RECEIVABLES UNDERWRITING AND SERVICING PROCEDURES

The following is a description of the underwriting and servicing of motor vehicle retail installment sale contracts by HMFC as of the date of this prospectus. The applicable prospectus supplement will describe any material changes to this information with respect to the underwriting and servicing of the pool of receivables transferred to the related issuing entity. HMFC will act as servicer of the receivables for each transaction unless another servicer is specified in the applicable prospectus supplement.

Underwriting Procedures

HMFC purchases motor vehicle retail installment sale contracts from dealers in the ordinary course of business in accordance with HMFC’s underwriting standards. Contracts originated by a dealer are acquired by HMFC under an agreement between HMFC and each such dealer.

HMFC’s underwriting procedures are intended to assess an applicant’s willingness and ability to repay the amounts when due on the contract as well as the value of the vehicle to be financed. The creditworthiness of any co-purchaser or guarantor is also considered. Each applicant for a retail installment sale contract completes a credit application that includes the applicant’s name, income, expenses, residential status, bank account information, credit and employment history, and other personal and financial information. Dealers submit applications together with information about the proposed terms of the retail installment sale contract to HMFC through website based systems or by facsimile. HMFC generally obtains a credit report on the applicant from a national credit bureau selected based upon HMFC’s assessment of which credit bureau provides the most accurate and complete credit reports in the applicant’s geographic area. In a limited number of cases, a credit report is not available because an applicant does not have an established credit history. If an individual applicant has sufficient recent credit history, the credit bureau data includes the applicant’s credit risk score, often referred to as a FICO® score, which is generated using statistical models created by Fair Isaac Corporation. The FICO® score measures the likelihood an applicant will repay an obligation as expected.

HMFC also evaluates credit applications using proprietary credit scoring algorithms developed by a third party credit scoring company for HMFC and referred to as scorecards. The scorecards are used to assess the creditworthiness of each applicant using the information provided on the credit application, the proposed terms of the retail installment sale contract and the applicant’s credit bureau data to assign the applicant a proprietary credit score. HMFC improves and modifies the scorecards from time to time based on actual historical portfolio experience.

Credit applications are automatically evaluated when received and some are approved or rejected based on HMFC’s electronic decisioning model which uses the HMFC derived credit score along with the applicant’s FICO®

score. In most cases, HMFC’s credit analysts evaluate applications to make a purchase decision using the company’s written underwriting guidelines. The credit analyst considers the same information included in the electronic decisioning model and weighs other factors, such as the prospective purchaser’s prior experience with HMFC, and makes a credit decision based on the analyst’s assessment of the strengths and weaknesses of each application.

HMFC uses risk-based pricing that includes a tiered system of interest rates and advance rates representing the varying degrees of risk assigned to different ranges of credit risk. If HMFC considers an applicant to be relatively less credit worthy and, as a result, a greater risk, HMFC will assign the applicant a higher interest rate and lower permissible advance rates. HMFC makes its final credit decision based upon the degree of credit risk with respect to each applicant.

HMFC regularly reviews and analyzes its portfolio of receivables to evaluate the effectiveness of its underwriting guidelines and purchasing criteria. If external economic factors, credit loss or delinquency experience, market conditions or other factors change, HMFC may adjust its underwriting guidelines and purchasing criteria in order to change the asset quality of its portfolio or to achieve other goals and objectives.

Servicing Procedures and Requirements

The servicer will make reasonable efforts to collect all payments due with respect to the receivables held by the issuing entity and will, consistent with the applicable sale and servicing agreement, follow the collection procedures it follows with respect to comparable motor vehicle retail installment sale contracts it services for itself and others.

The servicer will covenant in the applicable sale and servicing agreement that, except as otherwise required by law or provided in the transaction documents and to the extent consistent with the servicer’s customary servicing practices and its credit and collection policies:

1. it will not release any financed vehicle from the security interest granted under the related contract, in whole or in part, except (i) in the event of payment in full by or on behalf of the obligor thereunder or payment in full less a deficiency which the servicer would not attempt to collect in accordance with its customary servicing practices, (ii) in connection with repossession and sale of the financed vehicle or (iii) as may be required by an insurer in order to receive proceeds from any insurance policy covering such financed vehicle;

2. it will not take actions which impair the rights of the issuing entity in the property of the issuing entity;

3. it will not extend the date for final payment by the obligor of any receivable beyond the last day of the Collection Period prior to the last scheduled maturity date for the notes; and

4. it will not reduce the APR or unpaid principal balance with respect to any receivable other than as required by applicable law.

Each of the issuing entity, Hyundai ABS Funding Corporation, the servicer and the indenture trustee has agreed to inform each other party in writing promptly upon the discovery of any breach by the servicer of the above obligations. If the servicer does not correct or cure such breach prior to the end of the Collection Period which includes the 60th day (or, if the servicer elects, an earlier date) after the date that the servicer became aware or was notified of such breach, then the servicer shall purchase any receivable materially and adversely affected by such breach from the issuing entity on the payment date following the end of such Collection Period. The servicer is required to purchase the receivable affected by such breach (an “Administrative Receivable”) from the issuing entity at a price equal to the Administrative Purchase Payment for such receivable. The “Administrative Purchase Payment” for an Administrative Receivable will be equal to its unpaid principal balance, plus interest on that receivable at a rate equal to that receivable’s APR to the last day of the Collection Period that receivable is repurchased.

Upon the purchase of any Administrative Receivable, the servicer will for all purposes of the applicable sale and servicing agreement, be deemed to have released all claims for the reimbursement of outstanding Advances (as defined in “Description of the Transaction Documents—Advances” in this prospectus) made in respect of that Administrative Receivable. This purchase obligation will constitute the sole remedy available to the noteholders, the certificateholders, the indenture trustee, the owner trustee, or the issuing entity for any uncured breach by the servicer.

If the servicer determines that eventual payment in full of a receivable is unlikely, the servicer will follow its normal practices and procedures to recover amounts due on that receivable, including repossessing and disposing of the related financed vehicle at a public or private sale, or taking any other action permitted under applicable law.

However, the servicer may elect not to repossess a financed vehicle if in its good judgment it determines that the proceeds ultimately recoverable with respect to such receivable would not be greater than the expense of such repossession.

The applicable prospectus supplement may include a description of more specific servicing requirements than the requirements set forth above.

Collection and Repossession Procedures

The customer billing process is initiated by the mailing of invoices on a monthly basis. Monthly payments are received at a lockbox account, mailed directly to HMFC, or are paid electronically, including through direct debit or telephonic payment systems. Customers may enroll in a variety of recurring and one-time automated clearinghouse programs that debit funds directly from their bank accounts. As payments are received, they are electronically transferred to HMFC and processed through HMFC’s servicing system for the application of payments to the appropriate accounts.

HMFC measures delinquency by the number of days elapsed from the date a payment is due under the contract. Collection activities with respect to delinquent contracts generally begin shortly after the payment due date. Since January 1, 2006, HMFC has used a behavioral scoring model to assess the probability and severity of payment default for accounts and implemented collection efforts based on its determination of the credit risk associated with each customer. The model assesses the risk of the delinquent obligor through a behavioral scoring algorithm. This algorithm prioritizes the obligors from high to low risk and calling campaigns are structured to target high-risk obligors. The collection team is able to focus resources on higher risk obligors based on the assessment of the score.

The collection process is divided into primary and secondary collection teams. The primary collection team starts as early as 6 days delinquent and continues through about 29 days. The primary collection team uses a predictive dialer to cycle individual names through the dialer continuously until the contact is made. Once contact is made, the customer is cycled back into the system and, if payment is not received by the date promised, the customer is called again until such time as either the payment is received, or the account exceeds 29 days past due.

The secondary collection team continues the collection effort, beginning at about 30 days past due and continuing until the account is brought current, repossessed, paid off or charged off at approximately 120 days past due. At the secondary collection team level, the account becomes the responsibility of one person until resolution when the delinquency is cured or the financed vehicle securing the delinquent contract is repossessed. If the delinquent vehicle cannot be brought current or completely collected by around 75 days delinquent, HMFC generally attempts to repossess the vehicle. Vehicles generally are sold at auction within 30 to 45 days of repossession. Deficiencies remaining after repossession and sale of the vehicle or after the full charge-off of the installment contract may be pursued by or on behalf of HMFC to the extent practicable and legally permitted. HMFC attempts to contact customers and establish and monitor repayment schedules until the deficiencies are either paid in full or become impractical to pursue.

Extensions

HMFC will grant extensions or deferments of contracts in accordance with its customary servicing procedures and the applicable sale and servicing agreement.

Insurance

Each applicant for a contract is required to maintain specific levels and types of insurance with respect to the financed vehicle. The issuing entity will be entitled to proceeds from any insurance policies relating to the financed vehicles to the extent received by HMFC. There is no formal follow-up for written evidence of insurance or for evidence of continued coverage. HMFC has no obligation, and in fact does not track or monitor whether there is insurance coverage in effect with respect to financed vehicles. HMFC does not maintain a back-up or blanket insurance policy which would take effect if the insurance coverage maintained by a financed vehicle’s owner is terminated, nor does HMFC purchase insurance for the account of a financed vehicle owner upon such a termination.

Collection Account

All payments and other proceeds of any type and from any source on or with respect to the receivables shall be the property of the applicable issuing entity, subject to the lien of the related indenture and the rights of the indenture trustee thereunder. The servicer shall, no later than the second Business Day after the receipt of such collections, remit such collections to the collection account maintained in the name of the indenture trustee with the account bank (the “Collection Account”). Pursuant to the terms of the applicable sale and servicing agreement, payments received by the servicer are to be deposited in the applicable Collection Account within two (2) Business Days after receipt. However, so long as certain conditions are satisfied, the servicer may retain such amounts received during a Collection Period until the Business Day prior to the related payment date. Notwithstanding the foregoing, the servicer may remit collections to the Collection Account on any other alternate remittance schedule (but not later than the related payment date) if certain rating agency conditions specified in the applicable sale and

Pursuant to the terms of the applicable sale and servicing agreement, the servicer will be required to transfer all collections received into the Collection Account to the applicable distribution account (to the extent practicable) on the Business Day immediately preceding each distribution date.

The Collection Account will be established by the servicer in accordance with the terms of the applicable sale and servicing agreement.

Set-Off

Pursuant to the terms of the applicable receivables purchase agreement, HMFC will provide an undertaking to the depositor whereby HMFC will pay to the depositor an amount equal to the amount of any reduction in or cancellation of any payment due under a contract as a result of any exercise or purported exercise of any right of set-off or other similar right, not arising from the financial inability of the obligor to pay, by any obligor against the amount due thereunder with respect to any receivable sold to the depositor. The depositor will transfer its right to enforce such undertaking by HMFC to the issuing entity under the applicable sale and servicing agreement.