PEOPLES CHOICE HOME LOAN SECURITIES CORP.,

as Purchaser,

and

PEOPLES CHOICE HOME LOAN, INC.,

as Seller

MORTGAGE LOAN PURCHASE AGREEMENT

Dated as of July 1, 2006

FIXED AND ADJUSTABLE RATE MORTGAGE LOANS

TABLE OF CONTENTS

EXHIBITS

ii

This MORTGAGE LOAN PURCHASE AGREEMENT (this Agreement), dated as of July 1, 2006 (the Cut-off Date), is made among Peoples Choice Home Loan, Inc. (the Seller) and Peoples Choice Home Loan Securities Corp. (the Purchaser).

WHEREAS, the Seller owns the mortgage loans indicated on the Mortgage Loan Schedule attached as Schedule I hereto (the Mortgage Loans), including rights to (a) any property acquired by foreclosure or deed in lieu of foreclosure or otherwise and (b) the proceeds of any insurance policies covering the Mortgage Loans;

WHEREAS, the parties hereto desire that the Seller sell the Mortgage Loans to the Purchaser and that the Seller make certain representations and warranties and undertake certain obligations with respect to the Mortgage Loans;

WHEREAS, pursuant to the terms of a Pooling and Servicing Agreement, dated as of July 1, 2006 (the Pooling and Servicing Agreement), among the Purchaser, Wells Fargo Bank, N.A., as master servicer (in such capacity, the Master Servicer) and as securities administrator (the Securities Administrator), HSBC Bank USA, National Association, as trustee (the Trustee), the Seller, EMC Mortgage Corporation, as servicer (the Servicer), and Peoples Choice Home Loan, Inc., as subservicer (the Subservicer), the Purchaser will convey the Mortgage Loans to Peoples Financial Realty Mortgage Securities Trust, Series 2006-1, a New York common law trust (the Issuing Entity); and

WHEREAS, pursuant to the terms of the Pooling and Servicing Agreement, the Issuing Entity will issue and transfer to the Purchaser the Peoples Financial Realty Mortgage Securities Trust, Series 2006-1, Mortgage Pass-Through Certificates, Series 2006-1, Class 1A1, Class 1A2, Class 1A3, Class 1A4, Class 2A1, Class 2A2, Class M1, Class M2, Class M3, Class M4, Class M5, Class M6, Class M7, Class M8, Class M9, Class M10, Class B1, Class B2, Class C, Class P, Class R and Class RX Certificates (collectively, the Certificates), representing ownership interests in, among other things, the Mortgage Loans;

NOW, THEREFORE, inconsideration of the mutual covenants herein contained, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Definitions.

For all purposes of this Agreement, except as otherwise expressly provided herein or unless the context otherwise requires, capitalized terms not otherwise defined herein shall have the meanings assigned to such terms in the Pooling and Servicing Agreement. All other capitalized terms used herein shall have the meanings specified herein.

ARTICLE II

SALE OF MORTGAGE LOANS AND RELATED PROVISIONS

Section 2.1 Sale of Mortgage Loans.

(a) The Seller, by the execution and delivery of this Agreement, does hereby sell, assign, set over and otherwise convey to the Purchaser, on a servicing-released basis, without recourse but subject to the terms of this Agreement, (i) all of its right, title and interest in the Mortgage Loans, as of the Closing Date, including the related Cut-off Date Principal Balance, all interest accruing thereon on and after the Cut-off Date, and all collections of interest and principal due after the Cut-off Date, (ii) the Sellers interest in any insurance policies and (iii) all proceeds of the foregoing.

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