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Exhibit 10.16

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SHEFFIELD RECEIVABLES CORPORATION

Purchaser,

BARCLAYS BANK PLC,
NEW YORK BRANCH

Administrative Agent,

CENDANT MORTGAGE CORPORATION

Seller and Servicer,

and

PHH CORPORATION

Guarantor

SECOND AMENDED AND RESTATED MORTGAGE LOAN REPURCHASE
AND SERVICING AGREEMENT

dated as of December 16, 2002

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TABLE OF CONTENTS

 
 
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ARTICLE I DEFINITIONS
 
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ARTICLE II SALE OF ELIGIBLE LOANS; POSSESSION OF MORTGAGE FILES; BOOKS AND
RECORDS; CUSTODIAL AGREEMENT; DELIVERY OF DOCUMENTS
 
18   Section 2.1 Transfer of Eligible Loans   18   Section 2.2 Transfer Limits  
19   Section 2.3 All Transfers; Possession of Mortgage Loan Files; Maintenance
of Mortgage Loan Files   20   Section 2.4 Determination of Transfer Price;
Deposit by Seller   21   Section 2.5 Transfer Commitment Term   22   Section 2.6
Books and Records; Transfers of Eligible Loans; Custodial Agreement   22  
Section 2.7 Selection of Interest Rates and Interest Periods; Eurodollar
Protection; Illegality   23   Section 2.8 Seller's Obligation to Pay Carrying
Costs   25   Section 2.9 Allocation of Collections   25   Section 2.10 Seller's
Option to Repurchase Eligible Loans   25   Section 2.11 Margin Payment
Obligation; Margin Call Account; Withdrawals   25   Section 2.12 Liquidation
Settlement Procedures   26   Section 2.13 Protection of Ownership Interest of
the Administrative Agent (on behalf of the Owners)   26   Section 2.14 Fees   27
  Section 2.15 Optional Reduction of Maximum Net Investment; Optional Margin
Payment   27   Section 2.16 Mandatory Repurchase Under Certain Circumstances  
27   Section 2.17 Payments and Computations, Etc.; Allocation of Collections  
28   Section 2.18 Repurchase Procedures   28   Section 2.19 [RESERVED]   29  
Section 2.20 Conditions to Initial Transfer   29   Section 2.21 Conditions to
Incremental Transfers   31   Section 2.22 Principal Account   31
ARTICLE III REPRESENTATIONS AND WARRANTIES; COVENANTS; REMEDIES AND BREACH
 
31   Section 3.1 Representations and Warranties of The Company   31  
Section 3.2 Representations and Warranties Regarding Individual Mortgage Loans;
Eligibility Representations   34   Section 3.3 Remedies for Breach of
Representations and Warranties   41   Section 3.4 Conditions to Closing   42  
Section 3.5 Covenants of the Company   42
ARTICLE IV ADMINISTRATION AND SERVICING OF ELIGIBLE LOANS
 
43   Section 4.1 The Company to Act as Servicer; Servicing and Administration of
the Eligible Loans   43   Section 4.2 Sales and Securitizations   44  
Section 4.3 Liquidation of Eligible Loans   44   Section 4.4 Collection of
Eligible Loan Payments   45   Section 4.5 Establishment of, and Deposits to,
Collection Account   45   Section 4.6 Permitted Withdrawals From Collateral
Account, Principal Account or Margin Call Account; Deposits into Collateral
Account   45

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  Section 4.7 Establishment of, and Deposits to, Escrow Account   46  
Section 4.8 Permitted Withdrawals From Escrow Account   46   Section 4.9 Payment
of Taxes, Insurance and Other Charges   47   Section 4.10 Protection of
Accounts; Investment of Funds   47   Section 4.11 Maintenance of Hazard
Insurance   47   Section 4.12 Maintenance of Mortgage Impairment Insurance   48
  Section 4.13 Maintenance of Fidelity Bond and Errors and Omissions Insurance  
49   Section 4.14 Inspections   49   Section 4.15 Restoration of Mortgaged
Property   49   Section 4.16 Maintenance of PMI Policy; Claims   49  
Section 4.17 Title, Management and Disposition of REO Property   50  
Section 4.18 Servicer Reports   51   Section 4.19 Real Estate Owned Reports   51
  Section 4.20 Liquidation Reports   51   Section 4.21 Reports of Foreclosures
and Abandonments of Mortgaged Property   51
ARTICLE V SERVICER ADVANCES
 
52   Section 5.1 [RESERVED]   52
ARTICLE VI GENERAL SERVICING PROCEDURES
 
52   Section 6.1 Transfers of Mortgaged Property   52   Section 6.2 Satisfaction
of Mortgages and Release of Mortgage Loan Files   52   Section 6.3 Servicing
Compensation   52   Section 6.4 Annual Statement as to Compliance   53  
Section 6.5 Annual Independent Public Accountants' Servicing Report   53  
Section 6.6 Right to Examine Servicer Records   53
ARTICLE VII REPURCHASE OBLIGATION
 
53   Section 7.1 Servicer's Purchase Obligations   53
ARTICLE VIII SERVICER TO COOPERATE
 
54   Section 8.1 Provision of Information   54
ARTICLE IX THE SERVICER
 
54   Section 9.1 Indemnification of Third-Party Claims   54   Section 9.2
Corporate Existence of the Servicer   54   Section 9.3 Limitation on Liability
of Servicer and Others   54   Section 9.4 Limitation on Resignation and
Assignment by the Servicer   55   Section 9.5 Limitation on Assignment of Right
  55
ARTICLE X DEFAULT
 
55   Section 10.1 Servicer Events of Default   55   Section 10.2 Waiver of
Defaults   57
ARTICLE XI TERMINATION AND LIQUIDATION
 
57   Section 11.1 Termination of Agreement   57   Section 11.2 Termination of
Transfer Obligations   57   Section 11.3 Termination of Servicing With Respect
to Any Eligible Loan   58   Section 11.4 Liquidation of Eligible Loans   59  
Section 11.5 Additional Rights Upon the Occurrence of Certain Events   60
ARTICLE XII INDEMNIFICATION; EXPENSES; RELATED MATTERS
 
61   Section 12.1 Indemnities by the Seller   61   Section 12.2 Indemnity for
Taxes, Reserves and Expenses   62

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  Section 12.3 Taxes   63   Section 12.4 Other Costs, Expenses and Related
Matters   64
ARTICLE XIII MISCELLANEOUS PROVISIONS
 
64   Section 13.1 Successor to Servicer   64   Section 13.2 Amendment   65  
Section 13.3 Governing Law   65   Section 13.4 Duration of Agreement   65  
Section 13.5 Notices   65   Section 13.6 Severability of Provisions   66  
Section 13.7 Relationship of Parties   66   Section 13.8 Execution; Successors
and Assigns   67   Section 13.9 Recordation of Assignments of Mortgage   67  
Section 13.10 [RESERVED]   67   Section 13.11 Non-Petition Agreement   67  
Section 13.12 Waiver of Offset   67   Section 13.13 Limited Recourse   67
ARTICLE XIV PHH CORPORATION GUARANTEE
 
68   Section 14.1 Guarantee of Seller's Representations and Warranties,
Servicer's Performance and Payment Obligations   68

EXHIBIT A   FORM OF NOTICE OF LIQUIDATION EXHIBIT B   FORM OF NOTICE OF
TERMINATION EXHIBIT C   FORM OF REPURCHASE NOTICE EXHIBIT D   FORM OF REPURCHASE
SUPPLEMENT EXHIBIT E   FORM OF SERVICER REPORT EXHIBIT F   FORM OF TRANSFER
NOTICE EXHIBIT G   FORM OF TRANSFER SUPPLEMENT EXHIBIT H   FORM OF CREDITOR
ACKNOWLEDGEMENT AND AGREEMENT

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        SECOND AMENDED AND RESTATED MORTGAGE LOAN REPURCHASE AND SERVICING
AGREEMENT, dated as of December 16, 2002 (as amended, supplemented or otherwise
modified and in effect from time to time, the "Repurchase Agreement"), among
Sheffield Receivables Corporation, a Delaware corporation, as Purchaser (the
"Purchaser"), Cendant Mortgage Corporation, a New Jersey corporation (the
"Company"), as Seller and Servicer (in its capacity as Seller hereunder, the
"Seller" and, in its capacity as Servicer hereunder, the "Servicer"), Barclays
Bank PLC, New York Branch, as Administrative Agent (the "Administrative Agent"),
and PHH Corporation, a Maryland corporation, as Guarantor of the Servicer's
obligations (the "Guarantor").

        W I T N E S S E T H

        WHEREAS, the Purchaser, the Company and the Administrative Agent have
entered in that certain mortgage loan repurchase and servicing agreement, dated
as of December 11, 1998 (the "Original Repurchase Agreement");

        WHEREAS, the Original Repurchase Agreement was amended by those certain
amendment agreements, dated as of March 30, 2001 (the "First Amendment
Agreement") and dated as of December 28, 2001 (the "Amended and Restated
Repurchase Agreement" and, together with the Original Repurchase Agreement and
the First Amendment Agreement, the "Amended Repurchase Agreement");

        WHEREAS, pursuant to the Amended Repurchase Agreement, the Purchaser and
the Company, as Seller and Servicer, hereby prescribe the manner of sale of each
Eligible Loan and the management, control and servicing of the Eligible Loans,
including the method and manner by which the Seller will repurchase each
Eligible Loan;

        WHEREAS, the Purchaser, the Company and the Administrative Agent desire
to amend and restate the Amended Repurchase Agreement in its entirety;

        WHEREAS, this Repurchase Agreement amends and restates the Amended
Repurchase Agreement in all respects, and from and after the date hereof,
constitutes the governing instrument of such Purchaser; and

        NOW, THEREFORE, in consideration of the mutual agreements hereinafter
set forth, and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

        Whenever used herein, the following words and phrases, unless the
context otherwise requires, shall have the following meanings:

        Accepted Servicing Practices:    The Servicer's Customary Servicing
Procedures and the servicing practices required by the Guidelines.

        Accrued Interest Component:    For any Collection Period, that portion
of the Interest Component of all Related Commercial Paper outstanding at any
time during such Collection Period that accrued from the first day through the
last day of such Collection Period whether or not such Related Commercial Paper
matures during such Collection Period, based on the actual number of days in
such Collection Period that such Related Commercial Paper was outstanding.

        Additional Collateral:    With respect to any Additional Collateral
Mortgage Loan, collateral that consists of either (i) marketable securities
owned by the borrower and deposited in an account held by Merrill, subject to a
security interest in favor of the Company pursuant to a security agreement or
(ii) with respect to a loan to a borrower that is subject to a guaranty,
(a) marketable securities owned

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by the guarantor and deposited in an account held by Merrill, subject to a
security interest in favor of the Company pursuant to a security agreement or
(b) a home equity line of credit to fund such guaranty that is secured by a lien
on residential real estate owned by such guarantor subject to a security
interest in favor of the Company pursuant to a security agreement; provided,
however, that the amount available to be drawn under the home equity line of
credit supporting such guaranty must be at least equal to the Original
Additional Collateral Requirement for such Additional Collateral Mortgage Loan.

        Additional Collateral Mortgage Loan:    The meaning ascribed to
"Additional Collateral Mortgage Loan," as such term is defined in the Surety
Bond. The underwriting guidelines for the Mortgage 100 SM and Parent Power SM
programs will not be materially altered without prior consent of the
Administrative Agent.

        Additional Collateral Transfer Agreement:    That certain additional
collateral transfer and servicing agreement, dated as of November 1, 2001,
between MLCC and the Company.

        Adjusted LIBOR Rate:    With respect to any period during which the
return to any APA Purchaser is to be calculated by reference to the London
interbank offered rate, a rate which is 0.75% in excess of a rate per annum
equal to the sum (rounded upwards, if necessary, to the nearest 1/16th of 1%) of
(A) the rate obtained by dividing (i) the applicable LIBOR Rate by (ii) a
percentage equal to 100% minus the sum of (A) the maximum reserve requirement as
specified in Regulation D (including, without limitation, any marginal,
emergency, supplemental, special or other reserves) that is applicable to the
Agent during such period in respect of eurocurrency or eurodollar funding,
lending or liabilities (or, if more than one percentage shall be so applicable,
the daily average of such percentage for those days in such period during which
any such percentage shall be applicable) and (B) the then daily net annual
assessment rate (rounded upwards, if necessary, to the nearest 1/16th of 1%) as
estimated by the Agent for determining the current annual assessment payable by
the Agent to the Federal Deposit Insurance Corporation in respect of
eurocurrency or eurodollar funding, lending or liabilities.

        Adjusted Mark to Market Price:    For a mortgage loan on any day, the
product of (x) the Advance Percentage on such day and (y) the Mark to Market
Price of such mortgage loan on such day.

        Adjusted Net Investment:    At any time, the Net Investment minus the
amount, if any, equal to the sum of the amounts on deposit in the Collateral
Account, the Principal Account and the Margin Call Account. The Adjusted Net
Investment shall be calculated by the Servicer on or before the second Business
Day after the Net Investment (as most recently computed) exceeds the Aggregate
Adjusted Mark to Market Price. In computing the Adjusted Net Investment, the
Servicer shall use the Administrative Agent information contained in the last
Servicer Report (or any more recently delivered information) delivered to the
Administrative Agent.

        Administration Agreement:    The Amended and Restated Administration
Agreement, dated as of December 12, 1991, between the Purchaser and the
Administrative Agent, as the same may be at any time amended, modified or
supplemented.

        Administrative Agent:    Barclays Bank, PLC, New York Branch, as
Administrative Agent under the Administration Agreement.

        Advance Percentage:    On any day, a percentage equal to 100% minus the
Loss Percentage on such day.

        Adverse Claim:    A lien, security interest, charge or encumbrance, or
other right or claim in, of or on any Person's assets or properties in favor of
any other Person (including any UCC financing statement or any similar
instrument filed against such Person's assets or properties).

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        Affiliate:    With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities (including, without limitation, partnership interests), by contract
or otherwise and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.

        Agency:    Any of GNMA, FNMA or FHLMC, as applicable.

        Agency Custodial Agreement:    The custodial agreement, among Sheffield,
GNMA, FNMA or FHLMC, as applicable, and the Custodian, pursuant to which the
Custodian will act as document custodian for a pool or pools of mortgage loans
to be formed to back Agency Securities, as such agreement may at any time be
amended, modified or supplemented.

        Agency Securities:    Securities backed by a pool or pools of mortgage
loans owned by the Seller, which are issued and guaranteed by the applicable
Agency.

        Agent:    The Barclays Bank PLC, New York Branch, as agent for the APA
Purchasers under the Revolving Asset Purchase Agreement.

        Aggregate Adjusted Mark to Market Price:    On any day, the aggregate
sum of the Adjusted Mark to Market Price of all Eligible Loans on such day
(excluding Defaulted Loans).

        Aggregate Interest Component:    The aggregate sum of the Interest
Components of all issued and outstanding Related Commercial Paper.

        Aggregate Unpaids:    At any time, an amount equal to the sum of (i) the
aggregate accrued and unpaid Carrying Costs with respect to all Collection
Periods at such time, (ii) the Net Investment at such time, (iii) all fees
accrued and unpaid hereunder or under the Fee Letter at such time and (iv) all
other amounts owed (whether due or accrued) hereunder by the Seller to the
Owners at such time.

        Agreement or Repurchase Agreement:    This Second Amended and Restated
Mortgage Loan Repurchase and Servicing Agreement and all amendments hereof and
supplements hereto, including as the context requires, any Transfer Supplement.

        AMBAC:    Ambac Indemnity Corporation.

        APA Purchaser:    Each party (or assignee thereof) who has executed a
signature page of the Revolving Asset Purchase Agreement, which execution
obligates such party to become a purchaser or an assignee of all or any part of
the Purchaser's interest in the Eligible Loans at any time, pursuant to the
Revolving Asset Purchase Agreement or an assignee of the Purchaser's obligations
to purchase Eligible Loans from the Seller.

        Appraised Value:    The value set forth in an appraisal made in
connection with the origination of the related Eligible Loan as the value of the
Mortgaged Property.

        Approved Seller/Servicer:    An approved seller and servicer under the
Guidelines.

        Assignment of Mortgage:    An assignment of the Mortgage, notice of
transfer or equivalent instrument in recordable form, sufficient under the laws
of the jurisdiction wherein the related Mortgaged Property is located, to
reflect the sale of the Mortgage to the Purchaser.

        Base Rate:    For any day, the higher of (i) the prime rate in the
United States announced from time to time by Barclays Bank PLC, New York Branch
in effect on such day, and (ii) the sum of (x) the rate equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published for such
day

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(or, if such day is not a Business Day, for the next preceding Business Day) by
the Federal Reserve Bank of New York, or, if such rate is not so published for
such day, the average of the quotations for such day for such transactions
received by Barclays Bank PLC, New York Branch from three Federal funds brokers
of recognized standing selected by it, and (y) one-half of one percent (1/2%).

        Best's:    The meaning specified in Section 4.11 of this Agreement.

        BIF:    The Bank Insurance Fund or any successor thereto.

        Business Day:    Any day other than (i) Saturday and Sunday, or (ii) a
day on which banking institutions or foreign exchange markets in New York City
are authorized or required by law, regulation or executive order to be closed
for business.

        Calculation Agent:    The Servicer.

        Carrying Costs:    For a Collection Period, the sum, without
duplication, of (i) the Accrued Interest Component of Related Commercial Paper
with respect to such Collection Period whether or not such amount is payable
during such Collection Period (for purposes of this clause (i), Related
Commercial Paper shall include Commercial Paper issued to fund the Net
Investment even if such Commercial Paper is issued in an amount in excess of the
Net Investment), (ii) all interest amounts accrued in accordance with Sections
2.7(c), (d) and (e) hereof whether or not such amount is payable during such
Collection Period, (iii) any Servicing Fees due to any successor Servicer,
(iv) any amounts owed to the Indemnified Parties pursuant to Sections 12.1,
12.2, 12.3 and 12.4 hereof, (v) the Program Fee and the Transfer Availability
Fee accrued from the first day through the last day of such Collection Period,
(vi) interest on any other borrowings by the Purchaser to fund small dollar
amounts that are not easily accommodated in the commercial paper market that
accrued from the first day through the last day of such Collection Period
whether or not such amount is payable during such Collection Period, and
(vii) any past due Carrying Costs owing in respect of any prior Collection
Period, together with interest thereon (to the extent permitted by applicable
law) at a rate equal to the sum of the Base Rate and 2.00% per annum for the
period from and including the original due date for such past due Carrying Costs
to but excluding the date on which they are paid in full together with such
interest thereon.

        Carrying Costs Account:    The account listed under the signature of the
Administrative Agent on the signature page hereof as the "Carrying Costs
Account" or such other account designated in writing to the Seller and the
Servicer by the Administrative Agent.

        Closing Date:    The Closing Date specified in any Transfer Supplement
as the date on which the purchase of any Eligible Loan by the Administrative
Agent (on behalf of the Owners) is designated to occur.

        Code:    The Internal Revenue Code of 1986, as it may be amended from
time to time or any successor statute thereto, and applicable U.S. Department of
the Treasury regulations issued pursuant thereto.

        Collateral Account:    The account listed under the signature of the
Administrative Agent on the signature page hereof as the "Collateral Account" or
such other account designated in writing to the Seller and the Servicer by the
Administrative Agent.

        Collection:    The meaning specified in Section 4.5 hereof.

        Collection Period:    The calendar month preceding the Payment Date, or
in the case of the first Collection Period, the period commencing on
December 15, 1998 to the end of the calendar month preceding the first Payment
Date.

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        Combined Loan-to-Value Ratio:    With respect to any HELOC, the ratio
expressed as a percentage of (i) the Credit Limit of the HELOC plus the amount
of any related senior mortgage loans to the lesser of (ii)(a) the Appraised
Value of the Mortgaged Property and (b) if the HELOC was made to finance the
acquisition of the related Mortgaged Property, the purchase price of the
Mortgaged Property.

        Commercial Paper or Commercial Paper Notes:    The short-term promissory
notes of the Purchaser issued pursuant to the Issuing and Paying Agency
Agreement.

        Commitment Fee:    The meaning assigned to such term in Section 15.1
hereof.

        Company:    Cendant Mortgage Corporation, as Seller and Servicer of the
Eligible Loans sold to the Administrative Agent (on behalf of the Owners)
pursuant to the terms of this Agreement.

        Company Employees:    The meaning specified in Section 4.13 hereof.

        Condemnation Proceeds:    As to any Eligible Loan, all awards or
settlements in respect of a Mortgaged Property, whether permanent or temporary,
partial or entire, by exercise of the power of eminent domain or condemnation,
to the extent not required to be released to a Mortgagor in accordance with the
terms of the related Loan Documents.

        Conforming Loan:    An Eligible Loan which conforms to the Guidelines of
GNMA, FNMA or FHLMC, as amended for the Seller.

        CP Dealer:    Lehman Commercial Paper Inc., Goldman Sachs & Co. and
Barclays Capital, Inc. each as a Commercial Paper dealer pursuant to the Program
Documents.

        Credit Limit:    The maximum amount a borrower is permitted to draw down
the credit line under a Home Equity Line Agreement.

        Custodian:    Bank One Trust Company, N.A., in its capacity as Custodian
under the Custodial Agreement, or any successor Custodian under the Custodial
Agreement.

        Custodial Agreement:    The Custodial Agreement, dated as of
December 11, 1998, as amended as of April 12, 2002, among Barclays Bank PLC, New
York Branch, as Administrative Agent, Cendant Mortgage Corporation, as Seller
and Servicer, and the Custodian, as such agreement may at any time hereafter be
amended, modified or supplemented.

        Customary Servicing Procedures:    Procedures (including collection
procedures) that the Servicer customarily employs and exercises in servicing and
administering mortgage loans for its own account and arranging for the sale and
Securitization of mortgage loans and which are in accordance with accepted
mortgage servicing practices of prudent lending institutions in the jurisdiction
in which the Mortgaged Property is situated for properties of a similar type.

        Defaulted Loan:    Any Eligible Loan where (i) the Mortgagor thereon has
failed to make a required payment for 90 days or more after the Due Date of such
required payment or (ii) any other event has occurred which gives the holder the
right to accelerate payment and/or take steps to foreclose on the mortgage
securing the Eligible Loan under the Eligible Loan documentation.

        Delinquency Ratio:    With respect to any date of determination, the
ratio (expressed as a percentage) computed as of the last day of each calendar
month by dividing (i) the aggregate Outstanding Principal Balance of all
Delinquent Loans as of the last day of such calendar month by (ii) the
Outstanding Principal Balance of the Eligible Loans as of the last day of such
calendar month.

        Delinquent Loan:    Any Eligible Loan which has a payment which is
30 days or more past its Due Date.

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        Determination Date:    With respect to a Due Period, the 5th day (or if
such day is not a Business Day, the Business Day immediately succeeding such
day) of the calendar month following such Due Period.

        Due Date:    The first day of the month in which the related Monthly
Payment is due on an Eligible Loan, exclusive of any days of grace.

        Due Period:    With respect to each Payment Date, the period commencing
on the first day of the month preceding the month of the Payment Date and ending
on the last day of the month preceding the month in which the Payment Date
occurred.

        Eligible Investments:    Investments which mature no later than the next
following Payment Date in the following: (i) obligations issued by, or the full
and timely payment of principal of and interest on which is fully guaranteed by,
the United States of America or any agency or instrumentality thereof (which
agency or instrumentality is backed by the full faith and credit of the United
States of America); (ii) commercial paper (other than the Commercial Paper)
rated (at the time of purchase) at least "A-1+" by S&P and "P-1" by Moody's;
(iii) certificates of deposit, other deposits or bankers' acceptances issued by
or established with commercial banks having short-term deposit ratings (at the
time of purchase) of at least "A-1+" by S&P and "P-1" by Moody's;
(iv) repurchase agreements involving any of the Eligible Investments described
in the foregoing clauses (i) through (iii) so long as the other party to the
repurchase agreement has short-term unsecured debt obligations or short-term
deposits rated (at the time of purchase) at least "A-1+" by S&P and "P-1" by
Moody's; and (v) if approved in writing by Moody's, direct obligations of any
money market fund or other similar investment company all of whose investments
consist of obligations described in the foregoing clauses of this definition and
that is rated "AAm" by S&P and "Aam" by Moody's or higher. In addition, the
instrument should not have an "r' highlighter affixed to its rating, and its
terms should have a predetermined fixed dollar amount of principal due at
maturity that cannot vary or change. Interest on any Eligible Investment should
be tied to a single interest rate index plus a single fixed spread, if any, and
move proportionately with that index.

        Eligible Loan:    A Conforming Loan (provided that the Seller is an
Approved Seller/Servicer by the related Agency), a Jumbo Loan, an Additional
Collateral Mortgage Loan, a Landscape Loan, an Uninsured Loan or a HELOC
identified on a Transfer Supplement that satisfies the Eligibility Criteria and
the Portfolio Criteria and that is not a Terminated Loan. An Eligible Loan
includes, without limitation, the Mortgage Loan File, the Related Security, the
Monthly Payments, Principal Prepayments, Liquidation Proceeds, Condemnation
Proceeds, Insurance Proceeds, VA Guaranty Proceeds, REO Disposition Proceeds and
all other rights, benefits, proceeds and obligations arising from or in
connection with such Eligible Loan (other than the right to service such
Eligible Loans, which shall be retained by the Seller pursuant to the terms of
this Agreement).

        Eligibility Criteria:    In connection with the Transfer of a mortgage
loan on any day, the mortgage loans sold on such day must satisfy the following
criteria: (i) each mortgage loan must be an Eligible Loan, (ii) each mortgage
loan must have been originated or purchased by the Seller in accordance with its
then-current origination or acquisition underwriting practices within 120 days
prior to the acquisition thereof by the Purchaser, except for HELOCs originated
or purchased by the Seller more than 120 days prior to the acquisition thereof
by the Purchaser on December 16, 2002, (iii) the aggregate Transfer Price of all
mortgage loans secured by properties located in California and acquired on such
day may not exceed 30% of the aggregate Transfer Price of all mortgage loans
acquired on such day, (iv) the aggregate Transfer Price of all mortgage loans
secured by properties located in any state other than California and acquired on
such day may not exceed 15% of the aggregate Transfer Price of all mortgage
loans acquired on such day, (v) the aggregate Transfer Price of all Jumbo Loans
acquired on such day may not exceed 45% of the aggregate Transfer Price of all
mortgage loans acquired on such day and, (vi) each mortgage loan may not be made
to a borrower that is generally referred to as

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"sub-prime borrower," and (vii) the aggregate Transfer Price of all Uninsured
Loans acquired on such day may not exceed 15% of the aggregate Transfer Price of
all mortgage loans acquired on such day. In addition, the representations and
warranties made by the Seller in this Agreement must be true and correct in all
material respects on such day.

        Eligibility Representations:    The representations and warranties made
by the Seller with respect to each mortgage loan, set forth in Section 3.2
herein.

        Equivalent Security:    With respect to a mortgage loan, a
mortgage-backed security issued by FHLMC, FNMA or GNMA having a term to final
maturity equal to the remaining term to maturity of such mortgage loan and an
interest or pass-through rate equal to the interest rate on such mortgage loan
(net of servicing fees).

        Equivalent Security Price:    With respect to a mortgage loan, the price
(expressed as a percentage of the principal amount) of the Equivalent Security
for such mortgage loan. The price of an Equivalent Security shall be determined
by the Servicer on any date by reference to an independent market price
reference such as Telerate.

        Errors and Omissions Insurance Policy:    An errors and omissions
insurance policy or policies to be maintained by the Servicer pursuant to
Section 4.13 hereof.

        Escrow Account:    As to any Eligible Loan (other than HELOCs), any
separate account or accounts created and maintained pursuant to Section 4.7
hereof.

        Escrow Payments:    With respect to any Eligible Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, and any other payments required by the Mortgagee to be escrowed by the
Mortgagee pursuant to the Mortgage or any other related document.

        Excluded Taxes:    The meaning specified in Section 12.3 hereof.

        Expiration Date:    The earliest of (i) 364 days after the date of this
Agreement or such later day as mutually agreed to in writing by the Seller and
the Administrative Agent, (ii) the latest Purchase Commitment Termination Date
under the Revolving Asset Purchase Agreement (as defined therein), (iii) the
date of termination of the commitment of any APA Purchaser under the Revolving
Asset Purchase Agreement (unless other APA Purchaser(s) or a replacement APA
Purchaser accepts such terminating APA Purchaser's commitment or the Collateral
Account is funded if necessary in accordance with Section 2.16(b) hereof),
(iv) the date of termination of the commitment of the Program Banks under the
Program Credit Agreement or (v) the day on which the Administrative Agent
delivers a Notice of Termination pursuant to Section 11.2 hereof or a
Termination Event specified in Section 11.2(c),(d) or (e) occurs.

        FDIC:    The Federal Deposit Insurance Corporation, or any successor
thereto.

        Fee Letter:    The agreement, dated as of December 11, 1998, between the
Seller and the Purchaser setting forth the fees payable to the Owners by the
Seller in connection with the Owners' investment in the Eligible Loans.

        FHA:    The Federal Housing Administration, an agency within the United
States Department of Housing and Urban Development, or any successor thereto and
including the Federal Housing Commissioner and the Secretary of Housing and
Urban Development where appropriate under the FHA Regulations.

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        FHA Approved Mortgagee:    A corporation or institution approved as a
mortgagee by the FHA under the Act and applicable FHA Regulations, and eligible
to own and service mortgage loans such as the FHA Loans.

        FHA Loan:    An Eligible Loan that is the subject of an FHA Mortgage
Insurance Contract.

        FHA Mortgage Insurance:    Mortgage insurance authorized under Sections
203(b), 213, 221(d)(2), 222, and 235 of the Act and provided by the FHA.

        FHA Mortgage Insurance Contract:    The contractual obligation of the
FHA respecting the insurance of an Eligible Loan.

        FHA Regulations:    Regulations promulgated by HUD under the Federal
Housing Administration Act, codified in 24 Code of Federal Regulations, and
other HUD issuances relating to FHA Loans, including the related handbooks,
circulars, notices and mortgagee letters.

        FHLMC:    The Federal Home Loan Mortgage Corporation, or any successor
thereto.

        FHLMC Guides:    The Federal Home Loan Mortgage Corporation Sellers'
Guide and the Federal Home Loan Mortgage Corporation Servicers' Guide and all
amendments or additions thereto.

        FICO Score:    A statistical credit score obtained by many mortgage
lenders in connection with a loan application to help assess a borrower's
creditworthiness. A FICO Score is generated by models developed by a third party
and made available to lenders through three national credit bureaus. The FICO
Score is based on a borrower's historical credit data, including, among other
things, payment history, delinquencies on accounts, levels of outstanding
indebtedness, length of credit history, types of credit and bankruptcy
experience.

        Fidelity Bond:    A fidelity bond to be maintained by the Servicer
pursuant to Section 4.13 hereof.

        Finance Charge Collections:    With respect to an Eligible Loan, any
finance, interest or similar charges owing by an Mortgagor pursuant to such
Eligible Loan; provided, however, that any prepayment penalties, late fees, or
assumption fees collected pursuant to the terms of any Eligible Loan, and any
ancillary revenues and fees for servicing-related administrative activities
collected from or on behalf of Mortgagors as provided herein, shall not
constitute Finance Charge Collections for purposes of this Agreement.

        Finance Charges:    With respect to a Eligible Loan, any finance,
interest, late or similar charges owing by an Mortgagor pursuant to such
Eligible Loan.

        FNMA:    The Federal National Mortgage Association, or any successor
thereto.

        FNMA Guides:    The FNMA Selling and Servicing Guides and all amendments
or additions thereto.

        GAAP:    Generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
accounting profession, as in effect from time to time.

        GNMA:    The Government National Mortgage Association, or any successor
thereto.

        GNMA Guides:    The GNMA Handbooks 5500.1 and 5500.2 and all amendments
or additions thereto.

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        Guarantee:    The full, unconditional and irrevocable guarantee of the
Servicer's performance and payment obligations, set forth in Article XIV hereof.

        Guarantor:    PHH Corporation, a Maryland corporation.

        Guidelines:    The GNMA Guides, the FNMA Guides and the FHLMC Guides, as
such Guides have been amended from time to time with respect to the Seller.

        Home Equity Line Agreement:    The agreement between a borrower and a
lender pursuant to which a borrower receives a line of credit secured by a
Mortgage on the Mortgaged Property.

        HELOC:    A Piggyback HELOC, a Stand Alone HELOC or a Stand Alone Hybrid
HELOC.

        HUD:    The Department of Housing and Urban Development, or any federal
agency or official thereof which may from time to time succeed to the functions
thereof with regard to FHA Mortgage Insurance. The term "HUD," for purposes of
this Agreement, is also deemed to include subdivisions thereof such as the FHA
and GNMA.

        Incremental Transfer:    The meaning specified in Section 2.2 hereof.

        Insurance Proceeds:    With respect to any Eligible Loan, proceeds of
insurance policies insuring the Eligible Loan or the related Mortgaged Property.

        Insured Amount:    The meaning specified in Section 4.10 of this
Agreement.

        Issuing and Paying Agency Agreement:    The Amended and Restated Issuing
and Paying Agency Agreement, dated as of December 12, 1991, between Sheffield
Receivables Corporation and Bankers Trust Company, as amended by the Master
Amendment, Resignation and Appointment Agreement, dated as of August 1, 1997,
among Sheffield Receivables Corporation, The Chase Manhattan Bank and Bankers
Trust Company, as the same may at any time be amended, modified or supplemented.

        Interest Component:    With respect to (i) any Commercial Paper issued
on an interest-bearing basis, the interest payable on such Commercial Paper at
its maturity (including any dealer commissions) and (ii) any Commercial Paper
issued on a discount basis, the portion of the face amount of such Commercial
Paper representing the discount incurred in respect thereof (including any
dealer commissions to the extent included as part of such discount).

        Jumbo Loan:    A mortgage loan which substantially conforms to the
Guidelines, except (i) the principal balance thereof may exceed the principal
balance of a mortgage loan which conforms to the Guidelines, and (ii) for other
specified exceptions to the Guidelines which are consistent with the Seller's
Jumbo Loan underwriting standards. Jumbo Loans will not include mortgage loans
made to borrowers that are generally referred to as "sub-prime" borrowers.

        Jumbo Price Spread:    With respect to Jumbo Loans, the reduction in
Equivalent Security Price, as agreed to by the Seller, the Purchaser and the
Agent.

        Landscape Loan:    A mortgage loan that substantially conforms to the
Guidelines, except (i) maintenance of a PMI Policy will not be required and
(ii) the mortgage loan is not an FHA Loan or VA Loan.

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        LIBOR Rate:    With respect to any funding period, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on
Telerate Page 3750 (or any successor page) as the London interbank offered rate
for deposits in U.S. dollars at approximately 11:00 a.m. (London time) two
London Business Days prior to the first day of such funding period for a term of
one month. If for any reason such rate is not available, the term "LIBOR Rate"
shall mean, for any funding period, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBOR Page as
the London interbank offered rate for deposits in dollars at approximately
11:00 a.m. (London time) two London Business Days prior to the first day of such
funding period for a term of one month; provided, however, if more than one rate
is specified on the Reuters Screen LIBOR Page, the applicable rate shall be the
arithmetic mean of all such rates. In the event no such rate appears as
described in the preceding sentences, the LIBOR Rate shall be, with respect to
any funding period, the per annum rate of interest at which Dollar deposits in
immediately available funds are offered to the Agent by prime banks in the
interbank eurodollar market at or about 10:00 a.m., London time, on the second
Business Day before (and for value on) the first day of such funding period (or
portion thereof) and in an amount of not less than $1,000,000 for such funding
period (or portion thereof).

        Law:    Any law (including common law), constitution, statute, treaty,
regulation, rule, ordinance, order, injunction, writ, decree or award of any
Official body.

        Lien:    In respect of the property of any Person, any ownership
interest of any other Person, any mortgage, deed of trust, hypothecation,
pledge, lien, security interest, filing of any financing statement, charge or
other encumbrance or security arrangement of any nature whatsoever, including,
without limitation, any conditional sale or title retention arrangement, and any
assignment, deposit arrangement, consignment or lease intended as, or having the
effect of, security.

        Liquidation Event:    The meaning specified in Section 11.4.

        Liquidation Notice Date:    The meaning specified in Section 11.5
hereof.

        Liquidation Proceeds:    All amounts received and retained in connection
with the liquidation of Defaulted Loans.

        Loan Documents:    The documents listed in Section 2.3 of this
Agreement.

        Loan Termination Date:    Each day on which a deposit is made into the
Collateral Account in respect of Terminated Loans.

        Loan-to-Value Ratio or LTV:    With respect to any Eligible Loan (except
for HELOCs), the ratio expressed as a percentage of (i)(a) the Scheduled
Principal Balance of the Eligible Loan less (b) for any Additional Collateral
Mortgage Loan, the value of the Additional Collateral as of the date of
origination to (ii) the lesser of (a) the Appraised Value of the Mortgaged
Property, and (b) if the Eligible Loan was made to finance the acquisition of
the related Mortgaged Property, the purchase price of the Mortgaged Property.

        London Business Day:    Any day on which banks in the City of London and
New York City are open and conducting transactions in United States dollars.

        Loss Percentage:    At any time, 3.6% if the ratings assigned to PHH
Corporation are "A-" or better by S&P and "A3" or better by Moody's, 5%, if the
ratings assigned to PHH Corporation are "BBB+" by S&P or "Baa1" by Moody's, 7%
if the ratings assigned to PHH Corporation are "BBB" by S&P or "Baa2" by
Moody's; 9% if the ratings assigned to PHH Corporation are "BBB-" or less by S&P
or "Baa3" or less by Moody's; and, for any HELOCs, 15% regardless of the ratings
assigned to PHH Corporation.

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        Majority Owners:    At any time, the Administrative Agent and those
Owners owning in the aggregate in excess of 50% of the Net Investment in
Eligible Loans at such time.

        Margin Call Account:    The account listed under the signature of the
Administrative Agent on the signature page hereof as the "Margin Call Account"
or such other account designated in writing to the Seller and the Servicer by
the Administrative Agent.

        Margin Call Condition:    The meaning specified in Section 2.11 hereof.

        Margin Call Trigger Amount:    On any day, an amount equal to the
product of the Advance Percentage and $2,000,000, if the ratings assigned to PHH
Corporation are "A-" or better by S&P and "A3" or better by Moody's; the product
of the Advance Percentage and $1,000,000, if the ratings assigned to PHH
Corporation are "BBB+" by S&P or "Baa1" by Moody's; the product of the Advance
Percentage and $500,000, if the ratings assigned to PHH Corporation are "BBB" by
S&P or "Baa2" by Moody's; and the product of the Advance Percentage and
$100,000, if the ratings assigned to PHH Corporation are "BBB-" or less by S&P
or "Baa3" or less by Moody's.

        Margin Payment:    The meaning specified in Section 2.11 hereof.

        Margin Payment Amount:    The meaning specified in Section 2.11 hereof.

        Mark to Market Price:    With respect to a mortgage loan, (i) the Mark
to Market Price of a Conforming Loan shall be the Equivalent Security Price
multiplied by the unpaid principal amount of such Conforming Loan and (ii) the
Mark to Market Price of a Jumbo Loan shall be the Equivalent Security Price
reduced by the Jumbo Price Spread multiplied by the unpaid principal amount of
such Jumbo Loan and (iii) the Mark to Market price of a HELOC shall be 100%.

        Maximum Net Investment:    $700,000,000, unless otherwise increased with
the consent of the Purchaser and confirmation by S&P and Moody's of the
then-current ratings of the Commercial Paper, or unless reduced as provided in
Section 2.15(a) hereof; provided, however, that at all times on and after the
Expiration Date, the "Maximum Net Investment" shall mean the Net Investment.

        Merrill:    Merrill Lynch, Pierce, Fenner & Smith Incorporated.

        MLCC:    Merrill Lynch Credit Corporation.

        Monthly Payment:    The scheduled monthly payment of principal and/or
interest on an Eligible Loan.

        Monthly Report Date:    The tenth Business Day of each calendar month.

        Moody's:    Moody's Investors Service, Inc., and any successors thereto.

        Mortgage:    The mortgage, deed of trust or other instrument securing a
Mortgage Note, which creates a lien on an estate in fee simple in real property
securing the Mortgage Note.

        Mortgage Impairment Insurance Policy:    A mortgage impairment or
blanket hazard insurance policy as described in Section 4.12 hereof.

        Mortgage Interest Rate:    The annualized regular rate of interest borne
on a Mortgage Note.

        Mortgage Loan File:    The items pertaining to each Eligible Loan
referred to in Section 2.3 hereof, and any additional documents required to be
added to the Mortgage Loan File pursuant to this Agreement.

        Mortgage Loan Schedule:    A schedule of Eligible Loans setting forth
the following information as of the Determination Date with respect to each
Eligible Loan: (1) the identifying number for the

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Eligible Loan; (2) the Mortgagor's name; (3) the street address of the Mortgaged
Property including the state code; (4) a code indicating whether the Mortgaged
Property is a one family residence or a 2-4 family residence; (5) the months to
maturity from the Closing Date based on the amortization schedule for such
Eligible Loan; (6) the Combined Loan-to-Value Ratio or the Loan-to-Value Ratio,
as applicable, at the Closing Date; (7) the Mortgage Interest Rate; (8) the
stated maturity date; (9) the amount of the Monthly Payment; (10) the original
principal balance; (11) the PMI Policy certificate number, if any; (12) the
Qualified Insurer, if any; (13) the type of loan (FHA, VA, Conforming, Jumbo);
(14) payment type (fixed rate or adjustable rate); and (15) the Transfer Price.
With respect to Eligible Loans in the aggregate, the Mortgage Loan Schedule
shall set forth the following information, as of the Determination Date: (1) the
number of Eligible Loans; (2) the current aggregate Outstanding Principal
Balance of the Eligible Loans; (3) the weighted average Mortgage Interest Rate
of the Eligible Loans; (4) the weighted average maturity of the Eligible Loans;
and (5) for any HELOC, the Combined Loan-to-Value Ratio.

        Mortgage Note:    The note, Home Equity Line Agreement or other evidence
of the indebtedness of a Mortgagor secured by a Mortgage.

        Mortgagee:    The lender on a Mortgage Note.

        Mortgaged Property:    The real property securing repayment of the debt
evidenced by a Mortgage Note.

        Mortgagor:    The borrower on a Mortgage Note.

        Net Eligible Loan Balance:    At any time, the lesser of (i) the
aggregate sum of the Mark to Market Prices of the Eligible Loans and (ii) the
aggregate sum of the Outstanding Principal Balances of Eligible Loans, excluding
in each case Defaulted Loans.

        Net Investment:    At any time, the sum of the amounts of Transfer Price
paid to the Seller for each Incremental Transfer less the aggregate amount
received and applied by the Administrative Agent to reduce such Net Investment
pursuant to this Agreement hereof; provided that the Net Investment shall be
increased by any amount so received by the Administrative Agent if at any time
the distribution of such amount is rescinded or must otherwise be returned or
restored for any reason.

        Notice of Liquidation:    The meaning specified in Section 11.4 hereof,
a form of which is attached hereto as Exhibit A.

        Notice of Termination:    The meaning specified in Section 11.2 hereof,
a form of which is attached hereto as Exhibit B.

        Officer's Certificate:    A certificate signed by the Chairman of the
Board and Chief Executive Officer, the President, or any Vice President of the
Seller or the Servicer, as applicable, and delivered to the Administrative Agent
as required by this Agreement.

        Official Body:    Any government or political subdivision or any agency,
authority, bureau, central bank, commission, department or instrumentality of
any such government or political subdivision, or any court, tribunal, grand jury
or arbitrator, in each case whether foreign or domestic.

        Opinion of Counsel:    A written opinion of counsel, who may be an
employee of the Seller or the Servicer, as applicable, in a form reasonably
acceptable to the Purchaser.

        Original Additional Collateral Requirement:    With respect to any
Additional Collateral Mortgage Loan, an amount equal to the Additional
Collateral required at the time of origination of such mortgage loan in order to
achieve an Loan-to-Value Ratio equal to a maximum of 70%.

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        Outstanding Principal Balance:    With respect to any Eligible Loan at
any date, the then outstanding principal amount thereof as of such date
excluding any accrued and outstanding Finance Charges related thereto.

        Owner:    At any time, the Purchaser, each APA Purchaser, if any, and
all other owners by assignment or otherwise of the Eligible Loans at such time.

        Payment Date:    For Eligible Loans, the 10th day (or if such day is not
a Business Day, the immediately succeeding Business Day) of any month,
commencing January 10, 1999.

        Permitted Beneficiary:    The meaning ascribed to such term in the
Surety Bond.

        Person:    Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof.

        Piggyback HELOC:    A home equity variable rate revolving line of credit
secured by a mortgage on residential properties that is registered, processed
and closed in conjunction with the first mortgage loan.

        PHH Corporation:    A Maryland corporation.

        PMI Policy:    A policy of primary mortgage guaranty insurance issued by
a Qualified Insurer, as required by this Agreement with respect to certain
Eligible Loans.

        Pooling Date:    With respect to any Terminated Loan sold by the
Servicer on behalf of the Owners to a third party, the date on which the pool in
which such Terminated Loan is included is cut by the Servicer.

        Portfolio:    An Eligible Loan or pool of Eligible Loans sold to the
Administrative Agent (on behalf of the Owners) on a given day pursuant to the
terms hereof and the applicable Transfer Supplement.

        Portfolio Aging Limitations:    With respect to the age of the Eligible
Loans owned by the Administrative Agent (on behalf of the Owners) on any day,
the following limitations shall apply: (i) the aggregate Repurchase Price of
Eligible Loans transferred to the Owners more than three (3) months prior to
such day may not exceed 50% of the then-current Program Size; (ii) the aggregate
Repurchase Price of Eligible Loans acquired by the Owners more than six
(6) months prior to such day may not exceed 25% of the then-current Program
Size; and (iii) the Seller must repurchase each Eligible Loan acquired by the
Owners within one (1) year of the date of acquisition; provided, however, that,
subject to Rating Agency Confirmation, the Administrative Agent and the Majority
Owners may waive any of the requirements of clauses (i) and (ii) above.

        Portfolio Criteria:    On any day, after giving effect to the
Administrative Agent's purchase and sale (on behalf of the Owners) of mortgage
loans on such day, the mortgage loans owned by the Owners in the aggregate must
satisfy the following criteria: (i) the aggregate Repurchase Price of mortgage
loans secured by property in California may not on such date exceed 30% of the
then-current Program Size; (ii) the aggregate Repurchase Price of mortgage loans
secured by property in a single state other than California may not on such date
exceed 15% of the then current Program Size; (iii) the aggregate Repurchase
Price of Jumbo Loans may not on such date exceed 45% of the then-current Program
Size; (iv) the aggregate Repurchase Price of Uninsured Loans acquired on such
date may not exceed 15% of the then-current Program Size; (v) the mortgage loans
(excluding FHA Loans and VA Loans) owned by the Owners must have a weighted
average FICO Score of at least 675; (vi) the weighted average Loan-to-Value
Ratio of the mortgage loans (excluding FHA Loans, VA Loans and HELOCs) owned by
the Owners must not on such date exceed 85%; (vii) the aggregate Repurchase
Price of HELOCs may not on such date exceed 40% of the then-current Program
Size; and (viii) the weighted average Combined Loan-to-Value Ratio of HELOCs
owned by the Owners must not on such date exceed 85%.

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        Potential Termination Event:    An event or condition which with the
giving of notice, the passage of time or any combination of the foregoing,
would, unless cured or waived, constitute a Termination Event.

        Principal Account:    The account listed under the signature of the
Administrative Agent on the signature page hereof as the "Principal Account" or
such other account designated in writing to the Seller and the Servicer by the
Administrative Agent.

        Principal Collections:    With respect to any Collection Period, all
principal payments contractually due and owing under an Eligible Loan for such
Collection Period, whether or not received, and all Principal Prepayments.

        Principal Prepayment:    Any payment or other recovery of principal made
on an Eligible Loan that is received in advance of its scheduled Due Date,
including any prepayment penalty or premium thereon, which is not accompanied by
an amount of interest representing scheduled interest due on any date or dates
in any month or months subsequent to the month of prepayment.

        Program Bank:    Barclays Bank PLC, as Program Bank, under the Program
Credit Agreement.

        Program Credit Agreement:    The Irrevocable Program Loan Agreement,
dated as of December 12, 1991, between Sheffield Receivables Corporation and
Barclays Bank PLC, New York Branch.

        Program Documents:    This Repurchase Agreement, the Custodial
Agreement, the Revolving Asset Purchase Agreement, the Program Credit Agreement,
the Issuing and Paying Agency Agreement, the Commercial Paper Dealer Agreements
and the Administration Agreement.

        Program Fee:    The meaning specified in the Fee Letter.

        Program Size:    $700,000,000 (as such size may be increased or
decreased in accordance with the Program Documents).

        Purchaser:    Sheffield Receivables Corporation, a Delaware corporation.

        Qualified Depository:    Any depository the accounts of which are
insured by the FDIC through the BIF or the SAIF and the debt obligations of
which are rated "A2" and "Aa" or better by Moody's and S&P, respectively or such
depository as shall be acceptable to Moody's and S&P, as applicable.

        Qualified Insurer:    A mortgage guaranty insurance company duly
authorized and licensed where required by law to transact mortgage guaranty
insurance business and approved as an insurer by FHLMC, FNMA or GNMA.

        Rating Agency:    Each of S&P and Moody's.

        Rating Agency Confirmation:    A written confirmation from any Rating
Agency that requires written confirmation that the proposed action will not
cause the reduction or withdrawal of their respective then current ratings on
the outstanding Commercial Paper.

        Records:    All documents, books, records and other information
(including, without limitation, computer programs, tapes, discs, punch cards,
data processing software and related property and rights) maintained with
respect to Eligible Loans and the related Mortgagors.

        Related Commercial Paper:    Commercial Paper issued by the Company the
proceeds of which were used to acquire, or refinance the acquisition of, an
interest in Eligible Loans with respect to the Seller.

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        Related Security:    With respect to any Eligible Loan, all of the
Seller's right, title and interest in, to and under:

        (i)    all security agreements, mortgages, deeds of trust, Home Equity
Line Agreements or other agreements that relate to such Eligible Loan;

        (ii)  all other security interests or liens and property subject thereto
from time to time, if any, purporting to secure payment of such Eligible Loan,
whether pursuant to the Eligible Loan related to such Eligible Loan or
otherwise, together with all financing statements signed by a Mortgagor
describing any collateral securing such Eligible Loan;

        (iii)  the assignment to the Administrative Agent, for the benefit of
the Owners, of all UCC financing statements covering any collateral securing
payment of such Eligible Loan;

        (iv)  all guarantees, indemnities, warranties, insurance (and proceeds
and premium refunds thereof) or other agreements or arrangements of any kind
from time to time supporting or securing payment of such Loan whether pursuant
to the Eligible Loan or otherwise;

        (v)  all Records related to such Eligible Loan;

        (vi)  all rights and remedies of the Seller under the Custodial
Agreement, together with all financing statements filed by the Seller against
the Seller in connection therewith; and

        (vii) all proceeds of any of the foregoing.

        REO Disposition:    The final sale by the Servicer of any REO Property.

        REO Disposition Proceeds:    All amounts received with respect to an REO
Disposition (net of costs related thereto) pursuant to Section 4.17 hereof.

        REO Property:    A Mortgaged Property acquired by the Servicer on behalf
of the Purchaser through foreclosure or by deed in lieu of foreclosure, as
described in Section 4.17 hereof.

        Repurchase:    The meaning specified in Section 2.10 hereof.

        Repurchase Date:    The date specified in any Repurchase Notice, which
is the date on which any Repurchase is scheduled to occur.

        Repurchase Notice:    The meaning specified in Section 2.10 hereof, a
form of which is attached hereto as Exhibit C.

        Repurchase Price:    For each Eligible Loan, an amount equal to the
Transfer Price thereof at the time of the sale of such Eligible Loan to the
Administrative Agent hereunder.

        Repurchase Schedule:    A schedule of Eligible Loans annexed to the
Repurchase Notice and delivered to the Purchaser on the related Repurchase Date,
such schedule setting forth the following information with respect to each
Eligible Loan: (1) the identifying number for the Eligible Loan; (2) the
Outstanding Principal Balance and (3) the Transfer Price. With respect to any
Portfolio in the aggregate, the Repurchase Schedule shall set forth the
following information, as of the related Closing Date: (1) the number of
Eligible Loans; (2) the current aggregate Outstanding Principal Balance of the
Eligible Loans; (3) the aggregate Transfer Price; and (4) for any HELOCs, the
Combined Loan-to-Value Ratio.

        Repurchase Supplement:    The document pursuant to which each Eligible
Loan or Eligible Loans are repurchased by the Seller or the Servicer from the
Administrative Agent (on behalf of the Owners) pursuant to Sections 2.10, 2.16,
3.3 6.2 and 7.1 hereof, a form of which is attached hereto as Exhibit D.

        Repurchaser:    The meaning specified in Section 2.18 hereof.

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        Revolving Asset Purchase Agreement:    The Revolving Asset Purchase
Agreement, dated as of December 11, 1998, among the Purchaser, the APA
Purchasers and the Agent.

        SAIF:    The Savings Association Insurance Fund, or any successor
thereto.

        Scheduled Principal Balance:    As of any date of determination, (i) for
any Eligible Loan, the original principal balance thereof, reduced by the
principal portion of all Monthly Payments then due on or before such date of
determination, whether or not received, or (ii) for any HELOC, the original
principal balance thereof either (a) reduced by the principal portion of Monthly
Payments, if any, then due on or before such date of determination, whether or
not received, and (b) increased by a draw down on the credit line.

        Securities Account:    The meaning ascribed to such term in the
Additional Collateral Transfer Agreement.

        Securities Act of 1933 or the 1933 Act:    The Securities Act of 1933,
as amended.

        Securities or Securitization Securities:    Any note, bond or
pass-through certificate that is, directly or indirectly secured by, or
represents an interest in, any Eligible Loan or pool of Eligible Loans.

        Securitization or Securitized:    A transaction in which any Eligible
Loan or pool of Eligible Loans designated by the Servicer or the Seller is
financed through or sold to a Securitization Vehicle, which vehicle issues
Securities in the capital markets.

        Securitization Vehicle:    FHLMC, FNMA, GNMA or any trust, partnership,
corporation, limited liability corporation, limited liability partnership or
other state law entity that is created for the principal purpose of owning or
holding an Eligible Loan or Eligible Loans which are the subject of a
Securitization.

        Seller:    Cendant Mortgage Corporation, a New Jersey corporation.

        Servicer:    Cendant Mortgage Corporation, a New Jersey corporation, or
any successor Servicer as provided herein.

        Servicer Event of Default:    Any one of the conditions or circumstances
enumerated in Section 10.1.

        Servicer Report:    The meaning specified in Section 4.18 hereof, a form
of which is attached hereto as Exhibit E.

        Servicing Fee:    With respect to the services provided by the Servicer
pursuant to this Agreement, a monthly servicing fee of (i) 3/8 of 1% on the
average monthly balance of Eligible Loans (excluding HELOCs), and (ii) 0.65% on
the average monthly balance of HELOCs, in each case, held by the Purchaser
during such month.

        S&P:    Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., or any successor thereto.

        Stand Alone HELOC:    A home equity variable rate revolving line of
credit secured by a mortgage on residential properties that is registered,
processed and closed more than 60 days from the closing of the first mortgage
loan and/or generated from a borrower with no prior relationship with the
Company.

        Stand Alone Hybrid HELOC:    A home equity variable rate revolving line
of credit secured by a mortgage on residential properties that is registered,
processed and closed not more than 60 days after the closing of the first
mortgage loan using the original mortgage loan documents from the first mortgage
loan.

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        Surety Bond:    That certain limited purpose surety bond identified by
policy number AB0039BE, issued by AMBAC on February 28, 1996, guaranteeing
payment by AMBAC to MLCC or any Permitted Beneficiary of any shortfalls that
occur with respect to any Additional Collateral Mortgage Loan that becomes a
Defaulted Loan.

        Terminated Loan:    Each Eligible Loan which is (i) sold or Securitized,
(ii) prepaid in full or (iii) repurchased by the Seller.

        Termination Event:    The meaning specified in Section 11.2 of this
Agreement.

        Transaction Costs:    The meaning specified in Section 12.4 hereof.

        Transfer:    A transfer by the Seller to the Administrative Agent (on
behalf of the Owners) of Eligible Loans, together with all Related Security and
Collections with respect thereto.

        Transfer Availability Amount:    As of any date, an amount equal to the
excess, if any, of (i) the Maximum Net Investment as of such date over (ii) the
Net Investment as of such date.

        Transfer Availability Fee:    The meaning specified in the Fee Letter.

        Transfer Documents:    This Agreement, the Custodial Agreement, and the
Revolving Asset Purchase Agreement.

        Transfer Notice:    The meaning specified in Section 2.1 hereof, a form
of which is attached hereto as Exhibit F.

        Transfer Price:    For each Eligible Loan, excluding HELOCs, an amount
equal to the lesser of (x) the Outstanding Principal Balance of such Eligible
Loan and (y) the Adjusted Mark to Market Price of such Eligible Loan; for each
HELOC, the Outstanding Principal Balance of such HELOC.

        Transfer Schedule:    A schedule of Eligible Loans annexed to the
Transfer Supplement and delivered to the Purchaser on the related Closing Date,
such schedule setting forth the following information with respect to each
Eligible Loan: (1) the identifying number for the Eligible Loan; (2) the
Outstanding Principal Balance and (3) the Transfer Price. With respect to any
Portfolio in the aggregate, the Transfer Schedule shall set forth the following
information, as of the related Closing Date: (1) the number of Eligible Loans;
(2) the current aggregate Outstanding Principal Balance of the Eligible Loans;
(3) the aggregate Transfer Price; (4) the weighted average Mortgage Interest
Rate of the Eligible Loans; and (5) for any HELOCs, the Combined Loan-to-Value
Ratio.

        Transfer Supplement:    The document pursuant to which each Eligible
Loan or Eligible Loans are transferred by the Seller to the Administrative Agent
(on behalf of the Owners) pursuant to Sections 2.1 and 2.2 hereof, a form of
which is attached hereto as Exhibit G.

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        Uninsured Loan:    A mortgage loan that substantially conforms to the
Guidelines, except (i) the principal balance of such Eligible Loan may exceed
the principal balance of a mortgage loan that conforms to the Guidelines,
(ii) maintenance of a PMI Policy will not be required and (iii) the mortgage
loan is not an FHA Loan or VA Loan.

        UCC:    Uniform Commercial Code.

        VA:    The U.S. Department of Veterans Affairs, an agency of the United
States of America, or any successor thereto including the Secretary of Veterans
Affairs.

        VA Approved Lender:    Those lenders which are approved by the VA to act
as a lender in connection with the origination of VA Loans.

        VA Guaranty Proceeds:    The proceeds of any payment of a VA Loan
Guaranty Certificate.

        VA Loan:    An Eligible Loan which is the subject of a VA Loan Guaranty
Certificate as evidenced by a VA Loan Guaranty Certificate, or an Eligible Loan
which is a vendee loan sold by the VA.

        VA Loan Guaranty Certificate:    The obligation of the United States to
pay a specific percentage of an Eligible Loan (subject to a maximum amount) upon
default of the Mortgagor pursuant to the Servicemen's Readjustment Act, as
amended.

        VA Regulations:    Regulations promulgated by the U.S. Department of
Veterans Affairs pursuant to the Servicemen's Readjustment Act, as amended,
codified in 38 Code of Federal Regulations, and other VA issuances relating to
VA Loans, including related handbooks, circulars and notices.

        Wet Funded Loan:    A mortgage loan that is originated by the Seller and
purchased by the Administrative Agent (on behalf of the Owners), prior to the
delivery of the Mortgage Note to the Custodian.

        Wet Funded Loan Limitation:    On any day, (i) if the ratings of PHH
Corporation are below "BBB+" or "Baa1", the aggregate Outstanding Purchase Price
of Wet Funded Loans, excluding Landscape Loans, may not exceed 30% of the
then-current Program Size and (ii) starting on the 45th day after the date of
this Agreement, the average daily percentage for the preceding 30 days of Wet
Funded Loans, excluding Landscape Loans, as a percentage of Eligible Loans
(based on principal balance) may not exceed 45%.

ARTICLE II

SALE OF ELIGIBLE LOANS; POSSESSION OF MORTGAGE FILES; BOOKS AND
RECORDS; CUSTODIAL AGREEMENT; DELIVERY OF DOCUMENTS

        Section 2.1    Transfer of Eligible Loans.    

        At the time of any transfer pursuant to Section 2.2 hereof, the Seller
hereby sells, assigns, sets over and conveys to the Administrative Agent for the
benefit of the Owners, and the Owners hereby cause the Administrative Agent, on
behalf of the applicable Owner or Owners, to accept such assignment, conveyance
and transfer from the Seller but subject to the terms of this Agreement, of all
the right, title and interest (not including (i) servicing rights with respect
to the Eligible Loans, which shall be retained by the Seller pursuant to the
terms of this Agreement, or (ii) the Seller's obligation to fund advances for
any HELOC pursuant to the related Home Equity Line Agreement up to the Credit
Limit) of the Seller in and to any Eligible Loans, including Wet Funded Loans,
originated or purchased by the Seller, together with any Related Security and
Collections related to such Eligible Loans; provided, however, that the
Administrative Agent (on behalf of the Owners) shall not at any time be required
to accept Eligible Loans if after such transfer, the Net Investment would be
greater than the

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then-current Program Size; provided, further, that mortgage loans transferred on
each Closing Date must satisfy the Eligibility Criteria. The Seller shall
provide a notice (a "Transfer Notice") to the Administrative Agent and the Agent
not later then 4:00 p.m., New York City time, one Business Day prior to the
execution of any Transfer Supplement of its intention to transfer a Portfolio to
the Administrative Agent (on behalf of the Owners) pursuant to a Transfer
Supplement. In such notice, the Seller shall inform the Administrative Agent of
the aggregate Outstanding Principal Balance of the Eligible Loans that it
intends to transfer on such date, the Mark to Market Price of the Eligible Loans
and the Transfer Price thereof and a preliminary Transfer Supplement shall be
annexed thereto. The subject Portfolio shall be assigned, conveyed and
transferred by the Seller to the Administrative Agent (on behalf of the Owners)
as described in Section 2.2 hereof. Each Transfer Supplement shall be executed
by the Seller and the Administrative Agent at the time of the transfer of the
subject Portfolio. Notwithstanding the foregoing, the Administrative Agent, each
Owner and the Seller each acknowledge and agree that the Seller is the owner of
the servicing rights with respect to the Eligible Loans subject to the terms of
this Agreement, and the Seller, as Servicer hereunder, is responsible for all
servicing duties, in the absence of a Servicer Event of Default.

        It is intended that the transfer, assignment and conveyance herein
contemplated constitute a sale of the Eligible Loans, conveying good title
thereto free and clear of any Liens from the Seller to the Administrative Agent
(on behalf of the Owners) and that the Eligible Loans not be part of the
Seller's estate in the event of insolvency. In the event that Eligible Loans are
held to be property of the Seller or if for any other reason this Agreement is
held or deemed to create a security interest in the Eligible Loans, the parties
intend that the Seller shall be deemed to have granted to the Administrative
Agent (on behalf of the Owners) and does hereby grant a first priority perfected
security interest in the Eligible Loans, in the Related Security and all the
Collections related thereto now existing or hereafter arising for the purpose of
securing the rights of the Administrative Agent (on behalf of the Owners) and
the Owners under this Agreement, and that this Agreement shall constitute a
security agreement under applicable law.

        The Purchaser hereby authorizes the filing of any financing statements
or continuation statements, and amendments to financing statements, in any
jurisdictions and with any filing offices as the Administrative Agent may
determine, in its sole discretion, are necessary or advisable to perfect the
security interest granted to the Administrative Agent (on behalf of the Owners)
in connection herewith. Such financing statements may describe the collateral in
the same manner as described in any security agreement or pledge agreement
entered into by the parties in connection herewith or may contain an indication
or description of collateral that describes such property in any other manner as
the Administrative Agent may determine, in its sole discretion, is necessary,
advisable or prudent to ensure the perfection of the security interest in the
collateral granted to the Administrative Agent (on behalf of the Owners) in
connection herewith, including, without limitation, describing such property as
"all assets" or "all property," whether now owned or hereafter acquired.

        Section 2.2    Transfer Limits.    

        (a)  Subject to the terms and conditions hereof, the Seller may at any
time and from time to time at its option sell, transfer and convey to the
Administrative Agent (as agent for the applicable Owner or Owners) and the
applicable Owner or Owners agree to cause the Administrative Agent, on behalf of
the applicable Owner or Owners, to purchase from the Seller of each and every
Eligible Loan identified on the Transfer Schedule attached to the Transfer
Supplement relating to such Eligible Loans, together with the Related Security
and all Collections with respect thereto (each an "Incremental Transfer"). Each
Incremental Transfer shall be in an amount of $1,000,000 or any higher multiple
of $100,000.

        (b)  If, on any Closing Date for an Incremental Transfer, the Transfer
Price to be paid on such date for such Incremental Transfer would cause the Net
Investment to exceed the Maximum Net

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Investment or the Net Investment to exceed the Aggregate Adjusted Mark to Market
Price, the Owners may, at their option, either refuse to accept such Incremental
Transfer or make a smaller Incremental Transfer such that, immediately after the
payment of the smaller Transfer Price, the Net Investment would not exceed the
Maximum Net Investment. The Owners shall not be obligated to increase the
Maximum Net Investment.

        Section 2.3    All Transfers; Possession of Mortgage Loan Files;
Maintenance of Mortgage Loan Files.    

        (a)  Subsequent to each Transfer, the Administrative Agent shall have
all right, title and interest of the Seller (other than the servicing rights,
which shall be retained by the Seller subject to the terms of this Agreement) in
and to the Eligible Loans, the Related Security and all Collections with respect
thereto, on behalf of the Owners. The Administrative Agent shall hold such
interest in the Eligible Loans on behalf of the Owners in accordance with each
Owners' percentage interest in the Eligible Loans (determined on the basis of
the relationship that the portion of the Net Investment funded by such Owner
bears to the aggregate Net Investment of the all Owners at such time).

        (b)  Pursuant to Section 2.6(b), as soon as practicable but in any event
on or before the date which is 30 days after any sale of Eligible Loans to the
Administrative Agent (on behalf of the Owners), the Seller shall deliver each
Mortgage Note, including Mortgage Notes on Wet Funded Loans (subject to the Wet
Funded Loan Limitation), to the Custodian as agent of the Administrative Agent.
The Seller shall deliver the related Loan Documents to the Servicer and the
contents of each Mortgage Loan File shall be held in trust by the Servicer for
the benefit of the Owners. The possession of each Mortgage Loan File by the
Servicer is at the will of the Administrative Agent for the sole purpose of
servicing the related Eligible Loan and such retention and possession by the
Servicer is in a custodial capacity only. Upon the sale of the Eligible Loans,
each Mortgage Note, the related Mortgage, the Related Security and all
Collections and the related Mortgage Loan File shall vest immediately in the
Administrative Agent (on behalf of the Owners), and the ownership of all records
and documents with respect to the related Eligible Loan prepared by or which
come into the possession of the Servicer shall vest immediately in the
Administrative Agent (on behalf of the Owners) and shall be retained and
maintained by the Servicer, in trust, at the will of the Administrative Agent
(on behalf of the Owners) and only in such custodial capacity. The Servicer's
master data processing records shall be marked appropriately to reflect clearly
the transfer of the related Eligible Loans to the Administrative Agent (on
behalf of the Owners). The Custodian shall only release its custody of the
contents of any Mortgage Loan File in its possession accordance with the
Custodial Agreement.

        The Mortgage Loan File shall consist of the following documents
(constituting, collectively, the "Loan Documents"), and such other documents as
the Administrative Agent may require from time to time:

        (1)  the original of any guarantee executed in connection with the
Mortgage Note (if any);

        (2)  the original Mortgage with evidence of recording thereon. If in
connection with any Eligible Loan, the Seller cannot deliver or cause to be
delivered the original Mortgage with evidence of recording thereon on or prior
to the Closing Date because of a delay caused by the public recording office
where such Mortgage has been delivered for recordation or because such Mortgage
has been lost or because such public recording office retains the original
recorded Mortgage, the Seller shall deliver or cause to be delivered to the
Servicer, a photocopy of such Mortgage, together with (i) in the case of a delay
caused by the public recording office, an officer's certificate of the Seller
stating that such Mortgage has been dispatched to the appropriate public
recording office for recordation and that the original recorded Mortgage or a
copy of such Mortgage certified by such public recording office to be a true and
complete copy of the original recorded Mortgage will be promptly delivered to
the Servicer upon receipt thereof by the Seller; or (ii) in the case of a
Mortgage where a public recording office retains the original recorded Mortgage
or in the case where a Mortgage is lost after recordation in a

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public recording office, a copy of such Mortgage certified by such public
recording office to be a true and complete copy of the original recorded
Mortgage;

        (3)  the originals of all assumption, modification, consolidation or
extension agreements, with evidence of recording thereon;

        (4)  any original duly executed Assignment of Mortgage for each Eligible
Loan, in form and substance acceptable for recording, and all interim
assignments with evidence of recording thereon, if any; if the Eligible Loan was
acquired by the Seller in a merger, any Assignment of Mortgage must be made by
"[Seller], successor by merger to [name of predecessor]." If the Eligible Loan
was acquired or originated by the Seller while doing business under another
name, any Assignment of Mortgage must be by "[Seller], formerly known as
[previous name]." If the Eligible Loan was acquired by the Seller as receiver
for another entity, any Assignment of Mortgage must be by "[Seller], receiver
for [name of entity in receivership]." Any Assignment of Mortgage must be duly
recorded only if recordation is either necessary under applicable law to perfect
or on direction of the Administrative Agent as provided in this Agreement. If
any Assignment of Mortgage is to be recorded, the Mortgage shall be assigned to
the Custodian. If any Assignment of Mortgage is not to be recorded, such
Assignment of Mortgage shall be delivered in blank;

        (5)  the originals of all intervening assignments of mortgage with
evidence of recording thereon, or if any such intervening assignment has not
been returned from the applicable recording office or has been lost or if such
public recording office retains the original recorded assignments of mortgage,
the Seller shall deliver or cause to be delivered to the Servicer, a photocopy
of such intervening assignment, together with (i) in the case of a delay caused
by the public recording office, an Officer's Certificate of the Seller stating
that such intervening assignment of mortgage has been dispatched to the
appropriate public recording office for recordation and that such original
recorded intervening assignment of mortgage or a copy of such intervening
assignment of mortgage certified by the appropriate public recording office to
be a true and complete copy of the original recorded intervening assignment of
mortgage will be promptly delivered to the Servicer upon receipt thereof by the
Seller; or (ii) in the case of an intervening assignment where a public
recording office retains the original recorded intervening assignment or in a
case where an intervening assignment is lost after recordation in a public
recording office, a copy of such intervening assignment certified by such public
recording office to be a true and complete copy of the original recorded
intervening assignment;

        (6)  if available, the original mortgagee title insurance policy or
attorney's opinion of title and abstract of title, or if the policy has not yet
been issued, (a) the irrevocable written commitment, interim binder or marked up
binder for a title insurance policy issued by the title insurance company dated
and certified as of the date the Eligible Loan was funded, or (b) a copy of the
applicable escrow instructions indicating the name of the title company with, in
either case, a statement by the title insurance company or closing attorney on
such binder or commitment or escrow instructions that the priority of the lien
on the related Mortgage during the period between the date of the funding of the
related Eligible Loan and the date of the related title policy is insured;

        (7)  the original of any security agreement, chattel mortgage,
securities account control agreement, guarantee, filings or equivalent document
executed in connection with the Mortgage;

        (8)  the original of any primary mortgage insurance policy (if any); and

        (9)  if the Eligible Loans are sold to the Agencies, the originals of
other documents, forms, releases, certifications and papers required by the
applicable Agency Custodial Agreement.

        Section 2.4    Determination of Transfer Price; Deposit by Seller.    

        (a)  Upon notice from the Seller to the Administrative Agent of the
prospective transfer of a Portfolio by the Seller to the Administrative Agent
(on behalf of the Owners) under Section 2.2 hereof,

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the Seller shall submit to the Administrative Agent (i) a Transfer Supplement
and Transfer Schedule and (ii) the Closing Date for the sale of the Portfolio.
The Seller shall not choose a preliminary Closing Date which is less than one
Business Day from the date that the Administrative Agent receives the items
specified in the preceding sentence. Not later than 8:00 a.m. on the Closing
Date, the Seller shall notify the Administrative Agent of its calculation of the
Transfer Price for the Portfolio. If the Administrative Agent does not agree
with such calculation or the Transfer does not close for any other reason, the
Closing Date for the Portfolio shall be rescheduled to a later date, at its
option, by the Seller. The Administrative Agent (on behalf of the Owners) and
the Seller shall use their best efforts to close the transfer of any Portfolio
on any such Closing Date. The Administrative Agent (on behalf of the Owners)
shall pay to the Seller the Transfer Price of any Eligible Loan transferred to
the Administrative Agent (on behalf of the Owners) hereunder in immediately
available funds not later than 2:00 p.m., New York City time, on the Closing
Date. Each mortgage loan must satisfy the Eligibility Criteria and the
Eligibility Representations.

        (b)  The Transfer Price of the initial Transfer shall equal the Owners'
initial Net Investment. Each Transfer Notice shall be irrevocable and binding on
the Seller and the Seller shall indemnify the applicable Owner or Owners against
any loss or expense incurred by the applicable Owner or Owners, as a result of
any failure by the Seller to complete such Transfer including, without
limitation, any loss (including loss of anticipated profits) or expense incurred
by the applicable Owner or Owners, either directly or indirectly, including, in
the case of the Purchaser, losses and expenses incurred through the Program
Credit Agreement, by reason of the liquidation or reemployment of funds acquired
by the applicable Owner or Owners (including, without limitation, funds obtained
by issuing commercial paper (in the case of the Purchaser) or promissory notes
or obtaining deposits as loans from third parties) for the applicable APA
Purchaser or APA Purchasers to fund such Incremental Transfer; provided,
however, that the Seller shall have no obligation to indemnify any Owner for any
loss or expense resulting from failure of the Administrative Agent, the
Purchaser or any APA Purchaser to perform its obligations hereunder. The Owner
or Owners shall make a good faith effort to mitigate any of the losses or
expenses described in the preceding sentence and incurred as a result of the
failure by the Seller to complete such Incremental Transfer including, without
limitation, any loss (including loss of anticipated profits) or expense incurred
by the applicable Owner or Owners, either directly or indirectly including, in
the case of the Purchaser, losses and expenses incurred through the Program
Credit Agreement. The Administrative Agent shall notify the Seller of the amount
determined by the applicable Owner or Owners for such loss or expense. Such
amount shall be due and payable by the Seller to the Administrative Agent for
distribution to the applicable Owner or Owners ten Business Days after such
notice is given.

        Section 2.5    Transfer Commitment Term.    

        The commitment of the Administrative Agent (on behalf of the Owners)
under this Agreement to accept the Transfer of any interest in Eligible Loans
shall expire on the Expiration Date.

        Section 2.6    Books and Records; Transfers of Eligible Loans; Custodial
Agreement.    

        (a)  From and after each related Closing Date, all rights arising with
respect to the Eligible Loans transferred (not including (i) servicing rights
with respect to the Eligible Loans, which shall be retained by the Seller
subject to the terms of this Agreement or (ii) the Seller's obligation to fund
future advances for any HELOC pursuant to the related Home Equity Line Agreement
up to the Credit Limit) pursuant to any Transfer Supplement including but not
limited to all funds received on or in connection with the Eligible Loans, shall
be received and held by the Servicer in trust for the benefit of the
Administrative Agent (on behalf of the Owners). Pursuant to the Custodial
Agreement, the Custodian shall hold all of the Mortgage Notes as described in
such Custodial Agreement.

        The Servicer shall be responsible for maintaining, and shall maintain, a
complete set of books and records for each Eligible Loan which shall be marked
clearly to reflect the transfer of each Eligible

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Loan to the Administrative Agent (on behalf of the Owners). In particular, the
Servicer shall maintain in its possession, available for inspection by the
Administrative Agent, the Agent or their respective designees, evidence of
compliance with applicable laws, rules and regulations. To the extent that
original documents are not required for purposes of realization of Liquidation
Proceeds, Insurance Proceeds, VA Guaranty Proceeds, FHA Proceeds or
Securitization proceeds, documents maintained by the Servicer may be in the form
of microfilm or microfiche or such other reliable means of recreating original
documents, including but not limited to, optical imagery techniques so long as
the Servicer complies with the requirements of the Guidelines.

        The Servicer shall maintain with respect to each Eligible Loan and shall
make available for inspection, upon reasonable advance notice, at the offices of
the Servicer during normal business hours by the Administrative Agent, the
Agent, any CP Dealer or their respective designees the related Mortgage Loan
File during the time the Administrative Agent retains ownership of an Eligible
Loan and thereafter in accordance with applicable laws and regulations.

        (b)  Pursuant to the Custodial Agreement delivered to the Purchaser in
connection with the Original Repurchase Agreement, the Seller shall, from time
to time in connection with each Transfer of Eligible Loans pursuant to the terms
of this Agreement, deliver to the Custodian, on or before the date which is
30 days after the related Closing Date, the Mortgage Note for each Eligible Loan
transferred. The Custodian shall hold all Mortgage Notes in trust as agent for
the Administrative Agent (on behalf of the Owners).

        Section 2.7    Selection of Interest Rates and Interest Periods;
Eurodollar Protection; Illegality.    

        (a)  Prior to the Expiration Date; Eligible Loans Held on Behalf of the
Purchaser.

        At all times hereafter, but prior to the Expiration Date and not with
respect to any undivided interest in the Eligible Loans held on behalf of the
APA Purchasers (or any of them), the Seller may, subject to the Purchaser's
approval and the limitations described below, request that the Net Investment be
allocated among one or more funding periods, so that the aggregate amounts so
allocated at all times shall equal the Net Investment held on behalf of the
Purchaser. The Seller shall give the Purchaser irrevocable notice by telephone
of the new requested funding period(s) at least one (1) Business Day prior to
the expiration of any then existing funding period; provided, however, that the
Purchaser may select, in its sole discretion, any such new funding period if
(i) the Seller fails to provide such notice on a timely basis or (ii) the
Purchaser determines, in its sole discretion, that the funding period requested
by the Seller is unavailable or for any reason commercially undesirable. The
Purchaser confirms that it is its intention to fund all or substantially all of
the Net Investment held on behalf of it by issuing Related Commercial Paper and
that it will use its reasonable best efforts to fund through the issuance of
Related Commercial Paper if it is commercially reasonable to do so; provided
that the Purchaser may determine, from time to time, in its sole discretion,
that funding such Net Investment by means of Related Commercial Paper is not
possible or is not desirable for any reason.

        (b)  After the Expiration Date; Eligible Loans Held on behalf of the
Purchaser.

        At all times on and after the Expiration Date, with respect to any
portion of the Eligible Loans which shall be held by the Administrative Agent on
behalf of the Purchaser, the Administrative Agent shall select all funding
periods and rates applicable thereto.

        (c)  Prior to the Expiration Date; Eligible Loans Held on Behalf of APA
Purchasers.

        At all times with respect to any undivided interest in the Eligible
Loans held by the Administrative Agent on behalf of the APA Purchasers, but
prior to the Expiration Date, the initial funding period applicable to such
portion of the Net Investment allocable thereto shall be a period of not greater
than 14 days and shall accrue Carrying Costs on the basis of the Base Rate.
Thereafter, with respect to such portion, and with respect to any other portion
of the Eligible Loans held on behalf of the APA

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Purchasers (or any of them), provided that the Expiration Date shall not have
occurred, Carrying Costs shall accrue with respect thereto at either the Base
Rate or the Adjusted LIBOR Rate, at the Seller's option. The Seller shall give
the Administrative Agent irrevocable notice by telephone of the new requested
funding period at least three (3) Business Days prior to the expiration of any
then existing funding period. If the Seller has requested that Carrying Costs
accrue at the Adjusted LIBOR Rate, the funding period shall commence three
(3) London Business Days after notice of such request (and prior to such
commencement shall accrue at the applicable rate for the prior funding period or
otherwise shall accrue at the Base Rate). Each funding period for which Carrying
Costs accrue at the Adjusted LIBOR Rate shall be for a period of 1, 2 or
3 months. In the case of any funding period outstanding upon the occurrence of
the Expiration Date, such funding period shall end on the date of such
occurrence.

        (d)  After the Expiration Date; Eligible Loans Held on Behalf of APA
Purchasers.

        At all times on and after the Expiration Date, with respect to any
portion of the Eligible Loans held by the Administrative Agent on behalf of the
APA Purchasers, the Administrative Agent shall select all funding periods and
rates applicable thereto.

        (e)  Eurodollar Rate Protection; Illegality.

(i)If the Administrative Agent is unable to obtain on a timely basis the
information necessary to determine the LIBOR Rate for any proposed funding
period, then

(A)the Administrative Agent shall forthwith notify the Purchaser or APA
Purchasers, as applicable, and the Seller that the Adjusted LIBOR Rate cannot be
determined for such funding period, and

(B)while such circumstances exist, neither the Purchaser, the APA Purchasers nor
the Administrative Agent shall allocate the Net Investment of any additional
Eligible Loans purchased during such period or reallocate the Net Investment
allocated to any then existing funding period ending during such period, to a
funding period which accrues Carrying Costs on the basis of the Adjusted LIBOR
Rate.

(ii)If, with respect to any outstanding funding period which accrues Carrying
Costs on the basis of the Adjusted LIBOR Rate, any of the APA Purchasers on
behalf of which the Administrative Agent holds any Eligible Loans therein
notifies the Administrative Agent that it is unable to obtain matching deposits
in the London inter-bank market to fund its purchase or maintenance of its share
of the Net Investment in such Eligible Loans or that the Adjusted LIBOR Rate
applicable to its Net Investment in such Eligible Loans will not adequately
reflect the cost to the APA Purchaser of funding or maintaining its respective
Net Investment for such funding period then the Administrative Agent shall
forthwith so notify the Seller, whereupon neither the Administrative Agent nor
the APA Purchasers, as applicable, shall, while such circumstances exist,
allocate any Net Investment of any additional Eligible Loans purchased during
such period or reallocate the Net Interest allocated to any funding period
ending during such period, to a funding period which accrues Carrying Costs on
the basis of the Adjusted LIBOR Rate, and such APA Purchaser's share of the Net
Investment allocated to such funding period shall be deemed to accrue Carrying
Costs on the basis of the Base Rate from the effective date of such notice until
the end of such funding period.

(iii)Notwithstanding any other provision of this Agreement, if any of the APA
Purchasers, as applicable, shall notify the Administrative Agent that such APA
Purchaser has determined that the introduction of or any change in or in the
interpretation of any law or regulation makes it unlawful, or any central bank
or other governmental authority asserts that it is unlawful to fund or maintain
its Net Investment in Eligible Loans at the Adjusted LIBOR Rate, then (x) as of
the effective date of such notice from such APA Purchaser to the Administrative

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Agent, the obligation or ability of the APA Purchaser to fund its Net Investment
at the Adjusted LIBOR Rate shall be suspended until such APA Purchaser notifies
the Administrative Agent that the circumstances causing such suspension no
longer exist and (y) the Net Investment allocated to each funding period which
accrues Carrying Costs on the basis of the Adjusted LIBOR Rate in which such APA
Purchaser owns an interest shall either (1) if such APA Purchaser may lawfully
continue to maintain such Net Investment at the Adjusted LIBOR Rate until the
last day of the applicable funding period, be reallocated on the last day of
such funding period to another funding period in respect of which the Net
Investment allocated thereto which accrues Carrying Costs on a basis other than
the Adjusted LIBOR Rate or (2) if such APA Purchaser shall determine that it may
not lawfully continue to maintain such Net Investment at the Adjusted LIBOR Rate
until the end of the applicable funding period, such APA Purchaser's share of
the Net Investment allocated to such funding period shall be deemed to accrue
Carrying Costs on the basis of the Base Rate from the effective date of such
notice until the end of such funding period.

        Section 2.8    Seller's Obligation to Pay Carrying Costs.    

        The Administrative Agent shall notify the Seller on each Determination
Date of the Carrying Costs for the preceding Collection Period. On the related
Payment Date, the Seller shall pay to the Administrative Agent in immediately
available funds an amount equal to such Carrying Costs for deposit by the
Administrative Agent to the Carrying Costs Account.

        Section 2.9    Allocation of Collections.    

        (a)  On each day after the day of the initial Incremental Transfer, with
respect to all Collections received on such day, the Owners shall be entitled to
all Principal Collections, and within one Business Day of receipt thereof the
Servicer shall deposit to the Principal Account an amount equal to the aggregate
of all such Principal Collections; provided that if a Termination Event shall
have occurred and be continuing, all such Principal Collections shall be
deposited by the Servicer within one Business Day of the receipt thereof into
the Collateral Account for application in reduction of the Net Investment.

        (b)  On each day, if a Termination Event shall not have occurred and be
continuing, Finance Charge Collections received by the Servicer shall be
remitted by the Servicer to the Seller; provided that if a Termination Event
shall have occurred and be continuing, within one Business Day of receipt
thereof the Servicer shall deposit into the Collateral Account for application
in reduction of the Net Investment.

        Section 2.10    Seller's Option to Repurchase Eligible Loans.    

        The Seller, at its option, may from time to time request the assignment,
transfer and conveyance of Eligible Loans from the Administrative Agent (on
behalf of the Owners) to the Seller (a "Repurchase"). The subject Eligible Loans
shall be repurchased, reassigned and reconveyed to the Seller in accordance with
the provisions of Section 2.18 hereof.

        Section 2.11    Margin Payment Obligation; Margin Call Account;
Withdrawals.    

        (a)  If at any time the Adjusted Net Investment shall exceed the
Aggregate Adjusted Mark to Market Price, by an amount equal to or greater than
the Margin Call Trigger Amount (such condition, a "Margin Call Condition"), the
Administrative Agent may, by written notice to the Seller, require the Seller to
pay to the Administrative Agent (a "Margin Payment"), in an amount (the "Margin
Payment Amount ") equal to such excess of the Adjusted Net Investment over the
Aggregate Adjusted Mark to Market Price. Provided that such notice is delivered
to the Seller by the Administrative Agent prior to 11:00 a.m. on any Business
Day on which a Margin Call Condition exists, the Seller shall pay to the
Administrative Agent prior to 5:00 p.m. on such Business Day an amount equal to
the Margin Payment

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Amount and if received after 11:00 a.m., such notice shall be deemed received on
the next succeeding Business Day.

        (b)  All amounts paid by the Seller to the Administrative Agent in
respect of Margin Payment Amounts shall be deposited by the Administrative Agent
into the Margin Call Account and held for the benefit of the Owners.

        (c)  On any day on which a Termination Event shall not have occurred and
be continuing, if the amount on deposit in the Margin Call Account exceeds the
excess, if any, of the Adjusted Net Investment over the Aggregate Adjusted Mark
to Market Price, such excess shall be withdrawn from the Margin Call Account by
the Administrative Agent and paid to the Seller.

        (d)  If a Termination Event shall have occurred and be continuing, all
amounts on deposit in the Margin Call Account, if any, shall be withdrawn by the
Admi in reduction of the Net Investment. nistrative Agent and deposited into the
Collateral Account and applied

        Section 2.12    Liquidation Settlement Procedures.    

        Following the date on which the Net Investment has been reduced to zero
and all other Aggregate Unpaids have been paid in full, (i) the Administrative
Agent, on behalf of the Owners, shall be considered to have reconveyed to the
Seller all of the Administrative Agent's right, title and interest in and to the
Eligible Loans and (ii) the Administrative Agent, on behalf of the Owners, shall
execute and deliver to the Seller, at the Seller's expense, such documents or
instruments as are necessary to terminate the Administrative Agent's interest in
the Eligible Loans. Any such documents shall be prepared by or on behalf of the
Seller.

        Section 2.13    Protection of Ownership Interest of the Administrative
Agent (on behalf of the Owners).    

        The Seller agrees that it will from time to time, at its expense,
promptly execute and deliver all instruments and documents and take all actions
as may be necessary or as the Administrative Agent may reasonably request in
order to perfect or protect the interest of the Administrative Agent (on behalf
of the Owners) in the Eligible Loans or to enable the Administrative Agent or
the Owners to exercise or enforce any of their respective rights hereunder.
Without limiting the foregoing, the Seller will upon the request of the
Administrative Agent or any of the Owners, in order to accurately reflect this
assignment, transfer and conveyance transaction, execute and file such financing
or continuation statements or amendments thereto or assignments thereof as may
be requested by the Administrative Agent or any of the Owners. The Seller shall
upon request of the Administrative Agent or any of the Owners obtain such
additional search reports as the Administrative Agent or any of the Owners shall
request. To the fullest extent permitted by applicable law, the Administrative
Agent shall be permitted to sign and file continuation statements and amendments
thereto and assignments thereof without the Seller's signature. Carbon,
photographic or other reproduction of this Agreement or any financing statement
shall be sufficient as a financing statement. The Seller shall not change its
name, identity or corporate structure (within the meaning of Section 9-402(7) of
the UCC as in effect in the State of New York) nor relocate its chief executive
office or any office where Records are kept unless it shall have: (i) given the
Administrative Agent at least thirty (30) days prior notice thereof and
(ii) prepared at Seller's expense and delivered to the Administrative Agent all
financing statements, instruments and other documents necessary to preserve and
protect the Eligible Loans and the Net Investment therein or requested by the
Administrative Agent in connection with such change or relocation. Any filings
under the UCC or otherwise that are occasioned by such change in name or
location shall be made at the expense of Seller.

        The Seller agrees that it will at its expense, on or prior to the
Closing Date indicate clearly and unambiguously in its master data processing
records that the Eligible Loans have been conveyed to the Administrative Agent,
for the benefit of the Owners pursuant to this Agreement. The Seller further
agrees to deliver or to cause the Servicer to deliver to the Administrative
Agent a computer file or

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microfiche list containing a true and complete list of all such Eligible Loans,
identified by loan number and by Outstanding Principal Balance as of the Closing
Date. The Seller agrees to deliver or to cause the Servicer to deliver to the
Administrative Agent within five (5) Business Days of the request therefor by
the Administrative Agent a computer file or microfiche list containing a true
and complete list of all Eligible Loans in existence as of the last day of the
prior Collection Period, identified by loan number and by Outstanding Principal
Balance as of the last day of the prior Collection Period. The Servicer agrees,
on behalf of the Seller, at its own expense, by the end of each Collection
Period in which any Eligible Loans have been originated to indicate clearly and
unambiguously in its master data processing records that the Eligible Loans
created have been conveyed to the Administrative Agent, for the benefit of the
Owners, pursuant to this Agreement.

        Section 2.14    Fees.    

        The Seller shall pay the non-refundable fees set forth in the Fee
Letter. Any of the fees described in the Fee Letter which are accrued but unpaid
on the Expiration Date shall be paid in full by the Seller on the Expiration
Date.

        Section 2.15    Optional Reduction of Maximum Net Investment; Optional
Margin Payment.    

        (a)  The Seller may reduce in whole or in part the Maximum Net
Investment (but not below the Net Investment) by giving the Administrative Agent
written notice thereof at least five Business Days before such reduction is to
take place; provided, however, that any partial reduction shall be in an amount
of $5,000,000 or any higher multiple of $1,000,000. The Seller shall pay the
Purchaser any accrued and unpaid Transfer Availability Fee on the date of such
reduction with respect to the reduction amount.

        (b)  If, at any time, the Net Investment exceeds the Aggregate Adjusted
Mark to Market Price, the Seller may fund the Margin Call Account on the next
Business Day after such determination in an amount up to an amount sufficient to
cause the Adjusted Net Investment not to exceed the Aggregate Adjusted Mark to
Market Price.

        Section 2.16    Mandatory Repurchase Under Certain Circumstances.    

        (a)  The Seller agrees to repurchase from the Administrative Agent (as
agent for the Owners) each Eligible Loan if at any time the Administrative
Agent, on behalf of the Owners, shall cease to have a perfected ownership
interest, or a first priority perfected security interest, in such Eligible
Loan, free and clear of any Lien (except as provided herein), within five days
of notice thereof by the Administrative Agent. The Repurchase Price shall be
paid by the Seller to the Administrative Agent for deposit to the Collateral
Account for application in reduction of the Net Investment. The subject Eligible
Loans shall be repurchased, reassigned and reconveyed to the Seller in
accordance with the provisions of Section 2.18 hereof.

        (b)  If an APA Purchaser's Purchase Commitment (as defined in the
Revolving Asset Purchase Agreement) terminates and no other APA Purchaser(s) or
replacement APA Purchaser(s) accept such terminating APA Purchaser's Purchase
Commitment, the Maximum Net Investment shall be automatically reduced by the
amount of such APA Purchaser's Purchase Commitment. If, following such reduction
of the Maximum Net Investment, the Net Investment is greater than the Maximum
Net Investment, the Seller agrees to repurchase from the Administrative Agent
sufficient Eligible Loans that upon the payment of the Repurchase Price therefor
to the Administrative Agent for deposit to the Collateral Account for
application in reduction of the Net Investment, the Adjusted Net Investment will
be less than the Maximum Net Investment. Such payment or funding shall occur on
the date of termination of the APA Purchaser's Purchase Commitment. The subject
Eligible Loans shall be repurchased, reassigned and reconveyed to the Seller in
accordance with the provisions of Section 2.18 hereof.

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        (c)  The Seller hereby agrees, with respect to each Eligible Loan
transferred to the Administrative Agent (on behalf of the Owners) hereunder, to
repurchase such Eligible Loan from the Administrative Agent not later than
364 days following the transfer thereof to the Administrative Agent at a price
equal to the Repurchase Price of such Eligible Loan. The Seller also agrees to
repurchase (i) each Defaulted Loan within five (5) Business Days of such
Eligible Loan becoming a Defaulted Loan, (ii) each Eligible Loan (other than a
Defaulted Loan or Delinquent Loan) that ceases to satisfy the Eligibility
Criteria within five (5) Business Days of such failure, and (iii) all Eligible
Loans on or before the termination of the Revolving Asset Purchase Agreement or
upon the delivery of a Notice of Termination pursuant to Section 11.2 hereof, in
each case for an amount equal to the Repurchase Price thereof. In connection
with each such repurchase, the Seller shall pay to the Administrative Agent an
amount equal to the Repurchase Price for such Eligible Loan. The subject
Eligible Loans shall be repurchased, reassigned and reconveyed to the Seller in
accordance with the provisions of Section 2.18 hereof.

        (d)  If on any day the Net Investment is greater than the Maximum Net
Investment then the Seller shall immediately repurchase from the Administrative
Agent (on behalf of the Owners) at the respective Repurchase Prices thereof
sufficient Eligible Loans so that, when the aggregate Repurchase Price is
deposited into the Collateral Account, the Adjusted Net Investment will be less
than or equal to the Maximum Net Investment. The aggregate Repurchase Price
shall be deposited to the Collateral Account for application in reduction of the
Net Investment. The subject Eligible Loans shall be repurchased, reassigned and
reconveyed to the Seller in accordance with the provisions of Section 2.18
hereof.

        Section 2.17    Payments and Computations, Etc.; Allocation of
Collections.    

        (a)  All per annum fees payable under this Agreement shall be calculated
for the actual days elapsed on the basis of a 360-day year. All amounts to be
paid or deposited by the Seller or the Servicer hereunder shall be paid or
deposited in accordance with the terms hereof in immediately available funds no
later than (i) in the case of the Seller, 12:30 p.m. (New York City time) on the
day when due and (ii) in the case of the Servicer, no later than 11:30 a.m. (New
York City time) on the day when due; if such amounts are payable to an Owner or
Owners they shall be paid or deposited in the Administrative Agent's account
indicated on the signature page hereof, until otherwise notified by the
Administrative Agent. The Seller shall, to the extent permitted by Law, pay to
the Administrative Agent for the account of each Owner upon demand of the
Administrative Agent, interest on all amounts not paid or deposited when due to
the Administrative Agent for the account of each Owner hereunder at a rate equal
to 2% per annum plus the Base Rate. All computations of interest hereunder shall
be made on the basis of a year of 360 days for the actual number of days
(including the first but excluding the last day) elapsed other than computations
of interest calculated by reference to the Base Rate which shall be calculated
on the basis of a 365- or 366- day year, as applicable.

        Section 2.18    Repurchase Procedures.    

        (a)  With respect to each repurchase of an Eligible Loan by the Seller
or the Servicer (each, a "Repurchaser") hereunder, the Repurchaser shall provide
a notice (a "Repurchase Notice") to the Administrative Agent and the Agent not
later than 4:00 p.m., New York City time, one Business Day prior to the
execution of a Repurchase Supplement of its intention to effect a repurchase of
Eligible Loans. In such notice, the Repurchaser shall specify the Eligible Loans
it intends to repurchase on such date and the Repurchase Price thereof and shall
attach a preliminary Repurchase Schedule listing such Eligible Loans. Each
Repurchase Supplement shall be executed by the Repurchaser and the
Administrative Agent (on behalf of the Owners) at the time of the repurchase of
the subject Eligible Loans.

        (b)  Upon notice by the Repurchaser to the Administrative Agent of the
prospective repurchase of Eligible Loans, the Repurchaser shall submit to the
Administrative Agent (i) a Repurchase Supplement

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and Repurchase Schedule and (ii) the Closing Date for the repurchase of the
Eligible Loans identified on the Repurchase Schedule. The Repurchaser shall not
choose a preliminary Repurchase Date which is less than one Business Day from
the date that the Administrative Agent receives the items specified in the
preceding sentence. Not later than 9:00 a.m. on the Repurchase Date, the
Repurchaser shall notify the Administrative Agent of its calculation of the
Repurchase Price for the Eligible Loans to be repurchased. If the Administrative
Agent does not agree with such calculation or the Transfer does not close for
any other reason, the Repurchase Date for such Eligible Loans shall be
rescheduled to a later date by the Repurchaser. The Administrative Agent (on
behalf of the Owners) and the Repurchaser shall use their best efforts to close
the repurchase of any such Eligible Loans on any such Repurchase Date. Each
Repurchase Supplement shall be executed by the Repurchaser and the
Administrative Agent at the time of the repurchase of the subject Eligible
Loans.

        (c)  On the date of such repurchase, the Repurchaser shall pay to the
Administrative Agent not later than 4:00 p.m., New York City time, in
immediately available funds an amount equal to such Repurchase Price. Upon
receipt of the Repurchase Price thereof by the Administrative Agent, the
Administrative Agent (on behalf of the Owners) and the Repurchaser shall arrange
for the Repurchase of such Eligible Loans to the Repurchaser and the delivery to
the Repurchaser of any documents held by the Custodian relating to the
repurchased Eligible Loans. If no Termination Event has occurred and is
continuing, the Administrative Agent shall pay to the Repurchaser on such
Repurchase Date all amounts held in the Principal Account that were received as
Principal Collections on such Eligible Loans.

        (d)  The aggregate Repurchase Price paid by the Repurchaser to the
Administrative Agent shall, upon receipt by the Administrative Agent, be
deposited by the Administrative Agent into the Collateral Account for
application in reduction of the Net Investment.

        (e)  Subsequent to each Repurchase, the Repurchaser shall have all
right, title and interest of the Owners in the subject Eligible Loans, and in
the Related Security and all Collections with respect thereto.

        (f)    At the time of each repurchase, Repurchase and reconveyance of
mortgage loans by the Administrative Agent to the Repurchaser, each Owner,
ratably in accordance with the percentage interest of such Owner in such
mortgage loans, hereby causes the Administrative Agent, on behalf of such Owner,
to reassign, retransfer and reconvey to the Repurchaser the interest of such
Owner in such mortgage loans, together with Related Security and Collections.

        Section 2.19    [RESERVED]    

        Section 2.20    Conditions to Initial Transfer.    

        On or prior to the date of the execution of the Original Repurchase
Agreement, each of the Company and the Guarantor, as applicable (each a
"Corporation"), shall deliver to the Administrative Agent the following
documents and instruments, all of which shall be in a form and substance
acceptable to the Administrative Agent (with such additional copies thereof as
the Administrative Agent may request):

        (a)  A copy of the resolutions of the Board of Directors of the
Corporation certified as of December 11, 1998 by the Corporation's secretary or
assistant secretary authorizing the execution, delivery and performance of this
Agreement and the other documents to be delivered by the Corporation hereunder
and approving the transactions contemplated hereby and thereby;

        (b)  The Articles of Incorporation or organizational documents of the
Corporation certified as of a date reasonably near December 11, 1998 by the
Secretary of State or other similar official of the Corporation's jurisdiction
of incorporation;

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        (c)  A good standing certificate for the Corporation issued by the
Secretary of State or other similar official of the Corporation's jurisdiction
of incorporation, certificates of qualification as a foreign corporation or
foreign limited liability company issued by the Secretaries of State or other
similar officials of the jurisdiction where such qualification is material to
the transactions contemplated by this Agreement and certificates of the
appropriate state official in each jurisdiction specified by the Administrative
Agent as to the absence of any tax Liens against the Corporation under the laws
of such jurisdiction, each such certificate to be dated a date reasonably near
December 11, 1998;

        (d)  A certificate of the secretary or assistant secretary of the
Corporation dated December 11, 1998 and certifying (i) the names and signatures
of the officers authorized on the Corporation's behalf to execute, and the
officers and other employees authorized to perform, this Agreement and any other
documents to be delivered by the Corporation hereunder (on which certificate the
Administrative Agent and each Owner may conclusively rely until such time as the
Administrative Agent shall receive from the Corporation a revised certificate
meeting the requirements of this clause (d)(i)) and (ii) a copy of such
Corporation's By-laws;

        (e)  Acknowledgement copies of proper financing statements (Form UCC-3),
if any, necessary under the laws of all appropriate jurisdictions to release all
security interests and other rights of any person in Eligible Loans previously
granted by the Seller.

        (f)    Certified copies of requests for information or copies (Form
UCC-11) (or similar search report certified by parties acceptable to the
Administrative Agent) dated a date reasonably near the date of the initial
Incremental Transfer listing all effective financing statements which name the
Seller (under its present name and any previous names) as debtor and which are
filed in jurisdictions in which the filings were made pursuant to item
(e) above, together with copies of such financing statements (none of which
shall cover any Eligible Loans;

        (g)  A favorable opinion or opinions of counsel for the Corporation,
dated December 11, 1998 relating to corporate matters, legality, validity and
enforceability of this Agreement, perfection of the Owners' ownership or
security interest in the Eligible Loans and such other matters as the
Administrative Agent may reasonably request;

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        (h)  An Officer's Certificate of the Corporation, dated December 11,
1998, in form and substance acceptable to the Administrative Agent;

        (i)    The arrangement fee described in the Fee Letter;

        (j)    The Transfer Notice for the Initial Incremental Transfer
hereunder;

        (k)  The Seller shall have delivered or caused to be delivered to the
Administrative Agent a computer file or tape containing a true and complete list
of all Eligible Loans, identified by loan number, Mortgagor's name and by
Outstanding Principal Balance of each Eligible Loan; and

        (l)    Such other documents as the Purchaser shall reasonably request.

        In addition, it shall be a condition precedent to the initial
Incremental Transfer hereunder that APA Purchasers have executed signature pages
to the Revolving Asset Purchase Agreement evidencing an aggregate Maximum
Purchase Amount (as defined therein) of at least $700,000,000.

        Section 2.21    Conditions to Incremental Transfers    

        The truth and correctness of the representations and warranties and
conditions in Article III hereof as of the date of the initial Incremental
Transfer and each subsequent Incremental Transfer pursuant to Section 2.2 hereof
as though made on and as of such date, compliance with the covenants and
agreements in Articles II, IV, V and VI hereof, the requirement that no
Termination Event or Potential Termination shall occur as a result of such
Incremental Transfer, in the case of an Incremental Transfer, the satisfactory
completion of any due diligence conducted by the Administrative Agent with
respect to the Eligible Loans and the related Mortgagors which are the subject
of such Transfer and the receipt by the Owners or the Administrative Agent of
any approvals, opinions or other documents as the Owners or the Administrative
Agent shall have reasonably requested shall be conditions precedent to any
Incremental Transfer under Section 2.2 hereof.

        Section 2.22    Principal Account.    

        (a)  If a Termination Event occurs and is continuing, moneys in the
Principal Account shall be deposited to the Collateral Account and applied in
reduction of the Net Investment.

        (b)  If a Termination Event has not occurred, moneys in the Principal
Account representing Principal Collections shall be distributed in accordance
with Section 2.10.

ARTICLE III

REPRESENTATIONS AND WARRANTIES; COVENANTS; REMEDIES AND BREACH

        Section 3.1    Representations and Warranties of The Company.    The
Company, as Seller and Servicer, represents and warrants to the Purchaser (and
for the benefit of the Administrative Agent) that as of each applicable Closing
Date and as of the date of the sale or Securitization of each Eligible Loan:

        (a)    Due Organization and Authority.    The Company is duly organized,
validly existing and in good standing under the laws of New Jersey and has all
licenses necessary to carry on its business as now being conducted and is
licensed, qualified and in good standing in each state where a Mortgaged
Property is located if required to conduct business of the type conducted by it,
and in any event the Company is in compliance with the laws of any such state to
the extent necessary to ensure the enforceability of any Eligible Loan sold
hereunder and the servicing of any such Eligible Loan in accordance with the
terms of this Agreement and any Transfer Supplement; the Company has the full
power and authority to execute and deliver this Agreement and any Transfer
Supplement and to perform its obligations in accordance herewith and therewith;
the execution, delivery and performance of this Agreement and any Transfer
Supplement by the Company and the consummation of the

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transactions contemplated hereby and thereby have been duly and validly
authorized by the Company; all requisite corporate action has been taken by the
Company to make this Agreement and any Transfer Supplement valid and binding
upon the Company in accordance with its terms; this Agreement and any Transfer
Supplement each evidences the valid, binding and enforceable obligation of the
Company, except that (i) the enforceability thereof may be limited by
bankruptcy, insolvency, moratorium, receivership and other similar laws relating
to creditors' rights generally and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.

        (b)    Ordinary Course of Business.    The consummation of the
transactions contemplated by this Agreement are in the ordinary course of
business of the Company, and the transfer, assignment and conveyance of the
Mortgage Notes and the Mortgages by the Company pursuant to this Agreement are
not subject to the bulk transfer or any similar statutory provisions in effect
in any applicable jurisdiction.

        (c)    No Conflicts.    Neither the execution and delivery of this
Agreement or any Transfer Supplement, the acquisition of Eligible Loans by the
Company, the sale of Eligible Loans to the Administrative Agent (on behalf of
the Owners) or the transactions contemplated hereby or thereby, nor the
fulfillment of or compliance with the terms and conditions of this Agreement or
any Transfer Supplement, will conflict with or result in a breach of any of the
terms, conditions or provisions of the Company's charter or by-laws or any
material agreement or instrument to which the Company is now a party or by which
it is bound, or constitute a default or result in an acceleration under any of
the foregoing, or result in the violation in any material respect of any
applicable law, rule, regulation, order, judgment or decree to which the Company
or its property is subject, or impair the ability of the Administrative Agent
(on behalf of the Owners) to realize on the Eligible Loans in any material
respect, or impair the value of the Eligible Loans in any material respect, or
impair in any material respect the ability of the Administrative Agent (on
behalf of the Owners) to realize the full mortgage insurance benefits (i) of the
FHA Mortgage Insurance Contract with respect to FHA Loans; (ii) of the VA Loan
Guaranty Certificate with respect to VA Loans; or (iii) other insurance benefits
accruing pursuant to this Agreement, including but not limited to any PMI
Policy.

        (d)    Ability to Service.    The Company is an Approved Seller/Servicer
of Eligible Loans for GNMA and either of FNMA or FHLMC with the facilities,
procedures, and experienced personnel necessary for the servicing of Eligible
Loans. The Company is in good standing to sell mortgage loans to and service
mortgage loans for GNMA and either of FNMA or FHLMC and no event has occurred,
including but not limited to a change in insurance coverage, which would make
the Company unable to comply with the eligibility requirements in all material
respects of either of GNMA and FNMA or FHLMC or which would require notification
to FNMA, FHLMC or GNMA. As of the Closing Date the Company is an FHA Approved
Mortgagee and a VA Approved Lender and has the facilities, procedures, and
experienced personnel necessary for the servicing of mortgage loans of the same
type as the Eligible Loans. As of the Closing Date, the Company is in good
standing to service mortgage loans for FHA and VA, and no event has occurred,
including but not limited to a change in insurance coverage, which would make
the Company unable to comply with FHA or VA eligibility requirements in all
material respects, or which would require notification to either the FHA or VA.

        (e)    Reasonable Servicing Fee.    The Servicer acknowledges and agrees
that the Servicing Fee represents reasonable compensation for performing such
services as compensation for the servicing and administration and arranging for
the sale or Securitization of the Eligible Loans pursuant to this Agreement and
shall be treated by the Servicer, for accounting and tax purposes, as
compensation for the servicing and administration of the Eligible Loans pursuant
to this Agreement.

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        (f)    No Litigation Pending.    There is no action, suit, proceeding or
investigation pending or to its knowledge threatened against the Company which,
either in any one instance or in the aggregate, may result in any material
adverse change in the business, operations, financial condition, properties or
assets of the Company, or in any material impairment of the right or ability of
the Company to carry on its business substantially as now conducted, or in any
material liability on the part of the Company, or which would draw into question
the validity of this Agreement or any Transfer Supplement or the Eligible Loans
or of any action taken or to be taken in connection with the obligations of the
Company contemplated herein, or which would be likely to impair materially the
ability of the Company to perform under the terms of this Agreement or any
Transfer Supplement.

        (g)    No Consent Required.    No consent, approval, authorization or
order of any court or governmental agency or body including, without limitation,
HUD, FHA or VA, is required for the execution, delivery and performance by the
Company of or compliance by it with this Agreement or any Transfer Supplement or
the sale of the Eligible Loans, or if required, such approval has been obtained.

        (h)    Selection Process.    Any Portfolio of mortgage loans sold
pursuant to a Transfer Supplement was selected from mortgage loans originated by
the Seller or purchased by the Seller from third parties and are Eligible Loans
which satisfy the Eligibility Representations and any selection process employed
by it was not made in a manner so as to materially adversely affect the interest
of the Purchaser.

        (i)    No Untrue Information.    Neither this Agreement, any Transfer
Supplement nor any statement, report or other document prepared by the Seller or
to be prepared by the Seller pursuant to this Agreement or in connection with
the transactions contemplated hereby contains any untrue statement of a material
fact relating to the Seller or the Eligible Loans or omits to state a fact
necessary to make the statements herein or therein not materially misleading.

        (j)    Financial Statements.    The Company has delivered to the
Administrative Agent consolidated financial statements of PHH Corporation as to
its last three complete fiscal years and any later quarter ended more than
60 days prior to the execution of this Agreement. All such financial statements
fairly present the pertinent results of operations and changes in financial
position at the end of each such period of PHH Corporation and its subsidiaries
and have been prepared in accordance with GAAP consistently applied throughout
the periods involved, except as set forth in the notes thereto. There has been
no change in the business, operations, financial condition, properties or assets
of the Company since the date of PHH Corporation's most recently provided
financial statements that would have a material adverse effect on its ability to
perform its obligations under this Agreement.

        (k)    No Brokers' Fees.    The Seller has not dealt with any broker,
investment banker, agent or other Person that may be entitled to any commission
or compensation in connection with the sale of any Eligible Loans to the
Purchaser.

        (l)    Fair Consideration.    The consideration received by the Seller
upon each Incremental Transfer under this Agreement constitutes fair
consideration and reasonably equivalent value for the Eligible Loans.

        (m)    Ability to Perform.    The Company does not believe, nor does it
have any reason or cause to believe, that it cannot perform each and every
covenant contained in this Agreement in all material respects. The Company is
solvent and the sale of the Eligible Loans is not undertaken to hinder, delay or
defraud any of the Company's creditors.

        (n)    Financing Treatment.    The Seller has determined that the
transfer of the Eligible Loans pursuant to this Agreement will be afforded
financing treatment for accounting and tax purposes.

        (o)    The Surety Bond.    The Surety Bond is in full force and effect
and is a legal, valid and binding obligation of the Surety, enforceable in
accordance with its terms, except that enforceability thereof

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may be limited by bankruptcy, insolvency, moratorium, receivership and other
similar laws relating to creditors' rights generally and the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.

        (p)    Premium Payments.    The Company agrees to make each premium
required under the Surety Bond on or prior to the date on which such premium
payment is due. No premium payments are past due on the Surety Bond.

        (q)    Permitted Beneficiaries.    Each Additional Collateral Mortgage
Loan is an "Additional Collateral Mortgage Loan," as such term is defined in the
Surety Bond, and each of the Company and the Purchaser is a "Permitted
Beneficiary" of the rights of MLCC thereunder.

        (r)    The Additional Collateral Transfer Agreement.    The Additional
Collateral Transfer Agreement is a legal, valid and binding obligation of MLCC,
enforceable in accordance with its terms, except that enforceability thereof may
be limited by bankruptcy, insolvency, moratorium, receivership and other similar
laws relating to creditors' rights generally and the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.

        (s)    Security Interest of the Company.    Pursuant to the Additional
Collateral Transfer Agreement, with respect to each Additional Collateral
Mortgage Loan, the Company has a first-priority perfected security interest in
each Securities Account, or, if necessary to perfect a first-priority security
interest in each asset contained in such Securities Account, a perfected
first-priority security interest in each such asset contained in each Securities
Account.

        (t)    Security Interest of the Purchaser.    Upon the purchase of each
Additional Collateral Mortgage Loan, the Purchaser will acquire a first-priority
perfect security interest in the related Securities Account.

        Section 3.2    Representations and Warranties Regarding Individual
Mortgage Loans; Eligibility Representations.    

        As to each Eligible Loan sold in each Portfolio, the Seller hereby
represents and warrants to the Owners that as of each applicable Closing Date
and (excluding Section 3.2(d) hereof) as of the date of the sale of each
Eligible Loan:

        (a)    Eligibility of Mortgage Loans.    The mortgage loan is an
Eligible Loan.

        (b)    Eligible Loans as Described.    The information set forth in the
Transfer Schedule attached to the applicable Transfer Supplement is complete,
true and correct in all material respects.

        (c)    Valid First Lien.    The Mortgage is either a (i) valid first
lien on the Mortgaged Property or (ii) valid second lien on the Mortgaged
Property. Except for Mortgaged Property that is the subject of a HELOC, the
Mortgaged Property is free and clear of all prior liens and encumbrances and no
rights or condition may exist that could give rise to such liens, except for
liens for real estate taxes and special assessments not yet due and payable. The
Mortgage is a legal, valid and binding obligation of the related borrower,
enforceable according to its terms and conditions, except that (i) the
enforceability thereof may be limited by bankruptcy, insolvency, moratorium,
receivership and other similar laws relating to creditors' rights generally and
(ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought, and free from any
right of set-off, counterclaim or other claim or defense. No part of the
Mortgaged Property has been released from the Mortgage. The terms of the
Mortgage have not in any material manner been modified, amended or in any way
waived or changed, except as stated in a written modification agreement that is
acceptable to and delivered to the Seller and Servicer.

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        Any security agreement, chattel mortgage, Home Equity Line Agreement or
equivalent document related to and delivered in connection with the Eligible
Loan establishes and creates a valid, subsisting and enforceable first lien or
second lien, as applicable, and first priority security interest on the property
described therein and the Seller has full right to sell and assign the same to
the Purchaser. The Mortgaged Property was not, as of the date of origination of
the Eligible Loan (except for HELOCs), subject to a mortgage, deed of trust,
deed to secure debt, or other security instrument creating a lien senior to the
lien of the Mortgage.

        (d)    HELOCs.    Each HELOC has been conveyed to the Purchaser free and
clear of any charge lien, mortgage, pledge, claim, security interest or other
encumbrance.

        (e)    Ownership.    The Seller is the sole owner of record and holder
of the Eligible Loan. The Eligible Loan is not assigned or pledged, and the
Seller has good and marketable title thereto, and has full right to transfer and
sell the Eligible Loan to the Purchaser free and clear of any encumbrance,
equity, participation interest, lien, pledge, charge, claim or security
interest, and has full right and authority subject to no interest or
participation of, or agreement with, any other party, to sell and assign each
Eligible Loan pursuant to the related Transfer Supplement.

        (f)    No Additional Collateral.    The Mortgage Note is not and has not
been secured by any collateral except the lien of the corresponding Mortgage and
the security interest of any applicable security agreement or chattel mortgage
referred to in Section 3.2(c) above.

        (g)    Conformance with Underwriting Standards.    The Eligible Loan was
underwritten in accordance with (i) the Seller's underwriting standards in
effect on the date of origination of such Eligible Loan, and (ii) the
Guidelines, if applicable.

        (h)    Payments Current.    As of the Closing Date, no payments due with
respect to the Eligible Loan are 30 days or more past their contractual due
date.

        (i)    No Mortgagor Bankruptcy; Delinquencies.    To the best of the
Seller's knowledge and belief, no Mortgagor is the subject of a bankruptcy or
similar proceeding. All payments required to be made up to the Closing Date for
each Eligible Loan under the terms of the related Mortgage Note have been made.
As of the Closing Date, no payment required under any such purchased Eligible
Loan has ever been delinquent more than 30 days.

        (j)    No Outstanding Charges.    There are no defaults in complying
with the terms of the Mortgages, and all taxes, governmental assessments,
insurance premiums, water, sewer and municipal charges, leasehold payments or
ground rents which previously became due and owing have been paid, or an escrow
of funds has been established in an amount sufficient to pay for every such item
which remains unpaid and which has been assessed but is not yet due and payable.
The Seller has not advanced funds, or induced, solicited or knowingly received
any advance of funds by a party other than the Mortgagor, directly or
indirectly, for the payment of any amount required under the Eligible Loan,
except for interest accruing from the date of the Mortgage Note or date of
disbursement of the Eligible Loan proceeds, whichever is greater, to the day
which precedes by one month the Due Date of the first installment of principal
and interest.

        (k)    Original Terms Unmodified.    The terms of the Mortgage Note and
Mortgage have not been impaired, waived, altered or modified in any material
respect (i) from the date of final endorsement of the Mortgage Note by HUD with
respect to FHA Loans, and (ii) from the date of origination for all other
mortgage loans, except by a written instrument which has been recorded, if
necessary to protect the interest of the Purchaser and which has been delivered
to the Custodian. The substance of any such waiver, alteration or modification
has been approved by the issuer of any related PMI Policy and the title insurer,
to the extent required by the policy, and by the FHA for the related FHA Loans,
and the VA for the related VA Loans, and its terms are reflected on the related
Transfer Schedule. No Mortgagor has been released, in whole or in part, except
in connection with an assumption agreement

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approved by the issuer of any related PMI Policy and the title insurer, to the
extent required by the policy, and by the FHA for the related FHA Loans, and the
VA for the related VA Loans, and which assumption agreement is part of the
Mortgage Loan File delivered to the Custodian and the terms of which are
reflected in the related Transfer Schedule.

        (l)    No Defenses.    The Eligible Loan is not subject to any right of
rescission, set-off, counterclaim or defense, including without limitation the
defense of usury, nor will the operation of any of the terms of the Mortgage
Note or the Mortgage, or the exercise of any right thereunder, render either the
Mortgage Note or the Mortgage unenforceable, in whole or in part, or, with
respect to FHA Loans, impair the Purchaser's ability to collect full insurance
benefits under the FHA Mortgage Insurance Contract, without indemnity to HUD,
or, with respect to VA Loans, impair the Purchaser's ability to collect full
value under the VA Loan Guaranty Certificate upon the Mortgagor's default, or
subject to any right of rescission, set-off, counterclaim or defense, including
without limitation the defense of usury, and no such right of rescission,
set-off, counterclaim or defense has been asserted with respect thereto, and no
Mortgagor was a debtor in any state or federal bankruptcy or insolvency
proceeding at the time the Eligible Loan was originated.

        (m)    Hazard Insurance.    Pursuant to the terms of the Mortgage, all
buildings or other improvements upon the Mortgaged Property are insured by
(i) an FHA approved insurer with respect to each FHA Loan, (ii) a VA approved
insurer with respect to each VA Loan or (iii) a generally acceptable insurer
against loss by fire and extended coverage and coverage for such other hazards
as are customary in the area where the Mortgaged Property is located pursuant to
insurance policies conforming to the requirements of Section 4.11 hereof and of
FHA and VA, if applicable. If upon origination of the Eligible Loan, the
Mortgaged Property was in an area identified in the Federal Register by the
Federal Emergency Management Agency as having special flood hazards (and such
flood insurance has been made available) a flood insurance policy meeting the
requirements of the current guidelines of the Flood Insurance Administration is
in effect which policy conforms to the requirements of Section 4.11 hereof and
of FHA and VA, if applicable. All individual insurance policies contain a
standard mortgagee clause naming the Seller and its successors and assigns as
mortgagee, and all premiums thereon have been paid. The Mortgage obligates the
Mortgagor thereunder to maintain the hazard insurance policy at the Mortgagor's
cost and expense, and on the Mortgagor's failure to do so, authorizes the holder
of the Mortgage to obtain and maintain such insurance at such Mortgagor's cost
and expense, and to seek reimbursement therefor from the Mortgagor. Where
required by state law or regulation, the Mortgagor has been given an opportunity
to choose the carrier of the required hazard insurance, provided the policy is
not a "master" or "blanket" hazard insurance policy covering the common
facilities of a planned unit development. The hazard insurance policy is the
valid and binding obligation of the insurer and is in full force and effect. The
Seller has not engaged in, and has no knowledge of the Mortgagor's having
engaged in, any act or omission which would impair the coverage of any such
policy, the benefits of the endorsement provided for herein, or the validity and
binding effect of either.

        (n)    Compliance with Applicable Laws.    Any applicable requirements
of federal, state or local law including, without limitation, usury,
truth-in-lending, real estate settlement procedures, consumer credit protection,
equal credit opportunity or disclosure laws and FHA Regulations and VA
Regulations applicable to the Eligible Loan have been complied with in all
material respects.

        (o)    No Satisfaction of Mortgage; No Waiver.    The Mortgage has not
been satisfied, cancelled, subordinated or rescinded, in whole or in part, and
the Mortgaged Property has not been released from the lien of the Mortgage, in
whole or in part, nor has any instrument been executed that would effect any
such release, cancellation, subordination or rescission. The Seller has not
waived the performance by the Mortgagor of any action, if the Mortgagor's
failure to perform such action would cause the Eligible Loan to be in default,
nor has the Seller waived any default resulting from any action or inaction by
the Mortgagor.

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        (p)    Location and Type of Mortgaged Property.    The Mortgaged
Property is located in the state identified in the Transfer Schedule and
consists of a parcel of real property with a detached single family residence
erected thereon, or a two- to four-family dwelling, or an individual condominium
unit, or an individual unit in a planned unit development; provided, however,
that any condominium unit or planned unit development shall conform with the
applicable FHA and VA requirements regarding such dwellings, if applicable, and
no residence or dwelling is a mobile home or a manufactured dwelling. To the
best of the Seller's knowledge and belief, no portion of the Mortgaged Property
is used for commercial purposes.

        (q)    Validity of Mortgage Documents.    The Mortgage Note and the
Mortgage are genuine, and each is the legal, valid and binding obligation of the
maker thereof enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles. All parties to the Mortgage Note and the Mortgage and any
other related agreement had legal capacity to enter into the Eligible Loan and
to execute and deliver the Mortgage Note and the Mortgage and any other related
agreement, and the Mortgage Note and the Mortgage have been duly and properly
executed by such parties. To the best of the Seller's knowledge and belief, the
documents, instruments and agreements submitted for loan underwriting were not
falsified and contain no untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the information
and statements therein not materially misleading. No fraud was committed in
connection with the origination of the Eligible Loan.

        (r)    Full Disbursement of Proceeds.    Each Eligible Loan has been
closed and its proceeds have been fully disbursed, excluding HELOCs, and there
is no requirement for future advances thereunder, and any and all requirements
as to completion of any on-site or off-site improvement and as to disbursements
of any escrow funds therefor have been complied with. All costs, fees and
expenses incurred in making or closing the Eligible Loan and the recording of
the Mortgage were paid, and the Mortgagor is not entitled to any refund of any
amounts paid or due under the Mortgage Note or Mortgage.

        (s)    Doing Business.    All parties which have had any interest in the
Eligible Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or,
during the period in which they held and disposed of such interest, were) (1) in
compliance with any applicable licensing requirements of the laws of the state
wherein the Mortgaged Property is located, and (2) organized under the laws of
such state, or (3) qualified to do business in such state, or (4) not required
to qualify to do business in such state.

        (t)    Loan-to-Value Ratio; PMI Policy.    Except where the Guidelines
exempt certain Eligible Loans from this requirement, the original Loan-to-Value
Ratio of the Eligible Loan other than an FHA Loan, a VA Loan, an Uninsured Loan
or a HELOC either was not more than 80% or the excess over 80% is and will be
insured as to payment defaults by a PMI Policy until the Loan-to-Value Ratio of
such Eligible Loan is reduced to 80%. All material provisions of such PMI Policy
have been and are being complied with, such policy is in full force and effect,
and all premiums due thereunder have been paid. No action, inaction, or event
has occurred and no state of facts exists that has, or will result in the
exclusion from, denial of, or defense to coverage. Any Eligible Loan subject to
a PMI Policy obligates the Mortgagor thereunder to maintain the PMI Policy and
to pay all premiums and charges in connection therewith. The Mortgage Interest
Rate for the Eligible Loan as set forth on the Transfer Schedule is net of any
such insurance premium.

        (u)    Combined Loan-to-Value Ratio:    No HELOC has a Combined
Loan-to-Value Ratio in excess of 100% at the time of origination or purchase by
the Seller.

        (v)    Title Insurance.    Except where the Guidelines or the Seller's
underwriting guidelines exempt certain Eligible Loans from this requirement,
each Eligible Loan is covered by (i) an attorney's opinion of title and abstract
of title, the form and substance of which is acceptable to mortgage lending

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institutions making mortgage loans in the area where the Mortgaged Property is
located; (ii) an ALTA lender's title insurance policy or other generally
acceptable form of policy of insurance acceptable to FNMA or FHLMC, issued by a
title insurer acceptable to FNMA or FHLMC and qualified to do business in the
jurisdiction where the Mortgaged Property is located or if applicable; (iii) an
attorney's opinion of title and abstract of title, the form and substance of
which is acceptable to the FHA with respect to FHA Loans and the VA with respect
to VA Loans; or (iv) an ALTA lender's title insurance policy or other generally
acceptable form of policy of insurance acceptable to (a) the FHA with respect to
the FHA Loans and (b) the VA with respect to the VA Loans, and each such title
insurance policy is issued by a title insurer acceptable to FHA or VA, as the
case may be, and qualified to do business in the jurisdiction where the
Mortgaged Property is located, insuring the Seller, its successors and assigns,
as to the first priority lien of the Mortgage in the original principal amount
of the Eligible Loan, and against any loss by reason of the invalidity or
unenforceability of the lien. Additionally, such lender's title insurance policy
affirmatively insures ingress and egress, and against encroachments by or upon
the Mortgaged Property or any interest therein. The Seller is the sole insured
of such lender's title insurance policy, and such lender's title insurance
policy is in full force and effect and will be in force and effect upon the
consummation of the transactions contemplated by this Agreement. No claims have
been made under such lender's title insurance policy, and no prior holder of the
Mortgage, including the Seller, has done, by act or omission, anything which
would impair the coverage of such lender's title insurance policy.

        (w)    No Defaults.    To the best of the Seller's knowledge and belief,
there is no default, breach, violation or event of acceleration existing under
the Mortgage or the Mortgage Note and no event which, with the passage of time
or with notice and the expiration of any grace or cure period, would constitute
a default, breach, violation or event of acceleration, and neither the Seller
nor its predecessors have waived any default, breach, violation or event of
acceleration.

        (x)    No Mechanics' Liens.    There are no mechanics' or similar liens
or claims which have been filed for work, labor or material (and no rights are
outstanding that under the law could give rise to such liens) affecting the
related Mortgaged Property which are or may be liens prior to, or equal or
coordinate with, the lien of the related Mortgage.

        (y)    Location of Improvements; No Encroachments.    All improvements
which were considered in determining the Appraised Value of the Mortgaged
Property lay wholly within the boundaries and building restriction lines of the
Mortgaged Property and, to the best of the Seller's knowledge and belief, no
improvements on adjoining properties encroach upon the Mortgaged Property. No
improvement located on or being part of the Mortgaged Property is in violation
of any applicable zoning law or regulation.

        (z)    Customary Provisions.    The Mortgage contains customary and
enforceable provisions such as to render the rights and remedies of the holder
thereof adequate for the realization against the Mortgaged Property of the
benefits of the security provided thereby, including, (i) in the case of a
Mortgage designated as a deed of trust, by trustee's sale, and (ii) otherwise by
judicial foreclosure. Upon default by a Mortgagor on an Eligible Loan and
foreclosure on, or trustee's sale of, the Mortgaged Property pursuant to the
proper procedures, the holder of the Eligible Loan will be able to deliver good
and marketable title to the Mortgaged Property. There is no homestead or other
exemption available to a Mortgagor which would interfere with the right to sell
the Mortgaged Property at a trustee's sale or the right to foreclose the
Mortgage.

        (aa)    Occupancy of the Mortgaged Property.    As of the Closing Date,
the Mortgaged Property is lawfully occupied under applicable law. All
inspections, licenses and certificates required to be made or issued with
respect to all occupied portions of the Mortgaged Property and, with respect to
the use and occupancy of the Eligible Loan, including but not limited to
certificates of occupancy and fire underwriting certificates, have been made or
obtained from the appropriate authorities. All of the

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Mortgagors represented at the time of origination of the related Eligible Loan
that any such Mortgagor would occupy the Mortgaged Property as the Mortgagor's
primary residence.

        (bb)    Deeds of Trust.    If the Mortgage constitutes a deed of trust,
a trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in the Mortgage, and no
fees or expenses are or will become payable by the Owners to the trustee under
the deed of trust, except in connection with a trustee's sale after default by
the Mortgagor.

        (cc)    Acceptable Investment.    The Seller has no knowledge of any
circumstances or conditions with respect to the Mortgage, the Mortgaged
Property, the Mortgagor or the Mortgagor's credit-standing not reflected in the
representations set forth herein, or in the documents delivered to the Custodian
or in the Mortgage Loan File, that could reasonably be expected to cause private
institutional investors to regard the Eligible Loan as an unacceptable
investment or cause the Eligible Loan to become delinquent or materially
adversely affect the value or the marketability of the Eligible Loan.

        (dd)    Delivery of Mortgage Notes.    With the exception of Wet Funded
Loans, the Mortgage Note endorsed in blank or to the Administrative Agent (on
behalf of the Owners) required to be delivered for the Eligible Loan by the
Seller under the Custodial Agreement has been delivered to the Custodian on or
prior to Closing Date. With respect to Wet Funded Loans, the Mortgage Note will
be delivered as soon as practicable, but in no event later than 30 days from the
Closing Date.

        (ee)    Transfer of Eligible Loans.    The Assignment of Mortgage is in
recordable form and is acceptable for recording under the laws of the
jurisdiction in which the Mortgaged Property is located.

        (ff)    Due on Sale.    The Mortgage contains an enforceable provision
for the acceleration of the payment of the unpaid principal balance of the
Eligible Loan if the Mortgaged Property is sold or transferred without the prior
written consent of the Mortgagee thereunder.

        (gg)    No Graduated Payments or Contingent Interests.    The Eligible
Loan is not a graduated payment mortgage loan and does not have a shared
appreciation or other contingent interest feature.

        (hh)    Mortgaged Property Undamaged.    There is no proceeding pending
or, to the best of the Seller's knowledge and belief, threatened for the total
or partial condemnation of the Mortgaged Property. The Mortgaged Property is
undamaged by waste, fire, earthquake or earth movement, windstorm, flood,
tornado or other casualty so as to affect materially adversely the value of the
Mortgaged Property as security for the Eligible Loan or the use for which the
premises were intended.

        (ii)    Collection Practices; Escrow Deposits; Interest Rate
Adjustments.    The origination and collection practices used with respect to
the Eligible Loan have been in accordance with Accepted Servicing Practices, and
have been in compliance in all material respects with applicable laws and
regulations. With respect to escrow deposits and Escrow Payments, all such
payments are in the possession of the Seller and there exist no deficiencies in
connection therewith for which customary arrangements for repayment thereof have
not been made or for which repayment is not provided for in the Mortgage. All
Escrow Payments have been collected in compliance with applicable state and
federal law. An escrow of funds is not prohibited by applicable law and has been
established in an amount sufficient to pay for each applicable item which
remains unpaid and which has been assessed but is not yet due and payable. No
escrow deposits or Escrow Payments or other charges or payments due the Seller
have been capitalized under the Mortgage or the Mortgage Note. All interest rate
adjustments in respect of Eligible Loans have been made in strict compliance
with state and federal law and the terms of the related Mortgage and Mortgage
Note.

        (jj)    Appraisal.    Except where the Guidelines or the Seller's
underwriting standards exempt certain Eligible Loans from this requirement, the
Mortgage Loan File contains an appraisal of the related Mortgaged Property
signed prior to the approval of the Eligible Loan application by a qualified
appraiser, duly appointed by or acceptable to the Seller, who had no interest,
direct or indirect in the

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Mortgaged Property or in any loan made on the security thereof; and whose
compensation is not affected by the approval or disapproval of the Eligible
Loan, and the appraisal and appraiser both satisfy the requirements of Title XI
of the Federal Institutions Reform, Recovery, and Enforcement Act of 1989 and
the regulations promulgated thereunder, all as in effect on the date that the
Eligible Loan was originated and the appraiser and appraisal both satisfy
requirements of the FHA or VA, if applicable.

        (kk)    Soldiers' and Sailors' Relief Act.    The Mortgagor has not
notified the Seller and the Seller has no knowledge of any relief requested by
the Mortgagor under the Soldiers' and Sailors' Civil Relief Act of 1940.

        (ll)    Environmental Matters.    To the best of the Seller's knowledge
and belief, the Mortgaged Property is free from any and all toxic or hazardous
substances and there exists no violation of any local, state or federal
environmental law, rule or regulation. There is no pending action or proceeding
directly involving any Mortgaged Property of which the Seller is aware in which
compliance with any environmental law, rule or regulation is an issue; and, to
the best of the Seller's knowledge and belief, nothing further remains to be
done to satisfy in full all requirements of each such law, rule or regulation
consisting of a prerequisite to use and enjoyment of said property.

        (mm)    No Construction Loans.    No Eligible Loan (i) was made in
connection with the construction or rehabilitation of a Mortgaged Property which
has not been completed, (ii) except for HELOCs, provides for future advances of
funds by the Seller that have not yet been advanced or (iii) facilitates the
trade-in or exchange of a Mortgaged Property.

        (nn)    No Denial of Insurance.    No action, inaction, or event has
occurred and no state of facts exists or has existed that has resulted or would
result in the exclusion from, denial of, or defense to coverage under any
applicable PMI Policy or bankruptcy bond, irrespective of the cause of such
failure of coverage. In connection with the placement of any such insurance, no
commission, fee, or other compensation has been or will be received by the
Seller or any designee of the Seller or any corporation in which the Seller or
any officer, director, or employee had a financial interest at the time of
placement of such insurance.

        (oo)    Regarding the Mortgagor.    The Mortgagor is one or more natural
persons.

        (pp)    Condominiums/Planned Unit Developments.    If the Mortgaged
Property is a condominium unit or a planned unit development (other than a de
minimus planned unit development) such condominium or planned unit development
project meets FHA, VA and GNMA eligibility requirements for sale to GNMA or is
located in a condominium or planned unit development project which has received
FHA, VA and GNMA project approval and the representations and warranties
required by FHA, VA and GNMA with respect to such condominium or planned unit
development have been made and remain true and correct in all material respects.

        (qq)    FHA Mortgage Insurance; VA Loan Guaranty.    With respect to the
FHA Loans, the application for coverage under the FHA Mortgage Insurance
Contract has been submitted to HUD or the FHA and neither the Seller nor the
Servicer has been notified of a denial of the application or a refusal to issue
the FHA Mortgage Insurance. With respect to the VA Loans, the application for
the VA Loan Guaranty Certificate has been submitted to the VA and neither the
Seller nor the Servicer has been notified of a denial of the application or the
refusal to issue the Certificate. All necessary steps have been taken with
respect to each such application in order to obtain such coverage or the
issuance of such Certificate and each such application is complete and correct
in all material respects. Upon issuance, each such guarantee or insurance will
be the binding, valid and enforceable obligation of the FHA and the VA,
respectively, to the full extent thereof, without surcharge, set-off or defense
upon the issuance of the insurance or guaranty.

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        (rr)    HUD Form 92080.    With respect to each FHA Loan, a HUD
Form 92080 has been duly executed and delivered to HUD.

        (ss)    Filings:    Any UCC filings necessary in any jurisdiction to
give the Administrative Agent (on behalf of the Owners) a perfected security
interest in the Eligible Loans have been made.

        (tt)    Servicing.    Subject to the terms of this Agreement, the Seller
holds all right, title and interest in and to the servicing rights related to
such Eligible Loan and no other person has the right to service such Eligible
Loan.

        (uu)    Future Advances for HELOCS:    Pursuant to the related Home
Equity Line Agreement, the Seller retains the obligation to make future advances
on any HELOC transferred to the Purchaser up to the Credit Limit specified in
such Home Equity Line Agreement.

        Section 3.3    Remedies for Breach of Representations and
Warranties.    

        It is understood and agreed that the representations and warranties set
forth in Sections 3.1 and 3.2 hereof shall survive the sale of the Eligible
Loans to the Administrative Agent (on behalf of the Owners) and the delivery of
the Loan Documents to the Servicer and delivery of the Mortgage Notes to the
Custodian and shall inure to the benefit of the Administrative Agent (on behalf
of the Owners) notwithstanding any restrictive or qualified endorsement on any
Mortgage Note or Assignment of Mortgage or the examination or failure to examine
any Mortgage Loan File. Upon discovery by either the Seller, the Servicer or the
Administrative Agent (on behalf of the Owners) of a breach of any of the
foregoing representations and warranties which materially and adversely affects
the value of the Eligible Loans or the interest of the Administrative Agent (on
behalf of the Owners) (or which materially and adversely affects the interest of
the Administrative Agent (on behalf of the Owners) in the related Eligible Loan
in the case of a representation and warranty relating to a particular Eligible
Loan), the party discovering such breach shall give prompt written notice to the
other, the Agent and the Administrative Agent.

        Within 60 days of the earlier of either discovery by or notice to the
Seller of any breach of a representation or warranty set forth in Section 3.2
hereof which materially and adversely affects the value of any Eligible Loan,
the Seller shall use its best efforts promptly to cure such breach in all
material respects and, if such breach cannot be cured, or is not cured, within
such 60 day time period, the Seller shall repurchase such Eligible Loan at the
Repurchase Price. In the event that a breach shall involve any representation or
warranty set forth in Section 3.1 hereof, and such breach cannot be cured, or is
not cured, within 60 days of the earlier of either discovery by or notice to the
Seller of such breach, all of the Eligible Loans shall, be repurchased by the
Seller at the Repurchase Price. Upon receipt of the Repurchase Price by the
Administrative Agent, the Purchaser and the Seller shall arrange for the
Repurchase of the Eligible Loan to the Seller and the delivery to the Seller of
any documents held by the Custodian relating to the reassigned Eligible Loan and
any amounts in the Principal Account with respect to Collections on such
Eligible Loan shall be remitted to the Seller.

        In addition to such repurchase obligation, the Seller shall indemnify
the Administrative Agent and each Owner and hold them harmless against any
losses, damages, penalties, fines, forfeitures, reasonable and necessary legal
fees and related costs, judgments, and other costs and expenses resulting from
any claim, demand, defense or assertion based on or grounded upon, or resulting
from, a breach of the representations and warranties contained in this
Agreement. It is understood and agreed that the obligations of the Seller set
forth in this Section 3.3 to cure or repurchase an Eligible Loan and to
indemnify the Administrative Agent and each Owner constitute the sole remedies
of the Administrative Agent and each Owner respecting a breach of the foregoing
representations and warranties.

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        Section 3.4    Conditions to Closing.    

        The obligation of the Purchaser to purchase the mortgage loans that are
the subject of any Transfer Supplement shall be subject to satisfaction of each
of the following conditions on or before the related Closing Date:

        (a)  To the best of Seller's knowledge and belief, all of the
representations and warranties of Seller contained in this Agreement shall be
true and correct in all material respects as of such Closing Date and no event
shall have occurred which, with notice or the passage of time, would constitute
a Servicer Event of Default under this Agreement;

        (b)  Seller shall have delivered and released to the Custodian all
documents required to be delivered to the Custodian pursuant to the Custodial
Agreement;

        (c)  No Termination Event shall have occurred and be continuing; and

        (d)  All other material terms and conditions of this Agreement shall
have been satisfied.

        Section 3.5    Covenants of the Company.    

        (a)    Licenses.    The Seller shall maintain its qualifications to do
business and all licenses necessary to perform its obligations hereunder.

        (b)    Servicing Standards/Sales and Securitizations.    The Servicer
will administer and service Eligible Loans, and arrange for the sale and
Securitization of Eligible Loans, in accordance with the terms of this
Agreement, the Mortgage Notes and Accepted Servicing Practices.

        (c)    Delivery of Mortgage Note.    The Seller shall deliver each
Mortgage Note, including Mortgage Notes on Wet Funded Loans, to the Custodian as
soon as practicable, but in any event within 30 days of the purchase and, if any
Mortgage Note is not delivered within 30 days of the purchase, it shall be
repurchased on such 30th day by the Seller at the Repurchase Price.

        (d)    Assignment.    The Company shall assign to the Purchaser all
right, title and interest of the Company under the Additional Collateral
Transfer Agreement with respect to Additional Collateral Mortgage Loans
transferred.

        (e)    Portfolio Criteria and Limitations.    As of any date of
determination, the Eligible Loans in the aggregate shall satisfy the Portfolio
Criteria, the Portfolio Aging Limitations and the Wet Funded Loan Limitation.

        (f)    Changes in Origination and Underwriting Criteria.    The Seller
shall inform each rating agency rating any outstanding Commercial Paper of any
material changes (as determined by the Seller) in its origination and
underwriting practices and guidelines with respect to the Mortgage Loans.

        (g)    Funding Future Advances.    The Seller will be obligated to, and
will fulfill its obligation to, make any future advance for any HELOC pursuant
to the related Home Equity Line Agreement, up to the Credit Limit.

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ARTICLE IV

ADMINISTRATION AND SERVICING OF ELIGIBLE LOANS

        Section 4.1    The Company to Act as Servicer; Servicing and
Administration of the Eligible Loans.    

        (a)  The Company, as an independent contractor and owner of the
servicing rights to the Eligible Loans, shall diligently service and administer
the Eligible Loans, and shall comply with the Portfolio Criteria, Portfolio
Aging Limitations and Wet Funded Loan Limitation, in the best interest of and
for the benefit of the Owners in accordance with applicable law, the terms of
this Agreement and the terms of the respective Eligible Loans, with a view to
the maximization of timely recovery of principal and interest on the Mortgage
Notes. Except to the extent that this Agreement provides for a contrary specific
course of action, the Servicer will be required to service and administer the
Eligible Loans (y) in the same manner in which, and with the same care, skill,
prudence and diligence with which it services and administers similar mortgage
loans for other third-party portfolios, giving due consideration to customary
and usual standards of practice of prudent institutional residential mortgage
loan servicers used with respect to loans comparable to the Eligible Loans, or
(z) in the same manner in which, and with the same care, skill, prudence and
diligence with which, it services and administers similar mortgage loans which
it owns, whichever standard of care is higher, and taking into account its other
obligations under this Agreement, but without regard to (i) any other
relationship that Servicer, any sub-servicer or any affiliate of the Servicer or
any sub-servicer may have with the borrowers or any affiliate of such borrowers;
(ii) the ownership of any interest in an Eligible Loan by the Servicer or any
affiliate; (iii) the Servicer's obligations to incur servicing expenses with
respect to the Eligible Loans; (iv) the Servicer's or any sub-servicer's right
to receive compensation for its services under this Agreement or with respect to
any particular transaction; or (v) the ownership, servicing or management for
others by the Servicer or any sub-servicer of any other mortgage loans or
property. The Servicer shall maintain its qualification to do business and all
licenses necessary to perform its obligations hereunder.

        (b)  The Servicer shall be obligated to service and administer the
Eligible Loans. The Servicer may enter into additional servicing or
sub-servicing agreements with third parties with respect to any of its
respective obligations hereunder, provided that any such agreement shall be
consistent with the provisions of this Agreement and no sub-servicer (or its
agent or subcontractors) shall grant any modification, waiver or amendment to
any Eligible Loan without the approval of the Servicer. Notwithstanding any
servicing or sub-servicing agreement, any of the provisions of this Agreement
relating to agreements or arrangements between the Servicer and any Person
acting as servicer or sub-servicer (or its agents or subcontractors) or any
reference to action taken through any Person acting as servicer or sub-servicer
or otherwise, the Servicer shall remain obligated and primarily liable to the
Administrative Agent (on behalf of the Owners) for the servicing and
administering of the Eligible Loans and arranging for the sale and
Securitization of the Eligible Loans in accordance with the provisions of this
Agreement without diminution of such obligation or liability by virtue of such
servicing or sub-servicing agreements or arrangements or by virtue of
indemnification from any Person acting as servicer or sub-servicer (or its
agents or subcontractors) to the same extent and under the same terms and
conditions as if the Servicer alone were engaging in such activities. In the
event the Servicer is a sub-servicer, the Administrative Agent (on behalf of the
Owners) shall be entitled to proceed directly against the Servicer as
sub-servicer to enforce the Servicer's obligations to the Administrative Agent
(on behalf of the Owners).

        (c)  Subject to the above-described servicing standards, the further
provisions of this Agreement, including but not limited to the Wet Funded Loan
Limitation, Portfolio Criteria and Portfolio Aging Limitation, and the terms of
the respective Eligible Loans, the Servicer shall have full power and authority,
acting alone, to do or cause to be done any and all things in connection with
such servicing and administration that it may deem necessary or desirable in
connection with the servicing and

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administration of the Eligible Loans. Without limiting the generality of the
foregoing, the Servicer is hereby authorized and empowered to waive, modify or
vary any term of any Eligible Loan or consent to the postponement of compliance
with any such term or in any manner grant indulgence to any Mortgagor if in the
Servicer's reasonable and prudent determination such waiver, modification,
postponement or indulgence is not materially adverse to the Owners; provided,
however, that the Servicer shall not make any future advances to a Mortgagor
with respect to an Eligible Loan and (unless the Mortgagor is in default with
respect to the Eligible Loan or such default is, in the judgment of the
Servicer, imminent) the Servicer shall not permit any modification with respect
to any Eligible Loan that would change the Mortgage Interest Rate, defer or
forgive the payment of principal or interest, reduce or increase the outstanding
principal balance (except for actual payments of principal), release any
collateral from the Eligible Loan or change the final maturity date on such
Eligible Loan. Without limiting the generality of the foregoing, the Servicer
shall continue, and is hereby authorized and empowered, to execute and deliver
on behalf of itself and the Purchaser all instruments of satisfaction or
cancellation, or of partial or full release, discharge and all other comparable
instruments, with respect to the Eligible Loans and with respect to the
Mortgaged Properties. If reasonably required by the Servicer, the Owners shall
furnish the Servicer with any powers of attorney, in recordable form, and other
documents necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties under this Agreement.

        Section 4.2    Sales and Securitizations.    

        Subject to the servicing standards described in Section 4.1, the
Servicer shall have full power and authority, acting alone, to do or cause to be
done any and all things in connection with such servicing and administration
that it may deem necessary and desirable in connection with the sale and/or
Securitization of Eligible Loans with the Seller or third-party purchasers. In
connection with any Securitization of Eligible Loans, in the event the
Administrative Agent (on behalf of the Owners) receives securities from the
Securitization Vehicle in exchange for the Eligible Loans subject to such
Securitization ("Securitization Securities"), the Servicer shall, on behalf of
the Administrative Agent (on behalf of the Owners), arrange for the sale of such
Securitization Securities. The Servicer shall use its best efforts to realize
for the Administrative Agent (on behalf of the Owners) the market value for the
Securitization Securities but shall have no liability to the Owners with respect
to any Securitization or Securitization Security provided that the Servicer
arranges for such Securitization or sale in good faith in accordance with the
procedures utilized by the Servicer in connection with any Securitization and
Securitization Securities held for its own account. The share of the proceeds of
sale of any Securitization Security due the Owners and the proceeds of sale of
any whole loan will be remitted to the Administrative Agent and will be
deposited into the Collateral Account for application in reduction of the Net
Investment.

        All mortgage loans not sold or transferred pursuant to a sale or
Securitization shall continue to be serviced in accordance with the terms of
this Agreement.

        Section 4.3    Liquidation of Eligible Loans.    

        In the event that any payment due under any Eligible Loan is not paid
when the payment becomes due and payable, or in the event that the Mortgagor
fails to perform any other covenant or obligation under the Eligible Loan and
such failure continues beyond any applicable grace period, the Servicer shall
take such action as (1) the Servicer would take under similar circumstances with
respect to a similar Eligible Loan held for its own account for investment,
(2) shall be consistent with Accepted Servicing Practices, (3) the Servicer
shall determine in accordance with Accepted Servicing Practices to be in the
best interest of the Owners, and (4) is consistent with the related PMI Policy,
if any; provided, however, any Defaulted Loan will be sold by the Servicer on
behalf of the Owners as soon as practicable after becoming a Defaulted Loan.

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        Section 4.4    Collection of Eligible Loan Payments.    

        The Servicer shall proceed diligently, in accordance with Accepted
Servicing Practices, to collect all payments called for under the terms and
provisions of the Eligible Loans it is obligated to service hereunder and shall
follow such collection procedures as are consistent with this Repurchase
Agreement (including without limitation, the servicing standards set forth in
Section 4.1 hereof). The Servicer shall ascertain and estimate, in accordance
with Accepted Servicing Practices, Escrow Payments and all other charges that
will become due and payable with respect to the Eligible Loans and the Mortgaged
Property, to the end that the installments payable by the Mortgagors will be
sufficient to pay such charges as and when they become due and payable. The
Servicer shall segregate and hold all payments received by it separate and apart
from any of its funds and general assets and in trust for the Owners and shall
apply such payments as provided in Section 4.5 hereof. The accounts established
by the Servicer pursuant to this Article IV may include any number of
sub-accounts for convenience in administering the Eligible Loans.

        Section 4.5    Establishment of, and Deposits to, Collection
Account.    

        The Servicer shall establish a single, segregated trust account which
shall be designated as the Collection Account, which shall be held in trust in
the name of the Administrative Agent for the benefit of the Owners, into which
the Servicer shall from time to time deposit, within two Business Days of the
receipt thereof, and retain therein, the following collections (the
"Collections") received by the Servicer: (a) all payments on account of
scheduled principal on the Eligible Loans; (b) all payments on account of
interest on the Eligible Loans (including interest accrued and unpaid on the
Eligible Loans prior to the applicable Closing Date); (c) any Principal
Prepayments; (d) all Liquidation Proceeds; (e) all Insurance Proceeds including
amounts required to be deposited pursuant to Section 4.11 (other than proceeds
to be held in the Escrow Account and applied to the restoration or repair of the
Mortgaged Property or released to the Mortgagor in accordance with Accepted
Servicing Practices as specified in Section 4.15 hereof), Section 4.12 and
Section 4.16 hereof; (f) all Condemnation Proceeds which are not applied to the
restoration or repair of the Mortgaged Property or released to the Mortgagor in
accordance with Section 4.15 hereof; (g) any amount required to be deposited in
the Collection Account pursuant to Section 2.12, 3.3, 4.10, 6.2 or 7.1; (h) any
amounts required to be deposited by the Servicer pursuant to Section 4.11 hereof
in connection with the deductible clause in any blanket hazard insurance policy;
(i) any amounts received with respect to or related to any REO Property and all
REO Disposition Proceeds pursuant to Section 4.17 hereof; and (j) any other
amounts received with respect to or related to the mortgage loan including but
not limited to late payment charges and interest paid on funds deposited in the
Collection Account or Escrow Account, to the extent permitted by applicable law.
The Collection Account shall be established with a Qualified Depository
acceptable to the Administrative Agent. Any funds deposited in the Collection
Account shall at all times be fully insured to the full extent permitted under
applicable law. Any interest earnings on amounts on deposit from time to time in
the Collection Account shall be remitted to the Servicer in accordance with such
arrangements, as shall be agreed upon by the Servicer and the Administrative
Agent; provided that the Servicer shall deposit promptly from its own funds to
the Collection Account an amount equal to any loss incurred with respect to an
investment of funds in the Collection Account.

        Section 4.6    Permitted Withdrawals From Collateral Account, Principal
Account or Margin Call Account; Deposits into Collateral Account.    

        (a)  In connection with any withdrawals of amounts deposited by the
Servicer into the Collateral Account, the Principal Account or the Margin Call
Account by mistake or overpayment or as otherwise required to make adjustments
to amounts deposited therein in accordance with ordinary and normal servicing
adjustments the Servicer shall provide the Administrative Agent with a written
request, including such information with respect to such withdrawals as such
Administrative Agent may

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reasonably request to justify such withdrawal. Upon approval by the
Administrative Agent of such request, the Administrative Agent shall authorize
the withdrawal of such amount from such account; provided that if such request
is for an amount less than $10,000 and the aggregate amount withdrawn from such
account under this proviso in the current Due Period is less than $50,000, such
withdrawal may be made without approval from the Administrative Agent.

        (b)  The proceeds of any sales and Securitizations, the Repurchase Price
of any Eligible Loans reassigned to the Seller pursuant to Section 2.10, 2.16,
3.3, 6.2 or 7.1 and any other amounts payable in connection with the Repurchase
to the Seller or Servicer of any Eligible Loan and repayments in full of
Eligible Loans shall be deposited directly into the Collateral Account on the
same day of receipt for application in reduction of the Net Investment. Any and
all funds at any time on deposit in, or otherwise to the credit of, the
Collateral Account shall be held by the Administrative Agent for the benefit of
the Owners.

        (c)  The Servicer shall, on the day of receipt of any principal
prepayments in full, deposit such funds into the Collateral Account for
application in reduction of the Net Investment.

        Section 4.7    Establishment of, and Deposits to, Escrow Account.    

        The Servicer shall segregate and hold all funds collected and received
pursuant to an Eligible Loan constituting Escrow Payments separate and apart
from any of its own funds and general assets and shall establish and maintain
one or more Escrow Accounts, in the form of time deposit or demand accounts, in
a manner which shall provide maximum available insurance thereunder. Funds
deposited in any Escrow Account may be invested by the Servicer which shall be
entitled to any investment income therefrom except as otherwise required by law.
Funds deposited in any Escrow Account may be drawn on by the Servicer in
accordance with Section 4.8 hereof.

        The Servicer shall deposit in such Escrow Account within two Business
Days of receipt thereof and retain therein (a) all Escrow Payments collected on
account of the Eligible Loans, for the purpose of effecting timely payment of
any such items as required under the terms of this Agreement; and (b) all
amounts representing Insurance Proceeds or Condemnation Proceeds which are to be
applied to the restoration or repair of any Mortgaged Property.

        The Servicer shall make withdrawals from any Escrow Account only to
effect such payments as are required under this Agreement, as set forth in
Section 4.8 hereof. To the extent required by law, the Servicer shall pay
interest on escrowed funds to the Mortgagor notwithstanding that such Escrow
Account may be non-interest bearing or that interest paid thereon is
insufficient for such purposes.

        The Seller shall deposit to the Escrow Account an amount equal to all
Escrow Payments, Insurance Proceeds and Condemnation Proceeds collected on
account of each Eligible Loan and held by the Seller as of the date of the
transfer of such Eligible Loan to the Administrative Agent (on behalf of the
Owners).

        Section 4.8    Permitted Withdrawals From Escrow Account.    

        Withdrawals from any Escrow Account may be made by the Servicer only:

        (a)  To effect timely payments of ground rents, taxes, assessments,
water rates, mortgage insurance premiums, fire and hazard insurance premiums or
other items constituting Escrow Payments for the related Mortgage;

        (b)  To reimburse the Servicer for any servicing advances made by the
Servicer pursuant to Section 4.9 hereof with respect to a related Eligible Loan,
but only from amounts received on the related Eligible Loan which represent late
collections of Escrow Payments thereunder;

        (c)  To refund to any Mortgagor any funds found to be in excess of the
amounts required under the terms of the related Eligible Loan;

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        (d)  For transfer to the Collection Account and application to reduce
the principal balance of the Eligible Loan in accordance with the terms of the
related Mortgage and Mortgage Note;

        (e)  For application to restoration or repair of the Mortgaged Property
in accordance with the procedures outlined in Section 4.15 hereof; and

        (f)    To pay to the Mortgagor, to the extent required by law, any
interest paid on the funds deposited in the Escrow Account.

        Section 4.9    Payment of Taxes, Insurance and Other Charges.    

        With respect to each Eligible Loan (other than HELOCs), the Servicer
shall maintain accurate records reflecting the status of ground rents, taxes,
assessments, water rates, sewer rents, and other charges which are or may become
a lien upon the Mortgaged Property and the status of PMI Policy premiums, if
any, and fire and hazard insurance coverage and shall obtain, from time to time,
all bills for the payment of such charges (including renewal premiums) and shall
effect payment thereof prior to the applicable penalty or termination date,
employing for such purpose deposits of the Mortgagor in the Escrow Account which
shall have been estimated and accumulated by the Servicer in amounts sufficient
for such purposes, as allowed under the terms of the Mortgage. To the extent
that a Mortgage does not provide for Escrow Payments, the Servicer shall
determine that any such payments are made by the Mortgagor at the time they
first become due. The Servicer assumes full responsibility for the timely
payment of all such bills and shall effect timely payment of all such charges
irrespective of each Mortgagor's faithful performance in the payment of an
Eligible Loan or the making of the Escrow Payments, and the Servicer shall make
such payments.

        Section 4.10    Protection of Accounts; Investment of Funds.    

        Amounts on deposit in each of the Collateral Account, the Principal
Account and the Margin Call Account may at the option of the Seller be invested
in Eligible Investments; provided that in the event that amounts on deposit in
the each such account (which shall be properly titled to insure the funds in
such account on a loan-by-loan basis) exceed the amount fully insured by the
FDIC (the "Insured Amount") the Servicer shall be obligated to invest the excess
amount over the Insured Amount in Eligible Investments on the next Business Day
as such excess amount becomes present in the Collection Account. Monies held in
each of the Collection Account, the Principal Account and the Margin Call
Account shall be invested in Eligible Investments having maturities of no
greater than one day; provided, that if there is no Commercial Paper then
outstanding, monies held in each such account shall be invested in Eligible
Investments having maturities of no greater than 30 days. So long as there are
Eligible Investments having maturities of greater than one day, the Purchaser
shall not issue Commercial Paper. If a Termination Event has not occurred and is
not continuing, earnings on all such Eligible Investments (after deducting any
losses), if any, shall be paid to the Seller. All such Eligible Investments
shall be made in the name of, and shall be payable to, the Administrative Agent.

        Section 4.11    Maintenance of Hazard Insurance.    

        The Servicer shall cause to be maintained for each Eligible Loan (other
than HELOCs) hazard insurance such that all buildings upon the Mortgaged
Property are insured by a generally acceptable insurer rated A:VI or better in
the current Best's Key Rating Guide ("Best's") against loss by fire, hazards of
extended coverage and such other hazards as are customary in the area where the
Mortgaged Property is located, in an amount which is at least equal to the
lesser of (i) the maximum insurable value of the improvements securing such
Eligible Loan and (ii) the greater of (a) the outstanding principal balance of
the Eligible Loan and (b) an amount such that the proceeds thereof shall be
sufficient to prevent the Mortgagor or the loss payee from becoming a
co-insurer.

        If upon origination or acquisition of the Eligible Loan, the related
Mortgaged Property was located in an area identified in the Federal Register by
the Federal Emergency Management Agency as having

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special flood hazards (and such flood insurance has been made available) the
Servicer shall cause to be in effect a flood insurance policy meeting the
requirements of the current guidelines of the Flood Insurance Administration
with a generally acceptable insurance carrier rated A:VI or better in Best's in
an amount representing coverage equal to the lesser of (i) the minimum amount
required, under the terms of coverage, to compensate for any damage or loss on a
replacement cost basis (or the unpaid balance of the mortgage if replacement
cost coverage is not available for the type of building insured) and (ii) the
maximum amount of insurance which is available under the Flood Disaster
Protection Act of 1973, as amended. If at any time during the term of the
Eligible Loan, the Servicer determines in accordance with applicable law and
pursuant to the Guidelines that a Mortgaged Property is located in a special
flood hazard area and is not covered by flood insurance or is covered in an
amount less than the amount required by the Flood Disaster Protection Act of
1973, as amended, the Servicer shall notify the related Mortgagor that the
Mortgagor must obtain such flood insurance coverage, and if said Mortgagor fails
to obtain the required flood insurance coverage within forty-five (45) days
after such notification, the Servicer shall immediately force place the required
flood insurance on the Mortgagor's behalf.

        The Servicer shall cause to be maintained on each Mortgaged Property
earthquake or such other or additional insurance as may be required pursuant to
such applicable laws and regulations as shall at any time be in force and as
shall require such additional insurance, or pursuant to the requirements of any
private mortgage guaranty insurer, or as may be required to conform with
Accepted Servicing Practices.

        In the event that the Administrative Agent or the Servicer shall
determine that the Mortgaged Property should be insured against loss or damage
by hazards and risks not covered by the insurance required to be maintained by
the Mortgagor pursuant to the terms of the Mortgage, the Servicer shall
communicate and consult with the Mortgagor with respect to the need for such
insurance and bring to the Mortgagor's attention the desirability of protection
of the Mortgaged Property.

        The Servicer shall not interfere with the Mortgagor's freedom of choice
in selecting either his insurance carrier or agent; provided, however, that the
Servicer shall not accept any such insurance policies from insurance companies
unless such companies are rated A:VI or better in Best's and are licensed to do
business in the jurisdiction in which the Mortgaged Property is located. The
Servicer shall determine that such policies provide sufficient risk coverage and
amounts, that they insure the property owner, and that they properly describe
the property address. The Servicer shall furnish to the Mortgagor a formal
notice of expiration of any such insurance in sufficient time for the Mortgagor
to arrange for renewal coverage by the expiration date.

        Pursuant to Section 4.5 hereof, any amounts collected by the Servicer
under any such policies (other than amounts to be deposited in any Escrow
Account and applied to the restoration or repair of the related Mortgaged
Property, or property acquired in liquidation of the Eligible Loan, or to be
released to the Mortgagor, in accordance with Accepted Servicing Practices as
specified in Section 4.15 hereof) shall be deposited in the Collection Account
subject to withdrawal pursuant to Section 4.6 hereof.

        Section 4.12    Maintenance of Mortgage Impairment Insurance.    

        If the Servicer shall obtain and maintain a blanket policy insuring
against losses arising from fire and hazards covered under extended coverage on
all of the Eligible Loans, then, to the extent such policy provides coverage in
an amount equal to the amount required pursuant to Section 4.11 hereof and
otherwise complies with all other requirements of Section 4.11, it shall
conclusively be deemed to have satisfied its obligations as set forth in such
Section 4.11. Any amounts collected by the Servicer under any such policy
relating to an Eligible Loan shall be deposited in the Collection Account
subject to withdrawal pursuant to Section 4.6 hereof. Such policy may contain a
deductible clause, in which case, in the event that there shall not have been
maintained on the related Mortgaged Property a

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policy complying with Section 4.11 hereof, and there shall have been a loss
which would have been covered by such policy, the Servicer shall deposit in the
Collection Account at the time of such loss the amount not otherwise payable
under the blanket policy because of such deductible clause, such amount to be
deposited from the Servicer's funds, without reimbursement therefor. Upon
request of the Administrative Agent, the Servicer shall cause to be delivered to
the Administrative Agent a certified true copy of such policy.

        Section 4.13    Maintenance of Fidelity Bond and Errors and Omissions
Insurance.    

        The Servicer shall maintain with responsible companies, at its own
expense, a blanket Fidelity Bond and an Errors and Omissions Insurance Policy,
with broad coverage on all officers, employees or other persons acting in any
capacity requiring such persons to handle funds, money, documents or papers
relating to the Eligible Loans ("Company Employees"). Any such Fidelity Bond and
Errors and Omissions Insurance Policy shall be in the form of the Mortgage
Banker's Blanket Bond and shall protect and insure the Servicer against losses,
including forgery, theft, embezzlement, fraud, errors and omissions and
negligent acts of such Company Employees. Such Fidelity Bond and Errors and
Omissions Insurance Policy also shall protect and insure the Servicer against
losses in connection with the release or satisfaction of an Eligible Loan
without having obtained payment in full of the indebtedness secured thereby. No
provision of this Section 4.13 requiring such Fidelity Bond and Errors and
Omissions Insurance Policy shall diminish or relieve the Servicer from its
duties and obligations as set forth in this Agreement. The minimum coverage
under any such bond and insurance policy shall be at least equal to the
corresponding amounts required by the Guidelines. Upon the request of the
Administrative Agent, the Servicer shall cause to be delivered to the
Administrative Agent a certified true copy of such fidelity bond and insurance
policy.

        Section 4.14    Inspections.    

        The Servicer shall inspect the Mortgaged Property as often as deemed
necessary by the Servicer to assure itself that the value of the Mortgaged
Property is being preserved.

        Section 4.15    Restoration of Mortgaged Property.    

        The Servicer need not obtain the approval of the Administrative Agent or
the Owners prior to releasing any Insurance Proceeds or Condemnation Proceeds to
the Mortgagor to be applied to the restoration or repair of the Mortgaged
Property if such release is in accordance with Accepted Servicing Practices. At
a minimum, the Servicer shall comply with the following conditions in connection
with any such release of Insurance Proceeds or Condemnation Proceeds:

        (a)  The Servicer shall receive satisfactory independent verification of
completion of repairs and issuance of any required approvals with respect
thereto;

        (b)  The Servicer shall take all steps necessary to preserve the
priority of the lien of the Mortgage, including, but not limited to, requiring
waivers with respect to mechanics' and materialmen's liens;

        (c)  The Servicer shall verify that the Eligible Loan is not in default;
and

        (d)  Pending repairs or restoration, the Servicer shall place the
Insurance Proceeds or Condemnation Proceeds in any Escrow Account.

        Section 4.16    Maintenance of PMI Policy; Claims.    

        Except where the Guidelines exempt certain Eligible Loans from this
requirement, for each Eligible Loan (other than FHA Loans, VA Loans, Uninsured
Loans and HELOCs) with a Loan-to-Value Ratio in excess of 80%, the Servicer
shall, without any cost to the Purchaser, maintain or cause the Mortgagor to
maintain in full force and effect a PMI Policy insuring that portion of the
Eligible Loan in excess of 80% of value, and shall pay or shall cause the
Mortgagor to pay the premium thereon on a timely basis, until the Loan-to-Value
Ratio of such Eligible Loan is reduced to

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80% or less. In the event that such PMI Policy shall be terminated, the Servicer
shall, prior to any such termination, obtain from another Qualified Insurer a
comparable replacement policy, with a total coverage equal to the remaining
coverage of such terminated PMI Policy. If the insurer shall cease to be a
Qualified Insurer, the Servicer shall determine whether recoveries under the PMI
Policy are jeopardized for reasons related to the financial condition of such
insurer, it being understood that the Servicer shall in no event have any
responsibility or liability for any failure to recover under the PMI Policy for
such reason. If the Servicer determines that recoveries are so jeopardized, it
shall notify the Administrative Agent and the Mortgagor, if required, and obtain
from another Qualified Insurer a replacement insurance policy. The Servicer
shall not take any action which would result in noncoverage under any applicable
PMI Policy of any loss which, but for the actions of the Servicer, would have
been covered thereunder. In connection with any assumption or substitution
agreement entered into or to be entered into pursuant to Section 6.1 hereof, the
Servicer shall promptly notify the insurer under the related PMI Policy, if any,
of such assumption or substitution of liability in accordance with the terms of
such PMI Policy and shall take all actions which may be required by such insurer
as a condition to the continuation of coverage under such PMI Policy. If such
PMI Policy is terminated as a result of such assumption or substitution of
liability, the Servicer shall obtain a replacement PMI Policy as provided above.

        In connection with its activities as Servicer, the Servicer agrees to
prepare and present claims to the insurer under any PMI Policy in a timely
fashion in accordance with the terms of such PMI Policy and, in this regard, to
take such action as shall be necessary to permit recovery under any PMI Policy
respecting a Defaulted Loan. Pursuant to Section 4.5 hereof, any amounts
collected by the Servicer under any PMI Policy shall be deposited in the
Collection Account, subject to withdrawal pursuant to Section 4.6 hereof.

        Section 4.17    Title, Management and Disposition of REO Property.    

        In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be taken in the name of the Servicer as agent for the Administrative
Agent, or in the event the Servicer is not authorized or permitted to hold title
to real property in the state where the REO Property is located, or would be
adversely affected under the "doing business" or tax laws of such state by so
holding title, the deed or certificate of sale shall be taken in the name of
such Person or Persons as shall be reasonably acceptable to the Administrative
Agent. The Person or Persons holding such title other than the Servicer shall
acknowledge in writing that such title is being held as nominee for the
Servicer.

        The Servicer shall manage, conserve, protect and operate each REO
Property for the Owners solely for the purpose of its prompt disposition and
sale. The Servicer, either itself or through an agent selected by the Servicer,
shall manage, conserve, protect and operate the REO Property in the manner that
it manages, conserves, protects and operates other foreclosed property for its
own account, and in the manner that similar property in the locality as the REO
Property is managed. The Servicer shall attempt to sell the Eligible Loan on
such terms and conditions as the Servicer deems to be in the best interest of
the Purchaser. The Servicer shall dispose of the REO Property in accordance with
Accepted Servicing Practices as soon as possible.

        The Servicer shall also maintain on each REO Property fire and hazard
insurance with extended coverage in an amount which is at least equal to the
maximum insurable value of the improvements which are a part of such property,
liability insurance and, to the extent required and available under the Flood
Disaster Protection Act of 1973, as amended.

        The disposition of REO Property shall be carried out by the Servicer at
such price and, upon such terms and conditions, as the Servicer deems to be in
the best interest of the Purchaser. The proceeds of sale of the REO Property
shall be promptly deposited in any Collection Account.

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        Section 4.18    Servicer Reports.    

        (a)  On or prior to the Monthly Report Date in each month, the Servicer
shall prepare and forward to the Administrative Agent, the Custodian, the Agent
and the CP Dealers (i) a monthly report, substantially in the form of Exhibit D
(a "Servicer Report"), as of the close of business on the last day of the
immediately preceding calendar month (which shall include, without limitation,
(a) the aggregate Outstanding Principal Balance of the Eligible Loans,
(b) Finance Charge Collections and Principal Collections on the Eligible Loans,
(c) the aggregate Outstanding Principal Balance of Delinquent Loans and
Defaulted Loans and (d) the yield on the Eligible Loans, (e) the Adjusted Net
Investment, (f) the Aggregate Adjusted Mark to Market Price, (g) the amount on
deposit in the Collateral Account, if any, and (h) the amount of repayment of
maturing Related Commercial Paper, if any, as of the date of such Report),
(ii) an updated Mortgage Loan Schedule and (iii) if requested by the
Administrative Agent, a listing of all Eligible Loans together with an aging of
such Eligible Loans and such other information concerning actual historical
collections experience and other matters as the Administrative Agent may
reasonably request.

        (b)  On the second (2nd) Business Day after the Net Investment exceeds
the Aggregate Adjusted Mark to Market Price, the Servicer shall prepare and
forward to the Administrative Agent a revised Servicer Report, based on the same
data contained in the last delivered Servicer Report (or any more recently
available information). The revised Servicer Report shall specifically include
the Adjusted Net Investment, the Aggregate Adjusted Mark to Market Price, the
amount on deposit in the Collateral Account, if any, and the amount of repayment
of maturing Related Commercial Paper, if any, as of the date of such Report.

        The Seller shall, or shall cause the Servicer to, furnish to the
Administrative Agent at any time and from time to time, such other or further
information in respect of the Eligible Loans, the Seller and the Mortgagors as
the Administrative Agent may reasonably request.

        Section 4.19    Real Estate Owned Reports.    

        The Servicer shall furnish to the Administrative Agent on or before the
Payment Date a statement with respect to any REO Property covering the operation
of such REO Property and the Servicer's efforts in connection with the sale of
such REO Property and any rental of such REO Property incidental to the sale
thereof. That statement shall be accompanied by such other information as the
Purchaser shall reasonably request.

        Section 4.20    Liquidation Reports.    

        Upon the foreclosure sale of any Mortgaged Property or the acquisition
thereof by the Purchaser pursuant to a deed in lieu of foreclosure, the Servicer
shall submit to the Purchaser a liquidation report with respect to such
Mortgaged Property.

        Section 4.21    Reports of Foreclosures and Abandonments of Mortgaged
Property.    

        Following the foreclosure sale or abandonment of any Mortgaged Property,
the Servicer shall report such foreclosure or abandonment as required pursuant
to Section 6050J of the Code.

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ARTICLE V

SERVICER ADVANCES

        Section 5.1    [RESERVED].    

ARTICLE VI

GENERAL SERVICING PROCEDURES

        Section 6.1    Transfers of Mortgaged Property.    

        The Servicer shall enforce any "due-on-sale" provision in accordance
with Accepted Servicing Practices and applicable law contained in any Mortgage
or Mortgage Note and to deny assumption by the Person to whom the Mortgaged
Property has been or is about to be sold whether by absolute conveyance or by
contract of sale, and whether or not the Mortgagor remains liable on the
Mortgage and the Mortgage Note. When the Mortgaged Property has been conveyed by
the Mortgagor, the Servicer shall, to the extent it has knowledge of such
conveyance, exercise its rights to accelerate the maturity of such Eligible Loan
under the "due-on-sale" clause applicable thereto; provided, however, that the
Servicer shall not exercise such rights if prohibited by law from doing so or if
the exercise of such rights would impair or threaten to impair any recovery
under the related PMI Policy, if any.

        If the Servicer reasonably believes it is unable under applicable law to
enforce such "due-on-sale" clause, the Servicer shall enter into (i) an
assumption and modification agreement with the person to whom such property has
been conveyed, pursuant to which such person becomes liable under the Mortgage
Note and the original Mortgagor remains liable thereon or (ii) in the event that
the Servicer is unable under applicable law to require that the original
Mortgagor remain liable under the Mortgage Note and the Servicer has the prior
consent of the primary mortgage guaranty insurer, a substitution of liability
agreement with the purchaser of the Mortgaged Property pursuant to which the
original Mortgagor is released from liability and the purchaser of the Mortgaged
Property is substituted as Mortgagor and becomes liable under the Mortgage Note.

        Section 6.2    Satisfaction of Mortgages and Release of Mortgage Loan
Files.    

        Upon the payment in full of any Eligible Loan, or the receipt by the
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer shall notify the Administrative Agent.

        If the Servicer satisfies or releases a Mortgage without first having
obtained payment in full of the indebtedness secured by the Mortgage or should
the Servicer otherwise prejudice any rights the Purchaser may have under the
mortgage instruments, upon written demand of the Purchaser, the Servicer shall
repurchase the related Eligible Loan at the Repurchase Price by deposit thereof
in the Collateral Account within two Business Days of receipt of such demand by
the Purchaser for application in reduction of the Net Investment. The Servicer
shall maintain the Fidelity Bond and Errors and Omissions Insurance Policy as
provided for in Section 4.13 hereof insuring the Servicer against any loss it
may sustain with respect to any Eligible Loan not satisfied in accordance with
the procedures set forth herein.

        Section 6.3    Servicing Compensation.    

        As compensation for its services hereunder, Servicer shall be entitled
to the Servicing Fee.

        Section 6.4    Annual Statement as to Compliance.    

        The Servicer shall deliver to the Administrative Agent and the CP
Dealers, on or before April 5 each year beginning in April 1999, an Officer's
Certificate, stating that (i) a review of the activities of the Servicer during
the preceding fiscal year ended December 31 and of performance under this

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Agreement has been made under such officer's supervision, (ii) the Servicer has
complied with the provisions of Article II and Article IV hereof, and (iii) to
the best of such officer's knowledge, based on such review, the Servicer has
fulfilled its obligations in all material respects under this Agreement
throughout such year, or, if there has been a default in the fulfillment of any
such obligation, specifying each such default known to such officer and the
nature and status thereof and the action being taken by the Servicer to cure
such default.

        Section 6.5    Annual Independent Public Accountants' Servicing
Report.    

        On or before April 5 of each year beginning in April 1999, the Servicer,
at its expense, shall cause a firm of independent public accountants which is a
member of the American Institute of Certified Public Accountants to furnish a
statement to the Administrative Agent and the CP Dealers to the effect that such
firm has examined certain documents and records relating to the servicing of the
Eligible Loans and this Agreement and that such firm is of the opinion that the
provisions of Article II and Article IV hereof have been complied with, and
that, on the basis of such examination conducted substantially in compliance
with the Uniform Single Attestation Program for Mortgage Bankers, nothing has
come to their attention which would indicate that such servicing has not been
conducted in compliance therewith, except for (i) such exceptions as such firm
shall believe to be immaterial, and (ii) such other exceptions as shall be set
forth in such statement.

        Section 6.6    Right to Examine Servicer Records.    

        The Administrative Agent and the Agent shall each have the right to
reasonable access to the books, records, or other information of the Servicer,
whether held by the Servicer or by another on its behalf, with respect to or
concerning this Agreement or the Eligible Loans, during regular business hours
or at such other times as may be reasonable under applicable circumstances, upon
reasonable advance notice.

ARTICLE VII

REPURCHASE OBLIGATION

        Section 7.1    Servicer's Purchase Obligations.    

        Upon receipt by the Servicer of notice from the Administrative Agent of
a breach of any representation or warranty of it contained in Section 3.1 of
this Agreement or any action resulting in prejudice to the Owners in accordance
with Section 6.2 hereof, the Servicer shall promptly notify the Seller and
shall, at the direction of the Administrative Agent use its best efforts to cure
and correct any such breach, and, in the event such breach is not cured and
corrected within the applicable 30 day time period, the Servicer shall
repurchase the related Eligible Loan at the Repurchase Price pursuant to
Section 3.3 hereof.

        Upon deposit by the Servicer of the Repurchase Price in the Collateral
Account, the Custodian and the Servicer shall arrange for the Repurchase of
Eligible Loans adversely affected by such breach to the Servicer according to
the Servicer's instructions, and the delivery to the Custodian of any documents
held by the Administrative Agent. In the event of a repurchase, the Servicer
shall, simultaneously with such Repurchase, give written notice to the Seller
and the Agent that such repurchase has taken place, and amend the Mortgage Loan
Schedule to reflect the subtraction of the repurchased Eligible Loan from this
Agreement.

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ARTICLE VIII

SERVICER TO COOPERATE

        Section 8.1    Provision of Information.    

        During the term of this Agreement, the Servicer shall furnish to the
Administrative Agent such periodic, special, or other reports or information,
including the Servicer Report required to be delivered to the Administrative
Agent, the Custodian and the CP Dealers and the Agent on each Payment Date, and
copies or originals of any documents contained in the Mortgage Loan File for
each Eligible Loan, whether or not provided for herein, as shall be necessary,
reasonable, or appropriate with respect to the Owners. All such reports,
documents or information shall be provided by and in accordance with all
reasonable instructions and directions which the Administrative Agent may give.

        The Servicer shall execute and deliver all such instruments and take all
such action as the Administrative Agent and the Custodian may reasonably request
from time to time, in order to effectuate the purposes and to carry out the
terms of this Agreement.

ARTICLE IX

THE SERVICER

        Section 9.1    Indemnification of Third-Party Claims.    

        The Servicer agrees to indemnify and hold harmless each of the Owners,
the Administrative Agent and the CP Dealers against any and all claims, losses,
penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments, and any other costs, fees and expenses that they may sustain in any
way related to the failure of the Servicer to perform its duties and service the
mortgage loans in strict compliance with the terms of this Agreement or for any
losses related to the investment of funds in the Escrow Account. The Servicer
shall immediately notify the Administrative Agent if a claim is made by a third
party with respect to this Agreement or the mortgage loans and the Servicer
shall assume the defense of any such claim and pay all expenses in connection
therewith, including counsel fees, and promptly pay, discharge and satisfy any
judgment or decree which may be entered against the Owners, the Administrative
Agent and the CP Dealers in respect of such claim. The Servicer's
indemnification obligation pursuant to this Section 9.1 shall survive the
termination of this Agreement.

        Section 9.2    Corporate Existence of the Servicer.    

        The Servicer shall keep in full effect its existence, rights and
franchises as a corporation, and shall obtain and preserve its qualification to
do business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement or any of the Eligible Loans and to perform its
duties under this Agreement.

        Section 9.3    Limitation on Liability of Servicer and Others.    

        Neither the Servicer nor any of the directors, officers, employees or
agents of the Servicer shall be under any liability to the Administrative Agent
or any Owner for any action taken or for refraining from the taking of any
action in good faith pursuant to this Agreement, or for errors in judgment;
provided, however, that this provision shall not protect the Servicer or any
such person against any breach of warranties or representations made herein, or
failure to perform its obligations in compliance with any standard of care set
forth in this Agreement, or any liability which would otherwise be imposed by
reason of any breach of the terms and conditions of this Agreement. The Servicer
and any director, officer, employee or agent of the Servicer may rely in good
faith on any document which it in good faith reasonably believes to be genuine
and have been adopted or signed by the proper authorities respecting any matters
arising hereunder. The Servicer shall not be under any obligation to appear in,
prosecute or defend any legal action which is not incidental to its duties to
service the

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Eligible Loans in accordance with this Agreement and which in its opinion may
involve it in any expense or liability; provided, however, that the Servicer
may, with the consent of the Majority Owners undertake any such action which it
may deem necessary or desirable with respect to this Agreement and the rights
and duties of the parties hereto. In such event, the Servicer shall be entitled
to reimbursement from the Purchaser of the reasonable legal expenses and costs
of such action.

        Section 9.4    Limitation on Resignation and Assignment by the
Servicer.    

        The Purchaser has entered into this Agreement with the Servicer in
reliance upon the representations as to the adequacy of its servicing
facilities, plant, personnel, records and procedures, its integrity, reputation
and financial standing, and the continuance thereof. The Servicer shall not
resign from the obligations and duties hereby imposed on it as to any Eligible
Loan except by consent of the Majority Owners and the Administrative Agent or
upon the determination that its duties hereunder are no longer permissible under
applicable law and such incapacity cannot reasonably be cured by the Servicer.
Notice of any such determination permitting the resignation of the Servicer
shall be delivered to each Rating Agency and any such determination shall
evidenced by an Opinion of Counsel to such effect delivered to the
Administrative Agent (on behalf of the Owners) which Opinion of Counsel shall be
in form and substance acceptable to the Administrative Agent. No such
resignation shall become effective until a successor shall have assumed the
Servicer's responsibilities and obligations hereunder in the manner provided in
Section 13.1 hereof, subject to Rating Agency Confirmation.

        Section 9.5    Limitation on Assignment of Right.    

        Except pursuant to a resignation approved pursuant to Section 9.4
hereof, the Servicer shall not assign, sell or otherwise transfer its right to
receive any payments (including the Servicing Fee) hereunder.

ARTICLE X

DEFAULT

        Section 10.1    Servicer Events of Default.    

        Each of the following shall constitute a "Servicer Event of Default" on
the part of the Servicer:

        (a) any failure by the Servicer to observe or perform in any material
respect any of the terms, covenants or agreements on the part of the Servicer
set forth in this Agreement, any Transfer Supplement or in the Custodial
Agreement (other than those set forth in clauses (h), (i) and (m) below) which
continues unremedied for a period of forty-five (45) days after the date on
which the Servicer has actual knowledge of such failure or written notice of
such failure, requiring the failure to be remedied, shall have been given to the
Servicer by the Administrative Agent, Custodian or the Agent;

        (b) any representation, warranty, statement or certificate made by the
Servicer shall prove to have been incorrect in any material respect at the time
when made, and which continues to be incorrect in any material respect for
45 days after actual knowledge or written notice;

        (c) any failure by the Servicer to maintain any required licenses to do
business in any jurisdiction where the Mortgaged Property is located;

        (d) jurisdiction for the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, including bankruptcy,
marshalling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered against the
Servicer and a decree or order shall have remained in force undischarged or
unstayed for a period of 45 days;

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        (e) the Servicer shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings of or relating to the Servicer or
of or relating to all or substantially all of its property;

        (f) the Servicer shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable insolvency, bankruptcy or reorganization statute, make an assignment
for the benefit of its creditors, voluntarily suspend payment of its obligations
or cease its normal business operations for six Business Days;

        (g) the Servicer or PHH Corporation enters into a consent agreement or
otherwise agrees in writing with any federal or state regulatory agency or
authority to restrict its activities, if the default of such agreement by the
Servicer or PHH Corporation entitles such applicable federal or state agency to
place the Servicer in receivership or conservatorship;

        (h) failure of the Servicer to deposit into the Collateral Account on
the date of sale or Securitization of an Eligible Loan the proceeds of any such
sale or Securitization;

        (i) failure of the Servicer to deposit into the Collection Account not
later than two Business Days after receipt by the Servicer of any amounts
required by Section 4.5 hereof to be deposited by the Servicer in the Collection
Account;

        (j) the Seller, Servicer or PHH Corporation shall default on any of its
debt obligations in excess of $50,000,000 in the aggregate;

        (k) failure of the Servicer to be an Approved Seller/Servicer by GNMA,
and at least one of FNMA and FHLMC;

        (l) the ratings of PHH Corporation or its successors and assigns are
withdrawn or are downgraded below "BBB-" or "Baa3" by either Rating Agency; or

        (m) the failure on the part of the Servicer to make any payment or
deposit (not described in clause (h) or (i) above) required under this Agreement
on or before five Business Days after the date such payment or deposit is
required to be made.

        In each and every such case, so long as a Servicer Event of Default
shall not have been remedied, in addition to whatsoever rights the Purchaser may
have at law or in equity to damages, including injunctive relief and specific
performance, the Administrative Agent, by notice in writing to the Servicer, the
Agent, Moody's and S&P may terminate all of the rights and obligations of the
Servicer under this Agreement and in and to the Eligible Loans and the proceeds
thereof other than unpaid Servicing Fees. The Administrative Agent will only
remove the Servicer as described above upon the affirmative vote of the Majority
Owners.

        Upon receipt by the Servicer of such written notice, all authority and
power of the Servicer under this Agreement, whether with respect to the Eligible
Loans or otherwise, shall pass to and be vested in the successor appointed
pursuant to Section 12.1 hereof. Upon written request from the Administrative
Agent, the Servicer shall prepare, execute and deliver to the successor entity
designated by the Administrative Agent any and all documents and other
instruments, place in such successor's possession all Mortgage Loan Files, and
do or cause to be done all other acts or things necessary or appropriate to
effect the purposes of such notice of termination, including but not limited to
the transfer and endorsement or assignment of the Eligible Loans and related
documents, at the Servicer's sole expense. The Servicer shall cooperate with
such successor in effecting the termination of the Servicer's responsibilities
and rights hereunder, including without limitation, the transfer to such
successor for administration by it of all cash amounts which shall at the time
be credited by the Servicer to any Collection Account or Escrow Account or
thereafter received with respect to the Eligible Loans.

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        Section 10.2    Waiver of Defaults.    

        With the consent of the Majority Owners, the Administrative Agent may
waive any default by the Servicer in the performance of its obligations
hereunder and its consequences. Upon any waiver of a past default, such default
shall cease to exist, and any event of default arising therefrom shall be deemed
to have been remedied for every purpose of this Agreement. No such waiver shall
extend to any subsequent or other default or impair any right consequent thereon
except to the extent expressly so waived. Notice of any such waiver shall be
given to each Rating Agency.

ARTICLE XI

TERMINATION AND LIQUIDATION

        Section 11.1    Termination of Agreement.    

        This Agreement shall terminate upon the final payment or other
liquidation (or any advance with respect thereto) of the last Eligible Loan sold
hereunder.

        Section 11.2    Termination of Transfer Obligations.    

        Upon the occurrence and continuance of any of the following conditions,
the Administrative Agent (on behalf of the Owners) shall have the right subject
to the consent of the Majority Owners to notify ("Notice of Termination") the
Seller that the commitment of the Administrative Agent (on behalf of the Owners)
to purchase Eligible Loans from the Seller shall terminate (each, a "Termination
Event"):

        (a) any representation, warranty, statement, or certification made by
PHH Corporation in its capacity as Guarantor of the Seller or Servicer shall
prove to have been false or misleading in any material respect as of the time
when made, and which continues to be incorrect in any material respect for a
period of forty-five (45) days after written notice;

        (b) the failure on the part of the Seller to observe or perform in any
material respect any of the terms, covenants or agreements of the Seller
contained in this Agreement or the Custodial Agreement which failure continues
unremedied for a period of forty-five (45) days after written notice;

        (c) the appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, including bankruptcy, marshalling of assets
and liabilities or similar proceedings, or for the winding-up or liquidation of
its affairs, shall have been entered against the Seller or PHH Corporation and
such decree or order shall have remained in force undischarged or unstayed for a
period of forty-five (45) days;

        (d) the Seller or PHH Corporation shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or relating to
the Seller or PHH Corporation or of or relating to all or substantially all of
its property;

        (e) the Seller or PHH Corporation shall admit in writing its inability
to pay its debts generally as they become due, file a petition to take advantage
of any applicable insolvency, bankruptcy or reorganization statute, make an
assignment for the benefit of its creditors, voluntarily suspend payment of its
obligations or cease its normal business operations for six (6) Business Days;

        (f) failure of the Seller to make a payment to the Administrative Agent
in accordance with Section 2.8 hereof within two (2) Business Days of day on
which such payment is due;

        (g) the ratings assigned to PHH Corporation by any Rating Agency shall
fall below "BBB-" in the case of S&P or "Baa3" in the case of Moody's;

        (h) noncompliance with the Portfolio Aging Limitations;

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        (i) an event of default shall have occurred under the Five Year
Competitive Advance and Revolving Credit Agreement, dated as of March 4, 1997,
among PHH Corporation, as Borrower, and the Lenders referred to therein and The
Chase Manhattan Bank, as Administrative Agent, as the same has been and may at
any time hereafter be further amended, modified or supplemented, and shall
continue for a period of sixty (60) days;

        (j) the Servicer or PHH Corporation enters into a consent agreement or
otherwise agrees in writing with any Federal or state regulatory agency or
authority to restrict its activities, if a default under such agreement by the
Servicer or PHH Corporation entitles such applicable Federal or state agency to
place the Servicer in receivership or conservatorship;

        (k) failure of the Seller or the Servicer to deposit into the Collateral
Account on the date of sale or Securitization of any Mortgage Loans the proceeds
of any such sale or Securitization;

        (l) failure of the Servicer to deposit into the Principal Account or
Collateral Account not later than two (2) Business Days after receipt by the
Servicer of any amounts required to be deposited by the Servicer in the
Principal Account or Collateral Account, as applicable;

        (m) any Servicer Event of Default has occurred and is continuing after
giving effect to any applicable grace period;

        (n) at any time the Outstanding Transfer Price of all Delinquent Loans
shall equal more than seven percent (7%) of the Outstanding Transfer Price of
all Mortgage Loans owned by the Seller at such time; or

        (o) failure of the Seller to make any required Margin Payment as
required by Section 2.11 hereof.

        Upon delivery of a Notice of Termination in the event a Termination
Event occurs and is continuing, the Purchaser will no longer be permitted to
purchase additional Eligible Loans and principal and interest payments on
Eligible Loans and principal proceeds of sales and Securitizations of Eligible
Loans will be deposited into the Collateral Account for application in reduction
of the Net Investment.

        Section 11.3    Termination of Servicing With Respect to Any Eligible
Loan.    

        This Agreement shall terminate with respect to any Eligible Loan upon
the occurrence of the following: (i) the receipt into the Collateral Account of
the proceeds of any sale or Securitization of such Eligible Loan or the
Repurchase Price or Principal Prepayment in full of such Eligible Loan; or
(ii) the effectiveness of the termination of the Company pursuant to
Section 13.1. No termination shall become effective until a successor shall have
assumed the Servicer's responsibilities and obligations hereunder in the manner
provided in Section 13.1.

        Upon written request from the Administrative Agent, the Servicer shall
prepare, execute and deliver to the successor entity designated by the
Administrative Agent any and all documents and other instruments, place in such
successor's possession all Mortgage Loan Files, and do or cause to be done all
other acts or things necessary or appropriate to effect the purposes of such
notice of termination, including but not limited to the transfer and endorsement
or assignment of the Eligible Loans and related documents, at the Servicer's
sole expense. The Servicer shall cooperate with such successor in effecting the
termination of the Servicer's responsibilities and rights hereunder, including
without limitation, the transfer to such successor for administration by it of
all cash amounts which shall at the time be credited by the Servicer to any
Collection Account or Escrow Account or thereafter received with respect to the
Eligible Loans.

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        Section 11.4    Liquidation of Eligible Loans.    

        Upon the occurrence and continuance of any of the following conditions,
the Administrative Agent (on behalf of the Owners) shall have the right subject
to the consent of the Majority Owners to notify ("Notice of Liquidation") the
Seller that the Administrative Agent has determined to sell the Eligible Loans
(on behalf of the Owners) (each, a "Liquidation Event"):

        (a) any representation, warranty, statement, or certification made by
PHH Corporation in its capacity as Guarantor of the Seller or Servicer shall
prove to have been false or misleading in any material respect as of the time
when made, and which continues to be incorrect in any material respect for a
period of ninety (90) days after written notice;

        (b) the failure on the part of the Seller to observe or perform in any
material respect any of the terms, covenants or agreements of the Seller
contained in the Program Documents which failure continues unremedied for a
period of ninety (90) days after written notice;

        (c) the appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, including bankruptcy, marshalling of assets
and liabilities or similar proceedings, or for the winding-up or liquidation of
its affairs, shall have been entered against the Seller or PHH Corporation and
such decree or order shall have remained in force undischarged or unstayed for a
period of sixty (60) days;

        (d) the Seller or PHH Corporation shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or relating to
the Seller or PHH Corporation or of or relating to all or substantially all of
its property;

        (e) the Seller or PHH Corporation shall admit in writing its inability
to pay its debts generally as they become due, file a petition to take advantage
of any applicable insolvency, bankruptcy or reorganization statute, make an
assignment for the benefit of its creditors, voluntarily suspend payment of its
obligations or cease its normal business operations for six (6) Business Days;

        (f) the ratings assigned to PHH Corporation by any Rating Agency shall
fall below "B-" in the case of S&P or "B3" in the case of Moody's;

        (g) an event of default shall have occurred under the Five Year
Competitive Advance and Revolving Credit Agreement, dated as of March 4, 1997,
among PHH Corporation, as Borrower, and the Lenders referred to therein and The
Chase Manhattan Bank, as Administrative Agent, as the same has been and may at
any time hereafter be further amended, modified or supplemented, and shall
continue for a period of sixty (60) days;

        (h) failure of the Seller or the Servicer to deposit into the Collateral
Account not later than five (5) Business Days after the sale or Securitization
of any Eligible Loans the proceeds of any such sale or Securitization;

        (i) failure of the Servicer to deposit into the Principal Account or
Collateral Account not later than ten (10) Business Days after receipt by the
Servicer of any amounts required to be deposited by the Servicer in the
Principal Account or Collateral Account, as applicable; or

        (j) failure of the Seller to make any required Margin Payment as
required by Section 2.11 hereof.

        Upon delivery of a Notice of Liquidation in the event a Liquidation
Event occurs, the Administrative Agent (on behalf of the Owners) will no longer
be permitted to purchase additional Eligible Loans and principal and interest
payments on Eligible Loans and principal proceeds of sales and Securitizations
of Eligible Loans will be used to pay the Owners.

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        Section 11.5    Additional Rights Upon the Occurrence of Certain
Events.    

        (a) If a Liquidation Notice is delivered to the Seller, the Eligible
Loans shall be liquidated in accordance with the following procedures. The
Seller shall on the day such Liquidation Notice is delivered (the "Liquidation
Notice Date") immediately cease to transfer Eligible Loans to the Administrative
Agent (on behalf of the Owners). Notwithstanding any cessation of the transfer
to the Administrative Agent of Eligible Loans, Eligible Loans transferred to the
Administrative Agent (on behalf of the Owners) prior to the occurrence of such
Liquidation Event and Collections accrued in respect of such the Eligible Loans
shall continue to be allocated and paid in accordance with Articles II and IV.
Within 15 days of the Liquidation Notice Date, the Administrative Agent shall
publish a notice in an Authorized Newspaper that a Liquidation Event has
occurred and that the Administrative Agent intends to sell, dispose of or
otherwise liquidate the Outstanding Principal Balances of the Eligible Loans as
described below. The Administrative Agent shall make a reasonable attempt to
solicit the Seller with respect to such proposed sale. The Administrative Agent
shall sell, dispose of or otherwise liquidate the Outstanding Principal Balances
of the Eligible Loans in a commercially reasonable manner and on commercially
reasonable terms, which shall include the solicitation of competitive bids. The
Administrative Agent may obtain a prior determination from any such conservator,
receiver or liquidator that the terms and manner of any proposed sale,
disposition or liquidation are commercially reasonable.

        (b) The proceeds from the sale, disposition or liquidation of the
Outstanding Principal Balances of the Eligible Loans pursuant to subsection
(a) above (net of the Administrative Agent's fees and expenses, including the
fees and expenses of its counsel) shall be treated as Collections on the
Outstanding Principal Balances of the Eligible Loans and shall be allocated and
deposited in accordance with the provisions of Articles II and IV; provided,
however, that the Administrative Agent shall determine conclusively in its sole
discretion the amount of such proceeds which are allocable to Finance Charge
Collections and the amount of such proceeds which are allocable to Principal
Collections. Such proceeds shall be distributed on the Distribution Date
following the date such proceeds are received (the "Liquidation Distribution
Date").

        (c) The Administrative Agent may appoint an agent or agents to assist
with its responsibilities pursuant to this Article XI with respect to
competitive bids. The Administrative Agent may recover its reasonable actual
third party expenses.

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ARTICLE XII

INDEMNIFICATION; EXPENSES; RELATED MATTERS

        Section 12.1    Indemnities by the Seller.

        Without limiting any other rights which the Administrative Agent or the
Owners may have hereunder or under applicable law, the Seller hereby agrees to
indemnify the Purchaser, the Administrative Agent, the APA Purchasers and the CP
Dealers and any successors and permitted assigns and their respective officers,
directors and employees (collectively, "Indemnified Parties"), from and against
any and all damages, losses, claims, liabilities, costs and expenses, including,
without limitation, reasonable attorneys' fees (which such attorneys may be
employees of the APA Purchasers and the CP Dealers or the Administrative Agent,
as applicable) and disbursements (all of the foregoing being collectively
referred to as "Indemnified Amounts"), arising out of or in connection with:

        (i) any dispute, action, suit, litigation or proceeding arising out of
or as a result of (x) this Agreement, the other Transfer Documents, the
ownership or maintenance by the Administrative Agent, the Purchaser or any APA
Purchaser of the Eligible Loans, (y) the use of proceeds of Transfers by the
Seller, or (z) any Eligible Loan; provided that no Indemnified Party shall have
the right to be indemnified under this paragraph (i) in respect of any
litigation instituted by (x) any person (a "Participant") participating in the
interest of any APA Purchaser under the Revolving Asset Purchase Agreement
against any APA Purchaser or the Agent, (y) any APA Purchaser against any
Participant, any APA Purchaser or the Agent, or (z) any holder of any security
of any APA Purchaser (in its capacity as such) against any APA Purchaser, to the
extent any such litigation does not arise out of any misconduct (alleged in good
faith by such APA Purchaser) by or on behalf of the Seller.

        (ii) any representation or warranty (other than a representation or
warranty in Section 3.2 hereof) made by the Seller (including, in its capacity
as the Servicer) or any officers of the Seller (including, in its capacity as
the Servicer) under or in connection with this Agreement, any of the other
Transfer Documents, any Servicer Report or any other information or report
delivered by the Seller or the Servicer pursuant hereto, which shall have been
false or incorrect in any material respect when made or deemed made;

        (iii) the failure by the Seller (including, in its capacity as the
Servicer) to comply with any applicable law, rule or regulation with respect to
any Eligible Loan or the nonconformity of any Eligible Loan with any such
applicable law, rule or regulation;

        (iv) any claim resulting from the sale of merchandise or services by the
Seller, any Affiliate of the Seller or any designee of the Seller to the related
Mortgagor with respect to any Eligible Loan or the furnishing or failure to
furnish such merchandise or services by the Seller, any Affiliate of the Seller
or any designee of the Seller;

        (v) the transfer of an ownership interest in any mortgage loan other
than an Eligible Loan;

        (vi) the failure by the Seller (individually or as Servicer) to comply
with any term, provision or covenant contained in this Agreement or any of the
other Transfer Documents to which it is a party or to perform any of its
respective duties under any Eligible Loan;

        (vii) the Net Investment exceeds the Maximum Net Investment at any time;

        (viii) the failure of the Seller to pay when due any taxes, including
without limitation, sales, excise or personal property taxes payable by the
Seller in connection with any of the Eligible Loans;

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        (ix) any repayment by any Indemnified Party of any amount previously
distributed in reduction of Net Investment which such Indemnified Party believes
in good faith is required to be made;

        (x) any inability to obtain any judgment in or utilize the court or
other adjudication system of, any state in which a Mortgagor may be located as a
result of the failure of the Seller to qualify to do business or file any notice
of business activity report or any similar report; or

        (xi) any action taken by the Seller, or the Servicer (if the Seller or
any Affiliate or designee of the Seller) in the enforcement or collection of any
Eligible Loan;

provided that no Indemnified Party shall have the right to be indemnified
hereunder (x) for its own gross negligence or willful misconduct as determined
by a court of competent jurisdiction, (y) for any lost profits of such
Indemnified Party, or (z) any claim for punitive damages claimed by such
Indemnified Party against the Seller.

        Section 12.2    Indemnity for Taxes, Reserves and Expenses.

        (a) If after December 11, 1998, the adoption of any Law or bank
regulatory guideline or any amendment or change in the interpretation of any
existing or future Law or bank regulatory guideline by any Official Body charged
with the administration, interpretation or application thereof, or the
compliance with any directive of any Official Body (in the case of any bank
regulatory guideline, whether or not having the force of Law):

        (i) shall subject any Indemnified Party to any tax, duty or other charge
(other than Excluded Taxes) with respect to this Agreement, the other Transfer
Documents, the ownership, maintenance or financing of the Eligible Loans or
payments of amounts due hereunder, or shall change the basis of taxation of
payments to any Indemnified Party of amounts payable in respect of this
Agreement, the other Transfer Documents, the ownership, maintenance or financing
of the Eligible Loans or payments of amounts due hereunder or its obligation to
advance funds hereunder, under the Revolving Asset Purchase Agreement or the
credit support furnished by the Program Bank or otherwise in respect of this
Agreement, the other Transfer Documents, the ownership, maintenance or financing
of the Eligible Loans (except for changes in the rate of general corporate,
franchise, net income or other income tax imposed on such Indemnified Party by
the jurisdiction in which such Indemnified Party's principal executive office is
located);

        (ii) shall impose, modify or deem applicable any reserve, special
deposit or similar requirement (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve System)
against assets of, deposits with or for the account of, or credit extended by,
any Indemnified Party or shall impose on any Indemnified Party or on the United
States market for certificates of deposit or the London interbank market any
other condition affecting this Agreement, the other Transfer Documents, the
ownership, maintenance or financing of the Eligible Loans or payments of amounts
due hereunder or its obligation to advance funds hereunder under the Revolving
Asset Purchase Agreement or the credit support provided by the Program Bank or
otherwise in respect of this Agreement, the other Transfer Documents, or the
ownership, maintenance or financing of the Eligible Loans; or

        (iii) imposes upon any Indemnified Party any other expense (including,
without limitation, reasonable attorneys' fees and expenses, and expenses of
litigation or preparation therefor in contesting any of the foregoing) with
respect to this Agreement, the other Transfer Documents, the ownership,
maintenance or financing of the Eligible Loans or payments of amounts due
hereunder or its obligation to advance funds hereunder, under the Revolving
Asset Purchase Agreement or the credit support furnished by the Program Bank or
otherwise

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in respect of this Agreement, the other Transfer Documents, or the ownership,
maintenance or financing of the Eligible Loans,

and the result of any of the foregoing is to increase the cost to such
Indemnified Party with respect to this Agreement, the other Transfer Documents,
the ownership, maintenance or financing of the Eligible Loans, the obligations
hereunder, the funding of any purchases hereunder, the Revolving Asset Purchase
Agreement or the Program Credit Agreement, by an amount deemed by such
Indemnified Party to be material, then, within ten (10) days after demand by
such Indemnified Party through the Administrative Agent, the Seller shall pay to
the Administrative Agent, for the benefit of such Indemnified Party, such
additional amount or amounts as will compensate such Indemnified Party for such
increased cost or reduction.

        (b) If any Indemnified Party shall have determined that after
December 11, 1998, the adoption of any applicable Law or bank regulatory
guideline regarding capital adequacy, or any change therein, or any change in
the interpretation thereof by any Official Body, or any directive regarding
capital adequacy (in the case of any bank regulatory guideline, whether or not
having the force of law) of any such Official Body, has or would have the effect
of reducing the rate of return on capital of such Indemnified Party (or its
parent) as a consequence of such Indemnified Party's obligations hereunder or
with respect hereto to a level below that which such Indemnified Party (or its
parent) could have achieved but for such adoption, change, request or directive
(taking into consideration its policies with respect to capital adequacy) by an
amount deemed by such Indemnified Party to be material, then from time to time,
within ten (10) days after demand by such Indemnified Party through the
Administrative Agent, the Seller shall pay to the Administrative Agent, for the
benefit of such Indemnified Party, such additional amount or amounts as will
compensate such Indemnified Party (or its parent) for such reduction.

        (c) The Administrative Agent will promptly notify the Seller of any
event of which it has knowledge, occurring after December 11, 1998, which will
entitle an Indemnified Party to compensation pursuant to this Section 12.2. A
notice by the Administrative Agent or the applicable Indemnified Party claiming
compensation under this Section and setting forth the additional amount or
amounts to be paid to it hereunder shall be conclusive in the absence of
manifest error. In determining such amount, the Administrative Agent or any
applicable Indemnified Party may use any reasonable averaging and attributing
methods.

        Section 12.3    Taxes.

        All payments made hereunder by the Seller or the Servicer (each, a
"payor") to the Purchaser, any APA Purchaser or the Administrative Agent (each,
a "recipient") shall be made free and clear of and without deduction for any
present or future income, excise, stamp or franchise taxes and any other taxes,
fees, duties, withholdings or other charges of any nature whatsoever imposed by
any taxing authority on any recipient (or any assignee of such parties) (such
nonexcluded items being called "Taxes"), but excluding franchise taxes and taxes
imposed on or measured by the recipient's net income or gross receipts
("Excluded Taxes"). In the event that any withholding or deduction from any
payment made by the payor hereunder is required in respect of any Taxes (other
than Excluded Taxes), then such payor shall:

        (a) pay directly to the relevant authority the full amount required to
be so withheld or deducted;

        (b) promptly forward to the Administrative Agent an official receipt or
other documentation satisfactory to the Administrative Agent evidencing such
payment to such authority; and

        (c) pay to the recipient such additional amount or amounts as is
necessary to ensure that the net amount actually received by the recipient will
equal the full amount such recipient would have received had no such withholding
or deduction been required.

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        Moreover, if any Taxes (other than Excluded Taxes) are directly asserted
against any recipient with respect to any payment received by such recipient
hereunder, the recipient may pay such Taxes and the payor will promptly pay such
additional amounts (including any penalties, interest or expenses) as shall be
necessary in order that the net amount received by the recipient after the
payment of such Taxes (including any Taxes on such additional amount) shall
equal the amount such recipient would have received had such Taxes not been
asserted.

        If the payor fails to pay any Taxes when due to the appropriate taxing
authority or fails to remit to the recipient the required receipts or other
required documentary evidence, the payor shall indemnify the recipient for any
incremental Taxes, interest, or penalties that may become payable by any
recipient as a result of any such failure.

        Section 12.4    Other Costs, Expenses and Related Matters.

        The Seller agrees, upon receipt of a written invoice, to pay or cause to
be paid, and to save each Owner and the Administrative Agent harmless against
liability for the payment of, all reasonable out-of-pocket expenses (including,
without limitation, attorneys', accountant's and other third parties' fees and
expenses, any rating agency fees, any filing fees and expenses incurred by
officers or employees of each Owner and the Administrative Agent, but excluding
salaries and similar overhead costs of each Owner and the Administrative Agent
which are incurred notwithstanding the execution and performance of this
Agreement) incurred by or on behalf of any Owner and the Administrative Agent
(i) in connection with the negotiation, execution, delivery and preparation of
the Transfer Documents and the transactions contemplated by or undertaken
pursuant to or in connection herewith or therewith (including, without
limitation, the perfection or protection of the Eligible Loans) and (ii) from
time to time (a) relating to any requested amendments, waivers or consents under
the Transfer Documents requested by the Seller, (b) arising in connection with
the Owners' or the Administrative Agent's or their enforcement or preservation
of their respective rights (including, without limitation, the perfection and
protection of the Eligible Loans) under the Transfer Documents, or (c) arising
in connection with any audit, dispute, disagreement, litigation or preparation
for litigation involving the Transfer Documents, which audit, dispute,
disagreement, litigation or preparation for litigation directly results from the
Seller's failure to comply with the Seller's obligations (as Seller or Servicer)
under the Transfer Documents (collectively, the "Transaction Costs").

ARTICLE XIII

MISCELLANEOUS PROVISIONS

        Section 13.1    Successor to Servicer.

        Prior to termination of the Servicer's responsibilities and duties under
this Agreement pursuant to Sections 9.4 or 10.1 hereof, the Administrative Agent
shall appoint a successor which shall succeed to all rights and assume all of
the responsibilities, duties and liabilities of the Servicer under this
Agreement prior to the termination of the Servicer's responsibilities, duties
and liabilities under this Agreement. In connection with such appointment and
assumption, the Purchaser may make such arrangements for the compensation of
such successor out of payments on Eligible Loans as it and such successor shall
agree. In the event that the Servicer's duties, responsibilities and liabilities
under this Agreement should be terminated pursuant to the aforementioned
sections, the Servicer shall discharge such duties, responsibilities and
liabilities during the period from the date it acquires knowledge of such
termination until the effective date thereof with the degree of diligence and
prudence which it is obligated to exercise under this Agreement and shall take
no action whatsoever that might impair or prejudice the rights or financial
condition of its successor. The resignation or removal of the Servicer pursuant
to the aforementioned Sections shall not become effective until (i) a successor
shall be appointed pursuant to this Section 13.1 and (ii) notice thereof shall
have been given to Moody's and S&P and the Purchaser shall have received Rating
Agency Confirmation, and such resignation or

64

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removal shall in no event relieve the Servicer of the representations and
warranties made pursuant to Sections 3.1 and 3.2 hereof and the remedies
available to the Purchaser under Section 3.3 hereof, it being understood and
agreed that the provisions of such Sections 3.1, 3.2 and 3.3 shall be applicable
to the Servicer notwithstanding any such sale, assignment, resignation or
termination of the Servicer, or the termination of this Agreement.

        Any successor appointed as provided herein shall execute, acknowledge
and deliver to the Servicer and the Administrative Agent an instrument accepting
such appointment, wherein the successor shall make the representations and
warranties set forth in Section 3.1 hereof, whereupon such successor shall
become fully vested with all the rights, powers, duties, responsibilities,
obligations and liabilities of the Servicer, with like effect as if originally
named as a party to this Agreement. Any termination or resignation of the
Servicer or termination of this Agreement pursuant to Sections 9.4, or 10.1
hereof shall not affect any claims that the Purchaser may have against the
Servicer arising out of the Servicer's actions or failure to act prior to any
such termination or resignation.

        The Servicer shall deliver promptly to the successor Servicer the funds
in any Collection Account and Escrow Account and all Mortgage Loan Files and
related documents and statements held by it hereunder and the Servicer shall
account for all funds and shall execute and deliver such instruments and do such
other things as may reasonably be required to more fully and definitively vest
in the successor all such rights, powers, duties, responsibilities, obligations
and liabilities of the Servicer.

        Section 13.2    Amendment.

        This Agreement may only be amended with the written consent of the
Purchaser, the Seller, the Administrative Agent, the Majority Owners, the
Guarantor and the Servicer, and written notice of such amendment to each Rating
Agency. Any material amendment shall be subject to Rating Agency Confirmation.
The costs and expenses associated with any such amendment shall be borne by the
party requesting the amendment.

        Section 13.3    Governing Law.

        This Agreement shall be construed in accordance with the laws of the
State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws.

        Section 13.4    Duration of Agreement.

        This Agreement shall continue in existence and effect until terminated
as herein provided.

        Section 13.5    Notices.

        All demands, notices and communications hereunder shall be in writing
and shall be deemed to have been duly given if personally delivered at or mailed
by registered mail, postage prepaid, addressed as follows:

(i)if to Cendant Mortgage Corporation:

Cendant Mortgage Services
3000 Leadenhall Road
Mt. Laurel, NJ 08054
Attn: Richard Bradfield
Telephone: 856-917-0107
Telecopy: 856-917-0215
or such other address as may hereafter be furnished to the Purchaser in writing;

65

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(ii)if to the Purchaser:

Sheffield Receivables Corporation
c/o Barclays Bank PLC, New York Branch
222 Broadway
New York, New York 10038
Attn: Andrew E. Shuster
Telephone: (212) 412-7554
Telecopy: (212) 412-6846

(iii)if to the Administrative Agent:

Barclays Bank PLC, New York Branch
222 Broadway
New York, New York 10038
Attn: Andrew E. Shuster
Telephone: (212) 412-7554
Telecopy: (212) 412-6846

(iv)if to the Guarantor:

One Campus Drive
Parsippany, New Jersey 07054
Attn: Mark Johnson
Telephone: 973-496-7491
Telecopy: 973-496-5852

(v)if to Moody's:

Moody's Investors Service, Inc.
99 Church Street
New York, New York 10007
Attn: Leticia Hanson
Telephone: (212) 553-1323
Telecopy: (212) 553-0881

(vi)if to the S&P:

Standard & Poor's
a division of The McGraw-Hill Companies, Inc.
55 Water Street
New York, New York 10041
Attn: Joanne DeSimone
Telephone: (212) 438-2444
Telecopy: (212) 355-4175

        Section 13.6    Severability of Provisions.

        If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be held invalid for any reason whatsoever, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement

        Section 13.7    Relationship of Parties.

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        Nothing herein contained shall be deemed or construed to create a
partnership or joint venture between the parties hereto and the services of the
Servicer shall be rendered as an independent contractor and not as agent for the
Purchaser.

        Section 13.8    Execution; Successors and Assigns.

        This Agreement may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one agreement. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and assigns;
provided, however, that the rights of the Owners to an indemnity from the
Servicer pursuant to Section 3.3 hereof are not assignable and shall inure only
to the benefit of the Owners and to no other Person.

        Section 13.9    Recordation of Assignments of Mortgage.

        To the extent permitted by applicable law, each of the Assignments of
Mortgage is subject to recordation in all appropriate public offices for real
property records in all the counties or other comparable jurisdictions in which
any or all of the Mortgaged Properties are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected at the Purchaser's expense in the event recordation is either necessary
under applicable law or requested by the Purchaser at its sole option.

        Section 13.10    [RESERVED]

        Section 13.11    Non-Petition Agreement.

        Each of the Company, the Administrative Agent, each APA Purchaser, and
the Guarantor agrees not to cause the filing of a petition in bankruptcy against
the Purchaser for failure to pay amounts due under this Repurchase Agreement
until the payment in full of the Obligations and not before one year and one day
(or if longer, the applicable preference period then in effect) have elapsed
since such payment.

        Section 13.12    Waiver of Offset.

        The Servicer agrees to deliver to the Purchaser all amounts required by
this Agreement to be delivered by the Servicer to the Purchaser free and clear
of any offset, counterclaim or other deduction on account of, or in respect of,
any Purchaser to the Servicer hereunder.

        Section 13.13    Limited Recourse.

        The Servicer agrees that the obligations of the Purchaser to the
Servicer under this Agreement are limited recourse obligations of the Purchaser
payable solely from the assets of the Purchaser available for such purposes and
that, upon application of all assets of the Purchaser available for such
purposes, the Servicer shall have no recourse to the Purchaser for any
obligations of the Purchaser to the Servicer to the extent such application does
not provide for full satisfaction and payment of such obligation.

67

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ARTICLE XIV

PHH CORPORATION GUARANTEE

        Section 14.1    Guarantee of Seller's Representations and Warranties,
Servicer's Performance and Payment Obligations.    

        For value received, and in consideration of the financial accommodation
accorded to the Company by the Purchaser under this Repurchase Agreement, PHH
Corporation (the "Guarantor") hereby fully, unconditionally, and irrevocably
guarantees to the Purchaser, the holders of all the holders of the Commercial
Paper and the APA Purchasers (i) with respect to the Seller, the representations
and warranties set forth in Section 3.2 hereof, and (ii) as to the Servicer, the
due performance of, and punctual payment of all amounts payable by, the Company,
in its capacity as Servicer under this Agreement when and as such obligations
hereunder shall become due and, in the case of any payments, payable. The
Guarantor will ensure the performance and payment of every act, duty,
obligation, agreement and responsibility of the Servicer set forth herein.

        In case of the failure or inability of (i) the Seller, regarding its
obligations pursuant to Section 3.3 hereof with respect to a breach of a
representation or warranty made in Section 3.2 hereof, (iii) the Seller, with
respect to its obligations pursuant to Section 2.2(b) and 3.5 hereof and
(iii) the Servicer to punctually perform any such act, duty, obligation,
responsibility or agreement or to pay punctually any such amounts, the Guarantor
hereby agrees, upon written demand by the Purchaser, to, as applicable,
(i) perform any such act, duty, obligation, responsibility or agreement and
(ii) pay or cause to be paid any such amount, punctually when and as the same
shall become due and, in the case of any payment, payable (exclusive of any
grace period).

        (a)  Guarantor hereby agrees that its obligations under this
Section 14.1 constitute a guarantee of performance and payment when due and not
of collection.

        (b)  Guarantor hereby agrees that its obligations under this
Section 14.1 shall be unconditional, irrespective of the validity, regularity or
enforceability of this Repurchase Agreement against the Servicer, the absence of
any action to enforce the Servicer's obligations under this Repurchase
Agreement, any waiver or consent by the Purchaser, or the APA Purchasers with
respect to any provisions thereof, the entry by the Servicer and the Purchaser
into additional transactions under this Repurchase Agreement or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of a guarantor (other than the defenses of statute of limitations or
payment, which are not waived); provided, however, that Guarantor shall be
entitled to exercise any right that the Servicer could have exercised under this
Repurchase Agreement to cure any default in respect of its obligations under
this Repurchase Agreement or to set-off, counterclaim or withhold payment in
respect of any event of default or potential event of default in respect of the
Purchaser or any Affiliate, but only to the extent such right is provided to the
Servicer under this Repurchase Agreement. The Guarantor acknowledges that the
Servicer and the Purchaser may from time to time enter into one or more
transactions pursuant to this Repurchase Agreement and agrees that the
obligations of the Guarantor under this Section 13.1 will upon the execution of
any such transaction by the Servicer and the Purchaser extend to all such
transactions without the taking of further action by the Guarantor.

        (c)  The Guarantor hereby waives (i) promptness, diligence, presentment,
demand of payment, protest, order and, except as set forth in paragraph (a)
hereof, notice of any kind in connection with this Repurchase Agreement and this
Section 14.1, or (ii) any requirement that the Administrative Agent, the
Purchaser or the APA Purchasers exhaust any right to take any action against the
Servicer or any other person prior to or contemporaneously with proceeding to
exercise any right against the Guarantor under this Section 14.1.

        (d)  Each of the parties hereby confirms that it has executed the
Creditor Acknowledgment and Agreement, dated as of December 11, 1998, a form of
which is attached hereto as Exhibit H.

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        IN WITNESS WHEREOF, the Company, the Purchaser, the Guarantor and the
Administrative Agent have caused their names to be signed hereto by their
respective officers thereunto duly authorized as of the day and year first above
written.

    CENDANT MORTGAGE CORPORATION,
        as Seller and Servicer
 
 
By:
/s/  RICHARD J. BRADFIELD      

--------------------------------------------------------------------------------

Name:    Richard J. Bradfield
Title:    Vice President
 
 
SHEFFIELD RECEIVABLES CORPORATION,
        as Purchaser
BY BARCLAYS BANK PLC, NEW YORK BRANCH,
        as attorney-in-fact
 
 
By:
/s/  ANDREW SHUSTER      

--------------------------------------------------------------------------------

Name:    Andrew Shuster
Title:    Director
 
 
PHH CORPORATION, solely in its capacity of Guarantor of the Servicer's
obligations pursuant to Article XIII of this Agreement.
 
 
By:
/s/  DUNCAN H. COCROFT      

--------------------------------------------------------------------------------

Name:    Duncan H. Cocroft
Title:    Executive Vice President and Chief Fiancancial Officer
 
 
BARCLAYS BANK PLC, NEW YORK BRANCH,
        as Administrative Agent
 
 
By:
/s/  ANDREW SHUSTER      

--------------------------------------------------------------------------------

Name:    Andrew Shuster
Title:    Director
Carrying Costs Account No:.
Collateral Account No:
Principal Account No:
Margin Call Account No:

69

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EXHIBIT D

REPURCHASE SUPPLEMENT

[            ], 200    

Cendant Mortgage Corporation
3000 Leadenhall Road
Mt. Laurel, NJ 08054

Repurchase Terms Letter

Ladies and Gentlemen:

        Cendant Mortgage Corporation, a New Jersey corporation (the "Company")
and Barclays Bank PLC, New York Branch, as administrative agent (the
"Administrative Agent") on behalf of the Owners, herewith confirm the terms and
provisions of the Second Amended and Restated Mortgage Loan Repurchase and
Servicing Agreement (the "Repurchase Agreement"), dated as of December 16, 2002
among Sheffield Receivables Corporation, a Delaware corporation, as purchaser,
the Company, as seller and servicer, the Administrative Agent and PHH
Corporation, a Maryland corporation, as guarantor, pursuant to which the Company
and the Administrative Agent agreed upon the terms under which the Company would
from time to time sell mortgage loans (the "Eligible Loans") to the
Administrative Agent. In consideration of the promises and the mutual agreements
herein and therein set forth, the Company and the Administrative Agent, for the
benefit of the Owners, hereby agree to the terms and provisions of the
repurchase of the Eligible Loans described in the Repurchase Schedule attached
hereto as Exhibit I, as set forth below and as described in more detail in the
Repurchase Agreement. Upon execution of this Repurchase Supplement by the
Company and the Administrative Agent and upon receipt of the Repurchase Price
therefor, the Administrative Agent hereby sells, assigns, transfers, sets over
and conveys to the Company all right, title and interest of the Administrative
Agent in, to and under each Eligible Loan identified on the attached Repurchase
Schedule. It is intended that the transfer, assignment and conveyance herein
contemplated constitute a sale of the Eligible Loans, conveying good title
thereto free and clear of any liens, by the Administrative Agent to the Company
and that the Eligible Loans not be part of the Administrative Agent's estate in
the event of insolvency. In the event that the Eligible Loans are held to be
property of the Administrative Agent or if for any other reason, this Repurchase
Supplement is held or deemed to create a security interest in the Eligible
Loans, the parties intend that the Administrative Agent shall be deemed to have
granted, and does hereby grant, to the Company a first-priority perfected
security interest in the Eligible Loans now existing or hereafter arising for
the purpose of securing the obligations of the Administrative Agent under the
Repurchase Agreement, and that the Repurchase Agreement and this Repurchase
Supplement shall each constitute a security agreement under applicable law.

i.   Closing Date:    •    The Repurchase Price shall be paid by the Company to
the Administrative Agent in immediately available funds on such Closing Date.
ii.
 
Repurchase Price:    The purchase price for the Eligible Loan(s) shall be $    •
.
iii.
 
The Eligible Loans:    The Eligible Loans have the characteristics set forth on
the Repurchase Schedule, set forth as Exhibit I attached hereto.
iii.
 
Terms:    All references herein to the Eligible Loans shall be deemed to refer
only to the Eligible Loans described in the Repurchase Schedule attached hereto.
Capitalized terms used herein but not otherwise defined herein shall have the
meanings ascribed to such terms in the Repurchase Agreement.

D-1

--------------------------------------------------------------------------------

        Kindly acknowledge your agreement and consent to the terms of this
letter by signing and returning to us the enclosed duplicate copy hereof.

    Very truly yours,
 
 
BARCLAYS BANK PLC, NEW YORK BRANCH (on
behalf of the Owners),
as Administrative Agent        
 
 
By:
       

--------------------------------------------------------------------------------

Name:
Title:    

Date:                                   
ACCEPTED AND AGREED:
 
 
 
CENDANT MORTGAGE CORPORATION
 
 
 

     
By:
 
   

--------------------------------------------------------------------------------

Name:
Title:      

D-2

--------------------------------------------------------------------------------

Exhibit I to Repurchase Supplement

Mortgage Loan Schedule

(1)identifying number for the Mortgage Loan:

(2)mortgagor's name:

(3)street address of the mortgage property including the state code:

(4)mortgage interest rate:

(5)stated maturity date:

(6)amount of monthly payment:

(7)original principal balance for Mortgage Loans other than HELOCs:

8)outstanding principal balance of HELOCs:

(9)purchase price:

(10)closing date;

(11)FHA/VA Case Number, if applicable;

(12)Note date;

(13)first Due Date; and

(14)MERS MIN#.

D-3

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EXHIBIT G

TRANSFER SUPPLEMENT

        [                  ], 200    

Barclays Bank PLC, New York Branch
222 Broadway
New York, NY 10038

Transfer Terms Letter

Ladies and Gentlemen:

        Cendant Mortgage Corporation, a New Jersey corporation (the "Company")
and Barclays Bank PLC, New York Branch, as administrative agent (the
"Administrative Agent") on behalf of the Owners, herewith confirm the terms and
provisions of the Second Amended and Restated Mortgage Loan Repurchase and
Servicing Agreement (the "Repurchase Agreement"), dated as of December 16, 2002,
among Sheffield Receivables Corporation, a Delaware corporation, as purchaser,
the Company, as seller and servicer, the Administrative Agent and PHH
Corporation, a Maryland corporation, as guarantor, pursuant to which the Company
and the Administrative Agent agreed upon the terms under which the Company would
from time to time sell mortgage loans (the "Eligible Loans") to the
Administrative Agent. In consideration of the promises and the mutual agreements
herein and therein set forth, the Company and the Administrative Agent, for the
benefit of the Owners, hereby agree to the terms and provisions of the sale of
the Eligible Loans described in the Mortgage Loan Schedule attached hereto as
Exhibit I, as set forth below and as described in more detail in the Repurchase
Agreement. Upon execution of this Transfer Supplement by the Company and the
Administrative Agent and upon receipt of the Transfer Price therefor, the
Company hereby sells, assigns, transfers, sets over and conveys to the
Administrative Agent all right, title and interest of the Company in, to and
under each Eligible Loan identified on the attached Mortgage Loan Schedule. It
is intended that the transfer, assignment and conveyance herein contemplated
constitute a sale of the Eligible Loans, conveying good title thereto free and
clear of any liens, by the Company to the Administrative Agent and that the
Eligible Loans not be part of the Company's estate in the event of insolvency.
In the event that the Eligible Loans are held to be property of the Company or
if for any other reason, this Transfer Supplement is held or deemed to create a
security interest in the Eligible Loans, the parties intend that the Company
shall be deemed to have granted, and does hereby grant, to the Administrative
Agent a first-priority perfected security interest in the Eligible Loans now
existing or hereafter arising for the purpose of securing the obligations of the
Company under the Repurchase Agreement, and that the Repurchase Agreement and
this Transfer Supplement shall each constitute a security agreement under
applicable law.

i.Closing Date:    •    . The Transfer Price shall be paid by the Administrative
Agent to the Company in immediately available funds on such Closing Date.

ii.Transfer Price: The purchase price for the Eligible Loan(s) shall be
$    •    .

iii.The Eligible Loans: The Eligible Loans have the characteristics set forth on
the Mortgage Loan Schedule, set forth as Exhibit I attached hereto.

iv.Representations and Warranties: Each representation and warranty of the
Company set forth in Sections 3.1 and 3.2 of the Repurchase Agreement will be
true and correct on the Closing Date as they relate to the Eligible Loans.

G-1

--------------------------------------------------------------------------------

v.Terms: All references herein to the Eligible Loans shall be deemed to refer
only to the Eligible Loans described in the Mortgage Loan Schedule attached
hereto. Capitalized terms used herein but not otherwise defined herein shall
have the meanings ascribed to such terms in the Repurchase Agreement.

        Kindly acknowledge your agreement and consent to the terms of this
letter by signing and returning to us the enclosed duplicate copy hereof.

    Very truly yours,
 
 
CENDANT MORTGAGE CORPORATION
 
 
By:
       

--------------------------------------------------------------------------------

Name:
Title: Date:        

--------------------------------------------------------------------------------

 

ACCEPTED AND AGREED:

BARCLAYS BANK PLC, NEW YORK BRANCH (on behalf of the Owners),
    as Administrative Agent

By:
 
 
     

--------------------------------------------------------------------------------

Name:
Title:  

G-2

--------------------------------------------------------------------------------

Exhibit I to Transfer Supplement

Mortgage Loan Schedule

(1)identifying number for the Mortgage Loan:

(2)mortgagor's name:

(3)street address of the mortgage property including the state code:

(4)mortgage interest rate:

(5)stated maturity date:

(6)amount of monthly payment:

(7)original principal balance for Mortgage Loans other than HELOCs:

(8)outstanding balance for HELOCs:

(9)purchase price:

(10)closing date;

(11)FHA/VA Case Number, if applicable;

(12)Note date;

(13)first Due Date; and

(14)MERS MIN#.

G-3

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EXHIBIT H

CREDITOR ACKNOWLEDGMENT AND AGREEMENT

1.    Acknowledgment by each of the undersigned parties (each a "Holdings
Creditor") under the Mortgage Loan Repurchase and Servicing Agreement, dated as
of December 11, 1998, among Sheffield Receivables Corporation, as Purchaser,
Barclays Bank PLC, New York Branch, as Administrative Agent, Cendant Mortgage
Corporation, as Seller and Servicer and PHH Corporation ("Holdings"), as
Guarantor (the "Holdings Creditor Document"):

        (a)    of the corporate separateness of HFS Mobility Funding Corporation
("Funding") and HFS Mobility Services, Inc. ("Services") from each other and
each of Services and each of its Subsidiaries and Affiliates other than Funding
or any permitted Subsidiary of Funding (each a "Services Person"); and

        (b)    that Funding is a limited purpose corporation whose primary
activities will be restricted in its certificate of incorporation to purchasing
Receivables, Home Purchase Contracts and Other Related Assets from Services,
entering into agreements for the servicing of such assets, transferring such
assets to the Trust and conducting such other activities as it deems necessary
or appropriate to carry out its primary activities.

2.    Each Holdings Creditor agrees that:

        (a)    Funding and Services are not parties to the Holdings Creditor
Document, and the Holdings Creditors are not creditors of, and have no recourse
to, Funding and Services pursuant to the Holdings Creditor Document, and the
Holdings Creditors have no lien on or claim, contractual or otherwise, arising
under the Holdings Creditor Document to the Receivables, Home Purchase
Contracts, Related Assets and other Trust Assets, nor any other assets of
Funding or Services (other than assets which are not purported to be required
under the Transaction Documents and which are transferred to Funding or Services
in violation of the Holdings Creditor Document), including any proceeds thereof
or earnings thereon (other than any proceeds or earnings which were transferred
by Services to Holdings or any subsidiary of Holdings other than Services or
Funding) whether now existing or hereafter acquired and whether tangible or
intangible, including, without limitation, any assets sold or proposed or
purported to be sold to Funding or transferred or purported to be transferred to
the Trustee under the Transaction Documents ("Funding and Services Assets");

        (b)    It will not file, nor join with any other person in filing,
against Funding or Services any involuntary bankruptcy, reorganization,
arrangement, insolvency or liquidation (each an "Insolvency") proceeding under
any Federal or state bankruptcy or similar law at any time other than a date
which is at least one year and one day after all amounts under the Transaction
Documents have been paid in full; provided, however, that (i) the Holdings
Creditors shall have no duty, liability or responsibility with respect to any
such filing by any other person except for duties expressly created by this
Agreement; and (iii) the foregoing shall not limit the rights of the Holdings
Creditors to file any claim in or otherwise take any action (not inconsistent
with the express provisions of this Agreement) permitted or required by
applicable law with respect to any Insolvency proceeding instituted against
Funding or Services by any other person;

        (c)    Without limiting the foregoing, in the event of any Insolvency
proceeding involving Holdings, Services and/or Funding or any other affiliates
of Holdings as debtor, or otherwise, the Trustee, for the benefit of the Agent
and the Holders, shall have a first and prior claim to the Funding and Services
Assets and any claim or rights of the Holdings Creditors pursuant to the
Holdings Creditor Document, contractual or otherwise, shall be, with respect to
such Funding and Services Assets, subject to the prior claims of the Trustee and
Holders until all amounts owing under the Transaction Documents shall have

H-1

--------------------------------------------------------------------------------

been paid in full; and the Holdings Creditors agree to turn over to the Trustee
any amounts received contrary to the provisions of this clause (c);

        (d)    It will not agree to any amendment, supplement or other
modification of this Agreement without the prior written consent of the Majority
Investors;

        (e)    The provisions of this Agreement are made for the benefit of, and
may be relied upon and enforced by, the Trustee, the Agent and the Investor, and
such parties shall be third-party beneficiaries of this Agreement with respect
to this Agreement; and

        (f)    It will not, without the prior written consent of the Majority
Investors, agree to any amendment, supplement or modification of the provisions
of the Holdings Creditor Document which expressly permit the transactions
contemplated by the Transaction Documents without the prior written consent of
the Majority Investors.

3.    The terms "Affiliate," "Agent," "Holders," "Home Purchase Contract,"
"Investors," "Majority Investors," "Program," "Receivables," "Related Assets,"
"Subsidiary," "Transaction Documents," "Trust," "Trust Assets" and "Trustee"
shall have meanings given to such terms in the Pooling and Servicing Agreement
dated as of October 5, 1994 among Funding, Services as the Servicer, the Agent
and the Trustee named therein, as such Agreement is in effect on the date this
Agreement becomes effective (the "Pooling and Servicing Agreement").

4.    As a condition to the acknowledgments and agreements of the Holdings
Creditors herein, it is agreed that each Holdings Creditor may rely on
Section 14.22 of the Pooling and Servicing Agreement, the provisions of which
are attached hereto and each Holdings Creditor shall be deemed to be an
Acknowledging Creditor thereunder.

        Section 14.22 Recourse to CBFC and CBRS.    Except to the extent
expressly provided otherwise in the Transaction Documents, as such Transaction
Documents are in existence on December 11, 1998 without giving effect to any
amendment or modification thereof, any recourse obligations of CBRS (whether as
Seller or as Servicer or otherwise) and/or CBFC arising under this Agreement and
the other Transaction Documents are solely the obligations of CBRS and CBFC,
respectively, and no recourse shall be had by the Trustee, the Agent or any
Investor against any Holdings Person for payment of any such obligation or
claim. In the event of any Insolvency Proceeding involving any Holdings Person,
or otherwise, the Trustee, the Agent and each Investor agrees, solely in its
capacity as a party to the Transaction Documents, and on behalf of itself and
its successors and assigns, under the Transaction Documents, that (i) any right
or claim it may have to the assets of Holdings under any Transaction Document,
shall be limited to the Receivables, Home Purchase Contracts, Related Assets and
other Trust Assets and to the assets of CBFC and CBRS and all proceeds thereof
and earnings thereon (other than any such proceeds or earnings which are
transferred by CBRS to such Holdings Person); (ii) all other assets of such
Holdings Person shall otherwise be subject to the first and prior claims of the
Acknowledging Creditors any amounts received contrary to the provisions of this
sentence; provided that nothing in this Section 14.22 shall limit any claims of
the Trustee, the Agent or any Investor against any Holdings Person to the extent
such claims expressly arise under (i) the Parent Undertaking or (ii) any other
Transaction Documents executed by such Holdings Person as such Transaction
Documents are in existence on December 11, 1998 without giving effect to any
amendment or modification thereof. The Trustee, the Agent and each Investor
agrees that (i) the provisions contained in this Section 14.22 are made for the
benefit of, and may be relied upon by the Acknowledging Creditors and may be
enforced by each Acknowledging Creditor; (ii) each Acknowledging Creditors will,
subject to the foregoing agreement, to be third-party beneficiaries of this
Agreement with respect to this Section 14.22, and (iii) it will not amend,
supplement, or otherwise modify the provisions contained in this Section 14.22
without the prior written consent of such Acknowledging Creditors.

H-2

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        IN WITNESS WHEREOF, the Company, the Purchaser, the Guarantor and the
Administrative Agent have caused their names to be signed hereto by their
respective officers thereunto duly authorized as of the day and year first above
written.

 
 
CENDANT MORTGAGE CORPORATION,
    as Seller and Servicer
 
 
By:
       

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Name:
Title:
 
 
SHEFFIELD RECEIVABLES CORPORATION,
    as Purchaser
By BARCLAYS BANK PLC, NEW YORK BRANCH,
    as attorney-in-fact
 
 
By:
       

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Name:
Title:
 
 
PHH CORPORATION, solely in its capacity of Guarantor of the Servicer's
obligations pursuant to Article XIII of this Agreement.
 
 
By:
       

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Name:
Title:
 
 
BARCLAYS BANK PLC, NEW YORK BRANCH,
as Administrative Agent
 
 
By:
       

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Name:
Title:

H-3

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TABLE OF CONTENTS
ARTICLE I DEFINITIONS
ARTICLE II SALE OF ELIGIBLE LOANS; POSSESSION OF MORTGAGE FILES; BOOKS AND
RECORDS; CUSTODIAL AGREEMENT; DELIVERY OF DOCUMENTS
ARTICLE III REPRESENTATIONS AND WARRANTIES; COVENANTS; REMEDIES AND BREACH
ARTICLE IV ADMINISTRATION AND SERVICING OF ELIGIBLE LOANS
ARTICLE V SERVICER ADVANCES
ARTICLE VI GENERAL SERVICING PROCEDURES
ARTICLE VII REPURCHASE OBLIGATION
ARTICLE VIII SERVICER TO COOPERATE
ARTICLE IX THE SERVICER
ARTICLE X DEFAULT
ARTICLE XI TERMINATION AND LIQUIDATION
ARTICLE XII INDEMNIFICATION; EXPENSES; RELATED MATTERS
ARTICLE XIII MISCELLANEOUS PROVISIONS
ARTICLE XIV PHH CORPORATION GUARANTEE
EXHIBIT D REPURCHASE SUPPLEMENT
Mortgage Loan Schedule
EXHIBIT G TRANSFER SUPPLEMENT
Transfer Terms Letter
Exhibit I to Transfer Supplement Mortgage Loan Schedule
EXHIBIT H CREDITOR ACKNOWLEDGMENT AND AGREEMENT