Ratings

Expected closing date: March 30, 2007.

Collateral: Residential mortgages originated by Xceed Mortgage Corp.

Underwriters: CIBC World Markets Inc., Deutsche Bank Securities Limited, RBC Dominion Securities Inc., TD Securities Inc., and HSBC Securities (Canada) Inc.

Seller: QSPE-XCD Trust

Servicer: Xceed Mortgage Corp.

Sub-servicer: MCAP Service Corp.

Issuer trustee: Computershare Trust Co. of Canada

Indenture trustee: BNY Trust Co. of Canada

Financial services agent: Xceed Mortgage Corp.

Financial services sub-agent: Canadian Imperial Bank of Commerce

Swap counterparty: Citibank N.A.

The preliminary ratings assigned to Xceed Mortgage Trust's […] Series 2007-T2 reflect the credit quality of the underlying collateral; the ability of the servicer, Xceed Mortgage Corp., and the subservicer MCAP Service Corp., to service the collateral in the transaction; the sound legal and payment structure; and the solid cash flow mechanics of the transaction.

Other credit positives include:

• The cash collateral account is funded upfront and maintained at 3.5% of the initial program amount;
• There is strong protection for the class A-1, A-2 and class A-3 noteholders provided by the subordinated medium-term class B notes (3.5% of the initial program amount), class C notes (4.5% of the initial program amount), and the class D notes (4.5% of the initial program amount). The class B noteholders will not receive any principal paydown until the aggregate principal amount of all class A-1, A-2, and A-3 notes is accumulated or paid in full. The class C noteholders will not receive any principal paydown until all class B noteholders are paid in full. The class D noteholders will not receive any principal paydown until all class C noteholders are paid in full;
• The cofunding arrangement between Xceed Mortgage Corp. and a third-party financial institution is such that the institution funds a portion of the loan on a subordinated basis in respect of certain mortgages with loan-to-value greater than 90%; and
• There is protection provided by certain triggers, which would lead to a servicer termination event, a related event of possession, or an amortization event. Upon a servicer termination event (which includes a failure to make required payments, a failure on the part of the servicer to perform any duties, breach of any representations and warranties, and bankruptcy of the servicer), the trust may, among other things, terminate Xceed Mortgage Corp. as servicer.

Xceed Mortgage Trust (the trust) was established by Computershare Trust Co. of Canada under Ontario laws by a declaration of trust made Aug. 19, 2005, as amended. The issuer is a special-purpose trust with no independent business activities other than the purchase, acquisition, disposition and administration of mortgages originated by Xceed Mortgage Corp.

The issuer will finance the purchase of the portfolio of assets through the issuance of the class A-1, A-2, A-3, B, C, and D notes, as well as the issuance of, on a private placement basis, class A-C notes and the cash collateral account through the issuance of the class E notes, according to the terms of the trust indenture and the Series 2007-T2 supplemental indenture. The trust, as owner of the portfolio of mortgages, will be entitled to payments in the amounts and in the priorities established in accordance with the tranche 2007-T2 collateral agreement. That will be applied in payment of certain obligations of the issuer, including the payment of interest and principal owing under the class A-1, A-2, A-3, B, C, and D notes, as well as the class A-C and E notes. Gross proceeds received from the issuance of the class A-1, A-2, A-3, and A-C notes account for about 87.5% of the initial program amount.

The portfolio of assets is made up of mortgages meeting certain eligibility criteria, the related rights (including the related receivables payable through the portfolio of mortgages after the cutoff date), the related hedges, and the related collections payable after the cutoff date.

Xceed Mortgage Corp. was originally incorporated as IMC Mortgage Corp. in 1997. It was a wholly owned subsidiary of IMC Mortgages Inc., an originator and securitizer of nontraditional mortgages in the U.S. In 1998, IMC was sold to Bank of Montreal and renamed Xceed Mortgage Corp. In April 2002, a group of investors purchased 90% of the common shares of Xceed Mortgage Corp. In June 2004, Xceed Mortgage Corp. undertook its IPO of shares on the Toronto Stock Exchange.

Xceed Mortgage Corp. is a specialized, single-family residential mortgage lender that focuses on an underserviced niche in the Canadian mortgage market. It provides residential mortgages to borrowers who typically have not qualified for a mortgage from the Canadian Schedule I banks. In some cases, it is because these borrowers have limited specific issues that are noted on their credit bureau files but have since been resolved. In some cases, applicants have not yet established a credit rating (new immigrants and recent entrants to the work force, for example). The company originates mortgages primarily from two sources: mortgage brokers, and financial institution referrals.

Standard & Poor's Ratings Services met with Xceed Mortgage Corp. to gather information in key areas such as underwriting standards, portfolio history, servicer procedures, and arrears collection experience. We believe that satisfactory procedures are in place to service the portfolio properly. In this respect, Xceed Mortgage Corp., and MCAP Service Corp. (which Standard & Poor's ranks "Above Average") as subservicer, agree to administer the mortgages according to their normal business practices. This entails collecting payments due under the mortgages, and if required, repossessing and selling any property on behalf of the trust. The cash flow modeling of the transaction assumed that a replacement servicer would be appointed, and the replacement servicer fee has been sized to reflect the assumption of Xceed Mortgage Corp.'s obligations through the various agreements.

The portfolio of mortgages in this transaction is being sold on a fully serviced basis. Unless a replacement servicer is appointed by the trust, Xceed Mortgage Corp., as the initial servicer and MCAP Service Corp as subservicer, will administer the mortgages according to and in compliance with the credit and collection policy. Xceed Mortgage Corp. can delegate any of its duties as servicer to any entity in accordance with the standard of care imposed on Xceed Mortgage Corp., but any such delegation will not relieve Xceed Mortgage Corp. of its obligations as servicer under the master mortgage securitization agreement. Xceed Mortgage Corp. delegated its obligations to MCAP Service Corp.

The servicer may not terminate the subservicing agreement with MCAP Service Corp. unless a replacement subservicer that satisfies the rating agency condition is appointed. Moreover, the subservicing agreement may not be amended unless such amendment satisfies the rating agency condition. Any replacement servicer will be entitled to receive the replacement servicer fee, which, together with applicable taxes, will be payable out of the collections account in the priority described below.

The class A-1, A-2, and A-3 notes will bear interest on their respective principal amounts outstanding, payable semiannually in arrears on each settlement date, in September and March of each year starting September 2007. Interest for any payment date will accrue from and include the preceding interest payment date (or, in the case of the initial interest payment date, from and including the closing date) to, but excluding, the interest payment date; it will be calculated on the basis of a 365-day year. During the amortization period, if any, interest on the principal amount outstanding of class A-1, A-2, and A-3 notes will be payable monthly in arrears on each settlement date at the monthly equivalent of the respective applicable annual rate.

In general, the trust will not repay principal on the class A-1, A-2, or A-3 notes until the related targeted principal distribution date. The trust should fund principal payments on the class A-1, A-2, and A-3 notes through the additional issuance of class A-C notes during each refinancing period. The proceeds of those, when issued, will be deposited to either the class A-1, A-2, or A-3 distribution account, and applied on the related targeted principal distribution date toward payment of all principal amounts outstanding for the applicable class of notes. No principal payments on the class B, C, D or E notes will be made until the aggregate principal amount owing on the senior notes has been accumulated or paid in full. If the trust cannot issue additional class A-C notes to repay maturing class A-1, A-2, or A-3 notes, the full principal amount of the notes will likely not be paid on the related targeted distribution date. Moreover, once the amortization period is under way, the issuer will no longer be able to issue class A-C notes to pay the amounts outstanding on the class A-1, A-2, or A-3 notes. As a result, there is no assurance that all amounts outstanding for class A-1, A-2, or A-3 notes will be paid on the related targeted principal distribution date, or otherwise.

The trust will establish an account into which all collections will be deposited pending their distribution. The servicer is required to deposit collections into eligible accounts within one business day of receipt.

On each settlement date, all collections and other amounts deposited on account of principal to the collections account will be applied by deposit to the class A-C principal distribution account, at any time before the commencement of the amortization period, for the payment of the class A-C principal distribution amount to the extent that the class A-C principal distribution amount has not been reduced to zero at or before that time. If the class A-C principal distribution amount is zero, the principal distribution amount will be deposited into the accumulation account. There, it will be applied until the aggregate principal amount of the class A-1 notes is accumulated in full toward payment of the class A-1 principal distribution amount, and then until the principal of the class A-2 notes, then the class A-3 notes, is accumulated in full. Funds will then go toward payment of the class B, C, D and E notes.

On or before each settlement date, the amount of any hedge termination payments received by the trust since the preceding settlement date that are not included as collections will be applied in respect of amounts payable by the trust for the trust to replace the hedge counterparty. The amount of any replacement hedge initiation payments received by the trust since the preceding settlement date that are not included in collections will be applied in payment of any hedge termination payments payable by the trust.

On each settlement date (except as otherwise specified), the trust will apply the balance of the monies deposited during the related collection period together with any servicer advances required on such settlement date, after retention of certain specified amounts payable to the servicer and the deposit of all prepayment charges to the prepayment interest penalty account:

• First, by deposit to the servicer account of an amount equal to any late collections of interest (other than compound interest) received during the related collection period in respect of mortgage loans of which a servicer advance was made;
• Second, in payment to the appropriate hedge counterparties of the related net hedge payment amount, the related hedge termination payments (of which the trust is the defaulting party or affected party), and any remaining payments for the replacement of the hedge counterparty;
• Third, in payment of the replacement servicer fee and collection costs, if any;
• Fourth, in payment of the related expenses of the trust;
• Fifth, by deposit to the servicer account of any unreimbursed servicer advance made out of the servicer account that has been determined by the servicer to be a nonrecoverable advance;
• Sixth, after the occurrence and during the continuance of a related event of possession, all costs for the appointment of a receiver;
• Seventh, (i) first, in payment, on a pro rata basis, the related interest for the Class A-1 notes; then for the Class A-2 notes; then for the Class A-3 notes; and then for the Class A-C notes; (ii) second, the related interest for the Class B notes; (iii) third, the related interest for the Class C notes; and (iv) fourth, the related interest for the Class D notes;
• Eighth, by deposit to the provision account of the amount, if any, by which the related provision amount exceeds the balance on deposit in the provision account; and
• Ninth, the related interest for the Class E notes.

The balance of the amounts held in the collection account after the above applications will go into the cash collateral account. The trust will apply the balance on deposit in the cash collateral account on each settlement date except as otherwise specified:

• Subject to the fourth clause below, first, by retention in the cash collateral account (and investment thereof by the trust in eligible investments) of the required deposit amount at such time;
• Second, on the settlement date referenced in the fourth paragraph below toward payment of any remaining principal amount owing under the class E notes until paid out;
• Third, in payment to the hedge counterparties of the related hedge termination payments (of which a hedge counterparty is the defaulting party or affected party);
• Fourth, all other amounts owing by the trust in respect of tranche 2007-T2 or the series 2007-T2 notes and not otherwise specified above;
• Fifth, following completion of all deposits to the prepayment interest penalty account and payments to hedge counterparties in respect of adjustments to the hedges by deposit to the PIP account of, (i) until the balance of the PIP account is equal to C$6 million, the amount by which the greater of (a) C$6 million and (b) the aggregate related settlement amounts in respect of all of the hedge agreements exceeds such balance; and (ii) thereafter, the amount, if any, by which the aggregate related settlement amounts in respect of all hedge agreements exceeds such balance; and
• Sixth, other than in the case of any servicer termination event or during a suspension period, by payment of the balance in excess of the required deposit amount thereof to Xceed Mortgage Corp. on account of the deferred purchase price.

On each settlement date (except during the amortization period and when class A-C notes are outstanding) any principal distribution amount must be deposited into the accumulation account. Any balance of the accumulation account will reduce the number of class A-C notes required to be issued during the refinancing period.

To mitigate the risk of negative carry on the accumulated principal (risk that the issuer earns a rate of return on the balance in the accumulation account that is less than the rates on the class A-1, A-2, and A-3 notes), the trust will enter a swap transaction on closing. Through this transaction, the trust must pay the swap counterparty, Citibank N.A., the investment earnings on the accumulation account, and the counterparty must pay to the trust the class A-1, A-2, and A-3 rates on the balance of the accumulation account.

As part of tranche 2007–T2, the trust will acquire the seller's position in certain interest rate caps and interest-rate swaps that, in part, hedge the interest rate mismatch between the purchased mortgage loans and the class A-C notes. In addition, the trust will enter interest-rate swap transactions with Citibank to hedge the interest-rate mismatch between certain hedges that the trust will purchase and the class A-1, A-2, A-3, B, C, and D notes. Standard & Poor's modeled the impact of such interest rate hedges as part of the cash flow analysis.

Standard & Poor's was given certain portfolio data, including loss information, dating to 2001. As a result, the data did not reflect portfolio performance during a recessionary environment. To partially mitigate this risk, we ran stress testing parameters on a more conservative basis to ensure that there was sufficient cash flow to merit the 'AAA' ratings assigned to the class A-1, A-2 and A-3 notes, the 'AA' ratings on the class B notes, the 'A' ratings on the class C notes, and the 'BBB' ratings on the class D notes.

We determined the required level of credit enhancement for the rated notes by estimating future delinquency, prepayment, and credit loss levels using historical performance indicators, stressing these levels and running various cash flow models to ensure the timely payment of interest and the ultimate repayment of principal.

The first step was to determine delinquency, prepayment, and credit loss amounts, which were assessed based on historical delinquency, prepayment, and default frequency data. The historical data were analyzed, and expected levels for the securitized pool were determined. The expected levels are then stressed at the required rating level to determine stressed levels that must be covered by transaction credit enhancement.

The mortgages designated by Xceed Mortgage Corp. for this transaction, the portfolio of mortgages, are all eligible mortgages. The mortgagors under the portfolio of mortgages reside in every province in Canada.

There will be approximately 3,000 mortgages. No single mortgage represents more than C$800,000, or 0.14% of the portfolio. Each mortgage must satisfy a number of eligibility criteria to form part of the portfolio of assets being securitized. Eligibility criteria include:

• Each mortgage must be originated in accordance with the credit and collection policy of Xceed Mortgage Corp. existing at the time;
• Each mortgage must be in Canadian dollars;
• Each mortgage must not be delinquent more than 30 days from the payment due date; and
• Each mortgage is represented by a first lien on the subject property.

Mortgages typically have an original maturity of 30-60 months. The majority of the mortgages have remaining maturities of 25-60 months. The weighted average original term to maturity was approximately 47.7 months, and the weighted average remaining term to maturity is approximately 43.59 months. The portfolio consists of fixed-rate residential mortgages. Mortgages (by pool balance) are geographically concentrated in the provinces of Alberta (22.3%), British Columbia (9.6%), Ontario (28.1%) and Quebec (31.3%).

The conveyance of the mortgage loans and the transaction's legal structure conform to Standard & Poor's legal criteria.