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                         SAXON ASSET SECURITIES COMPANY
                            ASSET BACKED CERTIFICATES

                       STANDARD TERMS TO TRUST AGREEMENT
                             (February 2000 Edition)
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                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                                              <C>
Preliminary Statement.............................................................................................1
Article I Definitions.............................................................................................1
         Section 1.01.  Defined Terms.............................................................................1
         Section 1.02.  Section References; Calculations; Ratings; Consents......................................15
         Section 1.03.  Certain Matters Relating to any Certificate Insurance Policy.............................15
Article II Mortgage Loan Files...................................................................................16
         Section 2.01.  Mortgage Loan Files......................................................................16
         Section 2.02.  Acceptance by the Trustee................................................................17
         Section 2.03.  Purchase or Substitution of Mortgage Loans by a Seller, a Servicer or Saxon..............19
         Section 2.04.  Representations and Warranties of Saxon..................................................22
         Section 2.05.  Representations and Warranties of the Master Servicer....................................23
Article III Administration of the Trust..........................................................................24
         Section 3.01.  Master Servicer Custodial Account........................................................24
         Section 3.02.  Asset Proceeds Account...................................................................25
         Section 3.03.  Issuing REMIC Accounts...................................................................26
         Section 3.04.  Advances by Master Servicer and Trustee..................................................27
         Section 3.05.  Month End Interest.......................................................................28
         Section 3.06.  Trustee to Cooperate; Release of Mortgage Files..........................................28
         Section 3.07.  Reports to the Trustee; Annual Compliance Statements.....................................29
         Section 3.08.  Title, Management and Disposition of REO Properties......................................29
         Section 3.09.  Amendments to Servicing Agreements; Modification of the Servicing Guides.................32
         Section 3.10.  Oversight of Servicing...................................................................32
         Section 3.11.  Credit Enhancement.......................................................................33
Article IV Reporting/Remitting to Certificateholders.............................................................33
         Section 4.01.  Statements to Certificateholders.........................................................33
         Section 4.02.  Remittance Reports.......................................................................33
         Section 4.03.  Compliance with Withholding Requirements.................................................34
         Section 4.04.  Reports to the Clearing Agency...........................................................34
         Section 4.05.  Preparation of Regulatory Reports........................................................34
Article V The Pooling Interests and the Certificates.............................................................35
         Section 5.01.  Pooling REMIC Interests..................................................................35
         Section 5.02.  The Certificates.........................................................................35
         Section 5.03.  Book-Entry Certificates..................................................................35
         Section 5.04.  Registration of Transfer and Exchange of Certificates....................................36
         Section 5.05.  Restrictions on Transfers................................................................37
         Section 5.06.  Mutilated, Destroyed, Lost or Stolen Certificates........................................38
         Section 5.07.  Persons Deemed Owners....................................................................39
         Section 5.08.  Paying Agent.............................................................................39
Article VI Saxon and the Master Servicer.........................................................................39
         Section 6.01.  Liability of, and Indemnification by, Saxon and the Master Servicer......................39
         Section 6.02.  Merger or Consolidation of Saxon or the Master Servicer..................................39
         Section 6.03.  Limitation on Liability of Saxon, the Master Servicer and Others.........................40
         Section 6.04.  Resignation of the Master Servicer.......................................................40
         Section 6.05.  Compensation to the Master Servicer......................................................40
         Section 6.06.  Assignment or Delegation of Duties by Master Servicer....................................40
Article VII Termination of Servicing and Master Servicing Arrangements...........................................41
         Section 7.01.  Termination and Substitution of Servicing Agreements.....................................41
         Section 7.02.  Termination of Master Servicer; Trustee to Act...........................................41
         Section 7.03.  Notification to Certificateholders.......................................................43
Article VIII Concerning the Trustee..............................................................................43
</TABLE>
                                       1
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<TABLE>
<S>                                                                                                              <C>
         Section 8.01.  Duties of Trustee........................................................................43
         Section 8.02.  Certain Matters Affecting the Trustee....................................................44
         Section 8.03.  Trustee Not Liable for Certificates or Mortgage Loans....................................45
         Section 8.04.  Trustee May Own Certificates.............................................................45
         Section 8.05.  Trustee's Fees...........................................................................45
         Section 8.06.  Eligibility Requirements for Trustee.....................................................46
         Section 8.07.  Resignation and Removal of the Trustee...................................................46
         Section 8.08.  Successor Trustee........................................................................47
         Section 8.09.  Merger or Consolidation of Trustee.......................................................47
         Section 8.10.  Appointment of Trustee or Separate Trustee...............................................47
         Section 8.11.  Appointment of Custodians................................................................48
         Section 8.12.  Trustee May Enforce Claims Without Possession of Certificates............................48
Article IX Termination of the Trust; Purchase of Certificates....................................................48
         Section 9.01.  Termination of Trust.....................................................................48
         Section 9.02.  Optional Termination.....................................................................49
         Section 9.03.  Optional Purchase........................................................................49
         Section 9.04.  Termination Upon Loss of REMIC Status....................................................49
         Section 9.05.  Disposition of Proceeds..................................................................50
Article X REMIC Tax Provisions...................................................................................51
         Section 10.02.  Prohibited Activities...................................................................52
Article XI Miscellaneous Provisions..............................................................................53
         Section 11.01.  Amendment of Trust Agreement............................................................53
         Section 11.02.  Recordation of Agreement; Counterparts..................................................53
         Section 11.03.  Limitation of Rights of Certificateholders..............................................53
         Section 11.04.  Governing Law...........................................................................54
         Section 11.05.  Notices.................................................................................54
         Section 11.06.  Severability of Provisions..............................................................54
         Section 11.07.  Sale of Mortgage Loans..................................................................54
         Section 11.08.  Notice to Rating Agency.................................................................55
</TABLE>

Exhibit A-1       Form of Initial Certification
Exhibit A-2       Form of Final Certification
Exhibit B         Form of Recordation Report
Exhibit C         Form of Remittance Report
Exhibit D         Form of Rule 144A Agreement-QIB Certification
Exhibit E         Form of Transferee Agreement
Exhibit F         Form of Benefit Plan Affidavit
Exhibit G         Form of Residual Transferee Agreement
Exhibit H-1       Form of Disqualified Organization Affidavit
Exhibit H-2       Form of Disqualified Organization Affidavit
Exhibit I         Form of Reportable Exceptions
Exhibit J         Form of Remittance Agency Agreement
Exhibit K         Form of Security Release Certification

                                       2
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                              Preliminary Statement

         Saxon Asset Securities  Company  ("Saxon"),  a bank or mortgage banking
company, as administrative agent (in such capacity, the "Master Servicer"),  and
a bank or trust company,  as trustee (the "Trustee"),  have entered into a Trust
Agreement (the "Trust  Agreement") that provides for the issuance of a series of
asset backed  certificates (the  "Certificates")  that in the aggregate evidence
the entire interest in mortgage-related  assets and certain other property owned
by the trust created by the Trust Agreement (the "Trust").  These Standard Terms
are a part of, and are incorporated by reference into, the Trust Agreement.

        NOW,  THEREFORE,  in consideration  of the mutual  promises,  covenants,
representations  and warranties  made in the Trust  Agreement and as hereinafter
set forth, Saxon, the Master Servicer and the Trustee agree as follows:

                                    Article I
                                   Definitions
        Section 1.01.  Defined Terms

        Except as otherwise  specified or as the context may otherwise  require,
the following  capitalized  terms shall,  whenever used in the Trust  Agreement,
have the respective meanings assigned to them in this Section 1.01.  Capitalized
terms used but not  defined  in the Trust  Agreement  shall have the  respective
meanings assigned to them in a Servicing Guide.

        "Advance":  With respect to any Mortgage  Loan, any advance of principal
and interest,  taxes,  insurance  or  expenses  made  by a Servicer, the Master
Servicer, the Trustee or an Insurer.

        "Affiliate":  Any person or entity  controlling,  controlled by or under
common control with Saxon or the Master Servicer ("control" meaning the power to
direct  the  management  and  policies  of  a  person  or  entity,  directly  or
indirectly,  whether  through  ownership  of voting  securities,  by contract or
otherwise, and "controlling" and "controlled" having meanings correlative to the
foregoing).

        "Annual Compliance  Statement": The Officer's certificate required to be
delivered annually by the Master Servicer pursuant to Section 3.07 hereof.

        "ARM Loan":  An "adjustable  rate" Mortgage Loan, the Mortgage  Interest
Rate of which is subject to periodic  adjustment in accordance with the terms of
the related Mortgage Note.

        "Asset Proceeds Account": The account or accounts created and maintained
for the Trust pursuant to Section 3.02 hereof.

        "Basis Limit  Amount":  With respect to a Mortgage Loan purchased from a
REMIC, an amount equal to the REMIC's  adjusted federal income tax basis in such
Mortgage  Loan as of the date on which  the  purchase  occurs  as set forth in a
certificate of an Officer of the Master  Servicer,  which  certificate  shall be
delivered to the Trustee in connection with any purchase of a Mortgage Loan.

        "Beneficial Owner": With respect to a Book-Entry Certificate, the Person
who is  registered  as owner of such  Certificate  in the books of the  Clearing
Agency for such  Certificate or in the books of a Person  maintaining an account
with such Clearing Agency.

        "Benefit Plan Affidavit":  An affidavit substantially in  the  form  of
Exhibit F attached hereto.

        "Benefit Plan Opinion": An Opinion of Counsel satisfactory to the Master
Servicer  and the Trustee (and upon which Saxon,  the Master  Servicer,  the Tax
Matters  Person and the Trustee are  authorized  to rely) to the effect that the
proposed  transfer  will not (i) cause the assets of the Trust to be regarded as
plan assets for  purposes of the Plan Asset  Regulations,  (ii) give rise to any
fiduciary duty under ERISA on the part of Saxon, a Servicer, the Master Servicer
or the Trustee or (iii)  result in, or be treated as, a  prohibited  transaction
under  Section 406 or 407 of ERISA or section  4975 of the Code  (which  opinion
shall not be a cost or expense of Saxon,  the Master  Servicer,  the Tax Matters
Person or the Trustee).

        "Book-Entry Certificates": Each Class of Certificates, if any, specified
as such in the Trust Agreement.
<PAGE>

        "Borrower":  With respect to each  Mortgage  Loan,  the  individual  or
individuals or any Servicer  obligated to repay the related Mortgage Note.

        "Business Day":  Unless otherwise  provided in the Trust Agreement,  any
day that is not a Saturday, Sunday, or a day on which the Certificate Insurer or
commercial  banking  institutions  in New York  City or the  city in  which  the
Corporate  Trust  Office of the  Trustee,  or the Paying  Agent is  located  are
authorized or obligated by law or executive order to be closed.

        "Certificate":  Any asset backed certificate  designated in  the  Trust
Agreement.

        "Certificate   Guaranty  Insurance  Policy"  means  any  certificate  or
financial guaranty insurance policy identified in the Trust Agreement.

        "Certificate  Insurer"  means  the  issuer,  if  any,  of a  Certificate
Guaranty  Insurance Policy with respect to the  Certificates  named in the Trust
Agreement.

        "Certificate Insurer Default":  The existence and continuance of any of
the following:

         (a)      the Certificate Insurer fails to make a payment required under
the Certificate Insurance Policies in accordance with their terms; or

         (b)      (i)  the entry by a court having  jurisdiction in the premises
of (A) a decree or order for relief in respect of the Certificate  Insurer in an
involuntary  case or proceeding  under any  applicable  United States federal or
state bankruptcy,  insolvency,  rehabilitation,  reorganization or other similar
law or (B) a decree or order  adjudging the  Certificate  Insurer as bankrupt or
insolvent,  or approving as properly  filed a petition  seeking  reorganization,
rehabilitation,  arrangement,  adjustment or composition of or in respect of the
Certificate  Insurer under any applicable United States federal or state law, or
appointing a custodian, receiver, liquidator, rehabilitator,  assignee, trustee,
sequestrator  or  other  similar   official  of  any  substantial  part  of  the
Certificate Insurer's property, or ordering the winding-up or liquidation of its
affairs,  and the continuance of any such decree or order for relief or any such
other  decree or order  unstayed  and in effect  for a period of 60  consecutive
days; or

        (ii) the commencement by the Certificate  Insurer of a voluntary case or
proceeding  under any  applicable  United  States  federal or state  bankruptcy,
insolvency,  reorganization  or  other  similar  law or of  any  other  case  or
proceeding to be  adjudicated  as bankrupt or  insolvent,  or the consent of the
Certificate  Insurer  to the entry of a decree or order for relief in respect of
the  Certificate  Insurer  in  an  involuntary  case  or  proceeding  under  any
applicable  United  States  federal  or  state  bankruptcy,  insolvency  case or
proceeding  against the Certificate  Insurer,  or the consent by the Certificate
Insurer to the filing of such  petition or to the  appointment  of or the taking
possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator
or similar  official of the Certificate  Insurer of any substantial  part of its
property,  or the failure of the  Certificate  Insurer to pay debts generally as
they become due, or the admission by the  Certificate  Insurer in writing of its
inability  to pay its debts  generally  as they  become  due,  or the  taking of
corporate action by the Certificate Insurer in furtherance of any such action;

provided,   however,  the  Certificate  Insurer's  rights  shall  be  reinstated
following a cure, to the satisfaction of the Trustee, of any Certificate Insurer
Default.

        "Certificate of Title  Insurance":  A  certificate  of  title insurance
issued pursuant to a master title insurance policy.

        "Certificate Principal Balance":  Unless otherwise provided in the Trust
Agreement, with respect to each Class of Certificates, on any Distribution Date,
the  aggregate   principal  amount,  if  any,  of  such  Class  of  Certificates
immediately  prior to such  Distribution  Date  (or,  in the  case of the  first
Distribution  Date, an amount equal to the aggregate initial principal amount of
such  Class of  Certificates  as of the  Closing  Date)  less the  amounts to be
applied on such  Distribution  Date to reduce the aggregate  principal amount of
such Class of  Certificates  in  accordance  with the Trust  Agreement  plus any
amount  previously  distributed with respect to principal that is recovered as a
voidable   preference  by  a  trustee  in   bankruptcy   pursuant  to  a  final,
nonappealable order (except, for purposes of effecting the Certificate Insurer's
subrogation  rights, any payment made by the Certificate Insurer with respect to
principal of the Certificates shall not be taken into account).

        "Certificate Register":  The register maintained pursuant to the related
Trust Agreement.

                                       2
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        "Certificate  Registrar":  The registrar designated in the related Trust
Agreement,  or appointed  pursuant to Section 5.02 hereof.

        "Certificateholders":  The holders of the Certificates as  recorded  on
the Certificate Register.

        "Class":  The Certificates of a Series bearing the same designation.

        "Clearing  Agency":  The  Depository  Trust  Company  or  any  successor
organization  or  any  other  organization  registered  as a  "clearing  agency"
pursuant  to Section  17A of the  Exchange  Act and the  regulations  of the SEC
thereunder.

        "Clearing Agency Participant":  A broker,  dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects
book-entry  transfers  and pledges of  securities  deposited  with such Clearing
Agency.

        "Closing Date":  The date on which Certificates are issued by a Trust as
set forth in the Trust Agreement.

        "Code":  The Internal Revenue Code of 1986, as amended.

        "Collateral":  With respect to any Mortgage Loan, the Mortgaged Premises
and any real  property  (other than the related  Mortgaged  Premises),  personal
property, securities, cash, instruments,  contracts, or other documents, if any,
constituting or evidencing  collateral  pledged as additional  security for such
Mortgage Loan.

        "Converted  Mortgage  Loan":  An ARM Loan  with  respect  to  which  the
Borrower has complied with the applicable  requirements of the related  Mortgage
Note to convert the Mortgage  Interest Rate relating  thereto to a fixed rate of
interest  (and with  respect to which the related  Servicer has  processed  such
conversion).

        "Cooperative  Loan":  A  Mortgage  Loan that is  secured by a first lien
against (i) shares  issued by a  cooperative  housing  corporation  and (ii) the
related Borrower's  leasehold  interest in a cooperative  dwelling unit owned by
such cooperative housing corporation.

        "Corporate  Trust Office":  The principal  corporate trust office of the
Trustee,  any  Paying  Agent  or  any  Certificate  Registrar  at  which  at any
particular time its corporate trust business shall be administered.

        "Credit   Enhancement":   Any  certificate  guaranty  insurance  policy,
mortgage pool insurance policy,  special hazard insurance policy, special hazard
fund,  mortgagor  bankruptcy fund,  reserve fund, letter of credit,  Certificate
Guaranty  Insurance Policy,  corporate  guaranty,  third party guaranty or other
form of  insurance  specified in the Trust  Agreement  that is obtained by or on
behalf of Saxon with respect to the Certificates.

        "Credit   Enhancement   Fee":  With  respect  to  each  form  of  Credit
Enhancement,  the monthly premium or fee that is payable to the provider of such
Credit Enhancement as specified in the Trust Agreement.

        "Credit  Enhancement  Fee  Rate":  With  respect  to each form of Credit
Enhancement,  each Mortgage Loan and each Distribution  Date, an amount equal to
the Credit Enhancement Fee with respect to the related Certificates,  divided by
the aggregate Scheduled Principal Balance of the related Mortgage Loans.

        "Custodian":  The Custodian identified in the Trust Agreement that shall
hold all or a portion of the Trustee  Mortgage Loan Files with respect  to  the
Certificates.

        "Cut-Off Date": The date specified as such in the Trust Agreement.

        "Defect  Discovery  Date":  With respect to a Mortgage Loan, the date on
which either the Trustee or the Master  Servicer first discovers a Qualification
Defect affecting such Mortgage Loan.

        "Deleted Mortgage Loan":  A Mortgage Loan replaced or to be replaced  by
a Qualified Substitute Mortgage Loan.

        "Directly Operate":  With respect to any REO Property, the furnishing or
rendering of services to the tenants  thereof,  the  management  or operation of
such REO  Property,  or any use of such  REO  Property  in a trade  or  business
conducted  by the  Trust,  in  each  case  other  than  through  an  Independent
Contractor; provided, however, that the Trustee or the Master Servicer on behalf
of the Trust shall not be considered to Directly  Operate an REO Property solely
because  the Trustee or the Master  Servicer on behalf of the Trust  establishes
rental terms,  chooses tenants,  enters into or renews leases,  deals with taxes
and insurance,  or makes decisions as to repairs or maintenance  with respect to
such REO Property.

                                       3
<PAGE>

        "Disqualified  Organization":  Either  (i) the United  States,  (ii) any
state or political subdivision thereof,  (iii) any foreign government,  (iv) any
international  organization,  (v) any  agency or  instrumentality  of any of the
foregoing,  (vi) any tax-exempt organization (other than a cooperative described
in section 521 of the Code) that is exempt from  federal  income tax unless such
organization  is  subject to tax under the  unrelated  business  taxable  income
provisions   of  the  Code,   (vii)  any   organization   described  in  section
1381(a)(2)(C)  of  the  Code,  or  (vii)  any  other  entity   identified  as  a
disqualified  organization by the REMIC  Provisions.  A corporation  will not be
treated as an  instrumentality  of the United  States or any state or  political
subdivision  thereof if all its  activities  are  subject  to tax and,  with the
exception of the Federal Home Loan Mortgage Corporation, a majority of its board
of directors is not selected by such governmental unit.

        "Disqualified Organization Affidavit": If provided by a Non-U.S. Person,
an affidavit  substantially in the form of Exhibit H-1 attached hereto, and, if
provided by a U.S. Person, an affidavit substantially in the form of Exhibit H-2
attached hereto.

        "Distribution  Account":  With  respect to any Double REMIC  Series,  an
Eligible Account established and maintained with the Paying Agent by the Trustee
for the Issuing REMIC.  Unless otherwise  provided in the Trust  Agreement,  the
Distribution Account shall be considered an asset of the Issuing REMIC.

        "Distribution  Date":  Unless otherwise provided in the Trust Agreement,
the 25th day of each month,  or the next  Business Day if such 25th day is not a
Business Day, commencing in the month following the Closing Date.

        "Double  REMIC  Series":  A  Series  with  respect  to which  two  REMIC
elections are made to form an Issuing REMIC and a Pooling REMIC.

        "Due Date": The first day of the month of the related Distribution Date.

        "Due Period": Unless otherwise provided in the Trust Agreement,  (i) the
period from but excluding the Cut-Off Date to and including the first day of the
month  in which  the  first  Distribution  Date  occurs  and  (ii)  each  period
thereafter  from and  including  the second day of a month to and  including the
first day of the following month.

        "Eligible Account":  Either (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company the long-term
or  short-term  unsecured  debt  obligations  of which  (or a  federal  or state
chartered  depository  institution  or  trust  company  that  is  the  principal
subsidiary  of a holding  company the  long-term or  short-term  unsecured  debt
obligations of which),  respectively,  are rated by each Rating Agency in one of
its two highest  long-term rating  categories and its highest  short-term rating
category  at the time any  amounts  are held on deposit  therein or (ii) a trust
account or  accounts  maintained  with a federal or state  chartered  depository
institution or trust company,  acting in the capacity of a trustee, paying agent
or master servicer,  in a manner  acceptable to each Rating Agency in respect of
mortgage  pass-through  certificates  rated  in one of its  two  highest  rating
categories.  Eligible  Accounts  may be  interest-bearing  accounts or the funds
therein  may be invested  in  Permitted  Investments.  If  qualified  under this
definition,  accounts  maintained  with  the  Trustee  may  constitute  Eligible
Accounts.

        "ERISA":  The Employee Retirement Income  Securities  Act  of 1974,  as
amended.

        "Event of Default":  An  event  with  respect  to the  Master  Servicer
described in Section 7.02 hereof.

        "Exchange Act":  The Securities Exchange Act of 1934, as amended.

        "Final  Certification":  A certification  as to the completeness of each
Trustee  Mortgage  Loan File  substantially  in the form of Exhibit A-2 attached
hereto  provided  by the  Trustee  (or the  Custodian)  on or  before  the first
anniversary of the Closing Date pursuant to Section 2.02(c) hereof.

        "Final Distribution Date": The meaning set forth in Section 9.03 hereof.

        "Fiscal Year":  Unless otherwise  provided in the Trust  Agreement,  the
fiscal year of the Trust shall run from January 1 (or from the Closing  Date, in
the case of the first fiscal year) through the last day of December.

        "FNMA Guidelines": The provisions contained in the guide for selling and
servicing first lien residential  mortgage loans issued from time to time by the
Federal National Mortgage Association.

        "Fraud   Losses":  Losses  on  Mortgage  Loans  resulting  from  fraud,
dishonesty or  misrepresentation  in the origination of such
Mortgage Loans.

                                       4
<PAGE>

        "Gross  Margin":  With  respect to each ARM Loan,  the fixed  percentage
specified in the related  Mortgage Note that is added to or subtracted  from the
Index to determine the Mortgage Interest Rate for such ARM Loan.

        "Guide":  Unless  otherwise  provided  in the Trust  Agreement,  the SMI
Underwriting  Manual and Shipping Manual,  as supplemented and amended from time
to time through the Closing Date.

        "Holders":   The  holders  of  the  Certificates  as  recorded  on  the
Certificate Register.

        "Home Improvement Loan": A mortgage loan that is made to finance actions
or items that  substantially  protect or improve the basic livability or utility
of a  residential  property  and that is secured  by a lien on such  residential
property.

        "Independent Contractor":  Either (i) any Person (other than the Trustee
or the Master  Servicer) that would be an "independent  contractor" with respect
to the Trust  within the meaning of section  856(d)(3)  of the Code if the Trust
were a real estate investment trust (except that, in applying such section, more
than 35% of the outstanding principal balance of any Class shall be deemed to be
more than 35% of the certificates of beneficial  interest of the Trust), so long
as the Trust  does not  receive  or derive  any  income  from such  Person,  the
relationship  between  such  Person  and the Trust is at arm's  length  and such
Person is not an employee of the Trust, the Trustee or the Master Servicer,  all
within the meaning of Treasury  Regulation  Section  1.856-4(b)(5),  or (ii) any
other Person  (including the Trustee or the Master Servicer) upon receipt by the
Trustee of an Opinion of  Counsel,  the  expense of which  shall  constitute  an
Advance if borne by a Servicer or a  subservicer,  to the effect that the taking
of any action in  respect of any REO  Property  by such  Person,  subject to any
conditions therein specified,  that is otherwise herein contemplated to be taken
by an  Independent  Contractor  will not  cause  such REO  Property  to cease to
qualify as "foreclosure  property"  within the meaning of section  860G(a)(8) of
the Code (determined without regard to the exception  applicable for purposes of
section  860D(a) of the Code),  or cause any income  realized in respect of such
REO Property to fail to qualify as Rents From Real Property.

        "Index":  With respect to each ARM Loan, the index rate specified in the
related  Mortgage  Note to which or from  which  the  Gross  Margin  is added or
subtracted, in accordance with the terms of such Mortgage Note, to determine the
Mortgage Interest Rate for such ARM Loan.

        "Initial Certification":  A certification as to the completeness of each
Trustee  Mortgage  Loan File  substantially  in the form of Exhibit A-1 attached
hereto  provided by the Trustee (or the  Custodian) on the Closing Date pursuant
to Section 2.02(b) hereof.

        "Initial Mortgage Loans":  Any of  the  Mortgage  Loans  listed  on the
Mortgage Loan Schedule attached to the Trust Agreement.

        "Initial Optional Termination Date":  As defined in the Trust Agreement.

        "Insurance  Proceeds":  The proceeds paid by any Insurer  pursuant to an
insurance  policy  covering any Mortgage  Loan,  less the expenses of recovering
such  proceeds  and any  Non-Recoverable  Advances  made  with  respect  to such
Mortgage Loan.

        "Insurer":  Any issuer of an insurance policy relating to  the Mortgage
Loans.

        "Interest  Fund":  An Eligible  Account that may be established  for the
purpose of making interest payments on Mortgage Loans for which the Trust is not
due any  payments  until after the first  Distribution  Date.  The amount of the
Interest Fund, if any, shall be set forth in the Trust  Agreement.  The Interest
Fund  shall not be an asset of any REMIC  but  shall be for the  benefit  of the
Certificateholders.

        "Interest Shortfall":  Month End Interest Shortfall  and  Soldiers' and
Sailors' Shortfall.

        "Issuing  REMIC":  With  respect  to any  Double  REMIC  Series,  unless
otherwise provided in the Trust Agreement, the REMIC consisting primarily of the
Distribution Account and the Subaccounts of such Distribution Account.

        "Junior  Mortgage  Loan":  Any  Mortgage  Loan with respect to which the
related Security  Instrument  constitutes a lien of other than first priority on
the related Collateral.

        "Letter of  Credit":  A letter of credit  issued to the  Trustee and its
successors or assigns by any Person whose long-term  unsecured debt  obligations
are rated by each Rating Agency in one of its two highest rating categories.

                                       5
<PAGE>

        "Liquidation  Proceeds":  The proceeds  received in connection  with the
liquidation of any Mortgage Loan as a result of defaults by the related Borrower
(including  any  insurance or guarantee  proceeds  with respect to such Mortgage
Loan),  less the expenses of such liquidation and any Advances made with respect
to such Mortgage Loan.

        "Loan to Value Ratio": With respect to any Mortgage Loan, the ratio that
results when the Unpaid  Principal  Balance of such  Mortgage Loan is divided by
the fair  market  value of the  related  Mortgaged  Premises.  For  purposes  of
determining that ratio,  the fair market value of the Mortgage  Premises must be
reduced by (i) the full amount of any lien on such  Mortgaged  Premises  that is
senior  to the  Mortgage  Loan and (ii) a pro rata  portion  of any lien on such
Mortgaged Premises that is in parity with the Mortgage Loan.

        "Master Servicer":  The bank or mortgage banking company  identified as
such in the Trust Agreement.

        "Master Servicer Advance Amount":  The amount, if any, specified as such
in the Trust Agreement.

        "Master  Servicer  Compensation": The  Master  Servicing  Fee  and  any
additional  compensation  payable to the Master Servicer as specified in Section
6.05 hereof.

        "Master Servicer Custodial Account":  The account described  in Section
3.01 hereof.

        "Master Servicer Errors and Omissions  Insurance Policy":  If the Master
Servicer is not a national banking association, an insurance policy in an amount
and otherwise in form and substance  acceptable  under FNMA Guidelines  insuring
the Master Servicer as the named insured  against  liability for damages arising
out of  errors,  omissions  or  mistakes  committed  in the  performance  of the
services and other  obligations  required of the Master Servicer under the Trust
Agreement and, if permitted by the issuer of such policy,  naming the Trustee as
an additional insured,  and containing a severability of interests provision but
no other  exclusion  or other  provision  that would limit the  liability of any
insured to any other insured.

        "Master  Servicer  Fidelity  Bond":  If  the  Master  Servicer  is not a
national banking  association,  a fidelity bond issued by an insurer and in form
and  substance  acceptable  under FNMA  Guidelines  (i) under which such insurer
agrees to indemnify the Master Servicer for all losses  sustained as a result of
any theft, embezzlement,  fraud or other dishonest act on the part of the Master
Servicer's  directors,  officers or employees and (ii) which provides for limits
of  liability  for each such  director,  officer or employee of not less than an
amount required by such guidelines.

        "Master Servicer  Remittance  Date":  Unless  otherwise  provided in the
Trust Agreement,  (i) each Distribution  Date, if the Asset Proceeds Account and
the Master Servicer  Custodial  Account are maintained at the same bank, or (ii)
the Business Day  preceding  each  Distribution  Date,  if such accounts are not
maintained at the same bank.

        "Master Servicer Reporting Date": Unless otherwise provided in the Trust
Agreement,  the close of  business  on the third  Business  Day  preceding  each
Distribution Date.

        "Master  Servicing  Fee":   Unless  otherwise   provided  in  the  Trust
Agreement,  with respect to each  Distribution  Date and each Mortgage  Loan, an
amount equal to one-twelfth of the Master  Servicing Fee Rate  multiplied by the
Scheduled Principal Balance of such Mortgage Loan as of the preceding Due Date.

        "Master Servicing Fee Rate":  The rate specified as such  in  the Trust
Agreement.

        "Maximum  Lifetime  Mortgage  Interest  Rate":  With respect to each ARM
Loan, the interest  rate, if any, set forth in the related  Mortgage Note as the
maximum Mortgage Interest Rate thereunder.

        "Minimum  Lifetime  Mortgage  Interest  Rate":  With respect to each ARM
Loan, the interest  rate, if any, set forth in the related  Mortgage Note as the
minimum Mortgage Interest Rate thereunder.

        "Month End  Interest":  With respect to any Mortgage Loan  liquidated or
prepaid during a Prepayment  Period,  the  difference  between the interest that
would have been paid on such  Mortgage Loan through the last day of the month in
which such liquidation or prepayment occurred and the interest actually received
by the Servicer  with  respect to such  Mortgage  Loan,  in each case net of the
Servicing  Fee  applicable  thereto.  No Month End  Interest  shall  accrue with
respect to a prepayment of a Mortgage Loan or to Liquidation  Proceeds  received
on account of any Mortgage  Loan during the period from the first day of a month
through the last day of the Prepayment Period ending during such month.

                                       6
<PAGE>

        "Month End Interest Shortfall": The amount of  Month  End  Interest not
paid by a Servicer or the Master Servicer.

        "Monthly Payment":  With respect to any Mortgage Loan and any month, the
scheduled payment of principal and interest due in such month under the terms of
the related Mortgage Note.

        "Monthly Statement": The statement required to be prepared and delivered
to the  Trustee  by the  Master  Servicer  on or  before  each  Master  Servicer
Reporting Date as described in Section 4.01 hereof.

        "Mortgage  Interest Rate": With respect to any Mortgage Loan, the annual
interest rate required to be paid by the related Borrower under the terms of the
related Mortgage Note.

        "Mortgage  Loan":  Any of the Single Family Loans,  Multi-Family  Loans,
Home  Improvement  Loans,  or  Cooperative  Loans sold by Saxon to the Trust and
listed on the Mortgage  Loan Schedule to the Trust  Agreement or any  Subsequent
Sales Agreement and any loans substituted  therefor pursuant to the terms of the
Trust Agreement.

        "Mortgage Loan  Schedule":  The  schedule(s) of the Mortgage Loans which
are attached to the Trust Agreement,  in the case of the Initial Mortgage Loans,
and to the  Subsequent  Sales  Agreement(s)  in the case of Subsequent  Mortgage
Loans,  and set forth  for each  Mortgage  Loan (i) the  Servicer  (Saxon)  Loan
Number, (ii) the Borrower's name, (iii) the original principal balance, (iv) the
Scheduled  Principal  Balance  as of the  Cut-Off  Date and (v) such  additional
information as may be reasonably  requested by the Trustee,  the Master Servicer
or any Certificate Insurer.

        "Mortgage Note":  The note  or  other  evidence  of  indebtedness of  a
Borrower with respect to a Mortgage Loan.

        "Mortgaged  Premises":  With respect to any  Mortgage  Loan other than a
Cooperative Loan, the real property or the leasehold interest, together with any
improvements  thereon,  securing the  indebtedness  of the  Borrower  under such
Mortgage  Loan.  With respect to any  Cooperative  Loan,  the shares issued by a
cooperative  housing  corporation  that secure the  indebtedness of the Borrower
under such Cooperative Loan.

        "Mortgagor  Bankruptcy  Fund": A fund  consisting of: (i) a surety bond,
insurance policy, Letter of Credit, guarantee or other credit instrument, issued
by an insurance company,  surety company, bank, trust company,  savings and loan
association,  financial  institution  or other  Person or (ii)  cash,  Permitted
Investments or a Class of  Certificates  or portion thereof held by or on behalf
of the Trust.  The Mortgagor  Bankruptcy Fund will not be considered an asset of
the Trust or any REMIC, but shall be for the benefit of the  Certificateholders.
The  owner of the  Mortgagor  Bankruptcy  Fund will be  identified  in the Trust
Agreement  and,  to the extent  provided  in the REMIC  Provisions,  any amounts
transferred  by a REMIC to such fund shall be treated as amounts  distributed by
such REMIC to the owner of such fund.

        "Mortgagor  Bankruptcy Losses":  Losses resulting from any court ordered
reduction in the valuation of the Collateral securing a Mortgage Loan or changes
in the  repayment  terms of a Mortgage  Loan in  conjunction  with a  bankruptcy
proceeding of a Borrower or otherwise.

        "Multi-Family  Loan":  A  mortgage  loan that is  secured by a lien on a
rental  apartment  building,  a  cooperative  housing  corporation  or  a  mixed
commercial and residential use property.

        "Negative  Amortization Amount": With respect to each Mortgage Loan, the
excess,  if any, of interest accrued at the related  Mortgage  Interest Rate for
any month over the  greater of (i) the amount of the  Monthly  Payment  for such
month and (ii) the interest received in respect of such month.

        "Net  Rate":  Unless  otherwise  provided in the Trust  Agreement,  with
respect to each  Mortgage  Loan and  Distribution  Date,  the  related  Mortgage
Interest Rate less the sum of the Servicing Fee Rate,  the Master  Servicing Fee
Rate, the Trustee Fee Rate and the Credit Enhancement Fee Rate relating thereto.

        "New  Lease":  Any lease of REO  Property  entered into on behalf of the
Trust, including any lease renewed,  modified or extended on behalf of the Trust
(if the Trustee,  the Master  Servicer,  a Servicer or an agent of the foregoing
has the right to renegotiate the terms of such lease).

        "Non-Recoverability  Certificate": The meaning set forth in Section 3.04
hereof.

        "Non-Recoverable  Advance":  Any  Advance or proposed  Advance  that the
Master  Servicer  or the  Trustee,  as the case  may be,  has  determined  to be
non-recoverable in accordance with Section 3.04 hereof.

                                       7
<PAGE>

        "Non-U.S.  Person":  A foreign  person  within the  meaning of  Treasury
regulation  Section  1.860G-3(a)(1)  (i.e., a person other than (i) a citizen or
resident  of the  United  States,  (ii) a  corporation  or  partnership  that is
organized  under the laws of the United  States or any  jurisdiction  thereof or
therein,  or (iii) an estate or trust that is subject to United  States  federal
income taxation  regardless of the source of its income) who would be subject to
United  States  income tax  withholding  pursuant to section 1441 or 1442 of the
Code and the Treasury  regulations  thereunder on income derived from a Residual
Interest.

        "Officer":  With  respect  to  the  Trustee,  Custodian,  Paying  Agent,
Certificate  Registrar or Master Servicer,  any senior vice president,  any vice
president,  any assistant vice  president,  any assistant  treasurer,  any trust
officer,  any assistant secretary,  or any other officer customarily  performing
functions  similar to those  performed  by the  persons who at the time shall be
such officers,  and also to whom,  with respect to a particular  corporate trust
matter,  such  matter is referred  because of such  officer's  knowledge  of and
familiarity with the particular  subject.  With respect to any other Person, the
chairman of the board, the president, a vice president (however designated), the
treasurer or the controller of such Person.

        "Opinion of Counsel":  A written opinion of counsel,  who may be counsel
for Saxon or the Master  Servicer,  acceptable to the Trustee,  the  Certificate
Insurer and the Master  Servicer.  Except with the consent of each Rating Agency
and the  Certificate  Insurer,  an Opinion of Counsel  may not be  delivered  by
in-house counsel of the entity required to deliver such opinion.

        "Pass-Through  Rate": With respect to each Class of Certificates,  as to
each Distribution Date, the rate specified as such in the Trust Agreement.

        "Paying Agent":  The  paying  agent  designated  in  the  related Trust
Agreement or appointed pursuant to Section 5.08 hereof.

        "Percentage  Interest":  With  respect  to any  Certificate  to  which a
principal  balance is assigned as of the Closing Date,  the portion of the Class
evidenced by such Certificate, expressed as a percentage, the numerator of which
is the  initial  Certificate  Principal  Balance  of  such  Certificate  and the
denominator of which is the aggregate  Certificate  Principal Balance of all the
Certificates  of  such  Class  as of  the  Closing  Date.  With  respect  to any
Certificate to which a principal balance is not assigned as of the Closing Date,
the  portion  of  the  Class  evidenced  by  such  Certificate,  expressed  as a
percentage, as stated on the face of such Certificate.

        "Permitted Investments":  Except as  otherwise  provided  in  the Trust
Agreement, the following investments:

               (a) direct  obligations of, or obligations fully guaranteed as to
        principal   and  interest  by,  the  United  States  or  any  agency  or
        instrumentality  thereof,  provided such  obligations  are backed by the
        full faith and credit of the United States;

               (b) senior  debt  obligations   and   mortgage   participation
        certificates  of  the Federal National  Mortgage  Association  or  the
        Federal Home Loan Mortgage Corporation;

               (c) repurchase  obligations of a depository  institution or trust
        company  (acting as principal)  (the  collateral  for which is held by a
        third party or the Trustee)  with  respect to any security  described in
        clauses (a) or (b) above,  provided  that the  long-term  or  short-term
        unsecured  debt  obligations  of the party  agreeing to repurchase  such
        obligations  are at the time rated by each  Rating  Agency in one of its
        two highest  long-term  unsecured debt rating categories and its highest
        short-term unsecured debt rating category;

               (d)   certificates   of  deposit,   time  deposits  and  bankers'
        acceptances  of any  bank  or  trust  company  (including  the  Trustee)
        incorporated  under the laws of the United States or any state  thereof,
        provided that the long-term  unsecured debt  obligations of such bank or
        trust company at the date of acquisition thereof have been rated by each
        Rating Agency in one of its two highest long-term  unsecured debt rating
        categories  and the short  term  unsecured  debt  rating of such bank or
        trust company at the date of  acquisition  thereof by each Rating Agency
        is the highest short term unsecured debt rating by each Rating Agency;

               (e) any other demand, money market or time deposit or obligation,
        interest-bearing or other security or investment earning a return in the
        nature of  interest  that would not  adversely  affect the then  current
        rating of the  Certificates  by any Rating Agency (without regard to the
        existence of any Credit Enhancement); and

               (f) any other investment approved by the Certificate Insurer;

                                       8
<PAGE>

provided,  however,  that no  investment  described  above  shall  constitute  a
Permitted  Investment if such investment  evidences  either the right to receive
(i) only interest with respect to the obligations  underlying such instrument or
(ii) both principal and interest  payments derived from  obligations  underlying
such  instrument  if the interest and  principal  payments  with respect to such
instrument  provide a yield to maturity at par greater than 120% of the yield to
maturity at par of the underlying  obligations;  and, provided further,  that no
investment  described above shall constitute a Permitted  Investment unless such
investment matures on or before the Business Day preceding the Distribution Date
on which the funds invested  therein are required to be distributed  (or, in the
case of an  investment  that is an obligation  of the  institution  in which the
account is maintained, on or before such Distribution Date).

        "Person":  Any  individual,  corporation,  partnership,  joint  venture,
association,  joint stock company,  trust  (including any beneficiary  thereof),
unincorporated  organization,  government  or  agency or  political  subdivision
thereof or any other entity.

        "Plan":  Any "employee  benefit plan" within the meaning of Section 3(3)
of ERISA, any retirement  arrangement (including individual retirement accounts,
individual  retirement annuities and Keogh plans), and any collective investment
funds, separate accounts,  insurance company general accounts and similar pooled
investment  funds in which such plans or  arrangements  are  invested,  that are
described in or subject to the Plan Asset  Regulations,  ERISA or  corresponding
provisions of the Code.

        "Plan  Asset  Regulations":  The United  States  Department  of  Labor
regulations set forth in 29 C.F.R.ss.2510.3-101,  as amended from time to time.

        "Plan  Investor":  Any Plan, any Person  acting on behalf of a Plan  or
any Person  using the assets of a Plan, as  determined  under  the  Plan  Asset
Regulations.

        "Pooling  REMIC":  With  respect  to any  Double  REMIC  Series,  unless
otherwise provided in the Trust Agreement, the REMIC consisting primarily of the
Mortgage Loans and the Asset Proceeds Account.

        "Pre-Funding  Account": An Eligible Account that may be established with
the Paying Agent for the purpose of  providing  for the purchase by the Trust of
Subsequent Mortgage Loans.

        "Prepayment  Period":  The period specified in each Servicing  Agreement
with respect to which  prepayments  or  Liquidation  Proceeds  with respect to a
Mortgage Loan will be remitted on a Remittance Date.

        "Private Certificate":  Any Certificate designated as such in the Trust
Agreement.

        "Private Subordinated Certificate":  Any Certificate designated as  such
in the Trust Agreement.

        "Public Subordinated Certificate": Any Certificate designated as such in
the Trust Agreement.

        "Purchase Price":  With respect to each Mortgage Loan purchased from the
Trust,  an amount equal to the Unpaid  Principal  Balance of such Mortgage Loan,
plus accrued and unpaid interest thereon at the related  Mortgage  Interest Rate
to the last day of the month in which such purchase  occurs,  and, if a Servicer
is the Purchaser, minus any unreimbursed Advances of principal and interest made
by such Servicer on such Mortgage  Loan and any  outstanding  Servicing Fee owed
with respect to such Mortgage Loan.

        "Purchaser":  The Person that purchases a Mortgage Loan from the  Trust
pursuant to Section 2.03 hereof.

        "Qualification Defect": With respect to a Mortgage Loan, (i) a defective
document in the Trustee  Mortgage  Loan File,  (ii) the absence of a document in
the  Trustee  Mortgage  Loan File,  or (iii) the  breach of any  representation,
warranty or covenant  with  respect to such  Mortgage  Loan made by a Seller,  a
Servicer or Saxon, but only if the affected Mortgage Loan would cease to qualify
as a "qualified mortgage" for purposes of the REMIC Provisions.  With respect to
a Regular Interest or a mortgage certificate  described in section 860G(a)(3) of
the Code,  the failure to qualify as a "qualified  mortgage" for purposes of the
REMIC Provisions.

        "Qualified Institutional Buyer":  Any "qualified institutional buyer" as
defined in clause (a)(1) of Rule 144A.

        "Qualified  Substitute  Mortgage  Loan": A mortgage loan  substituted by
Saxon  or a  Seller  for a  Deleted  Mortgage  Loan  that,  on the  date of such
substitution:  (i) has an Unpaid  Principal  Balance not less than the Unpaid
Principal  Balance of the Deleted  Mortgage  Loan,  (ii) with respect to a fixed
rate  Mortgage  Loan,  has a Mortgage  Interest Rate not less than (and not more
than one  percentage  point in  excess  of) the  Mortgage  Interest  Rate of the
Deleted  Mortgage  Loan,  (iii) has a Net Rate not less than the Net Rate of the
Deleted  Mortgage Loan,

                                       9
<PAGE>

(iv) has a remaining  term to  maturity  ending not later than one year prior to
the "latest possible  maturity date" specified in the Trust  Agreement,  and (v)
complies with each applicable representation,  warranty, and covenant pertaining
to  an  individual  Mortgage  Loan  set  forth  in  the  Trust  Agreement,   was
underwritten on the basis of credit underwriting standards at least as strict as
the credit underwriting standards used with respect to the Deleted Mortgage Loan
and, if a Seller is effecting the  substitution,  complies with each  applicable
representation,  warranty, or covenant pertaining to an individual Mortgage Loan
set  forth  in the  related  Sales  Agreement  or  Subsequent  Sales  Agreement;
provided,  however,  that no ARM Loan may be substituted for a Deleted  Mortgage
Loan unless such Deleted  Mortgage  Loan is also an ARM Loan and, in addition to
meeting the conditions set forth above,  the ARM Loan to be substituted,  on the
date of the  substitution:  (a) provides for a lowest  possible Net Rate that is
not lower than the lowest possible Net Rate for the Deleted  Mortgage Loan and a
highest  possible Net Rate that is not lower than the highest  possible Net Rate
for the Deleted  Mortgage Loan, (b) has a Gross Margin that is not less than the
Gross Margin of the Deleted Mortgage Loan, and (c) is not convertible to a fixed
Mortgage  Interest Rate unless the Deleted  Mortgage Loan is so convertible.  If
more than one mortgage  loan is  substituted  for one or more  Deleted  Mortgage
Loans,  the amount  described in clause (i) of the preceding  sentence  shall be
determined  on the  basis of  aggregate  Unpaid  Principal  Balances,  the rates
described in clauses (ii) and (iii) of the preceding  sentence and clause (a) of
the  proviso  to the  preceding  sentence  shall be  determined  on the basis of
weighted average Mortgage  Interest Rates and Net Rates, as the case may be, the
Gross Margins  described in clause (b) of the proviso to the preceding  sentence
shall be determined on the basis of weighted average Gross Margins.  In the case
of a Trust  for which a REMIC  election  has been or will be made,  a  Qualified
Substitute  Mortgage Loan also shall  satisfy the  following  criteria as of the
date of its substitution for a Deleted Mortgage Loan: (A) the Borrower shall not
be 59 or more days  delinquent in payment on the Qualified  Substitute  Mortgage
Loan,  (B) the  Trustee  Mortgage  Loan File for such  Mortgage  Loan  shall not
contain any material deficiencies in documentation and shall include an executed
Mortgage Note and a recorded Security Instrument; (C) the Loan to Value Ratio of
such  Mortgage  Loan  must be 125% or less on the  date of  origination  of such
Mortgage Loan or, if any of the terms of such Mortgage Loan were modified  other
than in connection with a default or imminent  default on such Mortgage Loan, on
the date of such  modification;  (D) no property securing such Mortgage Loan may
be subject to  foreclosure,  bankruptcy,  or  insolvency  proceedings;  (E) such
Mortgage Loan must be secured by a valid lien on the related Mortgaged Premises;
and (F) shall otherwise constitute an eligible asset for a REMIC under the REMIC
Provisions.

        "Rating Agency":  Each nationally  recognized  statistical rating agency
specified in the Trust  Agreement  that, on the Closing Date,  rated one or more
Classes of Certificates at the request of Saxon.

        "Realized  Interest  Shortfall":  With respect to any Mortgage Loan, the
amount by which the interest  payable thereon  exceeds the net amount  recovered
(including Insurance Proceeds) in liquidation thereof, after payment of expenses
of liquidation and  reimbursement of Advances made with respect to such Mortgage
Loan.

        "Realized  Loss":  With respect to any Mortgage Loan, an amount equal to
the sum of (i) the amount by which the Unpaid Principal  Balance thereof exceeds
the net amount  recovered in  liquidation  thereof (after payment of expenses of
liquidation and reimbursement of Advances), after payment of accrued interest on
such Mortgage Loan and after application of any Insurance  Proceeds with respect
thereto,  and (ii) any  other  types of  principal  loss  with  respect  to such
Mortgage  Loan,  including,  but not limited to,  Mortgagor  Bankruptcy  Losses,
Special Hazard Losses and Fraud Losses.

        "Record Date":  Unless otherwise  provided in the Trust  Agreement,  (i)
with respect to the first  Distribution  Date,  the Closing Date,  and (ii) with
respect to each Distribution Date thereafter, the last Business Day of the month
preceding the month in which such Distribution Date occurs.

        "Recordation  Report":  A report  substantially in the form of Exhibit B
attached hereto  provided by the Trustee (or the Custodian)  pursuant to Section
2.02 hereof identifying those Mortgage Loans for which a Security  Instrument or
an Assignment remains unrecorded.

        "Redeeming Purchase":  The purchase  of  all the  Regular  Certificates
issued by the Trust pursuant to Section 9.01 hereof.

        "Redemption  Account":  An  escrow  account  maintained  by the  Trustee
into  which  any Trust  funds  not  distributed  on a Distribution Date on which
a Redeeming Purchase is made are deposited.  The Redemption Account shall be an
Eligible Account.

        "Redemption Date":  The date, if any, specified as such  in  the  Trust
Agreement.

                                       10
<PAGE>

        "Regular Certificate":  A Certificate that represents a Regular Interest
or a combination of Regular Interests.

        "Regular  Interest":  An interest in a REMIC that is  designated  as  a
"regular interest" in such REMIC for purposes of the REMIC
Provisions.

        "REMIC":  With respect to a Trust, each "real estate mortgage investment
conduit," within the meaning of the REMIC Provisions, relating to such Trust.

        "REMIC Provisions":  The provisions of the Code relating to "real estate
mortgage investment  conduits," which provisions appear at sections 860A through
860G of the Code,  related Code provisions,  and regulations,  announcements and
rulings thereunder, as the foregoing may be in effect from time to time.

        "Remittance  Date":  The date  specified in the  Servicing  Agreement as
the date on which the related Servicer is to make the  remittance  required  by
Section 3.01(b) hereof.

        "Remittance  Report": A report (either a data file or hard copy) that is
prepared  by the Master  Servicer in  accordance  with  Section  4.02 hereof and
contains the information specified in Exhibit C attached hereto.

        "Rents From Real  Property":  With  respect to any REO  Property,  gross
income of the character described in section 856(d) of the Code and the Treasury
regulations thereunder.

        "REO  Disposition":  The receipt by a Servicer of Insurance Proceeds and
other payments and recoveries (including  Liquidation Proceeds) which a Servicer
recovers from the sale or other disposition of an REO Property.

        "REO Property": A Mortgaged Premises acquired by a Servicer on behalf of
the  Certificateholders  through foreclosure or deed in lieu of foreclosure,  as
further described in Section 3.08 hereof.

        "Request for Release":  A release  signed by an Officer of a Servicer in
the form  attached to the Servicing  Agreement as Form 340 of a Servicing  Guide
(or  a  similar   certificate  of  the  Master  Servicer   containing  the  same
information).

        "Reserve Fund":  Unless otherwise  provided in the Trust Agreement,  any
fund in the Trust Estate other than (i) the Asset  Proceeds  Account or (ii) any
other fund that is expressly excluded from a REMIC.

        "Residual  Certificate":  A  Certificate  that  represents  a  Residual
Interest.

        "Residual  Interest":  An interest in a REMIC that is  designated  as a
"residual  interest"  in such REMIC for purposes of the REMIC Provisions.

        "Residual Transferee Agreement":  An agreement substantially in the form
of Exhibit G attached hereto.

        "Rule  144A":  Rule  144A  promulgated  by the  SEC,  as the same may be
amended from time to time.

        "Rule 144A Agreement":  An  agreement  substantially  in  the  form  of
Exhibit D attached hereto.

        "Sales  Agreement":  The  Sales  Agreement  identified  in  the   Trust
Agreement.

        "Saxon":  Saxon Asset Securities Company, a Virginia corporation.

        "Scheduled  Principal  Balance":  Unless otherwise provided in the Trust
Agreement,  with respect to any Mortgage  Loan as of any date of  determination,
the scheduled principal balance thereof as of the Cut-Off Date, increased by the
Negative  Amortization  Amount, if any, with respect thereto, and reduced by (i)
the  principal   portion  of  all  Monthly   Payments  due  on  or  before  such
determination  date,  whether  or not  paid by the  Borrower  or  advanced  by a
Servicer,  the Master  Servicer,  the  Trustee or an  Insurer,  (ii) all amounts
allocable to unscheduled  principal  payments received on or before the last day
of the Prepayment Period preceding such date of determination, and (iii) without
duplication,  the amount of any Realized  Loss that has occurred with respect to
such Mortgage Loan.

        "SEC":  The Securities and Exchange Commission and its successors.

        "Securities Act":  The Securities Act of 1933, as amended.

        "Security Instrument":  With respect to any Mortgage Loan, the mortgage,
deed of trust, deed to secure debt,  security deed, or other instrument creating
a  first,  second,  or more  junior  lien on the  Collateral  that  secures  the
indebtedness of the Borrower under such Mortgage Loan.

                                       11
<PAGE>

        "Seller":  With respect to each  Mortgage  Loan,  SMI or any other party
other than Saxon that  executes a Sales  Agreement  applicable  to such Mortgage
Loan.

        "Senior  Mortgage  Loan":  Any  Mortgage  Loan with respect to which the
related Security Instrument  constitutes a lien of first priority on the related
Collateral.

        "Series":  A group of Certificates issued by the Trust.

        "Servicer":  With respect to each  Mortgage Loan, the Person responsible
for the servicing thereof in accordance with the applicable Servicing Agreement.

        "Servicer  Compensation":    The  Servicing  Fee  and  any   additional
compensation payable to the Servicer.

        "Servicing Agreement": Any agreement between a Servicer and SMI or Saxon
relating  to the  servicing  of Mortgage  Loans  which is in form and  substance
satisfactory to the Master Servicer.

        "Servicing Fee": Unless otherwise provided in the Trust Agreement,  with
respect to each  Distribution  Date and each  Mortgage  Loan, an amount equal to
one-twelfth  of the  applicable  Servicing Fee Rate  multiplied by the Scheduled
Principal Balance of such Mortgage Loan as of the first day of the preceding Due
Period.

        "Servicing Fee Rate":  With respect to each  Mortgage  Loan,  the  rate
specified as such in the Trust Agreement.

        Servicing Guide":  The Saxon Mortgage,  Inc. Servicing Guide for Credit-
Sensitive  Loans, or other loan servicing  guidelines adopted subject to Section
3.09 hereof, by a Servicer as may be referenced in the applicable Servicing
Agreement.

        "Single  Family  Loan":  A mortgage loan that is secured by  a  first,
second,  or more  junior  lien on a one- to  four-family residential property.

        "SMI":  Saxon Mortgage, Inc., a Virginia corporation.

        "Special  Hazard  Fund":  A  fund  consisting  of:  (i) a  surety  bond,
insurance policy, Letter of Credit,  guarantee or other credit instrument issued
by an insurance company,  surety company, bank, trust company,  savings and loan
association,  financial  institution  or other  Person or (ii)  cash,  Permitted
Investments or a Class of  Certificates  or portion thereof held by or on behalf
of the Trust.  The Special  Hazard Fund will not be  considered  an asset of any
REMIC but shall be for the benefit of the  Certificateholders.  The owner of the
Special Hazard Fund will be identified in the Trust Agreement and, to the extent
provided in the REMIC  Provisions,  any amounts  transferred  by a REMIC to such
fund shall be treated as amounts  distributed by such REMIC to the owner of such
fund.

        "Special  Hazard  Insurance  Policy":  An  insurance  policy  covering a
Mortgage Loan against (i) loss by reason of damage to Mortgaged  Premises caused
by certain  hazards not covered by any hazard  insurance  and (ii)  partial loss
from damage to the Mortgaged Premises caused by reason of the application of the
coinsurance clause contained in any Hazard Insurance policy.

        "Special Hazard  Losses":  Losses on Mortgage Loans arising by reason of
damage to Mortgaged  Premises not covered by hazard insurance,  excluding losses
caused by war,  nuclear  reaction,  nuclear or atomic  weapons,  insurrection or
normal wear and tear.

        "Special Tax Consent":  The written  consent of the Holder of a Residual
Certificate to any tax (or risk thereof)  arising out of a proposed  transaction
or activity  that may be imposed  upon such Holder or that may affect  adversely
the value of such Residual Certificate.

        "Special Tax Opinion": An Opinion of Counsel that a proposed transaction
or activity will not (i) affect  adversely the status of any REMIC as a REMIC or
of the Regular  Interests as the  "regular  interests"  therein  under the REMIC
Provisions,  (ii) affect the payment of  interest  or  principal  on the Regular
Interests or (iii)  result in the  encumbrance  of the  Mortgage  Loans by a tax
lien.

        "Standard Terms":  These Standard Terms, as amended or supplemented from
time to time.

        "State":  The jurisdiction specified in the Trust Agreement.

                                       12
<PAGE>

        "Subaccount":  With respect to any Double REMIC Series,  each subaccount
of the  Distribution  Account  that is deemed  established  by the Paying  Agent
solely for purposes of the REMIC Provisions pursuant to Section 3.03(a) hereof.

        "Subsequent  Cut-Off Date":  The time and date specified in a Subsequent
Sales  Agreement  with  respect to those  Subsequent  Mortgage  Loans  which are
acquired by the Trust pursuant to such Subsequent Sales Agreement.

        "Subsequent  Mortgage  Loans":  Any of the Mortgage Loans listed  on  a
Mortgage  Loan Schedule  attached to a Subsequent  Sales Agreement.

        "Subsequent Sales Agreement":  Each Subsequent Sales Agreement  executed
by the Master Servicer (on behalf of itself and the Trustee), the Seller and SMI
by which Subsequent Mortgage Loans are sold to the Trust in the form attached to
the related Trust Agreement.

        "Substitution Shortfall":  The meaning  set forth  in  Section  2.03(h)
hereof.

        "TAPRI  Certificate":  A  certificate  signed  by  the  transferor  of a
Residual  Certificate  stating  whether  such  Certificate  has  "tax  avoidance
potential" as defined in Treasury regulations section 1.860G-3(a)(2).

        "Tax Matters Person": The Person or Persons designated from time to time
under the Trust Agreement to act as the "tax matters person" (within the meaning
of the REMIC Provisions) of a REMIC.

        "Title Insurance  Policy":  A title insurance policy insuring the title
to Mortgaged Premises for the benefit of the holder  of  the  related  Mortgage
Note.

        "Transferee Agreement":  An  agreement substantially  in  the  form  of
Exhibit E attached hereto.

        "Treasury":  The United States Treasury Department.

        "Trust":  The trust formed pursuant to the Trust Agreement.

        "Trust Agreement":  The Trust Agreement among Saxon, the Master Servicer
and the Trustee  relating to the issuance of  Certificates  and into which these
Standard Terms are incorporated by reference.

        "Trust Estate":  The segregated pool of assets  transferred and assigned
and to be  transferred  and  assigned  to the  Trustee  for the  benefit  of the
Certificateholders  by Saxon  pursuant  to the  conveyance  clause  of the Trust
Agreement.

        "Trustee":  The bank or trust company identified as the Trustee in  the
Trust Agreement.

        "Trustee Fee":  Unless otherwise  provided in the Trust Agreement,  with
respect to each  Distribution  Date and each  Mortgage  Loan, an amount equal to
one-twelfth  of the  Trustee  Fee Rate  multiplied  by the  Scheduled  Principal
Balance of such Mortgage Loan as of the first day of the preceding Due Period.

        "Trustee Fee Rate":  The rate specified as such in the Trust Agreement.

        "Trustee Mortgage Loan File": With respect to each Cooperative Loan, the
file containing the documents specified in the Trust Agreement.  With respect to
each Mortgage Loan that is not a Cooperative Loan, unless otherwise specified in
the Trust Agreement, the file containing the following documents,  together with
any other  Mortgage Loan  Documents  held by the Trustee or the  Custodian  with
respect to such Mortgage Loan:

         (a)      the original  Mortgage  Note or lost note  affidavits  in lieu
                  thereof,  provided the total  original  principal  balances of
                  such Mortgage Loans evidenced by such affidavits do not exceed
                  in the aggregate 5% of the total original  principal  balances
                  of the Mortgage Loans on the Mortgage Loan Schedule,  endorsed
                  in blank or to the Trustee or the Custodian with all prior and
                  intervening  endorsements  as  may  be  necessary  to  show  a
                  complete chain of endorsements from the originator  (provided,
                  however,  that SMI may direct such  originator  to endorse the
                  Mortgage Note directly to the Custodian pursuant to the Guide)
                  and  any  related  power  of  attorney,   surety  or  guaranty
                  agreement, Note Assumption Rider or buydown agreement, in each
                  case as has been identified on the Mortgage Loan Schedule;

         (b)      the  original recorded Security  Instrument  with evidence of
                  recordation noted thereon or attached thereto, together  with
                  any  addenda  or  riders  thereto,  in  each  case as has been

                                       13
<PAGE>

                  identified  on  the  Mortgage  Loan Schedule,  or  a  copy  of
                  such  recorded  Security  Instrument  with  such  evidence  of
                  recordation  certified  to   be   true  and  correct  by   the
                  appropriate   governmental   recording  office,  or,  if  such
                  original   Security   Instrument   has   been   submitted  for
                  recordation  but  has  not  been returned from the  applicable
                  public  recording  office,   a  photocopy  of  such   Security
                  Instrument certified  by an Officer of the Servicer or by the
                  title insurance  company providing title insurance in respect
                  of such Security Instrument, the  closing/settlement - escrow
                  agent or the closing attorney to be a true and correct copy of
                  the original Security Instrument submitted for recordation;

         (c)      each original recorded intervening  assignment of the Security
                  Instrument, regardless of the date of such assignment or the
                  date of the  acknowledgement  thereon,  as may be necessary to
                  show a  complete  chain  of  title  from the originator to the
                  related  Servicer, Trustee  or  Custodian,  as   applicable,
                  (provided,  however,  that SMI may direct such  originator  to
                  endorse  the  Mortgage  Note   directly  to   the  Custodian
                  pursuant to  the  Guide) with evidence of recordation  noted
                  thereon  or attached  thereto,  or a copy of such  assignment
                  with such  evidence of recordation certified  to be  true and
                  correct by the  appropriate governmental recording  office or,
                  if any such  Assignment has been submitted for recordation but
                  has  not been returned from the applicable public  recording
                  office or is not otherwise available,a copy of such certified
                  by an Officer of the Servicer to be a true and correct copy of
                  the recorded assignment or the assignment submitted for
                  recordation;

         (d)      if an assignment of the Security Instrument, regardless of the
                  date of such  assignment  or the  date of the  acknowledgement
                  thereon, to the related Servicer has been recorded or sent for
                  recordation, an original assignment of the Security Instrument
                  from such Servicer in blank or to the Trustee or the Custodian
                  in recordable form;

         (e)      in the  case of a Mortgage Loan that is not identified in the
                  Mortgage Loan Schedule as a Junior  Mortgage Loan of the  type
                  described  below,  an original   Title   Insurance   Policy,
                  Certificate  of  Title  Insurance  or a written  commitment to
                  issue  a Title Insurance  Policy  or  Certificate  of  Title
                  Insurance   or   a  copy  of  a   Title  Insurance  Policy  or
                  Certificate  of Title Insurance certified  as true and correct
                  by the  applicable  Insurer  (or,  in  the case of a Mortgage
                  Loan for which the related  Mortgaged  Premises are located in
                  the state of Iowa,  an attorney's  opinion of title or written
                  commitment for  the  issuance  thereof) and, in the case of a
                  Mortgage  Loan identified  as a  Junior Mortgage  Loan with a
                  principal balance  of  $50,000 or less, a  representation  of
                  the Seller in the Sales Agreement that (i) the  related senior
                  mortgage  loan is held by an  institutional  lender  such as a
                  bank, other  financial institution  or mortgage  company  and
                  (ii) the  Seller  has  determined  based  on  a  review  of a
                  property  profile  or title  report acceptable to such Seller
                  that the Borrower has valid title to the Mortgaged Premises;

         (f)      if  indicated  on a  Schedule  to  the  Trust  Agreement  or a
                  Subsequent  Sales  Agreement  (or  otherwise  received  by the
                  Trustee or the Custodian), the original or certified copies of
                  each assumption  agreement,  modification  agreement,  written
                  assurance or substitution agreement, if any; and

         (g)      any other items required by the Rating Agencies as a condition
                  to their provision of written confirmation that the ratings on
                  the rated Certificates will not be downgraded  (without regard
                  to any Certificate  Guaranty  Insurance Policy) or required by
                  the Certificate Insurer.

        "UCC":  The Uniform Commercial Code, as in effect in the State from time
to time.

        "Unpaid  Principal  Balance":  With  respect to any Mortgage  Loan,  the
outstanding principal balance thereof payable by the Borrower under the terms of
the related Mortgage Note.

        "U.S. Person":  A Person other than a Non-U.S. Person.

        "Voting   Rights":   The  portion  of  the  voting  rights  of  all  the
Certificates that is allocated to any Certificate.  Unless otherwise provided in
the  Trust  Agreement,  (i)  if  any  Class  of  Certificates  does  not  have a
Certificate  Principal Balance or has an initial  Certificate  Principal Balance
that is less than or equal to 1% of the aggregate  Certificate Principal Balance
of all the Certificates, then 1% of the Voting Rights shall be allocated to each
Class  of such  Certificates  and the  balance  of the  Voting  Rights  shall be
allocated  among the remaining  Classes of  Certificates  in proportion to their
respective Certificate Principal Balances following the most recent Distribution
Date, and (ii) if no Class of Certificates has an initial Certificate  Principal
Balance that is less than 1% of the aggregate  Certificate  Principal Balance of
all the  Certificates,  then all the Voting Rights shall be allocated  among all
the  Classes of  Certificates  in  proportion  to their  respective  Certificate
Principal  Balances  following the most recent  Distribution Date. Voting Rights

                                       14
<PAGE>

allocated to each Class of Certificates  shall be allocated in proportion to the
respective Percentage Interests of the Holders thereof.

        "Withholding  Agent": The Paying Agent or any other person who is liable
to withhold  federal  income tax from a distribution  on a Residual  Certificate
under section 1441 or 1442 of the Code and the Treasury regulations thereunder.

        Section 1.02.  Section References; Calculations; Ratings; Consents

         (a) Unless otherwise specified herein, all references in these Standard
Terms to sections shall mean sections contained in these Standard Terms.

         (b) Unless otherwise provided in the Trust Agreement,  all calculations
described  herein  shall be made on the basis of a 360-day  year  consisting  of
twelve 30-day months.

         (c) Unless otherwise  provided in the Trust  Agreement,  all references
herein to any  long-term  rating  category  of a Rating  Agency  shall mean such
rating category without regard to any plus or minus or numerical designation.

         (d) Whenever the  consent  of any Person is required  hereunder,  such
Person shall not be entitled to withhold its consent unreasonably.

        Section 1.03.  Certain Matters Relating to  any  Certificate  Insurance
Policy

         (a) The Trustee shall surrender any Certificate Insurance Policy to the
Certificate  Insurer for cancellation  upon termination of the Trust pursuant to
the applicable provisions of the Trust Agreement.

         (b) Saxon makes the representations and warranties set forth in Section
2.04 and the Master Servicer makes the  representations and warranties set forth
in Section 2.05 to the Certificate Insurer.

         (c) All notices, statements, reports, certificates or opinions required
by  the  Trust  Agreement  to be  sent  to  any  party  hereto  or to any of the
Certificateholders  shall  also be sent to the  Certificate  Insurer.  Any  such
opinions  shall be given by counsel  reasonably  acceptable  to the  Certificate
Insurer.  The Trust and the  Trustee  shall make  available  to the  Certificate
Insurer their books and records,  during normal business hours,  for the purpose
of copying and  inspecting any  information  about the  Certificates,  the Trust
Estate or the Certificateholders.

         (d) The  Certificate  Insurer  shall  be  entitled  to  indemnification
pursuant to Section 5.05 and 6.01 hereof and to security or  indemnity  pursuant
to  Section  5.06  hereof  to the  same  extent  as the  parties  named in those
Sections.

         (e)      Unless a Certificate Insurer Default exists and is continuing:

                  (i) The Certificate  Insurer shall be entitled to exercise the
         Voting  Rights,  other  than with  respect to  amendments  to the Trust
         Agreement  pursuant to Section  11.01 hereof  requiring  the consent of
         Certificateholders,  of any Class of the Certificates which are covered
         by a Certificate  Guaranty  Insurance Policy issued by such Certificate
         Insurer and the Certificateholders may not exercise such rights without
         the prior written consent of the Certificate Insurer.

                  (ii) the Certificate Insurer shall have the right to institute
         any  suit,  action or  proceeding  in equity or at law upon or under or
         with respect to the Trust  Agreement if it previously  shall have given
         the Trustee a written notice of default and of the continuance  thereof
         and shall have offered to the Trustee such  reasonable  indemnity as it
         may require against the costs,  expenses and liabilities to be incurred
         therein or thereby  and the  Trustee,  for 15 days after its receipt of
         such notice,  request and offer of indemnity,  shall have  neglected or
         refused to institute any such action, suit or proceeding;

                  (iii) the Certificate  Insurer's prior written consent will be
         required  (A) to remove any  Trustee,  Custodian,  Master  Servicer  or
         Servicer,  (B) to appoint  any  successor  Trustee,  Custodian,  Master
         Servicer or Servicer or (C) to amend the Trust  Agreement,  a Servicing
         Agreement or a Servicing Guide;

                                       15
<PAGE>

                  (iv) the  Certificate  Insurer  may give  notice to the Master
         Servicer  and the  Trustee  with  respect to Events of Default  and may
         direct  the  Trustee  to give any notice  pursuant  to Section  7.02(a)
         hereof  or to  exercise  any right to remove  any  Trustee,  Custodian,
         Master Servicer or Servicer;

                  (v) the  Trustee  shall not  exercise  the right,  without the
         prior written consent of the Certificate  Insurer (A) to consent to the
         resignation of the Master  Servicer  pursuant to Section 6.04 hereof or
         any assignment or delegation of duties pursuant to Section 6.06 hereof;
         (B) consent to the  resignation  of a Servicer  pursuant to a Servicing
         Agreement;  (B) to undertake any litigation  pursuant to the Agreement;
         (C) to  exercise  any of the  remedies  set  forth in  Section  7.01 or
         Section  7.02  hereof;  or (v) to agree to any  amendment  to any Sales
         Agreement  (or the  transfer  or  assignment  thereof),  any  Servicing
         Agreement or the Custody Agreement; and

                  (vi) the Trustee  shall  cooperate  in all  respects  with any
         reasonable request by the Certificate Insurer for action to preserve or
         enforce the  Certificate  Insurer's  rights or  interests  hereunder or
         under the Trust Agreement  without limiting the rights or affecting the
         interests  of the Holders as  otherwise  set forth  herein or under the
         Trust Agreement.

         (f)  Whenever  reference  is made in these  Standard  Terms,  the Trust
Agreement or the Certificates to "on behalf of the  Certificateholders  (and for
the  exclusive  use and benefit of all present and future  Certificateholders)",
"the   benefit  of  the   Certificateholders",   or  "for  the  benefit  of  the
Certificateholders",  such references shall be deemed to include the Certificate
Insurer,  and  references to "the interest of the Trust",  "an adverse effect on
the    Certificateholders   or   the   Trust"   or   "the   interests   of   the
Certificateholders" shall be deemed to include the Certificate Insurer.

         (g) This  Section 1.03 and  references  to  Certificate  Insurer in the
Standard Terms shall be deemed to be deleted with respect to any Trust Agreement
if a Certificate  Guaranty Insurance Policy is not issued with respect to one or
more Classes of Certificates issued pursuant thereto.

                                   Article II
                               Mortgage Loan Files

        Section 2.01.  Mortgage Loan Files

        (a) Pursuant to the Trust Agreement,  Saxon has sold to the Trustee, for
the benefit of the Certificateholders  without recourse all the right, title and
interest  of Saxon in and to the  Initial  Mortgage  Loans,  any and all rights,
privileges  and  benefits  accruing  to Saxon  under  the  Sales  Agreement  and
Servicing  Agreement with respect to the Initial Mortgage Loans (except,  in the
case of the Sales Agreement,  any rights of Saxon to fees and indemnification by
the Seller under such Agreement), including the rights and remedies with respect
to the  enforcement  of any and all  representations,  warranties  and covenants
under such  agreements,  and all other  agreements and assets  included or to be
included in the Trust for the benefit of the  Certificateholders as set forth in
the  conveyance  clause of the Trust  Agreement.  Such sale includes all Saxon's
rights to Monthly  Payments on the Initial  Mortgage Loans due after the Cut-Off
Date,  and all other  payments of principal  (and interest) made on or after the
Cut-Off Date that are reflected in the initial aggregate  Certificate  Principal
Balance of the  Certificates  issued pursuant to the Trust Agreement (other than
amounts deposited in a Pre-Funding Account).

        In  connection  with such  sale,  Saxon  shall  deliver,  or cause to be
delivered,  to the Trustee or the  Custodian  on or before the Closing  Date,  a
Trustee  Mortgage Loan File with respect to each Initial  Mortgage  Loan. If any
Security  Instrument  or  assignment  of a Security  Instrument  to the  related
Servicer,  the Trustee,  or the  Custodian,  as applicable,  or any  intervening
assignment is in the process of being recorded on the Closing Date,  Saxon shall
cause each such original recorded document,  or a certified copy thereof,  to be
delivered to the Custodian promptly following its recordation.  Saxon also shall
cause  to be  delivered  to the  Custodian  any  other  original  Mortgage  Loan
Documents  to be included in the Trustee  Mortgage  Loan File if a copy  thereof
initially was delivered.

        Saxon has  delivered or caused to be delivered to each  Servicer,  on or
before the Closing Date, a Servicer  File with respect to each Initial  Mortgage
Loan  serviced  by such  Servicer.  All  such  documents  shall  be held by such
Servicer   in  trust  for  the   benefit  of  the   Trustee  on  behalf  of  the
Certificateholders.

        (b) Pursuant to the Trust Agreement,  Saxon may sell to the Trustee, for
the benefit of the Certificateholders  without recourse all the right, title and

                                       16
<PAGE>

interest of Saxon in and to the Subsequent  Mortgage Loans,  any and all rights,
privileges and benefits  accruing to Saxon under the Subsequent Sales Agreements
and the Servicing  Agreement with respect to the Mortgage Loans (except,  in the
case of the  Subsequent  Sales  Agreement,  any  rights  of  Saxon  to fees  and
indemnification  by the Seller under such  Agreement),  including the rights and
remedies  with  respect  to the  enforcement  of any  and  all  representations,
warranties and covenants  under such  agreements,  and all other  agreements and
assets  included  or to be  included  in  the  Trust  for  the  benefit  of  the
Certificateholders as set forth in the conveyance clause of the Trust Agreement.
Any such sale  shall  include  all  Saxon's  rights to Monthly  Payments  on the
Subsequent Mortgage Loans due after the applicable  Subsequent Cut-Off Date, and
all other  payments of principal  (and interest) made on or after the applicable
Subsequent Cut-Off Date that are reflected in the purchase price therefor.

        In connection  with any such sale,  Saxon shall deliver,  or cause to be
delivered,  to  the  Trustee  or  the  Custodian  on or  before  the  applicable
Subsequent  Sales  Date,  a Trustee  Mortgage  Loan File  with  respect  to each
Mortgage Loan. If any Security Instrument or assignment of a Security Instrument
to the related Servicer,  the Trustee, or the Custodian,  as applicable,  or any
intervening  assignment  is in the process of being  recorded on the  applicable
Subsequent Sales Date, Saxon shall cause each such original  recorded  document,
or a certified copy thereof, to be delivered to the Custodian promptly following
its  recordation.  Saxon also shall cause to be delivered to the  Custodian  any
other original  Mortgage Loan  Documents to be included in the Trustee  Mortgage
Loan File if a copy thereof initially was delivered.

        Saxon will  deliver or cause to be  delivered  to each  Servicer,  on or
before the  applicable  Subsequent  Sales Date, a Servicer  File with respect to
each Mortgage Loan serviced by such Servicer.  All such documents  shall be held
by such  Servicer  in trust  for the  benefit  of the  Trustee  on behalf of the
Certificateholders.

        Section 2.02.  Acceptance by the Trustee

        (a) By its execution of the Trust Agreement, each of the Trustee and the
Custodian acknowledges and declares that it holds and will hold or has agreed to
hold all  documents  delivered  to it from  time to time  with  respect  to each
Mortgage  Loan and all  assets  included  in the  Trust  Estate in trust for the
exclusive  use and  benefit of all present  and future  Certificateholders.  The
Trustee represents and warrants that (i) it acquired the Initial Mortgage Loans,
and will acquire Subsequent Mortgage Loans, on behalf of the Trust from Saxon in
good  faith,  for value and without  actual  notice or actual  knowledge  of any
adverse claim, lien, charge,  encumbrance or security interest  (including,  but
not  limited  to,  federal  tax liens or liens  arising  under  ERISA) (it being
understood that the Trustee has not undertaken, and will not undertake, searches
(lien records or otherwise) of any public records),  (ii) except as permitted in
the Trust Agreement, it has not and will not, in any capacity,  assert any claim
or  interest in the  Mortgage  Loans and will hold (or its agent will hold) such
Mortgage  Loans and the proceeds  thereof in trust  pursuant to the terms of the
Trust Agreement and (iii) it has not encumbered or transferred its right,  title
or interest in the Mortgage Loans.

        In order to facilitate  sales and  deliveries of Mortgage Loans pursuant
to the  Trust  Agreement,  the  Trustee  may  execute  and  deliver  one or more
remittance  agency  agreements in substantially the form of Exhibit J hereto, or
such other  similar  form as may be attached  to the Trust  Agreement  (each,  a
"Remittance Agency Agreement"), and in such event the Trustee: (i) shall perform
the  duties  of  Remittance  Agent  (as  that  term is  defined  in the  related
Remittance Agency Agreement);  and (ii) may accept as conclusive evidence of the
release  of  the  related  security  interests  one  or  more  security  release
certifications  in substantially  the form attached as Exhibit K hereto, or such
other similar form as may be attached to the Trust Agreement  (each, a "Security
Release Certification").

        (b) The  Custodian  shall  deliver to Saxon,  the Trustee and the Master
Servicer,  on the Closing Date with respect to the Initial Mortgage Loans and on
each Subsequent Sale Date with respect to the related Subsequent Mortgage Loans,
an Initial  Certification  certifying  that,  except as specifically  noted on a
schedule of exceptions thereto and subject to its review as herein provided,  it
is in  possession  of a Trustee  Mortgage  Loan File for each such Mortgage Loan
that  includes  each of the documents  required to be included  therein.  Before
delivering  the Initial  Certification,  the Custodian  shall have examined each
Trustee  Mortgage Loan File to confirm that (except as  specifically  noted on a
schedule of exceptions thereto):

               (i) except for the endorsement required pursuant to clause (a) of
        the definition of Trustee  Mortgage Loan File, the Mortgage Note, on the
        face or the  reverse  side  thereof,  does not  contain  evidence of any
        unsatisfied  claims,   liens,   security   interests,   encumbrances  or
        restrictions on transfer;

               (ii) the Mortgage Note bears an endorsement  (which appears to be
        an  original) as  required  pursuant to clause (a) of the definition of
        Trustee Mortgage Loan File;

                                       17
<PAGE>

               (iii) all  documents  required to be  contained  in the Trustee
        Mortgage  Loan  File  are in  its  possession or in the possession of a
        Custodian on its behalf;

               (iv) such documents  have been reviewed by it, or by a Custodian
        on its behalf,  relate to such Mortgage Loan and are not torn or
        mutilated; and

               (v) based on its  examination,  or the examination by a Custodian
        on its behalf, and only as to the foregoing  documents,  the information
        set  forth  on  the  Mortgage  Loan  Schedule  accurately  reflects  the
        information set forth in the Trustee Mortgage Loan File.

        It is understood that, before delivering the Initial Certification,  the
Custodian shall examine the Mortgage Loan Documents to confirm that:

               (A) each Mortgage Note and Security  Instrument bears a signature
or  signatures  that  appear to be original  and that  purport to be that of the
Person or Persons named as the maker and  mortgagor/trustor  or, if  photocopies
are  permitted  under the  definition of Trustee  Mortgage Loan File,  that such
copies bear a reproduction of such signature or signatures;

               (B) except for the endorsement required pursuant to clause (a) of
the definition of Trustee  Mortgage Loan File,  neither the Security  Instrument
nor any assignment,  on the face or the reverse side thereof,  contains evidence
of  any  unsatisfied  claims,   liens,   security  interests,   encumbrances  or
restrictions on transfer;

               (C) the principal amount  of the  indebtedness  secured  by  the
Security  Instrument  is  identical  to  the  original principal amount of  the
Mortgage Note;

               (D) the assignment of the Security Instrument from the Seller, or
from the  originator  of the related  Mortgage Loan to the Custodian as the case
may be, is in the form  required  pursuant  to clause (c) of the  definition  of
Trustee Mortgage Loan File and bears a signature or signatures that appear to be
original and that purport to be that of the Seller and any other necessary party
or, if photocopies are permitted  under the definition of Trustee  Mortgage Loan
File, that such copies bear a reproduction of such signature or signatures;

               (E) if intervening  assignments are to be included in the Trustee
Mortgage  Loan File,  each such  intervening  assignment  bears a  signature  or
signatures  that  appear  to be  original  and  that  purport  to be that of the
Mortgagee and/or the assignee (and any other necessary party) or, if photocopies
are  permitted  under the  definition of Trustee  Mortgage Loan File,  that such
copies bear a reproduction of such signature or signatures;

               (F) if either a Title  Insurance  Policy,  a Certificate of Title
Insurance  or a  written  commitment  to  issue  a  Title  Insurance  Policy  is
delivered,  the address of the real property set forth in such policy, report or
written  commitment  is  substantially  identical  to the  address  of the  real
property contained in the Security Instrument; and

               (G) if a Title Insurance Policy or Certificate of Title Insurance
is delivered with respect to a Mortgage Loan, such policy or certificate: (i) is
for an  amount  not less  than the  original  principal  amount  of the  related
Mortgage Note and (ii) insures (x) in the case of a Senior  Mortgage Loan,  that
the Security  Instrument  constitutes a valid first lien,  senior in priority to
all other related  deeds of trust,  mortgages,  deeds to secure debt,  financing
statements and security agreements and to any related mechanic's liens, judgment
liens or writs of attachment and (y) in the case of a Junior Mortgage Loan, that
the Security  Instrument  constitutes a valid second or more junior lien, senior
in  priority  to any  related  mechanic's  liens,  judgment  liens  or  writs of
attachment  but  subordinate  in  priority  to certain  related  deeds of trust,
mortgages,  deeds to secure debt,  financing  statements and security agreements
with  respect to the related  Collateral  of higher  priority  (or, if a written
commitment  to issue a Title  Insurance  Policy is  delivered  with respect to a
Mortgage  Loan,  such  written  commitment  obligates  the insurer to issue such
policy for an amount not less than the original  principal amount of the related
Mortgage Note).

        (c) Prior to the first  anniversary  of the Closing Date,  the Custodian
shall deliver to Saxon and the Master Servicer a Final Certification  evidencing
the  completeness of the Trustee Mortgage Loan File for each Mortgage Loan, with
any applicable exceptions noted on such certification.

        (d)  In  delivering  each  of the  certifications  required  above,  the
Custodian shall be under no duty or obligation (i) to inspect, review or examine
any such  documents,  instruments,  securities or other papers to determine that
they or the signatures thereon are genuine,  enforceable, or appropriate for the
represented  purpose or that they have  actually  been recorded or that they are

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<PAGE>

other  than what they  purport  to be on their  face or that any  document  that
appears to be an original is in fact an  original or (ii) to  determine  whether
any Trustee  Mortgage Loan File should include any power of attorney,  surety or
guaranty  agreement,  note  assumption  rider,  buydown  agreement,   assumption
agreement, modification agreement, written assurance or substitution agreement.

        (e) On or before the fifth Business Day of each third month,  commencing
the fourth  month  following  the month in which the Closing  Date  occurs,  the
Custodian  shall  deliver to the Seller a  Recordation  Report,  dated as of the
first day of such month,  identifying  those Mortgage Loans for which it has not
yet  received (i) an original  recorded  Security  Instrument  or a copy thereof
certified to be true and correct by the public recording office in possession of
such Security  Instrument,  (ii) an original recorded assignment of the Security
Instrument to the related Servicer, the Trustee or the Custodian, as applicable,
and any  required  intervening  assignments  or copies  thereof,  in each  case,
certified  to be a true and  correct  copy by the  public  recording  office  in
possession  of such  assignment,  or  (iii)  if an  assignment  of the  Security
Instrument to the related Servicer has been recorded or sent for recordation, an
original assignment of the Security Instrument from such Servicer in blank or to
the Trustee or the Custodian in recordable form.

        (f) The Trustee may, in accordance with Section 8.11 hereof, appoint one
or more Custodians to hold the Trustee  Mortgage Loan Files on its behalf and to
review the Trustee  Mortgage Loan Files as provided in this Section 2.02.  Saxon
shall,  upon notice of the  appointment  of a Custodian,  deliver or cause to be
delivered all documents to such Custodian  that would  otherwise be delivered to
the Trustee.  In such event,  the Trustee shall obtain from each such  Custodian
will deliver,  within the specified  times,  the Initial  Certifications,  Final
Certifications,  and Recordation Reports with respect to the Mortgage Loans held
and reviewed by such Custodian to Saxon and the Master  Servicer in satisfaction
of the Trustee's  obligation  to prepare such  certifications  and reports.  The
Trustee shall notify the Custodian of any notices  delivered to the Trustee with
respect to the Trustee Mortgage Loan Files held by the Custodian.

        (g) During the Custodian's  review, the Custodian will create as to each
Trust  Estate a report  substantially  of the form of  Exhibit I hereto  setting
forth the  particular  respects in which any Mortgage  File fails to satisfy the
definition of "Trustee Mortgage Loan File" herein, and shall be under no duty or
obligation to report any other  exceptions to a Mortgage File.  Exhibit I may be
replaced  from time to time with the consent of the  Depositor,  the Trustee and
the Master Servicer.

        Section 2.03.  Purchase or Substitution of Mortgage Loans by a Seller, a
Servicer or Saxon

        (a) Seller Breach. Upon discovery or notice of any defective document in
a  Trustee  Mortgage  Loan  File  or of any  breach  by a  Seller  of any of its
representations,  warranties or covenants under a Sales Agreement,  which defect
or breach materially and adversely affects the value of any Mortgage Loan or the
interest  of the Trust  therein  (it being  understood  that any such  defect or
breach shall be deemed to have  materially  and adversely  affected the value of
such  Mortgage  Loan or the interest of the Trust  therein if the Trust incurs a
loss as a result of such defect or breach),  the  Custodian or the Trustee shall
promptly  notify the  Master  Servicer  of such  defect or breach and direct the
Master  Servicer  to  request  that the Seller of such  Mortgage  Loan cure such
defect or breach  and, if such Seller does not cure such defect or breach in all
material  respects  within 60 days from the date on which it is notified of such
defect or breach, to enforce such Seller's  obligation under the Sales Agreement
to purchase such Mortgage Loan from the Trustee.  In lieu of purchasing any such
Mortgage  Loan as provided  above,  if so provided in the Sales  Agreement,  the
Seller may cause such  Mortgage Loan to be removed from the Trust (in which case
it shall become a Deleted  Mortgage  Loan) and  substitute one or more Qualified
Substitute Mortgage Loans in the manner and subject to the limitations set forth
in Section  2.03(h)  hereof.  Notwithstanding  the foregoing,  if such defect or
breach  is  or  results  in a  Qualification  Defect,  such  cure,  purchase  or
substitution  must take place within 75 days of the Defect Discovery Date. It is
understood and agreed that  enforcement of the obligation of the Seller to cure,
purchase or substitute for any Mortgage Loan as to which a material  defect in a
constituent  document  exists or as to which such a breach has  occurred  and is
continuing  shall  constitute the sole remedy  respecting  such defect or breach
available to the Trustee on behalf of the Certificateholders; provided, however,
that such provision  shall not limit the  indemnification  provisions of Section
8.05 hereof or of any Sales Agreement.

         (b) Servicer Breach. In addition to taking any action required pursuant
to Section  7.01,  upon  discovery  or notice of any breach by a Servicer of any
representation,  warranty  or  covenant  under  the  Servicing  Agreement  which
materially and adversely  affects the value of any Mortgage Loan or the interest
of the Trust therein (it being  understood  that any such breach shall be deemed
to have materially and adversely affected the value of such Mortgage Loan or the

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<PAGE>

interest  of the Trust  therein  if the Trust  incurs a loss as a result of such
breach),  the Trustee shall promptly  notify the Master  Servicer of such breach
and direct the Master  Servicer to request  that the  Servicer of such  Mortgage
Loan cure such  breach and,  if such  Servicer  does not cure such breach in all
material  respects  within 60 days from the date on which it is notified of such
breach, to enforce the obligation of such Servicer under the Servicing Agreement
to purchase such Mortgage Loan from the Trustee.  Notwithstanding the foregoing,
if such breach  results in a  Qualification  Defect,  such cure or purchase must
take place within 75 days of the Defect Discovery Date.

        If a Seller has  breached a  representation  or  warranty  under a Sales
Agreement  that is  substantially  identical  to a  representation  or  warranty
breached by a Servicer,  the Master  Servicer  shall first proceed  against such
Seller.  If such  Seller  does not,  within 60 days  after  notification  of the
breach,  take  steps to cure  such  breach or  purchase  or  substitute  for the
Mortgage Loan, the Master Servicer shall enforce the obligation of such Servicer
under the Servicing  Agreement to cure such breach or purchase the Mortgage Loan
from the Trust as provided in this Section 2.03(b).

        Except as  specifically  set forth  herein,  the  Trustee  shall have no
responsibility  to enforce any  provision  of the Sales  Agreement  or Servicing
Agreements assigned to it hereunder, to oversee compliance therewith, or to take
notice of any breach or default thereunder. No successor servicer shall have any
obligation to repurchase a Mortgage Loan except to the extent  specifically  set
forth in the Servicing Agreement signed by such successor servicer.

        (c) Saxon Breach.  Within 90 days of the earlier of discovery or receipt
of notice by Saxon of the breach of any of its representations or warranties set
forth in Section  2.04 hereof with respect to any  Mortgage  Loan,  which breach
materially and adversely affects the value of such Mortgage Loan or the interest
of the Trust therein (it being  understood  that any such breach shall be deemed
to have materially and adversely affected the value of such Mortgage Loan or the
interest  of the Trust  therein  if the Trust  incurs a loss as a result of such
breach),  Saxon  shall  (i) cure  such  breach in all  material  respects,  (ii)
purchase such Mortgage Loan from the Trustee, or (iii) remove such Mortgage Loan
from the Trust  (in which  case it shall  become a  Deleted  Mortgage  Loan) and
substitute  one or more  Qualified  Substitute  Mortgage Loans in the manner and
subject to the limitations set forth in Section 2.03(h) hereof.  Notwithstanding
the foregoing,  if such breach  results in a  Qualification  Defect,  such cure,
purchase or substitution  must take place within 75 days of the Defect Discovery
Date.

        (d) Assignment Failure. If an Assignment of a Security Instrument to the
related  Servicer,  the Trustee,  or the Custodian,  as applicable,  as required
pursuant to the  definition of Trustee  Mortgage Loan File has not been recorded
within one year of the  Closing  Date,  the Master  Servicer  shall  enforce the
related  Servicer's  obligation  set forth in the  related  Servicing  Agreement
either to (i) purchase the related  Mortgage  Loan from the Trustee on behalf of
the  Certificateholders  or (ii) if there have been no  defaults  in the Monthly
Payments on such Mortgage Loan, deposit an amount equal to the Purchase Price of
such Mortgage Loan into an escrow account  maintained by the Paying Agent (which
account  shall not be an asset of the Trust or any  REMIC)  as  required  by the
related  Servicing  Agreement.  Any such amounts deposited to an escrow account,
plus any earnings  thereon,  shall (i) be released to the related  Servicer upon
receipt by the Trustee of  satisfactory  evidence  that an  Assignment  has been
recorded  in the  name of such  Servicer,  the  Trustee,  or the  Custodian,  as
applicable, as required pursuant to the definition of Trustee Mortgage Loan File
(and,  if the  Assignment  has  been  recorded  in  the  name  of the  Servicer,
satisfactory evidence that an original Assignment from such Servicer in blank or
to the Trustee or the Custodian in recordable  form has been  deposited into the
Trustee  Mortgage Loan File) or (ii) be applied to purchase the related Mortgage
Loan if the Master  Servicer  notifies the Trustee that there has been a default
thereon.  Any  amounts  in the  escrow  account  may be  invested  in  Permitted
Investments at the written direction of the Master Servicer.

        (e) Converted  Mortgage  Loans.  Upon receipt of written notice from the
Servicer of the  conversion of any ARM Loan to a Converted  Mortgage  Loan,  the
Master  Servicer shall enforce the Servicer's  obligation,  if any, set forth in
the  Servicing  Agreement or the Seller's  obligation,  if any, set forth in the
Sales  Agreement to purchase such Converted  Mortgage Loan from the Trustee.  If
the  Servicer  or the  Seller  defaults  upon its  obligation  to  purchase  any
Converted  Mortgage  Loan, and such default  remains  unremedied for a period of
five Business Days after written notice of such default shall have been given by
the Master  Servicer  to the  Servicer or the Seller,  as  applicable,  then the
Master Servicer shall use its best efforts to cause such Converted Mortgage Loan
to be sold for  settlement  on the last day of any month to any Person which the
Master Servicer may in its sole discretion select. The Master Servicer shall not
cause a Converted Mortgage Loan to be sold or otherwise  transferred to a Person
other than the Servicer or the Seller (or any other Person who has a preexisting
obligation to purchase  such  Mortgage  Loan) unless (i) upon such sale or other
transfer  the Trust would  receive a net amount at least  equal to the  Purchase
Price and (ii) if the Purchase Price exceeds the Basis Limit Amount,  the Master
Servicer receives an Opinion of Counsel (which Opinion of Counsel will not be an
expense of the Master  Servicer or the Trustee) that such sale or other transfer
will not result in the  imposition  of a "prohibited  transaction"  tax (as such
term is defined in the Code) on the related REMIC or jeopardize  its status as a

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<PAGE>

REMIC.  Any such Converted  Mortgage Loan which is not purchased by the Servicer
or the Seller and which the Master  Servicer  is unable to sell shall  remain in
the Trust.

        (f)  Delinquent  Mortgage  Loans.  Saxon may, but is not  obligated  to,
purchase any Mortgage  Loan that is delinquent in payment by 90 days or more for
a price equal to the greater of the Purchase Price for such Mortgage Loan or the
fair market value thereof at the time of purchase.

        (g) Purchase Price.  Unless  otherwise  provided in the Trust Agreement,
the purchase of any Mortgage  Loan from the Trust  pursuant to this Section 2.03
shall  be  effected  for the  related  Purchase  Price.  If the  Purchaser  is a
Servicer,  the  Purchase  Price shall be deposited  into its Servicer  Custodial
Account.  If the Purchaser is other than the Servicer,  the Purchase Price shall
be deposited into the Master Servicer  Custodial  Account.  Within five Business
Days of its receipt of such funds or  certification  by the Master Servicer that
such funds have been deposited in the appropriate  Servicer Custodial Account or
in the Master Servicer Custodial Account,  the Trustee shall release or cause to
be released to the  Purchaser  the related  Trustee  Mortgage  Loan File and the
related Servicer File and shall execute and deliver such instruments of transfer
or  assignment,  in each case  without  recourse,  in form as  presented  by the
Purchaser and satisfactory to the Trustee,  as shall be necessary to vest in the
Purchaser  title to any Mortgage Loan released  pursuant  hereto and the Trustee
shall have no further  responsibility  with regard to such Trustee Mortgage Loan
File or Servicer File.  The Master  Servicer shall use its best efforts to cause
the  Servicer  of any  Deleted  Mortgage  Loan to release to the  Purchaser  the
Servicer File relating thereto.

        (h) Substitution.  Unless otherwise provided in the Trust Agreement, the
right to  substitute  a  Qualified  Substitute  Mortgage  Loan  for any  Deleted
Mortgage  Loan that is an asset of the Trust shall be limited to (i) in the case
of  substitutions  pursuant to Section 2.03(a) or 2.03(c)  hereof,  the one-year
period  beginning  on the  Closing  Date  and  (ii)  in the  case  of any  other
substitution, the three-month period beginning on the Closing Date.

        As to any Deleted Mortgage Loan for which Saxon or a Seller  substitutes
one or more Qualified  Substitute  Mortgage Loans,  Saxon or the Seller,  as the
case may be, shall effect such  substitution  by delivering to the Custodian for
each such  Qualified  Substitute  Mortgage Loan the related  Mortgage  Note, the
related Security Instrument, the related Assignment(s), and such other documents
and agreements,  with all necessary  endorsements thereon, as are required to be
included in the Trustee  Mortgage  Loan File  pursuant to Sections 1.01 and 2.01
hereof,  together with a  certificate  of an Officer of Saxon to the effect that
each such  Qualified  Substitute  Mortgage  Loan  complies with the terms of the
Trust  Agreement  and notify the Master  Servicer  and the Trustee in writing of
such  substitution.  Monthly  Payments due with respect to Qualified  Substitute
Mortgage Loans in the month of  substitution  are not part of the Trust and will
be  retained  by Saxon or the  Seller,  as the  case  may be.  For the  month of
substitution,  distributions  to  Certificateholders  will  reflect  the Monthly
Payment  due on such  Deleted  Mortgage  Loan on or before  the first day of the
month in which the substitution occurs, and Saxon or the Seller, as the case may
be, shall thereafter be entitled to retain all amounts subsequently  received in
respect of such  Deleted  Mortgage  Loan.  The Master  Servicer  shall amend the
Mortgage Loan Schedule to reflect the removal of such Deleted Mortgage Loan from
the terms of the Trust  Agreement and the  substitution  of each such  Qualified
Substitute  Mortgage  Loan.  Each  Qualified  Substitute  Mortgage Loan shall be
subject, as of the date of its substitution, to the terms of the Trust Agreement
in all respects  (including  the  representations  and  warranties of Saxon with
respect to the Mortgage Loans set forth in the Trust Agreement). In addition, in
the case of any  substitution  effected by a Seller,  each Qualified  Substitute
Mortgage Loan shall be subject, as of the date of its substitution, to the terms
of the related Sales Agreement  (including the representations and warranties of
the Seller with respect to the Mortgage Loans set forth in the Sales Agreement).
The Trustee  shall,  within five  Business  Days of its receipt of the documents
referred to above,  effect the conveyance of such Deleted Mortgage Loan to Saxon
or the Seller,  as the case may be, in accordance with the procedures  specified
above.

        For any  month  in  which  Saxon  or a  Seller  substitutes  one or more
Qualified  Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the
Master Servicer shall determine and notify the Trustee in writing of the amount,
if any, by which the aggregate  Unpaid  Principal  Balance of all such Qualified
Substitute  Mortgage  Loans  as of the  date of  substitution  is less  than the
aggregate  Unpaid  Principal  Balance of all such Deleted  Mortgage Loans (after
application  of  Monthly  Payments  due  in  the  month  of  substitution)  (the
"Substitution  Shortfall").  On the  date of  such  substitution,  Saxon  or the
Seller, as the case may be, shall deliver or cause to be delivered to the Paying
Agent,  for deposit  into the Asset  Proceeds  Account,  an amount  equal to the
Substitution Shortfall.

        (i)  Determination  of  Purchase  Price.  The Master  Servicer  shall be
responsible for determining the Purchase Price of any Mortgage Loan for purposes

                                       21
<PAGE>

of this  Section  2.03 and,  where  appropriate,  the Basis Limit Amount for any
Converted  Mortgage Loan that is sold by the Trust, and shall at the time of any
purchase or escrow of funds  pursuant to this  Section 2.03 certify such amounts
to the Trustee.  If the Master  Servicer shall certify to the Trustee in writing
that  there is a  miscalculation  of the  amount  to be paid to the  Trust,  the
Trustee shall, from moneys in the Asset Proceeds Account, return any overpayment
that the Trust  received as a result of such  miscalculation  to the  applicable
Purchaser upon the discovery of such overpayment,  and the Master Servicer shall
collect  from  the   applicable   Purchaser  for  payment  to  the  Trustee  any
underpayment that resulted from such  miscalculation  upon the discovery of such
underpayment.  Recovery may be made either  directly or by set-off of all or any
part of such underpayment against amounts owed by the Trust to such Purchaser.

        (j) Qualification  Defect. If (i) any Person required to cure,  purchase
or substitute for a Mortgage Loan affected by a  Qualification  Defect under the
terms of the Trust Agreement or a separate agreement fails to perform within the
earlier  of (A) 75 days of the Defect  Discovery  Date or (B) the time limit set
forth in the Trust  Agreement  or such  separate  agreement or (ii) no Person is
obligated to cure,  purchase or  substitute  for a Mortgage  Loan  affected by a
Qualification  Defect,  the Trustee  shall dispose of such Mortgage Loan in such
manner and for such price as the Master Servicer notifies the Trustee in writing
are  appropriate,  provided  that the removal of such Mortgage Loan occurs on or
before the 90th day from the Defect  Discovery Date. It is the express intent of
the parties that a Mortgage Loan affected by a  Qualification  Defect be removed
from the Trust  before the 90th day from the Defect  Discovery  Date so that the
related  REMIC(s)  will  continue  to qualify as a  REMIC(s).  Accordingly,  the
Trustee is not  required to sell an affected  Mortgage  Loan for its fair market
value nor shall the Trustee be required to make up any shortfall  resulting from
the sale of such  Mortgage  Loan.  The  Person  failing  to cure,  purchase,  or
substitute  for a  Mortgage  Loan as  required  under  the  terms  of the  Trust
Agreement  shall be liable to the Trust for (i) any  difference  between (A) the
Unpaid  Principal  Balance of the Mortgage Loan plus accrued and unpaid interest
thereon at the related Mortgage Interest Rate to the date of disposition and (B)
the net amount received by the Trustee from the  disposition  (after the payment
of related  expenses),  (ii) interest on such difference at the related Mortgage
Interest Rate from the date of  disposition to the date of payment and (iii) any
legal and other  expenses  incurred by or on behalf of the Trust in seeking such
payments.  The Master  Servicer  shall  pursue the legal  remedies  of the Trust
relating  to this  Section  2.03(j) on the Trust's  behalf,  and the Trust shall
reimburse  the Master  Servicer  for any legal or other  expenses  of the Master
Servicer  related to such pursuit not  recovered  from the Person that failed to
cure, purchase, or substitute for a Mortgage Loan as required under the terms of
the Trust Agreement.

        (k) Any Person  required  under this  Section  2.03 to give notice or to
make a request of another  Person to give notice  shall give such notice or make
such request promptly.

        Section 2.04.  Representations and Warranties of Saxon

        Saxon  hereby  represents  and  warrants  to the  Trustee and the Master
Servicer  that as of the  Closing  Date or as of such  other  date  specifically
provided herein:

               (a) Saxon has been duly incorporated and is validly existing as a
        corporation  and in good standing under the laws of the  Commonwealth of
        Virginia with full power and authority  (corporate and other) to own its
        properties  and conduct its business as now conducted by it and to enter
        into and perform its obligations under the Trust Agreement, and has duly
        qualified  to do  business  as a  foreign  corporation  and  is in  good
        standing  under  the  laws  of each  jurisdiction  which  requires  such
        qualification wherein it owns or leases any material properties,  except
        where the failure so to qualify would not have a material adverse effect
        on Saxon;

               (b) The Trust Agreement,  assuming due  authorization,  execution
        and  delivery  by the  Trustee and the Master  Servicer,  constitutes  a
        legal, valid and binding agreement of Saxon,  enforceable  against Saxon
        in  accordance  with  its  terms,  subject  to  bankruptcy,  insolvency,
        reorganization,  moratorium or other similar laws  affecting  creditors'
        rights  generally  and to general  principles  of equity  regardless  of
        whether enforcement is sought in a proceeding in equity or at law;

               (c)  Neither  the  execution  and  delivery by Saxon of the Trust
        Agreement,  nor the  consummation by Saxon of the  transactions  therein
        contemplated,  nor compliance by Saxon with the provisions thereof, will
        (i)  conflict  with or result in a breach  of, or  constitute  a default
        under, any of the provisions of the articles of incorporation or by-laws
        of Saxon or any law,  governmental  rule or  regulation or any judgment,
        decree or order binding on Saxon or any of its properties, or any of the
        provisions of any indenture,  mortgage, deed of trust, contract or other
        instrument  to  which  Saxon  is a party or by which it is bound or (ii)
        result in the creation or imposition of any lien, charge, or encumbrance
        upon any of its properties  pursuant to the terms of any such indenture,
        mortgage, deed of trust, contract or other instrument;

                                       22
<PAGE>

               (d)  There  are no  actions,  suits or  proceedings  against,  or
        investigations  of,  Saxon  pending,  or,  to the  knowledge  of  Saxon,
        threatened,  before any court,  administrative  agency or other tribunal
        (i) asserting the  invalidity of the Trust  Agreement or (ii) seeking to
        prevent the issuance of the  Certificates or the  consummation of any of
        the transactions contemplated by the Trust Agreement;

               (e) As of the Closing Date with respect to each Initial  Mortgage
        Loan and as of each  Subsequent  Sale Date with  respect to each related
        Subsequent Mortgage Loan:

                       (i) The  information  set forth in the  related  Mortgage
               Loan  Schedule  with  respect to such  Mortgage  Loan is true and
               correct  in all  material  respects  at the  date or  dates  with
               respect to which such information is furnished;

                       (ii) Saxon either is (i) the owner of such  Mortgage Loan
               or (ii)  the  holder  of a  first,  second,  or more  junior  (as
               applicable)   priority   perfected   security   interest  in  the
               Collateral  securing such  Mortgage Loan subject,  in the case of
               any Junior  Mortgage Loan, to any lien on the related  Collateral
               that is senior in priority to the lien  represented by such loan,
               and subject,  in the case of any Mortgage Loan, to any exceptions
               of title set forth in the title insurance  policy with respect to
               such loan that are generally  acceptable to home equity  mortgage
               lending  institutions  and such other exceptions to which similar
               properties commonly are subject,  provided such exceptions do not
               individually,  or in  the  aggregate,  materially  and  adversely
               affect the  benefits of the  security  intended to be provided by
               the related Collateral;

                       (iii) Saxon has acquired its ownership  of, or security
               interest in, such  Mortgage  Loan in good faith without notice of
               any adverse claim;

                       (iv) Saxon has not assigned any interest or participation
               in such Mortgage Loan (or, if any such interest or  participation
               has been assigned, it has been released); and

               (e) Saxon has full right to sell the Trust Estate to the Trustee.

        It is understood and agreed that the  representations and warranties set
forth in this  Section 2.04 shall  survive  delivery of the  respective  Trustee
Mortgage Loan Files to the Trustee and shall inure to the benefit of the Trustee
notwithstanding any restrictive or qualified endorsement or assignment. Upon the
discovery by Saxon, the Master Servicer or the Trustee of a breach of any of the
foregoing  representations and warranties which materially and adversely affects
the  interest  of  the  Certificateholders  in  any  Mortgage  Loan,  the  party
discovering  such breach shall give prompt written notice (but in no event later
than two Business  Days  following  such  discovery) to the other parties to the
Trust  Agreement.  It is understood and agreed that the obligations of Saxon set
forth in Section  2.03(c) to cure,  repurchase or substitute for a Mortgage Loan
constitute  the sole  remedies  available  to the  Certificateholders  or to the
Trustee  on  their  behalf  respecting  a  breach  of  the  representations  and
warranties  contained in this Section 2.04. It is further  understood and agreed
that Saxon shall be deemed not to have made the  representations  and warranties
in this Section 2.04 with respect to, and to the extent of,  representations and
warranties made, as to the matters covered in this Section 2.04, by any Servicer
in the related Servicing  Agreement assigned to the Trustee or any Seller in the
related Sales Agreement assigned to the Trustee.

        Section 2.05.  Representations and Warranties of the Master Servicer

        The Master Servicer  hereby  represents and warrants to the Trustee that
as of the Closing Date or as of such other date specifically provided herein:

               (a) The Master Servicer has been duly incorporated and is validly
        existing as a bank or a corporation  and in good standing under the laws
        of the jurisdiction of its  incorporation  with full power and authority
        (corporate  and other) to own its properties and conduct its business as
        now conducted by it and to enter into and perform its obligations  under
        the Trust  Agreement,  and has duly  qualified  to do business and is in
        good standing  under the laws of each  jurisdiction  which requires such
        qualification  wherein  it owns or leases  any  material  properties  or
        conducts any material business or in which the performance of its duties
        under the Trust Agreement would require such qualification, except where
        the failure so to qualify  would not have a material  adverse  effect on
        the performance of its obligations under the Trust Agreement;

               (b) The Trust Agreement,  assuming due  authorization,  execution
        and delivery by Saxon and the Trustee,  constitutes  a legal,  valid and
        binding agreement of the Master Servicer, enforceable against the Master

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<PAGE>

        Servicer  in  accordance   with  its  terms,   subject  to   bankruptcy,
        insolvency, reorganization, conservatorship, receivership, moratorium or
        other similar laws affecting  creditors' rights generally and to general
        principles of equity  regardless of whether  enforcement  is sought in a
        proceeding in equity or at law;

               (c) Neither the execution and delivery by the Master  Servicer of
        the Trust Agreement,  nor the consummation by the Master Servicer of the
        transactions therein contemplated, nor compliance by the Master Servicer
        with the  provisions  thereof,  will (i)  conflict  with or  result in a
        breach of, or constitute a default  under,  any of the provisions of the
        articles of  association  or  incorporation  (or  corresponding  charter
        document)  or by-laws of the Master  Servicer  or any law,  governmental
        rule or  regulation  or any  judgment,  decree or order  binding  on the
        Master  Servicer or any of its  properties,  or any of the provisions of
        any indenture,  mortgage, deed of trust, contract or other instrument to
        which  the  Master  Servicer  is a party or by which it is bound or (ii)
        result in the creation or imposition of any lien,  charge or encumbrance
        upon any of its properties  pursuant to the terms of any such indenture,
        mortgage, deed of trust, contract or other instrument.

               (d)  There  are no  actions,  suits or  proceedings  against,  or
        investigations of, the Master Servicer pending,  or, to the knowledge of
        the Master Servicer, threatened, before any court, administrative agency
        or other tribunal which would prohibit the Master Servicer from entering
        into the Trust Agreement or performing its  obligations  under the Trust
        Agreement; and

               (e) If the Master Servicer is not a national banking association,
        the Master  Servicer  maintains a Master  Servicer  Errors and Omissions
        Policy  and a Master  Servicer  Fidelity  Bond  which  cover the  Master
        Servicer's  performance  under the Trust Agreement,  and such policy and
        bond are in full force and effect.

        Upon the  discovery  by Saxon,  the Master  Servicer or the Trustee of a
breach of any of the foregoing  representations  or warranties  which materially
and  adversely  affects the interest of the  Certificateholders  in any Mortgage
Loan, the party discovering such breach shall give prompt written notice (but in
no event later than two Business  Days  following  such  discovery) to the other
parties to the Trust Agreement.

                                   Article III
                           Administration of the Trust

        Section 3.01.  Master Servicer Custodial Account

        (a) Establishment. The Master Servicer shall establish a Master Servicer
Custodial  Account  into  which the  Master  Servicer  shall  deposit  payments,
collections  and Advances with respect to the Mortgage  Loans until such amounts
are  transferred to the Asset Proceeds  Account as provided  herein.  The Master
Servicer may elect to use a single Master  Servicer  Custodial  Account for more
than one Series of  Certificates  (and for more than one group of Mortgage Loans
if the Mortgage  Loans for a Series of  Certificates  are to be held in separate
groups),  but shall  maintain  separate  accounting  records  for each Series of
Certificates  (and for each group of Mortgage  Loans with respect to a Series of
Certificates).  Each  Master  Servicer  Custodial  Account  shall be an Eligible
Account and shall reflect the custodial nature of the account and that all funds
in such  account  (except  interest  earned  thereon)  are held in trust for the
benefit of the Trustee.  Unless otherwise  provided in the Trust Agreement,  the
owner of the Master Servicer Custodial Account shall be the Master Servicer.  To
the extent  provided  in the REMIC  Provisions  or proposed  temporary  or final
regulations, any amounts transferred by a REMIC to the Master Servicer Custodial
Account  shall be  treated as  amounts  distributed  by such REMIC to the Master
Servicer. The Master Servicer Custodial Account shall not be considered an asset
of the Trust or any REMIC.  The Master  Servicer shall notify the Trustee of the
location and account number of such Master Servicer Custodial Account and of any
changes in the location or account number of such account.

        (b) Deposits.  On each Remittance Date, the Servicer shall withdraw from
the Servicer  Custodial Account maintained by each Servicer and deposit into the
Master Servicer  Custodial  Account an amount with respect to each Mortgage Loan
serviced by such Servicer equal to the sum of the following:

               (i) all Monthly  Payments  received by such  Servicer  during the
        preceding  Due Period,  whether paid by the Borrower or advanced by such
        Servicer,  minus the  Servicing Fee due such Servicer to the extent paid
        by the Borrower after the payment of Month-End Interest;

               (ii) all Monthly  Payments  made by the Borrower  after their Due
        Date that  were not paid or  advanced  pursuant  to  Section  3.01(b)(i)
        hereof;

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<PAGE>

               (iii) all other  payments  (other than late  charges,  prepayment
        penalties,  conversion fees and miscellaneous servicing charges and fees
        retained by such Servicer pursuant to the Servicing  Agreement) received
        by such Servicer in connection with any unscheduled  principal  payments
        or recoveries  on such  Mortgage  Loan during the  preceding  Prepayment
        Period, including Liquidation Proceeds and Insurance Proceeds,  together
        with any  interest  thereon  paid by or for the account of the  Borrower
        minus the sum of (A) expenses  associated  with such  recovery,  (B) any
        Advances  on  such  Mortgage  Loan  paid by  such  Servicer  and (C) the
        Servicing Fee allocable thereto; and

               (iv) the Purchase  Price of such  Mortgage  Loan if such Mortgage
        Loan was  purchased by the Servicer  from the Trust during the preceding
        Prepayment Period.

        (c) Withdrawals.  On each Business Day, the Master Servicer may withdraw
from the appropriate  Master Servicer Custodial Account (to the extent the funds
therein are not invested) any Non-Recoverable Advance and any Advance previously
made with  respect to a Mortgage  Loan as to which a late  payment,  Liquidation
Proceeds or Insurance  Proceeds  have been  received  (but only to the extent of
such late payment, Liquidation Proceeds or Insurance Proceeds).

        On or prior to each Master Servicer Remittance Date, the Master Servicer
shall  remit from the funds in the  Master  Servicer  Custodial  Account by wire
transfer (or as otherwise  instructed by the Trustee) in  immediately  available
funds to the Asset Proceeds Account an amount with respect to each Mortgage Loan
equal to the sum of the following:

               (i) all Monthly  Payments  received by the Master Servicer during
        the preceding Due Period,  whether paid by the Borrower or advanced by a
        Servicer,  the Master Servicer, the Trustee or an Insurer, minus the sum
        of (A) the  Servicing  Fees due the  Servicer  to the extent paid by the
        Borrower (net of any payments on account of Month End Interest  required
        pursuant to Section 3.05 hereof or the Servicing  Agreement) and (B) the
        Master  Servicing  Fee to the extent paid by the Borrower or advanced by
        the Servicer or the Master Servicer;

               (ii) all Monthly Payments made by a Borrower after their Due Date
        that were not paid or advanced  pursuant to Section  3.01(c)(i)  hereof,
        net of the Master Servicing Fee;

               (iii)  all  other  payments  (excluding   prepayment   penalties)
        received  by the Master  Servicer  in  connection  with any  unscheduled
        principal  payments  or  recoveries  on the  Mortgage  Loans  during the
        preceding   Prepayment  Period,   including   Liquidation  Proceeds  and
        Insurance Proceeds, together, with respect to prepayments or Liquidation
        Proceeds or Insurance Proceeds received during the preceding month, with
        any interest  thereon received by the Master Servicer (net of the Master
        Servicing Fee attributable thereto); and

               (iv) the Purchase Price of any Mortgage Loans  purchased from the
        Trust during the preceding  Prepayment Period,  less any amounts due the
        Servicer or the Master  Servicer on account of Advances,  the  Servicing
        Fee or the Master Servicing Fee attributable to such Mortgage Loans.

        (d) Investment.  The Master Servicer shall cause the funds in the Master
Servicer  Custodial  Account to be  invested  in  Permitted  Investments  with a
maturity prior to the next Master Servicer Remittance Date. If so specified in a
Servicing  Agreement,  net investment income on the funds in the Master Servicer
Custodial  Account  shall be released  to the related  Servicer as a part of the
Servicer Compensation on or before the fifth Business Day of the month following
the  month in which  the  related  Distribution  Date  occurs  unless  the Trust
Agreement provides that such net investment income is to be applied to Month End
Interest  Shortfall;  provided,  however,  that,  if  there  is a  loss  on  the
investments in the Master Servicer  Custodial  Account for any month, the Master
Servicer  shall  deposit  the  amount  of such  loss  into the  Master  Servicer
Custodial  Account  on or  before  the  related  Distribution  Date  (and  shall
subsequently retain net investment income to recover such loss).

        Section 3.02.  Asset Proceeds Account

        (a) Deposits.  The Trustee shall  establish and maintain with the Paying
Agent one or more accounts (collectively,  the "Asset Proceeds Account") held in
trust for the benefit of the  Certificateholders.  Each Asset  Proceeds  Account
shall be an Eligible Account.  On each Distribution Date, the Paying Agent shall
deposit into the Asset Proceeds Account the following amounts, to the extent not
previously deposited therein:

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<PAGE>

               (i)   the amount  to  be  deposited  from  the  Master  Servicer
        Custodial Account pursuant to Section 3.01(c);

               (ii)  Advances;

               (iii) the amount  required  to  effect  a  Terminating  Purchase
        pursuant to Section 9.02 hereof; and

               (iv) amounts   required   to   be   deposited   from  any  Credit
        Enhancement,  Reserve Fund,  Interest Fund, or other fund as provided in
        the Trust Agreement.

        (b) Withdrawals.  Unless otherwise  provided in the Trust Agreement,  on
each Distribution  Date, the Paying Agent shall withdraw all moneys in the Asset
Proceeds  Account in  accordance  with the  amounts  set forth in the  statement
furnished  by the  Master  Servicer  pursuant  to  Section  4.01  hereof  in the
following order of priority and for the purposes indicated:

               (i)  to  pay  itself  the  Trustee  Fee  with   respect  to  such
        Distribution  Date  (unless  the Trustee Fee is to be paid by the Master
        Servicer out of its Master Servicing Fee);

               (ii)  to pay each Servicer its Servicing Fee with respect to such
        Distribution  Date, to the extent not retained
        by such Servicer;

               (iii) to pay the Master Servicer the Master  Servicing Fee with
        respect to such Distribution  Date, to the extent not previously paid to
        the Master Servicer;

               (iv)  to  pay  each  Credit   Enhancement   provider  its  Credit
        Enhancement Fee with respect to such  Distribution Date unless provision
        therefore is otherwise made in the Trust Agreement;

               (v) to  reimburse  the  Trustee,  the  Master  Servicer  and each
        Servicer,  in that order of priority,  for any Advance  previously  made
        that has been determined to be a Non-Recoverable Advance;

               (vi) to reimburse  Saxon  or  the  Master  Servicer for expenses
        incurred by or  reimbursable  to it pursuant to Section 6.03;

               (vii) to refund  any  overpayment  of  the Purchase  Price  of a
        Mortgage Loan; and

               (viii) to make the payments provided for in the Trust Agreement.

        (c)  Accounting.  The Master  Servicer shall keep and maintain  separate
accounting,  on a Mortgage  Loan by  Mortgage  Loan  basis,  for the  purpose of
justifying any payment to and from the Asset Proceeds Account.

        (d) Investment. No later than the close of business on the day preceding
the Master Servicer Remittance Date, the Master Servicer shall direct the Paying
Agent in writing (which may be in the form of standing  instructions)  as to the
investment of funds (which funds,  if received by noon,  Houston time,  shall be
invested in Permitted  Investments) in the Asset Proceeds Account for the period
from the Master  Servicer  Remittance  Date through the  Distribution  Date. Net
investment  income on funds in the Asset  Proceeds  Account shall be released to
the Master Servicer as part of the Master Servicer Compensation on or before the
fifth  Business  Day of the  month  following  the  month in which  the  related
Distribution  Date occurs,  unless the Trust  Agreement  provides  that such net
investment  income is to be applied to the payment of other amounts due from the
Master Servicer.

        Section 3.03.  Issuing REMIC Accounts

        (a) With  respect to any Double  REMIC  Series,  the Paying  Agent shall
establish one or more Subaccounts of the Distribution Account.  Unless otherwise
provided in the Trust Agreement,  the Subaccounts  will be Regular  Interests in
the Pooling  REMIC and the Paying Agent shall  deposit all payments with respect
to such Regular Interests into such Subaccounts.

        (b) With  respect  to any Double  REMIC  Series,  the  Paying  Agent may
establish  one or more  accounts  into which the Paying  Agent may  deposit  all
payments  on account  of the  Residual  Interest  in the  Pooling  REMIC and any
Regular  Interests in the Pooling  REMIC that are not  considered  assets of the
Issuing  REMIC and from which the  Paying  Agent may  withdraw  funds to pay the
Certificates  that do not evidence  interests in the Issuing  REMIC.  In lieu of
establishing  such accounts,  the Paying Agent may pay on each Distribution Date
to the Holders of the Certificates that do not evidence interests in the Issuing
REMIC the amounts that are due with respect to such  Certificates.  In addition,
with  respect to a Double  REMIC  Series,  upon  payment in full of all  related
Regular  Interests  and all  administrative  costs of the related Trust and each

                                       26
<PAGE>

related  REMIC,  any  amount  remaining  in the Asset  Proceeds  Account  may be
distributed directly to the Holders of the Certificate  representing  beneficial
ownership of the Residual Interest in the Pooling REMIC.

        Section 3.04.  Advances by Master Servicer and Trustee

        (a) To the  extent not made by the  Servicer  of a  Mortgage  Loan,  the
Master  Servicer  shall be  obligated  to make  Advances  with  respect  to such
Mortgage Loan to the extent the Master Servicer determines,  in good faith, that
such Advances will be recoverable from Insurance Proceeds,  Liquidation Proceeds
or  subsequent  payments by the Borrower of such  Mortgage  Loan.  If the Master
Servicer  determines  that all, or a portion  of, any  Advance  required by this
Section 3.04 is not so recoverable,  the Master Servicer shall promptly  deliver
to the  Trustee an  Officer's  certificate  setting  forth the  reasons for such
determination   and   the   amount   of   the    Non-Recoverable    Advance   (a
"Non-Recoverability Certificate"). Subject to the foregoing:

               (i) Prior to the close of business on the  Business  Day prior to
        each  Master  Servicer   Remittance  Date,  the  Master  Servicer  shall
        determine  whether and to what extent any Servicers  have failed to make
        any  Advances  in  respect  of  Monthly  Payments  that  were due on the
        previous  Due Date.  The  Master  Servicer  shall make an Advance to the
        Master  Servicer  Custodial  Account  in  the  amount,  if  any,  of the
        aggregate  Monthly  Payments  (less  applicable  Servicing  Fees) on the
        Mortgage  Loans  that  were  due on such Due  Date  but  which  were not
        received  or  advanced  by the  Servicers  and  remitted  to the  Master
        Servicer  Custodial  Account  prior to such Master  Servicer  Remittance
        Date. Each such Advance shall be remitted in immediately available funds
        to the  Master  Servicer  Custodial  Account  on or before  such  Master
        Servicer Remittance Date.

               (ii) To the extent not made by a  Servicer,  the Master  Servicer
        shall  make  Advances  from time to time for  attorneys'  fees and court
        costs incurred, or which reasonably can be expected to be incurred,  for
        the foreclosure of any Mortgage Loan or for any transaction in which the
        Trustee is expected to receive a deed in lieu of foreclosure.

               (iii) If any Mortgaged Premises shall be damaged or destroyed and
        the  Servicer  of the related  Mortgage  Loan fails to Advance the funds
        necessary  to repair or  restore  the  damaged  or  destroyed  Mortgaged
        Premises,  then the Master  Servicer  shall  Advance such funds and take
        such other  action as is  necessary  to repair or restore  the damage or
        loss.

               (iv) To the  extent a  Servicer  is  required  to  Advance  funds
        sufficient  to pay the taxes or  insurance  premiums  with  respect to a
        Mortgage Loan pursuant to a Servicing Agreement or a Servicing Guide and
        fails to make such Advance, the Master Servicer shall Advance such funds
        and take such  steps as are  necessary  to pay such  taxes or  insurance
        premiums.

               (v) If any  Servicer  fails  to  remit  to  the  Master  Servicer
        Custodial Account, on or before the Master Servicer Remittance Date, the
        full  amount of the funds in the  custody  or under the  control  of the
        Servicer  that the  Servicer is  required  to remit under its  Servicing
        Agreement,  then the  Master  Servicer  shall  Advance  and remit to the
        Master  Servicer  Custodial  Account  an  amount  equal to the  required
        remittance  on or before the  Master  Servicer  Remittance  Date for the
        month in which such funds were  required to be remitted by the  Servicer
        under the Servicing Agreement.

        (b) Any Advance  made by the Master  Servicer  under this  Section  3.04
which the Master Servicer shall ultimately  determine in its good faith judgment
to be non-recoverable from Insurance Proceeds, Liquidation Proceeds, the related
Servicer,  or  subsequent  payments by the Borrower  shall be a  Non-Recoverable
Advance.   The  determination  by  the  Master  Servicer  that  it  has  made  a
Non-Recoverable  Advance shall be evidenced by a Non-Recoverability  Certificate
of the Master  Servicer  promptly  delivered  to the Trustee  setting  forth the
reasons  for  such  determination.  Following  the  Trustee's  receipt  of  such
Non-Recoverability  Certificate,  the  Master  Servicer  shall  be  entitled  to
reimbursement for such Non-Recoverable Advance as provided herein.

        (c) If the Master  Servicer  fails to make any  Advance  required  of it
hereunder,  the Trustee shall, to the maximum extent permitted by law, make such
Advance in its stead,  and,  in such  event,  the  Trustee  shall be entitled to
receive the Master Servicing Fee payable with respect to the  Distribution  Date
related to such Master Servicer Remittance Date; provided,  however,  that in no
event shall the Trustee,  whether as Trustee,  Master  Servicer or Servicer,  be
deemed to have  assumed the  obligations  of any Person to purchase any Mortgage
Loan  from the  Trust  for  breach  of  representations  or  warranties  or as a
Converted  Mortgage  Loan or  otherwise or to make any Advances or pay Month End
Interest  with  respect to any Mortgage  Loan except to the extent  specifically
provided  in  Sections  3.04 and 3.05  hereof.  Notwithstanding  the  foregoing,

                                       27
<PAGE>

neither the Master Servicer nor the Trustee will be obligated to make an Advance
that it reasonably  believes to be a  Non-Recoverable  Advance.  The Trustee may
conclusively  rely for any  determination  to be made by it  hereunder  upon the
determination  of the  Master  Servicer  as set forth in its  Non-Recoverability
Certificate.

        (d) To the extent  that any Advance  has been made by the  Trustee,  the
Trustee shall be entitled to reimbursement therefor at the times and to the same
extent as either the Servicer or the Master Servicer would have been so entitled
had such Person  originally  made such Advance,  whether or not any provision of
the Trust  Agreement  specifically  references  the right of the Trustee to such
reimbursement. If the Trustee determines that it is prevented by law from making
an Advance,  the Trustee will notify the Master Servicer within one Business Day
of such determination.

        (e) Notwithstanding anything herein to the contrary, no Advance shall be
required  to be made by the Master  Servicer  or the  Trustee to the extent that
making  such  Advance  would  result in the amount of  aggregate  Advances  then
outstanding and unreimbursed by the Master Servicer or the Trustee to exceed the
Master Servicer Advance Amount.

        Section 3.05.  Month End Interest

        Unless otherwise provided in the Servicing Agreement, the Servicer shall
pay and deposit into the Servicer Custodial Account,  on or before each Servicer
Remittance  Date,  an amount  equal to Month End  Interest  with  respect to the
preceding month, but only to the extent of the Servicer Fee payable with respect
to the preceding  month.  Such payment will not be considered a  Non-Recoverable
Advance.  The Servicer shall not be entitled to any recovery or reimbursement of
such payment from the Master Servicer, the Trustee or the Certificateholders.

        Section 3.06.  Trustee to Cooperate; Release of Mortgage Files

        The  Trustee  shall,   if  requested  by  any  Servicer  with  a  rating
satisfactory  to the Trustee,  execute a power of appointment  pursuant to which
the Trustee shall authorize, make, constitute and appoint designated officers of
such  Servicer  with full power to execute in the name of the  Trustee  (without
recourse, representation or warranty) any deed of reconveyance, any substitution
of trustee  documents  or any other  document  to  release,  satisfy,  cancel or
discharge  any Security  Instrument or Mortgage Loan upon its payment in full or
other liquidation;  provided,  however,  that such power of appointment shall be
limited to the powers listed above.  The Servicer shall promptly  forward to the
Trustee for its files copies of all documents executed pursuant to such power of
appointment.

        Upon the liquidation of any Mortgage Loan, the Servicer of such Mortgage
Loan shall remit the  proceeds  thereof to its Servicer  Custodial  Account and,
unless such  Servicer has been given a power of  appointment  as provided in the
proceeding  paragraph,  deliver to the Master  Servicer  a Request  for  Release
requesting  that the Trustee  execute such instrument of release or satisfaction
as is necessary to release the related  Collateral from the lien of the Security
Instrument.  Upon the Master Servicer's  receipt of such Request for Release and
its  confirmation  that all amounts  required to be remitted to the  appropriate
Servicer  Custodial  Account in connection  with such  liquidation  have been so
deposited,  the Master  Servicer  shall  deliver such Request for Release to the
Trustee.  The Trustee  shall,  within five  Business Days of its receipt of such
Request for Release,  execute,  and deliver to the Servicer,  such instrument of
release or  satisfaction;  and release,  or cause the Custodian to release,  the
related Trustee  Mortgage Loan File to the Master  Servicer or the Servicer,  as
requested by the Master  Servicer.  No expenses  incurred in connection with any
instrument of satisfaction  or deed of  reconveyance  shall be chargeable to the
Master Servicer Custodial Account or the Asset Proceeds Account.

        From time to time and as appropriate for the servicing or foreclosure of
any Mortgage Loan,  including,  but not limited to,  collection  under any Title
Insurance  Policy or Credit  Enhancement  with  respect  thereto  or to effect a
partial release of any Collateral from the lien of the Security Instrument,  the
Servicer  shall deliver to the Master  Servicer a Request for Release.  Upon the
Master Servicer's  receipt of any such Request for Release,  the Master Servicer
shall  promptly  forward such Request for Release to the Trustee and the Trustee
shall,  within five  Business  Days of its receipt of such  Request for Release,
release,  or cause the Custodian to release,  the related Trustee  Mortgage Loan
File  to the  Master  Servicer  or the  Servicer,  as  requested  by the  Master
Servicer. Any such Request for Release shall obligate the Master Servicer or the
Servicer,  as the case may be, to  return  each and  every  document  previously
requested from the Trustee Mortgage Loan File to the Trustee by the twenty-first
day following the release thereof, unless (i) the related Mortgage Loan has been
liquidated and the Liquidation Proceeds relating to such Mortgage Loan have been
deposited in the Asset  Proceeds  Account or the Servicer  Custodial  Account or
(ii) the Trustee  Mortgage Loan File or such  document has been  delivered to an
attorney,  or to a public  trustee or other public  official as required by law,

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<PAGE>

for purposes of initiating or pursuing legal action or other proceedings for the
foreclosure   of  the  related   Mortgaged   Premises   either   judicially   or
non-judicially,  and  the  Master  Servicer  has  delivered  to  the  Trustee  a
certificate of the Master Servicer or the Servicer certifying as to the name and
address of the Person to which such Trustee  Mortgage Loan File or such document
was delivered and the purpose or purposes of such  delivery.  Upon receipt of an
Officer's  certificate of the Master Servicer or the Servicer  stating that such
Mortgage Loan was liquidated and that all amounts  received or to be received in
connection  with such  liquidation  which are required to be deposited  into the
Servicer Custodial Account or the Asset Proceeds Account have been so deposited,
or that such  Mortgage  Loan is  secured by an REO  Property,  the  Request  for
Release shall be released by the Trustee to the Master Servicer or the Servicer,
as appropriate.

        Upon written  certification of the Master Servicer or the Servicer,  the
Trustee  (subject to Section 8.01(e)  hereof),  shall execute and deliver to the
Master  Servicer or the  Servicer,  as directed  by the Master  Servicer,  court
pleadings,  requests  for  trustee's  sale or  other  documents  necessary  to a
foreclosure  proceeding or trustee's sale in respect of a Mortgaged  Premises or
to any legal  action  brought to obtain  judgment  against  any  Borrower on any
Mortgage Note or Security Instrument or to obtain a deficiency  judgment,  or to
enforce any other  remedies or rights  provided by any Mortgage Note or Security
Instrument or otherwise  available at law or in equity.  Each such certification
shall  include a request  that such  pleadings,  requests or other  documents be
executed  by the  Trustee  and a  statement  as to the  reason  such  pleadings,
requests or other  documents  are required and that the  execution  and delivery
thereof by the Trustee will not  invalidate or otherwise  affect the lien of the
Security  Instrument,  except for the termination of such a lien upon completion
of the foreclosure proceeding or trustee's sale.

        The Master  Servicer or Servicer may provide an electronic  transmission
for  release of  documents  in a form,  which  complies  in all  respects to the
requirements  of FNMA or GNMA or in a form mutually  acceptable to the Custodian
and either  the  Master  Servicer  or  Servicer,  and is agreed to in advance of
initial transmission by both the Master Servicer or Servicer, as applicable, and
the Custodian,  containing  information  readable  without  intervention  by the
Custodian's data processing operations computer hardware and software staff, and
arranged  in a record  layout  to be  specified  by the  Custodian.  The  Master
Servicer  and  Servicer  agree to  maintain  and  control  access to  electronic
signature information and assume liability for any unauthorized use thereof. The
Master  Servicer  and  Servicer  also  agree to  maintain  accurate  records  of
electronic  transactions  related to the  Mortgage  Files.  For purposes of this
Agreement  the  term  "electronic   signature"  is  defined  as  an  "electronic
identifier  intended by the person using it to have the same force and effect as
the use of manual signature."

        Section 3.07.  Reports to the Trustee; Annual Compliance Statements

        The Master Servicer shall deliver to the Trustee,  on or before March 31
of each year, an Annual Compliance Statement with respect to the Trust Agreement
(if the  Master  Servicer  entered  into the Trust  Agreement  on or before  the
preceding December 31), signed by an Officer of the Master Servicer,  certifying
that (i) such Officer has reviewed the activities of the Master  Servicer during
the preceding  calendar year or portion  thereof and its  performance  under the
Trust Agreement and (ii) to the best of such Officer's knowledge,  based on such
review,   the  Master   Servicer  has   performed   and  fulfilled  its  duties,
responsibilities  and  obligations  under the Trust  Agreement  in all  material
respects  throughout  such  year,  or,  if  there  has  been  a  default  in the
fulfillment of any such duties, responsibilities or obligations, specifying each
such default known to such Officer and the nature and status thereof,  and (iii)
(A) an Officer of the Master Servicer has conducted an examination (based solely
on  information  and written  reports  furnished by each  Servicer to the Master
Servicer) of the activities of each Servicer during the preceding  calendar year
and the performance of such Servicer under the related Servicing Agreement,  (B)
an Officer of the Master Servicer has examined each Servicer's Fidelity Bond and
Errors  and  Omissions  Policy  and each such  bond or  policy is in effect  and
conforms to the requirements of the related Servicing Agreement,  (C) the Master
Servicer  has  received  from  each  Servicer  such  Servicer's  annual  audited
financial statements and such other information as is required by the applicable
Servicing  Agreement  or Servicing  Guide and (D) to the best of such  Officer's
knowledge, based on such examination,  each Servicer has performed and fulfilled
its duties,  responsibilities  and obligations under its Servicing  Agreement in
all material  respects  throughout such year, or, if there has been a default in
the  performance  or  fulfillment  of  any  such  duties,   responsibilities  or
obligations,  specifying  each such default known to such Officer and the nature
and status  thereof.  The Trustee shall provide copies of the Annual  Compliance
Statement to any Certificateholder  upon written request provided such statement
is delivered, or caused to be delivered, by the Master Servicer to the Trustee.

        Section 3.08.  Title, Management and Disposition of REO Properties

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<PAGE>

        (a) If any  Mortgaged  Premises  becomes  an REO  Property,  the  Master
Servicer  shall  use its best  efforts  to cause  the  Servicer  of the  related
Mortgage Loan to manage, conserve, protect and operate such REO Property for the
benefit  of  the  Certificateholders  solely  for  the  purpose  of  its  prompt
disposition  and sale.  If one or more REMIC  elections are made with respect to
the assets of the Trust, the Master Servicer shall use its best efforts to cause
the Servicer to use its best efforts to dispose of any REO Property for its fair
market value by not later than October 31 of the third year  following  the year
of its  acquisition  by the  Trust,  unless  the  Trustee  has been  granted  an
extension  of time to  dispose  of such REO  Property  by the  Internal  Revenue
Service  pursuant  to section  856(e)(3)  of the Code (an  "Extension").  If the
Trustee has been granted an Extension, the Master Servicer shall continue to use
its best efforts to have the Servicer  sell the REO Property for its fair market
value for the period ending two months prior to the time such Extension  expires
(the  "Extended  Period").  If the  Servicer  is  unable to  dispose  of any REO
Property within such original period or Extended Period, as the case may be, the
Master  Servicer  shall use its best efforts to ensure that such REO Property is
auctioned to the highest  bidder within one month after the end of such original
period or Extended Period,  as the case may be. If no REMIC election has been or
is to be made with  respect  to the  assets of the  Trust,  the time  period for
disposing of any REO Property as specified in the preceding two sentences  shall
be within eleven  months of its  acquisition  by the Trust.  In the event of any
such sale or auction of an REO  Property,  the  Trustee  shall,  at the  written
request of the Master  Servicer and upon being provided with  appropriate  forms
therefor,  within five Business Days of its receipt of the proceeds of such sale
or auction, release or cause to be released to the purchaser the related Trustee
Mortgage  Loan  File and  Servicer  File and  shall  execute  and  deliver  such
instruments of transfer or assignment,  in each case without recourse,  as shall
be necessary to vest in the  purchaser  title to the REO  Property,  and upon so
doing the  Trustee  shall have no  further  responsibility  with  regard to such
Trustee  Mortgage Loan File or Servicer  File.  Neither the Trustee,  the Master
Servicer  nor the  Servicer,  acting  on  behalf  of the  Trust,  shall  provide
financing from the Trust to any purchaser of an REO Property.

        (b) If title to any REO Property is acquired, the deed or certificate of
sale shall be issued to the Trustee  for the benefit of the  Certificateholders.
Each  Servicer  shall,  in  accordance  with  Section  3.08(a)  hereof,  use its
reasonable efforts to sell any REO Property as expeditiously as possible, but in
any event within the time  period,  and subject to the  conditions  set forth in
Section 3.08(a) hereof.  Pursuant to its efforts to sell any REO Property,  each
Servicer  shall either  itself,  or through an agent selected by it, protect and
conserve  such REO  Property  in the same  manner  and to the same  extent as it
customarily  does in  connection  with  its own  real  estate  acquired  through
foreclosure or by deed in lieu of foreclosure,  incident to its conservation and
protection  of the  interests of the  Certificateholders,  and may rent such REO
Property,  or any part thereof,  as it deems likely to increase the net proceeds
distributable  to the  Certificateholders,  subject to the terms and  conditions
described in this Section 3.08.

        For  the  purpose  of  protecting  the  interests  of  the  Trustee  and
conserving any REO Property prior to sale, the Servicer of the related  Mortgage
Loan  may  contract  with  any  Independent  Contractor  for  the  conservation,
protection and rental of such REO Property, provided that:

               (i)  the terms  and  conditions of  any such contract may not be
        inconsistent herewith;

               (ii) any such contract shall require, or shall be administered to
        require, that the Independent  Contractor (A) pay all costs and expenses
        incurred in connection  with the  operation  and  management of such REO
        Property,  (B) hold all related revenues in a segregated account insured
        by the Federal Deposit  Insurance  Corporation and (C) remit all related
        revenues  collected  (net of such costs and  expenses  retained  by such
        Independent  Contractor)  to the Servicer on a monthly or more  frequent
        basis; and

               (iii) none of the provisions of this Section 3.08 relating to any
        such  contract  or  to  actions  taken  through  any  such   Independent
        Contractor  shall be deemed to relieve the Servicer of any of its duties
        and obligations to the Trustee and the  Certificateholders  with respect
        to the conservation, protection and rental of such REO Property.

        A  Servicer  shall be  entitled  to enter  into any  agreement  with any
Independent  Contractor  performing  services  for it  related to its duties and
obligations  hereunder for  indemnification  of the Servicer by such Independent
Contractor,  and  nothing in this  Agreement  shall be deemed to limit or modify
such indemnification. A Servicer or any Independent Contractor shall be entitled
to a fee,  based on the  prevailing  market  rate  (and  set in good  faith at a
reasonable level in the case of a fee payable to a Servicer),  for the operation
and  management of any REO Property,  which fee shall be an expense of the Trust
payable out of the gross income on such REO Property.

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<PAGE>

        (c) A  Servicer  shall  deposit  all funds  collected  and  received  in
connection  with the  operation of any REO  Property in its  Servicer  Custodial
Account on or before the second Business Day following receipt of such funds.

        (d) A Servicer, upon the final disposition of any REO Property, shall be
entitled to be  reimbursed  for any  unreimbursed  Advances  and paid any unpaid
Servicing  Fees with respect to the related  Mortgage Loan from the  Liquidation
Proceeds received in connection with the final disposition of such REO Property;
provided,  however, that any such unreimbursed Advances or unpaid Servicing Fees
may be  reimbursed  or paid, as the case may be, out of any net rental income or
other net amounts derived from such REO Property.

        (e) The final  disposition of any REO Property shall be carried out by a
Servicer at the fair market value of such REO Property  under the  circumstances
existing at the time of  disposition  and upon such terms and conditions as such
Servicer  shall  deem  necessary  or  advisable  and as are in  accordance  with
accepted servicing practices and in accordance with Section 3.08(a) hereof.

        (f) A Servicer  shall  deposit the  Liquidation  Proceeds from the final
disposition of any REO Property in its Servicer  Custodial  Account on or before
the second  Business Day  following  receipt of such  Liquidation  Proceeds and,
subject to such withdrawals as may be permitted by Section 3.08(d) hereof,  such
proceeds shall be transferred to the Asset Proceeds  Account pursuant to Section
3.01(c) hereof.

        (g) A  Servicer  shall  prepare  and file  reports  of  foreclosure  and
abandonment in accordance with section 6050J of the Code.

        (h) Notwithstanding  any other provision of this Agreement,  a Servicer,
acting on behalf of the Trustee,  shall not rent, lease or otherwise earn income
or take any action on behalf of the Trust with respect to any REO Property  that
might (i) cause such REO Property to fail to qualify as  "foreclosure  property"
within  the  meaning  of section  86OG(a)(8)  of the Code or (ii)  result in the
receipt  by the REMIC of any  "income  from  non-permitted  assets"  within  the
meaning of section  86OF(a)(2)  of the Code or any "net income from  foreclosure
property"  within the meaning of section  860G(c)(2) of the Code,  both of which
types of income  are  subject  to tax under the  REMIC  Provisions,  unless  the
Trustee has  received  an Opinion of  Counsel,  at the expense of the Trust (the
costs of which shall be recoverable  out of such Servicer's  Servicer  Custodial
Account),  to the  effect  that,  under the REMIC  Provisions  and any  relevant
proposed  legislation,  any income  generated  for any related REMIC by such REO
Property would not result in the imposition of a tax upon such REMIC.

        Without  limiting the generality of the foregoing,  neither the Trustee,
the Master Servicer nor a Servicer shall knowingly:

               (i) enter into, renew or extend any New Lease with respect to any
        REO  Property if the New Lease by its terms will give rise to any income
        that does not constitute Rents From Real Property;

               (ii) permit any amount to be  received  or accrued  under any New
        Lease other than amounts that will constitute Rents From Real Property;

               (iii)  authorize or permit any  construction on any REO Property,
        other than the completion of a building or other improvement thereon and
        then only if more than ten percent of the  construction of such building
        or  other  improvement  was  completed  before  default  on the  related
        Mortgage  Loan  became  imminent,  all  within  the  meaning  of section
        856(e)(4)(B) of the Code; or

               (iv)  Directly  Operate,  or allow any other  Person to  Directly
        Operate,  any REO  Property  on any date  more  than 90 days  after  its
        acquisition  date (unless the Person who would Directly Operate such REO
        Property is an Independent Contractor);

unless, in any such case, the Person proposing to take such action has requested
and received  the Opinion of Counsel  described in the  preceding  sentence,  in
which case the Person may take such actions as are  specified in such Opinion of
Counsel.

        A Servicer  shall not  acquire  any  personal  property  relating to any
Mortgage Loan pursuant to this Section 3.08 unless either:

               (i) such personal  property is incident to real property  (within
        the meaning  of section  856(e)(1) of  the  Code) so  acquired  by such
        Servicer; or

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<PAGE>

               (ii) such Servicer  shall have  requested and received an Opinion
        of  Counsel,  at the  expense of the Trust (the costs of which  shall be
        recoverable out of its Servicer Custodial  Account),  to the effect that
        the holding of such  personal  property  by the  related  REMIC will not
        cause the  imposition  of a tax under the REMIC  Provisions on any REMIC
        related  to the Trust or cause any such  REMIC to fail to  qualify  as a
        REMIC at any time that any Certificate is outstanding.

        (j) Any actions  required or permitted  to be taken by a Servicer  under
this  Section  3.08  may be taken  by the  Master  Servicer  on  behalf  of such
Servicer.

        (k) Each Servicing Agreement relating to a Trust Agreement shall provide
that the related  Servicer shall manage,  conserve,  protect and operate any REO
Property as provided in this  Section  3.08,  and the Master  Servicer is hereby
obligated to assure that each  Servicer  complies  with the  provisions  of this
Section 3.08.

        Section 3.09.  Amendments to Servicing Agreements; Modification of  the
Servicing Guides

        From time to time Saxon may, to the extent  permitted by the  applicable
Servicing  Agreement,  make such  modifications  and  amendments  to the related
Servicing  Guide as Saxon deems necessary or appropriate to confirm or carry out
more fully the intent and purpose of such  Servicing  Agreement  and the duties,
responsibilities  and  obligations  to be performed by the Servicer  thereunder;
provided,  however,  that in no event  shall  Saxon  modify or amend a Servicing
Guide if such  modification  or  amendment  would have an adverse  effect on the
Certificateholders.  Any such  modification  or amendment  of a Servicing  Guide
shall be deemed to have an  adverse  effect  on the  Certificateholders  if such
amendment or modification either (i) results in and of itself in the downgrading
of the rating assigned by any Rating Agency to the  Certificates or (ii) results
in the loss by the Trust or the  assets  thereof  of REMIC  status  for  federal
income  tax  purposes.  Prior  to the  issuance  of  any  such  modification  or
amendment,  Saxon  shall  deliver  to the  Master  Servicer  and the  Trustee an
Officer's  certificate setting forth (i) the provision that is to be modified or
amended,  (ii) the  modification  or amendment  that Saxon  desires to issue and
(iii) the reason or reasons for such proposed modification or amendment.

        Section 3.10.  Oversight of Servicing

        The Master Servicer shall supervise, administer, monitor and oversee the
servicing of the Mortgage  Loans by each  Servicer and the  performance  by each
Servicer of all services,  duties,  responsibilities and obligations that are to
be  observed  or  performed  by such  Servicer  under  its  Servicing  Agreement
(including,  but not limited to, such  Servicer's  obligation to comply with the
provisions  of Section 3.08  hereof).  Without  limiting the  generality  of the
foregoing, the Master Servicer,  acting with the consent of Saxon and subject to
Section   1.03   hereof  but   without   the  consent  of  the  Trustee  or  any
Certificateholder,  shall have the power and  responsibility  for  approving the
transfer or other assignment of any Servicing  Agreement by any Servicer.  Saxon
shall  provide  the  Master  Servicer  with a copy  of the  Servicing  Agreement
executed  by each  Servicer  as  well as any  Servicing  Guide  incorporated  by
reference  into such  Servicing  Agreement  on or before the Closing  Date.  The
Master Servicer  acknowledges  that, prior to taking certain actions required to
service the Mortgage Loans, as set forth in the applicable  Servicing  Agreement
or Servicing Guide the Servicer must notify, consult with, obtain the consent of
or otherwise follow the instructions of the Master Servicer. The Master Servicer
shall have authority to waive compliance by the Servicer with certain provisions
of the Servicing  Agreement to the extent set forth in the applicable  Servicing
Agreement or Servicing  Guide. In each such instance,  the Master Servicer shall
promptly  instruct  the  Servicer  or  otherwise  respond to any  request of the
Servicer as the Master  Servicer deems  appropriate,  provided that, in no event
shall the Master  Servicer  instruct the  Servicer to take any action,  give any
consent to action by the Servicer or waive  compliance  by the Servicer with any
provision of the Servicing  Agreement if any resulting  action or failure to act
is  inconsistent  with the  obligations  of the  Servicer  for  similarly  rated
transactions    or   would   otherwise   have   an   adverse   effect   on   the
Certificateholders. Any such action or failure to act shall be deemed to have an
adverse effect on the Certificateholders if such action or failure to act either
results (i) in and of itself,  in the  downgrading of the rating assigned by any
Rating Agency to the Certificates or (ii) in the loss by the Trust or the assets
thereof of REMIC status for federal income tax purposes.

        The Master Servicer shall instruct each Servicer that it should not take
any action to foreclose,  or accept a deed in lieu of foreclosure,  with respect
to any Mortgage Loan if such  Servicer  knows,  or has reason to know,  that the
related Mortgaged Premises are contaminated with toxic wastes or other hazardous
substances.

        During  the term of the  Trust  Agreement,  the  Master  Servicer  shall
consult  fully  with  each  Servicer  as may be  necessary  from time to time to
perform and carry out the Master Servicer's  obligations  hereunder and receive,

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<PAGE>

review and evaluate all reports, information and other data that are provided to
the Master Servicer by each Servicer and otherwise  exercise  reasonable efforts
to encourage each Servicer to perform and observe the covenants, obligations and
conditions to be performed or observed by it under its Servicing Agreement.

        For the purposes of determining  whether any  modification of a Mortgage
Loan shall be permitted by the Trustee or the Master Servicer, such modification
shall be  construed as a  substitution  of the  modified  Mortgage  Loan for the
Mortgage Loan originally  assigned and transferred to the Trust. No modification
shall be approved  unless (i) such  modification  is  occasioned by default or a
reasonably  foreseeable  default or (ii) there is  delivered  to the  Trustee an
Opinion of Counsel (at the expense of the party  seeking to modify the  Mortgage
Loan) to the effect that such  modification  would not be treated as giving rise
to a new debt instrument for federal income tax purposes.

        The  relationship  of the Master Servicer or any Servicer to the Trustee
under  the  Trust  Agreement  is  intended  by  the  parties  to be  that  of an
independent contractor and not that of a joint venturer or partner.

        Section 3.11.  Credit Enhancement

        To the  extent  provided  in the Trust  Agreement,  one or more forms of
Credit    Enhancement   shall   be   maintained   for   the   benefit   of   the
Certificateholders.  The Trust Agreement shall specify with respect to each such
form of Credit  Enhancement,  among other things,  the manner in which any funds
relating to such Credit Enhancement are to be invested, the source and manner of
payment of any Credit Enhancement Fees, the  circumstances,  if any, under which
supplemental or replacement Credit Enhancement shall be obtained,  the manner in
which such  Credit  Enhancement  is to be  enforced,  and  whether  such  Credit
Enhancement covers or will cover other Series of Certificates.

                                   Article IV
                    Reporting/Remitting to Certificateholders

        Section 4.01.  Statements to Certificateholders

        Unless otherwise provided in the Trust Agreement:  (i) on or before each
Master Servicer Reporting Date, the Master Servicer shall prepare and deliver to
Saxon and the Paying Agent a Monthly Statement and (ii) on the Distribution Date
following each Master Servicer Reporting Date, the Master Servicer shall prepare
and mail a copy of such Monthly  Statement to the Trustee,  the Rating Agencies,
the Underwriters and each Certificateholder.

        In addition to the Monthly Statement,  the Master Servicer shall prepare
and deliver to the Paying Agent prior to each Distribution  Date, and the Paying
Agent shall  forward to each Holder of a Residual  Certificate,  if any, on each
Distribution  Date, a statement  setting forth the amounts actually  distributed
with  respect to the Residual  Certificates  on such  Distribution  Date and the
aggregate  Certificate  Principal Balance, if any, of any Residual  Certificates
after giving effect to any  distribution to be made on such  Distribution  Date,
separately  identifying the amount of Realized Losses allocated to such Residual
Certificates for the preceding Prepayment Period.

        Within a reasonable  period of time after the end of each calendar year,
the  Master  Servicer  shall  prepare,  based  on  information  provided  by the
Servicers,  and deliver a statement setting forth the distributions  (based on a
Certificate in the original  principal  amount of $1,000)  allocable to interest
and  principal  to each  Person who at any time during the  calendar  year was a
Certificateholder   that   constituted  a  retail   investor  or  to  any  other
Certificateholder  that requests such  statement,  aggregated  for such calendar
year or portion thereof during which such Person was a  Certificateholder.  Such
obligation of the Master  Servicer shall be deemed to have been satisfied to the
extent that substantially comparable information shall be provided by the Master
Servicer  pursuant to any  requirements  of the Code as from time to time are in
effect.

        Within a reasonable  period of time after the end of each calendar year,
the Master  Servicer  shall prepare and deliver to the Trustee,  and the Trustee
shall  forward by mail to each Person who at any time during such  calendar year
was a Holder of a Residual  Certificate,  a statement containing the information
provided pursuant to the second preceding paragraph aggregated for such calendar
year.  Such  obligation  of the  Master  Servicer  shall be  deemed to have been
satisfied  to the extent  that  substantially  comparable  information  shall be
provided by the Trustee pursuant to any requirements of the Code as from time to
time are in effect.

        Access to the Monthly Statements and other statements  described in this
Section  4.01  may be  provided  via  electronic  on-line  reports  in  lieu  of
forwarding  such  statements  by mail to  Certificateholders  provided that such
electronic  on-line reports satisfy the requirements of the Code as from time to
time may be in effect.

        Section 4.02.  Remittance Reports

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<PAGE>

        The Master  Servicer  shall  prepare and deliver to the Trustee by mail,
facsimile or  electronic  transfer on or before each Master  Servicer  Reporting
Date, the  Remittance  Report with respect to the following  Distribution  Date.
Each  Remittance  Report shall  contain the  information  specified in Exhibit C
attached  hereto.  The information in such report shall be made available by the
Trustee to any Certificateholder that requests such report in writing.

        If the Master  Servicer  does not furnish the  Remittance  Report or any
other  statement  or report as required  by this  Section  4.02 or Section  4.01
hereof,  or if an Officer of the  Trustee  has  actual  knowledge  that any such
Remittance Report or other statement or report is erroneous or inaccurate in any
material respect, and if any such Remittance Report or other statement or report
is not  furnished  or  corrected,  as the case may be,  within one  Business Day
following the date it is due to be delivered, then the Trustee shall request and
the Master Servicer shall furnish by electromagnetic  tape (or such other medium
as the  Trustee  and the  Master  Servicer  may  agree  from  time to time)  the
information necessary to enable the Trustee to prepare the Remittance Report and
the other  statements  and reports as required by this  Section 4.02 and Section
4.01 hereof, and the Trustee shall thereupon prepare such report and receive the
Master  Servicing Fee for such month.  Upon  termination of the Master  Servicer
pursuant to Section 7.02 hereof, the Trustee shall thereafter  undertake all the
obligations  of the Master  Servicer  pursuant to this  Section 4.02 and Section
4.01 hereof and shall be entitled to the compensation  otherwise  payable to the
Master  Servicer  pursuant  hereto in  consideration  of the performance of such
obligations.

        The  Trustee  shall be under no duty and  shall  have no  obligation  to
recalculate, verify or recompute the information provided to it hereunder by the
Master Servicer.

        Section 4.03.  Compliance with Withholding Requirements

        Notwithstanding any other provision of the Trust Agreement,  each of the
Trustee  and  the  Paying  Agent  shall  comply  with  all  federal  withholding
requirements  respecting payments to  Certificateholders of interest or original
issue  discount  on the  Certificates  that  the  Trustee  or the  Paying  Agent
reasonably   believes   are   applicable   under  the  Code.   The   consent  of
Certificateholders  shall not be required  for such  withholding.  If either the
Trustee or the Paying Agent does  withhold any amount from  interest or original
issue discount payments or Advances thereof to any Certificateholder pursuant to
federal  withholding  requirements,  the Paying  Agent shall  indicate  with any
payment to such Certificateholder the amount withheld.

        Section 4.04.  Reports to the Clearing Agency

        If and for so long as any Certificate is held by a Clearing  Agency,  on
each Master Servicer  Remittance Date, the Paying Agent shall telecopy a copy of
the Monthly Statement to the Clearing Agency together with a statement as to (i)
the Distribution Date and (ii) the Record Date for such Distribution Date.

        Section 4.05.  Preparation of Regulatory Reports

        (a) Subject to the provisions of subsections (b) and (c) of this Section
4.05, the Master  Servicer  shall prepare or cause to be prepared,  on behalf of
the  Trust,  and  shall  file or  cause to be  filed  in a  timely  manner  such
supplementary  and periodic  information,  documents and reports  (collectively,
"Periodic  Reports")  as may be required  pursuant  to Section  12(g) or Section
15(d) of the Exchange Act, by the rules and regulations of the SEC thereunder or
as a condition  to  approval of any  application  for relief  ("Application  for
Relief")  hereinafter  referred to and, in connection  therewith,  shall prepare
such  applications  and  requests  for  exemption  and  other  relief  from such
provisions as it may deem appropriate.  If any Periodic Report is required to be
signed by Saxon or the Trustee  rather than by the Master  Servicer,  the Master
Servicer  shall be deemed to certify as to each  Periodic  Report  delivered  to
Saxon or the  Trustee for its review and  execution  that such  Periodic  Report
conforms in all material respects to applicable  reporting  requirements imposed
by the Exchange Act or is otherwise in form and content  appropriate  for filing
with the SEC.  Saxon or the Trustee shall execute all such Periodic  Reports and
Applications for Relief delivered as provided above and shall return the same to
the Master  Servicer for filing with the SEC and other required  filing offices,
if any, on behalf of the Trust or shall authorize the Master Servicer to execute
any such Periodic Report or Application for Relief on the Trustee's behalf.

        (b) Within 30 days after the  beginning  of the first fiscal year of the
Trust during  which the  obligation  to file  Periodic  Reports  pursuant to the
Exchange Act shall have been suspended,  the Master  Servicer shall prepare,  or
cause to be prepared, a notice on SEC Form 15 ("Form 15") and shall forward such
notice to the Trustee for  execution.  The Trustee  shall  execute  each Form 15
delivered as provided above and shall return the same to the Master Servicer for

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filing  with  the SEC on  behalf  of the  Trust or shall  authorize  the  Master
Servicer to execute such Form 15 on the  Trustee's  behalf;  provided,  however,
that the Master  Servicer shall be under no obligation to prepare such notice if
the number of  Certificateholders  exceeds 300. The Certificate  Registrar shall
notify   the   Master   Servicer   in  a  timely   manner   if  the   number  of
Certificateholders  at any one time exceeds 300. The Master  Servicer shall file
any Form 15 with the SEC in accordance  with the  provisions of Rule 15d-6 under
the Exchange Act.

        (c) Notwithstanding  any other provision of this Agreement,  none of the
Master Servicer, the Certificate Registrar, the Paying Agent, or the Trustee has
assumed,  and shall not by its performance  hereunder be deemed to have assumed,
any of the duties or  obligations  of Saxon or any other  Person with respect to
(i) the  registration of the  Certificates  pursuant to the Securities Act, (ii)
the issuance or sale of the Certificates or (iii) compliance with the provisions
of the  Securities  Act,  the Exchange  Act or any  applicable  federal or state
securities  or other laws,  including,  but not limited to, any  requirement  to
update the registration  statement or prospectus relating to the Certificates in
order to render the same not materially misleading to investors.

        (d) In connection with the Master Servicer's  preparation of any Form 15
or any Periodic  Report,  the  Certificate  Registrar  shall  provide the Master
Servicer with such  information as the Master  Servicer may  reasonably  request
concerning the number and identity of the Holders  appearing on the  Certificate
Register,  but the  Certificate  Registrar  shall have no duty or  obligation to
provide information which does not appear on the Certificate Register, including
any  information  concerning  the ownership of Persons for whom a nominee is the
Certificateholder of record.

                                    Article V
                   The Pooling Interests and the Certificates

        Section 5.01.  Pooling REMIC Interests

        If an election has been made to treat  certain  assets of the Trust as a
Pooling  REMIC,  the Trust  Agreement  will set  forth the terms of the  Regular
Interests  and the  Residual  Interest of the Pooling  REMIC.  Unless  otherwise
provided  in the  Trust  Agreement,  (i) the  Subaccounts  will  be the  Regular
Interests  in  the  Pooling  REMIC  but  will  not   constitute   securities  or
certificates  of interest in the Trust and (ii) the Trustee will be the owner of
the  Subaccounts,  which  may not be  transferred  to any  person  other  than a
successor  trustee  appointed  pursuant to Section 8.07 hereof  unless the party
desiring the transfer obtains a Special Tax Opinion.

        Section 5.02.  The Certificates

        The  Certificates  shall  be  designated  in the  Trust  Agreement.  The
Certificates  in the aggregate  will represent the entire  beneficial  ownership
interest in the Trust  Estate.  On the Closing Date,  the aggregate  Certificate
Principal  Balance of the Certificates  will be equal to or less than the sum of
(i) the aggregate  Scheduled  Principal Balance of the Initial Mortgage Loans as
of the  Cut-Off  Date  and  (ii)  the  amount  in the  Pre-Funded  Account.  The
Certificates  will be substantially in the forms annexed to the Trust Agreement.
Unless otherwise provided in the Trust Agreement, the Certificates of each Class
will be issuable in registered form, in  denominations or authorized  Percentage
Interests as described in the definition  thereof.  Each  Certificate will share
ratably in all rights of the related Class.

        Upon original issue, the Certificates shall be executed and delivered by
the Trustee and the Trustee shall cause the  Certificates to be authenticated by
the  Certificate  Registrar  to or upon the order of Saxon  upon  receipt by the
Trustee of the  documents  specified in Section 2.01  hereof.  The  Certificates
shall be executed and attested by manual or facsimile signature on behalf of the
Trustee by an authorized Officer.  Certificates  bearing the manual or facsimile
signatures  of  individuals  who  were at any time the  proper  Officers  of the
Trustee shall bind the Trustee,  notwithstanding that such individuals or any of
them have ceased to hold such  offices  prior to the  execution  and delivery of
such Certificates or did not hold such offices at the date of such Certificates.
The  Certificate  shall  be  authenticated  by a  manual  signature  of  a  duly
authorized  signatory of the  Certificate  Registrar.  No  Certificate  shall be
entitled to any benefit  under the Trust  Agreement  or be valid for any purpose
unless  there  appears  on such  Certificate  a  certificate  of  authentication
substantially  in the form  provided  in the  Trust  Agreement  executed  by the
Certificate   Registrar   by  manual   signature,   and  such   certificate   of
authentication  shall be conclusive evidence,  and the only evidence,  that such
Certificate has been duly authenticated and delivered under the Trust Agreement.
All Certificates shall be dated the date of their execution.

        Section 5.03.  Book-Entry Certificates

        (a) The Book-Entry Certificates shall be represented initially by one or
more  certificates  registered in the name  designated  by the Clearing  Agency.

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Saxon, the Master Servicer the Certificate  Registrar,  the Paying Agent and the
Trustee may for all intents and  purposes  (including  the making of payments on
the  Book-Entry  Certificates)  deal with the Clearing  Agency as the authorized
representative  of the Beneficial  Owners of the Book-Entry  Certificates for as
long as such Certificates are registered in the name of the Clearing Agency. The
rights of Beneficial Owners of the Book-Entry  Certificates  shall be limited to
those  established by law and agreements  between such Beneficial Owners and the
Clearing Agency and Clearing Agency  Participants.  The Beneficial Owners of the
Book-Entry Certificates shall not be entitled to certificates for the Book-Entry
Certificates as to which they are the Beneficial  Owners,  except as provided in
subsection (c) below.  Requests and directions  from, and votes of, the Clearing
Agency, as Certificateholder, shall not be deemed to be inconsistent if they are
made with respect to different  Beneficial Owners. A Book-Entry  Certificate may
not be  transferred  by the Clearing  Agency  without the consent of Saxon,  the
Master Servicer and the Trustee except to another Clearing Agency that agrees to
hold such  Book-Entry  Certificate  for the account of the  respective  Clearing
Agency Participants and Beneficial Owners.

        (b) Neither Saxon, the Master Servicer, the Certificate  Registrar,  the
Paying  Agent nor the  Trustee  shall have any  liability  for any aspect of the
records  relating  to or payment  made on account  of  Beneficial  Owners of the
Book-Entry   Certificates  held  by  the  Clearing  Agency,  for  monitoring  or
restricting any transfer of beneficial ownership in a Book-Entry  Certificate or
for  maintaining,   supervising  or  reviewing  any  records  relating  to  such
Beneficial Owners.

        (c) The  Book-Entry  Certificates  shall be issued in fully  registered,
certificated  form to  Beneficial  Owners of  Book-Entry  Certificates  or their
nominees,  rather than to the Clearing Agency or its nominee,  only if (i) Saxon
advises the Trustee in writing that the Clearing  Agency is no longer willing or
able to discharge  properly its  responsibilities  as depository with respect to
the Book-Entry Certificates, and Saxon is unable to locate a qualified successor
within 30 days, or (ii) Saxon, at its option, elects to terminate the book-entry
system operating through the Clearing Agency. Upon the occurrence of either such
event,  the  Trustee  shall  notify  the  Clearing  Agency  and the  Certificate
Registrar,  which in turn  shall  notify  all  Beneficial  Owners of  Book-Entry
Certificates  through  Clearing  Agency  Participants,  of the  availability  of
certificated  Certificates.  Upon  surrender  by  the  Clearing  Agency  of  the
certificates   representing   the   Book-Entry   Certificates   and  receipt  of
instructions for  re-registration,  the Certificate  Registrar shall reissue the
Book-Entry  Certificates as certificated  Certificates to the Beneficial  Owners
identified in writing by the Clearing  Agency.  Such  certificated  Certificates
shall not constitute  Book-Entry  Certificates.  All reasonable costs associated
with the preparation and delivery of certificated Certificates shall be borne by
Saxon.

        Section 5.04.  Registration of Transfer and Exchange of Certificates

        The Certificate  Registrar shall cause to be kept at its Corporate Trust
Office a Certificate Register in which,  subject to such reasonable  regulations
as  it  may  prescribe,   the  Certificate   Registrar  shall  provide  for  the
registration of  Certificates  and of transfers and exchanges of Certificates as
provided in the Trust  Agreement.  The Certificate  Registrar  designated in the
related Trust Agreement  shall initially serve as Certificate  Registrar for the
purpose of registering  Certificates and transfers and exchanges of Certificates
as provided in the Trust  Agreement.  Upon any  resignation  of any  Certificate
Registrar, the Trustee shall promptly appoint, subject to Section 1.03 hereof, a
successor  or, in the absence of such  appointment,  shall  assume the duties of
Certificate Registrar. The Trustee shall have no liability or responsibility for
any act or omission to act of any Certificate  Registrar  (unless the Trustee is
then serving as such Certificate  Registrar)  appointed pursuant to the terms of
the related Trust Agreement.  The Certificate Registrar shall be entitled to the
same rights,  privileges and immunities accorded the Trustee pursuant to Article
VIII hereof.

        Subject to Section 5.05  hereof,  upon  surrender  for  registration  of
transfer of any  Certificate  at the Corporate  Trust Office of the  Certificate
Registrar  or at  any  other  office  or  agency  of the  Certificate  Registrar
maintained  for such  purpose,  the Trustee  shall  execute and the  Certificate
Registrar  shall  authenticate  and  deliver,  in the  name  of  the  designated
transferee or transferees,  one or more new  Certificates of the same Class of a
like aggregate Percentage Interest.

        At  the  option  of  the  Certificateholders,  each  Certificate  may be
exchanged for other  Certificates of the same Class with the same and authorized
denominations  and a like aggregate  Percentage  Interest upon surrender of such
Certificate  to be  exchanged  at  any  such  office  or  agency.  Whenever  any
Certificates  are so  surrendered  for  exchange,  the Trustee shall execute and
cause the  Certificate  Registrar to authenticate  and deliver the  Certificates
which the  Certificateholder  making the exchange is entitled to receive.  Every
Certificate  presented  or  surrendered  for  transfer or exchange  shall (if so
required by the Certificate Registrar) be duly endorsed by, or be accompanied by
a written  instrument  of transfer  in a form  satisfactory  to the  Certificate
Registrar duly executed by, the Holder of such  Certificate or his attorney duly
authorized in writing.

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<PAGE>

        No  service  charge  to the  Certificateholders  shall  be made  for any
transfer or exchange of Certificates,  but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or governmental  charge that may be
imposed in connection with any transfer or exchange of Certificates.

        All  Certificates   surrendered  for  transfer  and  exchange  shall  be
destroyed by the Certificate Registrar.

        The  Certificate  Registrar  shall provide notice to the Trustee of each
transfer of a Certificate  and shall provide the Trustee and the Master Servicer
with an updated copy of the Certificate Register on January 1 and July 1 of each
year.  If the  Trustee  shall  not at any  time  be  acting  as the  Certificate
Registrar, the Trustee shall have the right to inspect such Certificate Register
at all  reasonable  times and to rely  conclusively  upon a  certificate  of the
Certificate  Registrar as to the names and  addresses of the  Certificateholders
and the Percentage Interests held by each.

        Section 5.05.  Restrictions on Transfers

        (a) Securities Law  Compliance.  No transfer of any Private  Certificate
shall be made unless that transfer is made pursuant to an effective registration
statement under the Securities Act and effective  registration or  qualification
under  applicable  state  securities laws, or is made in a transaction that does
not  require  such  registration  or  qualification.  Any  Holder  of a  Private
Certificate  shall,  and,  by  acceptance  of such  Certificate,  does agree to,
indemnify Saxon, the Trustee, the Certificate  Registrar and the Master Servicer
against any  liability  that may result if any transfer of such  Certificate  by
such Holder is not exempt from  registration  under the  Securities  Act and all
applicable  state securities laws or is not made in accordance with such federal
and state laws. None of Saxon,  the Trustee,  the  Certificate  Registrar or the
Master  Servicer is  obligated  to  register or qualify any Private  Certificate
under the Securities  Act or any other  securities law or to take any action not
otherwise  required  under the Trust  Agreement  to permit the  transfer of such
Certificate   without  such  registration  or  qualification.   The  Certificate
Registrar shall not register any transfer of a Private Certificate (other than a
Residual  Certificate) unless and until the prospective  transferee provides the
Certificate  Registrar  with a  Transferee  Agreement  or a Rule 144A  Agreement
certifying to facts which, if true, would mean that the proposed transferee is a
Qualified  Institutional  Buyer,  and  unless and until the  transfer  otherwise
complies with the provisions of this Section 5.05. If the proposed transferee of
a Private  Certificate does not certify to facts which, if true, would mean that
such proposed  transferee is a Qualified  Institutional  Buyer,  the Certificate
Registrar shall require that the transferor and such proposed transferee certify
as to the factual basis for the  registration  exemption(s)  relied upon, and if
the transfer is made within three years of the  acquisition of such  Certificate
by a  non-Affiliate  of Saxon from Saxon or an  Affiliate  of Saxon,  the Master
Servicer  or the  Certificate  Registrar  also may require an Opinion of Counsel
that such transfer may be made without  registration or qualification  under the
Securities Act and applicable  state  securities  laws, which Opinion of Counsel
shall not be obtained at the expense of Saxon, the Certificate  Registrar or the
Master  Servicer.   Notwithstanding  the  foregoing,  no  Rule  144A  Agreement,
Transferee  Agreement or Opinion of Counsel shall be required in connection with
the initial  issuance  of the Private  Certificates  to Saxon,  SMI,  the Master
Servicer, the Trustee or any of their Affiliates.

        Saxon  shall  provide  to any  Holder of a Private  Certificate  and any
prospective  transferee that is a Qualified  Institutional  Buyer  designated by
such Holder  information  regarding  the related  Certificates  and the Mortgage
Loans and such other  information as shall be necessary to satisfy the condition
to eligibility set forth in Rule 144A(d)(4) for transfer of any such Certificate
without   registration   thereof  under  the  Securities  Act  pursuant  to  the
registration exemption provided by Rule 144A.

        (b)       Regular Certificates.

               (i) Public Subordinated Certificates. No Regular Certificate that
        is  a  Public  Subordinated   Certificate  shall  be  transferred  to  a
        transferee  that  acknowledges  that it is a Plan  Investor  unless such
        transferee  provides the  Certificate  Registrar and the Master Servicer
        with a Benefit Plan Opinion.  The  transferee  of a Public  Subordinated
        Certificate  that does not provide  the  Certificate  Registrar  and the
        Master Servicer with a Benefit Plan Opinion will be deemed, by virtue of
        its acquisition of such Certificate,  to have represented that it is not
        a Plan Investor.

               (ii) Private  Subordinated  Certificates.  No Regular Certificate
        that is a Private  Subordinated  Certificate shall be transferred unless
        the prospective  transferee  provides the Certificate  Registrar and the
        Master  Servicer  with a  properly  completed  Benefit  Plan  Affidavit,
        together with a Benefit Plan Opinion if required in order to comply with
        such Benefit Plan Affidavit.

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<PAGE>

        (c)  Residual  Certificates.  No  Residual  Certificate  (including  any
beneficial interest therein) may be transferred to a Disqualified  Organization.
In addition, no Residual Certificate (including any beneficial interest therein)
may be transferred unless (i) the proposed  transferee  provides the Certificate
Registrar and the Master Servicer with (A) a Residual Transferee Agreement,  (B)
a Benefit Plan Affidavit,  (C) a Disqualified  Organization Affidavit and (D) if
the proposed transferee is a Non-U.S. Person, a TAPRI Certificate,  and (ii) the
interest  transferred  involves the entire interest in a Residual Certificate or
an undivided interest therein (unless the transferor or the transferee  provides
the Master  Servicer and the  Certificate  Registrar  with an Opinion of Counsel
(which  shall  not be an  expense  of the  Master  Servicer  or the  Certificate
Registrar) that the transfer will not jeopardize the REMIC status of any related
REMIC).  Notwithstanding  the  foregoing,  the  Residual  Transferee  Agreement,
Benefit Plan Affidavit, Disqualified Organization Affidavit or TAPRI Certificate
shall not be  required  to be  provided  upon  original  issuance  of a Residual
Certificate  to  Saxon  or  SMI  or any of  their  Affiliates  or to the  Master
Servicer,  the Trustee or any of their  Affiliates  for the purpose of acting as
the Tax Matters Persons.  Furthermore, if a proposed transfer involves a Private
Certificate, (i) the Certificate Registrar shall require that the transferor and
the transferee certify as to the factual basis for the registration exemption(s)
relied  upon  and (ii) if the  transfer  is made  within  three  years  from the
acquisition  of the  Certificate  by a  non-Affiliate  of Saxon from Saxon or an
Affiliate of Saxon,  the  Certificate  Registrar  also may require an Opinion of
Counsel that such  transfer may be made without  registration  or  qualification
under the Securities Act and applicable  state securities laws, which Opinion of
Counsel shall not be obtained at the expense of the Certificate Registrar or the
Master Servicer.  In any event,  the Certificate  Registrar shall not effect any
transfer of a Residual  Certificate except upon notification of such transfer to
the Master Servicer.  Notwithstanding the foregoing, no Opinion of Counsel shall
be required in connection with the initial issuance of the Residual Certificates
or their  transfer  by a broker or  dealer,  if such  broker  or dealer  was the
initial transferee.

        Upon notice to the Trustee that any legal or beneficial  interest in any
portion  of  the  Residual  Certificates  has  been  transferred,   directly  or
indirectly,  to a  Disqualified  Organization  or an agent thereof  (including a
broker,  nominee or middleman) in contravention  of the foregoing  restrictions,
(i)  such  transferee  shall be  deemed  to hold the  Residual  Certificates  in
constructive   trust  for  the  last  transferor  who  was  not  a  Disqualified
Organization or an agent thereof,  and such transferor  shall be restored as the
owner of such Residual  Certificates as completely as if such transfer had never
occurred;  provided,  however,  that the Trustee  may,  but is not  required to,
recover any  distributions  made to such transferee with respect to the Residual
Certificates  and return such  recovery to the  transferor,  and (ii) the Master
Servicer agrees to furnish to the Internal Revenue Service and to any transferor
of the Residual  Certificates  or any such agent  (within 60 days of the request
therefor by the  transferor or such agent) such  information as may be necessary
for the  computation of the tax imposed under section 860E(e) of the Code and as
otherwise  may be  required  by the Code,  including,  but not  limited  to, the
present value of the total  anticipated  excess  inclusions  with respect to the
Residual  Certificates (or portion thereof) for periods after such transfer.  At
the election of the Master  Servicer,  the cost of computing and furnishing such
information  may be charged to the  transferor  or the agent  referred to above;
provided,  however,  that the Master  Servicer shall in no event be excused from
furnishing such information.

        If a tax or a  reporting  cost is borne  by a REMIC  as a result  of the
transfer  of a Residual  Certificate  (or any  beneficial  interest  therein) in
violation of the  restrictions  set forth in this Section 5.05,  the  transferor
shall pay such tax or cost and,  if such tax or cost is not so paid,  the Paying
Agent, upon  notification  from the Master Servicer,  shall pay such tax or cost
with  amounts  that  otherwise  would  have been paid to the  transferee  of the
Residual  Certificate  (or the  beneficial  interest  therein).  In that  event,
neither the transferee nor the transferor shall have any right to seek repayment
of such amounts from Saxon, the Trustee,  any REMIC,  the Master  Servicer,  the
Certificate  Registrar,  the  Paying  Agent or the other  Holders  of any of the
Certificates,  and none of such parties  shall have any liability for payment of
any such tax or reporting cost.

        Section 5.06.  Mutilated, Destroyed, Lost or Stolen Certificates

        If (i) any mutilated  Certificate  is  surrendered to the Trustee or the
Certificate  Registrar,  or the Trustee and the  Certificate  Registrar  receive
evidence to its respective satisfaction of the destruction, loss or theft of any
Certificate,  and (ii) there is  delivered  to the  Trustee  or the  Certificate
Registrar  such security or indemnity as may be required by them to save each of
them  harmless,  then, in the absence of actual  knowledge by the Trustee or the
Certificate  Registrar  that such  Certificate  has been acquired by a bona fide
purchaser,  the Trustee shall execute and deliver, in exchange for or in lieu of
any such mutilated,  destroyed, lost or stolen Certificate, a new Certificate of

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<PAGE>

the same Class and of like tenor and Percentage  Interest.  Upon the issuance of
any new  Certificate  under this Section  5.06,  the  Certificate  Registrar may
require the payment of a sum  sufficient to cover any tax or other  governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Certificate  Registrar)  connected  therewith.  Any
replacement  Certificate  issued pursuant to this Section 5.06 shall  constitute
complete and  indefeasible  evidence of ownership in the Trust as if  originally
issued, whether or not the destroyed,  lost or stolen Certificate shall be found
at any time.

        Section 5.07.  Persons Deemed Owners

        Prior to due presentation of a Certificate for registration of transfer,
the Master Servicer,  the Trustee,  the Paying Agent, the Certificate  Registrar
and any  agent of  either  of them  may  treat  the  person  in  whose  name any
Certificate  is registered as the owner of such  Certificate  for the purpose of
receiving  distributions and for all other purposes whatsoever,  and neither the
Master Servicer,  the Trustee, the Certificate  Registrar,  the Paying Agent nor
any agent of either of them shall be affected by notice to the contrary.

        Section 5.08.  Paying Agent

        Any Paying Agent  designated in the related Trust  Agreement  shall make
distributions to  Certificateholders.  Upon any resignation of any Paying Agent,
the Trustee shall promptly appoint,  subject to Section 1.03 hereof, a successor
or, in the absence of such appointment, shall assume the duties of Paying Agent.
No such  resignation  shall be effective  until the acceptance of appointment by
the   successor   Paying   Agent.   The  Trustee  shall  have  no  liability  or
responsibility  for any act or  omission  to act of any Paying  Agent  appointed
(unless the Trustee is then  servicing  as such  Paying  Agent)  pursuant to the
terms of the related Trust  Agreement.  Any such Paying Agent will hold all sums
held by it for the payment to Certificateholders in an Eligible Account in trust
for the benefit of the Certificateholders entitled thereto until such sums shall
be paid to the  Certificateholders.  Any Paying  Agent  shall be entitled to the
same rights,  privileges and immunities accorded the Trustee pursuant to Article
VIII hereof.

                                   Article VI
                          Saxon and the Master Servicer

        Section 6.01. Liability of, and Indemnification by, Saxon and the Master
Servicer

        Saxon  and the  Master  Servicer  shall  each be  liable  in  accordance
herewith only to the extent of the respective  obligations  specifically imposed
by the Trust Agreement and undertaken by Saxon and the Master Servicer under the
Trust Agreement.

        The Master Servicer shall indemnify and hold harmless the Trustee, Saxon
and any director, officer, employee or agent thereof against any loss, liability
or  expense,  including  reasonable  attorney's  fees,  arising  out  of  or  in
connection  with or  incurred  by reason of  willful  misfeasance,  bad faith or
negligence in the  performance of duties of the Master  Servicer under the Trust
Agreement or by reason of reckless disregard of its obligations and duties under
the Trust  Agreement.  Any  payment  pursuant to this  Section  6.01 made by the
Master  Servicer to Saxon,  the Trustee  shall be from such  entity's own funds,
without  reimbursement  therefor.  The  provisions of this Section 6.01 or shall
survive the resignation or removal of the Master Servicer and the termination of
the Trust Agreement.

        Saxon shall  indemnify  and hold  harmless  the Master  Servicer and any
director,  officer,  employee or agent  thereof  against any loss,  liability or
expense,  including  reasonable  attorney's fees, incurred in connection with or
arising out of or in  connection  with the Trust  Agreement  (other than a loss,
liability or expense subject to  indemnification by the Master Servicer pursuant
to the  preceding  paragraph),  any  custodial  agreement  or the  Certificates,
including,  but not limited to, any such loss,  liability or expense incurred in
connection  with any legal action  against the Master  Servicer or any director,
officer,  employee or agent  thereof,  or the  performance  of any of the Master
Servicer's  duties under the Trust Agreement  other than any loss,  liability or
expense incurred by reason of the Master  Servicer's  willful  misfeasance,  bad
faith or negligence in the  performance of its duties under the Trust  Agreement
or by reason of its reckless  disregard of its  obligations and duties under the
Trust  Agreement.  The  provisions  of  this  Section  6.01  shall  survive  the
resignation or removal of the Master  Servicer and the  termination of the Trust
Agreement.

        Section 6.02.  Merger or Consolidation of Saxon or the Master Servicer

        Subject to the following  paragraph,  Saxon and the Master Servicer each
will keep in full effect its existence,  rights and franchises under the laws of
the  jurisdiction  of  its  organization,  and  will  obtain  and  preserve  its
qualification to do business in each jurisdiction in which such qualification is
or shall be necessary to protect the  validity and  enforceability  of the Trust
Agreement,  the  Certificates  or any of the  Mortgage  Loans and to perform its
respective duties under the Trust Agreement.

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        Saxon or the Master Servicer may be merged or consolidated  with or into
any Person,  or transfer all or substantially all their respective assets to any
Person,  in which case any Person  resulting from any merger or consolidation to
which Saxon or the Master Servicer shall be a party, or any Person succeeding to
the business of Saxon or the Master Servicer, shall be the successor of Saxon or
the Master  Servicer,  as the case may be,  hereunder,  without the execution or
filing of any paper or any  further act on the part of any of the parties to the
Trust Agreement, anything herein to the contrary notwithstanding.

        Section 6.03.  Limitation on Liability of Saxon, the Master Servicer and
Others

        Neither Saxon,  the Master Servicer nor any of the directors,  officers,
employees or agents of Saxon or the Master Servicer shall be under any liability
to the  Trust  or the  Certificateholders,  and all such  Persons  shall be held
harmless for any action taken or for refraining from the taking of any action in
good faith pursuant to the Trust Agreement, or for errors in judgment; provided,
however,  that this  provision  shall not protect  any such  Person  against any
breach of  warranties  or  representations  made herein or against any liability
which would otherwise be imposed by reason of willful misfeasance,  bad faith or
negligence in the  performance  of duties or by reason of reckless  disregard of
obligations and duties under the Trust Agreement. Saxon, the Master Servicer and
any of the  directors,  officers,  employees  or agents  of Saxon or the  Master
Servicer may rely in good faith on any document of any kind which,  prima facie,
is properly  executed and submitted by any Person respecting any matters arising
hereunder.  Neither Saxon nor the Master  Servicer shall be under any obligation
to appear in, prosecute or defend any legal action unless such action is related
to its respective  duties under the Trust  Agreement and in its opinion does not
involve it in any expense or liability,  except as provided in Section  10.01(b)
hereof;  provided,  however,  that  Saxon  or  the  Master  Servicer  may in its
discretion  subject to Section  1.03  hereof  undertake  any such action that it
deems  necessary or desirable with respect to the Trust Agreement and the rights
and duties of the parties  thereto and the  interests of the  Certificateholders
thereunder  if Saxon or the Master  Servicer,  as the case may be,  are  offered
reasonable  security or indemnity  against the costs,  expenses and  liabilities
that may be incurred therein or thereby.

        Section 6.04.  Resignation of the Master Servicer

        The Master  Servicer  shall not resign from the  obligations  and duties
hereby imposed on it except (i) upon  appointment of a successor master servicer
and  receipt by the  Trustee of a letter  from each  Rating  Agency  that such a
resignation and appointment will not, in and of itself,  result in a downgrading
of any rated  Certificates  (without  regard to any Credit  Enhancement) or (ii)
upon  determination  that its duties hereunder are no longer  permissible  under
applicable  law.  Any such  determination  under  clause  (ii) of the  preceding
sentence permitting the resignation of the Master Servicer shall be evidenced by
an  Opinion  of  Counsel  to  such  effect  delivered  to the  Trustee.  No such
resignation  shall  become  effective  until the Trustee or a  successor  master
servicer shall have become the successor master servicer hereunder and agreed to
perform the responsibilities,  duties, liabilities and obligations of the Master
Servicer that arise  thereafter;  provided,  however,  that no successor  master
servicer  shall (unless  otherwise  agreed) assume any liability for the actions
(or failure to act) of the Master Servicer prior to the date that such successor
becomes Master Servicer under the Trust Agreement.

        Section 6.05.  Compensation to the Master Servicer

        The  Master  Servicer  shall be  entitled  to  receive a monthly  fee as
compensation  for  services  rendered  by the  Master  Servicer  under the Trust
Agreement.  The monthly  Master  Servicing  Fee with  respect to the Trust shall
equal the amount set forth in the Trust Agreement,  which may be retained by the
Master Servicer when it remits funds from the Master Servicer  Custodial Account
to the Asset Proceeds  Account.  The Master  Servicer also will be entitled,  as
additional  compensation,  to any late  reporting fees or late  remittance  fees
assessed  against a Servicer  pursuant to a Servicing  Agreement  or a Servicing
Guide.

        Section 6.06.  Assignment or Delegation of Duties by Master Servicer

        Except as expressly provided in the Trust Agreement, the Master Servicer
shall not assign or transfer any of its rights, benefits or privileges under the
Trust  Agreement to any other  Person,  or delegate to or  subcontract  with, or
authorize or appoint any other Person to perform any of the duties, covenants or
obligations to be performed by the Master  Servicer  under the Trust  Agreement,
without the prior written consent of the Trustee, and any agreement,  instrument
or act  purporting  to  effect  any such  assignment,  transfer,  delegation  or
appointment  without such written  consent  shall be void.  Notwithstanding  the
foregoing,  the Master  Servicer  shall have the right without the prior written
consent of the Trustee to delegate to, subcontract with, authorize or appoint an
affiliate of the Master Servicer to perform and carry out any duties,  covenants
or obligations to be performed and carried out by the Master  Servicer under the
Trust  Agreement  and hereby  agrees so to delegate,  subcontract,  authorize or
appoint  to an  affiliate  of the  Master  Servicer  any  duties,  covenants  or
obligations  to be performed  and carried out by the Master  Servicer  under the

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<PAGE>

Trust Agreement to the extent that such duties,  covenants or obligations are to
be  performed  in any  state or  states  in which  the  Master  Servicer  is not
authorized to do business as a foreign corporation but in which the affiliate is
so authorized.  In no case, however,  shall any permitted assignment relieve the
Master Servicer of any liability under the Trust Agreement.

                                   Article VII
           Termination of Servicing and Master Servicing Arrangements

        Section 7.01.  Termination and Substitution of Servicing Agreements

        Upon  discovery  or  notice of the  occurrence  of any event for which a
Servicer  may be  terminated  pursuant to its  Servicing  Agreement,  the Master
Servicer shall promptly deliver to Saxon, the Master Servicer and the Trustee, a
certificate  of  an  Officer  that  an  event  has  occurred  that  may  justify
termination  of  such   Servicing   Agreement,   describing  the   circumstances
surrounding such event.  Subject to Section 1.03 hereof, the Master Servicer may
or shall terminate such Servicing Agreement.

         If a Servicing Agreement is terminated, the Master Servicer shall enter
into a substitute  Servicing  Agreement  with another  mortgage  loan  servicing
company  acceptable  to the Master  Servicer and Rating  Agency under which such
mortgage loan servicing company shall assume, satisfy, perform and carry out all
liabilities,  duties,  responsibilities  and  obligations  that  are to  be,  or
otherwise  were  to have  been,  satisfied,  performed  and  carried  out by the
terminated Servicer under such terminated Servicing  Agreement.  Notwithstanding
the foregoing, no such substitute Servicing Agreement need contain a covenant by
the substitute Servicer to purchase Converted Mortgage Loans. Until such time as
the Master Servicer enters into a substitute servicing agreement with respect to
the Mortgage Loans, the Master Servicer shall assume, satisfy, perform and carry
out all obligations  which otherwise were to have been satisfied,  performed and
carried out by the terminated Servicer under the terminated Servicing Agreement.
In no event,  however,  shall the Master  Servicer be deemed to have assumed the
obligations  of a Servicer to purchase any Mortgage Loan from the Trust pursuant
to any  provision of the related  Servicing  Agreement or Servicing  Guide or to
make  Advances  with  respect  to  any  Mortgage  Loan,  except  to  the  extent
specifically  provided in Section 3.04 of the Standard Terms. As compensation to
the Master  Servicer for any servicing  obligations  fulfilled or assumed by the
Master  Servicer,  the  Master  Servicer  shall  be  entitled  to any  servicing
compensation  to which the  terminated  Servicer would have been entitled if the
Servicing Agreement with such Servicer had not been terminated.

        Section 7.02.  Termination of Master Servicer; Trustee to Act

        Each of the following shall constitute an Event of Default by the Master
Servicer of its obligations under the Trust Agreement:

        (a) the  Master  Servicer  shall  fail duly to observe or perform in any
material  respect any of its covenants or agreements  (other than its obligation
to make an Advance  pursuant  to Section  3.04  hereof)  contained  in the Trust
Agreement and such failure  shall  continue  unremedied  for a period of 30 days
after the date on which written notice of such failure, requiring the same to be
remedied,  shall have been given to the Master Servicer by the Trustee or to the
Master  Servicer and the Trustee by the Holders of  Certificates  entitled to at
least 25% of the Voting Rights; or

        (b) a decree  or order of a court or  agency  or  supervisory  authority
having  jurisdiction in the premises in an involuntary case under any present or
future federal or state bankruptcy, insolvency or similar law or the appointment
of a conservator or receiver or liquidator in any  insolvency,  readjustment  of
debt,  marshaling of assets and  liabilities or similar  proceeding,  or for the
winding-up or  liquidation of its affairs,  shall have been entered  against the
Master  Servicer  and  such  decree  or  order  shall  have  remained  in  force
undischarged and unstayed for a period of 60 days; or

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

        (d) the Master  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 or  reorganization  statute,  make an assignment  for the
benefit of its creditors or voluntarily suspend payment of its obligations; or

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<PAGE>

        (e) the Master Servicer shall fail to remit funds in the Master Servicer
Custodial  Account to the Asset Proceeds  Account as required by Section 3.01(c)
hereof within one Business Day of the date that such funds are due; or

        (f) the Master  Servicer shall fail to make any Advance or other payment
required by Section 3.04 or Section  3.05 hereof  within one Business Day of the
date that such Advance or other payment is due.

        The  rights  and  obligations  of the  Master  Servicer  under the Trust
Agreement may be terminated  only upon the occurrence of an Event of Default and
subject to Section 1.03 hereof.  Subject to Section 1.03 hereof,  if an Event of
Default  described  in clauses (a) through (d) of this Section 7.02 shall occur,
then,  and in each and every such case,  so long as such Event of Default  shall
not have been remedied,  the Trustee may, and at the direction of the Holders of
Certificates  entitled to at least 51% of the Voting Rights,  the Trustee shall,
by notice in  writing  to the  Master  Servicer,  terminate  all the  rights and
obligations  of the Master  Servicer under the Trust  Agreement,  other than its
rights as a  Certificateholder.  Subject to Section  1.03  hereof if an Event of
Default  described in clauses (e) and (f) of this Section 7.02 shall occur,  the
Trustee  may  terminate,  by notice in writing to the Master  Servicer,  all the
rights and obligations of the Master Servicer under the Trust  Agreement,  other
than its rights as a  Certificateholder.  On and after the receipt by the Master
Servicer of such written notice,  all authority and power of the Master Servicer
under the Trust Agreement,  whether with respect to the Certificates (other than
as a Holder  thereof) or the Mortgage Loans or otherwise,  shall, to the maximum
extent  permitted by law,  pass to and be vested in the Trustee  pursuant to and
under this Section  7.02  (provided,  however,  that the Master  Servicer  shall
continue to be entitled to receive all amounts  accrued or owing to it under the
Trust Agreement on or prior to the date of such  termination.  Without  limiting
the generality of the foregoing,  the Trustee is hereby authorized and empowered
to execute and  deliver on behalf of and at the expense of the Master  Servicer,
as the Master Servicer's  attorney-in-fact  or otherwise,  any and all documents
and other instruments,  and to do or accomplish all other acts or things that in
the Trustee's  sole and absolute  judgment may be necessary or  appropriate,  to
effect  such  termination.   Notwithstanding   the  foregoing,   upon  any  such
termination the Master Servicer shall do all things reasonably  requested by the
Trustee to effect the  termination  of the Master  Servicer's  responsibilities,
rights and powers under the Trust  Agreement,  and the  transfer  thereof to the
Trustee,  including,  but not limited to, promptly providing to the Trustee (and
in no  event  later  than ten  Business  Days  subsequent  to such  notice)  all
documents  and records  electronic  and  otherwise  reasonably  requested by the
Trustee to enable the Trustee or its designee to assume and carry out the duties
and  obligations  that  otherwise were to have been performed and carried out by
the Master Servicer but for such termination.

        Upon any such  termination,  the Trustee  shall,  to the maximum  extent
permitted by law, be the successor in all respects to the Master Servicer in its
capacity as master servicer under the Trust Agreement, but the Trustee shall not
have any  liability  for, or any duty or  obligation  to perform,  any duties or
obligations of the Master  Servicer  required to be performed  prior to the date
that the Trustee becomes successor master servicer.

        As successor master servicer,  the Trustee shall be entitled to the fees
to which the Master Servicer would have been entitled if the Master Servicer had
continued to act as such. The Trustee shall also, as successor  master servicer,
be entitled to all the  protections and  indemnification  afforded to the Master
Servicer pursuant to Section 6.03 hereof.

        Notwithstanding  the above but subject to Section 1.03 hereof,  upon the
occurrence of an Event of Default,  if the Trustee shall be unwilling so to act,
or shall, if it is unable so to act or, if the Holders of Certificates  entitled
to at least 51% of the Voting  Rights so  request  in  writing  to the  Trustee,
promptly appoint, or petition a court of competent  jurisdiction to appoint, any
established mortgage loan servicing institution acceptable to each Rating Agency
and  having a net worth of not less than  $15,000,000  as the  successor  to the
Master  Servicer.  No appointment of a successor to the Master Servicer shall be
effective until the assumption by such successor of all future responsibilities,
duties and liabilities of the Master Servicer under the Trust Agreement. Pending
appointment of a successor to the Master  Servicer,  the Trustee or an affiliate
shall,  to the  maximum  extent  permitted  by  law,  act in  such  capacity  as
hereinabove provided.

        In connection with any such appointment and assumption described herein,
the Trustee may make such  arrangements  for the  compensation of such successor
out of payments  received on the assets  included in the Trust  Estate as it and
such successor shall agree;  provided,  however, that no such compensation shall
be in excess of that permitted the Master  Servicer  under the Trust  Agreement.
The Trustee and such  successor  shall take such  action,  consistent  with this
Agreement, as shall be necessary to effectuate any such succession.

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<PAGE>

        Upon the occurrence of any Event of Default, the Trustee, in addition to
the rights specified in this Section 7.02, shall have the right, in its own name
and as Trustee,  to take all actions now or hereafter existing at law, in equity
or by statute to enforce its rights and remedies  and to protect the  interests,
and enforce the rights and remedies,  of the  Certificateholders  (including the
institution   and  prosecution  of  all  judicial,   administrative   and  other
proceedings  and  the  filings  of  proofs  of  claim  and  debt  in  connection
therewith).  No remedy provided for by the Trust Agreement shall be exclusive of
any other remedy,  each and every remedy shall be cumulative  and in addition to
any other  remedy and no delay or failure to exercise  any right or remedy shall
impair  any such  right or remedy or shall be deemed to be a waiver of any Event
of Default.

        For the  purposes of this  Section  7.02 and Section  8.01  hereof,  the
Trustee shall not be deemed to have  knowledge of an Event of Default  unless an
Officer of the Trustee has actual knowledge  thereof or unless written notice of
such Event of Default is received by the Trustee at its  Corporate  Trust Office
and such notice references the Certificates, the Trust or the Trust Agreement.

        Section 7.03.  Notification to Certificateholders

        (a) Upon any  termination  pursuant  to  Section  7.01 or  Section  7.02
hereof,  or any appointment of a successor to a Servicer or the Master Servicer,
the Trustee shall give prompt written  notice thereof to the  Certificateholders
at their respective addresses appearing in the Certificate Register.

        (b) Within 60 days after the  occurrence  of any Event of Default or the
Trustee's   receipt  of  notice  of  the  occurrence  of  any  event  permitting
termination  of  a  Servicer,   the  Trustee  shall  transmit  by  mail  to  the
Certificateholders  notice of each such Event of  Default or event  known to the
Trustee, unless such Event of Default or event shall have been cured or waived.

                                  Article VIII
                             Concerning the Trustee

        Section 8.01.  Duties of Trustee

        The Trustee,  prior to the  occurrence  of an Event of Default and after
the curing of each Event of Default,  undertakes to perform such duties and only
such  duties as are  specifically  set forth in the Trust  Agreement.  During an
Event of Default of which the  Trustee has notice,  the Trustee  shall  exercise
such of the rights and powers vested in it by the Trust  Agreement,  and use the
same degree of care and skill in their exercise, as a prudent man would exercise
or use under the circumstances in the conduct of such person's own affairs.

        The Trustee,  upon receipt of any  resolution,  certificate,  statement,
opinion, report, document, order or other instrument specifically required to be
furnished to it pursuant to any provision of the Trust Agreement,  shall examine
such  instrument  to determine  whether it conforms to the  requirements  of the
Trust Agreement;  provided,  however, that the Trustee shall be under no duty to
recalculate,  verify or recompute  any  information  provided to it hereunder by
Saxon or the Master Servicer.  If any such instrument is found not to conform to
the requirements of the Trust Agreement in a material manner,  the Trustee shall
take action as it deems appropriate to have the instrument corrected, and if the
instrument  is not corrected to the  Trustee's  satisfaction,  the Trustee shall
provide notice thereof to the Certificateholders.

        No  provision of the Trust  Agreement  shall be construed to relieve the
Trustee from liability for its own negligent  action,  its own negligent failure
to act or its own willful misconduct; provided, however, that:

        (a) prior to the occurrence of an Event of Default, and after the curing
of each Event of Default,  the duties and  obligations  of the Trustee  shall be
determined solely by the express provisions of the Trust Agreement,  the Trustee
shall not be liable except for the performance of such duties and obligations as
are  specifically  set forth in the Trust  Agreement,  no implied  covenants  or
obligations  shall be read into the Trust Agreement  against the Trustee and, in
the  absence  of bad  faith  on  the  part  of  the  Trustee,  the  Trustee  may
conclusively  rely, as to the truth of the statements and the correctness of the
opinions expressed  therein,  upon any certificates or opinions furnished to the
Trustee that conform to the requirements of the Trust Agreement;

        (b) the Trustee shall not be personally  liable for an error of judgment
made in good faith by an Officer of the Trustee,  unless it shall be proved that
the Trustee was negligent in ascertaining the pertinent facts;

        (c) the  Trustee  shall not be  personally  liable  with  respect to any
action taken,  suffered or omitted to be taken by it in good faith in accordance

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<PAGE>

with the  direction of the Holders of  Certificates  entitled to at least 25% of
the Voting  Rights  relating  to the time,  method and place of  conducting  any
proceeding for any remedy  available to the Trustee,  or exercising any trust or
power conferred upon the Trustee, under the Trust Agreement;

        (d) any determination of negligence or bad faith of the Trustee shall be
made only upon a finding that there is clear and  convincing  evidence  (and not
upon the mere  preponderance of evidence) thereof in a proceeding before a court
of competent jurisdiction in which the Trustee has had an opportunity to defend;
and

        (e) in no event  shall the  Trustee be held  liable  for the  actions or
omissions of the Master  Servicer or a Servicer  (excepting  the  Trustee's  own
actions as Master  Servicer or Servicer),  and in connection  with any action or
claim for recovery  sought  against the Trustee  based upon facts  involving the
acts or omissions of the Master  Servicer or Saxon,  or involving any allegation
or claim of liability or recovery  against the Trustee by the Master Servicer or
by a Seller,  the Trustee  shall not be held to a greater  standard of care than
the Master Servicer or the Seller would be held in such situation.  No provision
of the Trust Agreement shall require the Trustee to expend or risk its own funds
or otherwise  incur any  financial  liability in the  performance  of any of its
duties hereunder, or in the exercise of any of its rights or powers, if it shall
have  reasonable  grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably  assured to it unless
such risk or liability  relates to duties set forth herein  (which  duties shall
not be deemed to include actions required to be taken by the Trustee arising out
of the failure of another person to take any required action hereunder).

        Section 8.02.  Certain Matters Affecting the Trustee

        (a)       Except as otherwise provided in Section 8.01 hereof:

               (i) the  Trustee  may rely and  shall be  protected  in acting or
        refraining from acting upon any  resolution,  certificate of auditors or
        other  certificate,  statement,  instrument,  opinion,  report,  notice,
        request,  consent,  order,  appraisal,  bond or other  paper or document
        believed by it to be genuine and to have been signed or presented by the
        proper party or parties.  Further,  the Trustee may accept a copy of the
        vote of the Board of  Directors  of any party  certified by its clerk or
        assistant  clerk or  secretary  or  assistant  secretary  as  conclusive
        evidence of the authority of any person to act in  accordance  with such
        vote,  and such vote may be considered as in full force and effect until
        receipt by the Trustee of written notice to the contrary;

               (ii) the  Trustee  may,  in the absence of bad faith on its part,
        rely upon a certificate of an Officer of the appropriate Person whenever
        in the  administration  of the Trust Agreement the Trustee shall deem it
        desirable that a matter be proved or established  (unless other evidence
        be  herein  specifically  prescribed)  prior  to  taking,  suffering  or
        omitting any action hereunder;

               (iii) the Trustee may consult with  counsel  chosen with due care
        and the written  advice of such counsel or any Opinion of Counsel  shall
        be full and  complete  authorization  and  protection  in respect of any
        action taken or suffered or omitted by it hereunder in good faith and in
        accordance with such written advice or Opinion of Counsel;

               (iv) the Trustee  shall be under no obligation to exercise any of
        the  trusts  or  powers  vested  in  it by  the  Trust  Agreement  or to
        institute,  conduct or defend any  litigation  thereunder or in relation
        thereto   at  the   request,   order   or   direction   of  any  of  the
        Certificateholders,  pursuant to the provisions of the Trust  Agreement,
        unless  such  Certificateholders  shall  have  offered  to  the  Trustee
        reasonable  security  or  indemnity  against  the  costs,  expenses  and
        liabilities which may be incurred therein or thereby;

               (v) the  Trustee  shall not be  personally  liable for any action
        taken,  suffered or omitted by it in good faith and believed by it to be
        authorized or within the  discretion or rights or powers  conferred upon
        it by the Trust Agreement;

               (vi) the  Trustee  shall  not be bound to make any  investigation
        into  the  facts  or  matters  stated  in any  resolution,  certificate,
        statement, instrument, opinion, report, notice, request, consent, order,
        approval,  bond or other paper or document,  unless requested in writing
        to do so by the Holders of Certificates  entitled to at least 25% of the
        Voting  Rights;  provided,   however,  that  if  the  payment  within  a
        reasonable  time to the Trustee of the costs,  expenses  or  liabilities
        likely to be incurred by it in the making of such  investigation  is, in
        the opinion of the  Trustee,  not assured to the Trustee by the security
        afforded  to it by the terms of the Trust  Agreement,  the  Trustee  may
        require  indemnity  against  such expense or liability as a condition to
        taking any such action. The expense of every such investigation shall be
        paid by the Master Servicer or, if paid by the Trustee,  shall be repaid
        by the Master Servicer upon demand;

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<PAGE>

               (vii) the Trustee  may execute any of the trusts or powers  under
        the Trust Agreement or perform any duties  thereunder either directly or
        by or  through  agents  or  attorneys  and  the  Trustee  shall  not  be
        responsible for any misconduct or negligence on the part of any agent or
        attorney appointed with due care by it under the Trust Agreement;

               (viii) whenever the Trustee is authorized  herein to require acts
        or  documents  in  addition  to those  required to be provided it in any
        matter,  it  shall  be under  no  obligation  to make any  determination
        whether or not such  additional  acts or  documents  should be  required
        unless obligated to do so under Section 8.01 hereof;

               (ix)  the permissive right or authority of the  Trustee to  take
        any action enumerated in the Trust Agreement shall not be construed as
        a duty or obligation; and

               (x) the Trustee shall not be deemed to have notice of any matter,
        including,  but limited  to, any Event of Default,  unless an Officer of
        the  Trustee  has  actual  knowledge  thereof or unless  written  notice
        thereof is  received by the Trustee at its  Corporate  Trust  Office and
        such  notice  references  the  Certificates,  the  Trust  or  the  Trust
        Agreement.

        (b) All rights of action  under the Trust  Agreement or under any of the
Certificates  that are enforceable by the Trustee may be enforced by the Trustee
without the possession of any of the Certificates,  or the production thereof at
any trial or other proceeding  relating  thereto,  and any such suit,  action or
proceeding  instituted  by the  Trustee  shall  be  brought  in its name for the
benefit of all the Holders of such  Certificates,  subject to the  provisions of
the Trust Agreement.

        Section 8.03.  Trustee Not Liable for Certificates or Mortgage Loans

        The recitals  contained in the Trust  Agreement and in the  Certificates
(other  than  the  signature  and   countersignature   of  the  Trustee  on  the
Certificates) shall be taken as the statements of Saxon, and the Trustee assumes
no responsibility for their correctness. The Trustee makes no representations or
warranties  as to the  validity or  sufficiency  of the Trust  Agreement  or the
Certificates  (other than the signature and  countersignature  of the Trustee on
the Certificates) or of any Mortgage Loan or related document. The Trustee shall
not  be  accountable  for  the  use  or  application  by  Saxon  of  any  of the
Certificates  or of  the  proceeds  of  such  Certificates,  or for  the  use or
application  of any funds  paid to Saxon in  respect  of the  Mortgage  Loans or
deposited in or withdrawn from the Asset Proceeds Account or the Master Servicer
Custodial  Account  other than any funds held by or on behalf of the  Trustee in
accordance  with  Sections  3.01 and  3.02  hereof  or as  owner of the  Regular
Interests of the Pooling REMIC.

        Section 8.04.  Trustee May Own Certificates

        The  Trustee,  the  Paying  Agent,  the  Certificate  Registrar  or  the
Custodian in its respective individual capacity or any other capacity may become
the owner or pledgee of  Certificates  with the same  rights it would have if it
were not Trustee, the Paying Agent, the Certificate Registrar or the Custodian.

        Section 8.05.  Trustee's Fees

        The Trustee shall be entitled to receive the Trustee Fee as compensation
for its  services  under the Trust  Agreement.  The Trustee Fee shall be payable
from amounts received with respect to the Mortgage Loans.  Saxon shall indemnify
and hold harmless the Trustee,  the Paying Agent,  the Certificate  Registrar or
the Custodian and any director,  officer,  employee or agent thereof against any
loss, liability or expense,  including  reasonable  attorney's fees, incurred in
connection  with or arising  out of or in  connection  with the Trust  Agreement
(other  than a loss,  liability  or expense  subject to  indemnification  by the
Master Servicer pursuant to Section 6.01 hereof), any custodial agreement or the
Certificates, including, but not limited to, any such loss, liability or expense
incurred in connection  with any legal action  against the Trust or the Trustee,
the Paying Agent,  the  Certificate  Registrar or the Custodian or any director,
officer,  employee or agent thereof,  or the performance of any of the duties of
the  Trustee,  the Paying  Agent or the  Certificate  Registrar  under the Trust
Agreement  or  the  duties  of  the  Custodian  under  any  custodial  agreement
(including,  but not limited to, the  execution  and  delivery of  documents  in
connection  with a  foreclosure  sale,  trustee's  sale,  or  deed  in  lieu  of
foreclosure  of a Mortgage  Loan,  including,  but not  limited  to, any deed of
reconveyance,  any  substitution of trustee  documents or any other documents to
release,  satisfy, cancel or discharge any Security Instrument or Mortgage Loan)
other than any loss,  liability  or expense  incurred  by reason of the  willful
misfeasance,  bad faith or negligence in the performance of the duties under the
Trust  Agreement  or by reason of the  willful  misfeasance,  bad faith or gross
negligence  of  the  Custodian   under  any   custodial   agreement   (including
specifically any loss,  liability or expense incurred by the Custodian by reason
of simple  negligence  under any custodial  agreement).  The  provisions of this

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Section 8.05 shall survive the resignation or removal of the Trustee, the Paying
Agent or the  Certificate  Registrar and the  termination of the Trust Agreement
and the resignation or removal of the Custodian  under any custodial  agreement.
The Trustee may receive an additional  indemnity from a party  acceptable to the
Trustee.

        Section 8.06.  Eligibility Requirements for Trustee

        The Trustee shall at all times be a bank or trust  company that:  (i) is
not an  Affiliate,  (ii) is organized and doing  business  under the laws of the
United States or any state thereof and is authorized under such laws to exercise
corporate  trust  powers,  (iii) has a combined  capital and surplus of at least
$50,000,000,  and (iv) is subject to  supervision or examination by a federal or
state  authority.  If such  bank  or  trust  company  publishes  reports  of its
condition  at least  annually,  pursuant  to law or to the  requirements  of the
aforesaid  supervising  or  examining  authority,  then for the purposes of this
Section  8.06 the  combined  capital and  surplus of such bank or trust  company
shall be deemed to be its combined  capital and surplus as set forth in its most
recent report of condition so published.  If at any time the Trustee shall cease
to be eligible in  accordance  with the  provisions  of this Section  8.06,  the
Trustee shall resign  immediately in the manner and with the effect specified in
Section 8.07 hereof.

        Section 8.07.  Resignation and Removal of the Trustee

        The  Trustee may at any time  resign and be  discharged  from the trusts
created  pursuant to the Trust  Agreement by giving  written  notice  thereof to
Saxon,  the Master  Servicer and all  Certificateholders.  Upon  receiving  such
notice of  resignation,  Saxon shall  promptly,  subject to Section 1.03 hereof,
appoint  a  successor  trustee  by  written  instrument,  in  duplicate,   which
instrument  shall be delivered  to the  resigning  Trustee and to the  successor
trustee.   Saxon   shall   deliver   a   copy   of   such   instrument   to  the
Certificateholders,  the Master  Servicer  and each  Servicer.  If no  successor
trustee  shall have been so appointed and have  accepted  appointment  within 30
days after the giving of such notice of resignation,  the resigning  Trustee may
petition any court of competent  jurisdiction for the appointment of a successor
trustee.

        If at any time the Trustee shall cease to be eligible in accordance with
the  provisions  of Section 8.06 hereof and shall fail to resign  after  written
request  therefor by Saxon, or if at any time the Trustee shall become incapable
of acting,  or shall be  adjudged  bankrupt or  insolvent,  or a receiver of the
Trustee or of its property shall be appointed,  or any public officer shall take
charge or control of the  Trustee or of its  property or affairs for the purpose
of rehabilitation,  conservation or liquidation,  then Saxon, subject to Section
1.03 hereof,  may remove the Trustee and appoint a successor  trustee by written
instrument, in duplicate,  which instrument shall be delivered to the Trustee so
removed and to the  successor  trustee.  Saxon shall also deliver a copy of such
instrument to the Certificateholders, the Master Servicer and each Servicer.

        Subject to Section 1.03 hereof, the Holders of Certificates  entitled to
at least 51% of the Voting Rights may at any time remove the Trustee and appoint
a successor trustee by written instrument or instruments, in triplicate,  signed
by such Holders or their attorneys-in-fact duly authorized,  one complete set of
which  instruments  shall be delivered to each of Saxon,  the Trustee so removed
and the successor so appointed.  Saxon shall deliver a copy of such  instruments
to the Certificateholders, the Master Servicer and each Servicer.

        Any resignation or removal of the Trustee and appointment of a successor
trustee  pursuant to any of the provisions of this Section 8.07 shall not become
effective until  acceptance of appointment by the successor  trustee as provided
in Section 8.08 hereof.

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        Section 8.08.  Successor Trustee

        Any successor trustee appointed as provided in Section 8.07 hereof shall
execute,  acknowledge  and  deliver  to  Saxon,  the  Master  Servicer  and  the
predecessor  trustee an instrument  accepting such  appointment  under the Trust
Agreement,  and thereupon the resignation or removal of the predecessor  trustee
shall become effective and such successor trustee, without any further act, deed
or conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor thereunder, with the like effect as if originally
named as trustee therein.  The predecessor trustee shall deliver, or cause to be
delivered,  to the successor trustee all Trustee Mortgage Loan Files and related
documents and statements held by it under the Trust  Agreement,  and Saxon,  the
Master  Servicer  and the  predecessor  trustee  shall  execute and deliver such
instruments  and do such other  things as may  reasonably  be required  for more
fully and certainly  vesting and  confirming  in the successor  trustee all such
rights, powers, duties and obligations.

        No  successor  trustee  shall  accept  appointment  as  provided in this
Section 8.08 unless at the time of such acceptance such successor  trustee shall
be eligible under the provisions of Section 8.06 hereof.

        Upon  acceptance of  appointment  by a successor  trustee as provided in
this  Section,  Saxon shall mail notice of the  succession of such trustee under
the Trust Agreement to all Certificateholders at their addresses as shown in the
Certificate  Register.  If Saxon fails to mail such notice  within 10 days after
acceptance of appointment by the successor trustee,  the successor trustee shall
cause such notice to be mailed at the expense of Saxon.

        Section 8.09.  Merger or Consolidation of Trustee

        Any Person  into which the Trustee  may be merged or  converted  or with
which it may be consolidated or any Person resulting from any merger, conversion
or consolidation to which the Trustee shall be a party, or any Person succeeding
to the business of the Trustee,  shall be the successor of the Trustee under the
Trust  Agreement  provided such Person shall be eligible under the provisions of
Section 8.06 hereof, without the execution or filing of any paper or any further
act on the part of any of the parties  hereto,  anything  herein to the contrary
notwithstanding.

        Section 8.10.  Appointment of Trustee or Separate Trustee

        For the purpose of meeting any legal requirements of any jurisdiction in
which any part of the  Trust or  property  securing  the same may at the time be
located,  Saxon, the Master Servicer and the Trustee acting jointly,  subject to
Section  1.03  hereof,  shall have the power and shall  execute  and deliver all
instruments  to appoint  one or more  Persons  approved by the Trustee to act as
co-trustee  or  co-trustees,  jointly with the Trustee,  or separate  trustee or
trustees,  of all or any  part of the  Trust,  and to vest  in  such  Person  or
Persons,  in such capacity,  such title to the Trust, or any part thereof,  and,
subject to the other  provisions  of this Section  8.10,  such  powers,  duties,
obligations,  rights and trusts as Saxon, the Master Servicer or the Trustee may
consider necessary or desirable.  If Saxon or the Master Servicer shall not have
joined in such  appointment  within 15 days after the receipt by it of a request
so to do, the Trustee  alone shall have the power to make such  appointment.  No
co-trustee(s)  or separate  trustee(s)  hereunder  shall be required to meet the
terms of  eligibility  as a successor  trustee  under Section 8.06 hereof and no
notice to  Certificateholders  of the appointment of  co-trustee(s)  or separate
trustee(s) shall be required under Section 8.08 hereof.

        In the case of any  appointment  of a  co-trustee  or  separate  trustee
pursuant to this  Section  8.10,  all  rights,  powers,  duties and  obligations
conferred  or imposed  upon the Trustee  shall be  conferred or imposed upon and
exercised or performed by the Trustee and such  separate  trustee or  co-trustee
jointly,  except to the extent that under any law of any  jurisdiction  in which
any  particular  act or acts are to be performed  (whether as Trustee  under the
Trust Agreement or as successor to the Master Servicer  pursuant to Section 7.02
hereof),  the Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights,  powers, duties and obligations (including the
holding of title to the Trust or any portion  thereof in any such  jurisdiction)
shall be exercised and  performed by such separate  trustee or co-trustee at the
direction of the Trustee.

        Any  notice,  request or other  writing  given to the  Trustee  shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as  effectively  as if given to each of them.  Every  instrument  appointing any
separate  trustee  or  co-trustee  shall  refer to the Trust  Agreement  and the
conditions of this Article VIII. Each separate trustee and co-trustee,  upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of  appointment,  either jointly with the Trustee or
separately,  as may be provided  therein,  subject to all the  provisions of the
Trust Agreement,  specifically  including every provision of the Trust Agreement
relating  to  the  conduct  of or  affecting  the  liability  of,  or  affording

                                       47
<PAGE>

protection  to,  the  Trustee.  Every  such  instrument  shall be filed with the
Trustee.

        Any separate  trustee or  co-trustee  may, at any time,  constitute  the
Trustee its agent or  attorney-in-fact,  with full power and  authority,  to the
extent not  prohibited  by law,  to do any lawful act under or in respect of the
Trust  Agreement  on its  behalf  and in its name.  If any  separate  trustee or
co-trustee shall die, become incapable of acting,  resign or be removed, all its
estates, properties,  rights, remedies and trusts shall vest in and be exercised
by the Trustee, to the extent permitted by law, without the appointment of a new
or successor trustee.  Any expense associated with the appointment of a separate
trustee or co-trustee shall not be an expense of the Master Servicer.

        Section 8.11.  Appointment of Custodians

        The  appointment  of the Custodian  may at any time be terminated  and a
substitute Custodian appointed therefor by the Trustee,  subject to Section 1.03
hereof,  pursuant to a Custody  Agreement  satisfactory in form and substance to
the Trustee.  Subject to Section 1.03 hereof,  the Trustee  shall  terminate the
appointment of any Custodian and appoint a substitute custodian upon the request
of the Master  Servicer.  The  Trustee  agrees to comply  with the terms of each
custodial  agreement and to enforce the terms and provisions thereof against the
Custodian for the benefit of the  Certificateholders.  Each Custodian shall be a
depository  institution  or trust company  subject to  supervision by federal or
state authority, shall have combined capital and surplus of at least $10,000,000
and shall be qualified to do business in the  jurisdiction in which it holds any
Trustee  Mortgage Loan File. Any such Custodian may not be an affiliate of Saxon
or any Seller.

        Section 8.12.  Trustee May Enforce Claims Without Possession of
        Certificates

        All  rights of action  and  claims  under  the  Trust  Agreement  or the
Certificates  may  be  prosecuted  and  enforced  by  the  Trustee  without  the
possession  of  any  of  the  Certificates  or  the  production  thereof  in any
proceeding relating thereto,  and any such proceeding  instituted by the Trustee
shall be brought in its own name or in its capacity as Trustee.  Any recovery of
judgment shall, after provision for the payment of the reasonable  compensation,
expenses,  disbursements and advances of the Trustee, its agents and counsel, be
for the  ratable  benefit  of the  Certificateholders  in  respect of which such
judgment has been recovered.

                                   Article IX
               Termination of the Trust; Purchase of Certificates

        Section 9.01.  Termination of Trust

        The Trust created under a Trust  Agreement and all  obligations  created
thereby  will  terminate  upon the  payment to the  Holders of all  Certificates
(including  the   Certificate   Insurer,   pursuant  to  its   subrogation   and
reimbursement  rights),  from  amounts  other  than  those  available  under the
Certificate  Insurance Policies, of all amounts held by the Trustee and required
to be paid to such Holders  pursuant to this Agreement upon the last to occur of
(a) the final  payment or other  liquidation  (or any advance  made with respect
thereto) of the last Mortgage Loan in the Trust Estate,  (b) the  disposition of
all  property  acquired in respect of any Mortgage  Loan  remaining in the Trust
Estate and (c) if an election has been made to treat certain assets of the Trust
as a REMIC, at any time when a Qualified Liquidation of the REMIC is effected as
described  below.  To effect a termination of this Agreement  pursuant to clause
(c)  above,  the  Holders  of  all  Certificates   then  Outstanding  shall  (i)
unanimously  direct  the  Trustee  on  behalf  of the  REMIC  to adopt a plan of
complete  liquidation , as contemplated by Section 860F(a)(4) of the Code and as
prepared by the Master  Servicer  and (ii)  provide to the Trustee an opinion of
counsel  experienced in federal income tax matters  acceptable to the Trustee to
the effect  that such  liquidation  constitutes,  as to the REMIC,  a  Qualified
Liquidation, and the Trustee either shall sell the assets constituting the REMIC
and  distribute the proceeds of the  liquidation  of the Trust Estate,  or shall
distribute equitably in kind all the assets of the Trust Estate to the remaining
Holders of the  Certificates  each in  accordance  with such  plan,  so that the
liquidation  or  distribution  of the  Trust  Estate,  the  distribution  of any
proceeds of the liquidation and the termination of this Agreement occur no later
than  the  close  of the 90th day  after  the  date of  adoption  of the plan of
liquidation  and such  liquidation  qualifies  as a Qualified  Liquidation.  The
Holders of the Certificates agree, by acceptance of Certificates, that there may
be no claim under any Certificate  Insurance Policy following termination of the
Trust  pursuant to clause (c) of the first sentence of this Section 9.01 without
the consent of the Certificate  Insurer.  In no event,  however,  will the Trust
created by this  Agreement  continue  beyond the  expiration of twenty-one  (21)
years from the death of the last survivor of the  descendants  of George Herbert
Walker Bush,  former President of the United States,  living on the date hereof.

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<PAGE>

The Trustee shall give written  notice of  termination  of the Agreement to each
Holder and Certificate Insurer in the manner set forth in Section 11.05 hereof.

        Section 9.02.  Optional Termination

        (a) On any  Master  Servicer  Remittance  Date on or after  the  Initial
Optional  Termination  Date,  Saxon or the Holders of a majority  in  Percentage
Interests of the Class of  Certificates  designated in the Trust  Agreement (the
"Designated  Class") may  determine to purchase and may cause the purchase  from
the  Trust of all (but not  fewer  than all)  Mortgage  Loans  and all  property
theretofore  acquired in respect of any Mortgage  Loan by  foreclosure,  deed in
lieu of foreclosure,  or otherwise then remaining in the Trust Estate at a price
equal to 100% of the  aggregate  Scheduled  Principal  Balances of the  Mortgage
Loans  (including  any REO  Property)  as of the day of purchase  minus  amounts
remitted  from the  Master  Servicer  Custodial  Account  to the Asset  Proceeds
Account  representing  collections of principal on the Mortgage Loans during the
current Remittance Period,  plus one month's interest on such amount computed at
the  Adjusted  Pass-Through  Rate,  plus in all cases  all  accrued  and  unpaid
Servicing Fees and Master Servicing Fees plus any unpaid  Reimbursement  Amounts
plus the aggregate amount of any unreimbursed  Advances and any Advances which a
Servicer or the Master  Servicer  has  theretofore  failed to remit;  but in any
event such purchase amount shall be sufficient to retire all other  Certificates
in full. In connection  with such purchase,  the Master  Servicer shall remit to
the Trustee (or the Paying  Agent on behalf of the  Trustee) all amounts then on
deposit  in the  Master  Servicer  Custodial  Account  for  deposit to the Asset
Proceeds  Account,  which deposit  shall be deemed to have occurred  immediately
preceding such purchase.

        (b) If an election has been made to treat certain assets of the Trust as
a REMIC,  in  connection  with any such  purchase,  Saxon or such Holders  shall
direct the Trustee to adopt and the Trustee shall adopt, as to the REMIC, a plan
of complete liquidation as contemplated by Section 860F(a)(4) of the Code and as
prepared by the Master Servicer,  and shall provide to the Trustee an Opinion of
Counsel  experienced in federal income tax matters  acceptable to the Trustee to
the effect that such purchase and  liquidation  constitutes,  as to the REMIC, a
Qualified Liquidation.  In addition,  Saxon or such Holders shall provide to the
Trustee an Opinion of Counsel  acceptable to the Trustee to the effect that such
purchase and liquidation  does not constitute a preference  payment  pursuant to
the United States Bankruptcy Code.

        (c) Promptly  following any purchase described in this Section 9.02, the
Trustee  will  release  the  Trustee  Mortgage  Loan File to the  Holders of the
Designated Certificates or otherwise upon their order.

        Section 9.03.  Optional Purchase

        On any Distribution  Date on or after the Initial  Optional  Termination
Date, the Holders of a majority in Percentage  Interests of the Designated Class
may purchase the Certificates of all other Classes by depositing with the Paying
Agent on the preceding  Master  Servicer  Remittance Date an amount equal to the
Certificate  Principal  Balance of such  Certificates on such  Distribution Date
plus interest thereon to such Distribution Date.

        Section 9.04.  Termination Upon Loss of REMIC Status

        If a REMIC has been  formed  with  respect to all or any  portion of the
Trust Estate:

        (a) Following a final  determination  by the Internal Revenue Service or
by a court of  competent  jurisdiction,  in either  case from which no appeal is
taken  within the  permitted  time for such  appeal,  or if any appeal is taken,
following a final  determination of such appeal from which no further appeal may
be taken,  to the effect that the REMIC does not and will no longer qualify as a
REMIC pursuant to Section 860D of the Code (the "Final  Determination"),  at any
time on or after  the date  which  is 30  calendar  days  following  such  Final
Determination  (i) the  Certificate  Insurer or the  Holders  of a  majority  in
Percentage  Interests  of the Regular  Certificates  then  outstanding  with the
consent of the Certificate Insurer may direct the Trustee on behalf of the Trust
to adopt a plan of complete liquidation, as prepared by the Master Servicer, and
(ii) the Certificate Insurer may notify the Trustee of the Certificate Insurer's
determination  to purchase  from the Trust all (but not fewer than all) Mortgage
Loans and all  property  theretofore  acquired by  foreclosure,  deed in lieu of
foreclosure,  or otherwise in respect of any Mortgage Loan then remaining in the
Trust  Estate at a price  equal to the sum of (x) the greater of (i) 100% of the
aggregate  Scheduled  Principal  Balances of the Mortgage Loans as of the day of
purchase  minus amounts  remitted  from the Master  Servicer  Custodial  Account
representing  collections  of principal on the Mortgage Loans during the current
Remittance  Period  and (ii)  the  fair  market  value  of such  Mortgage  Loans
(disregarding  accrued  interest),  (y) one  month's  interest  on  such  amount
computed at the Adjusted  Pass-Through  Rate and (z) the aggregate amount of any
unreimbursed  Advances and any Advances which a Servicer or Master  Servicer has
theretofore failed to remit.

                                       49
<PAGE>

        Upon receipt of such direction from the Certificate Insurer, the Trustee
shall notify the Servicers and the Holders of the Residual  Certificates of such
election to liquidate or such determination to purchase, as the case may be (the
"Termination  Notice").  The Holders of a majority of the Percentage Interest of
the Residual  Certificates then Outstanding may, within 60 days from the date of
receipt of the  Termination  Notice (the  "Purchase  Option  Period"),  at their
option,  purchase from the Trust all (but not fewer than all) Mortgage Loans and
all property theretofore  acquired by foreclosure,  deed in lieu of foreclosure,
or otherwise in respect of any Mortgage Loan then  remaining in the Trust Estate
at a purchase price equal to the aggregate  Scheduled  Principal Balances of all
Mortgage Loans as of the date of such purchase, plus (a) one month's interest on
such amount at the Adjusted  Pass-Through  Rate, (b) the aggregate amount of any
unreimbursed  Advances and unpaid  Servicing Fees and Master Servicing Fees, (c)
any Advances which a Servicer or Master Servicer has theretofore failed to remit
and (d) any outstanding Reimbursement Amount.

        If,  during the  Purchase  Option  Period,  the Holders of the  Residual
Certificates  have  not  exercised  the  option  described  in  the  immediately
preceding paragraph,  then upon the expiration of the Purchase Option Period (i)
if the Certificate Insurer or the Holders of a majority in Percentage  Interests
of the Regular  Certificates  with the consent of the  Certificate  Insurer have
given the Trustee the direction  described in clause  (a)(i) above,  the Trustee
shall sell the Mortgage Loans and reimburse the Servicers or Master Servicer for
unreimbursed Advances,  Master Servicing Fees, and Servicing Fees and distribute
the  remaining  proceeds  of  the  liquidation  of the  Trust  Estate,  each  in
accordance with the plan of complete liquidation, such that, if so directed, the
liquidation  of the  Trust  Estate,  the  distribution  of the  proceeds  of the
liquidation  and the termination of this Agreement occur no later than the close
of the 60th day, or such later day as the  Certificate  Insurer or Holders  with
the consent of the Certificate Insurer shall permit or direct in writing,  after
the expiration of the Purchase Option Period and (ii) if the Certificate Insurer
has given the  Trustee  notice of the  Certificate  Insurer's  determination  to
purchase the Trust Estate  described in clause  (a)(ii) above,  the  Certificate
Insurer  shall,  within 60 days,  purchase all (but not fewer than all) Mortgage
Loans and all  property  theretofore  acquired by  foreclosure,  deed in lieu of
foreclosure  or otherwise in respect of any Mortgage Loan then  remaining in the
Trust Estate. In connection with such purchase,  the Master Servicer shall remit
to the Trustee (or the Paying  Agent on behalf of the  Trustee) all amounts then
on deposit in the Master  Servicer  Custodial  Account  for deposit to the Asset
Proceeds  Account,  which deposit  shall be deemed to have occurred  immediately
preceding such purchase.

        (b)  Following  a Final  Determination,  the  Holders of a  majority  in
Percentage Interests of the Residual Certificates then Outstanding may, at their
option and upon  delivery  to the  Certificate  Insurer of an Opinion of Counsel
experienced in federal income tax matters acceptable to the Certificate  Insurer
selected by such Holders which opinion shall be reasonably  satisfactory in form
and  substance to the  Certificate  Insurer to the effect that the effect of the
Final Determination is to increase  substantially the probability that the gross
income of the Trust will be subject to federal taxation, purchase from the Trust
all (but not  fewer  than  all)  Mortgage  Loans  and all  property  theretofore
acquired by foreclosure, deed in lieu of foreclosure, or otherwise in respect of
any Mortgage Loan then  remaining in the Trust Estate at a purchase  price equal
to the aggregate  Scheduled  Principal  Balances of all Mortgage Loans as of the
date of such purchase,  plus (a) one month's interest on such amount computed at
the  Adjusted  Pass-Through  Rate,  (b) the  aggregate  amount  of  unreimbursed
Advances,  Servicing Fees and Master Servicing Fees, (c) the interest portion of
any Advances which a Servicer or Master Servicer has theretofore failed to remit
and (d) any outstanding  Reimbursement Amount. In connection with such purchase,
the Master Servicer shall remit to the Trustee (or the Paying Agent on behalf of
the  Trustee)  all  amounts  then on deposit in the  Master  Servicer  Custodial
Account for deposit to the Asset Proceeds Account, which deposit shall be deemed
to have occurred  immediately  preceding  such purchase.  The foregoing  opinion
shall be deemed  satisfactory  unless the Certificate Insurer gives such Holders
notice that such opinion is not satisfactory within thirty days after receipt of
such opinion.  In connection  with any such purchase,  such Holders shall direct
the  Trustee  to  adopt  a  plan  of  complete  liquidation  acceptable  to  the
Certificate Insurer, as prepared by the Master Servicer and shall provide to the
Trustee and the Certificate Insurer an Opinion of Counsel experienced in federal
income tax  matters  to the effect  that such  purchase  constitutes,  as to the
REMIC, a Qualified Liquidation.

        Section 9.05.  Disposition of Proceeds

        The Trustee (or the Paying Agent on behalf of the Trustee) shall deposit
the proceeds of any  liquidation of the Trust Estate pursuant to this Article IX
to the  Asset  Proceeds  Account  for  application  as  provided  in  the  Trust
Agreement; provided, however, that any amounts representing unrecovered Advances
which the Master  Servicer  determined to be  non-recoverable  and  unreimbursed

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<PAGE>

Advances,   accrued  and  unpaid  Master  Servicing  Fees,  and  Servicing  Fees
theretofore funded by a Servicer from such Servicer's own funds shall be paid by
the  Trustee  (or the  Paying  Agent on behalf  of the  Trustee)  to the  Master
Servicer or such Servicer, respectively, from the proceeds of the Trust Estate.


                                    Article X
                              REMIC Tax Provisions

        Section 10.01.  REMIC Administration

        (a) Unless otherwise specified in the Trust Agreement, the Trustee shall
elect (on behalf of each REMIC to be created)  to have the Trust (or  designated
assets  thereof)  treated  as one or  more  REMICs  on Form  1066 or such  other
appropriate federal tax or information return for the taxable year ending on the
last day of the calendar year in which the Certificates are issued as well as on
any  corresponding  state tax or information  return necessary to have the Trust
(or such assets) treated as one or more REMICs under state law.

        (b) The Master Servicer shall pay any and all tax related  expenses (not
including taxes) of the Trust and each REMIC, including, but not limited to, any
professional  fees or expenses  related to (i) audits or any  administrative  or
judicial  proceedings  with  respect  to each REMIC that  involve  the  Internal
Revenue  Service  or state tax  authorities  or (ii) the  adoption  of a plan of
complete liquidation.

        (c) The Master  Servicer shall prepare any necessary  forms for election
as  well  as all  the  Trust's  and  each  REMIC's  federal  and  state  tax and
information  returns.  At the request of the Master Servicer,  the Trustee shall
sign and file such  returns on behalf of each REMIC.  The  expenses of preparing
and filing such returns shall be borne by the Master Servicer.

        (d) The  Master  Servicer  shall  perform  all  reporting  and other tax
compliance duties that are the  responsibility of the Trust and each REMIC under
the REMIC  Provisions  or state or local tax law.  Among  its other  duties,  if
required by the REMIC Provisions,  the Master Servicer,  acting as agent of each
REMIC,  shall provide (i) to the Treasury or other  governmental  authority such
information  as is  necessary  for the  application  of any tax  relating to the
transfer of a Residual Certificate to any Disqualified  Organization and (ii) to
the Trustee such  information  as is necessary  for the Trustee to discharge its
obligations  under  the  REMIC  Provisions  to  report  tax  information  to the
Certificateholders.

        (e) Saxon, the Master  Servicer,  the Trustee (to the extent it has been
instructed  by Saxon or the Master  Servicer),  and the Holders of the  Residual
Certificates  shall  take any  action  or  cause  any  REMIC to take any  action
necessary  to create or  maintain  the status of such REMIC as a REMIC under the
REMIC  Provisions and shall assist each other as necessary to create or maintain
such status.

        (f) Saxon, the Master  Servicer,  the Trustee (to the extent it has been
instructed  by Saxon or the Master  Servicer),  and the Holders of the  Residual
Certificates  shall not take any action required by the Code or REMIC Provisions
or fail to take any  action,  or cause any  REMIC to take any  action or fail to
take any action,  that, if taken or not taken,  could endanger the status of any
such REMIC as a REMIC unless the Trustee and the Master  Servicer  have received
an Opinion of Counsel (at the expense of the party seeking to take or to fail to
take such action) to the effect that the  contemplated  action or failure to act
will not endanger such status.

        (g) Unless otherwise provided in the Trust Agreement, any taxes that are
imposed  upon the  Trust or any  REMIC by  federal  or state  (including  local)
governmental  authorities  (other than taxes paid by a party pursuant to Section
10.02 hereof or as provided in the following sentence) shall be allocated in the
same manner as Realized  Losses are allocated.  Any taxes imposed upon the Trust
or any  REMIC by the  jurisdiction  (or any  subdivision  thereof)  in which the
Corporate  Trust  Office of the  Trustee  is  located  that  would not have been
imposed  on the Trust or such  REMIC in the  absence  of any  legal or  business
connection  between the Trustee and such  jurisdiction  (or locality),  shall be
paid by the Trustee and,  notwithstanding  anything to the contrary in the Trust
Agreement,  such taxes shall be deemed to be part of the Trustee's cost of doing
business and shall not be reimbursable to the Trustee.

        (h)  Unless  otherwise  provided  in the  Trust  Agreement,  the  Master
Servicer or an Affiliate shall acquire a Residual  Certificate in each REMIC and
will act as the Tax  Matters  Person  of each  REMIC  and  perform  various  tax
administration  functions of each REMIC as its agent.  If the Master Servicer or
an  Affiliate  is unable  for any reason to  fulfill  its duties as Tax  Matters
Person  for a REMIC,  the  holder  of the  largest  Percentage  Interest  of the
Residual  Certificates  in such REMIC  shall  become the  successor  Tax Matters
Person of such REMIC.

                                       51
<PAGE>

        Section 10.02.  Prohibited Activities

        Except as otherwise provided in the Trust Agreement,  neither Saxon, the
Master Servicer, the Holders of the Residual Certificates, nor the Trustee shall
engage in, nor shall the parties  permit,  any of the following  transactions or
activities  unless it has  received (i) a Special Tax Opinion and (ii) a Special
Tax Consent  from each of the Holders of the Residual  Certificates  (unless the
Special Tax Opinion specially  provides that no REMIC-level tax will result from
the transaction or activity in question):

               (i) the sale or other  disposition of, or  substitution  for, any
        Mortgage  Loan except  pursuant  to (A) a  foreclosure  or default  with
        respect to such Mortgage  Loan,  (B) the bankruptcy or insolvency of any
        REMIC,  (C) the termination of any REMIC pursuant to Section 9.02 hereof
        or (D) a  substitution  or  purchase in  accordance  with  Section  2.03
        hereof;

               (ii) the acquisition of any Mortgage Loan for the Trust after the
        Closing Date except (A) during the three-month  period  beginning on the
        Closing Date pursuant to a fixed price contract in effect on the Closing
        Date that has been  reviewed and approved by tax counsel  acceptable  to
        the Master  Servicer or (B) a  substitution  in accordance  with Section
        2.03 hereof;

               (iii)the sale or other disposition of any investment in the
        Asset Proceeds Account at a gain;

               (iv) the sale or other disposition of any asset held in a Reserve
        Fund for a period of less than three months (a "Short-Term  Reserve Fund
        Investment") if such sale or other  disposition  would cause 30% or more
        of a REMIC's  income  from such  Reserve  Fund for the  taxable  year to
        consist of gain from the sale or disposition of Short-Term  Reserve Fund
        Investments;

               (v) the  withdrawal  of any amounts  from any Reserve Fund except
        (A)  for  the  distribution  pro  rata to the  Holders  of the  Residual
        Certificates  or (B) to  provide  for the  payment  of  expenses  of the
        related  REMIC or amounts  payable on the  Certificates  in the event of
        defaults or late  payments on the Mortgage  Loans or lower than expected
        returns on funds held in the Asset Proceeds  Account,  as provided under
        section 860G(a)(7) of the Code;

               (vi) the acceptance of any contribution to the Trust except (A) a
        cash  contribution  received during the three month period  beginning on
        the Closing Date, (B) any transfer of funds from a Mortgagor  Bankruptcy
        Fund,  Special  Hazard  Fund  or  Interest  Fund to the  Asset  Proceeds
        Account, (C) a cash contribution to a Reserve Fund owned by a REMIC that
        is made pro rata by the Holders of the Residual Certificates, (D) a cash
        contribution  to facilitate a  Terminating  Purchase that is made within
        the  90-day  period  beginning  on the date on which a plan of  complete
        liquidation is adopted pursuant to Section 9.04(a)(A) hereof, or (E) any
        other  cash   contribution   approved  by  the  Master   Servicer  after
        consultation with tax counsel; or

               (vii)any other transaction or activity that is not  contemplated
        by the Trust Agreement.

        Any  party  causing  the  Trust  to  engage  in any  of  the  activities
prohibited  in this  Section  10.02  shall be liable for the  payment of any tax
imposed on the Trust pursuant to section  860F(a)(1) or 860G(d) of the Code as a
result of the Trust engaging in such activities.

                                       52
<PAGE>

                                   Article XI
                            Miscellaneous Provisions

        Section 11.01.  Amendment of Trust Agreement

        The Trust Agreement may be amended or supplemented  from time to time by
Saxon, the Master Servicer and the Trustee,  subject to Section 1.03 hereof, but
without the consent of any of the  Certificateholders (i) to cure any ambiguity,
(ii) to correct or supplement  any provisions  herein which may be  inconsistent
with any other provisions  herein,  (iii) to modify,  eliminate or add to any of
its  provisions to such extent as shall be necessary or  appropriate to maintain
the  qualification of the Trust (or certain assets thereof) either as a REMIC or
as a  grantor  trust,  as  applicable  under  the  Code at all  times  that  any
Certificates  are outstanding or (iv) to make any other  provisions with respect
to matters or questions  arising  under the Trust  Agreement or matters  arising
with respect to the Trust that are not covered by the Trust Agreement,  provided
that  such  action  shall  not  adversely  affect in any  material  respect  the
interests of any  Certificateholder.  Any such amendment or supplement  shall be
deemed not to adversely affect in any material respect any  Certificateholder if
there is delivered to the Trustee written  notification  from each Rating Agency
to the effect  that such  amendment  or  supplement  will not cause such  Rating
Agency to reduce the then current rating assigned to such Certificates.

        The Trust Agreement may also be amended from time to time by Saxon,  the
Master  Servicer and the Trustee,  subject to Section 1.03 hereof,  and with the
consent of the  Holders of  Certificates  entitled to at least 66% of the Voting
Rights for the purpose of adding any  provisions to or changing in any manner or
eliminating  any of the provisions of the Trust Agreement or of modifying in any
manner the rights of the  Certificateholders;  provided,  however,  that no such
amendment  shall (i) reduce in any manner the amount of, or delay the timing of,
payments  received on Mortgage Loans which are required to be distributed on any
Certificate  without  the  consent  of the  Holder  of  such  Certificate,  (ii)
adversely  affect in any  material  respect the  interests of the Holders of any
Class of  Certificates  in a manner other than as described in (i),  without the
consent of the Holders of Certificates of such Class  evidencing at least 66% of
the Voting  Rights of such Class,  or (iii) reduce the  aforesaid  percentage of
Certificates the Holders of which are required to consent to any such amendment,
without the consent of the Holders of all such  Certificates  then  outstanding.
For purposes of the giving or withholding  of consents  pursuant to this Section
11.01,  Certificates  registered  in the name of Saxon or an Affiliate  shall be
entitled to Voting Rights with respect to matters affecting such Certificates.

        Promptly  after the  execution of any such  amendment  the Trustee shall
furnish a copy of such amendment to each Certificateholder.

        It shall not be necessary  for the consent of  Certificateholders  under
this Section 11.01 to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent shall approve the substance thereof.  The
manner of obtaining  such consents and of evidencing  the  authorization  of the
execution  thereof by  Certificateholders  shall be  subject to such  reasonable
regulations as the Trustee may prescribe.

        Section 11.02.  Recordation of Agreement; Counterparts

        To the extent  permitted  by  applicable  law,  the Trust  Agreement  is
subject to  recordation  in all  appropriate  public  offices for real  property
records in all the counties or other comparable jurisdictions in which any of or
all the properties subject to the Security Instruments are situated,  and in any
other appropriate  public recording office or elsewhere,  only if such recording
is deemed  necessary by an Opinion of Counsel  (which shall not be an expense of
the  Master  Servicer  or the  Trustee)  to the  effect  that  such  recordation
materially  and  beneficially  affects the interests of the  Certificateholders.
Neither the  Trustee nor the Master  Servicer  shall be  obligated  to seek such
recordation  or  Opinion of Counsel  unless  requested  in writing to do so by a
Certificateholder, Rating Agency or Certificate Insurer, in which case all legal
fees and  expenses  related to such  Opinion  of  Counsel  shall be paid by such
requesting Person.

        For the purpose of  facilitating  any recordation of the Trust Agreement
as herein provided and for other  purposes,  the Trust Agreement may be executed
simultaneously in any number of counterparts,  each of which  counterparts shall
be deemed to be an original,  and such counterparts shall constitute but one and
the same instrument.

        Section 11.03.  Limitation of Rights of Certificateholders

        The death or  incapacity of any  Certificateholder  shall not operate to
terminate the Trust Agreement or the Trust, nor entitle such Certificateholder's

                                       53
<PAGE>

legal  representatives  or heirs to claim an accounting or to take any action or
proceeding  in any  court  for a  partition  or  winding  up of the  Trust,  nor
otherwise  affect the rights,  obligations and liabilities of the parties hereto
or any of them.


        No  Certificateholder  shall have any right to vote (except as expressly
provided  for  herein) or in any manner  otherwise  control  the  operation  and
management of the Trust,  or the  obligations of the parties  hereto,  nor shall
anything  herein set forth,  or contained in the terms of the  Certificates,  be
construed  so as to  constitute  the  Certificateholders  from  time  to time as
partners or members of an association nor shall any  Certificateholder  be under
any  liability  to any third person by reason of any action taken by the parties
to the Trust Agreement pursuant to any provision thereof.

        No Certificateholder  shall have any right by virtue of any provision of
the Trust Agreement to institute any suit,  action or proceeding in equity or at
law upon or under or with respect to the Trust Agreement  unless (i) such Holder
previously  shall have given to the  Trustee a written  notice of default and of
the  continuance  thereof,  as  hereinbefore  provided,  and (ii) the Holders of
Certificates  entitled  to at least 25% of the  Voting  Rights  shall  have made
written request upon the Trustee to institute such action, suit or proceeding in
its own name as Trustee under the Trust  Agreement and shall have offered to the
Trustee such reasonable indemnity as it may require against the costs,  expenses
and liabilities to be incurred therein or thereby,  and the Trustee, for 15 days
after its receipt of such  notice,  request and offer of  indemnity,  shall have
neglected or refused to institute  any such action,  suit or  proceeding.  It is
understood and intended, and expressly covenanted by each Certificateholder with
every  other   Certificateholder   and  the   Trustee,   that  no  one  or  more
Certificateholders  shall have any right in any manner whatever by virtue of any
provision of the Trust  Agreement to affect,  disturb or prejudice the rights of
any other  Certificateholders,  or to obtain or seek to obtain  priority over or
preference  to any other  Certificateholders  or to enforce  any right under the
Trust  Agreement,  except in the  manner  therein  provided  and for the  equal,
ratable and common  benefit of all  Certificateholders.  For the  protection and
enforcement  of  the   provisions  of  this  Section   11.03,   each  and  every
Certificateholder  and the  Trustee  shall be  entitled to such relief as can be
given either at law or in equity.

        Section 11.04.  Governing Law

        The Trust  Agreement  shall be construed in accordance with and governed
by the laws of the  State  applicable  to  agreements  made and to be  performed
therein.

        Section 11.05.  Notices

        All demands and notices  under the Trust  Agreement  shall be in writing
and shall be deemed to have been duly given if personally delivered at or mailed
by first class mail,  postage prepaid,  or by express delivery  service,  to the
party concerned at its address set forth in the Trust  Agreement,  or such other
address or telecopy  number as may  hereafter  be furnished to each party to the
Trust  Agreement in writing by any such party.  Any notice required or permitted
to be mailed to a Certificateholder  shall be given by first-class mail, postage
prepaid,   or  by   express   delivery   service,   at  the   address   of  such
Certificateholder  as shown in the  Certificate  Register.  Any notice so mailed
within the time prescribed in the Trust Agreement shall be conclusively presumed
to have been duly  given,  whether or not the  Certificateholder  receives  such
notice.  A copy of any notice required to be telecopied  hereunder also shall be
mailed to the  appropriate  party in the manner set forth  above.  A copy of any
notice given hereunder to any other party shall be delivered to the Trustee.

        Section 11.06.  Severability of Provisions

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

        Section 11.07.  Sale of Mortgage Loans

        It is the express intent of Saxon and the Trustee that the conveyance of
the Mortgage  Loans by Saxon to the Trustee  pursuant to the Trust  Agreement be
construed  as a sale of the  Mortgage  Loans  by Saxon  to the  Trustee  for the
benefit of the  Certificateholders.  It is, further,  not the intention of Saxon
and the Trustee that such conveyance be deemed a pledge of the Mortgage Loans by
Saxon to the Trustee for the benefit of the  Certificateholders to secure a debt

                                       54
<PAGE>

or other obligation of Saxon.  Nevertheless,  if,  notwithstanding the intent of
the  parties,  the  Mortgage  Loans are held to continue to be property of Saxon
then (i) the Trust Agreement shall be deemed to be a security  agreement  within
the meaning of Article 9 of the UCC, (ii) the  conveyance by Saxon  provided for
in the Trust Agreement shall be deemed to be a grant by Saxon to the Trustee for
the  benefit of the  Certificateholders  of a security  interest  in all Saxon's
right,  title and interest in and to the Mortgage Loans and all amounts  payable
to the holders of the Mortgage  Loans in  accordance  with the terms thereof and
all proceeds of the conversion,  voluntary or involuntary, of the foregoing into
cash, instruments,  securities or other property, including, but not limited to,
all amounts, other than investment earnings,  from time to time held or invested
in the Master Servicer  Custodial Account or Asset Proceeds Account,  whether in
the  form  of  cash,  instruments,  securities  or  other  property,  (iii)  the
possession  by the Trustee or the  Custodian  of  Mortgage  Notes and such other
items of property as  constitute  instruments,  money,  negotiable  documents or
chattel  paper  shall be deemed to be  "possession  by the  secured  party"  for
purposes of perfecting  the security  interest  pursuant to Section 9-305 of the
UCC of the State and (iv)  notifications  to persons holding such property,  and
acknowledgments,  receipts or confirmations  from persons holding such property,
shall be deemed notifications to, or acknowledgments,  receipts or confirmations
from, financial intermediaries, bailees or agents (as applicable) of the Trustee
for the purpose of perfecting such security interest under applicable law. Saxon
and the  Trustee  (to the extent it has been  instructed  by Saxon or the Master
Servicer) shall, to the extent  consistent with the Trust  Agreement,  take such
actions as may be necessary to ensure that, if the Trust  Agreement  were deemed
to create a security  interest in the Mortgage  Loans,  such  security  interest
would be deemed to be a  perfected  security  interest of first  priority  under
applicable  law and will be maintained as such  throughout the term of the Trust
Agreement.

        Section 11.08.  Notice to Rating Agency

        (a) The Trustee shall use its best efforts promptly to provide notice to
each Rating  Agency with respect to each of the following of which it has actual
knowledge:

               (i) any material  change or  amendment to the Trust  Agreement or
        any agreement assigned to the Trust;

               (ii) the occurrence of any Event of Default  involving the Master
        Servicer  that has not been  cured or any  recommendation  by the Master
        Servicer that a Servicing Agreement with a Servicer be terminated;

               (iii) the resignation, termination or merger of Saxon, the Master
        Servicer, the Trustee or any Servicer;

               (iv) the purchase or  substitution  of Mortgage Loans pursuant to
        Section 2.03 hereof;

               (v) the final payment to Certificateholders;

               (vi) any change in the location of any Master Servicer  Custodial
        Account, Reserve Fund or Asset Proceeds Account;

               (vii)  any  event  that  would  result  in the  inability  of the
        Servicer or the Master  Servicer to make Advances  regarding  delinquent
        Mortgage  Loans or the inability of the Trustee to make any such Advance
        if it is serving as the Master Servicer pursuant to Section 7.02 hereof;

               (viii)  any  change  in  applicable  law that  would  require  an
        Assignment of a Security Instrument, not previously recorded pursuant to
        Section 2.01 hereof, to be recorded in order to protect the right, title
        and interest of the Trustee in and to the related  Mortgage  Loan or, in
        case a court should  recharacterize  the sale of the Mortgage Loans as a
        financing, to perfect a first priority security interest in favor of the
        Trustee in the related Mortgage Loan.

        (b) The Master  Servicer shall promptly notify the Trustee of any of the
events listed in Section 11.08(a) of which it has actual knowledge. In addition,
the Trustee  shall  promptly  furnish to each  Rating  Agency at its address set
forth in the Trust Agreement copies of the following:

               (i)  each report to Certificateholders  described in Section 4.01
        hereof; and

               (ii) each Annual Compliance Statement.

        (c) Any notice  pursuant to this  Section  11.08 shall be in writing and
shall be deemed to have been duly  given if  personally  delivered  or mailed by
first class mail,  postage  prepaid,  or by express  delivery  service,  to each
Rating Agency at the address specified in the Trust Agreement.

                                       55
<PAGE>

                                                                     Exhibit A-1



                          FORM OF INITIAL CERTIFICATION

                             [____________], 200[_]

Saxon Asset Securities Company
4880 Cox Road
Glen Allen, Virginia 23060
Attention:  [____________________]
[TRUSTEE]
[_________________________]
[_________________________]
Attention:  [____________________]

[MASTER SERVICER]
[_________________________]
[_________________________]
Attention:  [____________________]

               Trust Agreement, dated as of [____________], 200[_]
                      among Saxon Asset Securities Company,
                   [____________________], as Master Servicer,
                    and [____________________]_, as Trustee,
           Mortgage Loan Asset Backed Certificates, Series 200[_]-[_]

Ladies and Gentlemen:

        In  accordance   with  Section  2.02  of  the  Standard   Terms  to  the
above-captioned Trust Agreement, the Custodian hereby certifies that, as to each
mortgage  loan listed in the  Mortgage  Loan  Schedule  [to the Trust  Agreement
referred to above] [to the  Subsequent  Sales Agreement dated [   ], 200[ ], has
reviewed the Trustee Mortgage Loan File and determined that,  except as noted on
the Schedule of Exceptions  attached  hereto:  (i) all documents  required to be
included in the Trustee  Mortgage Loan File (as set forth in Section 2.01 of the
Standard Terms) are in its possession; (ii) such documents have been reviewed by
it and appear  regular on their face and relate to such Mortgage Loan; and (iii)
based on its examination,  or the examination by a Custodian on its behalf,  and
only as to such  documents,  the  information  set forth on such  Mortgage  Loan
Schedule  accurately  reflects the information set forth in the Trustee Mortgage
Loan File.  The  Custodian  further  certifies  that its review of each  Trustee
Mortgage  Loan File  included  each of the  procedures  listed in clause  (b) of
Section 2.02 of the Standard Terms.

        The Custodian further certifies as to each Mortgage Note that:

        (1) except for the  endorsement  required  pursuant to clause (a) of the
definition of Trustee  Mortgage Loan File, the Mortgage Note, on the face or the
reverse side(s) thereof,  does not contain  evidence of any unsatisfied  claims,
liens, security interests, encumbrances or restrictions on transfer; and

        (2) the  Mortgage  Note  bears an  endorsement  (which  appears to be an
original)  as  required  pursuant  to clause  (a) of the  definition  of Trustee
Mortgage Loan File.

        Except as described herein, neither the Trustee nor any Custodian on its
behalf has made an  independent  examination  of any documents  contained in any
Trustee  Mortgage  Loan File.  Neither the Trustee nor the  Custodian  makes any
representations as to: (i) the validity, legality,  sufficiency,  enforceability
or  genuineness of any of the documents  contained in any Trustee  Mortgage Loan
File for any of the Mortgage  Loans listed on the Mortgage  Loan Schedule to the
Trust  Agreement,  (ii)  the  collectibility,   insurability,  effectiveness  or
suitability of any such Mortgage Loan or (iii) whether any Trustee Mortgage Loan
File should include any surety or guaranty  agreement,  Note  Assumption  Rider,
buydown  agreement,   assumption  agreement,   modification  agreement,  written
assurance or substitution agreement.

                                     A-1-1
<PAGE>

        Capitalized  words and  phrases  used herein  shall have the  respective
meanings assigned to them in the above-captioned Trust Agreement.

                              [CUSTODIAN],

                              as custodian

                              By:____________________________

                              Title:_________________________

                                     A-1-2
<PAGE>

                                                         Exhibit A-2

                           FORM OF FINAL CERTIFICATION

                             [____________], 200[_]

Saxon Asset Securities Company
4880 Cox Road
Glen Allen, Virginia 23060
Attention:  [____________________]
[TRUSTEE]
[_________________________]
[_________________________]
Attention:  [____________________]

[MASTER SERVICER]
[_________________________]
[_________________________]
Attention:  [____________________]

               Trust Agreement, dated as of [____________], 200[_]
                      among Saxon Asset Securities Company,
                   [____________________], as Master Servicer,
                    and [____________________]_, as Trustee,
           Mortgage Loan Asset Backed Certificates, Series 200[_]-[_]

Ladies and Gentlemen:

        In  accordance   with  Section  2.02  of  the  Standard   Terms  to  the
above-captioned Trust Agreement,  the Custodian hereby certifies that, except as
noted on the Schedule of  Exceptions  attached  hereto,  for each  Mortgage Loan
listed in the Mortgage Loan Schedules (other than any Mortgage Loan paid in full
or listed on the attachment  hereto) it has received a complete Trustee Mortgage
Loan File which  includes each of the  documents  required to be included in the
Trustee Mortgage Loan File.

        Except as specifically  required in the above-captioned Trust Agreement,
neither  the  Trustee nor any  Custodian  on its behalf has made an  independent
examination  of any  documents  contained  in any  Trustee  Mortgage  Loan File.
Neither the Trustee nor the Custodian makes any  representations  as to: (i) the
validity,  legality,  sufficiency,  enforceability  or genuineness of any of the
documents  contained in any Trustee  Mortgage  Loan File for any of the Mortgage
Loans  listed on the Mortgage  Loan  Schedule to the Trust  Agreement,  (ii) the
collectibility,  insurability, effectiveness or suitability of any such Mortgage
Loan or (iii) whether any Trustee  Mortgage Loan File should  include any surety
or guaranty  agreement,  Note Assumption Rider,  buydown  agreement,  assumption
agreement, modification agreement, written assurance or substitution agreement.

        Capitalized  words and  phrases  used herein  shall have the  respective
meanings assigned to them in the above-captioned Trust Agreement.

                              [CUSTODIAN],

                              as custodian

                              By:____________________________

                              Title:_________________________

                                     A-2-1
<PAGE>

                                                                    Exhibit B

                           FORM OF RECORDATION REPORT

                             [____________], 200[_]
[MASTER SERVICER]
[_________________________]
[_________________________]
Attention:  [____________________]
[TRUSTEE]

[_________________________]
[_________________________]
Attention:  [____________________]

               Trust Agreement, dated as of [____________], 200[_]
                      among Saxon Asset Securities Company,
                   [____________________], as Master Servicer,
                    and [____________________]_, as Trustee,
           Mortgage Loan Asset Backed Certificates, Series 200[_]-[_]

Ladies and Gentlemen:

        In accordance with Section 2.02(e) of the Standard Terms,  the Custodian
hereby  notifies you that,  as of the date hereof with respect to the  following
Mortgage Loans, it has not received the indicated documents.

        If a Security Instrument for any Mortgage Loan has not been recorded and
the original  recorded  Security  Instrument or a copy of such recorded Security
Instrument with such evidence of recordation certified to be true and correct by
the  appropriate  governmental  recording  office has not been  delivered to the
Trustee  (or to a  Custodian  on its  behalf),  the  Seller or  Servicer  may be
required  to  purchase  such  Mortgage  Loan  from the  Trustee  if such  defect
materially and adversely  affects the value of the Mortgage Loan or the interest
of the Trust therein.

        [If an  Assignment  to the  Trustee or a  Custodian  on its  behalf,  as
applicable,  of the  Seller's  interest  in a Security  Instrument  has not been
recorded  within one year of the Closing Date,  the Seller or Servicer  shall be
required to (i) purchase the related  Mortgage  Loan from the Trustee or (ii) if
there have been no  defaults  in the Monthly  Payments  on such  Mortgage  Loan,
deposit an amount equal to the Purchase Price into an escrow account  maintained
by the Trustee.]



                                        Documents Not Received
                      __________________________________________________________

                                                         Original Recorded

  Saxon Loan Number         Original Recorded               Assignment of

                           Security Instrument           Security Instrument
_____________________   _________________________    ___________________________
                        or certified copy thereof     or certified copy thereof




               *Also required with regard to any intervening Assignments.

                              [TRUSTEE],

                              as Trustee

                              By:____________________________

                              Title:_________________________

                                      B-1
<PAGE>

                                                                    Exhibit C

                            FORM OF REMITTANCE REPORT

                         Saxon Asset Securities Company

        Trust:  Mortgage Loan Asset Backed Certificates, Series 200[_]-[_]

        Distribution Date:  [____________], 200[_]

        Reporting Month:  [____________] 200[_]

               The following  class,  series and collateral  information will be
included on each Remittance Report, as appropriate:

<TABLE>
<CAPTION>


Class Level                         Collateral Level                        Series Level
-----------                         ----------------                        ------------
<S>     <C>

Class Name                           Asset Proceeds Account -               Scheduled Principal

Pass-Through Rate                      Deposits and Withdrawals             Unscheduled Principal

Beginning Balance                    Balance Information for                Scheduled Interest

Interest Distribution                  Other Accounts                       Beginning Loan Count

Principal Distribution               Advances on Delinquencies              Ending Loan Count

Realized Losses                      Beginning Balance                      Realized Losses

Ending Balance                       Interest Distribution                  Weighted Average Maturity

Aggregate Realized Losses            Principal Distribution                    (WAM)

Original Balance                     Realized Losses                        Weighted Average

Record Date                          Ending Balance                         Mortgage Note Rate

Interest Distribution Factor         Total Distribution                     Total Distribution

Principal Distribution Factor        Aggregate Realized Losses              Weighted Average Net Rate

Remaining Principal Factor           Original Balance                       Weighted Average Pass-

Scheduled Principal                  Remaining Principal Factor               Through Rate

Unscheduled Principal                Scheduled Principal                    Delinquency Statistics

Current Interest                     Unscheduled Principal                     - 30, 60, and 90 day

Recovery/(Shortfall)                 Current Interest                          delinquencies; foreclosures

Accretion                            Recovery/(Shortfall)                      and REO's

                                     Accretion
</TABLE>

                                      C-1
<PAGE>

                                                                     Exhibit D

                  FORM OF RULE 144A AGREEMENT-QIB CERTIFICATION

                         SAXON ASSET SECURITIES COMPANY

     MORTGAGE LOAN ASSET BACKED CERTIFICATES, SERIES 200[_]-[_], CLASS [___]

                             [____________], 200[_]

[TRUSTEE]
[_________________________]
[_________________________]
Attention:  [____________________]

[MASTER SERVICER] [CERTIFICATE REGISTRAR]
[_________________________]
[_________________________]
Attention:  [____________________]
Saxon Asset Securities Company
4880 Cox Road
Glen Allen, Virginia 23060

Attention:  [____________________]

Ladies and Gentlemen:

         In  connection  with the  purchase on the date hereof of the  captioned
Certificates (the "Purchased Certificates"),  the undersigned (the "Transferee")
hereby  certifies and covenants to the transferor,  Saxon,  the Master Servicer,
the Trustee and the Trust as follows:

         1. The Transferee is a "qualified  institutional buyer" as that term is
defined in Rule 144A ("Rule 144A") promulgated under the Securities Act of 1933,
as amended (the "Securities Act") and has completed the form of certification to
that effect  attached  hereto as Annex A1 (if the Transferee is not a registered
investment  company) or Annex A2 (if the  Transferee is a registered  investment
company).  The Transferee is aware that the sale to it is being made in reliance
on Rule 144A.

         2. The Transferee  understands that the Purchased Certificates have not
been  registered  under the Securities Act or registered or qualified  under any
state  securities  laws and that no transfer  may be made  unless the  Purchased
Certificates  are registered under the Securities Act and under applicable state
law or unless an exemption from such  registration is available.  The Transferee
further  understands that neither Saxon,  the Master  Servicer,  the Certificate
Registrar,  the Paying Agent,  the Trustee nor the Trust is under any obligation
to  register  the  Purchased   Certificates  or  make  an  exemption  from  such
registration available.

         3. The Transferee is acquiring the Purchased  Certificates  for its own
account or for the account of a "qualified institutional buyer," and understands
that such Purchased  Certificates may be resold, pledged or transferred only (a)
to a person reasonably believed to be such a qualified  institutional buyer that
purchases  for its own account or for the  account of a qualified  institutional
buyer to whom notice is given that the resale,  pledge or transfer is being made
in reliance on Rule 144A, or (b) pursuant to another exemption from registration
under  the  Securities  Act and  under  applicable  state  securities  laws.  In
addition, such transfer may be subject to additional restrictions,  as set forth
in Section 5.05 of the Standard Terms to the Trust Agreement.

         4. The  Transferee  has been  furnished  with all  information  that it
requested regarding (a) the Purchased Certificates and distributions thereon and
(b) the Trust Agreement referred to below.

         5. If  applicable,  the  Transferee  has complied or will comply in all
material  respects  with  applicable   regulatory  guidelines  relating  to  the
ownership of mortgage derivative products.

                                      D-1
<PAGE>

         All  capitalized  terms used but not otherwise  defined herein have the
respective  meanings  assigned  thereto  in the  Trust  Agreement,  dated  as of
[____________],  200[_],  which  incorporates  by reference  the Standard  Terms
thereto,  among Saxon Asset  Securities  Company,  the Master  Servicer  and the
Trustee, pursuant to which the Purchased Certificates were issued.

         IN  WITNESS  WHEREOF,   the  undersigned  has  caused  this  Rule  144A
Agreement--QIB  Certification to be executed by a duly authorized representative
this [____] day of [____________], 200[_].

                                    [TRANSFEREE]

                                    By:____________________________

                                    Title:_________________________

                                      D-2
<PAGE>

                                                        Annex A1 to Exhibit D

             TRANSFEREES OTHER THAN REGISTERED INVESTMENT COMPANIES

         1. As  indicated  below, the  undersigned  is  the  President,  Chief
Financial Officer,  Senior  Vice  President  or  other executive officer of the
Transferee.

         2. The Transferee is a "qualified  institutional buyer" as that term is
defined in Rule 144A ("Rule 144A") promulgated under the Securities Act of 1933,
as amended  (the  "Securities  Act"),  because  (a) the  Transferee  owns and/or
invests on a discretionary  basis at least $100,000,000 in securities or, if the
Transferee is a dealer,  the Transferee  owns and/or invests on a  discretionary
basis at least  $10,000,000 in securities.  The Transferee owned and/or invested
on a discretionary basis at least  $[____________] in securities (except for the
excluded  securities  referred to in  paragraph 3 below) as of  [_____________],
200[_]  [specify a date on or since the end of the  Transferee's  most  recently
ended fiscal year] (such amount being  calculated in accordance  with Rule 144A)
and (b) the Transferee meets the criteria listed in the category marked below.

         _____    Corporation.  etc. The Transferee is an organization described
                  in Section 501(c) (3) of the Internal Revenue Code of 1986, as
                  amended,  a  corporation  (other  than a bank  as  defined  in
                  Section 3(a) (2) of the  Securities  Act or a savings and loan
                  association or other similar institution referenced in Section
                  3(a)  (5) (A) of the  Securities  Act),  a  partnership,  or a
                  Massachusetts or similar business trust.

         ____     Bank.  The  Transferee  (a)  is a  national  bank  or  banking
                  institution  as defined in Section 3(a) (2) of the  Securities
                  Act and is organized  under the laws of a state,  territory or
                  the District of Columbia.  The business of the  Transferee  is
                  substantially  confined  to banking and is  supervised  by the
                  appropriate state or territorial banking commission or similar
                  official or is a foreign bank or equivalent  institution,  and
                  (b) has an  audited  net  worth  of at  least  $25,000,000  as
                  demonstrated in its latest annual financial statements as of a
                  date  not  more  than 16  months  preceding  the  date of this
                  certification in the case of a U.S. bank, and not more than 18
                  months preceding the date of this certification in the case of
                  a  foreign  bank or  equivalent  institution,  a copy of which
                  financial statements is attached hereto.

         _____    Saving  and  Loan.  The  Transferee  is  a  savings  and  loan
                  association, building and loan association,  cooperative bank,
                  homestead  association  or similar  institution  referenced in
                  Section 3(a) (5) (A) of the Securities  Act. The Transferee is
                  supervised and examined by a state or federal authority having
                  supervisory  authority  over  any  such  institutions  or is a
                  foreign savings and loan association or equivalent institution
                  and has an  audited  net  worth  of at  least  $25,000,000  as
                  demonstrated in its latest annual financial statements as of a
                  date  not  more  than 16  months  preceding  the  date of this
                  certification   in  the  case  of  a  U.S.  savings  and  loan
                  association  or  similar  institution,  and not  more  than 18
                  months preceding the date of this certification in the case of
                  a  foreign   savings  and  loan   association   or  equivalent
                  institution,  a copy of which financial statements is attached
                  hereto.

         _____    Broker-dealer. The Transferee is a dealer registered pursuant
                  to Section 15 of  the  Certificates  Exchange Act of 1934, as
                  amended (the "1934 Act").

         _____    Insurance  Company.  The Transferee is an insurance company as
                  defined in Section 2(13) of the Securities  Act, whose primary
                  and predominant  business activity is the writing of insurance
                  or the reinsuring of risks underwritten by insurance companies
                  and  which  is  subject  to   supervision   by  the  insurance
                  commissioner  or a  similar  official  or  agency  of a state,
                  territory or the District of Columbia.

         _____    State or Local Plan. The Transferee is a plan  established and
                  maintained  by a state,  its  political  subdivisions,  or any
                  agency  or   instrumentality  of  a  state  or  its  political
                  subdivisions, for the benefit of its employees.

         _____    ERISA Plan. The Transferee is an employee  benefit plan within
                  the  meaning  of  Title I of the  Employee  Retirement  Income
                  Certificate Act of 1974, as amended.

                                     D-1-1
<PAGE>

         _____    Investment Adviser. The Transferee is an investment  adviser
                  registered under  the  Investment  Advisers  Act of  1940, as
                  amended.

         _____    Other. The Transferee qualifies as a "qualified  institutional
                  buyer" as  defined  in Rule  144A on the basis of facts  other
                  than  those  listed  in any  of the  entries  above.  If  this
                  response is marked,  the Transferee must certify on additional
                  pages,  to be  attached to this  certification,  to facts that
                  satisfy  the  Servicer  that the  Transferee  is a  "qualified
                  institutional buyer" as defined in Rule 144A.

         3. The term "securities" as used herein does not include (a) securities
of issuers that are affiliated with the Transferee,  (b) securities constituting
the whole or part of an unsold  allotment to or  subscription by the Transferee,
if the  Transferee  is a dealer,  (c) bank  deposit  notes and  certificates  of
deposit,  (d) loan  participations,  (e) repurchase  agreements,  (f) securities
owned but subject to a repurchase agreement and (g) currency,  interest rate and
commodity swaps.

         4. For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Transferee,  the Transferee used
the cost of such  securities  to the  Transferee  and did not include any of the
securities referred to in the preceding paragraph.  Further, in determining such
aggregate  amount,  the  Transferee  may  have  included   securities  owned  by
subsidiaries of the Transferee,  but only if such  subsidiaries are consolidated
with the  Transferee in its  financial  statements  prepared in accordance  with
generally  accepted  accounting  principles  and  if  the  investments  of  such
subsidiaries  are  managed  under  the  Transferee's  direction.  However,  such
securities were not included if the Transferee is a majority-owned, consolidated
subsidiary of another  enterprise  and the  Transferee is not itself a reporting
company under the 1934 Act.

         5. The Transferee  acknowledges  that it is familiar with Rule 144A and
understands  that the  Transferor  and other  parties  related to the  Purchased
Certificates are relying and will continue to rely on the statements made herein
because  one or more sales to the  Transferee  may be made in  reliance  on Rule
144A.

         6.       Will the Transferee be purchasing   YES     NO
the Purchased Certificates only for the Transferee's own account?

                  If  the  answer  to  the  foregoing   question  is  "NO",  the
         Transferee  agrees that, in connection  with any purchase of securities
         sold to the Transferee for the account of a third party  (including any
         separate  account) in reliance on Rule 144A, the  Transferee  will only
         purchase  for the  account  of a  third  party  that  at the  time is a
         "qualified  institutional  buyer"  within the meaning of Rule 144A.  In
         addition,  the Transferee  agrees that the Transferee will not purchase
         securities  for a third  party  unless the  Transferee  has  obtained a
         current  representation  letter  from such third  party or taken  other
         appropriate steps contemplated by Rule 144A to conclude that such third
         party  independently  meets the definition of "qualified  institutional
         buyer" set forth in Rule 144A.

         7. The  Transferee  will  notify  each of the  parties  to  which  this
certification is made of any changes in the information and conclusions  herein.
Until  such  notice  is  given,  the  Transferee's  purchase  of  the  Purchased
Certificates  will constitute a reaffirmation  of this  certification  as of the
date of such purchase.  In addition,  if the Transferee is a bank or savings and
loan as provided  above,  the  Transferee  agrees  that it will  furnish to such
parties  updated  annual  financial   statements   promptly  after  they  become
available.

                                     D-1-2
<PAGE>

         IN WITNESS  WHEREOF,  the undersigned has caused this certificate to be
executed   by  its  duly   authorized   representative   this   [____]   day  of
[____________], 200[_].

                                    [TRANSFEREE]

                                    By:____________________________

                                    Name:__________________________

                                    Title:_________________________

                                    Date:__________________________

      Saxon Asset Securities Company,

      Mortgage Loan Asset Backed Certificates, Series 200[_]-[_], Class [___]

                                     D-1-3
<PAGE>

                                                        Annex A2 to Exhibit D

              TRANSFEREES THAT ARE REGISTERED INVESTMENT COMPANIES
              ----------------------------------------------------

         1.  As  indicated  below,  the  undersigned  is  the  President,  Chief
Financial  Officer  or  Senior  Vice  President  of the  entity  purchasing  the
Purchased  Certificates  (the  `Transferee")  or, if the Transferee is part of a
Family of Investment  Companies (as defined in paragraph 3 below), is an officer
of the related investment adviser (the "Adviser").

         2. The Transferee is a "qualified  institutional buyer" as that term is
defined in Rule 144A ("Rule 144A") promulgated under the Securities Act of 1933,
as amended (the "Securities  Act"),  because (a) the Transferee is an investment
company (a  "Registered  Investment  Company")  registered  under the Investment
Company Act of 1940,  as amended (the "1940 Act") and (b) as marked  below,  the
Transferee alone, or the Transferee's Family of Investment  Companies,  owned at
least $100,000,000 in securities (other than the excluded securities referred to
in paragraph 4 below) as of  [____________],  200[_] [specify a date on or since
the end of the  Transferee's  most recently ended fiscal year].  For purposes of
determining the amount of securities owned by the Transferee or the Transferee's
Family of Investment Companies, the cost of such securities to the Transferee or
the Transferee's Family of Investment Companies was used.

         _____    The Transferee owned $[____________] in securities (other than
                  the excluded  securities  referred to in paragraph 4 below) as
                  of the end of the  Transferee's  most recent fiscal year (such
                  amount being calculated in accordance with Rule 144A).

         _____    The  Transferee  is part of a Family of  Investment  Companies
                  which owned in the  aggregate  $[____________]  in  securities
                  (other than the excluded securities referred to in paragraph 4
                  below) as of the end of the  Transferee's  most recent  fiscal
                  year (such amount being  calculated  in  accordance  with Rule
                  144A).

         3. The term "Family of  Investment  Companies" as used herein means two
or more Registered Investment Companies except for a unit investment trust whose
assets consist solely of shares of one or more Registered  Investment  Companies
(provided that each series of a "series company,  as defined in Rule 18f-2 under
the 1940 Act, shall be deemed to be a separate investment company) that have the
same investment  adviser (or, in the case of a unit investment  trust,  the same
depositor) or investment advisers (or depositors) that are affiliated (by virtue
of  being  majority-owned  subsidiaries  of  the  same  parent  or  because  one
investment adviser is a majority-owned subsidiary of the other).

         4. The term "securities" as used herein does not include (a) securities
of  issuers  that  are  affiliated  with  the  Transferee  or  are  part  of the
Transferee's  Family  of  Investment  Companies,  (b)  bank  deposit  notes  and
certificates of deposit, (c) loan participations, (d) repurchase agreements, (e)
securities  owned  but  subject  to a  repurchase  agreement  and (f)  currency,
interest rate and commodity swaps.

         5. The Transferee is familiar with Rule 144A and  understands  that the
parties to which this  certification is being made are relying and will continue
to  rely  on the  statements  made  herein  because  one or  more  sales  to the
Transferee  will be in reliance on Rule 144A. In addition,  the Transferee  will
only purchase for the Transferee's own account.

         6. The undersigned will notify the parties to which this  certification
is made of any changes in the  information and  conclusions  herein.  Until such
notice, the Transferee's purchase of the Purchased  Certificates will constitute
a reaffirmation of this  certification by the undersigned as of the date of such
purchase.

                                     D-2-1
<PAGE>

         IN WITNESS  WHEREOF,  the undersigned has caused this certificate to be
executed by its duly authorized  representative  this [____] of  [____________],
200[_].

                                    [TRANSFEREE OR ADVISOR]

                                    By:____________________________

                                    Name:__________________________

                                    Title:_________________________

                                    Date:__________________________

         Saxon Asset Securities Company,

         Mortgage Loan Asset Backed Certificates, Series 200[_]-[_], Class [___]

                                    IF AN ADVISER:

                                    Print Name of Transferee

                                    Date:__________________________

                                     D-2-2
<PAGE>

                                                                    Exhibit E

                          FORM OF TRANSFEREE AGREEMENT
                         SAXON ASSET SECURITIES COMPANY
     MORTGAGE LOAN ASSET BACKED CERTIFICATES, SERIES 200[_]-[_], CLASS [___]

                             [____________], 200[_]

[TRUSTEE]
[_________________________]
[_________________________]
Attention:  [____________________]

[MASTER SERVICER] [CERTIFICATE REGISTRAR]
[_________________________]
[_________________________]
Attention:  [____________________]

Saxon Asset Securities Company
4880 Cox Road
Glen Allen, Virginia 23060
Attention:  [____________________]

Ladies and Gentlemen:

         In  connection  with the  purchase on the date hereof of the  captioned
Certificates (the "Purchased Certificates"),  the undersigned (the "Transferee")
hereby  certifies and covenants to the transferor,  Saxon,  the Master Servicer,
the Trustee and the Trust as follows:

         1.       Representations and Warranties. The Transferee represents and
                  warrants:

                  (a) The Transferee is duly organized,  validly existing and in
         good  standing  under  the  laws  of  the  jurisdiction  in  which  the
         Transferee  is  organized,  is  authorized  to invest in the  Purchased
         Certificates  and to enter into this  Agreement,  and has duly executed
         and delivered this Agreement.

                  (b) The Transferee is acquiring the Purchased Certificates for
         its own account as principal and not with a view to the distribution of
         the  Purchased  Certificates,  in  whole or in part,  in  violation  of
         Section 5 of the  Securities  Act of 1933, as amended (the  "Securities
         Act").

                  (c) The Transferee is an  "Accredited  Investor" as defined in
         Rule 501(a) (1), (2), (3) or (7) of  Regulation D under the  Securities
         Act.

                  (d) The  Transferee  has  knowledge in financial  and business
         matters  and is  capable  of  evaluating  the  merits  and  risks of an
         investment in the Purchased  Certificates;  the  Transferee  has sought
         such accounting, legal and tax advice as it has considered necessary to
         make an informed  investment  decision;  and the  Transferee is able to
         bear the economic risk of an  investment in the Purchased  Certificates
         and can afford a complete loss of such investment;

                  (e) The  Transferee  confirms that Saxon has made available to
         the Transferee the opportunity to ask questions of, and receive answers
         from, Saxon concerning Saxon, the Trust, the purchase by the Transferee
         of the Purchased  Certificates and all matters relating thereto, and to
         obtain additional  information relating thereto that Saxon possesses or
         can acquire without unreasonable effort or expense.

         2.       Covenants.  The Transferee Covenants:

                  (a) The  Transferee  will not make a  public  offering  of the
         Purchased  Certificates,  and will not reoffer or resell the  Purchased

                                      E-1
<PAGE>

         Certificates in a manner that would render the issuance and sale of the
         Purchased Certificates,  whether considered together with the resale or
         otherwise,  a violation of the Securities Act, or any state  securities
         or "Blue Sky" laws or require registration pursuant thereto;

                  (b) The  Transferee  agrees that, in its capacity as holder of
         the Purchased Certificates,  it will assert no claim or interest in the
         Mortgage  Loans by reason of owning the  Purchased  Certificates  other
         than with respect to amounts that may be properly and actually  payable
         to the Transferee  pursuant to the terms of the Trust Agreement and the
         securities; and

                  (c) If applicable,  the Transferee will comply in all material
         respects with respect to the  Purchased  Certificates  with  applicable
         regulatory  guidelines relating to the ownership of mortgage derivative
         products.

         3.       Transfer Restrictions.

                  (a) The Transferee understands that the Purchased Certificates
         have not been  registered  under the  Securities  Act or  registered or
         qualified  under any state  securities laws and that no transfer may be
         made  unless  the  Purchased  Certificates  are  registered  under  the
         Securities  Act and under  applicable  state law or unless an exemption
         from such  registration  is  available.  If so  requested by the Master
         Servicer  or the  Trustee,  the  Transferee  and the  transferor  shall
         certify to Saxon, the Master Servicer and the Trustee as to the factual
         basis for the registration or qualification  exemption relied upon. The
         Transferee further understands that neither Saxon, the Master Servicer,
         the  Trustee  nor the Trust is under any  obligation  to  register  the
         Purchased  Certificates  or make an  exemption  from such  registration
         available.

                  (b) In the event that the  transfer is to be made within three
         years  of the  date  the  Purchased  Certificates  were  acquired  by a
         non-Affiliate  of Saxon from Saxon or an Affiliate of Saxon, the Master
         Servicer or the Trustee may require an Opinion of Counsel  (which shall
         not be an expense of Saxon,  the Master  Servicer or the Trustee)  that
         such transfer is not required to be registered under the Securities Act
         or state securities laws.

                  (c) Any Certificateholder desiring to effect a transfer shall,
         and does hereby agree to,  indemnify Saxon, the Master Servicer and the
         Trustee  against any  liability  that may result if the transfer is not
         exempt under federal or applicable state securities laws.

                  (d)  The  transfer  of  the  Certificates  may be  subject  to
         additional  restrictions,  as set forth in Section 5.05 of the Standard
         Terms of the Trust Agreement.

         All  capitalized  terms used but not otherwise  defined herein have the
respective  meanings  assigned  thereto  in the  Trust  Agreement,  dated  as of
[____________],  200[_],  which  incorporates  by reference  the Standard  Terms
thereto,  among Saxon Asset  Securities  Company,  the Master  Servicer  and the
Trustee, pursuant to which the Purchased Certificates were issued.

                                      E-2
<PAGE>

         IN  WITNESS  WHEREOF,   the  undersigned  has  caused  this  Transferee
Agreement to be executed by its duly authorized  representative as of the [____]
day of [____________], 200[_].

                                    [TRANSFEREE]

                                    By:____________________________

                                    Name:__________________________

                                    Title:_________________________


                                      E-3
<PAGE>

                                                                    Exhibit F

                         FORM OF BENEFIT PLAN AFFIDAVIT

Re:      Saxon Asset Securities Company
         Series 200[_]-[_] Trust (the "Trust")
         Mortgage Loan Asset Backed Certificates, Class [___]

STATE OF [____________]
                           ss
CITY OF [_____________]

         Under penalties of perjury,  I, the  undersigned,  declare that, to the
best of my  knowledge  and  belief,  the  following  representations  are  true,
correct, and complete.

         1. I am a duly authorized officer of [____________]  (the "Purchaser"),
whose taxpayer identification number is [____________], and on behalf of which I
have the authority to make this affidavit.

         2.  That  the   Purchaser  is  acquiring  a  Class  [___]   Certificate
representing an interest in the Trust,  certain assets of which one or more real
estate  mortgage  investment  conduit  ("REMIC")  elections are to be made under
Section 860D of the Internal Revenue Code of 1986, as amended (the "Code").

         3.       The Purchaser either:

                  (i) (A) is not a Plan  Investor  and (B)  either (I) is not an
         insurance company or (II) is an insurance  company,  in which case none
         of the funds used by the Purchaser in  connection  with its purchase of
         the  Certificates  constitute  plan assets as defined in the Plan Asset
         Regulations  ("Plan Assets") and its purchase of the Certificates shall
         not result in the  Certificates or the assets of the Trust being deemed
         to be Plan Assets;

                  (ii) is an insurance  company and either (A)  represents  that
         the funds used to purchase the  Certificates  are held in an "insurance
         company pooled  separate  account"  within the meaning of United States
         Department of Labor Prohibited  Transaction Class Exemption 90-1 ("PTCE
         90-1")  and that each of the  applicable  conditions  set forth in PTCE
         90-1  are  met  with  respect  to  the  purchase  and  holding  of  the
         Certificates,  or (B)  represents  that the funds used to purchase  the
         Certificates  are held in an  "insurance  company  general  account" as
         defined in United  States  Department of Labor  Prohibited  Transaction
         Class  Exemption  95-60 ("PTCE  95-60") and that each of the applicable
         conditions set forth in PTCE 95-60 are met with respect to the purchase
         and holding of the Certificates; or

                  (iii) has provided a Benefit  Plan  Opinion, obtained at  the
         Transferee's expense.

         All capitalized  terms used but not otherwise defined herein shall have
the  meanings  assigned  to such  terms  in the  Trust  Agreement,  dated  as of
[____________],  200[_],  which  incorporates  by reference  the Standard  Terms
thereto.

                                      F-1
<PAGE>

         IN WITNESS  WHEREOF,  the  undersigned  has caused  this  Benefit  Plan
Affidavit to be executed by its duly authorized  representative as of the [____]
day of [____________], 200[_].

                                    [PURCHASER]

                                    By:____________________________

                                    Name:__________________________

                                    Title:_________________________

         Personally appeared before me  [____________________],  known or proved
to me to be the same person who executed the  foregoing  instrument  and to be a
[____________________]  of the Purchaser,  and acknowledged to me that he or she
executed  the  same as his or her free act and deed and as the free act and deed
of the Purchaser.

         Subscribed  and sworn  before  me this  [____]  day of  [____________],
200[_].

                                    ________________________________
                                    Notary Public

         My commission expires the [____] day of [____________], 200[_].

                                      F-2
<PAGE>

                                                                       Exhibit G

                      FORM OF RESIDUAL TRANSFEREE AGREEMENT
                         SAXON ASSET SECURITIES COMPANY
      MORTGAGE LOAN ASSET BACKED CERTIFICATES, SERIES 200[_]-[_], CLASS [R]

                             [____________], 200[_]

[TRUSTEE]
[_________________________]
[_________________________]
Attention:  [____________________]

[MASTER SERVICER] [CERTIFICATE REGISTRAR]
[_________________________]
[_________________________]
Attention:  [____________________]

Saxon Asset Securities Company
4880 Cox Road
Glen Allen, Virginia 23060
Attention:  [____________________]

Ladies and Gentlemen:

         In  connection  with the  purchase on the date hereof of the  captioned
Certificates (the "Residual  Certificates"),  the undersigned (the "Transferee")
hereby  certifies and covenants to the transferor,  Saxon,  the Master Servicer,
the Trustee, and the Trust as follows:

         1.       Representations and Warranties. The Transferee represents and
                  warrants:

                  (a) The Transferee's taxpayer identification number is as
         set forth on the signature page hereof;

                  (b) The Transferee is duly organized,  validly existing and in
         good  standing  under  the  laws  of  the  jurisdiction  in  which  the
         Transferee  is  organized,  is  authorized  to invest  in the  Residual
         Certificates  and to enter into this  Agreement,  and has duly executed
         and delivered this Agreement;

                  (c) The Transferee represents that (i) it understands that the
         Residual  Certificates  represent  for  federal  income tax  purposes a
         "residual  interest"  in one or more real  estate  mortgage  investment
         conduits  (each,  a "REMIC")  and that,  as the holder of the  Residual
         Certificates,  it will be required to take into account, in determining
         its taxable  income,  its pro rata share of the taxable  income of each
         such REMIC,  (ii) it  understands  that it may incur federal income tax
         liabilities with respect to the Residual  Certificates in excess of any
         cash flows  generated by such Residual  Certificates,  (iii) it has the
         financial  wherewithal and intends to pay any tax imposed on the income
         that it derives from the  Certificates  as they become due, and (iv) it
         has  historically  paid its debts as they became due and intends to pay
         its debts as they become due in the future;

                  (d) The Transferee (i) has knowledge in financial and business
         matters  and is  capable  of  evaluating  the  merits  and  risks of an
         investment  in  the  Residual   Certificates,   (ii)  has  sought  such
         accounting,  legal,  and tax advice as it has  considered  necessary to
         make an  informed  investment  decision,  and (iii) is able to bear the
         economic  risk of an investment  in the Residual  Certificates  and can
         afford a complete loss of such investment;

                  *(e) The Transferee is acquiring the Residual Certificates for
         its own  account  as  principal  and not with a view to the  resale  or
         distribution thereof, in whole or in part, in violation of Section 5 of
         the Securities Act of 1933, as amended (the "Securities Act"); and

                                      G-1
<PAGE>

                  *(f) The Transferee  confirms that Saxon has made available to
         the Transferee the opportunity to ask questions of, and receive answers
         from, Saxon concerning Saxon, the Trust, the purchase by the Transferee
         of the Residual  Certificates and all matters relating thereto,  and to
         obtain additional  information relating thereto that Saxon possesses or
         can acquire without unreasonable effort or expense.

         2.       Covenants.  The Transferee covenants:

                  *(a) The  Transferee  will not make a public  offering  of the
         Residual  Certificates,  and will not  reoffer or resell  the  Residual
         Certificates in a manner that would render the issuance and sale of the
         Residual  Certificates  whether considered  together with the resale or
         otherwise,  a violation of the Securities Act, or any state  securities
         or "Blue Sky" laws or require registration pursuant thereto;

                  (b) The Transferee agrees that, in its capacity as a holder of
         the Residual  Certificates,  it will assert no claim or interest in the
         Mortgage Loans by reason of owning the Residual Certificates other than
         with respect to amounts  that may be properly  and actually  payable to
         the  Transferee  pursuant to the terms of the Trust  Agreement  and the
         Certificates;

                  (c) If applicable,  the Transferee will comply with respect to
         the Residual  Certificates  in all material  respects  with  applicable
         regulatory  guidelines relating to the ownership of mortgage derivative
         products;

                  (d) Upon notice thereof,  the Transferee  agrees to any future
         amendment  to the  provisions  of the Trust  Agreement  relating to the
         transfer of the Residual  Certificates  (or any interest  therein) that
         counsel  to Saxon or the Trust may deem  necessary  to ensure  that any
         such  transfer  will not  result  in the  imposition  of any tax on the
         Trust;

                  (e) The Transferee  hereby agrees that the Master  Servicer or
         an  affiliate  thereof  will (i)  supervise  or  engage  in any  action
         necessary or advisable to preserve the status of each related  REMIC as
         a REMIC,  (ii) be, and perform the  functions of, each such REMIC's tax
         matters person ("TMP"), and (iii) employ on a reasonable basis counsel,
         accountants,  and professional  assistance to aid in the preparation of
         tax returns or the performance of the above;

                  (f) The Transferee hereby agrees to cooperate with the TMP and
         to take any action  required of it by the REMIC  Provisions in order to
         create or maintain the REMIC status of each related REMIC;

                  (g) The  Transferee  hereby  agrees  that it will not take any
         action that could  endanger  the REMIC  status of any related  REMIC or
         result in the  imposition of tax on any such REMIC unless  counsel for,
         or acceptable to, the TMP has provided an opinion that such action will
         not result in the loss of such REMIC status or the  imposition  of such
         tax, as applicable;

                  (h)  The  Transferee  hereby  agrees  to be  bound  by all the
         provisions  of the  Trust  Agreement  applicable  to the  holders  of a
         Residual Certificate including,  but not limited to, Section 5.05(c) of
         the  Standard  Terms  to the  Trust  Agreement  (which  relates  to the
         transfer  of  a  Residual  Certificate),  and  acknowledges  that  each
         Residual  Certificate  will bear a legend  setting forth the applicable
         restrictions on transfer;

                  (i) The Transferee  hereby agrees that it shall pay any tax or
         reporting  costs  borne by a REMIC as  result  of its  purchase  of the
         Residual  Certificates or any beneficial  interest therein in violation
         of Section  5.05(c) of the Standard Terms to the Trust Agreement to the
         extent such tax or reporting costs are not paid by the Transferor or by
         the Trustee out of amounts that  otherwise  would have been paid to the
         Transferee;

                  (j)  The  Transferee  hereby  agrees  to  indemnify  and  hold
         harmless Saxon,  the Master Servicer,  the Trustee,  the Trust and each
         other  holder  of a  Residual  Certificate  from  and  against  any tax
         liability  or  reporting  costs  arising  from  its  violation  of  the
         restrictions  on transfer  contained in Section 5.05(c) of the Standard
         Terms  to  the   Trust   Agreement   or  its   breach  of  any  of  its
         representations, warranties, or covenants contained herein; and

                  (k) The  Transferee  agrees  that it will  take no  action  to
         question or invalidate  the interest of the Trust in the Mortgage Loans
         or seek or maintain any claim or interest in the Mortgage  Loans having
         a priority over the interest of the Trust in such Mortgage Loans.

                                      G-2
<PAGE>

The  representations and covenants above marked with an * apply only to Residual
Certificates that are Private Certificates.

         3.  Acknowledgments.

                  (a)  The  Transferee   acknowledges   that,  if  the  Residual
         Certificates are Private  Certificates,  the Residual Certificates have
         not been registered under the Securities Act or registered or qualified
         under any state securities laws and that no transfer may be made unless
         the Purchased  Certificates are registered under the Securities Act and
         under   applicable   state  law  or  unless  an  exemption   from  such
         registration  is available.  The Transferee  further  understands  that
         neither  Saxon,  the  Master  Servicer  nor  the  Trust  is  under  any
         obligation to register the  Certificate  or make an exemption from such
         registration available.

                  (b) The Transferee acknowledges that if a Residual Certificate
         is  transferred  to  a  Non-U.S.  Person,  the  transfer  will  not  be
         recognized  by the  Withholding  Agent (as  defined  below)  unless the
         Withholding  Agent  has  received  from  the  Transferee  an  affidavit
         substantially in the form of Exhibit H-1 attached to the Standard Terms
         to Trust Agreement.

                  (c) The  Transferee  acknowledges  that if any  United  States
         federal  income tax is due at the time a Non-U.S.  Person  transfers  a
         Residual  Certificate,  the Trustee or its  designated  Paying Agent or
         other  person  who is  liable to  withhold  federal  income  tax from a
         distribution on a Residual  Certificate under sections 1441 and 1442 of
         the Code and the  Treasury  regulations  thereunder  (the  "Withholding
         Agent")  may (i)  withhold  an  amount  equal  to the  taxes  due  upon
         disposition  of the  Certificate  from future  distributions  made with
         respect to the  Certificate to the  Transferee  (after giving effect to
         the withholding of taxes imposed on such Transferee),  and (ii) pay the
         withheld  amount to the Internal  Revenue  Service unless  satisfactory
         written evidence of payment of the taxes due by the transferor has been
         provided to the Withholding Agent.

                  (d) The Transferee  acknowledges the Withholding Agent may (i)
         hold  distributions  on  a  Certificate,   without  interest,   pending
         determination  of amounts to be withheld,  (ii) withhold  other amounts
         required to be withheld  pursuant to United States  federal  income tax
         law, if any, from  distributions  that otherwise  would be made to such
         Transferee on each  Certificate it holds, and (iii) pay to the Internal
         Revenue Service all such amounts withheld.

                  (e) The  Transferee  acknowledges  that the transfer of all or
         part of the Residual  Certificates that have "tax avoidance  potential"
         (as  defined in  Treasury  regulations  section  1.860G-3(a)(2)  or any
         successor  provision) to a Non-U.S.  Person will be disregarded for all
         federal  income tax purposes,  and that Treasury  regulations  or other
         administrative guidance issued by the Treasury may effectively prohibit
         the transfer of the Residual Certificates to Non-U.S. Persons.

                  (f) The  Transferee  acknowledges  that  the  transfer  of the
         Residual  Certificates  to a U.S.  Person will be  disregarded  for all
         federal income tax purposes if a significant purpose of the transfer is
         to impede  the  assessment  or  collection  of the  taxes and  expenses
         associated  with such  Certificates  within  the  meaning  of  Treasury
         regulation section 1.860E-1(c)(1).

         IN WITNESS  WHEREOF,  the  undersigned  has caused this Agreement to be
validly executed by its duly authorized  representative  as of the [____] day of
[____________], 200[_].

                                    [TRANSFEREE]

                                    By:____________________________

                                    Name:__________________________

                                    Title:_________________________

                                    Taxpayer ID #__________________

                                      G-3
<PAGE>

                                                                  Exhibit H-1

                        FORM OF NON-U.S. PERSON AFFIDAVIT
                       AND AFFIDAVIT PURSUANT TO SECTIONS
                          860D(a)(6)(A) and 86OE(e)(4)
                OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED

Re:      Saxon Asset Securities Company
         Series 200[_]-[_] Trust (the "Trust")
         Mortgage Loan Asset Backed Certificates, Class R

STATE OF [____________]
                           ss:
CITY OF [_____________]

         Under  penalties of perjury,  I, the  undersigned,  declare that to the
best of my knowledge and belief, the following representations are true, correct
and complete:

         1. I am a duly  authorized  officer  of  [__________________________]
(the "Transferee")  and on  behalf of  which I have the  authority to make this
affidavit.

         2.  The  Transferee  is  acquiring  all or a  portion  of the  Class  R
Certificates (the "Residual Certificates"),  which represent a residual interest
in one or more real estate  mortgage  investment  conduits (each, a "REMIC") for
which  elections are to be made under Section 860D of the Internal  Revenue Code
of 1986, as amended (the "Code").

         3. The  Transferee  is a foreign  person within the meaning of Treasury
Regulation  Section  1.860G-3(a)(1)  (i.e., a person other than (i) a citizen or
resident  of the  United  States,  (ii) a  corporation  or  partnership  that is
organized  under the laws of the United  States or any  jurisdiction  thereof or
therein,  or (iii) an estate or trust that is subject to United  States  federal
income  tax  regardless  of the  source of its  income)  who would be subject to
United  States  income tax  withholding  pursuant to Section 1441 or 1442 of the
Code and the Treasury regulations thereunder on income derived from the Residual
Certificates (a "Non-U.S. Person").

         4.  The   Transferee   agrees  that  it  will  not  hold  the  Residual
Certificates  in connection  with a trade or business in the United States,  and
the  Transferee  understands  that it will be subject to United  States  federal
income tax under  sections  871 and 881 of the Code in  accordance  with section
860G of the Code and any  Treasury  regulations  issued  thereunder  on  "excess
inclusions"  that accrue with  respect to the Residual  Certificates  during the
period the Transferee holds the Residual Certificates.

         5. The  Transferee  understands  that the federal  income tax on excess
inclusions  with  respect  to  the  Residual  Certificates  may be  withheld  in
accordance  with section 860G(b) of the Code from  distributions  that otherwise
would be made to the Transferee on the Residual  Certificates and, to the extent
that such tax has not been imposed  previously,  that such tax may be imposed at
the time of  disposition  of any such Residual  Certificate  pursuant to section
860G(b) of the Code.

         6. The  Transferee  agrees (i) to file a timely United  States  federal
income tax return for the year in which disposition of a Residual Certificate it
holds  occurs (or  earlier if  required  by law) and will pay any United  States
federal  income tax due at that time and (ii) if any tax is due at that time, to
provide  satisfactory  written evidence of payment of such tax to the Trustee or
its  designated  paying agent or other person who is liable to withhold  federal
income tax from a distribution on the Residual  Certificates under sections 1441
and 1442 of the Code and the Treasury  regulations  thereunder (the "Withholding
Agent").

         7. The Transferee  understands  that until it provides written evidence
of the payment of tax due upon the disposition of a Residual  Certificate to the

                                     H-1-1
<PAGE>

Withholding  Agent pursuant to paragraph 6 above, the Withholding  Agent may (i)
withhold an amount equal to such tax from future distributions made with respect
to the Residual  Certificate to subsequent  transferees  (after giving effect to
the withholding of taxes imposed on such subsequent  transferees),  and (ii) pay
the withheld amount to the Internal Revenue Service.

         8. The  Transferee  understands  that  (i) the  Withholding  Agent  may
withhold other amounts required to be withheld pursuant to United States federal
income tax law, if any, from  distributions that otherwise would be made to such
transferee on each Residual  Certificate it holds and (ii) the Withholding Agent
may pay to the Internal  Revenue Service  amounts  withheld on behalf of any and
all former holders of each Residual Certificate held by the Transferee.

         9.  The  Transferee   understands  that  if  it  transfers  a  Residual
Certificate  (or any interest  therein) to a United States  Person  (including a
foreign person who is subject to net United States federal income  taxation with
respect to such Residual  Certificate),  the Withholding Agent may disregard the
transfer for federal  income tax purposes if the transfer  would have the effect
of allowing the  Transferee to avoid tax on accrued  excess  inclusions  and may
continue  to  withhold  tax from  future  distributions  as though the  Residual
Certificate were still held by the Transferee.

         10.  The  Transferee   understands   that  a  transfer  of  a  Residual
Certificate  (or any interest  therein) to a Non-U.S.  Person  (i.e.,  a foreign
person who is not subject to net United States  federal  income tax with respect
to such  Residual  Certificate)  will not be recognized  unless the  Withholding
Agent has received from the  transferee an affidavit in  substantially  the same
form as this affidavit containing these same agreements and representations.

         11.    The  Transferee  understands that  distributions on a Residual
Certificate may be delayed, without interest,  pending determination of amounts
to be withheld.

         12. The  Transferee is not a  "Disqualified  Organization"  (as defined
below),  and the  Transferee  is not  acquiring a Residual  Certificate  for the
account of, or as agent or nominee of, or with a view to the  transfer of direct
or indirect record or beneficial ownership to, a Disqualified Organization.  For
the purposes  hereof, a Disqualified  Organization is any of the following:  (i)
the United  States,  any State or  political  subdivision  thereof,  any foreign
government, any international organization,  or any agency or instrumentality of
any of the foregoing;  (ii) any organization (other than a farmer's  cooperative
as defined  in  Section  521 of the Code)  that is exempt  from  federal  income
taxation  (including  taxation  under  the  unrelated  business  taxable  income
provisions  of the  Code);  (iii)  any rural  telephone  or  electrical  service
cooperative  described in Section 1381(a) (2) (C) of the Code; or (iv) any other
entity so designated by Treasury rulings or regulations promulgated or otherwise
in effect as of the date hereof. In addition,  a corporation will not be treated
as an  instrumentality  of the  United  States  or of  any  state  or  political
subdivision  thereof if all its  activities  are  subject  to tax and,  with the
exception of the Federal Home Loan Mortgage Corporation, a majority of its board
of directors is not selected by such governmental unit.

         13. The  Transferee  agrees to consent  to any  amendment  of the Trust
Agreement that shall be deemed necessary by Saxon (upon the advice of counsel to
Saxon) to  constitute a reasonable  arrangement  to ensure that no interest in a
Residual  Certificate  will be owned  directly or indirectly  by a  Disqualified
Organization.

         14. The Transferee  acknowledges that Section 860E(e) of the Code would
impose a substantial tax on the transferor or, in certain  circumstances,  on an
agent for the  Transferee,  with  respect to any transfer of any interest in any
Residual Certificate to a Disqualified Organization.

                                     H-1-2
<PAGE>

         Capitalized  terms used and not otherwise defined herein shall have the
meanings  assigned to them in the Trust Agreement,  dated as of  [____________],
200[_], which incorporates by reference the Standard Terms thereto,  among Saxon
Asset Securities Company, the Master Servicer and the Trustee.

         IN WITNESS  WHEREOF,  the  undersigned has caused this instrument to be
executed  by  its  duly  authorized  representative  as of  the  [____]  day  of
[____________], 200[_].

                                    [TRANSFEREE]

                                    By:____________________________

                                    Name:__________________________

                                    Title:_________________________

         Personally appeared before me  [____________________],  known or proved
to me to be the same person who executed the  foregoing  instrument  and to be a
[____________________] of the Transferee,  and acknowledged to me that he or she
executed  the  same as his or her free act and deed and as the free act and deed
of the Transferee.

         Subscribed  and sworn  before  me this  [____]  day of  [____________],
200[_].

                                    _________________________________
                                    Notary Public

         My commission expires the [____] day of [____________], 200[_].

                                     H-1-3
<PAGE>

                                                                    Exhibit H-2

                          FORM OF U.S. PERSON AFFIDAVIT
                PURSUANT TO SECTIONS 860D(a)(6)(A) and 860E(e)(4)
                OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED

Re:      Saxon Asset Securities Company
         Series 200[_]-[_] Trust (the "Trust")
         Mortgage Loan Asset Backed Certificates, Class R

STATE OF [____________]
                           ss:
CITY OF [_____________]

         Under  penalties of perjury,  I, the  undersigned,  declare that to the
best of my knowledge and belief, the following representations are true, correct
and complete:

         1.     I  am a  duly  authorized  officer  of  [____________________]
(the "Transferee")  and on  behalf of which I  have the  authority to make this
affidavit.

         2.  The  Transferee  is  acquiring  all or a  portion  of the  Class  R
Certificates (the "Residual Certificates"),  which represent a residual interest
in one or more real estate  mortgage  investment  conduits (each, a "REMIC") for
which  elections are to be made under Section 860D of the Internal  Revenue Code
of 1986, as amended (the "Code").

         3. The  Transferee  either is (i) a citizen or  resident  of the United
States,  (ii) a domestic  partnership or  corporation,  (iii) an estate or trust
that is subject to United States  federal income tax regardless of the source of
its  income,  or (iv) a foreign  person who would be  subject  to United  States
income taxation on a net basis on income derived from the Residual  Certificates
(a "U.S. Person").

         4. The Transferee is a not a  "Disqualified  Organization"  (as defined
below),  and the  Transferee  is not  acquiring a Residual  Certificate  for the
account of, or as agent or nominee of, or with a view to the  transfer of direct
or indirect record or beneficial ownership to, a Disqualified Organization.  For
the purposes  hereof, a Disqualified  Organization is any of the following:  (i)
the United  States,  any state or  political  subdivision  thereof,  any foreign
government, any international organization,  or any agency or instrumentality of
any of the foregoing;  (ii) any organization (other than a farmer's  cooperative
as defined  in  section  521 of the Code)  that is exempt  from  federal  income
taxation  (including  taxation  under  the  unrelated  business  taxable  income
provisions  of the  Code);  (iii)  any rural  telephone  or  electrical  service
cooperative  described in section  1381(a)(2)(C)  of the Code; or (iv) any other
entity so designated by Treasury rulings or regulations promulgated or otherwise
in effect as of the date hereof. In addition,  a corporation will not be treated
as an  instrumentality  of the  United  States  or of  any  state  or  political
subdivision  thereof if all its  activities  are  subject  to tax and,  with the
exception of the Federal Home Loan Mortgage Corporation, a majority of its board
of directors is not selected by such governmental unit.

         5. The  Transferee  agrees to  consent  to any  amendment  of the Trust
Agreement that shall be deemed necessary by Saxon (upon the advice of counsel to
Saxon) to  constitute a reasonable  arrangement  to ensure that no interest in a
Residual  Certificate  will be owned  directly or indirectly  by a  Disqualified
Organization.

         6. The Transferee  acknowledges  that Section 860E(e) of the Code would
impose a substantial tax on the transferor or, in certain  circumstances,  on an
agent for the  Transferee,  with  respect to any transfer of any interest in any
Residual Certificate to a Disqualified Organization.

         Capitalized  terms used and not otherwise defined herein shall have the
meanings  assigned to them in the Trust Agreement,  dated as of  [____________],
200[_], which incorporates by reference the Standard Terms thereto,  among Saxon
Asset Securities Company, the Master Servicer and the Trustee.

                                     H-2-1
<PAGE>

         IN WITNESS  WHEREOF,  the  undersigned has caused this instrument to be
executed  by  its  duly  authorized  representative  as of  the  [____]  day  of
[____________], 200[_].

                                    [TRANSFEREE]

                                    By:____________________________

                                    Name:__________________________

                                    Title:_________________________

         Personally appeared before me  [____________________],  known or proved
to me to be the same person who executed the  foregoing  instrument  and to be a
[____________________] of the Transferee,  and acknowledged to me that he or she
executed  the  same as his or her free act and deed and as the free act and deed
of the Transferee.

         Subscribed  and sworn  before  me this  [____]  day of  [____________],
200[_].

                                    ____________________________________
                                    Notary Public

         My commission expires the [____] day of [____________], 200[_].


                                     H-2-2