be permitted unless Euroclear or Clearstream, Luxembourg, as appropriate, notifies the Issuer that it is unwilling or unable to continue as a clearing system in connection with a Global Note Certificate and a successor clearing system approved by the Note Trustee is not appointed by the Issuer within 90 days after receiving such notice from Euroclear or Clearstream, Luxembourg. In these circumstances, title to a Note may be transferred into the names of holders notified by the Relevant Nominee, in accordance with the Conditions, except that certificates in respect of Notes so transferred may not be available until 21 days after the request for transfer is duly made.

The Registrar will not register title to the Notes of any Class in a name other than that of the Relevant Nominee for a period of 15 calendar days preceding the due date for any payment of principal or interest in respect of the Notes of that Class.

6. Transfers

Transfers of book-entry interests in the Notes of each Class will be effected through the records of Euroclear, and Clearstream, Luxembourg and their respective participants in accordance with the rules and procedures of Euroclear and Clearstream, Luxembourg and their respective direct and indirect participants, as more fully described under the section entitled Clearing and Settlement Arrangements.

7. Exchange for Definitive Note Certificates

The Global Note Certificates are exchangeable for Definitive Note Certificates, free of charge to the holder, in whole but not in part, if Euroclear or Clearstream, Luxembourg is closed for business for a continuous period of 14 days (other than by reason of holiday, statutory order or otherwise) or has announced an intention permanently to cease business or has in fact done so and no alternative clearing system satisfactory to the Note Trustee is available.

The Registrar will not register the transfer of, or exchange of interests in, the Global Note Certificates for Definitive Note Certificates for a period of five calendar days ending on the date for any payment of principal or interest in respect of the Notes represented thereby.

If a Global Note Certificate has become exchangeable for Definitive Note Certificates, the Global Note Certificate shall be exchanged in full for Definitive Note Certificates and the Issuer will, at the cost of the Issuer (but against such indemnity as the Registrar or any relevant Paying Agent may require in respect of any tax or other duty of whatever nature which may be levied or imposed in connection with such exchange), cause sufficient Definitive Note Certificates to be executed and delivered to the Registrar for completion, authentication and dispatch to the relevant Noteholders. A person having an interest in the relevant Global Note Certificate must provide the Registrar with a written order containing instructions and such other information as the Issuer and the Registrar may require to complete, execute and deliver such Definitive Note Certificates.

The forms of Definitive Note Certificates which may be issued in exchange for a beneficial interest in the Global Note Certificates are set out under Part 2 of Schedule 1 (Form of Definitive Note Certificate) to the Note Trust Deed.

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TAXATION

The following is a general description of certain Russian and Dutch tax considerations relating to the Notes and the Mortgage Loans. It does not purport to be a complete analysis of all of the tax considerations relating to the Notes or the Mortgage Loans, whether in those countries mentioned or elsewhere. Prospective purchasers of the Notes should consult their own tax advisors as to which countries' tax laws could be relevant to acquiring, holding and disposing of the Notes and receiving payments of interest, principal and/or other amounts under the Notes and the consequences of such actions under the tax laws of those relevant countries. This summary is based upon the laws of the Russian Federation and The Netherlands as in effect on the date of this prospectus (which are subject to change, possibly with retroactive effect). The information and analysis contained within this section are limited to taxation issues, and prospective investors should not apply any information or analysis set out below to other areas, including (but not limited to) the legality of transactions involving the Notes.

The Russian Federation

Taxation of the Notes

General

The following is a summary of certain Russian tax considerations relevant to the purchase, ownership and disposition of the Notes, as well as the taxation of interest on the Mortgage Loans. As noted above, this summary is based on the laws of the Russian Federation in effect at the date of this Prospectus, which are subject to change (possibly with retroactive effect). The summary does not seek to address the applicability of, and procedures in relation to, taxes levied by regions, municipalities or other non-federal authorities of the Russian Federation. The summary does not seek to address the availability of double tax treaty relief in respect of the Notes, and it should be noted that there may be practical difficulties, including satisfying certain documentation requirements, involved in claiming double tax treaty relief. Prospective investors should consult their own advisors regarding the tax consequences of investing in the Notes. No representations with respect to the Russian tax consequences to any particular holder are made hereby.

The provisions of the Russian Tax Code applicable to holders of, and transactions with, the Notes are uncertain and lack interpretive guidance. Both the substantive provisions of the Russian Tax Code applicable to financial instruments and the interpretation and application of those provisions by the Russian tax authorities may be subject to more rapid and unpredictable change and inconsistency than in jurisdictions with more developed capital markets or taxation systems. In particular, the interpretation and application of such provisions will, in practice, rest substantially with local tax inspectorates.

In practice, interpretation by different tax inspectorates may be inconsistent or contradictory and may constitute the imposition of conditions, requirements or restrictions not stated by the law. Similarly, in the absence of binding precedents, court rulings on tax or related matters by different courts relating to the same or similar circumstances may also be inconsistent or contradictory.

For the purposes of this section, a non-resident Noteholder means (i) an individual person actually present in the Russian Federation for an aggregate period of less than 183 days within 12 successive months (excluding days of arrival in the Russian Federation, but including days of departure from Russia) or (ii) a legal entity, person or organisation in each case not organised under Russian law that holds and disposes of the Notes otherwise than through a permanent establishment in the Russian Federation. The law specifies that for determining the tax residence status for an individual in Russia, the period of stay in the Russian Federation is not interrupted for the individual's short-term departures (less than six months) from the Russian Federation for medical treatment or educational purposes.

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The Russian tax treatment of interest payments made by Customers to the Issuer under the Mortgage Loan Agreements may affect the Noteholders. See the section entitled Taxation of Payments under the Mortgage Loans below.

Non-Resident holders

A non-resident Noteholder should not be subject to any Russian taxes on receipt from the Issuer of amounts payable in respect of principal, premium or interest on the Notes, subject to what is stated in the section entitled Taxation of Payments under the Mortgage Loans.

A non-resident Noteholder generally should not be subject to any Russian taxes in respect of any gain or other income realised on the redemption, sale or other disposal of the Notes outside the Russian Federation, provided that the proceeds of such sale, redemption, or other disposal of the Notes are not received from a source within the Russian Federation.

In the event that proceeds from a sale, redemption or disposal of Notes are received from a source within the Russian Federation, a non-resident Noteholder that is a legal entity or organisation should not be subject to Russian tax in respect of such proceeds, provided that no portion thereof is attributable to accrued interest. Any portion of such sales proceeds attributable to accrued interest may be subject to Russian withholding tax on income at the rate of 20 per cent., subject to any available double tax treaty relief, even if the disposal itself results in a capital loss. In order to enjoy the benefits of an applicable double tax treaty, documentary evidence is required prior to payment being made to confirm the applicability of the double tax treaty under which benefits are claimed. Non-resident Noteholders that are legal entities and organisations should consult their own tax advisors with respect to this possibility.

If proceeds from a disposal of the Notes are received from a Russian source, a non-resident Noteholder who is an individual (non-resident individual Noteholders) will generally be subject to tax at a rate of 30 per cent., subject to any available double tax treaty relief, in respect of the gross proceeds from such disposal less any available cost deduction (which includes the purchase price of the Notes) and in respect of the interest income. In this regard, if the Notes are disposed of in the Russian Federation, for Russian personal income tax purposes the proceeds of such disposition are likely to be regarded as received from a Russian source. In certain circumstances, if the disposal proceeds are payable by a Russian legal entity, individual entrepreneur or a Russian permanent establishment of a foreign organisation, the payer may be required to withhold this tax or the non-resident individual may be liable to pay the tax. In such a situation, there is a risk that the taxable base may be affected by changes in the exchange rates between the currency of acquisition of the Notes, the currency of sale of the Notes and Roubles. However, procedures for advance treaty clearance are not provided for by the current Russian legislation with respect to non-resident individual Noteholders. Therefore, technically, for non-resident individual Noteholders, a reduction of withholding income tax provided by the double tax treaty between the Russian Federation and the country of tax residence of such non-resident individual Noteholder could not be obtained. If a non-resident individual Noteholder does not obtain double tax treaty relief at the time the proceeds from a disposal of the relevant Notes are paid to such non-resident individual Noteholder and income tax is withheld by the Russian payor of such income, the non-resident individual Noteholder may apply for a refund within one year from the end of the tax period in which the tax was withheld. However, there can be no assurance that such double tax treaty relief (or refund of any taxes withheld) will be available for a non-resident individual Noteholder. Non-resident individual Noteholders should consult their own tax advisors with respect to the tax consequences of the receipt of proceeds from a source within the Russian Federation in respect of a disposition of the Notes.

Where the proceeds from the disposition of the Notes are received from a Russian source, in order for the non-resident holder, whether an individual, legal entity or organisation, to enjoy the benefits of an applicable double tax treaty, documentary evidence is required prior to payment being made to confirm the applicability of the double tax treaty for which benefits are claimed. No procedures exist currently

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for non-resident Noteholders who are individuals to claim treaty benefit prior to the receipt of income. Consequently, such non-resident Noteholders may be required to claim a refund from the Russian government for taxes withheld, as discussed below.

Resident holders

A Noteholder who is an individual or a legal entity resident in the Russian Federation for tax purposes is subject to all applicable Russian taxes including any documentation requirements that may be required by law or practice in respect of gains from disposal of the Notes and interest received on the Notes. Resident Noteholders should consult their own tax advisors with respect to their tax position regarding the Notes.

Refund of Tax Withheld

For a Noteholder who is not an individual and for whom double tax treaty relief is available, if Russian withholding tax on income has been withheld by the source of payment, a refund of such tax is possible within three years from the end of the tax period in which the tax was withheld. In order to obtain a refund, the tax documentation confirming the right of the non-resident recipient of the income to double tax treaty relief is required.

For an individual Noteholder for whom double tax treaty relief is available, if Russian withholding tax on income has been withheld by the source of payment, a refund of such tax may be filed within one year after the end of the year in which the tax was withheld.

The Russian tax authorities may, in practice, require a wide variety of documentation confirming the right to benefits under a double tax treaty. Such documentation, in practice, may not be explicitly required by the Russian Tax Code.

Obtaining a refund of Russian tax withheld may be a time consuming process and can involve considerable practical difficulties.

Taxation of Payments under the Mortgage Loans

Taxation of Principal

In general, repayment of principal on funds borrowed by a Russian person to a non-resident legal person or organisation should not be subject to Russian withholding tax. However, if the payment is made by a Russian legal entity, there is residual uncertainty regarding the tax treatment of any part of such payment which is attributable to a discount if the Mortgage Loans were purchased at a discount. Based on the professional advice it has received, the Servicer believes that, based on laws in effect as of the date hereof, payments under the Mortgage Loans made to the Issuer should not be subject to withholding tax under the terms of the double taxation treaty between the Russian Federation and The Netherlands. However, there can be no assurance that such double tax relief will continue to be available.

Taxation of Interest

In general, payments of interest and penalties on funds borrowed by a Russian individual are not subject to Russian withholding income tax. However, if the funds are transferred to a non-resident legal person by a Russian legal entity, such amounts are subject to Russian withholding tax at a rate of 20 per cent., subject to reduction or elimination pursuant to the terms of an applicable double tax treaty. Based on the professional advice it has received, the Servicer believes that, based on the laws in effect as of the date hereof, transfers of the above payments under the Mortgage Loans made to the Issuer should not be subject to Russian withholding tax under the terms of the Russian Tax Code and an applicable double taxation treaty between the Russian Federation and The Netherlands. However, there can be no assurance that such double tax treaty relief will be available.

In addition, the prospective investors cannot be assured that they will obtain such exemption from withholding tax under the treaty after enforcement of the Security or any part of it. If, as a result of the

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enforcement, by the Security Trustee, of the Security or any part of it, interest under the Mortgage Loans becomes payable to the Security Trustee, the benefit of the double tax treaty between the Russian Federation and The Netherlands may cease and payment of interest may be subject to Russian withholding tax at a rate of 20 per cent. (or, potentially, 30 per cent. in respect of non-resident individual Noteholders).

Russian VAT is not applicable to the rendering of financial services involving the provision of a loan in monetary form. Therefore, no VAT should be payable in the Russian Federation on any payment of interest or principal in respect of the Mortgage Loans.

VAT on Sale of Mortgage Certificates to Issuer

According to Article 13 of the Mortgage Law, a mortgage certificate is a registered security. Further, according to Article 48 of the Mortgage Law, the transfer of rights under a mortgage certificate has legal consequences which are similar to the legal consequences of an assignment of a receivable which is generally treated as a disposal of property rights under applicable Russian tax and civil law.

According to the Russian Tax Code, the disposal of a security is generally exempt from Russian VAT.

However, according to the amendments to the Russian Tax Code which came into force on 1 January 2006, a disposal of property rights is subject to Russian VAT. Based on Article 48 of the Mortgage Law, the transfer of the rights under the Mortgage Certificates from the Originator to the Issuer (and their subsequent transfer by the Issuer to a third party registered as a taxpayer in the Russian Federation (such as the Originator pursuant to an exercise of either Option)) could be regarded as a disposal of property rights for Russian VAT purposes.

However, the Russian Tax Code does not provide any clear guidance for determining the VAT taxable base for the disposal of property rights where the underlying assets involve transactions which are themselves exempt from VAT, as in the case of the Mortgage Certificates.

Based on the above provisions of applicable Russian tax and civil law, the sale of the Mortgage Certificates to the Issuer should not be subject to Russian VAT, provided that the receivables under the Mortgage Loans were disposed of at their outstanding par value plus interest accrued, but not paid, up to the Completion Date.

However, there is residual uncertainty regarding the VAT treatment of the sale of the Mortgage Certificates in the Russian Federation due to a lack of unambiguous and direct guidance on this issue under the Russian Tax Code. The Originator has received no assurance that the tax authorities will not challenge the interpretation that the sale of the Mortgage Certificates (including their disposal by the Issuer to the Originator pursuant to the exercise of an Option) should be exempt from VAT.

The Netherlands

General

The following summary describes the principal Dutch tax consequences of the acquisition, holding, redemption and disposal of the Notes, but does not purport to be a comprehensive description of all Dutch tax considerations thereof. This summary is intended as general information only and each prospective investor should consult a professional tax adviser with respect to the tax consequences of an investment in the Notes.

This summary is based on the tax legislation, published case law, treaties, regulations and published policy in force as of the date of this Prospectus, though it does not take into account any developments or amendments thereof after that date whether or not such developments or amendments have retroactive effect.

This summary does not address the Dutch tax consequences for:

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• holders of Notes holding a substantial interest (aanmerkelijk belang) in the Issuer. Generally speaking, a holder of Notes holds a substantial interest in the Issuer if such holder of Notes, alone or, where such holder is an individual, together with his or her partner (statutory defined term) or certain other related persons, directly or indirectly, holds (a) an interest of 5 per cent. or more of the total issued capital of the Issuer or of 5 per cent. or more of the issued capital of a certain class of shares of the Issuer, (b) rights to acquire, directly or indirectly, such interest or (c) certain profit sharing rights in the Issuer;

• pension funds or other entities that are exempt from Dutch corporate income tax; or

• investment institutions (fiscale beleggingsinstellingen).

Withholding tax

All payments made by the Issuer under the Notes may be made free of withholding or deduction for any taxes of whatsoever nature imposed, levied, withheld or assessed by The Netherlands or any political subdivision or taxing authority thereof or therein.

Corporate and individual income tax

Residents of The Netherlands

If a holder is a resident or deemed to be a resident of The Netherlands for Dutch tax purposes and is fully subject to Dutch corporate income tax or is only subject to Dutch corporate income tax in respect of its enterprise to which the Notes are attributable, income derived from the Notes and gains realised upon the redemption or disposal of the Notes are generally taxable in The Netherlands.

If an individual holder is a resident or deemed to be a resident of The Netherlands for Dutch tax purposes (including the individual holder who has opted to be taxed as a resident of The Netherlands), income derived from the Notes and gains realised upon the redemption or disposal of the Notes are taxable at the progressive rates of the Dutch Income Tax Act 2001, if:

• the holder has an enterprise or an interest in an enterprise, to which enterprise the Notes are attributable; or

• such income or gains qualify as income from miscellaneous activities (resultaat uit overige werkzaamheden), which include the performance of activities with respect to the Notes that exceed regular, active portfolio management (normaal, actief vermogensbeheer).

If neither of the above two conditions applies to the holder of the Notes, taxable income with regard to the Notes must be determined on the basis of a deemed return on income from savings and investments (sparen en beleggen), rather than on the basis of income actually received or gains actually realised. At present, this deemed return on income from savings and investments has been fixed at a rate of 4 per cent. of the average of the individual's yield basis (rendementsgrondslag) at the beginning of the calendar year and the individual's yield basis at the end of the calendar year, insofar as the average exceeds a certain threshold. The average of the individual's yield basis is determined as the fair market value of certain qualifying assets held by the holder of the Notes less the fair market value of certain qualifying liabilities on 1 January and 31 December, divided by two. The fair market value of the Notes will be included as an asset in the individual's yield basis. The deemed return on income from savings and investments of 4 per cent. will be taxed at a rate of 30 per cent.

Non-residents of The Netherlands

If a holder is not a resident nor deemed to be a resident of The Netherlands for Dutch tax purposes (nor has opted to be taxed as a resident of The Netherlands), such holder is not taxable in respect of income derived from the Notes and gains realised upon the redemption or disposal of the Notes, unless:

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• the holder has an enterprise or an interest in an enterprise that is, in whole or in part, carried on through a permanent establishment or a permanent representative in The Netherlands, to which permanent establishment or a permanent representative the Notes are attributable; or

• the holder is entitled to a share in the profits of an enterprise that is effectively managed in The Netherlands, other than by way of securities or through an employment contract, and to which enterprise the Notes are attributable; or

• the holder is an individual and such income or gains qualify as income from miscellaneous activities in The Netherlands, which include the performance of activities in The Netherlands with respect to the Notes that exceed regular, active portfolio management.

Gift and inheritance taxes

Residents of The Netherlands

Generally, gift and inheritance taxes will be due in The Netherlands in respect of the acquisition of the Notes by way of a gift by, or on the death of, a holder that is a resident or deemed to be a resident of The Netherlands for the purposes of Dutch gift and inheritance tax at the time of the gift or his or her death.

A holder of Dutch nationality is deemed to be a resident of The Netherlands for the purposes of the Dutch gift and inheritance tax if he or she has been resident in The Netherlands during the 10 years preceding the gift or his or her death. A holder of any other nationality is deemed to be a resident of The Netherlands for the purposes of the Dutch gift and inheritance tax if he or she has been resident in The Netherlands at any time during the 12 months preceding the time of the gift. The same 12-month rule may apply to entities that have transferred their seat of residence out of The Netherlands.

Non-residents of The Netherlands

No gift or inheritance taxes will arise in The Netherlands in respect of the acquisition of the Notes by way of gift by, or as a result of the death of, a holder that is neither a resident nor deemed to be a resident of The Netherlands for the purposes of the Dutch gift and inheritance tax, unless:

• such holder at the time of the gift has, or at the time of his or her death had, an enterprise or an interest in an enterprise that is or was, in whole or in part, carried on through a permanent establishment or a permanent representative in The Netherlands and to which permanent establishment or permanent representative the Notes are or were attributable; or

• the Notes are or were attributable to the assets of an enterprise that is effectively managed in The Netherlands and the donor is or the deceased was entitled, other than by way of securities or through an employment contract, to a share in the profits of that enterprise at the time of the gift or at the time of his or her death; or

• in the case of a gift of the Notes by a holder that at the date of the gift was neither a resident nor deemed to be a resident of The Netherlands, such holder dies within 180 days after the date of the gift, while at the time of his or her death being a resident or being deemed to be a resident of The Netherlands.

Value added tax

In general, no VAT will arise in The Netherlands in respect of payments in consideration for the issue of the Notes or in respect of the cash payment made under the Notes, or in respect of a transfer of Notes.

Other taxes and duties

No registration tax, customs duty, transfer tax, stamp duty or any other similar documentary tax or duty will be payable in The Netherlands by a holder in respect of or in connection with the subscription, issue, placement, allotment, delivery or transfer of the Notes.

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EU Savings Directive

Under EC Council Directive 2003/48/EC on the taxation of savings income, each Member State is required, from 1 July 2005, to provide to the tax authorities of another Member State details of payment of interest (or similar income) paid by a person within its jurisdiction to an individual resident in that other Member State. However for a transitional period, Belgium, Luxembourg and Austria are instead required (unless during that period they elect otherwise) to operate a withholding system in relation to such payments (the ending of such transitional period being dependent upon the conclusion of certain other agreements relating to information exchange with certain other countries).

Also with effect from 1 July 2005, a number of non-EU countries, including Switzerland, and certain dependent or associated territories of certain Member States have agreed to adopt similar measures (either the provision of information or transitional withholding – a withholding system in the case of Switzerland) in relation to payments made by a person within its jurisdiction to, or collected by such a person for, an individual resident in a Member State. In addition, the Member States have entered into reciprocal provision of information or transitional withholding arrangements with certain of those dependent or associated territories in relation to payments made by a person in a Member State to, or collected by such a person for, an individual resident in one of those territories.

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CLEARING AND SETTLEMENT ARRANGEMENTS

The information set out below is subject to any change in or reinterpretation of the rules, regulations and procedures of Euroclear or Clearstream, Luxembourg (together, the Clearing Systems) currently in effect. The information in this section concerning the Clearing Systems has been obtained from sources that the Issuer believes to be reliable, but neither the Issuer nor the Lead Managers take any responsibility for the accuracy of this section. Investors wishing to use the facilities of a Clearing System are advised to confirm the continued applicability of the rules, regulations and procedures of the relevant Clearing System. Neither the Issuer nor any other party to the Agency Agreement will have any responsibility or liability for any aspect of the records relating to, or payments made on account of, beneficial ownership interests in the Notes held through the facilities of any Clearing System or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.

Clearing Systems

Euroclear and Clearstream, Luxembourg

Euroclear and Clearstream, Luxembourg each hold securities for their customers and facilitate the clearance and settlement of securities transactions by electronic book-entry transfer between their respective account holders. Euroclear and Clearstream, Luxembourg provide various services including safekeeping, administration, clearance and settlement of internationally traded securities and securities lending and borrowing. Euroclear and Clearstream, Luxembourg also deal with domestic securities markets in several countries through established depositary and custodial relationships. Euroclear and Clearstream, Luxembourg have established an electronic bridge between their two systems across which their respective participants may settle trades with each other.

Euroclear and Clearstream, Luxembourg customers are worldwide financial institutions, including underwriters, securities brokers and dealers, banks, trust companies and clearing corporations. Indirect access to Euroclear and Clearstream, Luxembourg is available to other institutions that clear through or maintain a custodial relationship with an account holder of either system.

Registration and Form

Book-entry interests in each Class of Notes will be represented by the corresponding Global Note Certificate registered in the name of a nominee of, and held by, a common depositary for Euroclear and Clearstream, Luxembourg. As necessary, the Registrar will adjust the amounts of Notes on the Register for the accounts of Euroclear and Clearstream, Luxembourg to reflect the amounts of Notes held through Euroclear and Clearstream, Luxembourg, respectively. Beneficial ownership of book-entry interests in Notes will be held through financial institutions as direct and indirect participants in Euroclear and Clearstream, Luxembourg.

The aggregate holdings of book-entry interests in the Notes in Euroclear and Clearstream, Luxembourg will be reflected in the book-entry accounts of each such institution. Euroclear or Clearstream, Luxembourg, as the case may be, and every other intermediate holder in the chain to the beneficial owner of book-entry interests in the Notes will be responsible for establishing and maintaining accounts for their participants and customers having interests in the book-entry interests in the Notes. The Registrar will be responsible for maintaining a record of the aggregate holdings of Notes registered in the name of a common nominee for Euroclear and Clearstream, Luxembourg and/or, if Definitive Note Certificates are issued in the limited circumstances described under the section entitled The Global Note Certificates – Exchange for Definitive Note Certificates, holders of Notes represented by those Definitive Note Certificates. The Principal Paying Agent will be responsible for ensuring that payments received by it from the Issuer for holders of book-entry interests in the Notes holding through Euroclear and Clearstream, Luxembourg are credited to Euroclear or Clearstream, Luxembourg, as the case may be.

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The Issuer will not impose any fees in respect of holding the Notes. However, holders of book-entry interests in the Notes may incur fees normally payable in respect of the maintenance and operation of accounts in Euroclear or Clearstream, Luxembourg.

Clearing and Settlement Procedures

Initial Settlement

Upon their original issue, the Notes will be in global form represented by the Global Note Certificates. Interests in the Notes will be in uncertified book-entry form. Purchasers electing to hold book-entry interests in the Notes through Euroclear and Clearstream, Luxembourg accounts will follow the settlement procedures applicable to conventional Eurobonds. Book-entry interests in the Notes will be credited to Euroclear and Clearstream, Luxembourg participants' securities clearance accounts on the business day following the Issue Date against payment for value on the Issue Date.

Secondary Market Trading

Secondary market trades in the Notes will be settled by transfer of title to book-entry interests in the Clearing Systems. Title to such book-entry interests will pass by registration of the transfer within the records of Euroclear or Clearstream, Luxembourg, as the case may be, in accordance with their respective procedures. Book-entry interests in the Notes may be transferred within Euroclear and within Clearstream, Luxembourg and between Euroclear and Clearstream, Luxembourg in accordance with procedures established for these purposes by Euroclear and Clearstream, Luxembourg.

General

Neither Euroclear or Clearstream, Luxembourg is under any obligation to perform or continue to perform the procedures referred to above, and such procedures may be discontinued at any time.

None of the Issuer, the Note Trustee or any of their agents will have any responsibility for the performance by Euroclear or Clearstream, Luxembourg or their respective participants of their respective obligations under the rules and procedures governing their operations or the arrangements referred to above.

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SUBSCRIPTION AND SALE

Subscription Agreement

The Lead Managers have, pursuant to and in accordance with a subscription agreement (the Subscription Agreement dated 10 July 2007, jointly and severally agreed to subscribe or procure subscribers for the Class A Notes and the Class B Notes on or before the Issue Date. Further, pursuant to and in accordance with the Subscription Agreement, Raiffeisen Zentralbank Österreich AG (as Lead Manager) has agreed to subscribe for the Class C Notes on the Issue Date and the Originator has agreed to purchase the Class C Notes from Raiffeisen Zentralbank Österreich AG on the Issue Date (immediately following the purchase thereof by Raiffeisen Zentralbank Österreich AG).

United Kingdom

Each Manager has represented and agreed that, except as permitted by the Subscription Agreement:

(a) it has not offered or sold and, prior to the expiry of the period of six months from the Issue Date, will not offer or sell any Notes to persons in the United Kingdom except to persons whose ordinary activities involve the acquisition, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995 (as amended);

(b) (i) it is a person whose ordinary activities involve the acquisition, holding, managing or disposing of investments (as principal or agent) for the purposes of its business and (ii) it has not offered or sold and will not offer or sell any Notes other than to persons whose ordinary activities involve the acquisition, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or who it is reasonable to expect will acquire, hold, manage or dispose of investments (as principal or agent) for the purposes of their businesses where the issue of the Notes would otherwise constitute a contravention of Section 19 of the Financial Services and Markets Act 2000 (FSMA) by the Issuer;

(c) it has only communicated, or caused to be communicated, and will only communicate, or cause to be communicated, an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue of the Notes in circumstances in which Section 21(1) of the FSMA would not, if the Issuer was not an authorised person, apply to the Issuer; and

(d) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Notes in, from or otherwise involving the United Kingdom.

General

Subject to obtaining the approval of this Prospectus by the IFSRA in accordance with the Investment Funds, Companies & Miscellaneous Provisions Act 2005 Part V and the EU (Prospectus) Regulations 2005 for the Notes to be admitted to trading on the ISE's regulated market and to be admitted to the Official List, no action has been taken by the Issuer or any of the Lead Managers that would, or is intended to, permit a public offer of the Notes in any country or jurisdiction where any such action for that purpose is required. Accordingly, each Lead Manager has undertaken that it will not, directly or indirectly, offer or sell any Notes or distribute or publish any offering circular, prospectus, form of application, advertisement or other document or information in any country or jurisdiction except under circumstances that will, to the best of its knowledge and belief, result in compliance with any applicable laws and regulations and all offers and sales of Notes by it will be made on the same terms.

Responsibilities of Prospective Investors and Third Parties

The distribution of this Prospectus and the offering, sale or delivery of any Notes in certain jurisdictions may be restricted by law. This Prospectus does not constitute, and may not be used for the

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purposes of, an offer or solicitation by any person in any jurisdiction in which such offer or solicitation is not authorised or to any person to whom it is unlawful to make such offer or solicitation and no action is being taken to permit an offering of the Notes or the distribution of this Prospectus in any jurisdiction where such action is required.

Persons into whose hands this Prospectus comes are required by the Issuer and the Lead Managers to comply with all applicable laws and regulations in each country or jurisdiction in which they purchase, offer, sell or deliver any Note or have in their possession, distribute or publish this Prospectus or any other offering material relating to the Notes, in all cases, at their own expense.

Neither the Issuer nor the Lead Managers (or either of them) make any representation to any investor in the Notes regarding the legality of their investment under any applicable laws. The contents of this Prospectus should not be construed as providing legal, business, accounting or tax advice. Each prospective investor should consult its own legal, business, accounting and tax advisers prior to making a decision to invest in the Notes.

Each person contemplating making an investment in the Notes must make its own investigation and analysis of the Issuer and the terms of the offering, including the merits and risks involved, and its own determination of the suitability of any such investment, with particular reference to its own investment objectives and experience and any other factors which may be relevant to it in connection with such investment. Any investor in the Notes should be able to bear the economic risk of an investment in the Notes for an indefinite period of time.

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GENERAL INFORMATION

Authorisation

The issue of the Notes was duly authorised by a resolution of the Board of Directors of the Issuer dated 4 July 2007.

Admission to ISE

An application has been made to the Irish Financial Services Regulatory Authority in its capacity as competent authority under the Investment Funds, Companies & Miscellaneous Provisions Act 2005 Part V and Directive 2003/71/EC for the Notes to be admitted to the official list of the ISE (the Official List) and admitted to trading on the ISE's regulated market.

The admission of the Notes to trading on ISE will be expressed as a percentage of their nominal amount, excluding any accrued interest. It is expected that the admission of the Notes to trading on ISE will be effected on or about 18 July 2007, subject only to the issuance of the Notes. Prior to such admission to trading, dealings in the Notes will be permitted by ISE in accordance with its guidelines.

Listing Expenses

The estimated expenses associated with the admission to trading on the ISE of the Notes are expected to be around €5,000.

Warehouse Documents

To facilitate the issuance of the Notes, on and around 22 and 27 December 2006, the Issuer entered into certain financing, security and related documentation for the purposes of the acquisition by the Issuer of the Mortgage Portfolio in three tranches from the Originator (such documentation as amended (excluding the Master Purchase Agreement, each Purchase Amendment Agreement and the Corporate Services Agreement) being the Warehouse Documents. The financing obtained by the Issuer under the Warehouse Documents was provided by ZAO Raiffeisenbank Austria, Raiffeisen Zentralbank Österreich AG and HSBC Bank plc as joint arrangers (the Joint Arrangers) and as creditors and by the Originator as a creditor, respectively, and is to be refinanced in full on the Issue Date with the proceeds of the Notes.

Pursuant to respective English and Russian law release and termination instruments, on the Issue Date, the Warehouse Obligations and the security created under the Warehouse Documents will be released in full and the Warehouse Documents will be terminated. As a condition to such release, the Issuer and the Originator will issue a certificate confirming, inter alia, that the Issuer (a) is and will remain solvent upon such release (b) will be free of any present and future actual or contingent liabilities in respect of the Warehouse Documents upon such release and (c) has not entered into any transactions other than pursuant to the Warehouse Documents and the Transaction Documents.

See also The Notes – Use of Proceeds.

Revenue and principal received by the Issuer under the Mortgage Portfolio during the first Collection Period (which is to commence on the day immediately following the Portfolio Cut Off Date), excluding the purchase price received by the Issuer in respect of the Repurchased Mortgage Loans (which is an aggregate amount equal to US$789,817 plus certain interest accrued but not yet paid under such loans) is to be credited to the Revenue Ledger and the Principal Ledger respectively, as described under Cash Management, for further application on the first Note Payment Date in accordance with the Pre-Enforcement Payment Priorities.

No outstanding liabilities or encumbrances

Save as disclosed in this Prospectus, the Issuer has no outstanding loan capital, borrowings, indebtedness or contingent liabilities, nor has the Issuer created any mortgages or charges or given any guarantees.

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207

No material contracts

Since its date of incorporation and excluding the Subscription Agreement, each of the Warehouse Documents, the Master Purchase Agreement (as amended) and the Corporate Services Agreement, the Issuer has not entered into any material contract, being a contract entered into other than in its ordinary course of business.

No litigation

The Issuer is not involved in any legal, arbitration or governmental proceedings (including any proceedings which are pending or threatened of which the Issuer is aware) which may have or have had in the 12 months preceding the date of this Prospectus a significant effect on the financial position of the Issuer.

Issuer Auditor

The independent auditors of the Issuer are PricewaterhouseCoopers Accountants N.V. of Thomas R. Malthusstraat 5 1066 JR Amsterdam, The Netherlands as the independent accountants (the Issuer Auditor). Since its date of incorporation, the Issuer has not produced any financial statements, though it has been active (see Warehouse Documents above). The Issuer intends to produce and publish annual financial statements to be audited by the Issuer Auditor following the expiry of each of its financial years.

The Issuer Auditor is a member of the Royal Dutch Institute of Registered Auditors (Koninklijke Nederlands Instituut van Registeraccountants (NIvRA)).

Although the Issuer has commenced operations, as described under Warehouse Documents above, financial statements of the Issuer have not yet been produced.

Transaction Documents

Copies of the following documents will be available in physical form for inspection at the offices of each Paying Agent and the registered office of the Issuer during usual business hours on any weekday (Saturdays, Sundays and public holidays excepted) from the date of this Prospectus until redemption of the Notes in full:

• the constitutional documents of the Issuer (with an English translation thereof);

• the Subscription Agreement;

• final versions of each of the other Transaction Documents; and

• this Prospectus.

Note Trustee's and Security Trustee's Action

The Transaction Documents provide for the Note Trustee and the Security Trustee to take action on behalf of the Noteholders or (as the case may be) the Secured Parties in certain circumstances, but only if the Note Trustee and the Security Trustee is indemnified and/or secured to its satisfaction. It may not be possible for the Note Trustee and the Security Trustee to take certain actions and accordingly in such circumstances the Note Trustee and the Security Trustee will be unable to take such actions, notwithstanding the provision of an indemnity to them, and it will be for the Noteholders or the Secured Parties (as applicable) to take such actions directly.

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INDEX OF DEFINED TERMS

For each case of reference, below is an index of certain capitalised terms used in this Prospectus and in each case, the page numbers at which the relevant definition appears. Capitalised terms used in the Conditions have the meanings given to them in the Conditions. Capitalised terms used elsewhere in this Prospectus (except as otherwise defined) have the meaning given to them in the Conditions.

£ .................................................................. 7 € .................................................................. 7 Account Interest General Amount....... 52, 143 Account Interest Sweep Amount......... 52, 144 Accountholder.......................................... 193 Accrued Interest ................................. 18, 144 Action ...................................................... 184 Administrative Parties .............................. 144 Affected Party .......................................... 144 Agency Agreement............................143, 144 Agent Bank .................................10, 143, 144 Agent Bank Determination ....................... 144 Agent Fees ........................................144, 178 Agent Liabilities................................144, 178 Agents...................................................... 144 an applicable Russian entity...................... 162 Ancillary Rights ....................................... 144 Applicable Margin.................................... 144 Arrears Management and Problem Loans Department .............................................. 130 ARt ............................................................ 56 Austrian Raiffeisen Banking Group .......... 137 Authorised Signatory................................ 144 Available Redemption Funds.................... 144 Back-up Servicer ................................ 11, 144 Back-up Servicer Event .............................. 26 Back-up Servicer Fees .......................145, 178 Back-up Servicer Liabilities...............145, 178 Back-up Servicing Agreement .................. 145 Barclays ..................................................... 11 Barclays Group ........................................ 140 Barclays Swap Agreement.................101, 145 Basic Terms Modification......................... 186 Benefit ..................................................... 145 BNY ........................................................ 145 BNY Fee Letter ........................................ 145 Breach of Duty......................................... 145 BRt............................................................. 56 Business Day.....................................145, 174 Call Centre............................................... 126 Call Option .................................17, 146, 176 Cash Flow Determination Date ................. 146 Cash Management Agreement .................. 146 Cash Management Report........................... 16 Cash Management Services ...................... 146 Cash Manager .............................10, 143, 146 Cash Manager Fees ...........................146, 178 Cash Manager Liabilities ...................146, 178 Cash Swap Collateral ................................. 54 CBR............................................................. 4 CEE ......................................................... 140

Class.........................................................146 Class A Interest Arrears ............................146 Class A Noteholders .................................146 Class A Notes .....................................12, 143 Class A PDL.......................................53, 146 Class B Interest Arrears.............................146 Class B Noteholders..................................146 Class B Notes .....................................12, 143 Class B PDL.......................................53, 146 Class C Interest Arrears.............................146 Class C Noteholders..................................146 Class C Notes .....................................12, 143 Class C PDL.......................................53, 146 Clean-up Call Exercise Notice...................146 Clean-up Call Payment Date ............. 146, 176 Clean-up Call Threshold .....................17, 146 Clearing Systems ......................................202 Clearstream, Luxembourg ............................ 4 Collateral Agent..................................10, 146 Collection Period ................................16, 146 Collection Period End Date .................16, 146 Common Depositary ...............................4, 11 Completion Date.........................................63 Conditions ............................................1, 147 Corporate Services Agreement ..................147 CPR............................................................93 Credit and Liquidity Enhancement Priorities................................................... 58, 147, 182 Credit Support Annex ...............................147 Current Monthly Annuity Payment..............85 Custodian ...........................................11, 147 Custodian Agreement................................147 Custodian Fees.................................. 147, 178 Custodian Liabilities ......................... 147, 178 Customer ............................................62, 147 Customer Files..........................................147 Daily Settlement Date .................................59 Day Count Fraction...................................147 Deed of Charge................................. 143, 147 Default .....................................................147 Defaulted Mortgage Certificate .................104 Defaulting Party........................................147 Deferred Interest Arrears...........................147 Definitive Note Certificates.......................... 4 Distribution Account Agreement ...............147 Dollars..................................................7, 147 Duplicate Records.....................................119 Dutch Ineligible Securities ................ 118, 147 Eligibility Criteria.....................................148 Enforcement .............................................184 Enforcement Action ..................................148

INDEX OF DEFINED TERMS

209

Enforcement Notice...........................148, 177 Enforcement Procedures........................... 148 Enforcement Services ................................. 20 Enforcement Services Agreement ............. 148 English Law Release and Termination Deed................................................................ 148 Entitled Persons.................................148, 179 euro.............................................................. 7 Euroclear...................................................... 4 Event of Default ................................148, 183 Extraordinary Resolution.......................... 148 Fee Letters ............................................... 148 Final Discharge Date ................................ 148 Final Maturity Date ............................ 12, 148 First Subsequent Fitch Rating Event ......... 101 Fitch ...............................................1, 11, 148 Fixed Interest Amounts......................148, 170 Fixed Interest Payment Date ..............148, 170 Fixed Interest Period....................13, 148, 171 Fixed Rate of Interest ............................... 148 Floating Interest Amounts..................148, 171 Floating Interest Payment Date ..........148, 171 Floating Interest Period....................... 13, 149 Floating Rate of Interest ....................149, 171 Force Majeure Event ................................ 109 FSMA...................................................... 204 GFS ........................................................... 41 Global Note Certificates ......................... 4, 13 Governmental Authority........................... 149 holder....................................................... 149 holder of Notes......................................... 193 holding of Notes....................................... 193 IFRS ........................................................ 141 IFSRA.................................................. 1, 149 Illegality................................................... 149 Inconvertibility Event ............................... 149 Information Date ........................................ 15 Initial Fitch Rating Event.......................... 101 Initial Reserve Fund Required Amount . 1, 149 Insolvency Event...................................... 149 Insolvency Official ................................... 150 Insurance Policy....................................... 150 Insurers .................................................... 150 Interest Amount........................................ 150 Interest Determination Date...................... 150 Interest Period ...................................... 1, 150 International Account Bank .........11, 138, 150 International Account Bank Fees .......150, 178 International Account Bank Liabilities..... 150, 178 International Issuer Accounts.................... 150 IPAO ......................................................... 56 IRFA.......................................................... 56 Irish Paying Agent.......................10, 143, 150 ISDA ....................................................... 150 ISDA Master ...............................15, 101, 150 ISE....................................................... 1, 150 Issue Date ...................................12, 143, 151 Issuer ...................................... 1, 10, 143, 151

Issuer Accounts.........................................151 Issuer Auditor ...........................................207 Issuer Collection Account .........................151 Issuer Collection Account Agreement........151 Issuer Collection Account Bank ..........11, 151 Issuer Collection Account Bank Fees 151, 178 Issuer Collection Account Bank Liabilities......................................................... 151, 178 Issuer Covenants.......................................151 Issuer Distribution Account.......................151 Issuer Dutch Account................................151 Issuer Jurisdiction .....................................151 Issuer Rouble Administrative Account ......151 Joint Arrangers .........................................206 KKB.........................................................124 Large Loans................................................82 Late Fees ............................................65, 152 Law on Personal Data .................................39 LCIA Rules ..............................................152 Lead Managers ...................................11, 152 Lead Managers Fee Letter .........................152 Ledger ........................................................51 Listing Agent..............................................11 London Business Day ...............................152 LTV ...........................................................82 Managing Director..............................10, 152 Market Abuse Directive ............................108 Master Framework Agreement ..................152 Master Purchase Agreement......................152 Material Adverse Effect ............................152 Maximum Liabilities...................................88 Member State .............................................. 9 Minimum Amount ....................................152 minimum living costs..................................88 Minimum Short-Term Rating....................122 MIR............................................................64 Modelling Assumptions ..............................93 Monthly Annuity Payment ..........................85 Monthly Servicer Report .....................15, 152 Moody's.......................................... 1, 11, 152 Mortgage Certificate .................................153 Mortgage Law ............................................34 Mortgage Loan .........................................153 Mortgage Loan Agreement........................153 Mortgage Loan Documents .......................153 Mortgage Loan Interest Rate .......................64 Mortgage Loan Payment Date .....................64 Mortgage Portfolio................................1, 153 Mortgaged Properties..............................1, 62 Mortgaged Property ..................................153 Mortgages...................................................62 Moscow Business Day ........................59, 152 NAUFOR .................................................142 NESL .........................................................56 Net Family Income .....................................88 Netherlands GAAP ...................................... 7 NFA .........................................................142 NM.............................................................64 Non-Cash Swap Collateral ..................54, 153

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Non-Conforming Loan ................17, 106, 153 Non-Payment Servicer Event.................... 108 non-resident individual Noteholders.......... 196 non-resident Noteholder ........................... 195 Note ......................................................... 168 Note Certificate.................................153, 168 Note Documents....................................... 153 Note Payment Date............................... 1, 153 Note Principal Payment ............................ 153 Note Trust Deed ....................................... 143 Note Trustee................................10, 143, 154 Note Trustee............................................. 154 Noteholder ............................................... 168 Noteholders.......................................153, 193 Notes ................................................... 1, 143 Notional Excess Spread Level............. 57, 154 NPDt .............................................55, 56, 154 Obligations............................................... 154 Obligor .................................................... 154 Official List...................................1, 154, 206 Operating Procedures ............................... 154 Option...................................................... 154 Option Exercise Notice............................. 154 Option Price ................................18, 106, 154 Ordinary Shares........................................ 135 Originator .......................................1, 10, 154 Originator Warranties................................. 99 other regular payments ............................... 88 Outstanding Principal Balance.................. 154 PAOAt ....................................................... 56 PAOBt ....................................................... 57 PAOt .............................................56, 57, 155 Parameters of Mortgage Loan Products....... 82 PARTAD ................................................. 142 Paying Agents ...................................143, 155 Payment Priorities .................................... 155 PDL Application Order....................... 53, 155 PDL Rectification Order..................... 58, 155 Permitted Issuer Substitution .................... 155 Pledge Agreement .............................143, 155 Portfolio Cut Off Date ........................ 12, 155 Portfolio Servicing and Quality Control Department .............................................. 130 Post-Enforcement Payment Priorities.155, 180 Potential Event of Default......................... 155 Pre-Enforcement Payment Priorities ......... 156 Pre-Enforcement Principal Payment Priorities.........................................................156, 180 Pre-Enforcement Revenue Payment Priorities.........................................................156, 177 Principal Against Revenue Shortfall Reallocation ..................................50, 52, 156 Principal Amount Outstanding.................. 156 Principal Collections .......................... 52, 156 Principal Deficiency................................... 53 Principal Deficiency Ledgers.............. 53, 156 Principal Ledger................................. 52, 156 Principal Loss .................................... 53, 156 Principal Paying Agent................10, 143, 156

Principal Receipts ...............................52, 156 Principal Receivables ................................157 Principal Recoveries ...........................52, 157 Principal Transaction Documents ..............157 property expenditures..................................88 Prospectus ................................................157 Prospectus Directive .................................... 1 Prudent Mortgage Lender..........................100 Purchase Amendment Agreements ............157 Put Option .................................. 17, 106, 157 Rated Notes ..............................................157 Rated Notes Redemption Date...................157 Rating Agencies.............................. 1, 11, 157 Rating Event.............................................101 RBRU.................................................11, 137 Receivables...............................................157 Receiver ...................................................157 record date................................................173 Redemption Notice ........................... 157, 176 Reference Banks .......................................157 Register ....................................................157 Registrar ..................................... 11, 143, 157 Regulatory Direction.................................158 Related Security........................................158 Relevant Date ................................... 158, 183 relevant Mortgage Certificate ......................99 Relevant Nominee.....................................193 Representative Amount.............................158 Repurchased Mortgage Loans .....................12 Repurchased Pool Principal Amount .........158 Repurchased Pool Revenue Amount....52, 158 Requirement of Law .................................158 Reserve Fund................................ 50, 54, 158 Reserve Fund Base Case Amount..............158 Reserve Fund Drawing..............................159 Reserve Fund Ledger ..........................54, 159 Reserve Fund Multiplication Factor...........160 Reserve Fund Principal Drawing ... 52, 54, 160 Reserve Fund Reimbursement Amount.......58, 160, 182 Reserve Fund Required Amount............1, 160 Reserve Fund Revenue Drawing ... 52, 54, 160 Revenue Against Principal Reallocation .....53, 160 Revenue Collections ...........................52, 160 Revenue Ledger..................................51, 160 Revenue Loss ...........................................160 Revenue Receipts................................51, 161 Revenue Receivables ................................161 Revenue Recoveries............................52, 161 Revenue Shortfall .....................................161 Revenue Shortfalls......................................54 RFBCA ......................................................56 RFBCAt................................................55, 56 RFfloor...............................................56, 159 RFMFt ........................................................56 RFMFt ..................................................55, 56 RFOAt-1 ......................................................56 RFRAt ..................................................55, 56

INDEX OF DEFINED TERMS

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Right........................................................ 161 Rouble Administrative Account Agreement................................................................ 161 Roubles........................................................ 7 Rules........................................................ 189 RuMAC ..................................................... 41 RUR ............................................................ 7 Russian Civil Code..................................... 30 Russian Insolvency Event ......................... 162 Russian Law Release and Termination Agreement ............................................... 163 Russian Security....................................... 163 Russian Tax Code....................................... 45 RZB................................................... 11, 140 RZB Consolidated Financial Statement..... 141 RZB Group .............................................. 140 RZB Swap Agreement.......................101, 163 Sale Notices ............................................... 97 Screen ...................................................... 163 Second Subsequent Fitch Rating Event ..... 101 Secured Assets ..................................118, 163 Secured Liabilities.................................... 163 Secured Parties......................................... 163 Secured Transaction Documents ............... 163 Securities Market Law................................ 44 Security.................................................... 163 Security Documents ................................. 163 Security Interest ....................................... 163 Security Protection Notice .......................... 15 Security Services Department ................... 130 Security Trustee ..........................10, 143, 163 Senior Outstanding Class.......................... 163 Servicer.............................................. 11, 164 Servicer Event.................................... 26, 108 Servicer Expenses .............................164, 177 Servicer Fees............................................ 164 Services ................................................... 104 Services Agreements ................................ 164 Servicing Accounts................................... 104 Servicing Agreement ................................ 164 Stabilising Managers .................................... 6 Standard A1 ............................................... 88 Standard A2 ............................................... 88 Standard A3 ............................................... 88 Standard B1 ............................................... 88 Standard B2 ............................................... 88 Standard Documentation............................. 62 State Duty Overdraft................................. 164 State Register ............................................. 64 Statistical Cut Off Date............................... 12 Stichting............................................136, 164 Subordinated Expenses Advance .22, 120, 164 Subordinated Loan ......................22, 120, 164

Subordinated Loan Additional Interest .....120, 164 Subordinated Loan Agreement ..................164 Subordinated Loan Capitalised Outstandings.................................................................164 Subordinated Loan Interest Period.............120 Subordinated Loan Provider................11, 164 Subordinated Loan Scheduled Interest120, 164 Subordinated Loan Scheduled Interest Rate.................................................................164 Subordinated Reserve Advance ... 22, 120, 165 Subscription Agreement.................... 165, 204 Subscription Proceeds ...............................165 Successor..................................................165 Successor Cash Manager...........................165 Successor International Account Bank.......165 Successor Note Trustee .............................165 Successor Security Trustee........................165 Successor Servicer ....................................165 Swap ..........................................................15 Swap Agreements ................15, 101, 143, 165 Swap Collateral...........................................54 Swap Collateral Ledger.......................54, 165 Swap Collateral Return Payment ...............165 Swap Collateral Return Payments................55 Swap Counterparties ................... 11, 143, 165 Swap Event of Default ..............................165 Swap Excluded Termination Payment .......166 Swap Tax Event........................................166 Systems ....................................................107 Tax...........................................................166 Tax Authority ...........................................166 Tax Deduction ..........................................166 Tax Event ......................................... 166, 175 Termination Event ....................................166 TMF Trustee...............................................10 Transaction...............................................166 Transaction Closing Expenses.............52, 166 Transaction Documents.............................166 Transaction Party......................................167 Trust Corporation......................................121 Trust Documents.......................................167 Trustee Liabilities .....................................167 Underwriting Manual................................129 Unified State Register ...............................124 US$ ............................................................. 7 USD LIBOR.............................................167 VAT .........................................................167 Warehouse Documents...................... 167, 206 Warehouse Facility ...................................168 Warehouse Obligations ...............................52 Warehouse Principal Obligations.........52, 168 Warehouse Revenue Obligations.........51, 168

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ISSUER ORIGINATOR AND SERVICER Moscow Stars B.V. Commercial Bank "Moskommertsbank" LLC

TMF Management B.V. 2 Zvenigorodskaya street Locatellikade 1 Building 13/43 Parnassustoren 123022 Moscow

1076 AZ Amsterdam Russian Federation The Netherlands

LEAD MANAGERS, JOINT BOOKRUNNERS

AND JOINT ARRANGERS HSBC Bank plc Raiffeisen Zentralbank Österreich AG 8 Canada Square Am Stadtpark 9

London A-1030 E14 5HQ Vienna

United Kingdom Austria

JOINT ARRANGER ZAO Raiffeisenbank Austria

15A Leninsky prospekt Moscow 119071

Russian Federation

SECURITY TRUSTEE NOTE TRUSTEE TMF Trustee Limited TMF Trustee Limited

Pellipar House Pellipar House 1st Floor 1st Floor

9 Cloak Lane 9 Cloak Lane London EC4R 2RU London EC4R 2RU

United Kingdom United Kingdom

PRINCIPAL PAYING AGENT, CASH MANAGER AND ACCOUNT BANK The Bank of New York

One Canada Square London E14 5AL United Kingdom

IRISH PAYING AGENT REGISTRAR

BNY Financial Services PLC The Bank of New York (Luxembourg), S.A. 70 Sir John Rogerson's Quay Aerogolf Center

Dublin 2 1A Hoehenhof Republic of Ireland L – 1736 Senningerberg

Luxembourg

SWAP COUNTERPARTIES Barclays Bank PLC Raiffeisen Zentralbank Österreich AG 5 North Colonnade Am Stadtpark 9

Canary Wharf A-1030 London E14 4BB Vienna United Kingdom Austria

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LEGAL ADVISERS

To the Lead Managers, the Joint Book Runners

and the Joint Arrangers as to English and Russian law

To the Lead Managers and the Joint Book Runners as to Dutch law

Allen & Overy Legal Services Allen & Overy LLP 9 Dmitrovsky pereulok Apollolaan 15

107031 Moscow 1077 AB Amsterdam Russian Federation The Netherlands

To the Note Trustee and the Security Trustee as to English law

Allen & Overy LLP One Bishops Square

London E1 6AO United Kingdom

CUSTODIAN BACK-UP SERVICER

ZAO "Depository Company "REGION'' ZAO Raiffeisenbank Austria 11 A Verkhnyaya 15A Leninsky prospekt

Krasnoselskaya Str. bld. 6 Moscow 119071 Moscow 107140 Russian Federation

Russian Federation

LISTING AGENT The Bank of New York

One Canada Square London E14 5AL United Kingdom