FIRST AMENDMENT TO AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT

GOVERNING PURCHASES AND SALES OF MORTGAGE LOANS

        This Amendment, dated as of November 19, 2003 (the “Amendment”), to the
Amended and Restated Master Repurchase Agreement Governing Purchases and Sales
of Mortgage Loans, dated as of July 30, 2003 (the “Agreement”), is made by and
between LEHMAN BROTHERS BANK, FSB (“Buyer”) and AAMES CAPITAL CORPORATION
(“Seller” and, together with the Buyer, the “Parties”).

RECITALS

        WHEREAS, the Seller and the Buyer are parties to the Agreement, pursuant
to which the Buyer has agreed, subject to the terms and conditions set forth in
the Agreement, to purchase certain Mortgage Loans owned by the Seller,
including, without limitation, all rights of Seller to service and administer
such Mortgage Loans. Terms used but not defined herein shall have the respective
meanings ascribed to such terms in the Agreement, as amended hereby.

        WHEREAS, the Parties wish to amend the Agreement to modify certain of
the terms and conditions governing the purchase and sale of the Mortgage Loans.

        NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereto agree as
follows:

   Section 1. Amendment.

        1.1      As of January 1, 2004, Section 13(a)(xii) is hereby deleted in
its entirety and replaced with the following:

   "(xii) Tangible Net Worth of the Guarantor shall at any time be less than
$60,000,000;"

        1.2      As of the date hereof, Section 13(a)(xxii) is hereby deleted in
its entirety and replaced with the following:

   “(xxii) Guarantor shall pay any dividends under its preferred stock at any
time (it being understood and agreed that such dividends may accrue), other than
dividends accumulated through and including December 31, 2003 (payable in one or
more installments on or prior to December 31, 2003) to holders of the
Guarantor’s Series B Convertible Preferred Stock, Series C Convertible Preferred
Stock and Series D Convertible Preferred Stock.”

   Section 2. Covenants, Representations and Warranties of the Parties.

        2.1      Except as expressly amended by Section 1 hereof, the Agreement
remains unaltered and in full force and effect. Each of the Parties hereby
reaffirms all terms and covenants made in the Agreement as amended hereby.

        2.2      Each of the Parties hereby represents and warrants to the other
that (a) this Amendment constitutes the legal, valid and binding obligation of
such Party, enforceable against such Party in accordance with its terms, and (b)
the execution and delivery by such Party of this Amendment has been duly
authorized by all requisite corporate action on the part of such Party and will
not violate any provision of the organizational documents of such Party.

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   Section 3. Effect upon the Agreement.

        3.1      Except as specifically set forth herein, the Agreement shall
remain in full force and effect and is hereby ratified and confirmed. All
references to the “Agreement” in the Amended and Restated Master Repurchase
Agreement Governing Purchases and Sales of Mortgage Loans shall mean and refer
to the Amended and Restated Master Repurchase Agreement Governing Purchases and
Sales of Mortgage Loans as modified and amended hereby.

        3.2      The execution, delivery and effectiveness of this Amendment
shall not operate as a waiver of any right, power or remedy of any Party under
the Agreement, or any other document, instrument or agreement executed and/or
delivered in connection therewith.

   Section 4. Governing Law.

        THIS AMENDMENT SHALL BE CONSTRUED, INTERPRETED AND GOVERNED BY THE LAW
OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS
PRINCIPLES THEREOF.

   Section 5. Counterparts.

   This Amendment may be executed in any number of counterparts, and all such
counterparts shall together constitute the same agreement.

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        IN WITNESS WHEREOF, the Parties hereto have caused this Amendment to be
executed as of the day and year first above written.

    SELLER:
AAMES CAPITAL CORPORATION, as Seller                

By:_____________________________________

    Name:
Title:                 BUYER:
LEHMAN BROTHERS BANK, FSB, as Buyer                

By:______________________________________

    Name:
Title:

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