Seller and Master Servicer

Transcription

1 Prospectus Supplement dated November 25, 2005 (To Prospectus dated February10, 2004) $2,081,692,000 (Approximate) LONG BEACH MORTGAGE LOAN TRUST 2005-WL3 ASSET-BACKED CERTIFICATES, SERIES 2005-WL3 LONG BEACH SECURITIES CORP. Depositor Consider carefully the risk factors beginning on page S-10 in this prospectus supplement and on page 1 in the accompanying prospectus. The certificates represent obligations of the trust only and do not represent an interest in or obligation of Long Beach Securities Corp., Long Beach Mortgage Company or any of their affiliates. This prospectus supplement may be used to offer and sell the certificates only if accompanied by the prospectus. Seller and Master Servicer Only the offered certificates identified below are being offered by this prospectus supplement and the accompanying prospectus. The Offered Certificates Will represent ownership interests in a trust consisting primarily of a pool of first lien, adjustable-rate and fixed-rate residential mortgage loans. The mortgage loans underlying the trust will be segregated into two groups as described in this prospectus supplement. The Class I-A1 Certificates, Class I-A2 Certificates, Class I-A3 Certificates and Class I-A4 Certificates will generally represent interests in the first loan group. The Class II-A1 Certificates, Class II-A2A Certificates, Class II-A2B Certificates and Class II-A3 Certificates will generally represent interests in the second loan group. The Class M-1 Certificates, Class M-2 Certificates, Class M-3 Certificates, Class M-4 Certificates, Class M-5 Certificates, Class M-6 Certificates, Class M-7 Certificates, Class M-8 Certificates and Class M-9 Certificates will represent interests in both loan groups. Will accrue interest at a variable rate equal to one- month LIBOR plus a related fixed margin, subject to limitation (except with respect to the Class II-A2A Certificates) and increase as described in this prospectus supplement. Credit Enhancement Subordination as described in this prospectus supplement under Description of the Certificates Credit Enhancement Subordination. Excess Interest as described in this prospectus supplement under Description of the Certificates Credit Enhancement Excess Interest. Overcollateralization as described in this prospectus supplement under Description of the Certificates Credit Enhancement Overcollateralization Provisions. Allocation of Losses as described in this prospectus supplement under Description of the Certificates Credit Enhancement Allocation of Losses. Cross-Collateralization as described in this prospectus supplement under Description of the Certificates Allocation of Available Funds and Credit Enhancement Cross-Collateralization. A financial guaranty insurance policy issued by MBIA Insurance Corporation that will unconditionally and irrevocably guarantee timely distributions of interest due on and specified distributions of principal on the Class I-A4 Certificates only as described in this prospectus supplement under Description of the Certificates Class I-A4 Policy. Class Original Certificate Principal Balance Pass-Through Rate (1) Price to Public Underwriting Discount Proceeds to the Depositor (2) Class I-A1.... $ 443,200,000 Variable (3) % % % Class I-A2.... $ 296,147,000 Variable (3) % % % Class I-A3.... $ 53,138,000 Variable (3) % % % Class I-A4.... $ 139,850,000 Variable (3) % % % Class II-A1... $ 393,848,000 Variable (3) % % % Class II-A2A.... $ 208,958,000 Variable % % % Class II-A2B... $ 52,240,000 Variable (3) % % % Class II-A3... $ 48,392,000 Variable (3) % % % Class M-1... $ 108,467,000 Variable (3) % % % Class M-2... $ 106,276,000 Variable (3) % % % Class M-3... $ 35,060,000 Variable (3) % % % Class M-4... $ 52,590,000 Variable (3) % % % Class M-5... $ 33,964,000 Variable (3) % % % Class M-6... $ 26,295,000 Variable (3) % % % Class M-7... $ 33,964,000 Variable (3) % % % Class M-8... $ 25,199,000 Variable (3) % % % Class M-9... $ 24,104,000 Variable (3) % % % (1) Determined and subject to increase as described in this prospectus supplement. (2) Before deducting expenses estimated to be approximately $875,000. (3) Subject to limitation as described in this prospectus supplement. Neither the SEC nor any state securities commission has approved these securities or determined that this prospectus supplement or the accompanying prospectus is accurate or complete. Any representation to the contrary is a criminal offense. Delivery of the certificates offered by this prospectus supplement will be made in book entry form through the facilities of The Depository Trust Company, and upon request, Clearstream Banking Luxembourg and the Euroclear System on or about November 30, Underwriters C REDIT S UISSE FIRST B OSTON WA M U C APITAL C ORP. (Co-Lead Underwriters and Joint Book Running Managers)

2 TABLE OF CONTENTS PROSPECTUS SUPPLEMENT Page SUMMARY OF TERMS... S-1 RISK FACTORS... S-10 THE MORTGAGE POOL... S-24 LONG BEACH MORTGAGE COMPANY... S-51 THE POOLING AGREEMENT... S-59 DESCRIPTION OF THE CERTIFICATES... S-66 YIELD, PREPAYMENT AND MATURITY CONSIDERATIONS... S-111 USE OF PROCEEDS... S-134 MATERIAL FEDERAL INCOME TAX CONSEQUENCES... S-134 CONSIDERATIONS FOR BENEFIT PLAN INVESTORS... S-139 LEGAL INVESTMENT CONSIDERATIONS... S-140 METHOD OF DISTRIBUTION... S-141 LEGAL MATTERS... S-143 EXPERTS... S-143 RATINGS... S-143 INDEX OF DEFINED TERMS... S-144 ANNEX I... I-i ANNEX II...II-i S-i

3 SUMMARY OF TERMS This summary highlights selected information from this document and does not contain all of the information that you need to consider in making your investment decision. To understand all of the terms of the offering of the Offered Certificates, read carefully this entire document and the accompanying prospectus. This summary provides an overview of certain calculations, cash flow priorities and other information to aid your understanding and is qualified by the full description of these calculations, cash flow priorities and other information in this prospectus supplement and the accompanying prospectus. Some of the information consists of forward-looking statements relating to future economic performance or projections and other financial items. Forward-looking statements are subject to a variety of risks and uncertainties that could cause actual results to differ from the projected results. Those risks and uncertainties include, among others, general economic and business conditions, regulatory initiatives and compliance with governmental regulations, and various other matters, all of which are beyond our control. Accordingly, what actually happens may be very different from what we predict in our forward-looking statements. Offered Certificates On the Closing Date, Long Beach Mortgage Loan Trust 2005-WL3 will issue twenty-four classes of certificates, seventeen of which are being offered by this prospectus supplement and the accompanying prospectus. The assets of the trust that will support the certificates will consist primarily of a pool of first lien, fixed rate and adjustable-rate mortgage loans having the characteristics described in this prospectus supplement. The Class I-A1 Certificates, the Class I-A2 Certificates, the Class I-A3 Certificates, the Class I-A4 Certificates, the Class II-A1 Certificates, the Class II-A2A Certificates, the Class II-A2B Certificates, the Class II-A3 Certificates, the Class M-1 Certificates, the Class M-2 Certificates, the Class M-3 Certificates, the Class M-4 Certificates, the Class M-5 Certificates, the Class M-6 Certificates, the Class M-7 Certificates, the Class M-8 Certificates and the Class M-9 Certificates (collectively, the Offered Certificates ) are the only classes of certificates offered by this prospectus supplement and the accompanying prospectus. The Offered Certificates will be book entry securities clearing through The Depository Trust Company (in the United States) and, upon request, through Clearstream Banking Luxembourg and the Euroclear System (in Europe). The Offered Certificates (other than the Class II-A2A Certificates) and the Class B Certificates will be issued in minimum denominations of $25,000 and in $1 integrals in excess thereof, and the Class II-A2A Certificates will be issued in minimum denominations of $100,000 and in $1 integrals in excess thereof. Other Certificates In addition to the Offered Certificates, the trust will issue seven additional classes of certificates. These certificates will be designated as the Class B-1 Certificates, the Class B-2 Certificates, the Class C S-1 Certificates, the Class P Certificates, the Class R Certificates, the Class R-CX Certificates and the Class R-PX Certificates and are not being offered to the public by this prospectus supplement and the accompanying prospectus. The Class B-1 Certificates and the Class B-2 Certificates will be sold to Credit Suisse First Boston LLC on the closing date. The Class C Certificates, the Class P Certificates, the Class R Certificates, the Class R-CX Certificates and the Class R-PX Certificates will be delivered to the Seller as partial consideration for the Mortgage Loans. The Seller will deliver the Class C Certificates, the Class P Certificates, the Class R Certificates, the Class R-CX Certificates and the Class R-PX Certificates to Credit Suisse First Boston LLC. The Class B-1 Certificates and the Class B-2 Certificates will be subordinate to the Offered Certificates. The Class B-1 Certificates will have an original certificate principal balance of $21,913,000 and the Class B-2 Certificates will have an original certificate principal balance of $21,913,000. The Class C Certificates will accrue interest as provided in the pooling agreement and will have an original certificate principal balance of approximately $65,738,907, which is approximately equal to the initial overcollateralization that will be required by the pooling agreement. The certificate principal balance of the Class C Certificates on any related determination date will represent the overcollateralization for the Offered Certificates, the Class B-1 Certificates and the Class B-2 Certificates and may change from time to time as provided in the pooling agreement. The Class C Certificates will initially evidence an interest of approximately 3.00% of the aggregate principal balance of the Mortgage Loans in the trust on the Closing Date. The Class P Certificates will have an original certificate principal balance of $100 and will not be entitled to

4 distributions in respect of interest. The Class P Certificates will be entitled to all prepayment premiums or charges received in respect of the Mortgage Loans. The Class R Certificates, the Class R-CX Certificates and the Class R-PX Certificates will not have an original principal balance and are the classes of certificates representing the residual interests in the trust. We refer you to Description of the Certificates General and Book Entry Certificates and The Mortgage Pool in this prospectus supplement for additional information. Closing Date On or about November 30, Cut-off Date November 1, Depositor Long Beach Securities Corp., a Delaware corporation and a wholly-owned subsidiary of Long Beach Mortgage Company. We refer you to The Depositor in the accompanying prospectus for additional information. Seller and Master Servicer Long Beach Mortgage Company, a Delaware corporation. We refer you to Long Beach Mortgage Company in this prospectus supplement for additional information. Subservicer Washington Mutual Bank, a federal savings bank. We refer you to Long Beach Mortgage Company General Washington Mutual Bank in this prospectus supplement for additional information. Trustee Deutsche Bank National Trust Company, a national banking association. We refer you to The Pooling Agreement The Trustee in this prospectus supplement for additional information. Class I-A4 Insurer MBIA Insurance Corporation will issue a financial guaranty insurance policy for the benefit of the Class I-A4 Certificates only. We refer you to Description of S-2 the Certificates The Class I-A4 Insurer in this prospectus supplement for additional information. Cap Provider Credit Suisse First Boston International. We refer you to Description of the Certificates The Cap Provider and the Swap Counterparty in this prospectus supplement for additional information. Swap Counterparty Credit Suisse First Boston International. We refer you to Description of the Certificates The Cap Provider and the Swap Counterparty in this prospectus supplement for additional information. NIMS Insurer In the future, Credit Suisse First Boston LLC may decide to proceed with the issuance of net interest margin securities ( NIMS ) to be backed, in whole or in part, by the Class C Certificates and the Class P Certificates. The NIMS, if issued, would be issued by an affiliate of the Depositor or of Credit Suisse First Boston LLC or by one or more entities sponsored by an affiliate of the Depositor or of Credit Suisse First Boston LLC after the Closing Date. One or more insurance companies (together, the NIMS Insurer ) may issue a financial guaranty insurance policy covering certain payments to be made on the NIMS, if issued. In such event, the NIMS Insurer will have various rights under the pooling agreement and will be able to exercise certain rights that could adversely impact the certificateholders. We refer you to Risk Factors Certain Rights of the NIMS Insurer May Adversely Affect the Rights of Holders of Offered Certificates and Class B Certificates in this prospectus supplement for additional information. Designations Each class of certificates will have different characteristics, some of which are reflected in the following general designations: Offered Certificates Class A Certificates and Mezzanine Certificates. Class A Certificates Group I Senior Certificates and Group II Senior Certificates.

5 Group I Senior Certificates Class I-A1 Certificates, Class I-A2 Certificates, Class I-A3 Certificates and Class I-A4 Certificates. Group II Senior Certificates Class II-A1 Certificates, Class II-A2A Certificates, Class II-A2B Certificates and Class II-A3 Certificates. Mezzanine Certificates Class M-1 Certificates, Class M-2 Certificates, Class M-3 Certificates, Class M-4 Certificates, Class M-5 Certificates, Class M-6 Certificates, Class M-7 Certificates, Class M-8 Certificates and Class M-9 Certificates. Class B Certificates Class B-1 Certificates and Class B-2 Certificates. Residual Certificates Class R Certificates, Class R-CX Certificates and Class R-PX Certificates. Subordinate Certificates Mezzanine Certificates, Class B Certificates and Class C Certificates. Loan Group I The Mortgage Loans with principal balances that conform to Fannie Mae and Freddie Mac loan limits. Loan Group II The Mortgage Loans with principal balances that may or may not conform to Fannie Mae and Freddie Mac loan limits. Mortgage Loans The trust will acquire a pool of first lien, adjustable-rate and fixed-rate residential mortgage loans which will be divided into two loan groups, Loan Group I and Loan Group II (each, a Loan Group ). Loan Group I will consist of first lien, adjustable-rate and fixed-rate mortgage loans with principal balances that conform to Fannie Mae and Freddie Mac loan limits (the Group I Mortgage Loans ) and Loan Group II will consist of S-3 first lien, adjustable-rate and fixed-rate mortgage loans with principal balances that may or may not conform to Fannie Mae and Freddie Mac loan limits (the Group II Mortgage Loans and, together with the Group I Mortgage Loans, the Mortgage Loans ). As of the Cut-off Date the Mortgage Loans will consist of approximately 9,604 mortgage loans with an aggregate scheduled principal balance as of the Cut-off Date of approximately $2,191,257,007 consisting of approximately 7,120 Group I Mortgage Loans with an aggregate scheduled principal balance as of the Cut-off Date of approximately $1,248,941,626 and approximately 2,484 Group II Mortgage Loans with an aggregate scheduled principal balance as of the Cut-off Date of approximately $942,315,382. The scheduled principal balance of a Mortgage Loan as of any date is equal to the principal balance of that Mortgage Loan at origination, less all scheduled payments of principal on that Mortgage Loan due on or before that date, whether or not received. The statistical information in this prospectus supplement reflects the characteristics of the Mortgage Loans as of the Cut-off Date. Unless otherwise noted, all statistical percentages or weighted averages set forth in this prospectus supplement are measured as a percentage of the aggregate scheduled principal balances as of the Cut-off Date of the Mortgage Loans in the applicable Loan Group or of the indicated subset of the Mortgage Loans in the applicable Loan Group. After the date of this prospectus supplement and prior to the Closing Date, some Mortgage Loans may be removed from the mortgage pool, as described under The Mortgage Pool in this prospectus supplement and some Mortgage Loans may be added to the mortgage pool. As a result, the characteristics of the Mortgage Loans in each Loan Group on the Closing Date may differ from the characteristics presented in this prospectus supplement; however, such differences are not expected to be material. The Group I Mortgage Loans have the following characteristics as of the Cut-off Date (1) : Loans with Prepayment Charges: 67.16% Interest Only Loans: 15.45% Range of Remaining Terms to 176 months to Maturity: 479 months Weighted Average Remaining Term to Maturity: 402 months Range of Original Principal $14,400 to Balances: $686,375 Average Original Principal Balance: $175,712

6 Range of Outstanding Principal $14,158 to Balances: $686,375 Average Outstanding Principal Balance: $175,413 Range of Mortgage Rates: 5.200% to % Weighted Average Mortgage Rate: 7.440% Range of Original Loan-to-Value Ratios: 11.84% to % Weighted Average Original Loan-to-Value Ratio: 82.87% Geographic Concentrations in Excess of 5%: California 27.93% Florida 10.55% Illinois 8.08% (1) All figures are approximate. Percentages and weighted averages are based on scheduled principal balances as of the Cut-off Date. Approximately 93.08% of the Group I Mortgage Loans, by aggregate scheduled principal balance as of the Cutoff Date, are adjustable-rate mortgage loans. The adjustable-rate Group I Mortgage Loans have the following characteristics as of the Cut-off Date (1) : Weighted Average Gross Margin: 5.068% Weighted Average Maximum Mortgage Rate: % Weighted Average Minimum Mortgage Rate: 7.424% Weighted Average Initial Periodic Rate Cap: 2.000% Weighted Average Subsequent Periodic Rate Cap: 1.000% Weighted Average Time Until Next Adjustment Date: 23 months (1) All figures are approximate. Percentages and weighted averages are based on scheduled principal balances as of the Cut-off Date. The Group II Mortgage Loans have the following characteristics as of the Cut-off Date (1) : Loans with Prepayment Charges: 69.21% Interest Only Loans: 17.99% Range of Remaining Terms to 176 months to Maturity: 478 months Weighted Average Remaining Term to Maturity: 412 months Range of Original Principal $25,000 to Balances: $1,000,000 Average Original Principal Balance: $379,902 Range of Outstanding Principal $24,828 to Balances: $1,000,000 Average Outstanding Principal Balance: $379,354 Range of Mortgage Rates: 5.200% to % Weighted Average Mortgage Rate: 7.346% Range of Original Loan-to-Value Ratios: 32.47% to % Weighted Average Original Loan-to-Value Ratio: 82.58% Geographic Concentrations in Excess of 5%: California 49.97% Florida 6.77% (1) All figures are approximate. Percentages and weighted averages are based on scheduled principal balances as of the Cut-off Date. Approximately 95.48% of the Group II Mortgage Loans, by aggregate scheduled principal balance as of the Cut-off Date, are adjustable-rate mortgage loans. The adjustable-rate Group II Mortgage Loans have the following characteristics as of the Cut-off Date (1) : Weighted Average Gross Margin: 5.071% Weighted Average Maximum Mortgage Rate: % Weighted Average Minimum Mortgage Rate: 7.341% Weighted Average Initial Periodic Rate Cap: 1.913% Weighted Average Subsequent Periodic Rate Cap: 1.000% Weighted Average Time Until Next Adjustment Date: 22 months (1) All figures are approximate. Percentages and weighted averages are based on scheduled principal balances as of the Cut-off Date. Information about the characteristics of the Mortgage Loans in each Loan Group is described under The Mortgage Pool in this prospectus supplement. The Class I-A1 Certificates, the Class I-A2 Certificates, the Class I-A3 Certificates and the Class I-A4 Certificates will generally represent interests in the Group I Mortgage Loans, and the Class II-A1 Certificates, the Class II-A2A Certificates, the Class II-A2B Certificates and the Class II-A3 Certificates will generally represent interests in the Group II Mortgage Loans. The Mezzanine Certificates and the Class B Certificates will represent interests in all of the Mortgage Loans. Distribution Dates The Trustee will make distributions on the certificates on the 25th day of each calendar month (or if the 25th day of a month is not a business day, then on the next business day) beginning in December 2005 to the persons in whose names such certificates are registered at the close of business on the related record date. The record date for the Offered Certificates and the Class B Certificates (for so long as they are book-entry certificates) for any distribution date will be the business day immediately preceding such distribution date. S-4

7 Payments on the Certificates Interest Payments The pass-through rates for the Offered Certificates and the Class B Certificates will be calculated at the per annum rate of one-month LIBOR plus the related margin indicated below, subject to the limitations described in this prospectus supplement. Class Margin (1) (2) I-A I-A I-A I-A II-A II-A2A II-A2B II-A M M M M M M M M M B B (1) For each Distribution Date up to and including the Optional Termination Date. (2) For each Distribution Date after the Optional Termination Date. We refer you to Description of the Certificates Pass- Through Rates in this prospectus supplement for additional information. The interest accrual period for the Offered Certificates and the Class B Certificates for any distribution date will be the period from the previous distribution date (or, in the case of the first accrual period, from the Closing Date) to the day prior to the current distribution date. Interest will be calculated for the Offered Certificates and the Class B Certificates on the basis of the actual number of days in the accrual period, based on a 360-day year. The Offered Certificates and the Class B Certificates will accrue interest on their certificate principal balances outstanding immediately prior to each distribution date. The Class C Certificates will accrue interest as provided in the pooling agreement. The Class P Certificates and the Residual Certificates will not accrue interest. We refer you to Description of the Certificates in this prospectus supplement for additional information. Principal Payments Principal will be distributed to holders of the Offered Certificates and the Class B Certificates on each distribution date in the priority, in the amounts and to the extent described herein under Description of the Certificates Allocation of Available Funds. Payment Priorities In general, on any distribution date, funds available for distribution to the Certificates from payments and other amounts received on the Mortgage Loans will be distributed as follows: Interest Distributions first, to pay interest on the Class A Certificates as described under Description of the Certificates Allocation of Available Funds in this prospectus supplement; and second, to pay interest on the Mezzanine Certificates and the Class B Certificates, but only in the order of priority, in the amounts and to the extent described under Description of the Certificates Allocation of Available Funds in this prospectus supplement. Principal Distributions to pay principal on the Offered Certificates and the Class B Certificates, but only in the order of priority, in the amounts and to the extent described under Description of the Certificates Allocation of Available Funds in this prospectus supplement. We refer you to Description of the Certificates Allocation of Available Funds in this prospectus supplement for additional information. Advances The Master Servicer will make cash advances to cover delinquent payments of principal and interest to the extent it reasonably believes that the cash advances are recoverable from the difference between future payments on a Mortgage Loan and the unpaid principal balance of such Mortgage Loan. Advances are intended to maintain a regular flow of scheduled interest and principal payments on the certificates and are not intended to guarantee or insure against losses. S-5

8 We refer you to The Pooling Agreement Advances in this prospectus supplement and Description of the Securities Advances by Master Servicer in Respect of Delinquencies on the Trust Fund Assets in the accompanying prospectus for additional information. Optional Termination The majority holder of the Class C Certificates, except if such holder is Long Beach Mortgage Company or any of its affiliates (or if the majority holder of the Class C Certificates fails to exercise such right, the Master Servicer, or, if the Master Servicer fails to exercise such right, the NIMS Insurer, if any), may purchase all of the Mortgage Loans and retire the certificates when the aggregate stated principal balance of the Mortgage Loans and the REO Properties is equal to or less than 10% of the aggregate stated principal balance of the Mortgage Loans as of the Cut-off Date, subject to certain limitations; provided that the consent of the Class I-A4 Insurer will be required if such optional termination will cause a claim under the Class I-A4 Policy or if any amount owed to the Class I-A4 Insurer will not be fully reimbursed after the termination. We refer you to The Pooling Agreement Termination and Description of the Certificates Pass-Through Rates in this prospectus supplement and Description of the Securities Termination of the Trust Fund and Disposition of Trust Fund Assets in the accompanying prospectus for additional information. Credit Enhancement 1. Subordination the rights of the Mezzanine Certificates, the Class B Certificates and the Class C Certificates to receive distributions will be subordinated to the rights of the Class A Certificates; the rights of the Mezzanine Certificates with higher numerical class designations to receive distributions will be subordinated to the rights of the Mezzanine Certificates with lower numerical class designations; the rights of the Class B Certificates and the Class C Certificates to receive distributions will be subordinated to the rights of the Mezzanine Certificates; in each case to the extent described in this prospectus supplement. Subordination is intended to enhance the likelihood of regular distributions on the more senior classes of certificates in respect of interest and principal and to afford such certificates protection against realized losses on the Mortgage Loans. We refer you to Description of the Certificates Credit Enhancement Subordination in this prospectus supplement for additional information. 2. Excess Interest The Mortgage Loans bear interest each month that in the aggregate is expected to exceed the amount needed to pay monthly interest on the certificates, the fees and expenses of the trust, certain net amounts owed to the swap counterparty, amounts owed to the Class I-A4 Insurer and certain amounts required to be deposited in the final maturity reserve account, if applicable. The excess interest from the Mortgage Loans each month will be available to absorb realized losses on the Mortgage Loans and to maintain overcollateralization at required levels as described in the pooling agreement. We refer you to Description of the Certificates Allocation of Available Funds and Credit Enhancement Excess Interest in this prospectus supplement for additional information. 3. Overcollateralization As of the Closing Date, the aggregate principal balance of the Mortgage Loans as of the Cut-off Date will exceed the aggregate certificate principal balance of the Class A Certificates, the Mezzanine Certificates, the Class B Certificates and the Class P Certificates on the Closing Date by approximately $65,738,907, which will be equal to the original certificate principal balance of the Class C Certificates. Such amount represents approximately 3.00% of the aggregate principal balance of the Mortgage Loans as of the Cut-off Date, and is approximately equal to the initial amount of overcollateralization that will be required to be provided under the pooling agreement. Excess interest generated by the Mortgage Loans will be distributed as a payment of principal to the Offered Certificates and the Class B Certificates then entitled to distributions of principal to the extent necessary to maintain the required level of overcollateralization. The required level of overcollateralization may be permitted to step down as provided in the pooling agreement. We cannot assure you that sufficient interest will be generated by S-6

9 the Mortgage Loans to maintain the required level of overcollateralization. We refer you to Description of the Certificates Credit Enhancement Overcollateralization Provisions in this prospectus supplement for additional information. 4. Class I-A4 Policy The Class I-A4 Certificates have the benefit of a certificate guaranty insurance policy, called the Class I-A4 Policy, pursuant to which the Class I-A4 Insurer will unconditionally and irrevocably guarantee certain payments on the Class I-A4 Certificates on each distribution date subject to certain terms and conditions set forth in the Class I-A4 Policy. If the Class I-A4 Insurer were unable to pay under the Class I-A4 Policy, the Class I-A4 Certificates could be subject to losses. The Class I-A4 Policy will not cover prepayment interest shortfalls not covered by compensating interest or shortfalls resulting from application of the Relief Act or similar state or local law. The Class I-A4 Policy will not cover any class of Certificates other than the Class I-A4 Certificates. We refer you to Description of the Certificates The Class I-A4 Policy in this prospectus supplement for additional information. 5. Allocation of Losses If, on any distribution date, excess interest and overcollateralization are not sufficient to absorb realized losses on the Mortgage Loans as described under Description of the Certificates Credit Enhancement Overcollateralization Provisions in this prospectus supplement, then realized losses on such Mortgage Loans will be allocated to the Mezzanine Certificates and the Class B Certificates. If realized losses on the Mortgage Loans are allocated to the Mezzanine Certificates and the Class B Certificates, such losses will be allocated first, to the Class B-2 Certificates, second, to the Class B-1 Certificates, third, to the Class M-9 Certificates, fourth, to the Class M-8 Certificates, fifth, to the Class M-7 Certificates, sixth, to the Class M-6 Certificates, seventh, to the Class M-5 Certificates, eighth, to the Class M-4 Certificates, ninth, to the Class M-3 Certificates, tenth, to the Class M-2 Certificates and eleventh, to the Class M-1 Certificates. The pooling agreement does not permit the allocation of realized losses on the Mortgage Loans to the Class A Certificates, the Class P Certificates or the Residual Certificates; however, investors in the Class A S-7 Certificates should be aware that under certain loss scenarios and, with respect to the Class I-A4 Certificates if a Class I-A4 Insurer default occurs, there will not be enough interest and principal on the Mortgage Loans to pay the Class A Certificates all interest and principal amounts to which the Class A Certificates are then entitled. Once realized losses are allocated to the Mezzanine Certificates or the Class B Certificates, such amounts will not be reinstated thereafter (other than the amounts reinstated due to a subsequent recovery on a liquidated Mortgage Loan). However, the amount of any realized losses allocated to the Mezzanine Certificates or the Class B Certificates may be paid to the holders of those certificates at a later date from net monthly excess cash flow, to the extent available, according to the priorities set forth under Description of the Certificates Credit Enhancement Excess Interest in this prospectus supplement. We refer you to Description of the Certificates Credit Enhancement Allocation of Losses in this prospectus supplement for additional information. 6. Cross-Collateralization The trust provides for limited cross-collateralization of the Group I Senior Certificates and the Group II Senior Certificates through the application of interest generated by one loan group to fund interest shortfalls on the Class A Certificates primarily supported by the other loan group and through the application of principal generated by one loan group to fund certain distributions of principal on the Class A Certificates primarily supported by the other loan group. We refer you to Description of the Certificates Allocation of Available Funds and Credit Enhancement Cross Collateralization in this prospectus supplement for additional information. Cap Agreements Each of the Group I Senior Certificates, the Group II Senior Certificates (other than Class II-A2A Certificates) and the Mezzanine Certificates (together with the Class B Certificates) will have the benefit of a separate interest rate cap agreement in respect of basis risk shortfalls for the second distribution date through the 39th distribution date with respect to the Group I Senior Certificates, for the second distribution date through the 34th distribution date with respect to the Group II Senior Certificates (other than the Class II-A2A Certificates), and for the second distribution date through the 33rd distribution date with respect to

10 the Mezzanine Certificates and the Class B Certificates. Each interest rate cap agreement requires the cap provider to make a cap payment to the trust to the extent that one-month LIBOR (determined in accordance with the related cap agreement) for any interest accrual period exceeds the related strike rate set forth in Annex II attached hereto. Each such cap payment will be made monthly in an amount equal to the product of such excess (but one-month LIBOR for purposes of calculating such excess will not exceed the related maximum LIBOR rate set forth in Annex II attached hereto) and the related cap notional amount set forth in Annex II attached hereto, adjusted to an actual/360 basis. Cap payments, if any, made by the cap provider will be deposited in a reserve fund and will be available for distribution on the related Certificates in respect of basis risk shortfall amounts, to the limited extent described in this prospectus supplement. We refer you to Description of the Certificates The Cap Agreements in this prospectus supplement for additional information. Swap Agreement On the Closing Date, the trust will enter into a swap agreement with the counterparty to the swap agreement described in this prospectus supplement. For so long as the Class II-A2A Certificates remain outstanding, on each distribution date the trust will be obligated to make a payment to the swap counterparty at the swap fee rate, and the swap counterparty will be obligated to make a payment, to the extent greater than zero, for the benefit of the holders of the Class II-A2A Certificates at a rate equal to one-month LIBOR plus the applicable margin on the Class II-A2A Certificates less the applicable Net WAC Rate for such distribution date, in each case, on a scheduled notional amount equal to the lesser of (a) the certificate principal balance of the Class II-A2A Certificates and (b) the aggregate principal balance of the Group II Mortgage Loans as of the last day of the related due period multiplied by the Group II Fraction. Payments under the swap agreement will be made on a net basis. We refer you to "Description of the Certificates The Swap Agreement" in this prospectus supplement for additional information. Final Maturity Reserve Account On and after the distribution date in December 2012, if the constant prepayment rate of the Mortgage Loans is equal to or less than 5%, a portion of interest collections calculated at a per annum rate of 0.73% of S-8 the total principal balance of each loan group, to the extent available after payment of certain fees and expenses of the trust, and with respect to the Group I Mortgage Loans, any payments owed to the Class I-A4 Insurer and with respect to the Group II Mortgage Loans, any net payments owed to the swap counterparty but before payment of interest on the related Certificates, will be deposited in the final maturity reserve account maintained by the Trustee until the amounts on deposit in the final maturity reserve account are equal to the stated principal balance of the Mortgage Loans with an original term to maturity of 480 months. On the earlier of the final scheduled distribution date and the termination of the trust, any amounts on deposit in the final maturity reserve account will be applied as payment of principal or interest as described herein. We refer you to Description of the Certificates The Final Maturity Reserve Account in this prospectus supplement for additional information. Final Scheduled Distribution Date The final scheduled distribution date for the Offered Certificates and the Class B Certificates will be the distribution date in November It is intended that the amounts deposited in the final maturity reserve account will be sufficient to retire the Offered Certificates and the Class B Certificates on the final scheduled distribution date, even though the outstanding principal balance of the Mortgage Loans having 40-year original terms to maturity have not been reduced to zero on the final scheduled distribution date. The actual final distribution date for each class of the Offered Certificates and the Class B Certificates may be earlier or later, and could be substantially earlier, than the distribution date in November Ratings It is a condition of the issuance of the Offered Certificates that they be assigned ratings not lower than the following by Fitch, Inc., Moody s Investors Service, Inc. and Standard & Poor s, a division of The McGraw- Hill Companies, Inc. Fitch Moody s S&P I-A1 AAA Aaa AAA I-A2 AAA Aaa AAA I-A3 AAA Aaa AAA I-A4 AAA Aaa AAA II-A1 AAA Aaa AAA II-A2A AAA Aaa AAA II-A2B AAA Aaa AAA II-A3 AAA Aaa AAA

11 Fitch Moody s S&P M-1 AA+ Aa1 AA+ M-2 AA Aa2 AA M-3 AA- Aa3 AA- M-4 A+ A1 A+ M-5 A A2 A M-6 A- A3 A- M-7 BBB+ Baa1 BBB+ M-8 BBB Baa2 BBB M-9 BBB- Baa3 BBB- A security rating is not a recommendation to buy, sell or hold securities. These ratings may be lowered or withdrawn at any time by any of the rating agencies. The ratings assigned to the Class I-A4 Certificates will be issued without regard to the Class I-A4 Policy. We refer you to Ratings in this prospectus supplement and Rating in the accompanying prospectus for additional information. Tax Status One or more elections will be made to treat designated portions of the trust (exclusive of the reserve fund, the supplemental interest account and the final maturity reserve account, as described more fully herein) as real estate mortgage investment conduits for federal income tax purposes. We refer you to Material Federal Income Tax Consequences in this prospectus supplement and Material Federal Income Tax Consequences in the accompanying prospectus for additional information. Considerations for Benefit Plan Investors Generally, it is expected that the Offered Certificates may be purchased by a pension or other employee benefit plan subject to the Employee Retirement Income Security Act of 1974 or Section 4975 of the Internal Revenue Code of 1986, as amended, so long as the conditions of certain class exemptions are met. A fiduciary of an employee benefit plan must determine that the purchase of a certificate is consistent with its fiduciary duties under applicable law and does not result in a nonexempt prohibited transaction under applicable law. However, Offered Certificates may not be acquired or held by a person investing assets of any such plans unless such acquisition or holding is eligible for the exemptive relief available under one of the class exemptions described in this prospectus supplement under Considerations for Benefit Plan Investors. We refer you to Considerations for Benefit Plan Investors in this prospectus supplement and ERISA Considerations in the accompanying prospectus for additional information. Legal Investment The Class A Certificates, the Class M-1 Certificates, the Class M-2 Certificates and the Class M-3 Certificates will constitute mortgage related securities for purposes of the Secondary Mortgage Market Enhancement Act of 1984 ( SMMEA ) for so long as they are rated not lower than the second highest rating category by one or more nationally recognized statistical rating organizations, and, as such, will be legal investment for certain entities to the extent provided in SMMEA and applicable state laws. The Class M-4 Certificates, the Class M-5 Certificates, the Class M-6 Certificates, the Class M-7 Certificates, the Class M-8 Certificates, the Class M-9 Certificates, the Class B-1 Certificates and the Class B-2 Certificates will not be mortgage related securities for purposes of SMMEA. We refer you to Legal Investment Considerations in this prospectus supplement and Legal Investment Matters in the accompanying prospectus for additional information. S-9

12 RISK FACTORS The following information, which you should carefully consider, identifies certain significant sources of risk associated with an investment in the Offered Certificates and the Class B Certificates. You should also carefully consider the information set forth under Risk Factors in the accompanying prospectus. Mortgage Loans Originated Under the Seller s Underwriting Guidelines Carry a Risk of High Delinquencies The Seller s business primarily consists of originating, purchasing, selling and, through its affiliate Washington Mutual Bank ( WMB ), servicing mortgage loans secured by one- to four-family residences that generally do not conform to the underwriting guidelines typically applied by banks and other primary lending institutions, particularly with respect to a prospective borrower s credit history and debt-to-income ratio. Borrowers who qualify under the Seller s underwriting guidelines generally have equity in their property and repayment ability but may have a record of major derogatory credit items such as outstanding judgments or prior bankruptcies. The Seller originates mortgage loans based on its underwriting guidelines and does not determine whether such mortgage loans would be acceptable for purchase by Federal National Mortgage Association ( Fannie Mae ) or Federal Home Loan Mortgage Corporation ( Freddie Mac ). The Seller s underwriting guidelines are primarily intended to evaluate the applicant s credit standing and repayment ability and the value and adequacy of the mortgaged property as collateral for the mortgage loan. The Seller s considerations in underwriting a mortgage loan include a mortgagor s credit history, repayment ability and debt serviceto-income ratio and the value and adequacy of the mortgaged property as collateral, as well as the type and use of the mortgaged property. The Seller s underwriting guidelines do not prohibit a mortgagor from obtaining secondary financing, from the Seller or from another source, at the time of origination of the Seller s first lien, which secondary financing would reduce the equity the mortgagor would otherwise have in the related mortgaged property as indicated in the Seller s loan-to-value ratio determination. As a result of such underwriting guidelines, the Mortgage Loans in the mortgage pool are likely to experience rates of delinquency, foreclosure and bankruptcy that are higher, and that may be substantially higher, than those experienced by mortgage loans underwritten in a more traditional manner. Furthermore, changes in the values of mortgaged properties may have a greater effect on the delinquency, foreclosure, bankruptcy and loss experience of the Mortgage Loans than on mortgage loans originated in a more traditional manner. No assurance can be given that the values of the related mortgaged properties have remained or will remain at the levels in effect on the dates of origination of the related Mortgage Loans. See Long Beach Mortgage Company Underwriting Guidelines in this prospectus supplement. Unpredictability of Prepayments and Effect on Yields Mortgagors may prepay their Mortgage Loans in whole or in part at any time. We cannot predict the rate at which mortgagors will repay their Mortgage Loans. A prepayment of a Mortgage Loan generally will result in a prepayment on the certificates. If you purchase your certificates at a discount and principal is repaid slower than you anticipate, then your yield may be lower than you anticipate. If you purchase your certificates at a premium and principal is repaid faster than you anticipate, then your yield may be lower than you anticipate. The rate of prepayments on the Mortgage Loans may be sensitive to prevailing interest rates. Generally, if prevailing interest rates decline significantly below the interest rates on the fixed-rate Mortgage Loans, those Mortgage Loans are more likely to prepay than if prevailing rates remain above the interest rates on those Mortgage Loans. In addition, if interest rates decline, adjustable-rate Mortgage Loan prepayments may increase due to the availability of fixed-rate mortgage loans or other adjustable-rate mortgage loans at lower interest rates. Conversely, if prevailing interest rates rise significantly, the prepayments on fixed-rate and adjustablerate Mortgage Loans may decrease. Furthermore, adjustable-rate Mortgage Loans may prepay at different rates S-10

13 and in response to different factors than fixed-rate Mortgage Loans; the inclusion of both types of mortgage loans in the mortgage pool may increase the difficulty in analyzing possible prepayment rates. The prepayment behavior of the adjustable-rate Mortgage Loans and of the fixed-rate Mortgage Loans may respond to different factors or may respond differently to the same factors. If, at the time of their first adjustment, the mortgage rates on any of the adjustable-rate Mortgage Loans would be subject to adjustment to a rate higher than the then prevailing mortgage rates available to the related mortgagors, such mortgagors may prepay their adjustable-rate Mortgage Loans. The adjustable-rate Mortgage Loans may also suffer an increase in defaults and liquidations following upward adjustments of their mortgage rates, especially following their initial adjustments. Approximately 67.16% of the Group I Mortgage Loans and approximately 69.21% of the Group II Mortgage Loans (in each case by the aggregate scheduled principal balance of the Mortgage Loans in the related Loan Group as of the Cut-off Date) require the mortgagor to pay a prepayment charge in certain instances if the mortgagor prepays the Mortgage Loan during a stated period, which may be from one year to three years after the Mortgage Loan was originated. A prepayment charge may or may not discourage a mortgagor from prepaying the related Mortgage Loan during the applicable period. The Seller may be required to purchase Mortgage Loans from the trust in the event certain breaches of representations and warranties occur and have not been cured. In addition, the holder of the Class C Certificates, except if such holder is Long Beach Mortgage Company or any of its affiliates (or if the holder of the Class C Certificates fails to exercise such option, the Master Servicer, or if the Master Servicer fails to exercise such option, the NIMS Insurer, if any), has the option to purchase Mortgage Loans that become 90 days or more delinquent, which option is subject to certain limitations and conditions described in this prospectus supplement. These purchases will have the same effect on the holders of the Offered Certificates and the Class B Certificates as a prepayment of those Mortgage Loans. The majority holder of the Class C Certificates, except if such holder is Long Beach Mortgage Company or any of its affiliates (or if the majority holder of the Class C Certificates fails to exercise such right, the Master Servicer, or, if the Master Servicer fails to exercise such right, the NIMS Insurer, if any), may purchase all of the Mortgage Loans and retire the certificates when the aggregate stated principal balance of the Mortgage Loans and the REO Properties is equal to or less than 10% of the aggregate stated principal balance of the Mortgage Loans as of the Cut-off Date, subject to certain limitations; provided that the consent of the Class I-A4 Insurer will be required if such optional termination will cause a claim under the Class I-A4 Policy or if any amount owed to the Class I-A4 Insurer will not be fully reimbursed after the termination. Such purchases will result in an earlier return of the principal on the certificates and will affect the yield on the Offered Certificates and the Class B Certificates in a manner similar to the manner in which principal prepayments on the Mortgage Loans will affect the yield on the Offered Certificates and the Class B Certificates. If the rate of default and the amount of losses on the Mortgage Loans is higher than you expect, then your yield may be lower than you expect. As a result of the absorption of realized losses on the Mortgage Loans by excess interest and overcollateralization as described herein, liquidations of defaulted Mortgage Loans, whether or not realized losses are incurred upon such liquidations, will result in an earlier return of the principal of the Offered Certificates and the Class B Certificates and will influence the yield on the Offered Certificates and the Class B Certificates in a manner similar to the manner in which principal prepayments on the Mortgage Loans will influence the yield on the Offered Certificates and the Class B Certificates. The overcollateralization provisions are intended to result in an accelerated rate of principal distributions to the Offered Certificates and the Class B Certificates then entitled to principal distributions at any time that the overcollateralization provided by the mortgage pool falls below the required level. An earlier return of principal to the holders of the Offered Certificates and the Class B Certificates as a result of the overcollateralization provisions will influence the yield on the Offered Certificates and the Class B Certificates in a manner similar to the manner in which principal prepayments on the Mortgage Loans will influence the yield on the Offered Certificates and the Class B Certificates. In addition, if the Class A Certificates are entitled S-11