UNITED STATES
                             SECURITIES AND EXCHANGE COMMISSION
                                   WASHINGTON, D.C. 20549



                                          FORM 10-K


  (Mark one)

  /X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934
      For the fiscal year ended December 31, 2006

      OR



  / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934


       Commission file number:  333-132232-20

       Structured Asset Mortgage Investments II Trust 2006-AR8
       (exact name of issuing entity as specified in its charter)

       Structured Asset Mortgage Investments II Inc.
       (exact name of the depositor as specified in its charter)

       EMC Mortgage Corporation
       (exact name of the sponsor as specified in its charter)


  New York                                          51-0611729
  (State or other jurisdiction of                   51-0611730
  incorporation or organization)                    51-0611731
                                                    51-0611732
                                                    54-6725976
                                                    (I.R.S. Employer
                                                    Identification No.)


   c/o Wells Fargo Bank, N.A.
   9062 Old Annapolis Road
   Columbia, MD                                21045
  (Address of principal executive offices)    (Zip Code)


  Registrant's telephone number, including area code: (410) 884-2000


  Securities registered pursuant to Section 12(b) of the Act:

        NONE.


  Securities registered pursuant to Section 12(g) of the Act:

        NONE.


  Indicate by check mark if the registrant is a well-known seasoned issuer,
  as defined in Rule 405 of the Securities Act.

        Yes  ___     No  X


  Indicate by check mark if the registrant is not required to file reports
  pursuant to Section 13 or Section 15(d) of the Act.

        Yes  ___     No  X


  Indicate by check mark whether the registrant (1) has filed all reports
  required to be filed by Section 13 or 15(d) of the Securities Exchange
  Act of 1934 during the preceding 12 months (or for such shorter period
  that the registrant was required to file such reports), and (2) has been
  subject to such filing requirements for the past 90 days.

        Yes  X       No  ___


  Indicate by check mark if disclosure of delinquent filers pursuant to
  Item 405 of Regulation S-K ( 229.405 of this chapter) is not contained
  herein, and will not be contained, to the best of registrant's knowledge,
  in definitive proxy or information statements incorporated by reference
  in Part III of this Form 10-K or any amendment to this Form 10-K.

        Not applicable.


  Indicate by check mark whether the registrant is a large accelerated filer,
  an accelerated filer, or a non-accelerated filer. See definition of
  "accelerated filer and large accelerated filer" in Rule 12b-2 of the
  Exchange Act. (Check one):


  Large accelerated filer ___  Accelerated filer ___  Non-accelerated filer X


  Indicate by check mark whether the registrant is a shell company (as
  defined in Rule 12b-2 of the Act).

        Yes  ___     No  X


  State the aggregate market value of the voting and non-voting common
  equity held by non-affiliates computed by reference to the price at which
  the common equity was last sold, or the average bid and asked price of
  such common equity, as of the last business day of the registrant's most
  recently completed second fiscal quarter.

        Not applicable.


     Documents Incorporated by Reference

  List hereunder the following documents if incorporated by reference and
  the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the
  document is incorporated: (1)Any annual report to security holders; (2)
  Any proxy or information statement; and (3)Any prospectus filed pursuant
  to Rule 424(b) or (c) under the Securities Act of 1933. The listed
  documents should be clearly described for identification purposes (e.g.,
  annual report to security holders for fiscal year ended December 24, 1980).

        Not applicable.


                                   PART I
  Item 1.  Business.

            Omitted.


  Item 1A.  Risk Factors.

            Omitted.


  Item 1B.  Unresolved Staff Comments.

            None.


  Item 2.  Properties.

            Omitted.


  Item 3.  Legal Proceedings.

            Omitted.


  Item 4.  Submission of Matters to a Vote of Security Holders.

            Omitted.


                                PART II

  Item 5. Market for Registrants Common Equity, Related Stockholder
          Matters and Issuer Purchases of Equity Securities.

            Omitted.


  Item 6.  Selected Financial Data.

            Omitted.


  Item 7.  Management's Discussion and Analysis of Financial Condition and
           Results of Operations.

            Omitted.


  Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

            Omitted.


  Item 8.  Financial Statements and Supplementary Data.

            Omitted.


  Item 9.  Changes in and Disagreements With Accountants on Accounting and
           Financial Disclosure.

            Omitted.


  Item 9A. Controls and Procedures.

            Omitted.


  Item 9A(T). Controls and Procedures.

            Omitted.


  Item 9B. Other Information.

            None.


                                PART III

  Item 10. Directors, Executive Officers and Corporate Governance.

            Omitted.


  Item 11. Executive Compensation.

            Omitted.

  Item 12. Security Ownership of Certain Beneficial Owners and
           Management and Related Stockholder Matters.

            Omitted.


  Item 13. Certain Relationships and Related Transactions, and Director
           Independence.

            Omitted.


  Item 14. Principal Accounting Fees and Services.

            Omitted.



                ADDITIONAL DISCLOSURE ITEMS FOR REGULATION AB

  Item 1112(b) of Regulation AB, Significant Obligor Financial Information.

            No single obligor represents more than 10% of the pool assets held
            by this transaction.


  Item 1114(b)(2) and 1115(b) of Regulation AB, Significant Enhancement
             Provider Financial Information.



           The consolidated audited financial statements of Ambac Assurance
           Corporation as of December 31, 2006 and 2005, and for each of the
           years in the three-year period ended December 31, 2006, as filed by
           Ambac Financial Group, Inc., the holding company for Ambac Assurance
           Corporation, on Form 10-K dated March 1, 2007, file number 7-043958,
           are hereby incorporated by reference into this report on Form 10-K.


  Item 1117 of Regulation AB, Legal Proceedings.

            The registrant knows of no material pending legal proceedings
            involving the Trust and all parties related to such Trust, other
            than routine litigation incidental to the duties of those respective
            parties.



  Item 1119 of Regulation AB, Affiliations and Certain Relationships and
             Related Transactions.


            On February 9, 2007, Bear Stearns Residential Mortgage Corporation,
            a wholly owned subsidiary of The Bear Stearns Companies Inc. and an
            affiliate of the Registrant, acquired certain assets used in the
            subprime wholesale mortgage banking division of Performance Credit
            Corporation (formerly known as Encore Credit Corp.) ("PCC"), a
            California corporation that, until February 9, 2007, originated and
            purchased one-to four-family residential mortgage loans offered to
            borrowers with a particular emphasis on "nonconforming" borrowers
            who generally do not satisfy the credit, collateral, documentation
            or other standards required by conventional mortgage lenders and
            loan buyers.


  Item 1122 of Regulation AB, Compliance with Applicable Servicing Criteria.


            The servicing criteria have been completed within the manner stated
            in the governing documents and are attached hereto under Item 15.

            The 1122 statements for Wells Fargo Bank, National Association
            (Corporate Trust Services) has disclosed material noncompliance with
            criterion 1122(d)(3)(i), as applicable to the Company during the
            twelve months ended December 31, 2006.  Certain monthly investor or
            remittance reports included errors in the calculation and/or the
            reporting of delinquencies for the pool assets.

            Although each servicing criterion required by Item 1122(d) of
            Regulation AB is addressed in one or more of the Assessments of
            Compliance with Servicing Criteria and related Attestation Reports
            included with this report, the Servicer's, Countrywide Home Loans
            Servicing LP, Assessment of Compliance and related Attestation
            Report did not address each of the servicing criteria that the
            Servicer was required to address under the terms of the related
            Servicing Agreement. The Servicer has not identified such failure to
            provide an Assessment and Attestation for these items as a material
            failure to fulfill its obligations under the related servicing
            agreement in the Servicer's Compliance Statement provided under Item
            1123 of Regulation AB, because the Servicer asserts that those items
            are not applicable to the Servicer.



  Item 1123 of Regulation AB, Servicer Compliance Statement.


            The servicer compliance statements have been completed within the
            manner stated in the governing documents and are attached hereto
            under Item 15.




                                PART IV


  Item 15. Exhibits, Financial Statement Schedules.

      (a) Exhibits

    (4.1) Pooling and Servicing Agreement, dated as of October 1, 2006, among
          Structured Asset Mortgage Investments II Inc., as depositor, Wells
          Fargo Bank National Association, as master servicer and as securities
          administrator, EMC Mortgage Corporation and The Bank of New York, as
          trustee (As previously filed on Form 8-K filed on November 15, 2006
          and is hereby incorporated by reference into this report on Form 10-K)

    (4.2) Grantor Trust Agreement, dated as of October 31, 2006, among
          Structured Asset Mortgage Investments II, Inc., as depositor, Wells
          Fargo Bank National Association, as paying agent and certificate
          registrar, and The Bank of New York, as grantor trustee (As previously
          filed on Form 8-K filed on November 15, 2006 and is hereby
          incorporated by reference into this report on Form 10-K)

   (10.1) Yield Maintenance Agreements, dated October 31, 2006, between Bear
          Stearns Financial Products Inc. and the Trustee on the behalf of
          Structured Asset Mortgage Investments II Trust 2006-AR8 (As previously
          filed on Form 8-K filed on November 15,2006 and is hereby incorporated
          by reference into this report on Form 10-K)

   (10.2) Swap Agreements, dated October 31, 2006, between Structured Asset
          Mortgage Investments II Grantor Trust 2006-AR8 and Wells Fargo Bank,
          National Association (As previously filed on Form 8-K filed on
          November 17, 2006 and is hereby incorporated by reference into this
          report on Form 10-K)

   (10.4) Seller's Warranties and Servicing Agreement, dated as of September 1,
          2002 among EMC Mortgage Corporation, as purchaser and Countrywide Home
          Loans, Inc., as company, as amended.

   (10.5) Servicing Agreement, dated October 1, 2006 among Structured Asset
          Mortgage Investments II Inc., as owner and EMC Mortgage Corporation,
          as servicer.

   (10.6) Purchase, Warranties and Servicing Agreement, dated as of March 1,
          2006 among EMC Mortgage Corporation as purchaser, American Home
          Mortgage Corp., as company and American Home Mortgage Servicing, Inc.,
          as servicer

   (10.7) Servicing Agreement, dated April 1, 2005 by and between Washington
          Mutual Bank, as servicer and EMC Mortgage Corporation as owner, as
          amended.

   (10.8) Amendment  Reg AB  ("Amendment  Reg  AB"),  dated  as of January 1,
          2006, by and between EMC Mortgage  Corporation  (the  "Purchaser"),
          and  Countrywide  Home Loans,  Inc. (the  "Company") to that certain
          Seller's Warranties  and  Servicing  Agreement]  dated as of
          September  1, 2002 by and between the Company and the Purchaser
          (as amended,  modified or  supplemented, the "Existing Agreement").


     (31) Rule 13a-14(d)/15d-14(d) Certifications.

     (33) Reports on assessment of compliance with servicing criteria for
          asset-backed securities.



      <TABLE>

      
         <c>
      a) Assurant Inc. as Sub-Contractor for EMC Mortgage Corporation  <F1>
      b) Assurant Inc. as Sub-Contractor for Washington Mutual Bank  <F2>
      c) Countrywide Home Loans Servicing LP, as Servicer <F1>
      d) EMC Mortgage Corporation, as Servicer <F1>
      e) LandAmerica Tax and Flood Services as Sub-Contractor for EMC Mortgage Corporation  <F1>
      f) Treasury Bank, a division of Countrywide Bank, N.A., as Custodian <F1>
      g) Washington Mutual Bank, as Servicer <F2>
      h) Wells Fargo Bank, N.A., as Master Servicer <F1>
      i) Wells Fargo Bank, N.A., as Securities Administrator <F1>
      j) Wells Fargo Bank, N.A., as Custodian <F1>

      </TABLE>

     (34) Attestation reports on assessment of compliance with servicing
          criteria for asset-backed securities.

      <TABLE>

      
        <c>
      a) Assurant Inc. as Sub-Contractor for EMC Mortgage Corporation  <F1>
      b) Assurant Inc. as Sub-Contractor for Washington Mutual Bank  <F2>
      c) Countrywide Home Loans Servicing LP, as Servicer <F1>
      d) EMC Mortgage Corporation, as Servicer <F1>
      e) LandAmerica Tax and Flood Services as Sub-Contractor for EMC Mortgage Corporation  <F1>
      f) Treasury Bank, a division of Countrywide Bank, N.A., as Custodian <F1>
      g) Washington Mutual Bank, as Servicer <F2>
      h) Wells Fargo Bank, N.A., as Master Servicer <F1>
      i) Wells Fargo Bank, N.A., as Securities Administrator <F1>
      j) Wells Fargo Bank, N.A., as Custodian <F1>

      </TABLE>

     (35) Servicer compliance statement.

      <TABLE>

      
         <c>
      a) Assurant Inc. as Sub-Contractor for EMC Mortgage Corporation  <F4>
      b) Assurant Inc. as Sub-Contractor for Washington Mutual Bank  <F4>
      c) Countrywide Home Loans Servicing LP, as Servicer <F1>
      d) EMC Mortgage Corporation, as Servicer <F1>
      e) LandAmerica Tax and Flood Services as Sub-Contractor for EMC Mortgage Corporation  <F4>
      f) Treasury Bank, a division of Countrywide Bank, N.A., as Custodian <F4>
      g) Washington Mutual Bank, as Servicer <F3>
      h) Wells Fargo Bank, N.A., as Master Servicer <F1>
      i) Wells Fargo Bank, N.A., as Securities Administrator <F1>
      j) Wells Fargo Bank, N.A., as Custodian <F4>

      </TABLE>

   (b) Not applicable.

   (c) Omitted.


  <F1> Filed herewith.

  <F2> The Servicing Participant serviced less than 5% of the deal and is
       not required under Regulation AB to provide such documentation.

  <F3> The Servicing Participant serviced less than 10% of the deal and is
       not required under Regulation AB to provide such documentation.

  <F4> The Servicing Participant of the deal is not required under Regulation
        AB to provide such documentation.

                                SIGNATURES

  Pursuant to the requirements of Section 13 or 15(d) of the Securities
  Exchange Act of 1934, the registrant has duly caused this report to be
  signed on its behalf by the undersigned, thereunto duly authorized.



    Structured Asset Mortgage Investments II Trust 2006-AR8
    (Issuing Entity)

    Wells Fargo Bank, N.A.
    (Master Servicer)

    /s/ William Augustin IV
    William Augustin IV, Vice President

    Date: March 31, 2007


  Exhibit Index

  Exhibit No.

   (31) Rule 13a-14(d)/15d-14(d) Certifications.

    (33) Reports on assessment of compliance with servicing criteria for
         asset-backed securities.



      <TABLE>

      
         <c>
      a) Assurant Inc. as Sub-Contractor for EMC Mortgage Corporation
      c) Countrywide Home Loans Servicing LP, as Servicer
      d) EMC Mortgage Corporation, as Servicer
      e) LandAmerica Tax and Flood Services as Sub-Contractor for EMC Mortgage Corporation
      f) Treasury Bank, a division of Countrywide Bank, N.A., as Custodian
      h) Wells Fargo Bank, N.A., as Master Servicer
      i) Wells Fargo Bank, N.A., as Securities Administrator
      j) Wells Fargo Bank, N.A., as Custodian

      </TABLE>

     (34) Attestation reports on assessment of compliance with servicing
          criteria for asset-backed securities.

      <TABLE>

      
        <c>
      a) Assurant Inc. as Sub-Contractor for EMC Mortgage Corporation
      c) Countrywide Home Loans Servicing LP, as Servicer
      d) EMC Mortgage Corporation, as Servicer
      e) LandAmerica Tax and Flood Services as Sub-Contractor for EMC Mortgage Corporation
      f) Treasury Bank, a division of Countrywide Bank, N.A., as Custodian
      h) Wells Fargo Bank, N.A., as Master Servicer
      i) Wells Fargo Bank, N.A., as Securities Administrator
      j) Wells Fargo Bank, N.A., as Custodian

      </TABLE>

     (35) Servicer compliance statement.

      <TABLE>

      
         <c>
      c) Countrywide Home Loans Servicing LP, as Servicer
      d) EMC Mortgage Corporation, as Servicer
      h) Wells Fargo Bank, N.A., as Master Servicer
      i) Wells Fargo Bank, N.A., as Securities Administrator

      </TABLE>

  EX-31 Rule 13a-14(d)/15d-14(d) Certifications

  I, William Augustin IV, certify that:

  1. I have reviewed this report on Form 10-K and all reports on Form 10-D
     required to be filed in respect of the period covered by this report
     on Form 10-K of Structured Asset Mortgage Investments II Trust
     2006-AR8 (the "Exchange Act periodic reports");

  2. Based on my knowledge, the Exchange Act periodic reports, taken as a
     whole, do not contain any untrue statement of a material fact or omit
     to state a material fact necessary to make the statements made, in
     light of the circumstances under which such statements were made, not
     misleading with respect to the period covered by this report;

  3. Based on my knowledge, all of the distribution, servicing and other
     information required to be provided under Form 10-D for the period
     covered by this report is included in the Exchange Act periodic
     reports;

  4. I am responsible for reviewing the activities performed by the
     servicers and based on my knowledge and the compliance reviews
     conducted in preparing the servicer compliance statements required in
     this report under Item 1123 of Regulation AB, and except as disclosed
     in the Exchange Act periodic reports, the servicers have fulfilled
     their obligations under the servicing agreements; and

  5. All of the reports on assessment of compliance with servicing
     criteria for asset-backed securities and their related attestation
     reports on assessment of compliance with servicing criteria for
     asset-backed securities required to be included in this report in
     accordance with Item 1122 of Regulation AB and Exchange Act Rules
     13a-18 and 15d-18 have been included as an exhibit to this report,
     except as otherwise disclosed in this report.  Any material instances
     of noncompliance described in such reports have been disclosed in
     this report on Form 10-K.

     In giving the certifications above, I have reasonably relied on
     information provided to me by the following unaffiliated parties:
     Countrywide Home Loans Servicing LP as Servicer, EMC Mortgage Corporation
     as Servicer and Washington Mutual Bank, as Servicer.

     Dated: March 31, 2007

     /s/ William Augustin IV
     Signature

     Vice President
     Title


EX-33 (a)
REPORT ON ASSESSMENT OF COMPLIANCE WITH
section 1122(d)(2)(vi) and section 1122(d)(4)(xi)
of REGULATION AB SERVICING CRITERIA


American Security Insurance Company, Standard Guaranty Insurance Company and
Safeco Financial Institution Solutions, Inc. (affiliates of Assurant Inc.,
collectively the "Asserting Party") is responsible for assessing compliance as
of December 31, 2006 and for the period from January 1, 2006 through December
31, 2006 (the "Reporting Period") with the servicing criteria set forth in
section 1122(d)(2)(vi), section 1122(d)(4)(xi) and section 1122(d)(4)(xii) of
Title 17, section 229.1122(d) of the Code of Federal Regulations, which the
Asserting Party has concluded are applicable to the insurance escrow servicing
activities it performs with respect to all mortgage loan-tracking transactions
covered by this report. The transactions covered by this report include all
mortgage loan-tracking transactions for which the Asserting Party served as a
Vendor on behalf of Servicers for such asset-backed securities transactions that
were registered after January 1, 2006 with the Securities and Exchange
Commission pursuant to the Securities Act of 1933 (the "Platform"). The scope of
the Asserting Party assertions excludes section 1122(d)(4)(xii) of Title 17,
section 229.1122(d) of the Code of Federal Regulations, which relates to
servicing activities that are performed by the Asserting Party with respect to
the Platform, but are not reported on herein.

The Asserting Party has assessed its compliance with section 1122(d)(2)(vi) and
section 1122(d)(4)(xi) ("the Applicable Servicing Criteria") for the Reporting
Period and has concluded that the Asserting Party has complied, in all material
respects, with the Applicable Servicing Criteria for the Reporting Period with
respect to the Platform taken as a whole. The Asserting Party used the criteria
set forth in paragraph (d) of Item 1122 of Regulation AB to assess the
compliance with the Applicable Servicing Criteria.

The Asserting Party has complied, in all material respects, with the Applicable
Servicing Criteria for the Reporting Period.

PricewaterhouseCoopers LLP, an independent registered public accounting firm,
has issued an attestation report on the assessment of compliance with the
Applicable Servicing Criteria as of and for the Reporting Period ending December
31, 2006 as set forth in this assertion.

American Security Insurance Company
Standard Guaranty Insurance Company
Safeco Financial Institution Solutions, Inc.




/s/ John Frobose
By: John Frobose
Senior Vice President


Date: February 23, 2007





EX-33 (c)
(logo) Countrywide
HOME LOANS

2900 MADERA ROAD
SIMI VALLEY, CALIFORNIA 93065-6298
(805) 955-1000


ASSESSMENT OF COMPLIANCE WITH APPLICABLE SERVICING CRITERIA


Countrywide Financial Corporation and certain of its subsidiaries, including its
direct and indirect wholly-owned subsidiaries, Countrywide Home Loans, Inc.
(CHL), Countrywide Tax Services Corporation, Newport Management Corporation, and
Countrywide Home Loans Servicing, L.P., a wholly-owned subsidiary of CHL
(collectively the "Company") provides this platform-level assessment, for which
Countrywide Financial Corporation and such subsidiaries participated in
servicing functions, as such term is described under Title 17, Section 229.1122
of the Code of Federal Regulations ("Item 1122 of Regulation AB"), of compliance
in respect of the following Applicable Servicing Criteria specified in Item
1122(d) of Regulation AB promulgated by the Securities and Exchange Commission
in regard to the following servicing platform for the following period:

Platform: publicly-issued (i.e., registered with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended) residential
mortgage-backed securities (securities collateralized by residential mortgage
loans, including prime, alternative loan products, sub-prime, HELOC and dosed
seconds) issued on or after January 1, 2006 for which the Company provides cash
collection and administration, investor remittances and reporting (except for
those activities relating to trustee and paying agent services), and pool asset
administration (except for those activities relating to custodial operations of
pool assets and related documents), collectively "Servicing Functions" and for
which the related issuer has a fiscal year end of December 31, 2006. The
platform excludes any transactions issued by any government sponsored enterprise
for which the Company provides Servicing Functions.

Period: as of and for the year ended December 31, 2006.

Applicable Servicing Criteria: all servicing criteria set forth in Item 1122(d),
to the extent required in the related agreements, except for the following
paragraphs: 1122(d)(1)(iii), 1122(d)(3)(i)(B), only as it relates to information
other than that contained in the monthly remittance report delivered by the
servicer to the master servicer, trustee, and/or bond administrator,
1122(d)(3)(i)(D), only as it relates to the agreeing with investors' records as
to the total unpaid principal balance and number of pool assets serviced by the
servicer, 1122(d)(3)(ii), only as it relates to amounts other than amounts
remitted by the servicer to the master servicer, trustee, and/or bond
administrator, 1122(d)(3)(iii), 1122(d)(3)(iv), 1122(d)(4)(i) and
1122(d)(4)(ii), only as 1122(d)(4)(i) and 1122(d)(4)(ii) relate to the custodial
operations of the pool assets and related documents (collateral file) by the
document custodian responsible for such functions for the related transaction,
and 1122(d)(4)(xv), only as it relates to Item 1115 of Regulation AB (derivative
transactions).


(page)


With respect to the Platform and the Period, the Company provides the following
assessment of compliance in respect of the Applicable Servicing Criteria:

1. The Company is responsible for assessing its compliance with the Applicable
Servicing Criteria.

2. The Company has assessed compliance with the Applicable Servicing Criteria.

3. Other than as identified on Schedule A hereto, as of and for the Period, the
Company was in material compliance with the Applicable Servicing Criteria.

KPMG LLP, an independent registered public accounting firm, has issued an
attestation report with respect to the Company's foregoing assessment of
compliance.


(page)


COUNTRYWIDE FINANCIAL CORPORATION

By: /s/ Steve Bailey
Steve Bailey

Its: Senior Managing Director and Chief Executive Officer,
Loan Administration


Dated: February 28, 2007

By:/s/ Kevin Meyers
Kevin Meyers

Its: Managing Director and Chief Financial Officer,
Countrywide Home Loans, Inc. Loan Administration


Dated: February 28, 2007


(page)


Schedule A


Material Instances of Noncompliance

No material instances of noncompliance: the Company has complied, in all
material respects, with the applicable servicing criteria as of and for the year
ended December 31, 2006.





EX-33 (d)
(logo)EMC
Mortgage Corporation
Proven Performance

Certification Regarding Compliance with Applicable Servicing Criteria


1. EMC Mortgage Corporation ("EMC") is responsible for assessing compliance with
the servicing criteria applicable to it under paragraph (d) of Item 1122 of
Regulation AB, as of and for the 12-month period ended December 31, 2006 (the
"Reporting Period"), as set forth in Appendix A hereto. The transactions covered
by this report include the asset-backed securities transactions for which EMC
acted as servicer involving residential mortgage loans that were completed on or
after January 1, 2006, and that were registered with the Securities and Exchange
Commission pursuant to the Securities Act of 1933 (the "Platform");


2. Except as set forth in paragraph 3 below, EMC used the criteria set forth in
paragraph (d) of Item 1122 of Regulation AB to assess the compliance with the
applicable servicing criteria;


3. The criteria listed in the column titled "Inapplicable Servicing Criteria"
on Appendix A hereto are inapplicable to EMC based on the activities it
performs, directly or through its Vendors, with respect to the Platform;


4. EMC has complied, in all material respects, with the applicable
servicing criteria as of December 31, 2006 and for the Reporting Period with
respect to the Platform taken as a whole;


5. Deloitte & Touche LLP, a registered public accounting firm, has issued an
attestation report on EMC's assessment of compliance with the applicable
servicing criteria for the Reporting Period.

/s/ John Vella
John Vella
President and Chief Executive Officer

March 12, 2007


2780 Lake Vista Drive, Lewisville, Texas 75067
Mailing Address: P.O. Box 1292190 Lewisville, Texas 75029-2190

(logo) Member
Mortgage Bankers Association of America


(page)

<table>

 <c>
Appendix A


SERVICING CRITERIA                                                          APPLICABLE                                 INAPPLICABLE
                                                                            SERVICING CRITERIA                         SERVICING
                                                                                                                       CRITERIA
                                                              Performed    Performed by     Performed by
                                                              Directly     Sub-Servicer(s)  Sub-Servicer(s) or
                                                              By           for              Vendor(s) for
                                                              EMC          which EMC is     which EMC is
Reference               Criteria                                           the Responsible  NOT the
                                                                           Party            Responsible Party

General Servicing Consideration

1122(d)(1)(i)   Polices and procedures are instituted          X
                to monitor any performance or other
                triggers and events of default in
                accordance with the transaction
                agreements.

1122(d)(1)(ii)  If any material servicing activities
                are outsourced to third parties,               X
                policies and procedures are
                instituted to monitor the third
                party's performance and compliance
                with such servicing activities.

1122(d)(1)(iii) Any requirements in the transaction
                agreements to maintain a back-up                                                                           X
                servicer for the mortgage loans
                are maintained.

1122(d)(1)(iv)  A fidelity bond and errors and
                omissions policy is in effect on                X
                the party participating in the
                servicing function throughout the
                reporting period in the amount of
                coverage required by and otherwise in
                accordance with the terms of the
                transaction agreements.

Cash Collection and Administration

1122(d)(2)(i)   Payments on mortgage loans are
                deposited into the appropriate                  X
                custodial bank accounts and related
                bank clearing accounts no more than
                two business days following receipt,
                or such other number of days
                specified in the transaction agreements.

1122(d)(2)(ii)  Disbursements made via wire transfer on         X
                behalf of an obligor or to an investor
                are made only by authorized personnel.

1122(d)(2)(iii) Advances of funds or guarantees regarding
                collections, cash flows or distributions,       X
                and any interest or other fees charged for
                such advances, are made, reviewed and
                approved as specified in the transaction
                agreements.

1122(d)(2)iv)   The related accounts for the transaction,
                such as cash reserve accounts or accounts        X
                established as a form of overcollateralization.
                are separately maintained (e.g. with
                respect to commingling of cash) as set
                forth in the transaction agreements.

1122(d)(2)(v)   Each custodial account is maintained at a
                federally insured depository institution as set  X
                forth in the transaction agreements. For
                purposes of this criterion, "federally insured
                depository institutions" with respect to a
                foreign financial institution means a foreign
                financial that meets the requirements of Rule
                13k-1(b)(1) of the Securities Exchange Act.


(page)

Appendix A (page 2)

Servicing Criteria
                                                                                APPLICABLE                           INAPPLICABLE
                                                                             SERVICING CRITERIA                         SERVICING
                                                                                                                        CRITERIA
                                                               Performed       Performed by        Performed by
                                                               Directly        Sub-Servicer(s)     Sub-Servicer(s) or
                                                               By              for                 Vendor(s) for
                                                               EMC             which EMC is        which EMC is
Reference               Criteria                                               the Responsible     NOT the
                                                                               Party               Responsible Party
Cash Collection and Administration (con't)

1122(d)(2)(vi)   Un-issued checks are safeguarded                X                                     X
                 so as to prevent unauthorized access.

1122(d)(2)vii)  Reconciliations are prepared on a monthly
                basis for all asset-backed securities related    X
                bank accounts, including custodial accounts
                and related bank clearing accounts. These
                reconciliations are (A) mathematically
                accurate; (B) prepared within 30 calendar
                days after the bank statement cutoff date, or
                such other number of days specified in the
                transaction agreements; (C) reviewed and
                approved by someone other than the person
                who prepared the reconciliation; items are
                resolved within 90 calendar days of their
                original identification, or such other number
                of days specified in the transaction
                agreements.

Investor Remittances and Reporting

1122(d)(3)(i)   Reports to investors, including those
                to be filed with the Commission, are              X
                maintained in accordance with the
                transaction agreements and applicable
                Commission requirements. Specifically,
                such reports (A) are prepared in
                accordance with timeframes and other
                terms set forth in the transaction
                agreements; C)1 are filed with the
                Commission as required by its rules
                and regulations; and (D) agree with
                investors' or the trustee's records as
                to the total unpaid principal balance and
                number of mortgage loans serviced by the
                Servicer.

1122(d)(3)(ii)  Amounts due to investors are allocated
                and remitted in accordance with                   X
                timeframes, distribution priority
                and other terms set forth in the
                transaction agreements.

1122(d)(3)(iii) Disbursements made to an investor
                are posted within two business                     X
                days to the Servicer's investor
                records, or such other number
                of days specified in the
                transaction agreements.

1122(d)(3)(iv)  Amounts remitted to investors
                per the investor reports agree                     X
                with cancelled checks, or other
                form of payment, or custodial bank
                statements.

Pool Asset Administration

1122(d)(4)(i)   Collateral or security on mortgage
                loans is maintained as required by                 X
                the transaction agreements or
                related mortgage loan documents.

1 EMC is not responsible for filing reports with the Commission as included in
this criterion. The responsibility lies with the Securities Administrator or the
Trustee depending on the specific transaction agreements.


Appendix A (page 3)


SERVICING CRITERIA                                                               APPLICABLE                            INAPPLICABLE
                                                                             SERVICING CRITERIA                        SERVICING
                                                                                                                       CRITERIA
                                                               Performed       Performed by        Performed by
                                                               Directly        Sub-Servicer(s)     Sub-Servicer(s) or
                                                               By              for                 Vendor(s) for
                                                               EMC             which EMC is        which EMC is
Reference               Criteria                                               the Responsible     NOT the
                                                                               Party               Responsible Party

Pool Asset Administration (con't)

1122(d)(4)(ii)   Mortgage loan and related documents
                 are safeguarded as required by the               X
                 transaction agreements.

1122(d)(4)(iii)  Any additions, removals or
                 substitutions to the asset                       X
                 pool are made, reviewed and
                 approved in accordance with
                 any conditions or requirements
                 in the transaction agreements.

1122(d)(4)(iv)   Payments on mortgage loans, including
                 any payoffs, made in accordance with             X
                 the related mortgage loan documents
                 are posted to the Servicer's obligor
                 records maintained no more than two
                 business days after receipt, or such
                 other number of days specified in the
                 transaction agreements, and allocated to
                 principal, interest or other items (e.g.,
                 escrow) in accordance with the related
                 mortgage loan documents.

1122(d)(4)(v)    The Servicer's records regarding the
                 mortgage loans agree with the Servicer's         X
                 records with respect to an obligor's
                 unpaid principal balance.

1122(d)(4)(vi)   Changes with respect to the terms or
                 status of an obligor's mortgage loans            X
                 (e.g., loan modifications or re-agings)
                 are made reviewed and approved by
                 authorized personnel in accordance
                 with the transaction agreements and
                 related pool asset documents.

1122(d)(4)(vii)  Loss mitigation or recovery actions
                 (e.g., forbearance plans, modifications          X
                 and deed in lieu of foreclosure,
                 foreclosures and repossessions, as
                 applicable) are initiated, conducted
                 and concluded in accordance with the
                 timeframes or other requirements
                 established by the transaction agreements.

1122(d)(4)(viii) Records documenting collection efforts are
                 maintained during the period a mortgage          X
                 loan is delinquent in accordance with the
                 transaction agreements. Such records are
                 maintained on a least a monthly basis, or
                 such other period specified in the transaction
                 agreements, and describe the entity's
                 activities in monitoring delinquent mortgage
                 loans including, for example, phone calls,
                 letters and payment rescheduling plans in
                 cases where delinquency is deemed
                 temporary (e.g., illness or unemployment).

1122(d)(4)(ix)   Adjustments to interest rates or rates
                 of return for mortgage loans with                X
                 variable rates are computed based on
                 the related mortgage loan documents.


Appendix A (page 4)


SERVICING CRITERIA                                                               APPLICABLE                            INAPPLICABLE
                                                                             SERVICING CRITERIA                        SERVICING
                                                                                                                       CRITERIA
                                                                 Performed     Performed by        Performed by
                                                                 Directly      Sub-Servicer(s)     Sub-Servicer(s) or
                                                                 By            for                 Vendor(s) for
                                                                 EMC           which EMC is        which EMC is
Reference               Criteria                                               the Responsible     NOT the
                                                                               Party               Responsible Party
Pool Asset Administration (con't)

1122(d)(4)(x)    Regarding any funds held in trust for an
                 obligor (such as escrow accounts): (A) such          X
                 funds are analyzed, in accordance with the
                 obligor's mortgage loan documents, on a
                 least an annual basis, or such other period
                 specified n the transaction agreements; (B)
                 interest on such funds is paid, or credited, to
                 obligors in accordance with applicable
                 mortgage loan documents and state laws;
                 and (C) such funds are returned to the
                 obligor within 30 calendar days of full
                 repayment of the related mortgage loans, or
                 such other number of days specified in the
                 transaction agreements.

1122(d)(4)(xi)   Payments made on behalf of an obligor
                 (such as tax or insurance payments) are              X
                 made on or before the related penalty or
                 expiration dates, as indicated on the
                 appropriate bills or notices for such
                 payments, provided that such support has
                 been received by the servicer at least 30
                 calendar days prior to these dates, or such
                 other number of days specified in the
                 transaction agreements.

1122(d)(4)(xii)  Any late payments penalties in connection
                 with any payment to be made on behalf of             X
                 an obligor are paid from the Servicer's
                 funds and not charged to the obligor,
                 unless the late payment was due to the
                 obligor's error or omission.


1122(d)(4)(xiii) Disbursements made on behalf of an obligor
                 are posted within two business days to the           X                                X
                 obligor's records maintained by the Servicer,
                 or such other numbers of days specified in
                 the transaction agreements.

1122(d)(4)(xiv)  Delinquencies, charge-offs and uncollectible
                 accounts are recognized and recorded in              X
                 accordance with the transaction agreements.

1122(d)(4)(xv)   Any External enhancement or other support,
                 identified in Item 1114(a)(1) through (3)            X
                 or - Item 1115 of Regulation AB, is maintained
                 as set forth in the transaction agreements.


(page)


Exhibit B


Describe material instances of noncompliance:
NONE

Describe any remediation efforts:
NOT APPLICABLE

Describe material instances of noncompliance by Vendor(s):
NONE

Describe any remediation efforts:
NOT APPLICABLE

Describe material deficiencies if EMC's polices and procedures to monitor Vendor(s):
NONE

Describe any remediation efforts:
NOT APPLICABLE

</TABLE>





EX-33 (e)
Report on Assessment of Compliance

with Regulation AB Servicing Criteria

1. The undersigned authorized officer of LandAmerica Tax and Flood Services,
Inc. (the "Company") is responsible for assessing the Company's compliance with
the applicable servicing criteria as defined in 17 CFR Part 229 Section 1122(d)
(4)(xi) and 1122(d)(4)(xii) (the "Regulation AB Servicing Criteria") for
residential mortgage backed securities for which the Company served as
third-party property tax payment provider on the underlying collateral (the
"Platform"). Except as set forth in the preceding sentence, the servicing
criteria set forth in 17 CFR Part 229 Section 1122(d) are not applicable to the
activities the Company performed with respect to the Platform.

2. The Company used the criteria in 17 CFR Part 229 Section 1122(d) to assess
the compliance with the Regulation AB Servicing Criteria.

3. Under one of the services offered by the Company, some customers may elect to
remit tax payments directly to tax agencies without having the Company remit
those property tax payments through our tax payment service. We refer to these
customers as "non-outsourced servicer customers." With respect to these
non-outsourced customers and the services the Company delivered pursuant to the
servicing criteria set forth in 17 CFR Part 229 Section 1122(d)(4)(xi), the
Company's assertion is strictly limited to its processing of tax payments
submitted through the Company's tax payment service.

4. With respect to servicing criteria set forth in 17 CFR Part 229 Section
1122(d)(4)(xii), the Company's assertion is strictly limited to its processing
of property tax penalty payments. The Company has determined that its servicer
customers may also have access to systems that enable those servicers to process
penalties through obligor escrow accounts. Management's assessment of compliance
does not relate to the actual or potential activities of other parties with
access to obligor escrow accounts.

5. Based on such assessment, management believes that, as of and for the year
ended December 31, 2006, the Company has complied in all material respects with
the Regulation AB Servicing Criteria related to the servicing of the Platform.

6. The registered public accounting firm of Grant Thornton, LLP, has issued an
attestation report on the Company's assessment of compliance with the Regulation
AB Servicing Criteria as of and for the year ended December 31, 2006.

Date: February 20, 2007

LandAmerica Tax and Flood Services, Inc.



By: /s/ Bob Ige
Name: Bob Ige
Its: Executive Vice President





EX-33 (f)
(logo) TREASURY BANK
a division of Countrywide Bank, N.A.

4100 EAST LOS ANGELES AVENUE
MS: TB-SIMI
SIMI VALLEY, CA 93063

(805) 577-6011
(805) 577-6069 FAX


ASSESSMENT OF COMPLIANCE WITH APPLICABLE SERVICING CRITERIA


Treasury Bank, a division of Countrywide Bank, N.A. (the "Company") provides
this platform-level assessment, for which the Company participated in servicing
functions, as such term is described under Title 17, Section 229.1122 of the
Code of Federal Regulations ("Item 1122 of Regulation AB"), of compliance in
respect of the following Applicable Servicing Criteria specified in Item 1122(d)
of Regulation AB promulgated by the Securities and Exchange Commission in regard
to the following servicing platform for the following period:

Platform: publicly-issued (i.e., registered with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended) HELOC and other
residential mortgage-backed securities issued on or after January 1, 2006 for
which the Company provides custodial operations of pool assets and related
documents, collectively "Servicing Functions" and for which the related issuer
has a fiscal year end of December 31, 2006. For purposes of this assessment, the
publicly-issued residential mortgage-backed securities transactions included in
the Company's servicing platform for the following period are described on the
attached Schedule A.

Period: as of and for the year ended December 31, 2006.

Applicable Servicing Criteria: Regulation AB Items 1122(d)(4)(i) and
1122(d)(4)(ii). The Company has determined that no other servicing criteria are
applicable to the activities it performs with respect to the Platform.

With respect to the Platform and the Period, the Company provides the following
assessment of compliance in respect of the Applicable Servicing Criteria:

1. The Company is responsible for assessing its compliance with the Applicable
Servicing Criteria.

2. The Company has assessed compliance with the Applicable Servicing Criteria.

3. Other than as identified on Schedule B hereto, as of and for the Period, the
Company was in material compliance with the Applicable Servicing Criteria.

KPMG LLP, an independent registered public accounting firm, has issued an
attestation report with respect to the Company's foregoing assessment of
compliance.


(page)


TREASURY BANK, A DIVISION OF
COUNTRYWIDE BANK, N.A.

By: /s/ Teresita Que
Teresita Que

Its:    Executive Vice President


Dated: February 28, 2007


By: /s/ Maria S. Garner
Maria S. Garner

Its:    First Vice President


Dated: February 28, 2007


(page)


Schedule A


List of Residential Mortgage-Backed Securities Defined by Management As
Constituting the Platform


CWHEQ Revolving Home Equity Loan Trust, Series 2006-A

CWHEQ Revolving Home Equity Loan Trust, Series 2006-B

CWHEQ Revolving Home Equity Loan Trust, Series 2006-C

CWHEQ Revolving Home Equity Loan Trust, Series 2006-D

CWHEQ Revolving Home Equity Loan Trust, Series 2006-E

CWHEQ Revolving Home Equity Loan Trust, Series 2006-F

CWHEQ Revolving Home Equity Loan Trust, Series 2006-G

CWHEQ Revolving Home Equity Loan Trust, Series 2006-H

CWHEQ Revolving Home Equity Loan Trust, Series 2006-I

BSALTA 2006-5

BSALTA 2006-6

BSALTA 2006-7

BSARM 2006-4

SAMI 2006-AR4

SAMI 2006-AR6

SAMI 2006-AR7

SAMI 2006-AR8


(page)


Schedule B


Material Instances of Noncompliance

No material instances of noncompliance: the Company has complied, in all
material respects, with the Applicable Servicing Criteria as of and for the year
ended December 31, 2006.



(logo) MEMBER
       FDIC

(logo) EQUAL HOUSING
       LENDER





EX-33 (h)
(logo) WELLS FARGO

Corporate Trust Services
9062 Old Annapolis Road
Columbia, MD 21045-1951
410 884-2000
410 715-2380 Fax

Wells Fargo Bank, N.A.

ASSESSMENT OF COMPLIANCE WITH APPLICABLE SERVICING CRITERIA

Corporate Trust Services division of Wells Fargo Bank, National Association (the
"Company") provides this assessment of compliance with the following applicable
servicing criteria set forth in Item 1122(d) of Regulation AB promulgated by
the Securities and Exchange Commission. Management has determined that the
servicing criteria are applicable in regards to the servicing platform for the
period as follows:

Platform: Publicly-issued (i.e., transaction-level reporting initially required
under the Securities Exchange Act of 1934, as amended) residential
mortgage-backed securities, commercial mortgage-backed securities and other
asset-backed securities, for which the Company provides master servicing,
trustee, securities administration or paying agent services, excluding
transactions issued by any agency or instrumentality of the U.S. government or
any government sponsored entity (the "Platform").

Applicable Servicing Criteria: All servicing criteria set forth in Item 1122(d),
to the extent required in the related transaction agreements or required by the
Item 1122(d) servicing criteria in regards to the activities performed by the
Company, except for the following criteria: 1122(d)(1)(iii), 1122(d)(4)(ii),
1122(d)(4)(iv), 1122(d)(4)(v), 1122(d)(4)(viii), 1122(d)(4)(ix), 1122(d)(4)(x),
1122(d)(4)(xi), 1122(d)(4)(xii) and 1122(d)(4)(xiii), which management has
determined are not applicable to the activities the Company performs with
respect to the Platform (the "Applicable Servicing Criteria").

Period: Twelve months ended December 31, 2006 (the "Period").

Third parties classified as vendors: With respect to servicing criteria
1122(d)(4)(i), the Company has engaged various vendors to handle certain Uniform
Commercial Code filing functions required by the servicing criteria ("vendors").
The Company has determined that none of the vendors is a "servicer" as defined
in Item 1101(j) of Regulation AB, and the Company elects to take responsibility
for assessing compliance with the portion of the servicing criteria applicable
to each vendor as permitted by Interpretation 17.06 of the SEC Division of
Corporation Finance Manual of Publicly Available Telephone Interpretations
("Interpretation 17.06"). The Company has policies and procedures in place to
provide reasonable assurance that each vendor's activities comply in all
material respects with the servicing criteria applicable to each vendor. The
Company is solely responsible for determining that it meets the SEC requirements
to apply Interpretation 17.06 for the vendors and related criteria.

With respect to the Platform and the Period, the Company provides the following
assessment of compliance with respect to the Applicable Servicing Criteria:

1. The Company is responsible for assessing its compliance with the Applicable
Servicing Criteria.

2. The Company has assessed compliance with the Applicable Servicing Criteria,
including servicing criteria for which compliance is determined based on
Interpretation 17.06 as described above, as of and for the Period. In performing
this assessment, management used the criteria set forth by the Securities and
Exchange Commission in paragraph (d) of Item 1122 of Regulation AB.

3. Other than as identified on Schedule A hereto, as of and for the Period, the
Company was in material compliance with the Applicable Servicing Criteria. Any
material instances of noncompliance by a vendor of which the Company is aware
and any material deficiency in the Company's policies and procedures to monitor
vendors' compliance that the Company has identified is specified on Schedule A
hereto.

KPMG LLP, a registered public accounting firm, has issued an attestation
report with respect to the Company's foregoing assessment of compliance as of
and for the Period.

WELLS FARGO BANK, NATIONAL ASSOCIATION

By:/s/ Brian Bartlett
Brian Bartlett

Its:   Executive Vice President

Dated: March 1, 2007


(page)


(logo) WELLS FARGO

Corporate Trust Services
9062 Old Annapolis Road
Columbia, MD 21045-1951
410 884-2000
410 715-2380 Fax

Wells Fargo Bank, N.A.

Schedule A

Material Instances of Noncompliance by the Company

1122(d)(3)(i)- Delinquency Reporting - During the reporting period, certain
monthly investor or remittance reports included errors in the calculation and/or
the reporting of delinquencies for the pool assets, which errors may or may not
have been material. All such errors were the result of data processing errors
and/or the mistaken interpretation of data provided by other parties
participating in the servicing function. All necessary adjustments to data
processing systems and/or interpretive clarifications have been made to correct
those errors and to remedy related procedures.

Material instances of Noncompliance by any Vendor

NONE

Material Deficiencies In Company's Policies and Procedures to Monitor Vendors'
Compliance

NONE





EX-33 (i)
(logo) WELLS FARGO

Corporate Trust Services
9062 Old Annapolis Road
Columbia, MD 21045-1951
410 884-2000
410 715-2380 Fax

Wells Fargo Bank, N.A.

ASSESSMENT OF COMPLIANCE WITH APPLICABLE SERVICING CRITERIA

Corporate Trust Services division of Wells Fargo Bank, National Association (the
"Company") provides this assessment of compliance with the following applicable
servicing criteria set forth in Item 1122(d) of Regulation AB promulgated by
the Securities and Exchange Commission. Management has determined that the
servicing criteria are applicable in regards to the servicing platform for the
period as follows:

Platform: Publicly-issued (i.e., transaction-level reporting initially required
under the Securities Exchange Act of 1934, as amended) residential
mortgage-backed securities, commercial mortgage-backed securities and other
asset-backed securities, for which the Company provides master servicing,
trustee, securities administration or paying agent services, excluding
transactions issued by any agency or instrumentality of the U.S. government or
any government sponsored entity (the "Platform").

Applicable Servicing Criteria: All servicing criteria set forth in Item 1122(d),
to the extent required in the related transaction agreements or required by the
Item 1122(d) servicing criteria in regards to the activities performed by the
Company, except for the following criteria: 1122(d)(1)(iii), 1122(d)(4)(ii),
1122(d)(4)(iv), 1122(d)(4)(v), 1122(d)(4)(viii), 1122(d)(4)(ix), 1122(d)(4)(x),
1122(d)(4)(xi), 1122(d)(4)(xii) and 1122(d)(4)(xiii), which management has
determined are not applicable to the activities the Company performs with
respect to the Platform (the "Applicable Servicing Criteria").

Period: Twelve months ended December 31, 2006 (the "Period").

Third parties classified as vendors: With respect to servicing criteria
1122(d)(4)(i), the Company has engaged various vendors to handle certain Uniform
Commercial Code filing functions required by the servicing criteria ("vendors").
The Company has determined that none of the vendors is a "servicer" as defined
in Item 1101(j) of Regulation AB, and the Company elects to take responsibility
for assessing compliance with the portion of the servicing criteria applicable
to each vendor as permitted by Interpretation 17.06 of the SEC Division of
Corporation Finance Manual of Publicly Available Telephone Interpretations
("Interpretation 17.06"). The Company has policies and procedures in place to
provide reasonable assurance that each vendor's activities comply in all
material respects with the servicing criteria applicable to each vendor. The
Company is solely responsible for determining that it meets the SEC requirements
to apply Interpretation 17.06 for the vendors and related criteria.

With respect to the Platform and the Period, the Company provides the following
assessment of compliance with respect to the Applicable Servicing Criteria:

1. The Company is responsible for assessing its compliance with the Applicable
Servicing Criteria.

2. The Company has assessed compliance with the Applicable Servicing Criteria,
including servicing criteria for which compliance is determined based on
Interpretation 17.06 as described above, as of and for the Period. In performing
this assessment, management used the criteria set forth by the Securities and
Exchange Commission in paragraph (d) of Item 1122 of Regulation AB.

3. Other than as identified on Schedule A hereto, as of and for the Period, the
Company was in material compliance with the Applicable Servicing Criteria. Any
material instances of noncompliance by a vendor of which the Company is aware
and any material deficiency in the Company's policies and procedures to monitor
vendors' compliance that the Company has identified is specified on Schedule A
hereto.

KPMG LLP, a registered public accounting firm, has issued an attestation
report with respect to the Company's foregoing assessment of compliance as of
and for the Period.

WELLS FARGO BANK, NATIONAL ASSOCIATION

By:/s/ Brian Bartlett
Brian Bartlett

Its:   Executive Vice President

Dated: March 1, 2007


(page)


(logo) WELLS FARGO

Corporate Trust Services
9062 Old Annapolis Road
Columbia, MD 21045-1951
410 884-2000
410 715-2380 Fax

Wells Fargo Bank, N.A.

Schedule A

Material Instances of Noncompliance by the Company

1122(d)(3)(i)- Delinquency Reporting - During the reporting period, certain
monthly investor or remittance reports included errors in the calculation and/or
the reporting of delinquencies for the pool assets, which errors may or may not
have been material. All such errors were the result of data processing errors
and/or the mistaken interpretation of data provided by other parties
participating in the servicing function. All necessary adjustments to data
processing systems and/or interpretive clarifications have been made to correct
those errors and to remedy related procedures.

Material instances of Noncompliance by any Vendor

NONE

Material Deficiencies In Company's Policies and Procedures to Monitor Vendors'
Compliance

NONE





EX-33 (j)
(logo) WELLS FARGO

Wells Fargo Bank, N.A.
Document Custody
1015 10th Avenue SE
Minneapolis, MN 55414


Appendix I


ASSESSMENT OF COMPLIANCE WITH APPLICABLE SERVICING CRITERIA

Corporate Trust Services division of Wells Fargo Bank, National Association
(the "Company") is responsible for assessing compliance with the servicing
criteria set forth in Item 1122(d) of Regulation AB promulgated by the
Securities and Exchange Commission. The Company has determined that the
servicing criteria are applicable in regard to the servicing platform for the
period as follows:

Platform: Publicly-issued (i.e., transaction-level reporting required under
the Securities Exchange Act of 1934, as amended) residential mortgage-backed
securities and commercial mortgage-backed securities issued on or after January
1, 2006, for which the Company provides document custody services, excluding any
publicly issued transactions issued by any government sponsored entity (the
"Platform").

Applicable Servicing Criteria: The servicing criteria set forth in Item
1122(d)(4)(i) and 1122(d)(4)(ii), in regard to the activities performed by the
Company with respect to the Platform (the "Applicable Servicing Criteria"). The
Company has determined that all other servicing criteria set forth in Item
1122(d) are not applicable to the Platform.

Period: Twelve months ended December 31, 2006 (the "Period").

With respect to the Platform, the Company provides the following
assessment of compliance with respect to the Applicable Servicing Criteria:

1. The Company is responsible for assessing the Company's compliance with
the Applicable Servicing Criteria as of and for the Period.

2. The Company has assessed compliance with the Applicable Servicing
Criteria. In performing this assessment, the Company used the criteria set forth
by the Securities and Exchange Commission in paragraph (d) of Item 1122 of
Regulation AB.

3. Based on such assessment, as of and for the Period, the Company has
complied, in all material respects with the Applicable Servicing Criteria.

KPMG LLP, a registered public accounting firm, has issued an attestation
report with respect to the Company's assessment of compliance as of and for the
Period.


WELLS FARGO BANK, NATIONAL ASSOCIATION

By: /s/ Shari L. Gillund
Shari L. Gillund

Its: Senior Vice President

Dated: March 1, 2007





EX-34 (a)
(logo) PRICEWATERHOUSECOOPERS

PricewaterhouseCoopers LLP
10 Tenth Street, Northwest
Suite 1400
Atlanta, GA 30309-3851
Telephone (678) 419 1000
Facsimile (678) 419 1239
www.pwc.com



Report of Independent Registered Public Accounting Firm


To the Shareholders and the Board of Directors of
Assurant, Inc.:

We have examined management's assertion, included in the accompanying
management's Report on Assessment of Compliance with 1122(d)(2)(vi) and
1122(d)(4)(xi) of Regulation AB Servicing Criteria, that American Security
Insurance Company, Standard Guaranty Insurance Company and Safeco Financial
Institution Solutions, Inc. (affiliates of Assurant Inc., collectively the
"Asserting Party") complied with the servicing criteria set forth in Item
1122(d) of the Securities and Exchange Commission's Regulation AB for all
mortgage loan-tracking transactions for which the Asserting Party served as a
Vendor on behalf of Servicers for such asset-backed securities transactions that
were registered after January 1, 2006 with the Securities and Exchange
Commission pursuant to the Securities Act of 1933 (the "Platform"), as of
December 31, 2006 and for the year then ended, excluding (i) criteria
1122(d)(1)(i) through 1122 (d)(1)(iv), 1122 (d)(2)(i) through 1122(d)(2)(v),
1122(d)(2)(vii), 1122(d)(3)(i) through 1122(d)(3)(iv), 1122(d)(4)(i) through
1122(d)(4)(x) and 1122(d)(4)(xiii) through 1122(d)(4)(xv), which the Asserting
Party has determined are not applicable to the activities performed by it with
respect to the Platform and (ii), criterion 1122(d)(4)(xii), which relates to
servicing activities that are applicable to the Platform, but are excluded from
the scope of management's assertion and are not reported on herein. Management
is responsible for the Company's compliance with the servicing criteria. Our
responsibility is to express an opinion on management's assertion based on our
examination.

Our examination was conducted in accordance with standards of the Public Company
Accounting Oversight Board (United States) and, accordingly, included examining,
on a test basis, evidence about the Company's compliance with the applicable
servicing criteria and performing such other procedures as we considered
necessary in the circumstances. Our examination included testing of selected
asset-backed transactions and securities that comprise the Platform, testing of
selected servicing activities related to the Platform, and determining whether
the Company processed those selected transactions and performed those selected
activities in compliance with the applicable servicing criteria. Our procedures
were limited to the selected transactions and servicing activities performed by
the Company during the period covered by this report. Our procedures were not
designed to detect noncompliance arising from errors that may have occurred
prior to or subsequent to our tests that may


1


(page)


have affected the balances or amounts calculated or reported by the Company
during the period covered by this report. We believe that our examination
provides a reasonable basis for our opinion. Our examination does not provide a
legal determination on the Company's compliance with the servicing criteria.

In our opinion, management's assertion that the Asserting Party complied with
the aforementioned applicable servicing criteria as of and for the year ended
December 31, 2006 for the Platform is fairly stated, in all material respects.

/s/ PricewaterhouseCoopers LLP

Atlanta, Georgia
February 23, 2007


2





EX-34 (c)
(logo) KPMG

KPMG LLP
Suite 2000
355 South Grand Avenue
Los Angeles, CA 90071-1568




Report of Independent Registered Public Accounting Firm


The Board of Directors
Countrywide Financial Corporation:

We have examined management's assessment, included in the accompanying
Assessment of Compliance with Applicable Servicing Criteria, that Countrywide
Financial Corporation and certain of its subsidiaries, including its direct and
indirect wholly owned subsidiaries, Countrywide Home Loans (CHL), Countrywide
Tax Services Corporation, Newport Management Corporation, and Countrywide Home
Loans Servicing L.P., a wholly owned subsidiary of CHL (collectively the
Company) complied with the servicing criteria set forth in Item 1122(d) of the
Securities and Exchange Commission's Regulation AB for publicly issued
residential mortgage-backed securities (securities collateralized by residential
mortgage loans, including prime, alternative loan products, subprime, HELOC, and
closed seconds) issued on or after January 1, 2006, for which the Company
provides cash collection and administration, investor remittances, and reporting
(except for those activities relating to trustee and paying agent services), and
pool asset administration (except for those activities relating to custodial
operations of pool assets and related documents), collectively "Servicing
Functions", excluding any transactions issued by any government sponsored
enterprise for which the Company provides Servicing Functions (the Platform),
except for servicing criteria 1122(d)(1)(iii), 1122(d)(3)(i)(B), only as it
relates to information other than that contained in the monthly remittance
report delivered by the servicer to the master servicer, trustee, and/or bond
administrator, and 1122(d)(3)(i)(D), only as it relates to the agreeing with
investors' records as to the total unpaid principal balance and number of pool
assets serviced by the servicer, 1122(d)(3)(ii), only as it relates to amounts
other than amounts remitted by the servicer to the master services, trustee,
and/or bond administrator, 1122(d)(3)(iii), 1122(d)(3)(iv), 1122(d)(4)(i), and
1122(d)(4)(ii), only as 1122(d)(4)(i) and 1122(d)(4)(ii) relate to the custodial
operations of the pool assets and related documents (collateral file) by the
document custodian responsible for such functions for the related transaction
and 1122(d)(4)(xv), only as it relates to Item 1115 of Regulation AB (derivative
transactions), as of and for the year ended December 31, 2006. Management is
responsible for the Company's compliance with those servicing criteria. Our
responsibility is to express an opinion on management's assessment about the
Company's compliance based on our examination.

Our examination was conducted in accordance with the standards of the Public
Company Accounting Oversight Board (United States) and, accordingly, included
examining, on a test basis, evidence about the Company's compliance with the
servicing criteria specified above and performing such other procedures as we
considered necessary in the circumstances. Our examination included testing of
less than all of the individual asset-backed transactions and securities that
comprise the Platform, testing of less than all of the servicing activities
related to the Platform, and determining whether the Company processed those
selected transactions and performed those selected activities in compliance with
the servicing criteria. Furthermore,


(page)


our procedures were limited to the selected transactions and servicing
activities performed by the Company during the period covered by this report.
Our procedures were not designed to determine whether errors may have occurred
either prior to or subsequent to our tests that may have affected the balances
or amounts calculated or reported by the Company during the period covered by
this report for the selected transactions or any other transactions. We believe
that our examination provides a reasonable basis for our opinion. Our
examination does not provide a legal determination on the Company's compliance
with the servicing criteria.

In our opinion, management's assessment that the Company complied with the
aforementioned servicing criteria as of and for the year ended December 31, 2006
is fairly stated in all material respects.

/s/ KPMG LLP

Los Angeles, California
February 28, 2007


2


KPMG LLP, a U.S. limited liability partnership, is the U.S.
member firm of KPMG International, a Swiss cooperative.





EX-34 (d)
(logo) Deloitte

Deloitte & Touche LLP
JPMorgan Chase Tower
2200 Ross Avenue, Suite 1600
Dallas, TX 75201-6778
USA
Tel: +1 214 840 7000
www.deloitte.com

Report of Independent Registered Public Accounting Firm

Board of Directors and Shareholders
EMC Mortgage Corporation

We have examined management's assertion, included in the accompanying
Certification Regarding Compliance with Applicable Servicing Criteria, that EMC
Mortgage Corporation (the Company) complied with the servicing criteria set
forth in Item 1122 (d) of the Securities and Exchange Commission's Regulation AB
for the asset-backed securities transactions for which EMC acted as servicer
involving residential mortgage loans, that were completed on or after January 1,
2006, and that were registered with the Securities and Exchange Commission
pursuant in the Securities Act of 1933 (the Platform) as of and for the year
ended December 31, 2006, excluding criteria 1122 (d)(1)(iii), (d)(3)(i)C,
(d)(4)(xi) and (d)(4)(xii) which management has determined are not applicable to
the activities performed by the Company with respect to the Platform. Management
is responsible for the Company's compliance with the servicing criteria. Our
responsibility is to express an opinion on management's assertion about the
Company's compliance with the servicing criteria based on our examination.

Our examination was conducted in accordance with attestation standards
established by the American Institute of Certified Public Accountants, as
adopted by the Public Company Accounting Oversight Board (United States) and,
accordingly, included examining, on a test basis, evidence about the Company's
compliance with the applicable servicing criteria, including tests on a sample
basis of the servicing activities related to the Platform, determining whether
the Company performed those selected activities in compliance with the servicing
criteria during the specified period and performing such other procedures as we
considered necessary in the circumstances. Our procedures were limited to
selected servicing activities performed by the Company during the period covered
by this report and, accordingly, such samples may not have included servicing
activities related to each asset-backed transaction included in the Platform.
Further, an examination is not designed to detect noncompliance arising from
errors that may have occurred prior to the period specified above that may have
affected the balances or amounts calculated or reported by the Company during
the period covered by this report. We believe that our examination provides a
reasonable basis for our opinion. Our examination does not provide a legal
determination on the Company's compliance with the servicing criteria.

In our opinion, management's assertion that the Company complied with the
aforementioned applicable servicing criteria as of and for the year ended
December 31, 2006 for the asset-backed securities transactions for which EMC
acted as servicer involving residential mortgage loans, that were completed on
or after January 1, 2006, and that were registered with the Securities and
Exchange Commission pursuant to the Securities Act of 1933 is fairly stated, in
all material respects.

/s/ Deloitte & Touch LLP

March 12, 2007


Member of
Deloitte Touche Tohmatsu





EX-34 (e)
(logo) Grant Thornton
Accountants and Business Advisors



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


Board of Directors and Shareholders
LandAmerica Tax and Flood Services, Inc.

We have examined management's assertion, included in the accompanying Report on
Assessment of Compliance with Regulation AB Servicing Criteria ("Management's
Report"), that LandAmerica Tax and Flood Services, Inc. (the "Company") complied
with the servicing criteria set forth in Item 1122(d) of the U.S. Securities and
Exchange Commission's Regulation AB for the residential mortgage backed
securities for which the Company served as third-party property tax payment
provider on the underlying collateral (the "Platform") as of and for the year
ended December 31, 2006, excluding criteria 1122(d)(1)(i)-(iv),
1122(d)(2)(i)-(vii), 1122(d)(3)(i)-(iv), 1122(d)(4)(i)-(x) and
1122(d)(4)(xiii)-(xv), which management has determined are not applicable to the
activities performed by the Company with respect to the Platform. Management is
responsible for the Company's compliance with the applicable servicing criteria.
Our responsibility is to express an opinion on management's assertion about the
Company's compliance with the applicable servicing criteria for the Platform
based on our examination.

Our examination was conducted in accordance with the standards of the Public
Company Accounting Oversight Board (United States) and, accordingly, included
examining, on a test basis, evidence about the Company's compliance with the
applicable servicing criteria for the Platform and performing such other
procedures as we considered necessary in the circumstances. Our examination
included testing selected asset-backed transactions and securities constituting
the Platform and evaluating whether the Company performed servicing activities
related to those transactions and securities in compliance with the applicable
servicing criteria for the period covered by this report. Accordingly, our
testing may not have included servicing activities related to each asset-backed
transaction or security constituting the Platform. Further, our examination was
not designed to detect material noncompliance that may have occurred prior to
the period covered by this report and that may have affected the Company's
servicing activities during the period covered by this report. We believe that
our examination provides a reasonable basis for our opinion. Our examination
does not provide a legal determination on the Company's compliance with the
applicable servicing criteria.

In our opinion, management's assertion that LandAmerica Tax and Flood Services,
Inc. complied with the aforementioned applicable servicing criteria as of and
for the year ended December 31, 2006 is fairly stated, in all material respects.

/s/ Grant Thorton LLP

Irvine, CA
February 20, 2007



18400 Von Karman Avenue
Suite 900
Irvine, CA 92612-0525
T 949.553.1600
F 949.553.0168
W www.grantthornton.com

Grant Thornton LLP
US member of Grant Thornton International





EX-34 (f)
(logo) KPMG

KPMG LLP
Suite 2000
355 South Grand Avenue
Los Angeles, CA 90071-1568



Report of Independent Registered Public Accounting Firm



The Board of Directors
Countrywide Bank:


We have examined management's assessment, included in the accompanying
Assessment of Compliance with Applicable Servicing Criteria, that Treasury Bank,
a division of Countrywide Bank, N.A. (the Company) complied with the servicing
criteria set forth in Item 1122(d) of the Securities and Exchange Commission's
Regulation AB for publicly issued HELOC and other residential mortgage-backed
securities issued on or after January 1, 2006 (the Platform), specifically Item
1122(d)(4)(i) and 1122(d)(4)(ii), for which the Company provides custodial
operations of pool assets and related documents, as of and for the year ended
December 31, 2006. The Company has determined that no other servicing criteria
are applicable to the activities it performs with respect to the Platform.
Schedule A to the Assessment of Compliance with Applicable Servicing Criteria
lists the individual asset-backed transactions and securities identified by
management as constituting the Platform. Management is responsible for the
Company's compliance with those servicing criteria. Our responsibility is to
express an opinion on management's assessment about the Company's compliance
based on our examination.

Our examination was conducted in accordance with the standards of the Public
Company Accounting Oversight Board (United States) and, accordingly, included
examining, on a test basis, evidence about the Company's compliance with the
servicing criteria specified above and performing such other procedures as we
considered necessary in the circumstances. Our examination included testing of
less than all of the individual asset-backed transactions and securities that
comprise the Platform, testing of less than all of the servicing activities
related to the Platform, and determining whether the Company processed those
selected transactions and performed those selected activities in compliance with
the servicing criteria. Furthermore, our procedures were limited to the
selected transactions and servicing activities performed by the Company during
the period covered by this report. Our procedures were not designed to
determine whether errors may have occurred either prior to or subsequent to our
tests that may have affected the balances or amounts calculated or reported by
the Company during the period covered by this report for the selected
transactions or any other transactions. We believe that our examination
provides a reasonable basis for our opinion. Our examination does not provide a
legal determination on the Company's compliance with the servicing criteria.


(page)


In our opinion, management's assessment that the Company complied with the
aforementioned servicing criteria as of and for the year ended December 31,
2006 is fairly stated in all material respects.



/s/ KPMG LLP

Los Angeles, California
February 28, 2007


KPMG LLP, a U.S. limited liability partnership, is the U.S.
member firm of KPMG International, a Swiss cooperative.


2





EX-34 (h)
(logo) KPMG

KPMG LLP
303 East Wacker Drive
Chicago, IL 60801-5212

Report of Independent Registered Public Accounting Firm

The Board of Directors
The Corporate Trust Services division of Wells Fargo Bank, National Association:

We have examined the compliance of the Corporate Trust Services division of
Wells Fargo Bank, National Association (the Company) with the servicing criteria
set forth in Item 1122(d) of the Securities and Exchange Commission's Regulation
AB for publicly-issued (i.e., transaction-level reporting initially required
under the Securities Exchange Act of 1934, as amended) residential
mortgage-backed securities, commercial mortgage-backed securities and other
asset-backed securities, for which the Company provides master servicing,
trustee, securities administration or paying agent services, excluding
transactions issued by any agency or instrumentality of the U.S. government or
any government sponsored entity (the Platform), except for servicing criteria
1122(d)(1)(iii), 1122(d)(4)(ii), 1122(d)(4)(iv), 1122(d)(4)(v),
1122(d)(4)(viii), 1122(d)(4)(ix), 1122(d)(4)(x), 1122(d)(4)(xi),
1122(d)(4)(xii) and 1122(d)(4)(xiii), which the Company has determined are not
applicable to the activities it performs with respect to the Platform, as of and
for the twelve months ended December 31, 2006. Management is responsible for the
Company's compliance with those servicing criteria. Our responsibility is to
express an opinion on management's assertion about the Company's compliance
based on our examination.

Our examination was conducted in accordance with the standards of the Public
Company Accounting Oversight Board (United States) and, accordingly, included
examining, on a test basis, evidence about the Company's compliance with the
servicing criteria specified above and performing such other procedures as we
considered necessary in the circumstances. Our examination included testing of
less than all of the individual asset-backed transactions and securities that
comprise the Platform, testing of less than all of the servicing activities
related to the Platform, and determining whether the Company processed those
selected transactions and performed those selected activities in compliance with
the servicing criteria. Furthermore, our procedures were limited to the selected
transactions and servicing activities performed by the Company during the period
covered by this report. Our procedures were not designed to determine whether
errors may have occurred either prior to or subsequent to our tests that may
have affected the balances or amounts calculated or reported by the Company
during the period covered by this report for the selected transactions or any
other transactions. We believe that our examination provides a reasonable basis
for our opinion. Our examination does not provide a legal determination on the
Company's compliance with the servicing criteria.

As described in the accompanying management's Assessment of Compliance With
Applicable Servicing Criteria, for servicing criteria 1122(d)(4)(i), the Company
has engaged various vendors to perform the activities required by these
servicing criteria. The Company has determined that these vendors are not
considered a "servicer" as defined in Item 1101(j) of Regulation AB, and the
Company has elected to take responsibility for assessing compliance with the
servicing criteria applicable to each vendor as permitted by Interpretation
17.06 of the SEC Division of Corporation Finance Manual of Publicly Available
Telephone Interpretations ("Interpretation 17.06"). As permitted by
Interpretation 17.06, the Company has asserted that it has policies and

KPMG LLP, a U.S. limited liability partnership, in the U.S. member firm
of KPMG International, a Swiss cooperative.

(page)

(logo) KPMG

procedures in place designed to provide assurance that the vendors' activities
comply in all material respects with the servicing criteria applicable to each
vendor. The Company is solely responsible for determining that it meets the SEC
requirements to apply Interpretation 17.06 for the vendors and related criteria
as described in its assertion, and we performed no procedures with respect to
the Company's eligibility to apply Interpretation 17.06.

Our examination disclosed material noncompliance with criterion 1122(d)(3)(i),
as applicable to the Company during the twelve months ended December 31, 2006.
Certain monthly investor or remittance reports included errors in the
calculation and/or the reporting of delinquencies for the pool assets.

In our opinion, except for the material non-compliance described above, the
Company complied, in all material respects, with the aforementioned servicing
criteria, including servicing criteria for which compliance is determined based
on Interpretation 17.06 as discussed above, as of and for the twelve months
ended December 31, 2006.

/s/ KPMG LLP

Chicago, IL 60601
March 1, 2007





EX-34 (i)
(logo) KPMG

KPMG LLP
303 East Wacker Drive
Chicago, IL 60801-5212

Report of Independent Registered Public Accounting Firm

The Board of Directors
The Corporate Trust Services division of Wells Fargo Bank, National Association:

We have examined the compliance of the Corporate Trust Services division of
Wells Fargo Bank, National Association (the Company) with the servicing criteria
set forth in Item 1122(d) of the Securities and Exchange Commission's Regulation
AB for publicly-issued (i.e., transaction-level reporting initially required
under the Securities Exchange Act of 1934, as amended) residential
mortgage-backed securities, commercial mortgage-backed securities and other
asset-backed securities, for which the Company provides master servicing,
trustee, securities administration or paying agent services, excluding
transactions issued by any agency or instrumentality of the U.S. government or
any government sponsored entity (the Platform), except for servicing criteria
1122(d)(1)(iii), 1122(d)(4)(ii), 1122(d)(4)(iv), 1122(d)(4)(v),
1122(d)(4)(viii), 1122(d)(4)(ix), 1122(d)(4)(x), 1122(d)(4)(xi),
1122(d)(4)(xii) and 1122(d)(4)(xiii), which the Company has determined are not
applicable to the activities it performs with respect to the Platform, as of and
for the twelve months ended December 31, 2006. Management is responsible for the
Company's compliance with those servicing criteria. Our responsibility is to
express an opinion on management's assertion about the Company's compliance
based on our examination.

Our examination was conducted in accordance with the standards of the Public
Company Accounting Oversight Board (United States) and, accordingly, included
examining, on a test basis, evidence about the Company's compliance with the
servicing criteria specified above and performing such other procedures as we
considered necessary in the circumstances. Our examination included testing of
less than all of the individual asset-backed transactions and securities that
comprise the Platform, testing of less than all of the servicing activities
related to the Platform, and determining whether the Company processed those
selected transactions and performed those selected activities in compliance with
the servicing criteria. Furthermore, our procedures were limited to the selected
transactions and servicing activities performed by the Company during the period
covered by this report. Our procedures were not designed to determine whether
errors may have occurred either prior to or subsequent to our tests that may
have affected the balances or amounts calculated or reported by the Company
during the period covered by this report for the selected transactions or any
other transactions. We believe that our examination provides a reasonable basis
for our opinion. Our examination does not provide a legal determination on the
Company's compliance with the servicing criteria.

As described in the accompanying management's Assessment of Compliance With
Applicable Servicing Criteria, for servicing criteria 1122(d)(4)(i), the Company
has engaged various vendors to perform the activities required by these
servicing criteria. The Company has determined that these vendors are not
considered a "servicer" as defined in Item 1101(j) of Regulation AB, and the
Company has elected to take responsibility for assessing compliance with the
servicing criteria applicable to each vendor as permitted by Interpretation
17.06 of the SEC Division of Corporation Finance Manual of Publicly Available
Telephone Interpretations ("Interpretation 17.06"). As permitted by
Interpretation 17.06, the Company has asserted that it has policies and

KPMG LLP, a U.S. limited liability partnership, in the U.S. member firm
of KPMG International, a Swiss cooperative.

(page)

(logo) KPMG

procedures in place designed to provide assurance that the vendors' activities
comply in all material respects with the servicing criteria applicable to each
vendor. The Company is solely responsible for determining that it meets the SEC
requirements to apply Interpretation 17.06 for the vendors and related criteria
as described in its assertion, and we performed no procedures with respect to
the Company's eligibility to apply Interpretation 17.06.

Our examination disclosed material noncompliance with criterion 1122(d)(3)(i),
as applicable to the Company during the twelve months ended December 31, 2006.
Certain monthly investor or remittance reports included errors in the
calculation and/or the reporting of delinquencies for the pool assets.

In our opinion, except for the material non-compliance described above, the
Company complied, in all material respects, with the aforementioned servicing
criteria, including servicing criteria for which compliance is determined based
on Interpretation 17.06 as discussed above, as of and for the twelve months
ended December 31, 2006.

/s/ KPMG LLP

Chicago, IL 60601
March 1, 2007





EX-34 (j)
(logo) KPMG

KPMG LLP
303 East Wacker Drive
Chicago, IL 60601-5212

Report of Independent Registered Public Accounting Firm

The Board of Directors
The Corporate Trust Services division of Wells Fargo Bank National Association:

We have examined management's assertion, included in the accompanying Appendix
I, that the Document Custody section of the Corporate Trust Services division of
Wells Fargo Bank National Association complied with the servicing criteria set
forth in Item 1122(d) of the Securities and Exchange Commission's Regulation AB
for publicly-issued (i.e., transaction-level reporting required under the
Securities Exchange Act of 1934, as amended) residential mortgage-backed
securities and commercial mortgage-backed securities issued on or after January
1, 2006 for which the Company provides document custody services, excluding any
publicly issued transactions issued by any government sponsored entity (the
Platform) as of and for the twelve months ended December 31, 2006. Management
has determined that servicing criteria 1122(d)(4)(i) and 1122(d)(4)(ii) are
applicable to the activities it performs with respect to the Platform, and that
all other servicing criteria set forth in Item 1122(d) are not applicable to the
document custody services provided by the Company with respect to the Platform.
Management is responsible for the Company's compliance with those servicing
criteria. Our responsibility is to express an opinion on management's assertion
about the Company's compliance based on our examination.

Our examination was conducted in accordance with the standards of the Public
Company Accounting Oversight Board (United States) and, accordingly, included
examining, on a test basis, evidence about the Company's compliance with the
servicing criteria specified above and performing such other procedures as we
considered necessary in the circumstances. Our examination included testing of
less than all of the individual asset-backed transactions and securities that
comprise the Platform, testing of less than all of the servicing activities
related to the Platform, and determining whether the Company processed those
selected transactions and performed those selected activities in compliance with
the servicing criteria. Furthermore, our procedures were limited to the selected
transactions and servicing activities performed by the Company during the period
covered by this report. Our procedures were not designed to determine whether
errors may have occurred either prior to or subsequent to our tests that may
have affected the balances or amounts calculated or reported by the Company
during the period covered by this report for the selected transactions or any
other transactions. We believe that our examination provides a reasonable basis
for our opinion. Our examination does not provide a legal determination on the
Company's compliance with the servicing criteria.

In our opinion, management's assertion that the Company complied with the
aforementioned servicing criteria as of and for the period ended December 31,
2006 is fairly stated, in all material respects.

/s/ KPMG LLP

Chicago, Illinois
March 1, 2007

KPMG LLP, a U.S. limited liability partnership, is the U.S. member firm of KPMG
International, a Swiss cooperative.





EX-35 (c)
(logo) Countrywide
HOME LOANS

400 Countrywide Way
Simi Valley, California 93065-6298

February 28, 2007




WELLS FARGO
9062 OLD ANNAPOLIS RD
COLUMBIA, MD 21045
Laneise Foxworth


OFFICER'S CERTIFICATE


I, Joseph Candelario, hereby certify that I am an officer of Countrywide LP,
Inc., general partner of Countrywide Home Loans Servicing LP (the "Servicer"). I
further certify, with respect to the applicable servicing agreement relating to
the securitization transaction(s) set forth on Exhibit A attached hereto (the
"Servicing Agreement") that:

(a)  A review of the activities of the Servicer during the preceding calendar
year and of the performance of the Servicer under the Servicing Agreement has
been made under my supervision; and

(b)  To the best of my knowledge, based on such review, the Servicer has
fulfilled all of its obligations under the Servicing Agreement in all material
respects throughout such year.

/s/ Joseph Candelario
Joseph Candelario
First Vice President
Compliance Officer
Loan Administration

February 28, 2007

See Deal Name listing on following page.


(page)


Exhibit A

ACE 2006-CW1
ACE 2006-FM2
ACE 2006-NC2
ACE 2006-NC3
BAFC 2006-2
BAFC 2006-A
BAFC 2006-D
BAFC 2006-H
BCAP 2006AA1
BCAP 2006-AA2
BSALTA 2006-1
BSALTA 2006-2
BSALTA 2006-3
BSALTA 2006-4
BSALTA 2006-5
BSALTA 2006-6
BSALTA 2006-7
BSALTA 2006-8
BSARM 2006-2
BSARM 2006-4
CSAB 2006-2
CSAB 2006-3
CSAB 2006-4
CSFB ARMT 2006-1
CSFB ARMT 2006-2
CSFB ARMT 2006-3
CSMC 2006-1
CSMC 2006-2
CSMC 2006-3
CSMC 2006-4
CSMC 2006-5
CSMC 2006-7
CSMC 2006-8
CSMC 2006-9
DBALT 2006-AB3 (SUB)
DBALT 2006-AB4 (SUB)
DBALT 2006-AF1
DBALT 2006-AR1
DBALT 2006-AR2
DBALT 2006-AR3
DBALT 2006-AR4
DBALT 2006-AR5 (SUB)
DBALT 2006-AR6 (SUB)
DBALT 2006-OA1 (SUB)
GSAA 2006-10 (SUB)
GSAA 2006-11
GSAA 2006-14
GSAA 2006-16
GSAA 2006-17


(page)


Exhibit A (con't.)
GSAA 2006-19
GSAA 2006-20
GSAA 2006-4
GSAA 2006-4 (SUB)
GSAA 2006-7 SUB
GSAA 2006-8
GSAA 2006-8 (SUB)
GSR 2006-1F (SUB)
GSR 2006-1F (SUB)
GSR 2006-2F (SUB)
GSR 2006-2F (SUB)
GSR 2006-3F (SUB)
GSR 2006-3F (SUB)
GSR 2006-5F (SUB)
GSR 2006-5F (SUB)
GSR 2006-6F
GSR 2006-7F
GSR 2006-8F
GSR 2006-9F
GSR 2006-10F
GSR 2006-AR1
GSR 2006-AR2
GSR 2006-OA1
HARBORVIEW 2006-2
HARBORVIEW 2006-6
HARBORVIEW 2006-11
HARBORVIEW 2006-12
SASCO 2006-BC2
SASCO 2006-BC3
SASCO 2006-BC4
SASCO 2006-BC5
THORNBURG 2006-1
THORNBURG 2006-2
THORNBURG 2006-4
THORNBURG 2006-5
DBALT 2006-AR6
DBALT 2006-OA1
GSR 2006-1F
GSR 2006-5F
JPMMT 2006-A7
JPMMT 2006-S2
JPMMT 2006-S3
JPMMT 2006-54
LMT 2006-9
LUMINENT 2006-2
LUMINENT 2006-5
LUMINENT 2006-5
LUMINENT 2006-6
MARM 2006-2
MARM 2006-OA2
MLMI 2006-A1


(page)


Exhibit A (con't.)
MLMI 2006-A2
MLMI 2006-A3
MLMI 2006-A4
MSAC 2006-HE8
MSIX 2006-1
MSM 2006-1AR
SAIL 2006-3
SAMI II 2006-AR1
SAMI II 2006-AR2
SAMI II 2006-AR3
SAMI II 2006-AR4
SAMI II 2006-AR6
SAMI II 2006-AR7
SAMI II 2006-AR8
SARM 2006-2
SARM 2006-3
SARM 2006-4
SARM 2006-5
SARM 2006-7
SARM 2006-8
SARM 2006-9
THORNBURG 2006-3
ZUNI 2006-OA1
GSR 2006-3F
GSR 2006-2F
PRIME 2006-CL1
SARM 2006-1
THORNBURG 2006-6
JPALT 2006-A1
JPALT 2006-A2
JPALT 2006-A3
JPALT 2006-A4
JPALT 2006-A6
JPALT 2006-A7
JPALT 2006-S1
JPALT 2006-S3
JPALT 2006-S4
JPMAC 2006-CW2
JPMMT 2006-A1
JPMMT 2006-A2
JPMMT 2006-A3
JPMMT 2006-A4
JPMMT 2006-A6
HASCO 2006-HE1
SEQUOIA 2006-1
SEQUOIA 2006-1
SQALT 2006-1





EX-35 (d)
(logo) EMC Mortgage Corporaiton
Proven Performance


ITEM 1123 ANNUAL STATEMENT OF COMPLIANCE
EMC MORTGAGE CORPORATION

I, John Vella, President and Chief Executive Officer of EMC Mortgage Corporation
("EMC") as servicer pursuant to the Structured Asset Mortgage Investments II
Trust 2006-AR8 Agreement (the "Agreement") hereby certify that:


1. A review of EMC's activities during the period from and including January 1,
2006 through and including December 31, 2006 (the "Reporting Period") and EMC's
performance under the Agreement has been made under my supervision.

2. To the best of my knowledge, based on such review, EMC has fulfilled all of
its obligations under the Agreement in all material respects throughout the
Reporting Period.


IN WITNESS WHEREOF, the undersigned has duly executed this Certificate this 12th
day of March 2007.


BY:/s/ John Vella
John Vella
President and Chief Executive Officer



2780 Lake Vista Drive, Lewisville, Texas 75067
Mailing Address: P.O. Box 1292190 Lewisville, Texas 75029-2190

(logo) MBA
Member
Mortgage Bankers
Association of America





EX-35 (h)
(logo) WELLS FARGO

Wells Fargo Bank, N.A.
Corporate Trust Services
9062 Old Annapolis Road
Columbia, MD 21045
410 884-2000

March 20, 2007

Structured Asset Mortgage Investments II Inc.
245 Park Avenue
New York, NY 10167

RE: Annual Statement As To Compliance for Structured Asset Mortgage Investments
II Trust 2006-AR8

Per Section 3.16 of the Pooling and Servicing Agreement, dated as of 10/1/2006,
the undersigned Officer of Wells Fargo Bank, N.A., (Master Servicer), hereby
certifies the following for the 2006 calendar year or portion thereof:

(i) a review of the activities of each such party during the preceding calendar
    year and of its performance under this Agreement has been made under such
    officer's supervision and


(ii) to the best of such officer's knowledge, based on such review, such party
     has fulfilled all of its obligations under this Agreement in all material
     respects throughout such year, or, if there has been a failure to fulfill
     any such obligation in any material respect, specifying each such failure
     known to such officer and the nature and status of the cure provisions
     thereof.


Certified By:
/s/ Scott Strack
Scott Strack, Vice President


Certified By:
/s/ Gordon Johnson
Gordon Johnson, Assistant Secretary





EX-35 (i)
(logo) WELLS FARGO

Wells Fargo Bank, N.A.
Corporate Trust Services
9062 Old Annapolis Road
Columbia, MD 21045
410 884-2000

March 20, 2007

Structured Asset Mortgage Investments II Inc.
245 Park Avenue
New York, NY 10167


RE: Annual Statement As To Compliance for Structured Asset Mortgage Investments
II Trust 2006-AR8

Per Section 3.16 of the Pooling and Servicing Agreement, dated as of 10/1/2006,
the undersigned Officer of Wells Fargo Bank, N.A., (Securities Administrator),
hereby certifies the following for the 2006 calendar year or portion thereof:

(i) a review of the activities of each such party during the preceding calendar
    year and of its performance under this Agreement has been made under such
    officer's supervision and

(ii) to the best of such officer's knowledge, based on such review, such party
     has fulfilled all of its obligations under this Agreement in all material
     respects throughout such year, or, if there has been a failure to fulfill
     any such obligation in any material respect, specifying each such failure
     known to such officer and the nature and status of the cure provisions
     thereof.



Certified By:
/s/ Scott Strack
Scott Strack, Vice President


Certified By:
/s/ Gordon Johnson
Gordon Johnson, Assistant Secretary





EX.99





                               AMENDMENT REG AB
         TO THE MASTER MORTGAGE LOAN PURCHASEAND SERVICING AGREEMENT

            This  is  Amendment  Reg AB  ("Amendment  Reg  AB"),  dated  as of
January 1, 2006, by and between EMC Mortgage  Corporation  (the  "Purchaser"),
and  Countrywide  Home Loans,  Inc. (the  "Company") to that certain  Seller's
Warranties  and  Servicing  Agreement]  dated as of  September  1, 2002 by and
between the Company and the Purchaser (as amended,  modified or  supplemented,
the "Existing Agreement").

W I T N E S S E T H

            WHEREAS,  the Company and the  Purchaser  have agreed,  subject to
the terms and conditions of this Amendment Reg AB that the Existing  Agreement
be amended to  reflect  agreed  upon  revisions  to the terms of the  Existing
Agreement.

            Accordingly,  the  Company  and the  Purchaser  hereby  agree,  in
consideration of the mutual premises and mutual  obligations set forth herein,
that the Existing Agreement is hereby amended as follows:

1.    Capitalized  terms used herein but not otherwise  defined shall have the
meanings  set forth in the  Existing  Agreement.  The  Existing  Agreement  is
hereby   amended  by  adding  the  following   definitions   in  their  proper
alphabetical order:

      Commission:  The United States Securities and Exchange Commission.

      Company Information:  As defined in Section 2(g)(i)(A)(1).

      Depositor:  The  depositor,  as such term is defined in  Regulation  AB,
with respect to any Securitization Transaction.

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

      Master Servicer:  With respect to any  Securitization  Transaction,  the
"master servicer," if any, identified in the related transaction documents.

      Qualified  Correspondent:  Any Person from which the  Company  purchased
Mortgage  Loans,  provided that the following  conditions are  satisfied:  (i)
such  Mortgage  Loans were  either (x)  originated  pursuant  to an  agreement
between the Company and such Person that  contemplated  that such Person would
underwrite  mortgage  loans  from time to time,  for sale to the  Company,  in
accordance   with   underwriting   guidelines   designated   by  the   Company
("Designated  Guidelines") or guidelines that do not vary materially from such
Designated  Guidelines or (y) individually  re-underwritten  by the Company to
the  Designated  Guidelines at the time such  Mortgage  Loans were acquired by
the Company;  (ii) either (x) the Designated Guidelines were, at the time such
Mortgage  Loans  were  originated,  used  by the  Company  in  origination  of
mortgage  loans of the same type as the Mortgage  Loans for the  Company's own
account  or (y) the  Designated  Guidelines  were,  at the time such  Mortgage
Loans were  underwritten,  designated by the Company on a consistent basis for
use by lenders in  originating  mortgage loans to be purchased by the Company;
and (iii) the Company employed,  at the time such Mortgage Loans were acquired
by the Company,  pre-purchase or post-purchase  quality  assurance  procedures
(which may involve,  among other things,  review of a sample of mortgage loans
purchased  during a  particular  time period or through  particular  channels)
designed to ensure that either Persons from which it purchased  mortgage loans
properly  applied the underwriting  criteria  designated by the Company or the
Mortgage  Loans  purchased  by  the  Company  substantially  comply  with  the
Designated Guidelines.
<PAGE>

      Reconstitution:  Any Securitization Transaction or Whole Loan Transfer.

      Reconstitution  Agreement:  An agreement or  agreements  entered into by
the Company and the Purchaser  and/or certain third parties in connection with
a  Reconstitution  with respect to any or all of the Mortgage  Loans  serviced
under the Agreement.

      Regulation AB: Subpart  229.1100 - Asset Backed  Securities  (Regulation
AB), 17 C.F.R.  ss.ss.229.1100-229.1123,  as such may be amended  from time to
time,  and  subject  to such  clarification  and  interpretation  as have been
provided by the Commission in the adopting release  (Asset-Backed  Securities,
Securities Act Release No. 33-8518,  70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005))
or by the staff of the Commission,  or as may be provided by the Commission or
its staff from time to time.

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

      Securitization  Transaction:  Any  transaction  subject to Regulation AB
involving  either (1) a sale or other  transfer of some or all of the Mortgage
Loans  directly  or  indirectly  to an issuing  entity in  connection  with an
issuance of publicly offered, rated or unrated  mortgage-backed  securities or
(2) an  issuance  of  publicly  offered,  rated  or  unrated  securities,  the
payments  on  which  are  determined  primarily  by  reference  to one or more
portfolios of residential  mortgage loans consisting,  in whole or in part, of
some or all of the Mortgage Loans.

      Servicer:  As defined in Section 2(c)(iii).

      Servicing Criteria:  The "servicing  criteria" set forth in Item 1122(d)
of Regulation AB, as such may be amended from time to time.

      Static Pool  Information:  Static pool  information as described in Item
1105 of Regulation AB.

      Subcontractor:  Any vendor,  subcontractor  or other  Person that is not
responsible for the overall  servicing (as "servicing" is commonly  understood
by participants in the  mortgage-backed  securities  market) of Mortgage Loans
but  performs one or more  discrete  functions  identified  in Item 1122(d) of
Regulation AB with respect to Mortgage  Loans under the direction or authority
of the Company or a Subservicer.


                                      2
<PAGE>

      Subservicer:  Any Person that services  Mortgage  Loans on behalf of the
Company or any Subservicer  and is responsible  for the  performance  (whether
directly or through  Subservicers or Subcontractors) of a substantial  portion
of the material  servicing  functions  required to be performed by the Company
under this  Agreement or any  Reconstitution  Agreement that are identified in
Item 1122(d) of Regulation AB; provided,  however, that the term "Subservicer"
shall not include any master  servicer other than the Company,  or any special
servicer  engaged at the request of a  Depositor,  Purchaser  or investor in a
Securitization  Transaction,  nor any "back-up servicer" or trustee performing
servicing  functions on behalf of a Securitization  Transaction engaged at the
request  of  a  Depositor,   Purchaser,   or  investor  in  a   Securitization
Transaction.

      Third-Party   Originator:   Each   Person,   other   than  a   Qualified
Correspondent, that originated Mortgage Loans acquired by the Company.

      Whole  Loan  Transfer:  Any  sale  or  transfer  of  some  or all of the
Mortgage Loans, other than a Securitization Transaction.

2.    The  Purchaser  and the Company  agree that the  Existing  Agreement  is
hereby amended by adding the following provisions:

      (a)   Intent of the Parties; Reasonableness.

      The Purchaser and the Company  acknowledge and agree that the purpose of
Article 2 of this  Agreement is to facilitate  compliance by the Purchaser and
any  Depositor  with the  provisions  of  Regulation  AB and related rules and
regulations of the  Commission.  Neither the Purchaser nor any Depositor shall
exercise its right to request  delivery of  information  or other  performance
under these  provisions  other than in good faith,  or for purposes other than
compliance  with the  Securities  Act,  the  Exchange  Act and the  rules  and
regulations  of  the  Commission   thereunder.   Although   Regulation  AB  is
applicable by its terms only to offerings of asset-backed  securities that are
registered under the Securities Act, the parties  acknowledges  that investors
in  privately  offered  securities  may  require  that  the  Purchaser  or any
Depositor  provide  comparable  disclosure  in  unregistered  offerings.   The
parties  agree  over time to  negotiate  in good  faith  with  respect  to the
provision  of  comparable   disclosure  in  private  offerings.   The  Company
acknowledges  that  interpretations  of the  requirements of Regulation AB may
change  over  time,  whether  due to  interpretive  guidance  provided  by the
Commission  or its staff.  The Company  agrees to negotiate in good faith with
the  Purchaser or any  Depositor  with regard to any  reasonable  requests for
delivery  of  information  under  these  provisions  on the basis of  evolving
interpretations  of  Regulation  AB.  In  connection  with any  Securitization
Transaction,  the Company shall  cooperate fully with the Purchaser to deliver
to the  Purchaser  (including  any of its  assignees  or  designees)  and  any
Depositor, any and all statements,  reports,  certifications,  records and any
other  information  necessary  to permit the  Purchaser  or such  Depositor to
comply with the  provisions of Regulation AB,  together with such  disclosures
relating to the  Company,  and any parties or items  identified  in writing by
the Purchaser,  including, any Subservicer, any Third-Party Originator and the
Mortgage  Loans,  or the servicing of the Mortgage Loans necessary in order to
effect  such  compliance,   in  the  Purchaser's  or  Depositor's   reasonable
determination.


                                      3
<PAGE>

      The  Purchaser  agrees  that it will  cooperate  with  the  Company  and
provide   sufficient  and  timely  notice  of  any  information   requirements
pertaining  to a  Securitization  Transaction.  The  Purchaser  will  make all
reasonable  efforts to limit  requests for  information,  reports or any other
materials  to  items  the  Purchaser   reasonably  believes  is  required  for
compliance with Regulation AB, and shall not request  information which is not
required for such compliance.

      (b)   Additional Representations and Warranties of the Company.

            (i)   The Company  shall be deemed to represent  to the  Purchaser
      and to any  Depositor,  as of the  date on  which  information  is first
      provided to the  Purchaser  or any  Depositor  under  Section 2(c) that,
      except as disclosed in writing to the Purchaser or such Depositor  prior
      to such date:  (i) the Company is not aware and has not received  notice
      that any default,  early  amortization or other  performance  triggering
      event  has  occurred  as to any other  securitization  due to any act or
      failure to act of the Company;  (ii) the Company has not been terminated
      as servicer in a residential  mortgage loan  securitization,  either due
      to a servicing  default or to  application  of a  servicing  performance
      test or trigger;  (iii) no material  noncompliance  with the  applicable
      servicing criteria with respect to other  securitizations of residential
      mortgage  loans  involving the Company as servicer has been disclosed or
      reported  by the  Company;  (iv) no  material  changes to the  Company's
      policies or procedures  with respect to the  servicing  function it will
      perform  under  this  Agreement  and any  Reconstitution  Agreement  for
      mortgage  loans of a type  similar to the Mortgage  Loans have  occurred
      during  the  three-year   period   immediately   preceding  the  related
      Securitization  Transaction;  (v) there are no aspects of the  Company's
      financial  condition  that could have a material  adverse  effect on the
      performance  by the  Company  of its  servicing  obligations  under this
      Agreement or any  Reconstitution  Agreement;  (vi) there are no material
      legal or governmental  proceedings pending (or known to be contemplated)
      against the Company, any Subservicer or any Third-Party Originator;  and
      (vii) there are no affiliations,  relationships or transactions relating
      to the Company,  any  Subservicer  or any  Third-Party  Originator  with
      respect  to  any  Securitization   Transaction  and  any  party  thereto
      identified by the related  Depositor of a type described in Item 1119 of
      Regulation AB.

            (ii)  If so  requested by the  Purchaser  or any  Depositor on any
      date  following the date on which  information  is first provided to the
      Purchaser  or any  Depositor  under  Section  2(c),  the Company  shall,
      within five Business  Days  following  such request,  confirm in writing
      the  accuracy  of  the  representations  and  warranties  set  forth  in
      paragraph  (i) of  this  Section  or,  if any  such  representation  and
      warranty  is not  accurate  as of the  date  of  such  request,  provide
      reasonably  adequate  disclosure of the pertinent facts, in writing,  to
      the requesting party.

      (c)   Information to Be Provided by the Company.

      In connection with any Securitization  Transaction the Company shall (1)
within  five  Business  Days  following   request  by  the  Purchaser  or  any
Depositor,  provide to the Purchaser and such  Depositor  (or, as  applicable,
cause  each  Third-Party  Originator  and each  Subservicer  to  provide),  in
writing   reasonably   required  for  compliance   with   Regulation  AB,  the
information and materials  specified in paragraphs  (i), (ii),  (iii) and (vi)
of this Section 2(c), and (2) as promptly as practicable  following  notice to
or discovery by the Company,  provide to the  Purchaser  and any Depositor (as
required by  Regulation  AB) the  information  specified in paragraph  (iv) of
this Section.


                                      4
<PAGE>

            (i)   If so  requested  by the  Purchaser  or any  Depositor,  the
      Company shall  provide such  information  regarding (x) the Company,  as
      originator of the Mortgage  Loans  (including as an acquirer of Mortgage
      Loans  from  a  Qualified  Correspondent,  if  applicable),  or  (y)  as
      applicable,  each Third-Party  Originator,  and (z) as applicable,  each
      Subservicer,  as is requested for the purpose of  compliance  with Items
      1103(a)(1),  1105 (subject to paragraph (b) below),  1110, 1117 and 1119
      of Regulation AB.  Such information shall include, at a minimum:

                  (A)   the originator's form of organization;

                  (B)   to  the  extent   material,   a  description   of  the
            originator's  origination  program and how long the originator has
            been engaged in  originating  residential  mortgage  loans,  which
            description   shall  include  a  discussion  of  the  originator's
            experience in originating  mortgage loans of a similar type as the
            Mortgage  Loans; if material,  information  regarding the size and
            composition  of  the  originator's   origination  portfolio;   and
            information   that  may  be   material   to  an  analysis  of  the
            performance  of the Mortgage  Loans,  including  the  originators'
            credit-granting  or  underwriting  criteria for mortgage  loans of
            similar  type(s) as the Mortgage Loans and such other  information
            as the Purchaser or any Depositor may  reasonably  request for the
            purpose of compliance with Item 1110(b)(2) of Regulation AB;

                  (C)   a  brief   description   of  any  material   legal  or
            governmental  proceedings  pending (or known to be contemplated by
            a governmental  authority)  against the Company,  each Third-Party
            Originator, if applicable, and each Subservicer; and

                  (D)   a  description  of  any  affiliation  or  relationship
            between the Company, each Third-Party  Originator,  if applicable,
            each   Subservicer   and  any  of  the  following   parties  to  a
            Securitization  Transaction, as such parties are identified to the
            Company by the  Purchaser  or any  Depositor  in writing or in the
            related  Reconstitution  Agreement  within five  Business  Days in
            advance of such Securitization Transaction:

                        (1)   the sponsor;
                        (2)   the depositor;
                        (3)   the issuing entity;
                        (4)   any servicer;
                        (5)   any trustee;
                        (6)   any originator;
                        (7)   any significant obligor;
                        (8)   any enhancement or support provider; and


                                      5
<PAGE>

                        (9)   any other material transaction party.

            (ii)  If so  requested  by the  Purchaser  or any  Depositor,  and
      required by  Regulation  AB or as otherwise  agreed upon by the Company,
      the Purchaser  and/or the  Depositor,  the Company shall provide (or, as
      applicable,  cause each  Third-Party  Originator to provide) Static Pool
      Information  with  respect to the  mortgage  loans (of a similar type as
      the  Mortgage  Loans,  as  reasonably  identified  by the  Purchaser  as
      provided  below)  originated  by (a) the  Company,  if the Company is an
      originator  of  Mortgage  Loans  (including  as an  acquirer of Mortgage
      Loans from a  Qualified  Correspondent,  if  applicable),  and/or (b) as
      applicable,  each Third-Party  Originator.  Such Static Pool Information
      shall be prepared by the Company  (or, if  applicable,  the  Third-Party
      Originator) on the basis of its  reasonable,  good faith  interpretation
      of the  requirements  of Item  1105(a)(1)-(3)  of Regulation  AB. To the
      extent  that  there  is   reasonably   available   to  the  Company  (or
      Third-Party  Originator,  as applicable)  Static Pool  Information  with
      respect  to more than one  mortgage  loan  type,  the  Purchaser  or any
      Depositor  shall be  entitled  to  specify  whether  some or all of such
      information  shall be provided  pursuant to this paragraph.  The content
      of such Static Pool Information may be in the form customarily  provided
      by the  Company,  and need not be  customized  for the  Purchaser or any
      Depositor.  Such Static Pool  Information  for each vintage  origination
      year or prior  securitized  pool, as  applicable,  shall be presented in
      increments  no less  frequently  than  quarterly  over  the  life of the
      mortgage  loans  included  in the  vintage  origination  year  or  prior
      securitized  pool.  The most recent  periodic  increment must be as of a
      date no  later  than 135 days  prior  to the date of the  prospectus  or
      other  offering  document in which the Static Pool  Information is to be
      included or  incorporated  by  reference.  The Static  Pool  Information
      shall be provided  in an  electronic  format  that  provides a permanent
      record of the information  provided,  such as a portable document format
      (pdf) file, or other such electronic format.

            Promptly  following  notice or discovery  of a material  error (as
      determined in Company's  sole  discretion),  in Static Pool  Information
      provided pursuant to the immediately  preceding paragraph  (including an
      omission  to  include  therein  information   required  to  be  provided
      pursuant to such paragraph),  the Company shall provide corrected Static
      Pool  Information to the Purchaser or any Depositor,  as applicable,  in
      the  same  format  in  which  Static  Pool  Information  was  previously
      provided to such party by the Company.

            If so requested by the  Purchaser  or any  Depositor,  the Company
      shall provide (or, as applicable,  cause each Third-Party  Originator to
      provide),  at the expense of the requesting  party (to the extent of any
      additional  incremental  expense  associated  with delivery  pursuant to
      this  Agreement),  agreed-upon  procedures  letters of certified  public
      accountants  pertaining  to Static  Pool  Information  relating to prior
      securitized  pools for  securitizations  closed on or after  January  1,
      2006 or, in the case of Static  Pool  Information  with  respect  to the
      Company's or, if applicable,  Third-Party  Originator's  originations or
      purchases,  to  calendar  months  commencing  January  1,  2006,  as the
      Purchaser or such Depositor shall  reasonably  request.  Such statements
      and  letters  shall  be  addressed  to and be for  the  benefit  of such
      parties as the Purchaser or such Depositor shall designate,  which shall
      be limited to any Sponsor,  any  Depositor,  any broker dealer acting as
      underwriter,  placement  agent or initial  purchaser  with  respect to a
      Securitization  Transaction  or any other party that is  reasonably  and
      customarily  entitled  to  receive  such  statements  and  letters  in a
      Securitization  Transaction.  Any such  statement or letter may take the
      form of a  standard,  generally  applicable  document  accompanied  by a
      reliance  letter  authorizing  reliance by the addressees  designated by
      the Purchaser or such Depositor.


                                      6
<PAGE>

            (iii) If reasonably  requested by the Purchaser or any  Depositor,
      the Company shall  provide such  information  regarding the Company,  as
      servicer  of the  Mortgage  Loans,  and  each  Subservicer  (each of the
      Company  and  each  Subservicer,  for  purposes  of  this  paragraph,  a
      "Servicer"),  as is  reasonably  requested for the purpose of compliance
      with Item 1108 of Regulation AB. Such  information  shall include,  at a
      minimum:

                  (A)   the Servicer's form of organization;

                  (B)   a  description  of how  long  the  Servicer  has  been
            servicing  residential mortgage loans; a general discussion of the
            Servicer's  experience in servicing  assets of any type as well as
            a more detailed  discussion of the  Servicer's  experience in, and
            procedures for, the servicing  function it will perform under this
            Agreement   and   any   Reconstitution   Agreements;   information
            regarding  the size,  composition  and  growth  of the  Servicer's
            portfolio of  residential  mortgage loans of a type similar to the
            Mortgage Loans and  information on factors related to the Servicer
            that  may be  material,  in the  reasonable  determination  of the
            Purchaser or any  Depositor,  to any analysis of the  servicing of
            the  Mortgage  Loans or the related  asset-backed  securities,  as
            applicable, including, without limitation:

                        (1)   whether  any prior  securitizations  of mortgage
                  loans of a type similar to the Mortgage Loans  involving the
                  Servicer   have    defaulted   or   experienced   an   early
                  amortization or other  performance  triggering event because
                  of  servicing  during  the  three-year  period   immediately
                  preceding the related Securitization Transaction;
                        (2)   the extent of outsourcing the Servicer utilizes;
                        (3)   whether  there has been  previous  disclosure of
                  material   noncompliance   with  the  applicable   servicing
                  criteria   with   respect   to  other   securitizations   of
                  residential  mortgage  loans  involving  the  Servicer  as a
                  servicer during the three-year period immediately  preceding
                  the related Securitization Transaction;
                        (4)   whether  the  Servicer  has been  terminated  as
                  servicer  in a  residential  mortgage  loan  securitization,
                  either due to a  servicing  default or to  application  of a
                  servicing performance test or trigger; and
                        (5)   such other  information  as the Purchaser or any
                  Depositor  may   reasonably   request  for  the  purpose  of
                  compliance with Item 1108(b)(2) of Regulation AB;

                  (C)   a  description  of any  material  changes  during  the
            three-year    period    immediately    preceding    the    related
            Securitization   Transaction   to  the   Servicer's   policies  or
            procedures with respect to the servicing  function it will perform
            under  this  Agreement  and  any  Reconstitution   Agreements  for
            mortgage loans of a type similar to the Mortgage Loans;


                                      7
<PAGE>

                  (D)   information   regarding   the   Servicer's   financial
            condition,  to the extent  that  there is a material  risk that an
            adverse  financial  event or  circumstance  involving the Servicer
            could have a material  adverse  effect on the  performance  by the
            Company of its servicing  obligations  under this Agreement or any
            Reconstitution Agreement;

                  (E)   information  regarding  advances  made by the Servicer
            on  the  Mortgage  Loans  and  the  Servicer's  overall  servicing
            portfolio of residential  mortgage loans for the three-year period
            immediately  preceding  the  related  Securitization  Transaction,
            which may be limited to a statement  by an  authorized  officer of
            the  Servicer  to the  effect  that  the  Servicer  has  made  all
            advances  required  to  be  made  on  residential  mortgage  loans
            serviced by it during such  period,  or, if such  statement  would
            not be accurate,  information regarding the percentage and type of
            advances  not made as  required,  and the reasons for such failure
            to advance;

                  (F)   a  description   of  the   Servicer's   processes  and
            procedures  designed  to address  any  special  or unique  factors
            involved  in  servicing  loans of a similar  type as the  Mortgage
            Loans;

                  (G)   a  description   of  the   Servicer's   processes  for
            handling delinquencies,  losses, bankruptcies and recoveries, such
            as through liquidation of mortgaged properties,  sale of defaulted
            mortgage loans or workouts; and

                  (H)   information   as  to  how  the  Servicer   defines  or
            determines delinquencies and charge-offs,  including the effect of
            any  grace  period,  re-aging,  restructuring,   partial  payments
            considered  current or other practices with respect to delinquency
            and loss experience.

            (iv)  For the  purpose  of  satisfying  its  reporting  obligation
      under  the  Exchange  Act with  respect  to any  class  of  asset-backed
      securities,  the Company shall (or shall cause each  Subservicer and, if
      applicable,  any  Third-Party  Originator  to) (a) provide notice within
      two (2)  Business  Days to the  Purchaser,  any Master  Servicer and any
      Depositor  in  writing  of (1)  any  merger,  consolidation  or  sale of
      substantially all of the assets of the Company,  (2) the Company's entry
      into an  agreement  with a  Subservicer  to  perform  or  assist  in the
      performance of any of the Company's  obligations  under the Agreement or
      any  Reconstitution  Agreement  that  qualifies  as  an  "entry  into  a
      material definitive  agreement" under Item 1.01 of the form 8-K, and (b)
      provide  prompt  notice to the  Purchaser,  the Master  Servicer and the
      Depositor of (1) any Event of Default  under the terms of the  Agreement
      or any  Reconstitution  Agreement  to  the  extent  not  known  by  such
      Purchaser,   Master   Servicer  or  Depositor,   and  (2)  any  material
      litigation  or  governmental  proceedings  involving  the  Company,  any
      Subservicer or any Third Party Originator.


                                      8
<PAGE>

            (v)   To the  extent  the  Purchaser  or any  Depositor  does  not
      itself have an  affiliation  or  relationship  required to be  disclosed
      under Item 1119 of  Regulation  AB that  develops  following the closing
      date of a Securitization  Transaction,  the Company shall provide to the
      Purchaser  and any Depositor a description  of any such  affiliation  or
      relationship  involving the Company,  any Subservicer or any Third-Party
      Originator  no  later  than 15  calendar  days  prior  to the  date  the
      Depositor is required to file its Form 10-K disclosing such  affiliation
      or  relationship.  For purposes of the foregoing,  the Company (1) shall
      be  entitled   to  assume   that  the  parties  to  the   Securitization
      Transaction  with whom  affiliations  or relations must be disclosed are
      the same as on the closing date if it provides a written  request (which
      may be by e-mail) to the Depositor or Master  Servicer,  as  applicable,
      requesting  such  confirmation  and either obtains such  confirmation or
      receives no response  within three (3) Business  Days,  (2) shall not be
      obligated  to  disclose  any  affiliations  or  relationships  that  may
      develop after the closing date for the  Securitization  Transaction with
      any parties  not  identified  to the  Company  pursuant to clause (D) of
      paragraph  (i) of this Section  2(c),  and (3) shall be entitled to rely
      upon any written  identification  of parties  provided by the Depositor,
      the Purchaser or any master servicer.

            (v)   As a  condition  to the  succession  to the  Company  or any
      Subservicer  as  servicer or  subservicer  under this  Agreement  or any
      applicable  Reconstitution  Agreement  related thereto by any Person (i)
      into  which  the   Company  or  such   Subservicer   may  be  merged  or
      consolidated,  or (ii)  which may be  appointed  as a  successor  to the
      Company or any Subservicer,  the Company shall provide to the Purchaser,
      any Master Servicer, and any Depositor,  at least 15 calendar days prior
      to the effective  date of such  succession or  appointment,  (x) written
      notice  to the  Purchaser  and  any  Depositor  of  such  succession  or
      appointment and (y) in writing, all information  reasonably requested by
      the  Purchaser or any  Depositor  in order to comply with its  reporting
      obligation  under  Item  6.02 of Form 8-K with  respect  to any class of
      asset-backed securities.

            (vi)  Not  later  than ten  days  prior  to the  deadline  for the
      filing  of any  distribution  report  on  Form  10-D in  respect  of any
      Securitization  Transaction  that  includes  any of the  Mortgage  Loans
      serviced by the Company,  the Company  shall,  to the extent the Company
      has knowledge,  provide to the party  responsible for filing such report
      (including,   if  applicable,   the  Master   Servicer)  notice  of  the
      occurrence  of any of the following  events along with all  information,
      data,  and materials  related  thereto as may be required to be included
      in the related  distribution  report on Form 10-D (as  specified  in the
      provisions of Regulation AB referenced below):

                  (a)   any material  modifications,  extensions or waivers of
            Mortgage  Loan  terms,  fees,  penalties  or  payments  during the
            distribution  period or that  have  cumulatively  become  material
            over time (Item 1121(a)(11) of Regulation AB);

                  (b)   material breaches of Mortgage Loan  representations or
            warranties or transaction  covenants under the Existing Agreement,
            as amended herein (Item 1121(a)(12) of Regulation AB): and


                                      9
<PAGE>

                  (c)   information  regarding any Mortgage Loan changes (such
            as,  additions,  substitutions  or  repurchases)  and any material
            changes  in  origination,  underwriting,  or  other  criteria  for
            acquisition  or  selection  of pool assets  (Item  1121(a)(14)  of
            Regulation AB).

            (vii) In  addition  to  such   information  as  the  Company,   as
      servicer,  is obligated to provide  pursuant to other provisions of this
      Agreement,  if reasonably  requested by the Purchaser or any  Depositor,
      the Company  shall  provide such  information  which is available to the
      Company,  regarding the servicing of the Mortgage Loans as is reasonably
      required  to  facilitate   preparation   of   distribution   reports  in
      accordance with Item 1121 of Regulation AB.

      (d)   Servicer Compliance Statement.

      On or before March 5 of each  calendar  year,  commencing  in 2007,  the
Company  shall  deliver to the  Purchaser  and any  Depositor a  statement  of
compliance  addressed to the  Purchaser  and such  Depositor  and signed by an
authorized  officer of the  Company,  to the  effect  that (i) a review of the
Company's servicing activities during the immediately  preceding calendar year
(or applicable  portion  thereof) and of its  performance  under the servicing
provisions  of this  Agreement  and any  applicable  Reconstitution  Agreement
during such period has been made under such  officer's  supervision,  and (ii)
to the best of such  officers'  knowledge,  based on such review,  the Company
has fulfilled all of its servicing  obligations  under this  Agreement and any
applicable  Reconstitution  Agreement in all material respects throughout such
calendar year (or applicable  portion thereof) or, if there has been a failure
to  fulfill  any  such  obligation  in  any  material  respect,   specifically
identifying  each such  failure  known to such  officer and the nature and the
status thereof.

      (e)   Report on Assessment of Compliance and Attestation.

            (i)   On or before March 5 of each  calendar  year,  commencing in
      2007, the Company shall:

                  (A)   deliver to the  Purchaser  and any  Depositor a report
            regarding  the  Company's   assessment  of  compliance   with  the
            Servicing  Criteria  during  the  immediately  preceding  calendar
            year,  as required  under Rules  13a-18 and 15d-18 of the Exchange
            Act  and  Item  1122  of  Regulation  AB.  Such  report  shall  be
            addressed to the  Purchaser  and such  Depositor  and signed by an
            authorized  officer of the Company,  and shall address each of the
            applicable   Servicing   Criteria  specified  on  a  certification
            substantially in the form of Exhibit A hereto (wherein  "investor"
            shall  mean  the  Master  Servicer)  delivered  to  the  Purchaser
            concurrently with the execution of this Agreement;

                  (B)   deliver to the  Purchaser  and any  Depositor a report
            of a  registered  public  accounting  firm that  attests  to,  and
            reports on, the  assessment of compliance  made by the Company and
            delivered  pursuant to the preceding  paragraph.  Such attestation
            shall be in  accordance  with  Rules  1-02(a)(3)  and  2-02(g)  of
            Regulation S-X under the Securities Act and the Exchange Act;


                                      10
<PAGE>

                  (C)   if required by Regulation  AB, cause each  Subservicer
            and each  Subcontractor  determined  by the  Company  pursuant  to
            Section 2(f)(ii) to be "participating  in the servicing  function"
            within  the  meaning  of  Item  1122 of  Regulation  AB  (each,  a
            "Participating  Entity"),  to  deliver  to the  Purchaser  and any
            Depositor   an   assessment   of   compliance   and   accountants'
            attestation  as and when  provided  in  paragraphs  (A) and (B) of
            this Section 2(e)(i); and

                  (D)   deliver or, if required by  Regulation  AB, cause each
            Subservicer  and  Subcontractor  described  in Section  2(e)(i)(C)
            above to deliver to the  Purchaser,  Depositor or any other Person
            that  will  be  responsible  for  signing  the   certification  (a
            "Sarbanes   Certification")   required  by  Rules   13a-14(d)  and
            15d-14(d)  under the Exchange Act  (pursuant to Section 302 of the
            Sarbanes-Oxley  Act of 2002) on behalf of an  asset-backed  issuer
            with  respect to a  Securitization  Transaction  a  certification,
            signed by the  appropriate  officer  of the  Company,  in the form
            attached  hereto as Exhibit B;  provided  that such  certification
            delivered  by the  Company  may not be filed as an exhibit  to, or
            included in, any filing with the Commission.

      The Company  acknowledges  that the party  identified  in clause  (i)(D)
above may rely on the  certification  provided by the Company pursuant to such
clause  in  signing  a  Sarbanes   Certification  and  filing  such  with  the
Commission.  Neither the Purchaser nor any Depositor  will request  deliver of
a certification under clause (D) above unless the Purchaser,  Depositor or any
other Person is required  under the  Exchange Act to file an annual  report on
Form  10-K with  respect  to an  issuing  entity  whose  asset  pool  includes
Mortgage Loans.

            (ii)  Each  assessment  of  compliance  provided by a  Subservicer
      pursuant to Section  2(e)(i)(A)  shall  address  each of the  applicable
      Servicing  Criteria  specified on a certification  substantially  in the
      form of Exhibit A hereto  delivered to the Purchaser  concurrently  with
      the  execution  of this  Agreement  or,  in the  case  of a  Subservicer
      subsequently  appointed  as  such,  on or  prior  to the  date  of  such
      appointment.  An assessment of  compliance  provided by a  Participating
      Entity  pursuant to Section  2(e)(i)(C) need not address any elements of
      the  Servicing  Criteria  other  than  those  specified  by the  Company
      pursuant to Section 2(f).

            (iii) If reasonably  requested by the Purchaser or any  Depositor,
      the Company shall provide to the Purchaser,  any Master  Servicer or any
      Depositor,  evidence  of the  authorization  of the person  signing  any
      certification  or  statement  pursuant  to Section  2(d) or 2(e) of this
      Agreement.

      (f)   Use of Subservicers and Subcontractors.

      The Company  shall not hire or  otherwise  utilize  the  services of any
Subservicer  to fulfill  any of the  obligations  of the  Company as  servicer
under  this  Agreement  or any  related  Reconstitution  Agreement  unless the
Company  complies  with the  provisions  of paragraph  (i) of this  Subsection
(f).  The Company  shall not hire or  otherwise  utilize  the  services of any
Subcontractor,  and shall not  permit  any  Subservicer  to hire or  otherwise
utilize the services of any  Subcontractor,  to fulfill any of the obligations
of the Company as servicer under this Agreement or any related  Reconstitution
Agreement  unless the Company  complies with the  provisions of paragraph (ii)
of this Subsection (f).


                                      11
<PAGE>

            (i)   It  shall  not be  necessary  for the  Company  to seek  the
      consent of the  Purchaser  or any  Depositor to the  utilization  of any
      Subservicer.  If required by Regulation  AB, the Company shall cause any
      Subservicer  used by the Company (or by any Subservicer) for the benefit
      of the  Purchaser  and any  Depositor to comply with the  provisions  of
      this Section and with Sections 2(b), 2(c)(iii),  2(c)(v), 2(d), and 2(e)
      of  this  Agreement  , and to  provide  the  information  required  with
      respect to such  Subservicer  under Section  2(c)(iv) of this Agreement.
      The Company shall be  responsible  for obtaining  from each  Subservicer
      and   delivering  to  the  Purchaser  and  any  Depositor  any  servicer
      compliance  statement required to be delivered by such Subservicer under
      Section 2(d), any assessment of compliance and  attestation  required to
      be  delivered   by  such   Subservicer   under   Section  2(e)  and  any
      certification  required  to be  delivered  to the  Person  that  will be
      responsible  for signing the Sarbanes  Certification  under Section 2(e)
      as and when required to be delivered.

            (ii)  It  shall  not be  necessary  for the  Company  to seek  the
      consent of the  Purchaser  or any  Depositor to the  utilization  of any
      Subcontractor.   If  required  by  Regulation   AB,  the  Company  shall
      promptly  upon request  provide to the  Purchaser  and any Depositor (or
      any  designee  of  the   Depositor,   such  as  a  master   servicer  or
      administrator)  a written  description  of the role and function of each
      Subcontractor  utilized  by the Company or any  Subservicer,  specifying
      (A) the identity of each such Subcontractor,  (B) which (if any) of such
      Subcontractors  are  Participating  Entities,  and (C) which elements of
      the Servicing  Criteria will be addressed in  assessments  of compliance
      provided by each Participating  Entity identified pursuant to clause (B)
      of this paragraph.

      The  Company  shall  cause  any such  Participating  Entity  used by the
Company  (or by any  Subservicer)  for the  benefit of the  Purchaser  and any
Depositor to comply with the  provisions  of Section  2(e) of this  Agreement.
The Company shall be responsible for obtaining from each Participating  Entity
and   delivering  to  the  Purchaser  and  any  Depositor  any  assessment  of
compliance and attestation  and  certificate  required to be delivered by such
Participating  Entity under Section 2(e), in each case as and when required to
be delivered.

      (g)   Indemnification; Remedies.

            (i)   The Company  shall  indemnify  the Purchaser and each of the
      following parties  participating in a Securitization  Transaction:  each
      sponsor and issuing  entity;  each Person  responsible for the execution
      or filing of any report  required to be filed with the  Commission  with
      respect  to  such  Securitization  Transaction,  or for  execution  of a
      certification  pursuant to Rule  13a-14(d) or Rule  15d-14(d)  under the
      Exchange  Act with  respect  to such  Securitization  Transaction;  each
      Person who controls  any of such parties  (within the meaning of Section
      15 of the  Securities  Act and Section 20 of the Exchange  Act); and the
      respective present and former directors,  officers and employees of each
      of the  foregoing  and of the  Depositor,  and  shall  hold each of them
      harmless  from  and  against  any  losses,  damages,  penalties,  fines,
      forfeitures,  legal fees and expenses and related costs, judgments,  and
      any other costs,  fees and expenses that any of them may sustain arising
      out of or based upon:


                                      12
<PAGE>

                  (A)(1)      any  untrue   statement   of  a  material   fact
            contained or alleged to be  contained in any written  information,
            written  report,  certification  or other material  provided under
            this Amendment Reg AB by or on behalf of the Company,  or provided
            under this  Amendment  Reg AB by or on behalf of any  Subservicer,
            Participating  Entity or, if  applicable,  Third-Party  Originator
            (collectively,  the "Company Information"), or (2) the omission or
            alleged  omission to state in the Company  Information  a material
            fact  required  to  be  stated  in  the  Company   Information  or
            necessary in order to make the  statements  therein,  in the light
            of the  circumstances  under which they were made, not misleading;
            provided,  by way  of  clarification,  that  clause  (2)  of  this
            paragraph  shall be  construed  solely by reference to the Company
            Information  and  not to any  other  information  communicated  in
            connection  with a sale or purchase of securities,  without regard
            to whether  the  Company  Information  or any  portion  thereof is
            presented together with or separately from such other information;

                  (B)   any  failure  by the  Company,  any  Subservicer,  any
            Participating Entity or any Third-Party  Originator to deliver any
            information,  report, certification,  accountants' letter or other
            material  when  and as  required  under  this  Amendment  Reg  AB,
            including  any  failure by the  Company to  identify  pursuant  to
            Section 2(f)(ii) any Participating Entity; or

                  (C)   any  breach  by the  Company  of a  representation  or
            warranty  set forth in Section  2(b)(i) or in a writing  furnished
            pursuant  to Section  2(b)(ii)  and made as of a date prior to the
            closing  date of the related  Securitization  Transaction,  to the
            extent that such breach is not cured by such closing  date, or any
            breach  by  the  Company  of a  representation  or  warranty  in a
            writing furnished  pursuant to Section 2(b)(ii) to the extent made
            as of a date subsequent to such closing date.

      In the case of any failure of performance  described in clause (i)(B) of
this  Section,  the  Company  shall  promptly  reimburse  the  Purchaser,  any
Depositor,  as applicable,  and each Person  responsible  for the execution or
filing of any report  required to be filed with the Commission with respect to
such Securitization  Transaction, or for execution of a certification pursuant
to Rule  13a-14(d)  or Rule  15d-14(d)  under the Exchange Act with respect to
such  Securitization  Transaction,  for all costs reasonably  incurred by each
such  party  in  order  to  obtain  the  information,  report,  certification,
accountants'  letter  or other  material  not  delivered  as  required  by the
Company,  any  Subservicer,   any  Participating  Entity  or  any  Third-Party
Originator.


                                      13
<PAGE>

            (ii)  (A)   Any  failure  by the  Company,  any  Subservicer,  any
      Participating  Entity  or any  Third-Party  Originator  to  deliver  any
      information,   report,  certification,   accountants'  letter  or  other
      material  when  and as  required  under  this  Amendment  Reg AB , which
      continues  unremedied  for three  Business  Days  after  receipt  by the
      Company and the applicable  Subservicer,  Subcontractor,  or Third-Party
      Originator  of written  notice of such  failure  from the  Purchaser  or
      Depositor  shall,  except as provided  in clause (B) of this  paragraph,
      constitute  an Event of Default with  respect to the Company  under this
      Agreement  and  any  applicable   Reconstitution  Agreement,  and  shall
      entitle  the  Purchaser  or  Depositor,  as  applicable,   in  its  sole
      discretion  to terminate  the rights and  obligations  of the Company as
      servicer  under  this  Agreement  and/or any  applicable  Reconstitution
      Agreement related thereto without payment  (notwithstanding  anything in
      this  Agreement  or  any  applicable  Reconstitution  Agreement  related
      thereto to the contrary) of any  compensation to the Company (and if the
      Company  is  servicing  any of the  Mortgage  Loans in a  Securitization
      Transaction,  appoint a successor servicer reasonably  acceptable to any
      Master Servicer for such Securitization Transaction);  provided, however
      it is understood  that the Company  shall retain any rights  pursuant to
      which it may be  entitled  to  receive  reimbursement  for  unreimbursed
      Monthly  Advances and Servicing  Advances made by the Company under this
      Agreement    and/or    any    applicable    Reconstitution    Agreement.
      Notwithstanding  anything  to the  contrary  set  forth  herein,  to the
      extent  that any  provision  of this  Agreement  and/or  any  applicable
      Reconstitution  Agreement expressly provides for the survival of certain
      rights or obligations  following termination of the Company as servicer,
      such provision shall be given effect.

                  (B)   Any failure by the  Company,  any  Subservicer  or any
            Participating   Entity  to  deliver   any   information,   report,
            certification or accountants'  letter required under Regulation AB
            when and as required  under  Section 2(d) or 2(e),  including  any
            failure by the Company to identify a Participating  Entity,  which
            continues  unremedied  for ten  calendar  days  after  the date on
            which such  information,  report,  certification  or  accountants'
            letter was required to be delivered  shall  constitute an Event of
            Default with respect to the Company  under this  Agreement and any
            applicable   Reconstitution   Agreement,  and  shall  entitle  the
            Purchaser or Depositor,  as applicable,  in its sole discretion to
            terminate  the rights and  obligations  of the Company as servicer
            under  this  Agreement   and/or  any   applicable   Reconstitution
            Agreement  without  payment  (notwithstanding   anything  in  this
            Agreement  to the  contrary) of any  compensation  to the Company;
            provided,  however it is understood  that the Company shall retain
            any  rights  pursuant  to  which  it may be  entitled  to  receive
            reimbursement  for  unreimbursed  Monthly  Advances and  Servicing
            Advances  made by the  Company  under  this  Agreement  and/or any
            applicable Reconstitution  Agreement.  Notwithstanding anything to
            the contrary set forth  herein,  to the extent that any  provision
            of this Agreement and/or any applicable  Reconstitution  Agreement
            expressly   provides  for  the  survival  of  certain   rights  or
            obligations  following  termination  of the  Company as  servicer,
            such provision shall be given effect.


                                      14
<PAGE>

                  (C)   The Company  shall  promptly  reimburse  the Purchaser
            (or any  affected  designee  of the  Purchaser,  such as a  master
            servicer) and any  Depositor,  as  applicable,  for all reasonable
            expenses  incurred by the  Purchaser  (or such  designee)  or such
            Depositor  as  such  are   incurred,   in   connection   with  the
            termination  of the  Company  as  servicer  and  the  transfer  of
            servicing  of the  Mortgage  Loans to a  successor  servicer.  The
            provisions of this paragraph  shall not limit whatever  rights the
            Company,  the  Purchaser  or any  Depositor  may have under  other
            provisions of this Agreement and/or any applicable  Reconstitution
            Agreement or  otherwise,  whether in equity or at law,  such as an
            action for damages, specific performance or injunctive relief.

            (iii) The  Purchaser  agrees to  indemnify  and hold  harmless the
      Company, any Subservicer,  any Participating Entity, and, if applicable,
      any  Third-Party  Originator,  each  Person  who  controls  any of  such
      parties  (within  the  meaning of Section 15 of the  Securities  Act and
      Section 20 of the Exchange Act),  and the respective  present and former
      directors,  officers  and  employees of each of the  foregoing  from and
      against any losses, damages, penalties,  fines, forfeitures,  legal fees
      and expenses and related  costs,  judgments,  and any other costs,  fees
      and expenses  that any of them may sustain  arising out of or based upon
      any untrue  statement or alleged  untrue  statement of any material fact
      contained  in  any  filing  with  the  Commission   with  respect  to  a
      Securitization  Transaction or the omission or alleged omission to state
      in any filing  with the  Commission  with  respect  to a  Securitization
      Transaction  a material  fact  required to be stated or  necessary to be
      stated  in order to make the  statements  therein,  in the  light of the
      circumstances  under which they were made, not misleading,  in each case
      to the  extent,  but only to the  extent,  that such  untrue  statement,
      alleged untrue statement,  omission,  or alleged omission relates to any
      filing with the Commission with respect to a Securitization  Transaction
      other than the Company Information.

            (iv)  If the  indemnification  provided for herein is  unavailable
      or  insufficient  to hold  harmless  the  indemnified  party,  then  the
      indemnifying  party agrees that it shall  contribute  to the amount paid
      or payable by such indemnified party as a result of any claims,  losses,
      damages  or  liabilities  uncured  by  such  indemnified  party  in such
      proportion  as is  appropriate  to reflect  the  relative  fault of such
      indemnified  party  on the one hand  and the  indemnifying  party on the
      other.

            (v)   This  indemnification  shall survive the termination of this
      Amendment Reg AB or the  termination  of any party to this Amendment Reg
      AB.

3.    Notwithstanding  any  other  provision  of this  Amendment  Reg AB,  the
Company  shall seek the consent of the Purchaser  for the  utilization  of all
Subservicers and  Participating  Entities,  when required by and in accordance
with the terms of the Existing Agreement.

4.    The  Existing  Agreement  is  hereby  amended  by  adding  the  Exhibits
attached  hereto as Exhibit A and Exhibit B to the end thereto.  References in
this  Amendment  Reg  AB to  "this  Agreement"  or  words  of  similar  import
(including  indirect  references  to the  Agreement)  shall  be  deemed  to be
references  to the  Existing  Agreement as amended by this  Amendment  Reg AB.
Except as  expressly  amended  and  modified  by this  Amendment  Reg AB,  the
Agreement shall continue to be, and shall remain,  in full force and effect in
accordance with its terms.  In the event of a conflict  between this Amendment
Reg AB and any other document or agreement,  including without  limitation the
Existing Agreement, this Amendment Reg AB shall control.


                                      15
<PAGE>

5.    All notification pursuant to Section 2(c)(iv) should be sent to:

            EMC Mortgage Corporation
            2780 Lake Vista Drive
            Lewisville, TX  75067-3884
            Attention:  Conduit Seller Approval Dept.
            Facsimile:  (214) 626-3751
            Email:  sellerapproval@bear.com

            With a copy to:

            Bear, Stearns & Co. Inc.
            383 Madison Avenue, 3rd Floor
            New, York, NY  10179
            Attention:  Global Credit Administration
            Facsimile:  (212) 272-6564

            All notification pursuant to Section 2(c)(iv)(4) should be sent to:

            EMC Mortgage Corporation
            Two Mac Arthur Ridge
            909 Hidden Ridge Drive, Suite 200
            Irving, TX  75038
            Attention:  Associate General Counsel for Loan Administration
            Facsimile:  (972) 831-2555

            With copies to:

            Bear, Stearns & Co. Inc.
            383 Madison Avenue, 3rd Floor
            New, York, NY  10179
            Attention:  Global Credit Administration
            Facsimile:  (212) 272-6564

            EMC Mortgage Corporation
            2780 Lake Vista Drive
            Lewisville, TX  75067-3884
            Attention:  Conduit Seller Approval Dept.
            Facsimile:  (214) 626-3751
            Email:  sellerapproval@bear.com

      All  notifications  to any Master  Servicer,  to the extent such "Master
Servicer" is Wells Fargo, should be sent to:


                                      16
<PAGE>

            UPS/FedEx Delivery:

            9062 Old Annapolis Road
            Columbia, MD  21045
            Attention: Corporate Trust Group, [Insert Deal Name]

            USPS Delivery:

            P.O. Box 98
            Columbia, MD  21046
            Attention: Corporate Trust Group, [Insert Deal Name]

6.    This  Amendment  Reg AB shall be governed by and construed in accordance
with the laws of the State of New York  without  reference  to its conflict of
laws  provisions  (other than Section 5-1401 of the General  Obligation  Law),
and the  obligations,  rights and remedies of the parties  hereunder  shall be
determined accordance with such laws.

7.    This  Amendment Reg AB may be executed in one or more  counterparts  and
by different parties hereto on separate  counterparts,  each of which, when so
executed,  shall constitute one and the same agreement.  This Amendment Reg AB
will become  effective as of the date first  mentioned  above.  This Amendment
Reg AB  shall  bind and  inure to the  benefit  of and be  enforceable  by the
Company and the Purchaser and the respective  permitted successors and assigns
of the Company and the successors and assigns of the Purchaser.

                           [Signature Page Follows]


                                      17
<PAGE>

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

                                    EMC MORTGAGE CORPORATION

                                    Purchaser

                                    By:_________________________________
                                    Name:_______________________________
                                    Title:______________________________

                                    COUNTRYWIDE HOME LOANS, INC.

                                    Company

                                    By:_________________________________
                                    Name:_______________________________
                                    Title:______________________________


                                            Signature page to Amendment Reg AB
<PAGE>

                                  EXHIBIT A

        SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE

      The  assessment of compliance to be delivered by [the Company]  [Name of
Subservicer] shall address,  at a minimum,  the applicable criteria identified
below as "Applicable Servicing Criteria":

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
                                                                                           Applicable Servicing
                                   Servicing Criteria                                            Criteria
-----------------------------------------------------------------------------------------------------------------
     Reference                                     Criteria
-----------------------------------------------------------------------------------------------------------------
                                       General Servicing Considerations
-----------------------------------------------------------------------------------------------------------------
<S>                  <C>                                                                             <C>
1122(d)(1)(i)        Policies and procedures  are  instituted to monitor any  performance            X
                     or other  triggers  and  events of default  in  accordance  with the
                     transaction agreements.
-----------------------------------------------------------------------------------------------------------------
1122(d)(1)(ii)       If  any  material  servicing  activities  are  outsourced  to  third            X
                     parties,  policies  and  procedures  are  instituted  to monitor the
                     third  party's   performance  and  compliance  with  such  servicing
                     activities.
-----------------------------------------------------------------------------------------------------------------
1122(d)(1)(iii)      Any  requirements  in  the  transaction  agreements  to  maintain  a
                     back-up servicer for the mortgage loans are maintained.
-----------------------------------------------------------------------------------------------------------------
1122(d)(1)(iv)       A fidelity bond and errors and omissions  policy is in effect on the            X
                     party   participating  in  the  servicing  function  throughout  the
                     reporting  period  in  the  amount  of  coverage   required  by  and
                     otherwise  in   accordance   with  the  terms  of  the   transaction
                     agreements.
-----------------------------------------------------------------------------------------------------------------
                                      Cash Collection and Administration
-----------------------------------------------------------------------------------------------------------------
1122(d)(2)(i)        Payments  on  mortgage  loans  are  deposited  into the  appropriate            X
                     custodial  bank accounts and related bank clearing  accounts no more
                     than two business days  following  receipt,  or such other number of
                     days specified in the transaction agreements.
-----------------------------------------------------------------------------------------------------------------
1122(d)(2)(ii)       Disbursements  made via wire  transfer on behalf of an obligor or to            X
                     an investor are made only by authorized personnel.
-----------------------------------------------------------------------------------------------------------------
1122(d)(2)(iii)      Advances of funds or guarantees  regarding  collections,  cash flows            X
                     or  distributions,  and any  interest or other fees charged for such
                     advances,  are made,  reviewed  and  approved  as  specified  in the
                     transaction agreements.
-----------------------------------------------------------------------------------------------------------------
                     The  related  accounts  for the  transaction,  such as cash  reserve
                     accounts    or    accounts     established     as    a    form    of
                     overcollateralization,   are  separately   maintained   (e.g.,  with            X
                     respect  to  commingling  of cash) as set  forth in the  transaction
1122(d)(2)(iv)       agreements.
-----------------------------------------------------------------------------------------------------------------
1122(d)(2)(v)        Each  custodial   account  is  maintained  at  a  federally  insured            X
                     depository  institution as set forth in the transaction  agreements.
                     For  purposes  of  this  criterion,  "federally  insured  depository
                     institution" with respect to a foreign  financial  institution means
                     a foreign financial  institution that meets the requirements of Rule
                     13k-1(b)(1) of the Securities Exchange Act.
-----------------------------------------------------------------------------------------------------------------
1122(d)(2)(vi)       Unissued  checks  are  safeguarded  so  as to  prevent  unauthorized            X
                     access.
-----------------------------------------------------------------------------------------------------------------
</TABLE>


                                      A-1
<PAGE>

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
                                                                                           Applicable Servicing
                                   Servicing Criteria                                            Criteria
-----------------------------------------------------------------------------------------------------------------
     Reference                                     Criteria
-----------------------------------------------------------------------------------------------------------------
                                       General Servicing Considerations
-----------------------------------------------------------------------------------------------------------------
<S>                  <C>                                                                             <C>
1122(d)(2)(vii)      Reconciliations   are   prepared   on  a   monthly   basis  for  all            X
                     asset-backed  securities related bank accounts,  including custodial
                     accounts and related bank clearing accounts.  These  reconciliations
                     are (A)  mathematically  accurate;  (B) prepared  within 30 calendar
                     days after the bank  statement  cutoff date, or such other number of
                     days  specified  in the  transaction  agreements;  (C)  reviewed and
                     approved  by  someone   other  than  the  person  who  prepared  the
                     reconciliation;  and (D) contain explanations for reconciling items.
                     These  reconciling  items are  resolved  within 90 calendar  days of
                     their  original  identification,   or  such  other  number  of  days
                     specified in the transaction agreements.
-----------------------------------------------------------------------------------------------------------------
                                      Investor Remittances and Reporting
-----------------------------------------------------------------------------------------------------------------
1122(d)(3)(i)        Reports  to  investors,   including  those  to  be  filed  with  the            X
                     Commission,  are  maintained  in  accordance  with  the  transaction
                     agreements and  applicable  Commission  requirements.  Specifically,
                     such  reports (A) are prepared in  accordance  with  timeframes  and
                     other  terms set forth in the  transaction  agreements;  (B) provide
                     information  calculated  in accordance  with the terms  specified in
                     the  transaction  agreements;  (C) are filed with the  Commission as
                     required  by  its  rules  and   regulations;   and  (D)  agree  with
                     investors'  or  the  trustee's   records  as  to  the  total  unpaid
                     principal  balance  and number of  mortgage  loans  serviced  by the
                     Servicer.
-----------------------------------------------------------------------------------------------------------------
1122(d)(3)(ii)       Amounts due to investors  are  allocated  and remitted in accordance            X
                     with timeframes,  distribution priority and other terms set forth in
                     the transaction agreements.
-----------------------------------------------------------------------------------------------------------------
                     Disbursements  made to an investor  are posted  within two  business
                     days to the  Servicer's  investor  records,  or such other number of            X
1122(d)(3)(iii)      days specified in the transaction agreements.
-----------------------------------------------------------------------------------------------------------------
                     Amounts  remitted to investors  per the investor  reports agree with
                     cancelled  checks,  or other  form of  payment,  or  custodial  bank            X
1122(d)(3)(iv)       statements.
-----------------------------------------------------------------------------------------------------------------
                                          Pool Asset Administration
-----------------------------------------------------------------------------------------------------------------
1122(d)(4)(i)        Collateral  or security on mortgage  loans is maintained as required            X
                     by the transaction agreements or related mortgage loan documents.
-----------------------------------------------------------------------------------------------------------------
                     Mortgage loan and related  documents are  safeguarded as required by            X
1122(d)(4)(ii)       the transaction agreements
-----------------------------------------------------------------------------------------------------------------
1122(d)(4)(iii)      Any  additions,  removals  or  substitutions  to the asset  pool are            X
                     made,  reviewed and approved in  accordance  with any  conditions or
                     requirements in the transaction agreements.
-----------------------------------------------------------------------------------------------------------------
1122(d)(4)(iv)       Payments  on  mortgage  loans,   including  any  payoffs,   made  in            X
                     accordance  with the related  mortgage loan  documents are posted to
                     the Servicer's  obligor records maintained no more than two business
                     days after  receipt,  or such other number of days  specified in the
                     transaction  agreements,  and  allocated to  principal,  interest or
                     other items (e.g.,  escrow) in accordance with the related  mortgage
                     loan documents.
-----------------------------------------------------------------------------------------------------------------
1122(d)(4)(v)        The Servicer's  records  regarding the mortgage loans agree with the            X
                     Servicer's  records with respect to an  obligor's  unpaid  principal
                     balance.
-----------------------------------------------------------------------------------------------------------------
</TABLE>


                                      A-2
<PAGE>

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
                                                                                           Applicable Servicing
                                   Servicing Criteria                                            Criteria
-----------------------------------------------------------------------------------------------------------------
     Reference                                     Criteria
-----------------------------------------------------------------------------------------------------------------
                                       General Servicing Considerations
-----------------------------------------------------------------------------------------------------------------
<S>                  <C>                                                                             <C>
1122(d)(4)(vi)       Changes  with  respect  to  the  terms  or  status  of an  obligor's            X
                     mortgage  loans (e.g.,  loan  modifications  or re-agings) are made,
                     reviewed and approved by  authorized  personnel in  accordance  with
                     the transaction agreements and related pool asset documents.
-----------------------------------------------------------------------------------------------------------------
1122(d)(4)(vii)      Loss  mitigation  or  recovery  actions  (e.g.,  forbearance  plans,            X
                     modifications  and deeds in lieu of  foreclosure,  foreclosures  and
                     repossessions,   as  applicable)   are   initiated,   conducted  and
                     concluded in accordance  with the  timeframes or other  requirements
                     established by the transaction agreements.
-----------------------------------------------------------------------------------------------------------------
1122(d)(4)(viii)     Records  documenting  collection  efforts are maintained  during the            X
                     period  a  mortgage  loan  is  delinquent  in  accordance  with  the
                     transaction  agreements.  Such records are  maintained on at least a
                     monthly  basis,  or such other period  specified in the  transaction
                     agreements,  and  describe  the entity's  activities  in  monitoring
                     delinquent  mortgage  loans  including,  for  example,  phone calls,
                     letters and payment  rescheduling  plans in cases where  delinquency
                     is deemed temporary (e.g., illness or unemployment).
-----------------------------------------------------------------------------------------------------------------
1122(d)(4)(ix)       Adjustments  to interest rates or rates of return for mortgage loans            X
                     with variable rates are computed based on the related  mortgage loan
                     documents.
-----------------------------------------------------------------------------------------------------------------
1122(d)(4)(x)        Regarding  any funds  held in trust for an  obligor  (such as escrow            X
                     accounts):  (A) such  funds are  analyzed,  in  accordance  with the
                     obligor's  mortgage loan documents,  on at least an annual basis, or
                     such other  period  specified  in the  transaction  agreements;  (B)
                     interest  on such  funds  is  paid,  or  credited,  to  obligors  in
                     accordance with  applicable  mortgage loan documents and state laws;
                     and (C) such funds are  returned to the  obligor  within 30 calendar
                     days of full repayment of the related  mortgage loans, or such other
                     number of days specified in the transaction agreements.
-----------------------------------------------------------------------------------------------------------------
1122(d)(4)(xi)       Payments  made on behalf  of an  obligor  (such as tax or  insurance            X
                     payments)  are made on or before the related  penalty or  expiration
                     dates,  as  indicated on the  appropriate  bills or notices for such
                     payments,  provided  that  such  support  has been  received  by the
                     servicer at least 30  calendar  days prior to these  dates,  or such
                     other number of days specified in the transaction agreements.
-----------------------------------------------------------------------------------------------------------------
1122(d)(4)(xii)      Any late  payment  penalties  in  connection  with any payment to be            X
                     made on behalf of an obligor are paid from the servicer's  funds and
                     not charged to the  obligor,  unless the late payment was due to the
                     obligor's error or omission.
-----------------------------------------------------------------------------------------------------------------
                     Disbursements  made on behalf of an obligor  are  posted  within two
                     business days to the obligor's  records  maintained by the servicer,
                     or  such  other  number  of  days   specified  in  the   transaction            X
1122(d)(4)(xiii)     agreements.
-----------------------------------------------------------------------------------------------------------------
</TABLE>


                                      A-3
<PAGE>

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
<S>                  <C>                                                                             <C>
                     Delinquencies,    charge-offs   and   uncollectible   accounts   are
                     recognized   and  recorded  in  accordance   with  the   transaction
1122(d)(4)(xiv)      agreements.                                                                     X
-----------------------------------------------------------------------------------------------------------------
                     Any  external  enhancement  or  other  support,  identified  in Item
                     1114(a)(1)  through (3) or Item 1115 of Regulation AB, is maintained
1122(d)(4)(xv)       as set forth in the transaction agreements.
-----------------------------------------------------------------------------------------------------------------
</TABLE>

                                    [NAME OF COMPANY] [NAME OF SUBSERVICER]

                                    Date:__________________________________

                                    By:____________________________________
                                    Name:__________________________________
                                    Title:_________________________________


                                     A-4
<PAGE>

                                  EXHIBIT B

                         FORM OF ANNUAL CERTIFICATION

      Re: The [        ] agreement dated as of [    ], 200[ ] (the "Agreement"),
          among [IDENTIFY PARTIES]

      I,  ________________________________,   the  _______________________  of
Countrywide Home Loans,  Inc.,  certify to [the  Purchaser],  [the Depositor],
[Master Servicer],  [Securities Administrator] or [Trustee], and its officers,
with the  knowledge  and intent  that they will rely upon this  certification,
that:

            (1)   I have  reviewed  the servicer  compliance  statement of the
      Company  provided in  accordance  with Item 1123 of  Regulation  AB (the
      "Compliance  Statement"),  the  report on  assessment  of the  Company's
      compliance  with the  servicing  criteria  set forth in Item  1122(d) of
      Regulation AB (the  "Servicing  Criteria"),  provided in accordance with
      Rules  13a-18 and  15d-18  under  Securities  Exchange  Act of 1934,  as
      amended  (the  "Exchange  Act")  and  Item  1122 of  Regulation  AB (the
      "Servicing   Assessment"),   the  registered  public  accounting  firm's
      attestation  report  provided in accordance with Rules 13a-18 and 15d-18
      under  the  Exchange  Act and  Section  1122(b)  of  Regulation  AB (the
      "Attestation   Report"),   and   all   servicing   reports,    officer's
      certificates  and other  information  relating to the  servicing  of the
      Mortgage  Loans by the Company  during 200[ ] that were delivered by the
      Company to the [Depositor] [Master Servicer] [Securities  Administrator]
      or  [Trustee]  pursuant to the  Agreement  (collectively,  the  "Company
      Servicing Information");

            (2)   Based on my knowledge,  the Company  Servicing  Information,
      taken as a whole,  does not contain any untrue  statement  of a material
      fact or omit to state a material fact  necessary to make the  statements
      made,  in the light of the  circumstances  under  which such  statements
      were made, not misleading  with respect to the period of time covered by
      the Company Servicing Information;

            (3)   Based  on  my  knowledge,   all  of  the  Company  Servicing
      Information  required to be provided by the Company  under the Agreement
      has been  provided  to the  [Depositor]  [Master  Servicer]  [Securities
      Administrator] or [Trustee];

            (4)   I am responsible  for reviewing the activities  performed by
      the Company as servicer under the  Agreement,  and based on my knowledge
      and  the  compliance   review  conducted  in  preparing  the  Compliance
      Statement  and except as  disclosed  in the  Compliance  Statement,  the
      Servicing   Assessment  or  the  Attestation  Report,  the  Company  has
      fulfilled its obligations under the Agreement; and

                          [Intentionally Left Blank]


                                     B-1
<PAGE>

            (5)   The  Compliance  Statement  required to be  delivered by the
      Company  pursuant to this  Agreement,  and the Servicing  Assessment and
      Attestation  Report  required  to be provided by the Company and by each
      Subservicer and  Participating  Entity  pursuant to the Agreement,  have
      been  provided  to  the  [Depositor]  [Master  Servicer].  Any  material
      instances  of   noncompliance   described  in  such  reports  have  been
      disclosed to the [Depositor]  [Master  Servicer].  Any material instance
      of noncompliance  with the Servicing Criteria has been disclosed in such
      reports.

                                    Date:__________________________________

                                    By:____________________________________
                                    Name:__________________________________
                                    Title:_________________________________


                                     B-2







                            EMC MORTGAGE CORPORATION
                                   Purchaser,

                          AMERICAN HOME MORTGAGE CORP.
                                    Company,

                     AMERICAN HOME MORTGAGE SERVICING, INC.
                                    Servicer,

                  PURCHASE, WARRANTIES AND SERVICING AGREEMENT
                            Dated as of March 1, 2006

                   (Fixed and Adjustable Rate Mortgage Loans)
<PAGE>

                                    ARTICLE I
Section 1.01   Defined Terms ................................................. 2

                                   ARTICLE II

Section 2.01   Agreement to Purchase .........................................14
Section 2.02   Purchase Price ................................................15
Section 2.03   Servicing of Mortgage Loans ...................................15
Section 2.04   Record Title and Possession of Mortgage Files;
               Maintenance of Servicing Files ................................15
Section 2.05   Books and Records .............................................16
Section 2.06   Transfer of Mortgage Loans ....................................17
Section 2.07   Delivery of Mortgage Loan Documents ...........................17
Section 2.08   Quality Control Procedures ....................................19
Section 2.09   Near-term Principal Prepayments; Near Term Payment Defaults ...19
Section 2.10   Modification of Obligations ...................................19

                                   ARTICLE III

Section 3.01   Representations and Warranties of the Company .................21
Section 3.02   Representations and Warranties as to
               Individual Mortgage Loans .....................................24
Section 3.03   Repurchase ....................................................33
Section 3.04   Representations and Warranties of the Purchaser ...............35

                                   ARTICLE IV

Section 4.01   Company to Act as Servicer ....................................36
Section 4.02   Collection of Mortgage Loan Payments ..........................39
Section 4.03   Realization Upon Defaulted Mortgage Loans .....................40
Section 4.04   Establishment of Custodial Accounts;
               Deposits in Custodial Accounts ................................41
Section 4.05   Permitted Withdrawals from the
               Custodial Account .............................................42
Section 4.06   Establishment of Escrow Accounts;
               Deposits in Escrow Accounts ...................................43
Section 4.07   Permitted Withdrawals From Escrow Account .....................44
Section 4.08   Payment of Taxes, Insurance and Other
               Charges; Maintenance of Primary Mortgage
               Insurance Policies; Collections Thereunder ....................45
Section 4.09   Transfer of Accounts ..........................................46


                                        i
<PAGE>

Section 4.10   Maintenance of Hazard Insurance ...............................46
Section 4.11   Maintenance of Mortgage Impairment
               Insurance Policy ..............................................47
Section 4.12   Fidelity Bond, Errors and Omissions
               Insurance .....................................................48
Section 4.13   Title, Management and Disposition of REO Property .............48
Section 4.14   Notification of Maturity Date .................................50

                                    ARTICLE V

Section 5.01   Distributions .................................................50
Section 5.02   Statements to the Purchaser ...................................51
Section 5.03   Monthly Advances by the Company ...............................53
Section 5.04   Liquidation Reports ...........................................53

                                   ARTICLE VI

Section 6.01   Assumption Agreements .........................................53
Section 6.02   Satisfaction of Mortgages and Release
               of Mortgage Files .............................................54
Section 6.03   Servicing Compensation ........................................55
Section 6.04   Annual Statement as to Compliance .............................56
Section 6.05   Annual Independent Certified Public
               Accountants' Servicing Report .................................56
Section 6.06   Purchaser's Right to Examine Company Records ..................56

                                   ARTICLE VII

Section 7.01   Company Shall Provide Information as Reasonably Required ......57

                                  ARTICLE VIII

Section 8.01   Indemnification; Third Party Claims ...........................58
Section 8.02   Merger or Consolidation of the Company ........................58
Section 8.03   Limitation on Liability of the Company and Others .............59
Section 8.04   Company Not to Assign or Resign ...............................59
Section 8.05   No Transfer of Servicing ......................................59


                                       ii
<PAGE>

Section 9.01   Events of Default .............................................
Section 9.02   Waiver of Defaults ............................................

                                    ARTICLE X

Section 10.01  Termination ...................................................
Section 10.02  Termination without cause .....................................
Section 10.03  Survival ......................................................

                                   ARTICLE XI

Section 11.01  Successor to the Company ......................................63
Section 11.02  Amendment .....................................................64
Section 11.03  Recordation of Agreement ......................................65
Section 11.04  Governing Law .................................................65
Section 11.05  Notices .......................................................65
Section 11.06  Severability of Provisions ....................................66
Section 11.07  Exhibits ......................................................66
Section 11.08  General Interpretive Principles ...............................66
Section 11.09  Reproduction of Documents .....................................67
Section 11.10  Confidentiality of Information ................................67
Section 11.11  Recordation of Assignment of Mortgage .........................67
Section 11.12  Assignment by Purchaser .......................................68
Section 11.13  No Partnership ................................................68
Section 11.14  Execution: Successors and Assigns .............................68
Section 11.15  Entire Agreement ..............................................68
Section 11.16  No Solicitation ...............................................68
Section 11.17  Closing .......................................................69
Section 11.18  Cooperation of Company with Reconstitutioin....................
Section 11.19  Monthly Reporting with Respect to a Reconstitution.............



EXHIBITS
    A             Contents of Mortgage File
    B             Custodial Account Letter Agreement
    C             Escrow Account Letter Agreement
    D             Form of Assignment, Assumption and Recognition Agreement
    E             Form of Trial Balance
    F             [reserved]
    G             Request for Release of Documents and Receipt
    H             Company's Underwriting Guidelines
    I             Form of Term Sheet
    J             Reconstituted Mortgage Loan Reporting


                                       iii
<PAGE>

                                   ARTICLE IX

      This is a Purchase,  Warranties and Servicing Agreement, dated as of March
1, 2006 and is executed by and among EMC  MORTGAGE  CORPORATION,  as  Purchaser,
with offices located at Mac Arthur Ridge II, 909 Hidden Ridge Drive,  Suite 200,
Irving,  Texas 75038 (the  "Purchaser"),  American  Home  Mortgage  Corp.,  with
offices  located  at  538  Broadhollow  Road,  Melville,  New  York  11747  (the
"Company"),  and American Home Mortgage Servicing, Inc., with offices located at
4600 Regent Boulevard, Suite 200, Irving, Texas 75063 (the "Servicer").

                              W I T N E S S E T H :

      WHEREAS,  the Purchaser has heretofore agreed to purchase from the Company
and the Company has  heretofore  agreed to sell to the  Purchaser,  from time to
time, certain Mortgage Loans on a servicing retained basis;

      WHEREAS,  each of the  Mortgage  Loans is secured by a  mortgage,  deed of
trust  or other  security  instrument  creating  a first  lien on a  residential
dwelling  located in the  jurisdiction  indicated on the Mortgage Loan Schedule,
which is annexed to the related Term Sheet; and

      WHEREAS, the Purchaser, the Company and the Servicer wish to prescribe the
representations  and  warranties of the Company and the Servicer with respect to
themselves,  respectively,  and  the  Mortgage  Loans  and  the  management  and
servicing of the Mortgage Loans;

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

<PAGE>

                                  DEFINITIONS

      Section 1.01 Defined Terms.

      Whenever used in this Agreement,  the following words and phrases,  unless
the context  otherwise  requires,  shall have the following meaning specified in
this Article:

      Accepted  Servicing  Practices:  With respect to any Mortgage Loan,  those
mortgage  servicing  practices  (including  collection  procedures)  of  prudent
mortgage banking  institutions  which service mortgage loans of the same type as
such Mortgage Loan in the jurisdiction  where the related Mortgaged  Property is
located,  and which are in accordance  with Fannie Mae  servicing  practices and
procedures,  for MBS  pool  mortgages,  as  defined  in the  Fannie  Mae  Guides
including future updates.

      Adjustment  Date: As to each  adjustable  rate Mortgage  Loan, the date on
which the Mortgage Interest Rate is adjusted in accordance with the terms of the
related Mortgage Note.

      Agreement: This Purchase, Warranties and Servicing Agreement including all
exhibits hereto, amendments hereof and supplements hereto.

      Appraised Value: With respect to any Mortgaged Property, the value thereof
as  determined by an appraisal  made for the  originator of the Mortgage Loan at
the  time  of  origination  of the  Mortgage  Loan by an  appraiser  who met the
requirements of the Company and Fannie Mae.

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

      BIF: The Bank Insurance Fund, or any successor thereto.

      Business  Day:  Any day other than:  (i) a Saturday  or Sunday,  or (ii) a
legal  holiday  in the State of New York,  or (iii) a day on which  banks in the
State of New York are  authorized  or obligated by law or executive  order to be
closed.

      Closing Date:  With respect to any Mortgage  Loan,  the date stated on the
related Term Sheet.

      Code: The Internal Revenue Code of 1986, or any successor statute thereto.

      Commission or SEC: The Securities and Exchange Commission.

      Company:  American Home  Mortgage  Corp.,  its  successors in interest and
assigns, as permitted by this Agreement.


                                       2
<PAGE>

      Company's  Officer's  Certificate:  A certificate signed by the President,
the Executive Vice  President or Treasurer of Company  stating the date by which
Company  expects to receive any missing  documents  sent for recording  from the
applicable recording office.

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

      Confirmation:  The trade confirmation letter between the Purchaser and the
Company which relates to the Mortgage Loans.

      Consumer  Information:  Information  including,  but not  limited  to, all
personal information about Mortgagors that is supplied to the Purchaser by or on
behalf of the Company.

      Co-op  Lease:  With  respect to a Co-op Loan,  the lease with respect to a
dwelling unit  occupied by the Mortgagor and relating to the stock  allocated to
the related dwelling unit.

      Co-op Loan: A Mortgage Loan secured by the pledge of stock  allocated to a
dwelling unit in a residential  cooperative housing corporation and a collateral
assignment of the related Co-op Lease.

      Current Appraised Value: With respect to any Mortgaged Property, the value
thereof as determined by an appraisal  made for the Company (by an appraiser who
met  the  requirements  of the  Company  and  Fannie  Mae) at the  request  of a
Mortgagor for the purpose of canceling a Primary  Mortgage  Insurance  Policy in
accordance with federal,  state and local laws and regulations or otherwise made
at the request of the Company or Mortgagor.

      Current LTV: The ratio of the Stated Principal  Balance of a Mortgage Loan
to the Current Appraised Value of the Mortgaged Property.

      Custodial  Account:  Each separate demand account or accounts  created and
maintained    pursuant    to   Section    4.04   which    shall   be    entitled
"[______________________________],  in  trust  for  the  [Purchaser],  Owner  of
Adjustable Rate Mortgage Loans" and shall be established in an Eligible Account,
in the name of the Person that is the  "Purchaser"  with  respect to the related
Mortgage Loans.

      Custodian:  With respect to any Mortgage  Loan,  the entity  stated on the
related  Term Sheet,  and its  successors  and  assigns,  as  custodian  for the
Purchaser.

      Cut-off Date:  With respect to any Mortgage  Loan,  the date stated on the
related Term Sheet.

      Delinquency Recognition Policies: The generally accepted industry standard
that  defines the proper  means of  reporting  delinquency  status  (such as MBA
versus OTS reporting  methodology)  and the  processing  standard for addressing
residential  mortgage  loans of the same type as the  Mortgage  Loans at various
stages throughout default (such as Fannie Mae Guide or FHLMC Guide standards).


                                       3
<PAGE>

      Depositor:  The depositor,  as such term is defined in Regulation AB, with
respect to any Securitization Transaction.

      Determination  Date:  The 15th day (or if such 15th day is not a  Business
Day, the Business Day  immediately  preceding such 15th day) of the month of the
related Remittance Date.

      Due Date:  The day of the month on which the  Monthly  Payment is due on a
Mortgage  Loan,  exclusive  of any days of grace,  which is the first day of the
month.

      Due Period:  With respect to any Remittance Date, the period commencing on
the  second day of the month  preceding  the month of such  Remittance  Date and
ending on the first day of the month of the Remittance Date.

      Eligible Account: An account  established and maintained:  (i) within FDIC
insured accounts  created,  maintained and monitored by the Servicer so that all
funds deposited  therein are fully insured,  or (ii) as a trust account with the
corporate  trust  department  of  a  depository  institution  or  trust  company
organized  under  the laws of the  United  States of  America  or any one of the
states  thereof or the  District of Columbia  which is not  affiliated  with the
Company or the Servicer (or any  sub-servicer)  or (iii) with an entity which is
an  institution  whose  deposits  are  insured by the FDIC,  the  unsecured  and
uncollateralized  long-term  debt  obligations  of which  shall be rated "A2" or
higher by  Standard & Poor's and "A" or higher by Fitch,  Inc. or one of the two
highest  short-term ratings by any applicable Rating Agency, and which is either
(a) a federal savings  association duly organized,  validly existing and in good
standing  under the federal  banking laws, (b) an  institution  duly  organized,
validly  existing and in good standing under the applicable  banking laws of any
state, (c) a national banking association under the federal banking laws, or (d)
a principal  subsidiary of a bank holding  company,  or (iv) if ownership of the
Mortgage  Loans is  evidenced by  mortgaged-backed  securities,  the  equivalent
required  ratings of each  Rating  Agency,  and held such that the rights of the
Purchaser and the owner of the Mortgage Loans shall be fully  protected  against
the claims of any creditors of the Company or the Servicer (or any sub-servicer)
and of any creditors or depositors of the  institution  in which such account is
maintained  or (v)  in a  separate  non-trust  account  without  FDIC  or  other
insurance in an Eligible  Institution.  In the event that a Custodial Account is
established pursuant to clause (iii), (iv) or (v) of the preceding sentence, the
Servicer  shall  provide the Purchaser  with written  notice on the Business Day
following  the  date on  which  the  applicable  institution  fails  to meet the
applicable ratings requirements.

      Eligible  Institution:  An institution  having (i) the highest  short-term
debt rating,  and one of the two highest  long-term  debt ratings of each Rating
Agency; or (ii) with respect to any Custodial  Account,  an unsecured  long-term
debt rating of at least one of the two highest unsecured  long-term debt ratings
of each Rating Agency.

      Equity Take-Out  Refinanced  Mortgage Loan: A Refinanced Mortgage Loan the
proceeds  of which were in excess of the  outstanding  principal  balance of the
existing mortgage loan as defined in the Fannie Mae Guide(s).


                                       4
<PAGE>

      Escrow  Account:  Each  separate  trust  account or  accounts  created and
maintained pursuant to Section 4.06 which shall be entitled "_______________, in
trust for the [Purchaser],  Owner of Adjustable Rate Mortgage Loans, and various
Mortgagors" and shall be established in an Eligible Account,  in the name of the
Person that is the "Purchaser" with respect to the related Mortgage Loans.

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

      Event of Default: Any one of the conditions or circumstances enumerated in
Section 9.01.

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

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

      Fannie  Mae  Guide(s):  The Fannie  Mae  Selling  Guide and the Fannie Mae
Servicing Guide and all amendments or additions thereto.

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

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

      FHLMC  Guide:  The  FHLMC  Single  Family  Seller/Servicer  Guide  and all
amendments or additions thereto.

      Fidelity Bond: A fidelity bond to be maintained by the Company pursuant to
Section  4.12.

      FIRREA: The Financial  Institutions Reform,  Recovery, and Enforcement Act
of 1989.

      First  Remittance  Date: With respect to any Mortgage Loan, the Remittance
Date  occurring in the month  following  the month in which the related  Closing
Date occurs.

      GAAP: Generally accepted accounting principles, consistently applied.

      HUD: The United States  Department of Housing and Urban Development or any
successor thereto.

      Index:  With  respect to any  adjustable  rate  Mortgage  Loan,  the index
identified on the Mortgage  Loan Schedule and set forth in the related  Mortgage
Note for the purpose of calculating the interest rate thereon.

      Initial  Rate  Cap:  As to  each  adjustable  rate  Mortgage  Loan,  where
applicable,  the maximum  increase or decrease in the Mortgage  Interest Rate on
the first Adjustment Date.


                                       5
<PAGE>

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

      Lifetime Rate Cap: As to each  adjustable  rate Mortgage Loan, the maximum
Mortgage Interest Rate over the term of such Mortgage Loan.

      Liquidation Proceeds:  Cash received in connection with the liquidation of
a  defaulted  Mortgage  Loan,  whether  through the sale or  assignment  of such
Mortgage Loan, trustee's sale, foreclosure sale or otherwise.

      Loan-to-Value  Ratio or LTV: With respect to any Mortgage  Loan, the ratio
of the original  outstanding  principal  amount of the Mortgage Loan, to (i) the
Appraised  Value of the  Mortgaged  Property  as of the  Origination  Date  with
respect to a  Refinanced  Mortgage  Loan,  and (ii) the lesser of the  Appraised
Value of the Mortgaged Property as of the Origination Date or the purchase price
of the Mortgaged Property with respect to all other Mortgage Loans.

      Margin:  With respect to each  adjustable  rate Mortgage  Loan,  the fixed
percentage  amount set forth in each related Mortgage Note which is added to the
Index in order to determine the related Mortgage  Interest Rate, as set forth in
the Mortgage Loan Schedule.

      Master  Servicer:  With  respect to any  Securitization  Transaction,  the
"master servicer," if any, identified in the related transaction documents.

      Monthly Advance: The aggregate of the advances made by the Servicer on any
Remittance Date pursuant to Section 5.03.

      Monthly Payment:  The scheduled  monthly payment of principal and interest
on a Mortgage  Loan which is payable by a Mortgagor  under the related  Mortgage
Note.

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

      Mortgage File: The mortgage documents  pertaining to a particular Mortgage
Loan  which are  specified  in  Exhibit A hereto  and any  additional  documents
required to be added to the Mortgage File pursuant to this Agreement.

      Mortgage  Impairment  Insurance  Policy: A mortgage  impairment or blanket
hazard insurance policy as described in Section 4.11.

      Mortgage  Interest Rate: The annual rate at which interest  accrues on any
Mortgage  Loan,  which may be adjusted from time to time for an adjustable  rate
Mortgage Loan, in accordance with the provisions of the related Mortgage Note.

      Mortgage  Loan: An  individual  mortgage loan which is the subject of this
Agreement,  each Mortgage  Loan  originally  sold and subject to this  Agreement
being  identified  on the Mortgage  Loan  Schedule  attached to the related Term
Sheet,  which Mortgage Loan includes  without  limitation the Mortgage File, the
Monthly Payments,  Principal  Prepayments,  Liquidation  Proceeds,  Condemnation
Proceeds,  Insurance Proceeds,  REO Disposition Proceeds,  and all other rights,
benefits,  proceeds  and  obligations  arising from or in  connection  with such
Mortgage Loan, excluding replaced or repurchased mortgage loans.


                                       6
<PAGE>

      Mortgage Loan Documents: The documents listed in______________Exhibit A.

      Mortgage Loan  Remittance  Rate:  With respect to each Mortgage  Loan, the
annual rate of interest  remitted to the Purchaser,  which shall be equal to the
Mortgage Interest Rate minus the Servicing Fee Rate.

      Mortgage  Loan  Schedule:  The schedule of Mortgage  Loans  annexed to the
related Term Sheet,  such schedule setting forth the following  information with
respect to each Mortgage Loan in the related Mortgage Loan Package:

      (1) the Company's Mortgage Loan identifying number;

      (2) the Mortgagor's first and last name;

      (3) the street address of the Mortgaged Property including the city, state
and zip code;

      (4) a code indicating whether the Mortgaged Property is owner-occupied,  a
second home or an investor property;

      (5) the type of residential property constituting the Mortgaged Property;

      (6) the original months to maturity of the Mortgage Loan;

      (7) the remaining  months to maturity from the related Cut-off Date, based
on the original amortization schedule and, if different,  the maturity expressed
in the same manner but based on the actual amortization schedule;

      (8) the Sales Price,  if  applicable,  Appraised  Value and  Loan-to-Value
Ratio, at origination;

      (9) the Mortgage  Interest  Rate as of  origination  and as of the related
Cut-off Date;  with respect to each  adjustable  rate Mortgage Loan, the initial
Adjustment  Date, the next  Adjustment  Date  immediately  following the related
Cut-off Date, the Index, the Margin, the Initial Rate Cap, if any, Periodic Rate
Cap, if any, minimum Mortgage Interest Rate under the terms of the Mortgage Note
and the Lifetime Rate Cap;

      (10) the Origination Date of the Mortgage Loan;

      (11) the stated maturity date;


                                       7
<PAGE>

      (12) the amount of the Monthly Payment at origination;

      (13) the amount of the Monthly Payment as of the related Cut-off Date;

      (14) the original principal amount of the Mortgage Loan;

      (15) the scheduled Stated Principal Balance of the Mortgage Loan as of the
close of business on the related  Cut-off Date,  after  deduction of payments of
principal due on or before the related Cut-off Date whether or not collected;

      (16) a code  indicating the purpose of the Mortgage Loan (i.e.,  purchase,
rate and term refinance, equity take-out refinance);

      (17) a code indicating the  documentation  style (i.e. full,  alternative,
etc.);

      (18) the number of times during the twelve (12) month period preceding the
related  Closing Date that any Monthly Payment has been received after the month
of its scheduled due date;

      (19) the date on which the first payment is or was due;

      (20) a code indicating  whether or not the Mortgage Loan is the subject of
a  Primary  Mortgage  Insurance  Policy  and the name of the  related  insurance
carrier;

      (21) a code  indicating  whether  or not the  Mortgage  Loan is  currently
convertible and the conversion spread;

      (22) the last Due Date on which a Monthly Payment was actually  applied to
the unpaid principal balance of the Mortgage Loan.

      (23) product type (i.e. fixed, adjustable, 3/1, 5/1, etc.);

      (24) credit score and/or mortgage score, if applicable;

      (25) [reserved];

      (26) a code  indicating  whether or not the Mortgage Loan has a prepayment
penalty and if so, the amount and term thereof;

      (27) the Current  Appraised Value of the Mortgage Loan and Current LTV, if
applicable;

      (28) whether such  Mortgage  Loan is a "Home Loan",  "Covered  Home Loan",
"Manufactured  Housing" or "Home  Improvement Loan" as defined in the New Jersey
Home Ownership Security Act of 2002; and

      (29) whether the Mortgage Loan has a mandatory arbitration clause.


                                       8
<PAGE>

         With respect to the Mortgage Loans in the aggregate, the Mortgage
Loan Schedule attached to the related Term Sheet shall set forth the
following information, as of the related Cut-off Date:

      (1) the number of Mortgage Loans;

      (2) the current  aggregate  outstanding  principal balance of the Mortgage
Loans;

      (3) the weighted average Mortgage Interest Rate of the Mortgage Loans;

      (4) the weighted average maturity of theMortgage Loans; and

      (5) the weighted average months to next Adjustment Date.

      Mortgage  Note:  The  note or  other  evidence  of the  indebtedness  of a
Mortgagor secured by a Mortgage.

      Mortgaged  Property:  The underlying real property securing repayment of a
Mortgage  Note,  consisting of a single  parcel of real estate  considered to be
real estate  under the laws of the state in which such real  property is located
which may include condominium units and planned unit developments, improved by a
residential  dwelling;  except  that with  respect to real  property  located in
jurisdictions in which the use of leasehold  estates for residential  properties
is a widely-accepted  practice, a leasehold estate of the Mortgage,  the term of
which is equal to or longer than the term of the Mortgage.

      Mortgagor: The obligor on a Mortgage Note.

      Nonrecoverable  Advance:  Any  portion of a Monthly  Advance or  Servicing
Advance  previously made or proposed to be made by the Servicer pursuant to this
Agreement, that, in the good faith judgment of the Servicer, will not or, in the
case of a proposed advance,  would not, be ultimately recoverable by it from the
related  Mortgagor  or the related  Liquidation  Proceeds,  Insurance  Proceeds,
Condemnation Proceeds or otherwise with respect to the related Mortgage Loan.

      OCC: Office of the Comptroller of the Currency, or any successor thereto.

      Officers' Certificate: A certificate signed by the President, an Executive
Vice  President or a Vice  President or by the Treasurer or the Secretary or one
of the Assistant Treasurers or Assistant  Secretaries of the Person on behalf of
whom such  certificate  is being  delivered to the Purchaser as required by this
Agreement.

      Opinion of Counsel:  A written opinion of counsel,  who may be an employee
of the party on behalf of whom the opinion is being given, reasonably acceptable
to the Purchaser.

      Origination  Date:  The date on which a Mortgage  Loan funded,  which date
shall not, in  connection  with a Refinanced  Mortgage  Loan, be the date of the
funding  of the debt  being  refinanced,  but  rather  the  closing  of the debt
currently outstanding under the terms of the Mortgage Loan Documents.


                                       9
<PAGE>

      OTS: Office of Thrift Supervision, or any successor thereto.

      Periodic Rate Cap: As to each  adjustable  rate Mortgage Loan, the maximum
increase or decrease in the Mortgage  Interest Rate on any  Adjustment  Date, as
set forth in the related Mortgage Note and the related Mortgage Loan Schedule.

      Permitted  Investments:  Any one or more of the following  obligations  or
securities:

            (i) direct  obligations of, and obligations  fully guaranteed by the
            United  States of America or any  agency or  instrumentality  of the
            United States of America the  obligations of which are backed by the
            full faith and credit of the United States of America;

            (ii)  (a)  demand  or  time  deposits,  federal  funds  or  bankers'
            acceptances  issued by any  depository  institution or trust company
            incorporated  under the laws of the United  States of America or any
            state thereof and subject to supervision  and examination by federal
            and/or state banking authorities, provided that the commercial paper
            and/or the short-term deposit rating and/or the long-term  unsecured
            debt obligations or deposits of such depository institution or trust
            company at the time of such  investment  or  contractual  commitment
            providing  for such  investment  are rated in one of the two highest
            rating  categories by each Rating Agency and (b) any other demand or
            time deposit or  certificate of deposit that is fully insured by the
            FDIC;

            (iii)  repurchase  obligations with a term not to exceed thirty (30)
            days and with  respect to (a) any  security  described in clause (i)
            above  and  entered  into  with a  depository  institution  or trust
            company (acting as principal) described in clause (ii)(a) above;

            (iv) securities bearing interest or sold at a discount issued by any
            corporation  incorporated  under  the laws of the  United  States of
            America  or any  state  thereof  that  are  rated  in one of the two
            highest rating  categories by each Rating Agency at the time of such
            investment or contractual  commitment providing for such investment;
            provided,   however,   that  securities  issued  by  any  particular
            corporation  will not be  Permitted  Investments  to the extent that
            investments therein will cause the then outstanding principal amount
            of  securities  issued  by such  corporation  and held as  Permitted
            Investments  to exceed 10% of the  aggregate  outstanding  principal
            balances of all of the Mortgage Loans and Permitted Investments;

            (v) commercial paper (including both  non-interest-bearing  discount
            obligations and interest-bearing obligations payable on demand or on
            a  specified  date not more than one year after the date of issuance
            thereof) which are rated in one of the two highest rating categories
            by each Rating Agency at the time of such investment;


                                       10
<PAGE>

            (vi) any other  demand,  money market or time  deposit,  obligation,
            security or investment as may be acceptable to each Rating Agency as
            evidenced in writing by each Rating Agency; and

            (vii) any money market  funds the  collateral  of which  consists of
            obligations  fully guaranteed by the United States of America or any
            agency  or  instrumentality  of the  United  States of  America  the
            obligations  of which are backed by the full faith and credit of the
            United States of America (which may include  repurchase  obligations
            secured by collateral  described in clause (i)) and other securities
            and which  money  market  funds are rated in one of the two  highest
            rating categories by each Rating Agency.

provided,  however,  that  no  instrument  or  security  shall  be a  Permitted
Investment  if such  instrument  or security  evidences a right to receive only
interest  payments with respect to the  obligations  underlying such instrument
or if such  security  provides for payment of both  principal and interest with
a yield to  maturity  in excess of 120% of the yield to  maturity  at par or if
such investment or security is purchased at a price greater than par.

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

      Prepayment Charge: Any prepayment premium,  penalty or charge payable by a
Mortgagor  in  connection  with any  Principal  Prepayment  on a  Mortgage  Loan
pursuant to the terms of the related Mortgage Note.

      Prepayment  Interest  Shortfall:  With respect to any Remittance Date, for
each  Mortgage  Loan that was the subject of a Principal  Prepayment  during the
related Prepayment Period, an amount equal to the excess of one month's interest
at the applicable  Mortgage Loan Remittance Rate on the amount of such Principal
Prepayment over the amount of interest (adjusted to the Mortgage Loan Remittance
Rate)  actually paid by the related  Mortgagor  with respect to such  Prepayment
Period.

      Prepayment Period: With respect to any Remittance Date, the calendar month
preceding the month in which such Remittance Date occurs.

      Primary  Mortgage  Insurance  Policy:  Each  primary  policy  of  mortgage
insurance  represented  to be in effect  pursuant  to Section  3.02(hh),  or any
replacement policy therefor obtained by the Company pursuant to Section 4.08.

      Prime Rate:  The prime rate announced to be in effect from time to time as
published as the average rate in the Wall Street Journal (Northeast Edition).

      Principal  Prepayment:  Any payment or other  recovery of  principal  on a
Mortgage  Loan full or partial which is received in advance of its scheduled Due
Date,  including any Prepayment Charge and which is not accompanied by an amount
of  interest  representing  scheduled  interest  due on any date or dates in any
month or months subsequent to the month of prepayment.


                                       11
<PAGE>

      Purchase Price: As defined in Section 2.02.

      Purchaser:  EMC  Mortgage  Corporation,  its  successors  in interest  and
assigns.

      Qualified Appraiser: An appraiser,  duly appointed by the Company, who had
no interest, direct or indirect in the related Mortgaged Property or in any loan
made on the  security  thereof,  and whose  compensation  is not affected by the
approval  or  disapproval  of the  Mortgage  Loan,  and such  appraiser  and the
appraisal made by such appraiser  both satisfy the  requirements  of Title XI of
FIRREA and the regulations promulgated thereunder and the requirements of Fannie
Mae, all as in effect on the date the Mortgage Loan was originated.

      Qualified  Correspondent:  Any  Person  from which the  Company  purchased
Mortgage Loans,  provided that the following conditions are satisfied:  (i) such
Mortgage Loans were originated  pursuant to an agreement between the Company and
such Person that contemplated  that such Person would underwrite  mortgage loans
from time to time,  for sale to the Company,  in  accordance  with  underwriting
guidelines  designated by the Company  ("Designated  Guidelines")  or guidelines
that do not vary materially from such Designated Guidelines;  (ii) such Mortgage
Loans  were in fact  underwritten  as  described  in  clause  (i) above and were
acquired by the Company within 180 days after origination;  (iii) either (x) the
Designated  Guidelines  were, at the time such Mortgage  Loans were  originated,
used by the Company in  origination  of  mortgage  loans of the same type as the
Mortgage  Loans for the Company's own account or (y) the  Designated  Guidelines
were,  at the time such  Mortgage  Loans were  underwritten,  designated  by the
Company on a consistent  basis for use by lenders in originating  mortgage loans
to be purchased by the Company; and (iv) the Company employed,  at the time such
Mortgage  Loans were  acquired by the  Company,  pre-purchase  or  post-purchase
quality assurance procedures (which may involve, among other things, review of a
sample of mortgage loans  purchased  during a particular  time period or through
particular  channels)  designed to ensure that  Persons  from which it purchased
mortgage  loans properly  applied the  underwriting  criteria  designated by the
Company.

      Qualified  Insurer:  An insurance company duly qualified as such under the
laws of the states in which the related  Mortgaged  Property  is  located,  duly
authorized  and  licensed in such states to transact  the  applicable  insurance
business and to write the insurance  provided,  approved as an insurer by Fannie
Mae or FHLMC.

      Rating Agency:  Standard & Poor's,  Fitch, Inc. or, in the event that some
or all of the  ownership of the Mortgage  Loans is evidenced by  mortgage-backed
securities,  the nationally  recognized  rating  agencies  issuing  ratings with
respect to such securities, if any.

      Refinanced  Mortgage  Loan: A Mortgage  Loan which was made to a Mortgagor
who owned the Mortgaged  Property prior to the origination of such Mortgage Loan
and the  proceeds  of which were used in whole or part to  satisfy  an  existing
mortgage.


                                       12
<PAGE>

      Regulation AB: Subpart 229.1100 - Asset Backed Securities (Regulation AB),
17 C.F.R. ss.ss.229.1 100-229.1123, as amended from time to time, and subject to
such clarification and interpretation as have been provided by the Commission in
the adopting release (Asset-Backed Securities,  Securities Act Release No. 33-85
18, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the staff of the Commission,
or as may be provided by the Commission or its staff from time to time.

      REMIC:  A "real  estate  mortgage  investment  conduit,"  as such  term is
defined in Section 860D of the Code.

      REMIC Provisions: The provisions of the federal income tax law relating to
REMICs,  which appear at Sections 860A through 860G of the Code, and the related
provisions and regulations  promulgated  thereunder,  as the foregoing may be in
effect from time to time.

      Remittance  Date:  The 18th day of any  month,  beginning  with the  First
Remittance  Date, or if such 18th day is not a Business Day, the first  Business
Day immediately preceding such 18th day.

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

      REO Disposition  Proceeds:  Amounts received by the Servicer in connection
with a related REO Disposition.

      REO Property:  A Mortgaged  Property acquired by the Servicer on behalf of
the Purchaser as described in Section 4.13.

      Repurchase  Price: With respect to any Mortgage Loan, a price equal to (i)
the  product of the  greater of 100% or the  percentage  of par as stated in the
Confirmation multiplied by the Stated Principal Balance of such Mortgage Loan on
the repurchase date, plus (ii) interest on such outstanding principal balance at
the Mortgage Loan  Remittance Rate from the last date through which interest has
been  paid  and  distributed  to the  Purchaser  to the  end  of  the  month  of
repurchase,  plus, (iii) third party expenses  reasonably incurred in connection
with the transfer of the Mortgage Loan being repurchased;  less amounts received
or advanced in respect of such repurchased Mortgage Loan which are being held in
the Custodial Account for distribution in the month of repurchase.

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

      Sales Price:  With respect to any Mortgage Loan the proceeds of which were
used by the Mortgagor to acquire the related Mortgaged Property, the amount paid
by the related Mortgagor for such Mortgaged Property.

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

      Securitization Transaction: Any transaction involving either (1) a sale or
other transfer of some or all of the Mortgage Loans directly or indirectly to an
issuing entity in connection  with an issuance of publicly  offered or privately
placed,  rated or  unrated  mortgage-backed  securities  or (2) an  issuance  of
publicly offered or privately placed, rated or unrated securities,  the payments
on which are  determined  primarily by reference  to one or more  portfolios  of
residential  mortgage loans  consisting,  in whole or in part, of some or all of
the Mortgage Loans.


                                       13
<PAGE>

      Servicer:  American  Home  Mortgage  Servicing,  Inc.,  its  successors in
interest and assigns, as permitted by this Agreement.

      Servicing  Advances:  All  customary,  reasonable  and  necessary  "out of
pocket"  costs  and  expenses   (including   reasonable   attorneys'   fees  and
disbursements)  incurred in the  performance  by the  Servicer of its  servicing
obligations,  including,  but not limited to, the cost of (a) the  preservation,
restoration  and  protection of the  Mortgaged  Property,  (b) any  enforcement,
administrative or judicial proceedings, or any legal work or advice specifically
related  to  servicing  the  Mortgage  Loans,  including  but  not  limited  to,
foreclosures,    bankruptcies,    condemnations,   drug   seizures,   elections,
foreclosures  by  subordinate or superior  lienholders,  and other legal actions
incidental to the servicing of the Mortgage  Loans  (provided that such expenses
are  reasonable  and that the Servicer  specifies the Mortgage  Loan(s) to which
such  expenses  relate and, upon  Purchaser's  request,  provides  documentation
supporting such expense (which documentation would be acceptable to Fannie Mae),
and  provided  further  that any such  enforcement,  administrative  or judicial
proceeding  does not arise out of a breach of any  representation,  warranty  or
covenant of the  Company or the  Servicer  hereunder),  (c) the  management  and
liquidation of the Mortgaged  Property if the Mortgaged  Property is acquired in
full or partial  satisfaction  of the Mortgage,  (d) taxes,  assessments,  water
rates,  sewer  rates and other  charges  which are or may become a lien upon the
Mortgaged Property,  and Primary Mortgage Insurance Policy premiums and fire and
hazard insurance coverage, (e) any expenses reasonably sustained by the Servicer
with respect to the liquidation of the Mortgaged Property in accordance with the
terms of this Agreement and (f) compliance  with the  obligations  under Section
4.08.

      Servicing  Criteria:  As of any  date  of  determination,  the  "servicing
criteria" set forth in Item 1122(d) of Regulation AB, or any amendments thereto,
a summary of the  requirements of which as of the date hereof is attached hereto
as Exhibit M for  convenience  of reference  only. In the event of a conflict or
inconsistency  between  the terms of  Exhibit M and the text of Item  1122(d) of
Regulation AB, the text of Item 1122(d) of Regulation AB shall control (or those
Servicing Criteria  otherwise mutually agreed to by the Purchaser,  the Servicer
and any Person that will be responsible  for signing any Sarbanes  Certification
with  respect  to  a   Securitization   Transaction   in  response  to  evolving
interpretations of Regulation AB and incorporated into a revised Exhibit M).

      Servicing  Fee:  With  respect to each  Mortgage  Loan,  the amount of the
annual fee the Purchaser shall pay to the Servicer, which shall, for a period of
one full month,  be equal to one-twelfth of the product of (a) the Servicing Fee
Rate and (b) the outstanding  principal  balance of such Mortgage Loan. Such fee
shall be payable monthly, computed on the basis of the same principal amount and
period  respecting  which any  related  interest  payment on a Mortgage  Loan is
computed.  The  obligation  of the Purchaser to pay the Servicing Fee is limited
to, and the Servicing Fee is payable solely from,  the interest  portion of such
Monthly  Payment  collected  by the  Servicer,  or as otherwise  provided  under
Section 4.05 and in accordance with the Fannie Mae Guide(s).  Any fee payable to
the  Servicer  for  administrative  services  related  to any  REO  Property  as
described  in Section  4.13 shall be payable  from  Liquidation  Proceeds of the
related REO Property.


                                       14
<PAGE>

      Servicing Fee Rate: As set forth in the Term Sheet.

      Servicing  File:  With respect to each Mortgage Loan, the file retained by
the Servicer consisting of originals of all documents in the Mortgage File which
are not delivered to the  Purchaser  and copies of the Mortgage  Loan  Documents
listed in Exhibit A, the  originals of which are  delivered to the  Purchaser or
its designee pursuant to Section 2.04.

      Servicing Officer: Any officer of the Servicer involved in, or responsible
for, the  administration  and servicing of the Mortgage Loans whose name appears
on a list of servicing  officers furnished by the Servicer to the Purchaser upon
request, as such list may from time to time be amended.

      Stated  Principal  Balance:  As to each  Mortgage  Loan as of any  date of
determination,  (i) the  principal  balance of such Mortgage Loan at the Cut-off
Date after giving  effect to payments of  principal  due on or before such date,
whether or not received,  minus (ii) all amounts  previously  distributed to the
Purchaser with respect to the Mortgage Loan representing  payments or recoveries
of principal or advances in lieu thereof.

      Static Pool  Information:  Static pool  information as described in Item 1
105(a)(1)-(3) and 1105(c) of Regulation AB.

      Subcontractor:  Any  vendor,  subcontractor  or other  Person  that is not
responsible for the overall servicing (as "servicing" is commonly  understood by
participants  in the  mortgage-backed  securities  market) of Mortgage Loans but
performs one or more discrete functions identified in Item 1122(d) of Regulation
AB with  respect to  Mortgage  Loans under the  direction  or  authority  of the
Servicer or a Subservicer.

      Subservicer:  Any Person  that  services  Mortgage  Loans on behalf of the
Company or any  Subservicer  and is  responsible  for the  performance  (whether
directly or through  Subservicers or Subcontractors) of a substantial portion of
the material  servicing  functions required to be performed by the Company under
this  Agreement or any  Reconstitution  Agreement  that are  identified  in Item
1122(d) of Regulation  AB. Any  subservicer  shall meet the  qualifications  set
forth in Section 4.01.

      Subservicing   Agreement:   An  agreement   between  the  Servicer  and  a
Subservicer, if any, for the servicing of the Mortgage Loans.

      Term  Sheet:  A  supplemental  agreement  in the form  attached  hereto as
Exhibit I which shall be executed and delivered by the Company, the Servicer and
the  Purchaser  to provide for the sale and  servicing  pursuant to the terms of
this  Agreement  of the Mortgage  Loans  listed on Schedule I attached  thereto,
which supplemental agreement shall contain certain specific information relating
to such  sale of such  Mortgage  Loans  and  may  contain  additional  covenants
relating to such sale of such Mortgage Loans.

      Third-Party Originator: Each Person, other than a Qualified Correspondent,
that originated Mortgage Loans acquired by the Company.


                                       15
<PAGE>

                                  ARTICLE II

           PURCHASE OF MORTGAGE LOANS; SERVICING OF MORTGAGE LOANS;
                RECORD TITLE AND POSSESSION OF MORTGAGE FILES;
                    BOOKS AND RECORDS; CUSTODIAL AGREEMENT;
                     DEL IVERY OF MORTGAGE LOAN DOCUMENTS

      Section 2.01 Agreement to Purchase.

      The  Company  agrees  to sell and the  Purchaser  agrees to  purchase  the
Mortgage  Loans  having an  aggregate  Stated  Principal  Balance on the related
Cut-off  Date set forth in the  related  Term Sheet in an amount as set forth in
the  Confirmation,  or in such other amount as agreed by the  Purchaser  and the
Company as evidenced by the actual  aggregate  Stated  Principal  Balance of the
Mortgage  Loans  accepted by the  Purchaser on the related  Closing  Date,  with
servicing  retained  by the  Servicer.  The  Company  shall  deliver the related
Mortgage Loan Schedule attached to the related Term Sheet for the Mortgage Loans
to be  purchased on the related  Closing Date to the  Purchaser at least two (2)
Business  Days prior to the related  Closing Date.  The Mortgage  Loans shall be
sold  pursuant to this  Agreement,  and the related Term Sheet shall be executed
and delivered on the related Closing Date.

      Section 2.02 Purchase Price.

      The Purchase  Price for each Mortgage Loan shall be the  percentage of par
as stated in the  Confirmation  (subject to  adjustment  as  provided  therein),
multiplied by the Stated Principal  Balance,  as of the related Cut-off Date, of
the Mortgage Loan listed on the related  Mortgage Loan Schedule  attached to the
related Term Sheet,  after application of scheduled payments of principal due on
or before the related Cut-off Date whether or not collected.

      In addition to the Purchase Price as described  above, the Purchaser shall
pay to the Company, at closing, accrued interest on the Stated Principal Balance
of each  Mortgage  Loan as of the  related  Cut-off  Date at the  Mortgage  Loan
Remittance  Rate of each Mortgage Loan from the related Cut-off Date through the
day prior to the related Closing Date, inclusive.

      The  Purchase  Price plus accrued  interest as set forth in the  preceding
paragraph  shall  be paid on the  related  Closing  Date  by  wire  transfer  of
immediately available funds.

      Purchaser  shall be entitled to (1) all scheduled  principal due after the
related  Cut-off Date,  (2) all other  recoveries  of principal  collected on or
after the related Cut-off Date (provided,  however,  that all scheduled payments
of  principal  due on or before the related  Cut-off  Date and  collected by the
Company or the Servicer or any successor servicer after the related Cut-off Date
shall belong to the  Company),  and (3) all payments of interest on the Mortgage
Loans net of applicable  Servicing  Fees (minus that portion of any such payment
which is  allocable  to the  period  prior to the  related  Cut-off  Date).  The
outstanding  principal  balance of each Mortgage Loan as of the related  Cut-off
Date is determined  after  application of payments of principal due on or before
the related Cut-off Date whether or not collected, together with any unscheduled
principal  prepayments  collected prior to the related  Cut-off Date;  provided,
however,  that payments of scheduled  principal  and interest  prepaid for a Due
Date  beyond the  related  Cut-off  Date  shall not be applied to the  principal
balance as of the  related  Cut-off  Date.  Such  prepaid  amounts  shall be the
property of the Purchaser.  The Servicer shall deposit any such prepaid  amounts
into the Custodial Account,  which account is established for the benefit of the
Purchaser for subsequent remittance by the Servicer to the Purchaser.


                                       16
<PAGE>

      Section 2.03 Servicing of Mortgage Loans.

      Simultaneously  with the  execution  and delivery of each Term Sheet,  the
Servicer does hereby agree to directly  service the Mortgage Loans listed on the
related Mortgage Loan Schedule attached to the related Term Sheet subject to the
terms of this Agreement and the related Term Sheet.  The rights of the Purchaser
to receive  payments with respect to the related  Mortgage Loans shall be as set
forth in this Agreement.

      Section 2.04 Record Title and Possession of Mortgage Files; Maintenance of
Servicing Files.

      As of the related Closing Date, the Company sold,  transferred,  assigned,
set over  and  conveyed  to the  Purchaser,  without  recourse,  on a  servicing
retained basis, and the Company hereby  acknowledges that the Purchaser has, but
subject to the terms of this  Agreement  and the  related  Term  Sheet,  all the
right,  title and interest of the Company in and to the Mortgage Loans.  Company
will deliver the Mortgage Files to the Custodian designated by Purchaser,  on or
before the related  Closing  Date,  at the expense of the Company.  The Servicer
shall  maintain a Servicing  File  consisting  of a copy of the contents of each
Mortgage  File and the  originals  of the  documents in each  Mortgage  File not
delivered to the  Purchaser.  The  Servicing  File shall  contain all  documents
necessary to service the Mortgage  Loans.  The possession of each Servicing File
by the  Servicer  is at the  will of the  Purchaser,  for the  sole  purpose  of
servicing the related  Mortgage  Loan,  and such retention and possession by the
Servicer is in a custodial  capacity  only.  From the related  Closing Date, the
ownership of each Mortgage Loan, including the Mortgage Note, the Mortgage,  the
contents of the related  Mortgage  File and all rights,  benefits,  proceeds and
obligations arising therefrom or in connection therewith, has been vested in the
Purchaser.  All rights  arising out of the  Mortgage  Loans  including,  but not
limited to, all funds  received on or in connection  with the Mortgage Loans and
all records or documents with respect to the Mortgage Loans prepared by or which
come into the  possession of the Company and the Servicer  shall be received and
held by the Company and the Servicer, as applicable, in trust for the benefit of
the  Purchaser as the owner of the Mortgage  Loans.  Any portion of the Mortgage
Files  retained  by  the  Servicer  shall  be  appropriately  identified  in the
Servicer's  computer  system to clearly  reflect the  ownership  of the Mortgage
Loans by the  Purchaser.  The Servicer shall release its custody of the contents
of the  Mortgage  Files only in  accordance  with  written  instructions  of the
Purchaser,  except when such release is required as incidental to the Servicer's
servicing of the Mortgage  Loans or is in  connection  with a repurchase  of any
Mortgage Loan or Loans with respect  thereto  pursuant to this Agreement and the
related Term Sheet, such written instructions shall not be required.

      Section 2.05 Books and Records.


                                       17
<PAGE>


      The sale of each Mortgage Loan shall be reflected on the Company's balance
sheet and other  financial  statements  as a sale of assets by the Company.  The
Company shall be responsible for maintaining, and shall maintain, a complete set
of books  and  records  for the  Mortgage  Loans  that  shall  be  appropriately
identified in the Company's  computer system to clearly reflect the ownership of
the Mortgage Loan by the Purchaser. In particular, the Company shall maintain in
its possession,  available for inspection by the Purchaser,  or its designee and
shall deliver to the  Purchaser  upon demand,  evidence of  compliance  with all
federal, state and local laws, rules and regulations, and requirements of Fannie
Mae or FHLMC, as applicable,  including but not limited to  documentation  as to
the method used in determining the  applicability of the provisions of the Flood
Disaster  Protection  Act  of  1973,  as  amended,  to the  Mortgaged  Property,
documentation  evidencing  insurance  coverage  of any  condominium  project  as
required by Fannie Mae or FHLMC, and periodic  inspection reports as required by
Section  4.13.  To the extent  that  original  documents  are not  required  for
purposes of realization of Liquidation Proceeds or Insurance Proceeds, documents
maintained by the Company may be in the form of microfilm or microfiche.

      The Servicer  shall  maintain with respect to each Mortgage Loan and shall
make  available  for  inspection  by any  Purchaser  or its designee the related
Servicing  File during the time the  Purchaser  retains  ownership of a Mortgage
Loan and thereafter in accordance with applicable laws and regulations.

      In addition to the  foregoing,  Company and the Servicer  shall provide to
any supervisory agents or examiners that regulate  Purchaser,  including but not
limited to, the OTS, the FDIC and other similar entities,  access, during normal
business hours,  upon reasonable  advance notice to Company or the Servicer,  as
applicable,  and without cost to Company or the Servicer, as applicable, or such
supervisory  agents or examiners,  to any  documentation  regarding the Mortgage
Loans that may be required by any applicable regulator.

      Section 2.06. Transfer of Mortgage Loans.

      The  Servicer  shall keep at its  servicing  office  books and  records in
which, subject to such reasonable regulations as it may prescribe,  the Servicer
shall note  transfers of Mortgage  Loans.  No transfer of a Mortgage Loan may be
made  unless such  transfer  is in  compliance  with the terms  hereof.  For the
purposes  of this  Agreement,  the Company  and the  Servicer  shall be under no
obligation  to deal  with any  person  with  respect  to this  Agreement  or any
Mortgage  Loan unless a notice of the  transfer of such  Mortgage  Loan has been
delivered to the Company or the Servicer, as applicable, in accordance with this
Section 2.06 and the books and records of the  Servicer  show such person as the
owner of the Mortgage  Loan.  The  Purchaser  may,  subject to the terms of this
Agreement,  sell  and  transfer  one or more of the  Mortgage  Loans,  provided,
however,  that the  transferee  will not be deemed to be a  Purchaser  hereunder
binding upon the Company and the Servicer, as applicable, unless such transferee
shall  agree  in  writing  to be bound by the  terms  of this  Agreement  and an
original  counterpart  of  the  instrument  of  transfer  in an  Assignment  and
Assumption  of this  Agreement  substantially  in the form of  Exhibit  D hereto
executed  by the  transferee  shall have been  delivered  to the Company and the
Servicer,  as  applicable.  The Purchaser  also shall advise the Company and the
Servicer,  as  applicable,  of the  transfer.  Upon  receipt  of  notice  of the
transfer,  the Company and the Servicer  shall mark their  respective  books and
records to reflect the ownership of the Mortgage Loans of such assignee, and the
previous Purchaser shall be released from its obligations hereunder with respect
to the Mortgage Loans sold or transferred.


                                       18
<PAGE>

      Section 2.07 Delivery of Mortgage Loan Documents.

      The Company shall deliver and release to the Purchaser or its designee the
Mortgage Loan  Documents in accordance  with the terms of this Agreement and the
related Term Sheet.  The documents  enumerated as items (1), (2), (3), (4), (5),
(6),  (7),  (8),  (9) and (16) in  Exhibit A hereto  shall be  delivered  by the
Company to the  Purchaser or its designee no later than three (3) Business  Days
prior to the related  Closing Date  pursuant to a bailee letter  agreement.  All
other documents in Exhibit A hereto,  together with all other documents executed
in connection  with the Mortgage  Loan that Company may have in its  possession,
shall be  retained  by the  Company in trust for the  Purchaser.  If the Company
cannot  deliver the original  recorded  Mortgage Loan  Documents or the original
policy of title insurance,  including riders and  endorsements  thereto,  on the
related  Closing Date, the Company shall,  promptly upon receipt  thereof and in
any case not later than 120 days from the related  Closing  Date,  deliver  such
original documents,  including original recorded documents,  to the Purchaser or
its designee (unless the Company is delayed in making such delivery by reason of
the fact that such  documents  shall not have been  returned by the  appropriate
recording  office).  If delivery is not completed  within 120 days solely due to
delays in making such delivery by reason of the fact that such  documents  shall
not have been  returned  by the  appropriate  recording  office,  Company  shall
deliver such document to Purchaser, or its designee,  within such time period as
specified in a Company's Officer's Certificate. In the event that documents have
not been received by the date specified in the Company's Officer's  Certificate,
a subsequent  Company's  Officer's  Certificate  shall be delivered by such date
specified in the prior Company's Officer's  Certificate,  stating a revised date
for  receipt  of  documentation.  The  procedure  shall be  repeated  until  the
documents have been received and delivered.  If delivery is not completed within
180 days solely due to delays in making such delivery by reason of the fact that
such documents shall not have been returned by the appropriate recording office,
the Company shall continue to use its best efforts to effect delivery as soon as
possible  thereafter,  provided that if such  documents are not delivered by the
270th  day  from  the  date of the  related  Closing  Date,  the  Company  shall
repurchase the related Mortgage Loans at the Repurchase Price in accordance with
Section 3.03 hereof.

      The  Company  shall  pay all  initial  recording  fees,  if  any,  for the
assignments  of mortgage and any other fees in  connection  with the transfer of
all original documents to the Purchaser or its designee.  Company shall prepare,
in recordable form, all assignments of mortgage necessary to assign the Mortgage
Loans to Purchaser, or its designee.  Company shall be responsible for recording
the assignments of mortgage.

      Company  shall  provide an  original  or  duplicate  original of the title
insurance  policy to Purchaser or its  designee  within  ninety (90) days of the
receipt of the recorded  documents  (required  for issuance of such policy) from
the applicable recording office.

      Any review by the Purchaser,  or its designee, of the Mortgage Files shall
in no way alter or reduce the Company's obligations hereunder.


                                       19
<PAGE>

      If the  Purchaser or its designee  discovers  any defect with respect to a
Mortgage File, the Purchaser shall, or shall cause its designee to, give written
specification  of such defect to the Company which may be given in the exception
report  or the  certification  delivered  pursuant  to  this  Section  2.07,  or
otherwise in writing and the Company shall cure or repurchase such Mortgage Loan
in accordance with Section 3.03.

      The Company shall  forward to the  Purchaser,  or its  designee,  original
documents evidencing an assumption, modification,  consolidation or extension of
any Mortgage  Loan entered into in  accordance  with Section 4.01 or 6.01 within
one week of their execution;  provided,  however, that the Company shall provide
the Purchaser,  or its designee, with a certified true copy of any such document
submitted for  recordation  within one week of its execution,  and shall provide
the  original  of any  document  submitted  for  recordation  or a copy  of such
document  certified by the appropriate  public recording office to be a true and
complete  copy of the  original  within  sixty (60) days of its  submission  for
recordation.

      From time to time the Company may have a need for Mortgage Loan  Documents
to be released from Purchaser, or its designee.  Purchaser shall, or shall cause
its designee,  upon the written request of the Company, within ten (10) Business
Days, deliver to the Company, any requested  documentation  previously delivered
to Purchaser as part of the Mortgage File,  provided that such  documentation is
promptly  returned to  Purchaser,  or its  designee,  when the Company no longer
requires possession of the document,  and provided that during the time that any
such  documentation is held by the Company,  such possession is in trust for the
benefit of Purchaser.  Company shall indemnify Purchaser, and its designee, from
and against any and all losses, claims, damages,  penalties, fines, forfeitures,
costs and  expenses  (including  court  costs and  reasonable  attorney's  fees)
resulting  from  or  related  to  the  loss,  damage,  or  misplacement  of  any
documentation delivered to Company pursuant to this paragraph.

      Section 2.08 Quality Control Procedures.

      Each of the Company and the Servicer must have an internal quality control
program that,  among other things,  verifies,  on a regular basis, the existence
and accuracy of the legal documents, credit documents,  property appraisals, and
underwriting  decisions.  These  programs  must be  capable  of  evaluating  and
monitoring the overall  quality of the Company's and the  Servicer's  respective
loan production and servicing  activities.  These programs is to ensure that the
Mortgage Loans are originated and serviced in accordance  with prudent  mortgage
banking   practices  and  accounting   principles;   guard  against   dishonest,
fraudulent,  or  negligent  acts;  and guard  against  errors and  omissions  by
officers, employees, or other authorized persons.

      Section 2.09 Near-term Principal Prepayments; Near Term Payment Defaults

      In the event any  Principal  Prepayment is made by a Mortgagor on or prior
to three months after the related  Closing Date,  the Company shall remit to the
Purchaser  an  amount  equal  to the  excess,  if  any,  of the  Purchase  Price
Percentage over par multiplied by the amount of such Principal Prepayment.  Such
remittance  shall be made by the  Company to  Purchaser  no later than the third
Business Day following  receipt of such  Principal  Prepayment by the Company or
the Servicer.


                                       20
<PAGE>

      In the event  either of the first  three (3)  scheduled  Monthly  Payments
which are due the Purchaser  under any Mortgage  Loan after the related  Cut-off
Date are not made during the month in which such Monthly  Payments are due, then
not later than five (5)  Business  Days after notice to the Company by Purchaser
(and at Purchaser's  sole option),  the Company,  shall repurchase such Mortgage
Loan from the Purchaser pursuant to the repurchase  provisions contained in this
Section 3.03.

      Section 2.10 Modification of Obligations.

      Purchaser  may,  without  any notice to Company or the  Servicer,  extend,
compromise, renew, release, change, modify, adjust or alter, by operation of law
or  otherwise,  any of  the  obligations  of the  Mortgagors  or  other  persons
obligated  under a Mortgage  Loan without  releasing or otherwise  affecting the
obligations of Company and the Servicer under this Agreement, or with respect to
such Mortgage  Loan,  except to the extent  Purchaser's  extension,  compromise,
release, change,  modification,  adjustment, or alteration affects the Company's
or the  Servicer's  ability  to  collect  the  Mortgage  Loan or  realize on the
security  of the  Mortgage,  but then only to the  extent  such  action has such
effect.


                                       21
<PAGE>

                                  ARTICLE III

                       REPRESENTATIONS AND WARRANTIES OF
                         THE COMPANY AND THE SERVICER;
                     REPURCHASE; REVIEW OF MORTGAGE LOANS

      Section  3.01  Representations  and  Warranties  of the  Company  and  the
Servicer.

      Each of the  Company  and the  Servicer,  to the  extent set forth in this
Section 3.01, hereby  represent,  warrant and covenant to the Purchaser that, as
of the related Closing Date or as of such date specifically provided herein:

      (a)  Each  of  the  Company  and  the  Servicer  are a  corporation,  duly
organized,  validly  existing  and in good  standing  under  the  laws of  their
respective  jurisdictions  of  incorporation  or formation and have all licenses
necessary to carry out their respective business as now being conducted,  and is
licensed and qualified to transact business in and is in good standing under the
laws of each state in which any  Mortgaged  Property is located or is  otherwise
exempt under applicable law from such licensing or qualification or is otherwise
not required under applicable law to effect such licensing or qualification  and
no demand for such licensing or qualification  has been made upon the Company or
the  Servicer  by any such  state,  and in any event each of the Company and the
Servicer  are in  compliance  with  the laws of any  such  state  to the  extent
necessary to ensure the  enforceability  of each Mortgage Loan and the servicing
of the Mortgage Loans in accordance with the terms of this Agreement;

      (b) Each of the Company and the Servicer have the full corporate power and
authority and legal right to hold,  transfer and convey each  Mortgage  Loan, to
sell each Mortgage Loan and to execute,  deliver and perform,  and to enter into
and consummate all  transactions  contemplated by this Agreement and the related
Term  Sheet  and to  conduct  its  business  as  presently  conducted,  has duly
authorized  the  execution,  delivery and  performance of this Agreement and the
related Term Sheet and any agreements contemplated hereby, has duly executed and
delivered  this  Agreement  and the  related  Term  Sheet,  and  any  agreements
contemplated  hereby,  and this  Agreement  and the related  Term Sheet and each
Assignment to the Purchaser and any agreements contemplated hereby,  constitutes
a legal,  valid and  binding  obligation  of the Company  and the  Servicer,  as
applicable,  enforceable  against  it in  accordance  with  its  terms,  and all
requisite  corporate  action has been taken by the Company  and the  Servicer to
make this Agreement and the related Term Sheet and all  agreements  contemplated
hereby valid and binding upon the Company and the Servicer,  as  applicable,  in
accordance with their terms;

      (c) Neither the execution  and delivery of this  Agreement and the related
Term Sheet by the Company and the Servicer,  nor the  origination or purchase of
the  Mortgage  Loans  by the  Company,  the  sale of the  Mortgage  Loans to the
Purchaser,  the consummation of the transactions  contemplated  hereby,  nor the
fulfillment of or compliance with the terms and conditions of this Agreement and
the related  Term Sheet,  will  conflict  with any of the terms,  conditions  or
provisions  of the  Company's  and the  Servicer's,  as  applicable,  charter or
by-laws or materially conflict with or result in a material breach of any of the
terms,  conditions or provisions  of any legal  restriction  or any agreement or
instrument to which the Company or the Servicer,  as applicable,  is now a party
or by which it is bound,  or  constitute a default or result in an  acceleration
under any of the  foregoing,  or result in the  material  violation  of any law,
rule,  regulation,  order,  judgment  or  decree  to which  the  Company  or the
Servicer,  or their respective  properties are subject, or impair the ability of
the Purchaser to realize on the Mortgage Loans.


                                       22
<PAGE>

      (d) There is no litigation,  suit, proceeding or investigation pending or,
to  the  best  of  Company's  or  the  Servicer's,  as  applicable,   knowledge,
threatened,  or any order or decree outstanding,  with respect to the Company or
the  Servicer,  as  applicable,  which,  either  in any one  instance  or in the
aggregate, is reasonably likely to have a material adverse effect on the sale of
the Mortgage Loans, the execution,  delivery,  performance or  enforceability of
this Agreement and the related Term Sheet, or which is reasonably likely to have
a material  adverse  effect on the  financial  condition  of the Company and the
Servicer, as applicable.

      (e)  No  consent,  approval,  authorization  or  order  of  any  court  or
governmental  agency  or  body  is  required  for the  execution,  delivery  and
performance by the Company or the Servicer,  as applicable,  of or compliance by
the Company or the Servicer  with this  Agreement or the related Term Sheet,  or
the  sale of the  Mortgage  Loans  and  delivery  of the  Mortgage  Files to the
Purchaser or the consummation of the transactions contemplated by this Agreement
or the related Term Sheet,  except for consents,  approvals,  authorizations and
orders which have been obtained;

      (f) The consummation of the transactions contemplated by this Agreement or
the related Term Sheet is in the ordinary  course of business of the Company and
Company,  and the transfer,  assignment and conveyance of the Mortgage Notes and
the  Mortgages  by the Company  pursuant to this  Agreement  or the related Term
Sheet are not subject to bulk  transfer or any similar  statutory  provisions in
effect in any applicable jurisdiction;

      (g) The  origination  and servicing  practices  used by the Company or the
Servicer,  as applicable,  and any prior  originator or servicer with respect to
each  Mortgage  Note  and  Mortgage  have  been  legal  and in  accordance  with
applicable  laws and  regulations  and the Mortgage Loan  Documents,  and in all
material  respects proper and prudent in the mortgage  origination and servicing
business.  Each  Mortgage Loan has been serviced by the Servicer in all material
respects with Accepted Servicing Practices.  With respect to escrow deposits and
payments  that the Servicer,  on behalf of an investor,  is entitled to collect,
all such  payments  are in the  possession  of, or under  the  control  of,  the
Servicer,  and there exist no  deficiencies  in  connection  therewith for which
customary  arrangements  for  repayment  thereof have not been made.  All escrow
payments have been collected in full  compliance  with state and federal law and
the  provisions of the related  Mortgage  Note and Mortgage.  As to any Mortgage
Loan that is the  subject of an  escrow,  escrow of funds is not  prohibited  by
applicable law and has been established in an amount sufficient to pay for every
escrowed  item that remains  unpaid and has been assessed but is not yet due and
payable.  No escrow deposits or other charges or payments due under the Mortgage
Note have been capitalized under any Mortgage or the related Mortgage Note;


                                       23
<PAGE>

      (h) The Company used no selection  procedures that identified the Mortgage
Loans as being less desirable or valuable than other  comparable  mortgage loans
in the Company's portfolio at the related Cut-off Date;

      (i) The Company will treat the sale of the Mortgage Loans to the Purchaser
as a sale for reporting and accounting  purposes and, to the extent appropriate,
for federal income tax purposes;

      (j) The Company is an approved  seller of  residential  mortgage loans for
Fannie Mae, FHLMC and HUD. The Company is duly qualified,  licensed,  registered
and otherwise authorized under all applicable federal, state and local laws, and
regulations, if applicable,  meets the minimum capital requirements set forth by
the OCC, and is in good standing to sell mortgage  loans to Fannie Mae and FHLMC
and no event has  occurred  which  would  make  Company  unable  to comply  with
eligibility  requirements  or which would require  notification to either Fannie
Mae or FHLMC. The Servicer is an approved servicer of residential mortgage loans
for Fannie Mae,  FHLMC and HUD, with such  facilities,  procedures and personnel
necessary for the sound servicing of such mortgage  loans.  The Servicer is duly
qualified,  licensed,  registered and otherwise  authorized under all applicable
federal, state and local laws, and regulations, if applicable, meets the minimum
capital  requirements  set forth by the OCC, and is in good  standing to service
mortgage  loans for Fannie Mae and FHLMC and no event has  occurred  which would
make  Servicer  unable to comply with  eligibility  requirements  or which would
require notification to either Fannie Mae or FHLMC;

      (k) Neither the Company  nor the  Servicer  believe,  nor do they have any
cause or reason to believe, that they cannot perform each and every one of their
respective  covenants contained in this Agreement or the related Term Sheet. The
Company is solvent and the sale of the Mortgage Loans will not cause the Company
to become  insolvent.  The sale of the Mortgage Loans is not undertaken with the
intent to hinder, delay or defraud any of the Company's creditors;

      (l) No statement,  tape, diskette, form, report or other document prepared
by, or on behalf of,  Company  pursuant to this  Agreement  or the related  Term
Sheet or in connection with the transactions  contemplated  hereby,  contains or
will contain any  statement  that is  inaccurate  or  misleading in any material
respect;

      (m) The Servicer acknowledges and agrees that the Servicing Fee represents
reasonable  compensation  for  performing  such  services  and that  the  entire
Servicing Fee shall be treated by the Servicer, for accounting and tax purposes,
as  compensation  for the servicing  and  administration  of the Mortgage  Loans
pursuant  to this  Agreement.  In the  opinion  of  Company,  the  consideration
received by Company upon the sale of the Mortgage Loans to Purchaser  under this
Agreement  and the related Term Sheet  constitutes  fair  consideration  for the
Mortgage Loans under current market conditions.

      (n) Company has  delivered to the  Purchaser  financial  statements of its
parent,  for its last two complete fiscal years. All such financial  information
fairly presents the pertinent  results of operations and financial  position for
the period identified and has been prepared in accordance with GAAP consistently
applied  throughout  the  periods  involved,  except  as set  forth in the notes
thereto.  There has been no change in the servicing  policies and  procedures of
the Servicer, business, operations, financial condition, properties or assets of
the  Company  or  the  Servicer  since  the  date  of the  financial  statements
referenced hereunder that would have a material adverse effect on its ability to
perform its obligations under this Agreement;


                                       24
<PAGE>

      (o) The Company has not dealt with any broker, investment banker, agent or
other  person  that  may  be  entitled  to any  commission  or  compensation  in
connection with the sale of the Mortgage Loans;

      (p) As of the date of each Securitization  Transaction,  and except as has
been  otherwise  disclosed  to  the  Purchaser,  any  Master  Servicer  and  any
Depositor:  (1) no default or servicing related performance trigger has occurred
as to any other  securitization  due to any act or failure to act of the Company
or the  Servicer;  (2)  no  material  noncompliance  with  applicable  servicing
criteria as to any other securitization has occurred, been disclosed or reported
by the Company or the  Servicer;  (3) neither the Company nor the  Servicer  has
been  terminated  as servicer in a  residential  mortgage  loan  securitization,
either due to a servicing  default or to application of a servicing  performance
test or trigger;  (4) no material  changes to the  Company's  or the  Servicer's
servicing  policies  and  procedures  for  similar  loans  has  occurred  in the
preceding  three  years;  (5)  there  are no  aspects  of the  Company's  or the
Servicer's  financial condition that could have a material adverse impact on the
performance by the Company or the Servicer,  as applicable,  of its  obligations
hereunder;  (6)  there  are  no  legal  proceedings  pending,  or  known  to  be
contemplated  by governmental  authorities,  against the Company or the Servicer
that  could  be  material  to  investors  in  the  securities   issued  in  such
Securitization Transaction; and (7) there are no affiliations,  relationships or
transactions  relating  to the  Company  or the  Servicer  of a  type  that  are
described under Item 1119 of Regulation AB;

      (q) If so requested by the  Purchaser  or any  Depositor on any date,  the
Company and the Servicer  shall,  within five (5) Business Days  following  such
request,  confirm in writing the accuracy of the  representations and warranties
set forth in Section 3.01(p) of this Section or, if any such  representation and
warranty is not  accurate  as of the date of such  request,  provide  reasonably
adequate disclosure of the pertinent facts, in writing, to the requesting party;

      (r) Notwithstanding anything to the contrary in the Agreement, the Company
and the  Servicer  shall  (or  shall  cause  each  Subservicer  and  Third-Party
Originator to) (i) immediately notify the Purchaser, any Master Servicer and any
Depositor in writing of (A) any material litigation or governmental  proceedings
pending  against the Company,  the Servicer,  any Subservicer or any Third-Party
Originator,  (B) any  affiliations or relationships  that develop  following the
closing date of a Securitization  Transaction between the Company, the Servicer,
any Subservicer or any Third-Party  Originator and any of the parties  specified
in clause (7) of paragraph (p) of this Section (and any other parties identified
in  writing  by the  requesting  party)  with  respect  to  such  Securitization
Transaction,  (C) any Event of Default under the terms of this  Agreement or any
Reconstitution Agreement, (D) any merger, consolidation or sale of substantially
all of the assets of the Company or the Servicer,  and (E) the Servicer's  entry
into an agreement with a Subservicer to perform or assist in the  performance of
any of the Servicer's  obligations  under this  Agreement or any  Reconstitution
Agreement and (ii) provide to the  Purchaser and any Depositor a description  of
such proceedings, affiliations or relationships.


                                       25
<PAGE>

      All  notification  pursuant  to this  Section  3.0 1(r)  should be sent by
e-mail   transmission  to   regABnotifications@bear.com,   and  additionally  as
specified below.

      All  notification  pursuant  to this  Section  3.01(r),  other  than those
pursuant to Section 3.01 (r)(i)(A), should be sent to:

      EMC Mortgage Corporation
      2780 Lake Vista Drive
      Lewisville, TX 75067-3 884
      Attention: Conduit Seller Approval Dept.
      Facsimile: (214) 626-3751
      Email: sellerapproval@bear.com

      With a copy to:

      Bear, Stearns & Co. Inc.
      383 Madison Avenue, 3rd Floor
      New, York, NY 10179
      Attention: Global Credit Administration
      Facsimile: (212) 272-6564

      Notifications pursuant to Section 3.01(r)(i)(A) should be sent to:

      EMC Mortgage Corporation
      Two Mac Arthur Ridge
      909 Hidden Ridge Drive, Suite 200
      Irving, TX 75038
      Attention: Associate General
      Counsel for Loan Administration
      Facsimile: (972) 831-2555

      With copies to:

      Bear, Stearns & Co. Inc.
      383 Madison Avenue, 3rd Floor
      New, York, NY 10179
      Attention: Global Credit Administration
      Facsimile: (212) 272-6564

      EMC Mortgage Corporation
      2780 Lake Vista Drive
      Lewisville, TX 75067-3 884
      Attention: Conduit Seller Approval Dept.
      Facsimile: (214) 626-3751
      Email: sellerapproval@bear.com


                                       26
<PAGE>

      (s) As a condition to the succession to the Servicer or any Subservicer as
servicer or subservicer under this Agreement or any Reconstitution  Agreement by
any Person  (i) into which the  Servicer  or such  Subservicer  may be merged or
consolidated,  or (ii) which may be  appointed as a successor to the Servicer or
any  Subservicer,  the  Servicer  shall  provide  to the  Purchaser,  any Master
Servicer and any  Depositor,  at least 15 calendar  days prior to the  effective
date of such succession or appointment, (x) written notice to the Purchaser, any
Master  Servicer and any Depositor of such  succession or appointment and (y) in
writing and in form and substance reasonably satisfactory to the Purchaser,  any
Master Servicer and such Depositor,  all information reasonably requested by the
Purchaser,  any Master  Servicer  or any  Depositor  in order to comply with its
reporting  obligation  under Item 6.02 of Form 8-K with  respect to any class of
asset-backed securities.

      Section 3.02  Representations  and  Warranties as to  Individual  Mortgage
Loans.

      References in this Section to  percentages of Mortgage Loans refer in each
case to the percentage of the aggregate Stated Principal Balance of the Mortgage
Loans as of the related Cut-off Date, based on the outstanding  Stated Principal
Balances of the Mortgage Loans as of the related Cut-off Date, and giving effect
to  scheduled  Monthly  Payments  due on or prior to the related  Cut-off  Date,
whether or not  received.  References  to  percentages  of Mortgaged  Properties
refer, in each case, to the percentages of expected  aggregate  Stated Principal
Balances of the related Mortgage Loans (determined as described in the preceding
sentence).  Each of the  Company  and the  Servicer  (but  with  respect  to the
Servicer,  only to the extent expressly set forth in this Section 3.02),  hereby
represent  and warrant to the  Purchaser,  as to each  Mortgage  Loan, as of the
related Closing Date as follows:

      (a) The  information  set forth in the Mortgage Loan Schedule  attached to
the related Term Sheet is true, complete and correct in all material respects as
of the related Cut-Off Date;

      (b) The Mortgage creates a valid, subsisting and enforceable first lien or
a first priority  ownership interest in an estate in fee simple in real property
securing the related Mortgage Note subject to principles of equity,  bankruptcy,
insolvency  and  other  laws of  general  application  affecting  the  rights of
creditors;

      (c) All payments due prior to the related  Cut-off Date for such  Mortgage
Loan have been made as of the related  Closing  Date;  the Mortgage Loan has not
been dishonored;  there are no material defaults under the terms of the Mortgage
Loan;  the Company has not  advanced  its own funds,  or induced,  solicited  or
knowingly received any advance of funds from a party other than the owner of the
Mortgaged  Property  subject to the Mortgage,  directly or  indirectly,  for the
payment of any amount  required by the Mortgage Loan. As of the related  Closing
Date,  all of the Mortgage  Loans will have an actual  interest  paid to date of
their related Cut-off Date (or later) and will be due for the scheduled  monthly
payment next  succeeding the Cut-off Date (or later),  as evidenced by a posting
to Servicer's servicing collection system. No payment under any Mortgage Loan is
delinquent  as of the related  Closing Date nor has any  scheduled  payment been
delinquent  at any time during the twelve (12) months  prior to the month of the
related  Closing Date. For purposes of this  paragraph,  a Mortgage Loan will be
deemed delinquent if any payment due thereunder was not paid by the Mortgagor in
the month such payment was due;


                                       27
<PAGE>

      (d) There are no  defaults by Company in  complying  with the terms of the
Mortgage, and all taxes,  governmental  assessments,  insurance premiums, water,
sewer and municipal charges, leasehold payments or ground rents which previously
became due and owing have been paid, or escrow funds have been established in an
amount  sufficient to pay for every such escrowed item which remains  unpaid and
which has been assessed but is not yet due and payable;

      (e) The  terms  of the  Mortgage  Note  and the  Mortgage  have  not  been
impaired,  waived,  altered  or  modified  in any  respect,  except  by  written
instruments  which have been  recorded  to the extent  any such  recordation  is
required by law,  or,  necessary to protect the  interest of the  Purchaser.  No
instrument of waiver,  alteration or  modification  has been executed  except in
connection  with a modification  agreement and which  modification  agreement is
part of the  Mortgage  File and the terms of which are  reflected in the related
Mortgage Loan Schedule, and no Mortgagor has been released, in whole or in part,
from the terms  thereof  except in connection  with an assumption  agreement and
which  assumption  agreement is part of the Mortgage File and the terms of which
are reflected in the related  Mortgage Loan Schedule;  the substance of any such
waiver,  alteration  or  modification  has been  approved  by the  issuer of any
related Primary  Mortgage  Insurance Policy and title insurance  policy,  to the
extent required by the related policies;

      (f) The  Mortgage  Note and the  Mortgage  are not subject to any right of
rescission, set-off, counterclaim or defense, including, without limitation, the
defense of usury,  nor will the  operation  of any of the terms of the  Mortgage
Note or the  Mortgage,  or the  exercise  of any right  thereunder,  render  the
Mortgage Note or Mortgage unenforceable,  in whole or in part, or subject to any
right of rescission,  set-off, counterclaim or defense, including the defense of
usury,  and no such right of rescission,  set-off,  counterclaim  or defense has
been  asserted  with  respect  thereto;  and as of the related  Closing Date the
Mortgagor  was not a debtor in any state or  federal  bankruptcy  or  insolvency
proceeding;

      (g) All  buildings  or other  customarily  insured  improvements  upon the
Mortgaged  Property  are insured by a Qualified  Insurer,  against loss by fire,
hazards of extended  coverage and such other  hazards as are provided for in the
Fannie Mae or FHLMC Guide, as well as all additional  requirements  set forth in
Section 4.10 of this  Agreement.  All such standard  hazard policies are in full
force and effect and contain a standard  mortgagee clause naming the Company and
its successors in interest and assigns as loss payee and such clause is still in
effect and all  premiums  due thereon  have been paid.  If required by the Flood
Disaster  Protection Act of 1973, as amended,  the Mortgage Loan is covered by a
flood insurance policy meeting the requirements of the current guidelines of the
Federal  Insurance  Administration  which policy conforms to Fannie Mae or FHLMC
requirements,  as well as all additional  requirements set forth in Section 4.10
of this Agreement.  Such policy was issued by a Qualified Insurer.  The Mortgage
obligates  the  Mortgagor  thereunder  to  maintain  all such  insurance  at the
Mortgagor's  cost  and  expense,  and  on  the  Mortgagor's  failure  to do  so,
authorizes  the  holder  of the  Mortgage  to  maintain  such  insurance  at the
Mortgagor's  cost  and  expense  and to seek  reimbursement  therefor  from  the
Mortgagor.  None of the  Company,  the  Servicer  (nor any prior  originator  or
servicer of any of the Mortgage  Loans) nor any Mortgagor has engaged in any act
or omission  which has impaired or would impair the coverage of any such policy,
the benefits of the endorsement provided for herein, or the validity and binding
effect of either;


                                       28
<PAGE>

      (h) Each Mortgage Loan complies  with,  and the Company has complied with,
applicable  local,  state and federal laws,  regulations and other  requirements
including,  without  limitation,  usury, equal credit  opportunity,  real estate
settlement procedures, the Federal Truth-In-Lending Act, disclosure laws and all
predatory  and  abusive  lending  laws  and  consummation  of  the  transactions
contemplated  hereby,  including without limitation,  the receipt of interest by
the owner of such  Mortgage  Loan,  will not involve the  violation  of any such
laws,  rules or  regulations.  None of the Mortgage Loans are (a) Mortgage Loans
subject to 12 CFR Part 226.31, 12 CFR Part 226.32 or 226.34 of Regulation Z, the
regulation  implementing  TILA,  which  implements the Home Ownership and Equity
Protection  Act of  1994,  as  amended,  or (b)  except  as may be  provided  in
subparagraph  (c)  below,   classified   and/or  defined,   as  a  "high  cost",
"threshold", "predatory" "high risk home loan" or "covered" loan (or a similarly
classified  loan using  different  terminology  under a law imposing  additional
legal  liability  for mortgage  loans  having high  interest  rates,  points and
or/fees) under any other state, federal or local law including,  but not limited
to, the States of Georgia, New York, North Carolina,  Arkansas,  Kentucky or New
Mexico, (c) Mortgage Loans subject to the New Jersey Home Ownership Security Act
of 2002 (the "Act"),  unless such  Mortgage Loan is a (1) "Home Loan" as defined
in the Act that is a first lien  Mortgage  Loan,  which is not a "High Cost Home
Loan" as  defined  in the Act or (2)  "Covered  Home Loan" as defined in the Act
that is a first lien purchase money Mortgage Loan, which is not a High Cost Home
Loan under the Act, or (d) secured by Mortgaged  Property in the Commonwealth of
Massachusetts  with a loan  application  date on or after  November 7, 2004 that
refinances a mortgage loan that is less than sixty (60) months old,  unless such
Mortgage Loan (1) is on an investment property,  (ii) meets the requirements set
forth in the Code of Massachusetts  Regulation ("CMR"), 209 CMR 53.04(1 )(b), or
(iii) meets the requirements  set forth in the 209 CMR 53.04(1)(c).  In addition
to and  notwithstanding  anything to the contrary  herein,  no Mortgage Loan for
which the Mortgaged  Property is located in New Jersey is a Home Loan as defined
in the Act that was made,  arranged,  or assigned by a person  selling  either a
manufactured home or home improvements to the Mortgaged  Property or was made by
an  originator  to whom the  Mortgagor  was  referred by any such  seller.  Each
Mortgage  Loan is being (and has been)  serviced  in  accordance  with  Accepted
Servicing  Practices and applicable state and federal laws,  including,  without
limitation, the Federal Truth-In-Lending Act and other consumer protection laws,
real  estate  settlement   procedures,   usury,  equal  credit  opportunity  and
disclosure  laws.  Company shall maintain in its  possession,  available for the
Purchaser's  inspection,  as appropriate,  and shall deliver to the Purchaser or
its designee upon demand, evidence of compliance with all such requirements;

      (i) The  Mortgage has not been  satisfied,  canceled or  subordinated,  in
whole or in part, or rescinded, and the Mortgaged Property has not been released
from the lien of the Mortgage,  in whole or in part, nor has any instrument been
executed  that would effect any such  release,  cancellation,  subordination  or
rescission.  The Company has not waived the  performance by the Mortgagor of any
action,  if the  Mortgagor's  failure to perform  such  action  would  cause the
Mortgage Loan to be in default, nor has the Company waived any default resulting
from any action or inaction by the Mortgagor;

      (j) The Mortgage is a valid,  subsisting,  enforceable and perfected first
lien  on the  Mortgaged  Property,  including  all  buildings  on the  Mortgaged
Property and all installations and mechanical, electrical, plumbing, heating and
air  conditioning  systems  affixed  to  such  buildings,   and  all  additions,
alterations  and  replacements  made at any time with  respect to the  foregoing
securing the Mortgage Note's original principal balance subject to principles of
equity,  bankruptcy,  insolvency and other laws of general application affecting
the rights of  creditors.  The Mortgage and the Mortgage Note do not contain any
evidence of any security interest or other interest or right thereto.  Such lien
is free and clear of all adverse claims,  liens and encumbrances having priority
over  the  first  lien  of  the  Mortgage  subject  only  to  (1)  the  lien  of
non-delinquent  current  real  property  taxes and  assessments  not yet due and
payable,  (2) covenants,  conditions and restrictions,  rights of way, easements
and other  matters of the public  record as of the date of  recording  which are
acceptable to mortgage lending  institutions  generally and either (A) which are
referred to in the lender's title insurance  policy  delivered to the originator
or otherwise considered in the appraisal made for the originator of the Mortgage
Loan,  or (B) which do not  adversely  affect the  residential  use or Appraised
Value of the Mortgaged  Property as set forth in such  appraisal,  and (3) other
matters to which like properties are commonly  subject which do not individually
or in the  aggregate  materially  interfere  with the  benefits of the  security
intended  to be  provided  by the  Mortgage  or the  use,  enjoyment,  value  or
marketability of the related Mortgaged Property. Any security agreement, chattel
mortgage or equivalent  document related to and delivered in connection with the
Mortgage  Loan  establishes  and creates a valid,  subsisting,  enforceable  and
perfected  first  lien and first  priority  security  interest  on the  property
described  therein,  and the  Company  has the full right to sell and assign the
same to the Purchaser;


                                       29
<PAGE>

      (k) The  Mortgage  Note and the related  Mortgage are original and genuine
and each is the  legal,  valid and  binding  obligation  of the  maker  thereof,
enforceable  in all respects in accordance  with its terms subject to principles
of  equity,  bankruptcy,  insolvency  and  other  laws  of  general  application
affecting  the  rights of  creditors,  and the  Company  has  taken  all  action
necessary  to  transfer  such rights of  enforceability  to the  Purchaser.  All
parties to the Mortgage  Note and the  Mortgage had the legal  capacity to enter
into the  Mortgage  Loan and to execute and deliver  the  Mortgage  Note and the
Mortgage.  The Mortgage Loan Documents are on forms acceptable to Fannie Mae and
FHLMC.  The Mortgage Note and the Mortgage have been duly and properly  executed
by such parties. No fraud,  error,  omission,  misrepresentation,  negligence or
similar  occurrence  with respect to a Mortgage Loan has taken place on the part
of Company,  the  Servicer or the  Mortgagor,  or on the part of any other party
involved in the  origination  or servicing of the Mortgage Loan. The proceeds of
the Mortgage  Loan have been fully  disbursed  and there is no  requirement  for
future advances thereunder, and any and all requirements as to completion of any
on-site or off-site  improvements  and as to  disbursements  of any escrow funds
therefor  have been  complied  with.  All costs,  fees and expenses  incurred in
making or closing the Mortgage Loan and the recording of the Mortgage were paid,
and the Mortgagor is not entitled to any refund of any amounts paid or due under
the Mortgage Note or Mortgage;

      (l) The Company is the sole owner and holder of the Mortgage  Loan and the
indebtedness  evidenced by the Mortgage Note. Upon the sale of the Mortgage Loan
to the Purchaser,  the Company will retain the Mortgage File or any part thereof
with respect thereto not delivered to the Purchaser or the Purchaser's  designee
in trust only for the purpose of servicing and  supervising the servicing of the
Mortgage  Loan.  Immediately  prior  to  the  transfer  and  assignment  to  the
Purchaser, the Mortgage Loan, including the Mortgage Note and the Mortgage, were
not subject to an assignment, sale or pledge to any person other than Purchaser,
and the Company had good and marketable  title to and was the sole owner thereof
and had full right to transfer and sell the Mortgage Loan to the Purchaser  free
and clear of any encumbrance,  equity,  lien, pledge,  charge, claim or security
interest  and has the  full  right  and  authority  subject  to no  interest  or
participation  of, or agreement  with,  any other party,  to sell and assign the
Mortgage Loan pursuant to this  Agreement and following the sale of the Mortgage
Loan,  the  Purchaser  will  own  such  Mortgage  Loan  free  and  clear  of any
encumbrance,  equity,  participation  interest,  lien, pledge,  charge, claim or
security  interest.  The Company  intends to  relinquish  all rights to possess,
control and monitor the Mortgage Loan, except for the purposes of the Servicer's
servicing  the Mortgage Loan as set forth in this  Agreement.  After the related
Closing  Date,  the Company will not have any right to modify or alter the terms
of the sale of the Mortgage Loan and the Company will not have any obligation or
right to  repurchase  the Mortgage  Loan or substitute  another  Mortgage  Loan,
except as provided in this Agreement,  or as otherwise  agreed to by the Company
and the Purchaser;


                                       30
<PAGE>

      (m) Each  Mortgage  Loan is covered by an ALTA  lender's  title  insurance
policy or other generally  acceptable form of policy or insurance  acceptable to
Fannie Mae or FHLMC (including adjustable rate endorsements),  issued by a title
insurer  acceptable  to Fannie Mae or FHLMC and  qualified to do business in the
jurisdiction where the Mortgaged  Property is located,  insuring (subject to the
exceptions  contained in (j)(1), (2) and (3) above) the Company,  its successors
and  assigns,  as to the first  priority  lien of the  Mortgage in the  original
principal  amount of the  Mortgage  Loan and  against  any loss by reason of the
invalidity or  unenforceability of the lien resulting from the provisions of the
Mortgage  providing  for  adjustment  in the Mortgage  Interest Rate and Monthly
Payment. Where required by state law or regulation, the Mortgagor has been given
the opportunity to choose the carrier of the required  mortgage title insurance.
The Company,  its successors  and assigns,  is the sole insured of such lender's
title insurance  policy,  such title insurance  policy has been duly and validly
endorsed to the  Purchaser or the  assignment  to the Purchaser of the Company's
interest  therein does not require the consent of or notification to the insurer
and such lender's title insurance policy is in full force and effect and will be
in full force and effect upon the consummation of the transactions  contemplated
by this Agreement.  No claims have been made under such lender's title insurance
policy,  and no prior holder or servicer of the related Mortgage,  including the
Company, nor any Mortgagor,  has done, by act or omission,  anything which would
impair the coverage of such lender's title insurance policy;

      (n) Other than a Monthly  Payment due but not  delinquent  (as provided in
Section  3.02(c)  herein)  and in such case,  only if  specified  on the related
Mortgage  Loan  Schedule,  there is no default,  breach,  violation  or event of
acceleration  existing  under the Mortgage or the related  Mortgage  Note and no
event which,  with the passage of time or with notice and the  expiration of any
grace or cure period,  would  constitute a default,  breach,  violation or event
permitting  acceleration;  and neither the Company,  nor any prior mortgagee has
waived any default, breach, violation or event permitting acceleration;

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

      (p) All  improvements  subject to the Mortgage  which were  considered  in
determining the Appraised Value of the Mortgaged  Property lie wholly within the
boundaries and building  restriction lines of the Mortgaged Property (and wholly
within the project with respect to a condominium  unit) and no  improvements  on
adjoining properties encroach upon the Mortgaged Property except those which are
insured  against by the title  insurance  policy referred to in clause (m) above
and all  improvements  on the  property  comply with all  applicable  zoning and
subdivision laws and ordinances;


                                       31
<PAGE>

      (q) Each Mortgage Loan was  originated by or for the Company  pursuant to,
and conforms with, the Company's  underwriting  guidelines attached as Exhibit H
hereto.  The Mortgage Loan bears interest at an adjustable  rate (if applicable)
as set forth in the related  Mortgage Loan Schedule,  and Monthly Payments under
the  Mortgage  Note are due and  payable  on the  first day of each  month.  The
Mortgage  contains the usual and  enforceable  provisions  of the Company at the
time of origination for the  acceleration of the payment of the unpaid principal
amount of the Mortgage  Loan if the related  Mortgaged  Property is sold without
the prior consent of the mortgagee thereunder;

      (r) The  Mortgaged  Property is not  subject to any  material  damage.  At
origination  of the  Mortgage  Loan  there  was not,  since  origination  of the
Mortgage Loan there has not been, and there  currently is no proceeding  pending
for the total or partial condemnation of the Mortgaged Property. The Company has
not received notification that any such proceedings are scheduled to commence at
a future date;

      (s) The related  Mortgage  contains  customary and enforceable  provisions
such as to render the rights and remedies of the holder thereof adequate for the
realization  against  the  Mortgaged  Property of the  benefits of the  security
provided thereby,  including, (1) in the case of a Mortgage designated as a deed
of trust, by trustee's sale, and (2) otherwise by judicial foreclosure. There is
no homestead or other exemption available to the Mortgagor which would interfere
with the right to sell the Mortgaged  Property at a trustee's  sale or the right
to foreclose the Mortgage;

      (t) If the Mortgage constitutes a deed of trust, a trustee, authorized and
duly  qualified  if  required  under  applicable  law to act as  such,  has been
properly designated and currently so serves and is named in the Mortgage, and no
fees or  expenses,  except as may be required  by local law,  are or will become
payable  by the  Purchaser  to the  trustee  under the deed of trust,  except in
connection  with a  trustee's  sale  or  attempted  sale  after  default  by the
Mortgagor;

      (u) The  Mortgage  File  contains an  appraisal  of the related  Mortgaged
Property signed prior to the final approval of the mortgage loan  application by
a Qualified Appraiser,  approved by the Company, who had no interest,  direct or
indirect, in the Mortgaged Property or in any loan made on the security thereof,
and whose  compensation  is not affected by the approval or  disapproval  of the
Mortgage Loan, and the appraisal and appraiser both satisfy the  requirements of
Fannie Mae or FHLMC and Title XI of the Federal Institutions  Reform,  Recovery,
and Enforcement Act of 1989 and the regulations promulgated  thereunder,  all as
in effect on the date the Mortgage  Loan was  originated.  The appraisal is in a
form acceptable to Fannie Mae or FHLMC;

      (v) All parties which have had any legal interest in the Mortgage, whether
as  mortgagee,  assignee,  pledgee or otherwise,  are (or,  during the period in
which they held and disposed of such interest,  were) (A) in compliance with any
and all applicable  licensing  requirements of the laws of the state wherein the
Mortgaged  Property is  located,  and (B) (1)  organized  under the laws of such
state, or (2) qualified to do business in such state, or (3) federal savings and
loan  associations or national banks or a Federal Home Loan Bank or savings bank
having principal offices in such state, or (4) not doing business in such state;


                                       32
<PAGE>

      (w) The  related  Mortgage  Note is not and has not  been  secured  by any
collateral  except  the  lien of the  corresponding  Mortgage  and the  security
interest of any applicable  security  agreement or chattel mortgage  referred to
above and such collateral does not serve as security for any other obligation;

      (x) The  Mortgagor has received and has executed,  where  applicable,  all
disclosure  materials  required by applicable  law with respect to the making of
such mortgage loans;

      (y) The  Mortgage  Loan does not contain  balloon or  "graduated  payment"
features.  No Mortgage  Loan is subject to a buydown  agreement  or contains any
buydown provision;

      (z) The Mortgagor is not in bankruptcy and, the Mortgagor is not insolvent
and the Company has no knowledge of any circumstances or conditions with respect
to the Mortgage, the Mortgaged Property, the Mortgagor or the Mortgagor's credit
standing  that could  reasonably  be expected to cause  investors  who invest in
mortgage  loans of the type similar to the Mortgage Loans to regard the Mortgage
Loan  as  an  unacceptable  investment,   cause  the  Mortgage  Loan  to  become
delinquent,  or materially  adversely  affect the value or  marketability of the
Mortgage Loan;

      (aa) Each Mortgage Loan bears  interest based upon a thirty (30) day month
and a three  hundred  and sixty  (360)  day year.  The  Mortgage  Loans  have an
original  term to maturity of not more than  thirty  (30) years,  with  interest
payable in arrears on the first day of each month.  As to each  adjustable  rate
Mortgage Loan, on each applicable  Adjustment  Date, the Mortgage  Interest Rate
will be  adjusted  to equal the sum of the Index,  plus the  applicable  Margin;
provided,  that the Mortgage Interest Rate, on each applicable  Adjustment Date,
will not  increase  by more than the Initial  Rate Cap or Periodic  Rate Cap, as
applicable.  Over the term of each  adjustable  rate Mortgage Loan, the Mortgage
Interest  Rate will not exceed such Mortgage  Loan's  Lifetime Rate Cap. None of
the Mortgage Loans are "interest-only" Mortgage Loans or "negative amortization"
Mortgage  Loans.  With  respect to each  adjustable  rate  Mortgage  Loan,  each
Mortgage  Note requires a monthly  payment  which is  sufficient  (a) during the
period prior to the first  adjustment  to the Mortgage  Interest  Rate, to fully
amortize the original  principal  balance over the original  term thereof and to
pay interest at the related  Mortgage  Interest  Rate, and (b) during the period
following  each  Adjustment  Date, to fully amortize the  outstanding  principal
balance as of the first day of such period over the then  remaining term of such
Mortgage Note and to pay interest at the related  Mortgage  Interest Rate.  With
respect to each  adjustable  rate Mortgage Loan, the Mortgage Note provides that
when  the  Mortgage  Interest  Rate  changes  on an  Adjustment  Date,  the then
outstanding principal balance will be reamortized over the remaining life of the
Mortgage Loan. No Mortgage Loan contains terms or provisions  which would result
in  negative  amortization.  None of the  Mortgage  Loans  contain a  conversion
feature  which would cause the Mortgage Loan interest rate to convert to a fixed
interest rate. None of the Mortgage Loans are considered agricultural loans;

      (bb) (INTENTIONALLY LEFT BLANK)

      (cc) (INTENTIONALLY LEFT BLANK)


                                       33
<PAGE>

      (dd) (INTENTIONALLY LEFT BLANK)

      (ee) (INTENTIONALLY LEFT BLANK)

      (ff) (INTENTIONALLY LEFT BLANK)

      (gg) (INTENTIONALLY LEFT BLANK)

      (hh) In the event the Mortgage Loan had an LTV at origination greater than
80.00%,  the excess of the principal balance of the Mortgage Loan over 7 5.0% of
the  Appraised  Value of the  Mortgaged  Property  with  respect to a Refinanced
Mortgage Loan, or the lesser of the Appraised Value or the purchase price of the
Mortgaged Property with respect to a purchase money Mortgage Loan was insured as
to payment defaults by a Primary Mortgage Insurance Policy issued by a Qualified
Insurer.  No Mortgage  Loan has an LTV over 95%. All  provisions of such Primary
Mortgage  Insurance Policy have been and are being complied with, such policy is
in full force and effect,  and all premiums due  thereunder  have been paid.  No
Mortgage Loan  requires  payment of such  premiums,  in whole or in part, by the
Purchaser.  No action,  inaction,  or event has  occurred  and no state of facts
exists that has, or will result in the exclusion from,  denial of, or defense to
coverage.  Any Mortgage  Loan  subject to a Primary  Mortgage  Insurance  Policy
obligates the Mortgagor  thereunder to maintain the Primary  Mortgage  Insurance
Policy, subject to state and federal law, and to pay all premiums and charges in
connection  therewith.  No action  has been  taken or failed to be taken,  on or
prior to the Closing  Date which has  resulted  or will  result in an  exclusion
from,  denial of, or defense to coverage  under any Primary  Mortgage  Insurance
Policy (including, without limitation, any exclusions, denials or defenses which
would limit or reduce the  availability of the timely payment of the full amount
of the loss  otherwise  due  thereunder to the insured)  whether  arising out of
actions, representations, errors, omissions, negligence, or fraud of the Company
or the  Mortgagor,  or for any other  reason under such  coverage;  The mortgage
interest  rate for the Mortgage  Loan as set forth on the related  Mortgage Loan
Schedule is net of any such  insurance  premium.  None of the Mortgage Loans are
subject to "lender-paid" mortgage insurance;

      (ii) The Assignment is in recordable  form and is acceptable for recording
under the laws of the jurisdiction in which the Mortgaged Property is located;

      (jj) None of the Mortgage  Loans are secured by an interest in a leasehold
estate. The Mortgaged Property is located in the state identified in the related
Mortgage  Loan  Schedule and consists of a single parcel of real property with a
detached single family residence  erected thereon,  or a townhouse,  or a two-to
four-family  dwelling,  or  an  individual  condominium  unit  in a  condominium
project,  or an individual  unit in a planned unit  development  or a de minimis
planned unit development,  provided, however, that no residence or dwelling is a
single  parcel  of real  property  with a  manufactured  home not  affixed  to a
permanent  foundation,  or a mobile home. Any  condominium  unit or planned unit
development conforms with the Company's underwriting guidelines.  As of the date
of  origination,  no portion of any Mortgaged  Property was used for  commercial
purposes,  and since the Origination Date, no portion of any Mortgaged  Property
has been, or currently is, used for commercial purposes;


                                       34
<PAGE>

      (kk) Payments on the Mortgage Loan  commenced no more than sixty (60) days
after the funds  were  disbursed  in  connection  with the  Mortgage  Loan.  The
Mortgage Note is payable on the first day of each month in monthly  installments
of principal and interest,  which  installments are subject to change due to the
adjustments to the Mortgage Interest Rate on each Adjustment Date, with interest
calculated  and payable in arrears.  Each of the  Mortgage  Loans will  amortize
fully by the stated maturity date, over an original term of not more than thirty
years from commencement of amortization;

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

      (mm) There is no  pending  action or  proceeding  directly  involving  the
Mortgaged  Property in which  compliance  with any  environmental  law,  rule or
regulation is an issue;  there is no violation of any environmental law, rule or
regulation  with  respect to the  Mortgaged  Property;  and the  Company has not
received any notice of any  environmental  hazard on the Mortgaged  Property and
nothing further  remains to be done to satisfy in full all  requirements of each
such law, rule or regulation constituting a prerequisite to use and enjoyment of
said property;

      (nn) The  Mortgagor  has not notified the Company,  and the Company has no
knowledge  of any  relief  requested  or  allowed  to the  Mortgagor  under  the
Soldiers' and Sailors' Civil Relief Act of 1940;

      (oo) No Mortgage Loan is a construction or rehabilitation Mortgage Loan or
was made to facilitate the trade-in or exchange of a Mortgaged Property;

      (pp) The Mortgagor for each Mortgage Loan is a natural person;

      (qq) None of the Mortgage Loans are Co-op Loans;

      (rr) With  respect to each  Mortgage  Loan that has a  prepayment  penalty
feature, each such prepayment penalty is enforceable and will be enforced by the
Company and each prepayment penalty is permitted pursuant to federal,  state and
local law.  No  Mortgage  Loan will  impose a  prepayment  penalty for a term in
excess of five years from the date such Mortgage Loan was originated.  Except as
otherwise set forth on the Mortgage Loan Schedule, with respect to each Mortgage
Loan that contains a prepayment  penalty,  such  prepayment  penalty is at least
equal to the lesser of (A) the maximum amount permitted under applicable law and
(B) six months  interest at the  related  Mortgage  Interest  Rate on the amount
prepaid in excess of 20% of the  original  principal  balance  of such  Mortgage
Loan;

      (ss) With respect to each  Mortgage  Loan either (i) the fair market value
of the Mortgaged  Property  securing such Mortgage Loan was at least equal to 80
percent of the original principal balance of such Mortgage Loan at the time such
Mortgage  Loan was  originated  or (ii) (a) the Mortgage Loan is only secured by
the Mortgage Property and (b) substantially all of the proceeds of such Mortgage
Loan were used to acquire or to improve or protect the  Mortgage  Property.  For
the  purposes  of  the  preceding  sentence,  if  the  Mortgage  Loan  has  been
significantly  modified  other  than as a result  of a default  or a  reasonable
foreseeable  default,  the modified  Mortgage Loan will be viewed as having been
originated on the date of the modification;


                                       35
<PAGE>

      (tt) The  Mortgage  Loan was  originated  by a  mortgagee  approved by the
Secretary of Housing and Urban  Development  pursuant to sections 203 and 211 of
the National  Housing  Act, a savings and loan  association,  a savings  bank, a
commercial bank, credit union, insurance company or similar institution which is
supervised and examined by a federal or state authority;

      (uu) None of the Mortgage  Loans are simple  interest  Mortgage  Loans and
none of the Mortgaged Properties are timeshares;

      (vv)  All of the  terms  of  the  Mortgage  pertaining  to  interest  rate
adjustments,  payment  adjustments and adjustments of the outstanding  principal
balance are enforceable, all such adjustments have been properly made, including
the mailing of required notices, and such adjustments do not and will not affect
the priority of the Mortgage lien.  With respect to each Mortgage Loan which has
passed its  initial  Adjustment  Date,  Company  has  performed  an audit of the
Mortgage Loan to determine  whether all interest rate adjustments have been made
in accordance with the terms of the Mortgage Note and Mortgage;

      (ww) Each Mortgage  Note,  each  Mortgage,  each  Assignment and any other
documents  required  pursuant to this Agreement to be delivered to the Purchaser
or its designee, or its assignee for each Mortgage Loan, have been, on or before
the related  Closing Date,  delivered to the  Purchaser or its designee,  or its
assignee;

      (xx) There is no Mortgage Loan that was  originated on or after October 1,
2002 and before March 7, 2003, which is secured by property located in the State
of Georgia;

      (yy) [reserved];

      (zz) No borrower  was  encouraged  or  required to select a Mortgage  Loan
product offered by the Mortgage Loan's originator which is a higher cost product
designed  for less  creditworthy  borrowers,  unless at the time of the Mortgage
Loan's  origination,  such borrower did not qualify  taking into account  credit
history and  debt-to-income  ratios for a lower-cost credit product then offered
by the Mortgage  Loan's  originator  or any  affiliate  of the  Mortgage  Loan's
originator. If, at the time of loan application, the borrower may have qualified
for a lower-cost  credit product then offered by any mortgage lending  affiliate
of the Mortgage Loan's originator,  the Mortgage Loan's originator  referred the
borrower's application to such affiliate for underwriting consideration;

      (aaa) The  methodology  used in  underwriting  the extension of credit for
each Mortgage Loan employs  objective  mathematical  principles which relate the
borrower's  income,  assets and  liabilities  to the  proposed  payment and such
underwriting methodology does not rely on the extent of the borrower's equity in
the  collateral as the  principal  determining  factor in approving  such credit
extension.   Such  underwriting  methodology  confirmed  that  at  the  time  of
origination (application/approval) the borrower had a reasonable ability to make
timely payments on the Mortgage Loan;


                                       36
<PAGE>

      (bbb)  With  respect  to any  Mortgage  Loan  that  contains  a  provision
permitting  imposition  of a premium  upon a prepayment  prior to maturity:  (i)
prior to the loan's origination, the borrower agreed to such premium in exchange
for a monetary  benefit,  including but not limited to a rate or fee  reduction,
(ii) prior to the loan's  origination,  the  borrower  was offered the option of
obtaining a mortgage loan that did not require payment of such a premium,  (iii)
the  prepayment  premium is  disclosed  to the  borrower  in the loan  documents
pursuant to applicable state and federal law, and (iv) notwithstanding any state
or federal law to the contrary,  the Servicer  shall not impose such  prepayment
premium in any instance when the mortgage debt is  accelerated  as the result of
the borrower's default in making the loan payments;

      (ccc) No borrower was  required to purchase  any credit life,  disability,
accident or health  insurance  product as a condition of obtaining the extension
of  credit.  No  borrower  obtained  a  prepaid   single-premium   credit  life,
disability,   accident  or  health  insurance  policy  in  connection  with  the
origination  of the Mortgage  Loan; No proceeds from any Mortgage Loan were used
to purchase or finance single premium credit  insurance  policies as part of the
origination of, or as a condition to closing, such Mortgage Loan;

      (ddd) The Servicer will transmit  full-file credit reporting data for each
Mortgage  Loan  pursuant  to the  Fannie  Mae  Selling  Guide  and that for each
Mortgage Loan, the Servicer agrees it shall report one of the following statuses
each month as follows: new origination,  current, delinquent (30-, 60-, 90-days,
etc.), foreclosed, or charged-off,

      (eee) [reserved];

      (fff) With respect to any Mortgage  Loan  originated on or after August 1,
2004 and underlying the security,  neither the related  Mortgage nor the related
Mortgage  Note  requires  the borrower to submit to  arbitration  to resolve any
dispute arising out of or relating in any way to the mortgage loan transaction;

      (ggg)  No  Mortgage   Loan  is  secured  by  Mortgaged   Property  in  the
Commonwealth of Massachusetts  with a loan application date on or after November
7, 2004 that refinances a mortgage loan that is less than sixty (60) months old,
unless  such  Mortgage  Loan (1) is on an  investment  property,  (ii) meets the
requirements set forth in the Code of Massachusetts  Regulation ("CMR"), 209 CMR
53.04(1)(b),  or  (iii)  meets  the  requirements  set  forth  in  the  209  CMR
53.04(1)(c);

      (hhh) For any Mortgage Loan with Mortgaged Property located in Texas which
is a second  lien and the  interest  rate is in excess of 10% where terms of the
Mortgage  Note contain a provision  for which the  Mortgagor  may be entitled to
prepaid interest upon payoff, no Mortgagor paid any administrative fees, points,
or loan  origination  fees which would actually  result in any prepaid  interest
being due the Mortgagor under the terms of the Mortgage Note;

      (iii) The Company  and the  Servicer  have  complied  with all  applicable
anti-money laundering laws and regulations, including without limitation the USA
Patriot Act of 2001 (collectively, the Anti-Money Laundering Laws"). The Company
and the Servicer  have each  established  an  anti-money  laundering  compliance
program as required by the  Anti-Money  Laundering  Laws and has  conducted  the
requisite due diligence in connection with the origination of each Mortgage Loan
for the purposes of the Anti-Money Laundering Laws. The Company and the Servicer
further  represent that each takes reasonable  efforts to determine  whether any
Mortgagor appears on any list of blocked or prohibited parties designated by the
U.S. Department of Treasury; and


                                       37
<PAGE>

      (jjj) With  respect  to each  Mortgage  Loan,  information  regarding  the
borrower credit files related to such Mortgage Loan has been furnished to credit
reporting  agencies  in  compliance  with  the  provisions  of the  Fair  Credit
Reporting Act and the applicable implementing regulations.

      Section 3.03 Repurchase.

      It is understood  and agreed that the  representations  and warranties set
forth in Sections 3.01 and 3.02 shall survive the sale of the Mortgage Loans and
delivery of the Mortgage Loan Documents to the Purchaser,  or its designee,  and
shall inure to the benefit of the Purchaser,  notwithstanding any restrictive or
qualified endorsement on any Mortgage Note or Assignment or the examination,  or
lack of examination, of any Mortgage File. Upon discovery by any of the Company,
the  Servicer  or  the   Purchaser   of  a  breach  of  any  of  the   foregoing
representations  and warranties which materially and adversely affects the value
of the Mortgage Loans or the interest of the Purchaser in any Mortgage Loan, the
party discovering such breach shall give prompt written notice to the other. The
Company or the Servicer,  as applicable,  shall have a period of sixty (60) days
from the  earlier of its  discovery  or its receipt of notice of any such breach
within which to correct or cure such breach.  The Company and the  Servicer,  as
applicable,  hereby  covenant and agree that if any such breach is not corrected
or cured within such sixty day period,  the Company  shall,  at the  Purchaser's
option and not later than  ninety (90) days of its  discovery  or its receipt of
notice of such breach, repurchase such Mortgage Loan at the Repurchase Price. In
the event that any such breach shall involve any  representation or warranty set
forth in Section  3.01,  and such breach is not cured  within sixty (60) days of
the earlier of either discovery by or notice to the Company of such breach,  all
Mortgage  Loans shall,  at the option of the  Purchaser,  be  repurchased by the
Company at the Repurchase  Price.  Any such repurchase  shall be accomplished by
wire transfer of immediately  available  funds to Purchaser in the amount of the
Repurchase Price.  Notwithstanding anything to the contrary contained herein, it
is understood by the parties hereto that a breach of the representations made in
Section 3.02 (h), (xx), (yy), (zz), (aaa),  (bbb),  (ccc), (fff), (ggg) or (iii)
will be deemed to  materially  and  adversely  affect  the value of the  related
Mortgage Loan or the interest of Purchaser therein.

      It is  understood  and agreed that the  obligation  of the Company and the
Servicer,  as  applicable,  set forth in this Section 3.03 to cure or repurchase
for a defective  Mortgage Loan, and to indemnify  Purchaser  pursuant to Section
8.01,  constitute the sole remedies of the Purchaser  respecting a breach of the
foregoing  representations and warranties.  If the Company fails to repurchase a
defective Mortgage Loan in accordance with this Section 3.03, or fails to cure a
defective  Mortgage Loan to Purchaser's  reasonable  satisfaction  in accordance
with this Section 3.03, or to indemnify Purchaser pursuant to Section 8.01, that
failure  shall be an Event of Default  and the  Purchaser  shall be  entitled to
pursue  all  remedies  available  in this  Agreement  as a  result  thereof.  No
provision  of this  paragraph  shall  affect  the  rights  of the  Purchaser  to
terminate this Agreement for cause, as set forth in Sections 10.01 and 11.01.


                                       38
<PAGE>

      Any cause of action  against the Company or the Servicer,  as  applicable,
relating to or arising out of the breach of any  representations  and warranties
made in Sections 3.01 and 3.02 shall accrue as to any Mortgage Loan upon (i) the
earlier of  discovery  of such breach by the  Company or the  Servicer or notice
thereof by the  Purchaser  to the Company or the  Servicer,  (ii) failure by the
Company or the Servicer,  as applicable,  to cure such breach or repurchase such
Mortgage  Loan as  specified  above,  and (iii)  demand  upon the Company or the
Servicer, as applicable, by the Purchaser for compliance with this Agreement.

      Section 3.04 Representations and Warranties of the Purchaser.

      The Purchaser  represents,  warrants and convenants to the Company and the
Servicer  that, as of the related  Closing Date or as of such date  specifically
provided herein:

      (a) The Purchaser is a corporation,  dully organized  validly existing and
in good  standing  under the laws of the State of Delaware  and is  qualified to
transact  business in, is in good standing  under the laws of, and possesses all
licenses  necessary  for the conduct of its business in, each state in which any
Mortgaged  Property  is located or is  otherwise  exempt or not  required  under
applicable law to effect such qualification or license;

      (b) The Purchaser has full  corporate  power and authority and legal right
to hold each  Mortgage  Loan,  to purchase  each  Mortgage Loan pursuant to this
Agreement and the related Term Sheet and to execute, deliver and perform, and to
enter into and consummate all  transactions  contemplated  by this Agreement and
the related Term Sheet and to conduct its business as presently  conducted,  has
duly  authorized the execution,  delivery and  performance of this Agreement and
the related Term Sheet,  has duly executed and delivered  this Agreement and the
related  Term  Sheet,  and this  Agreement  and the  related  Term Sheet and any
agreements   contemplated  hereby,   constitutes  a  legal,  valid  and  binding
obligation  of the  Purchaser,  enforceable  against it in  accordance  with its
terms,  and all  requisite  corporate  action has been taken by the Purchaser to
make this Agreement and the related Term Sheet and all  agreements  contemplated
hereby valid and binding upon the Purchaser, in accordance with their terms;

      (c) None of the execution  and delivery of this  Agreement and the related
Term  Sheet,  the  purchase  of the  Mortgage  Loans,  the  consummation  of the
transactions  contemplated  hereby, or the fulfillment of or compliance with the
terms and  conditions of this Agreement and the related Term Sheet will conflict
with any of the terms,  conditions or provisions of the  Purchaser's  charter or
by-laws or materially conflict with or result in a material breach of any of the
terms,  conditions or provisions  of any legal  restriction  or any agreement or
instrument  to which the  Purchaser  is now a party or by which it is bound,  or
constitute a default or result in an acceleration under any of the foregoing, or
result in the material violation of any law, rule,  regulation,  order, judgment
or decree to which the Purchaser or its property is subject;

      (d) There is no litigation, legal proceeding or governmental investigation
pending or to the best of the Purchaser's knowledge,  threatened with respect to
the Purchaser  which is reasonably  likely to have a material  adverse effect on
the purchase of the related Mortgage Loans hereunder,  the execution,  delivery,
performance or  enforceability  of this Agreement and the related Term Sheet, or
which is reasonably  likely to have a material  adverse  effect on the financial
condition of the Purchaser;


                                       39
<PAGE>

      (e)  No  consent,  approval,  authorization  or  order  of  any  court  or
governmental  agency  or  body  is  required  for the  execution,  delivery  and
performance  by the  Purchaser  of or  compliance  by the  Purchaser  with  this
Agreement and the related Term Sheet,  the purchase of the Mortgage Loans or the
consummation of the transactions  contemplated by this Agreement and the related
Term Sheet except for consents, approvals,  authorizations and orders which have
been obtained;

      (f) The  consummation of the  transactions  contemplated by this Agreement
and the  related  Term  Sheet  is in the  ordinary  course  of  business  of the
Purchaser;

      (h) The Purchaser  will treat the purchase of the Mortgage  Loans from the
Company as a purchase for reporting, tax and accounting purposes; and

      (i) The Purchaser  does not believe,  nor does it have any cause or reason
to believe, that it cannot perform each and every one of its covenants contained
in this Agreement and the related Term Sheet.

      The Purchaser shall indemnify the Company and the Servicer, as applicable,
and hold  them  harmless  against  any  claims,  proceedings,  losses,  damages,
penalties,  fines, forfeitures,  reasonable and necessary legal fees and related
costs,  judgments,  and other costs and expenses  resulting from a breach by the
Purchaser of the representations and warranties  contained in this Section 3.04.
It is understood  and agreed that the  obligations of the Purchaser set forth in
this Section 3.04 to indemnify  the Company and the Servicer as provided  herein
constitute the sole remedies of the Company and the Servicer respecting a breach
of the foregoing representations and warranties.


                                       40
<PAGE>

                                  ARTICLE IV

                  ADMINISTRATION AND SERVICING OF MORTGAGE LOANS

      Section 4.01 Servicer to Act as Servicer.

      The  Servicer,  as  independent  contract  servicer,   shall  service  and
administer the Mortgage Loans in accordance  with this Agreement and the related
Term Sheet and with Accepted Servicing Practices,  and shall have full power and
authority,  acting  alone,  to do or  cause  to be done  any and all  things  in
connection  with such servicing and  administration  which the Servicer may deem
necessary or desirable and  consistent  with the terms of this Agreement and the
related Term Sheet and with Accepted  Servicing  Practices and exercise the same
care that it customarily employs for its own account. In addition,  the Servicer
shall furnish  information  regarding the borrower  credit files related to such
Mortgage Loan to credit reporting  agencies in compliance with the provisions of
the Fair  Credit  Reporting  Act and the  applicable  implementing  regulations.
Except as set forth in this  Agreement and the related Term Sheet,  the Servicer
shall  service  the  Mortgage  Loans in  strict  compliance  with the  servicing
provisions of the Fannie Mae Guides (special servicing  option),  which include,
but are not limited to, provisions  regarding the liquidation of Mortgage Loans,
the  collection of Mortgage Loan payments,  the payment of taxes,  insurance and
other charges, the maintenance of hazard insurance with a Qualified Insurer, the
maintenance of mortgage impairment  insurance,  the maintenance of fidelity bond
and errors and omissions  insurance,  inspections,  the restoration of Mortgaged
Property,  the maintenance of Primary  Mortgage  Insurance  Policies,  insurance
claims,  the  title,  management  and  disposition  of REO  Property,  permitted
withdrawals with respect to REO Property,  liquidation  reports,  and reports of
foreclosures and abandonments of Mortgaged  Property,  the transfer of Mortgaged
Property,  the release of Mortgage Files, annual statements,  and examination of
records  and  facilities.  In  the  event  of  any  conflict,  inconsistency  or
discrepancy  between any of the servicing  provisions of this  Agreement and the
related Term Sheet and any of the servicing provisions of the Fannie Mae Guides,
the provisions of this Agreement and the related Term Sheet shall control and be
binding upon the Purchaser and the Servicer.

      Consistent  with the terms of this  Agreement  and the related Term Sheet,
the Servicer may waive,  modify or vary any term of any Mortgage Loan or consent
to the  postponement  of any such term or in any manner grant  indulgence to any
Mortgagor if in the Servicer's reasonable and prudent determination such waiver,
modification,  postponement  or  indulgence  is not  materially  adverse  to the
Purchaser,  provided,  however,  that unless the Servicer has obtained the prior
written consent of the Purchaser, the Servicer shall not permit any modification
with respect to any Mortgage Loan that would change the Mortgage  Interest Rate,
defer for more than ninety days or forgive any payment of principal or interest,
reduce or increase the outstanding principal balance (except for actual payments
of  principal) or change the final  maturity date on such Mortgage  Loan. In the
event of any such  modification  which  has been  agreed  to in  writing  by the
Purchaser  and which  permits the deferral of interest or principal  payments on
any Mortgage Loan, the Servicer shall, on the Business Day immediately preceding
the Remittance Date in any month in which any such principal or interest payment
has been  deferred,  deposit in the  Custodial  Account  from its own funds,  in
accordance with Section 4.04, the difference  between (a) such month's principal
and one month's  interest at the  Mortgage  Loan  Remittance  Rate on the unpaid
principal  balance  of  such  Mortgage  Loan  and  (b)  the  amount  paid by the
Mortgagor.  The Servicer shall be entitled to reimbursement for such advances to
the same  extent as for all other  advances  pursuant to Section  4.05.  Without
limiting the generality of the foregoing,  the Servicer shall  continue,  and is
hereby  authorized  and  empowered,   to  prepare,   execute  and  deliver,  all
instruments  of  satisfaction  or  cancellation,  or of partial or full release,
discharge  and all other  comparable  instruments,  with respect to the Mortgage
Loans and with respect to the  Mortgaged  Properties.  Notwithstanding  anything
herein to the contrary,  the Servicer may not enter into a forbearance agreement
or similar  arrangement  with respect to any Mortgage  Loan which runs more than
180 days  after  the first  delinquent  Due Date.  Any such  agreement  shall be
approved by Purchaser and, if required, by the Primary Mortgage Insurance Policy
insurer, if required.


                                       41
<PAGE>

      Notwithstanding  anything  in  this  Agreement  to  the  contrary,  if any
Mortgage Loan becomes  subject to a  Securitization  Transaction,  the servicing
provisions set forth in the related  Reconstitution  Agreement  shall govern the
servicing  of such  Mortgage  Loans to the  extent  such  terms  contradict  the
servicing  provisions set forth in this Agreement,  including but not limited to
the servicing provisions of Articles IV, V and VI hereof.

      Notwithstanding  anything  in  this  Agreement  to  the  contrary,  if any
Mortgage Loan becomes subject to a Securitization Transaction,  the Servicer (a)
with  respect to such  Mortgage  Loan,  shall not permit any  modification  with
respect to such Mortgage  Loan that would change the Mortgage  Interest Rate and
(b) shall not (unless the  Mortgagor is in default with respect to such Mortgage
Loan  or  such  default  is,  in  the  judgment  of  the  Servicer,   reasonably
foreseeable) make or permit any modification, waiver or amendment of any term of
such  Mortgage Loan that would both (i) effect an exchange or reissuance of such
Mortgage  Loan  under  Section  1001  of  the  Code  (or  Treasury   regulations
promulgated  thereunder)  and (ii) cause any REMIC to fail to qualify as a REMIC
under the Code or the  imposition  of any tax on  "prohibited  transactions"  or
"contributions" after the startup date under the REMIC Provisions.

      Prior to taking any action with respect to the Mortgage Loans subject to a
Securitization  Transaction,  which is not contemplated  under the terms of this
Agreement,  the Servicer will obtain an Opinion of Counsel reasonably acceptable
to the trustee in such  Securitization  Transaction with respect to whether such
action could result in the imposition of a tax upon any REMIC (including but not
limited to the tax on prohibited  transactions as defined in Section  860F(a)(2)
of the Code and the tax on contributions to a REMIC set forth in Section 860G(d)
of the  Code)(either  such event,  an "Adverse REMIC  Event"),  and the Servicer
shall not take any such  actions as to which it has been advised that an Adverse
REMIC Event could occur.

      The Servicer shall not permit the creation of any "interests"  (within the
meaning of Section 860G of the Code) in any REMIC.  The Servicer shall not enter
into any  arrangement by which a REMIC will receive a fee or other  compensation
for  services  nor permit a REMIC to receive any income  from assets  other than
"qualified mortgages" as defined in Section 860G(a)(3) of the Code or "permitted
investments" as defined in Section 860G(a)(5) of the Code.

      In servicing and  administering  the Mortgage  Loans,  the Servicer  shall
employ Accepted Servicing Practices, giving due consideration to the Purchaser's
reliance  on the  Servicer.  Unless a  different  time  period is stated in this
Agreement  or the related  Term Sheet,  Purchaser  shall be deemed to have given
consent  in  connection   with  a  particular   matter  if  Purchaser  does  not
affirmatively  grant or deny consent within five (5) Business Days from the date
Purchaser  receives a second  written  request  for consent for such matter from
Servicer as servicer.


                                       42
<PAGE>

      The Mortgage  Loans may be  subserviced  by a Subservicer on behalf of the
Servicer provided that the Subservicer is an entity that engages in the business
of servicing loans, and in either case shall be authorized to transact business,
and licensed to service mortgage loans, in the state or states where the related
Mortgaged  Properties  it is to  service  are  situated,  if and  to the  extent
required by applicable law to enable the  Subservicer to perform its obligations
hereunder and under the  Subservicing  Agreement,  and in either case shall be a
FHLMC or Fannie Mae approved  mortgage  servicer in good standing,  and no event
has occurred, including but not limited to a change in insurance coverage, which
would make it unable to comply  with the  eligibility  requirements  for lenders
imposed by Fannie Mae or for seller/servicers imposed by Fannie Mae or FHLMC, or
which would  require  notification  to Fannie Mae or FHLMC.  In  addition,  each
Subservicer  will obtain and  preserve  its  qualifications  to do business as a
foreign  corporation  and  its  licenses  to  service  mortgage  loans,  in each
jurisdiction  in  which  such  qualifications  and/or  licenses  are or shall be
necessary to protect the validity and  enforceability of this Agreement,  or any
of the Mortgage  Loans and to perform or cause to be performed  its duties under
the  related  Subservicing  Agreement.  The  Servicer  may  perform  any  of its
servicing responsibilities hereunder or may cause the Subservicer to perform any
such servicing  responsibilities  on its behalf,  but the use by the Servicer of
the  Subservicer  shall not release  the  Servicer  from any of its  obligations
hereunder and the Servicer shall remain  responsible  hereunder for all acts and
omissions of the  Subservicer  as fully as if such acts and omissions were those
of the Servicer. The Servicer shall pay all fees and expenses of the Subservicer
from its own funds,  and the  Subservicer's  fee shall not exceed the  Servicing
Fee. Servicer shall notify Purchaser promptly in writing upon the appointment of
any Subservicer.

      At  the  cost  and  expense  of  the   Servicer,   without  any  right  of
reimbursement  from the  Custodial  Account,  the Servicer  shall be entitled to
terminate the rights and responsibilities of the Subservicer and arrange for any
servicing  responsibilities  to be performed by a successor  subservicer meeting
the requirements in the preceding  paragraph,  provided,  however,  that nothing
contained  herein  shall be deemed to prevent or prohibit the  Servicer,  at the
Servicer's  option,  from electing to service the related Mortgage Loans itself.
In the  event  that  the  Servicer's  responsibilities  and  duties  under  this
Agreement are terminated  pursuant to Section 4.13,  8.04,  9.01 or 10.01 and if
requested  to do so by the  Purchaser,  the  Servicer  shall at its own cost and
expense terminate the rights and  responsibilities of the Subservicer  effective
as of the date of termination of the Servicer.  The Servicer shall pay all fees,
expenses  or  penalties   necessary  in  order  to  terminate   the  rights  and
responsibilities  of the  Subservicer  from the  Servicer's  own  funds  without
reimbursement from the Purchaser.

      Notwithstanding  any of the  provisions  of  this  Agreement  relating  to
agreements  or  arrangements  between the  Servicer and the  Subservicer  or any
reference  herein to actions taken  through the  Subservicer  or otherwise,  the
Servicer shall not be relieved of its  obligations to the Purchaser and shall be
obligated  to the same extent and under the same terms and  conditions  as if it
alone were servicing and administering the Mortgage Loans. The Servicer shall be
entitled to enter into an agreement with the Subservicer for  indemnification of
the Servicer by the Subservicer and nothing contained in this Agreement shall be
deemed to limit or modify such indemnification.  The Servicer will indemnify and
hold Purchaser  harmless from any loss,  liability or expense arising out of its
use of a Subservicer  to perform any of its servicing  duties,  responsibilities
and obligations hereunder.


                                       43
<PAGE>

      Any Subservicing Agreement and any other transactions or services relating
to the Mortgage Loans  involving the  Subservicer  shall be deemed to be between
the Subservicer and Servicer alone, and the Purchaser shall have no obligations,
duties or liabilities  with respect to the Subservicer  including no obligation,
duty or liability of Purchaser to pay the Subservicer's  fees and expenses.  For
purposes  of  distributions  and  advances  by the  Servicer  pursuant  to  this
Agreement, the Servicer shall be deemed to have received a payment on a Mortgage
Loan when the Subservicer has received such payment.

      Section 4.02 Collection of Mortgage Loan Payments.

      Continuously from the date hereof until the date each Mortgage Loan ceases
to be subject to this Agreement, the Servicer will proceed diligently to collect
all  payments  due under each  Mortgage  Loan when the same shall become due and
payable and shall, to the extent such  procedures  shall be consistent with this
Agreement,  Accepted  Servicing  Practices,  and the terms and provisions of any
related Primary Mortgage Insurance Policy,  follow such collection procedures as
it follows with respect to mortgage  loans  comparable to the Mortgage Loans and
held for its own  account.  Further,  the  Servicer  will take  special  care in
ascertaining and estimating annual escrow payments,  and all other charges that,
as  provided  in the  Mortgage,  will  become  due  and  payable,  so  that  the
installments payable by the Mortgagors will be sufficient to pay such charges as
and when they become due and payable.

      The  Servicer  shall not  waive  any  Prepayment  Charge  unless:  (i) the
enforceability  thereof  shall  have been  limited  by  bankruptcy,  insolvency,
moratorium,  receivership  and other similar laws relating to creditors'  rights
generally,  (ii) the  enforcement  thereof is  illegal,  or any local,  state or
federal  agency  has  threatened  legal  action  if the  prepayment  penalty  is
enforced,  (iii) the mortgage debt has been  accelerated  in  connection  with a
foreclosure  or other  involuntary  payment or (iv) such waiver is standard  and
customary  in  servicing  similar  Mortgage  Loans and relates to a default or a
reasonably  foreseeable  default and would,  in the  reasonable  judgment of the
Servicer,  maximize  recovery of total proceeds taking into account the value of
such Prepayment  Charge and the related Mortgage Loan. If a Prepayment Charge is
waived,  but does not meet the standards  described above,  then the Servicer is
required to pay the amount of such waived  Prepayment  Charge by remitting  such
amount to the Purchaser by the Remittance Date.

      Section 4.03 Realization Upon Defaulted Mortgage

      The Servicer  shall use its best efforts,  consistent  with the procedures
that the Servicer would use in servicing  loans for its own account,  consistent
with Accepted Servicing  Practices,  any Primary Mortgage Insurance Policies and
the best  interest of  Purchaser,  to  foreclose  upon or  otherwise  comparably
convert the ownership of properties  securing such of the Mortgage Loans as come
into and continue in default and as to which no satisfactory arrangements can be
made for  collection  of  delinquent  payments  pursuant  to  Section  4.01.  In
determining the  delinquency  status of any Mortgage Loan, the Servicer will use
Delinquency  Recognition Policies, and shall revise these policies as reasonably
requested  by the  Purchaser  from  time  to  time.  Foreclosure  or  comparable
proceedings  shall be initiated within ninety (90) days of default for Mortgaged
Properties for which no satisfactory  arrangements can be made for collection of
delinquent  payments,  subject  to state and  federal  law and  regulation.  The
Servicer shall use its best efforts to realize upon defaulted  Mortgage Loans in
such  manner as will  maximize  the  receipt of  principal  and  interest by the
Purchaser,  taking into account,  among other things,  the timing of foreclosure
proceedings.  The  foregoing is subject to the  provisions  that, in any case in
which a Mortgaged Property shall have suffered damage, the Servicer shall not be
required to expend its own funds toward the  restoration of such property unless
it shall determine in its discretion (i) that such restoration will increase the
proceeds of  liquidation  of the related  Mortgage Loan to the  Purchaser  after
reimbursement  to itself for such expenses,  and (ii) that such expenses will be
recoverable by the Servicer through Insurance  Proceeds or Liquidation  Proceeds
from the related  Mortgaged  Property,  as  contemplated  in Section  4.05.  The
Servicer  shall obtain prior  approval of Purchaser as to repair or  restoration
expenses in excess of ten thousand dollars ($10,000).  The Servicer shall notify
the Purchaser in writing of the commencement of foreclosure  proceedings and not
less than five (5) days prior to the  acceptance  or  rejection  of any offer of
reinstatement.  The  Servicer  shall be  responsible  for all costs and expenses
incurred by it in any such proceedings or functions;  provided, however, that it
shall be  entitled  to  reimbursement  thereof  from the  related  property,  as
contemplated in Section 4.05. Notwithstanding anything to the contrary contained
herein,  in  connection  with a  foreclosure  or acceptance of a deed in lieu of
foreclosure,  in the event the Servicer has  reasonable  cause to believe that a
Mortgaged  Property is contaminated by hazardous or toxic  substances or wastes,
or if the Purchaser otherwise requests an environmental  inspection or review of
such  Mortgaged  Property,  such an inspection or review is to be conducted by a
qualified  inspector  at  the  Purchaser's  expense.   Upon  completion  of  the
inspection,  the Servicer  shall  promptly  provide the Purchaser with a written
report  of the  environmental  inspection.  After  reviewing  the  environmental
inspection  report, the Purchaser shall determine how the Servicer shall proceed
with respect to the Mortgaged Property.


                                       44
<PAGE>

      Notwithstanding  anything to the contrary  contained herein, the Purchaser
may, at the Purchaser's  sole option,  terminate the Servicer as servicer of any
Mortgage Loan which becomes ninety (90) days or greater delinquent in payment of
a scheduled Monthly Payment, without payment of any termination fee with respect
thereto,  provided that the Servicer  shall on the date said  termination  takes
effect be reimbursed  for any  unreimbursed  Monthly  Advances of the Servicer's
funds made pursuant to Section 5.03 and any unreimbursed  Servicing Advances and
Servicing  Fees in each case  relating  to the  Mortgage  Loan  underlying  such
delinquent Mortgage Loan  notwithstanding  anything to the contrary set forth in
Section 4.05. In the event of any such  termination,  the  provisions of Section
11.01  hereof  shall apply to said  termination  and the  transfer of  servicing
responsibilities  with respect to such delinquent Mortgage Loan to the Purchaser
or its designee.

      In the event that a Mortgage Loan becomes part of a REMIC, and becomes REO
Property,  such property shall be disposed of by the Servicer,  with the consent
of Purchaser  as required  pursuant to this  Agreement,  before the close of the
third taxable year  following the taxable year in which the Mortgage Loan became
an REO Property, unless the Servicer provides to the trustee under such REMIC an
opinion  of  counsel  to the  effect  that  the  holding  of such  REO  Property
subsequent to the close of the third taxable year  following the taxable year in
which  the  Mortgage  Loan  became  an REO  Property,  will  not  result  in the
imposition of taxes on "prohibited  transactions"  as defined in Section 860F of
the Code,  or cause the  transaction  to fail to  qualify as a REMIC at any time
that certificates are outstanding.  The Servicer shall manage, conserve, protect
and operate  each such REO Property  for the  certificateholders  solely for the
purpose of its prompt disposition and sale in a manner which does not cause such
property  to fail to qualify as  "foreclosure  property"  within the  meaning of
Section 860F(a)(2)(E) of the Code, or any "net income from foreclosure property"
which is subject to taxation under the REMIC provisions of the Code. Pursuant to
its efforts to sell such  property,  the Servicer shall either itself or through
an agent  selected by Servicer,  protect and conserve  such property in the same
manner and to such an extent as is customary in the locality where such property
is  located.  Additionally,  Servicer  shall  perform  the tax  withholding  and
reporting related to Sections 1445 and 6050J of the Code.


                                       45
<PAGE>

      Section 4.04  Establishment of Custodial  Accounts;  Deposits in Custodial
Accounts.

      The Servicer  shall  segregate  and hold all funds  collected and received
pursuant to each  Mortgage Loan separate and apart from any of its own funds and
general assets and shall establish and maintain one or more Custodial  Accounts.
The Custodial Account shall be an Eligible Account.  Funds shall be deposited in
the Custodial  Account within two (2) Business Days hours of receipt,  and shall
at all times be insured by the FDIC up to the FDIC insurance  limits, or must be
invested  in  Permitted  Investments  for the  benefit of the  Purchaser.  Funds
deposited in the Custodial Account may be drawn on by the Servicer in accordance
with Section 4.05. The creation of any Custodial Account shall be evidenced by a
letter  agreement  in the form shown in Exhibit B hereto.  The  original of such
letter  agreement  shall be furnished to the Purchaser on the Closing Date,  and
upon the request of any subsequent Purchaser.

      The Servicer shall deposit in the Custodial  Account on a daily basis, and
retain  therein the following  payments and  collections  received or made by it
subsequent  to the Cut-off Date, or received by it prior to the Cut-off Date but
allocable to a period subsequent thereto, other than in respect of principal and
interest on the Mortgage Loans due on or before the Cut-off Date:

      (i) all payments on account of principal, including Principal Prepayments,
on the Mortgage Loans;

      (ii) all payments on account of interest on the Mortgage Loans adjusted to
the Mortgage Loan Remittance Rate;

      (iii) all Liquidation Proceeds;

      (iv) any amounts  required to be deposited  by the Servicer in  connection
with any REO Property pursuant to Section 4.13 and in connection therewith,  the
Servicer shall provide the Purchaser  with written detail  itemizing all of such
amounts;

      (v) all  Insurance  Proceeds  including  amounts  required to be deposited
pursuant to Sections 4.08, 4.10 and 4.11,  other than proceeds to be held in the
Escrow  Account  and  applied  to the  restoration  or repair  of the  Mortgaged
Property or released to the  Mortgagor in  accordance  with  Accepted  Servicing
Practices, the Mortgage Loan Documents or applicable law;


                                       46
<PAGE>

      (vi) all Condemnation  Proceeds affecting any Mortgaged Property which are
not released to the Mortgagor in accordance with Accepted  Servicing  Practices,
the loan documents or applicable law;

      (vii) any Monthly Advances;

      (viii)  with  respect to each full or partial  Principal  Prepayment,  any
Prepayment  Interest  Shortfalls,  to the  extent  of the  Servicer's  aggregate
Servicing Fee received with respect to the related Prepayment Period;

      (ix) any amounts  required to be  deposited  by the  Servicer  pursuant to
Section 4.10 in  connection  with the  deductible  clause in any blanket  hazard
insurance  policy,  such deposit  shall be made from the  Servicer's  own funds,
without reimbursement therefor; and

      (x) any amounts required to be deposited in the Custodial Account pursuant
to Section 4.01, 4.13 or 6.02.

      The foregoing  requirements for deposit in the Custodial  Account shall be
exclusive,  it being understood and agreed that, without limiting the generality
of the foregoing,  payments in the nature of late payment charges and assumption
fees,  to the extent  permitted  by Section  6.01,  need not be deposited by the
Servicer in the Custodial  Account.  Any interest paid on funds deposited in the
Custodial  Account by the depository  institution shall accrue to the benefit of
the  Servicer and the  Servicer  shall be entitled to retain and  withdraw  such
interest from the Custodial Account pursuant to Section 4.05 (iv). The Purchaser
shall not be responsible  for any losses  suffered with respect to investment of
funds in the Custodial Account.

      Section 4.05 Permitted Withdrawals From the Custodial Account.

      The Servicer may, from time to time,  withdraw from the Custodial  Account
for the following purposes:

      (i) to make  payments  to the  Purchaser  in the amounts and in the manner
provided for in Section 5.01;

      (ii) to reimburse  itself for Monthly  Advances,  the Servicer's  right to
reimburse  itself  pursuant  to this  subclause  (ii)  being  limited to amounts
received on the related  Mortgage Loan which represent late  collections (net of
the related  Servicing Fees) of principal  and/or interest  respecting which any
such  advance  was  made,  it  being  understood  that,  in  the  case  of  such
reimbursement,  the Servicer's right thereto shall be prior to the rights of the
Purchaser,  except that,  where the Company is required to repurchase a Mortgage
Loan, pursuant to Section 3.03, the Servicer's right to such reimbursement shall
be subsequent to the payment to the Purchaser of the  Repurchase  Price pursuant
to such Section and all other amounts  required to be paid to the Purchaser with
respect to such Mortgage Loan;


                                       47
<PAGE>

      (iii) to  reimburse  itself for  unreimbursed  Servicing  Advances and any
unpaid Servicing Fees, the Servicer's right to reimburse itself pursuant to this
subclause  (iii) with respect to any  defaulted  Mortgage  Loan being limited to
related proceeds from Liquidation Proceeds,  Condemnation Proceeds and Insurance
Proceeds in accordance with the relevant  provisions of the Fannie Mae Guides or
as  otherwise  set  forth  in this  Agreement  and only to the  extent  that the
aggregate of  Liquidation  Proceeds and Insurance  Proceeds with respect to such
Mortgage Loan, after any reimbursement to the Servicer,  exceeds the outstanding
Stated Principal  Balance of such Mortgage Loan plus accrued and unpaid interest
thereon at the  related  Mortgage  Rate less the  Servicing  Fee Rate to but not
including the date of payment (in any event,  the aggregate  amount of servicing
compensation  received by a  Subservicer  and the  Servicer  with respect to any
defaulted Monthly Payment shall not exceed the applicable Servicing Fee);

      (iv)  to pay to  itself  as  part of its  servicing  compensation  (a) any
interest  earned on funds in the  Custodial  Account  (all such  interest  to be
withdrawn  monthly not later than each Remittance  Date),  and (b) the Servicing
Fee from that portion of any payment or recovery as to interest  with respect to
a particular Mortgage Loan;

      (v) to pay to itself  with  respect  to each  Mortgage  Loan that has been
repurchased  pursuant  to Section  3.03 all  amounts  received  thereon  and not
distributed as of the date on which the related repurchase price is determined,

      (vi) to transfer  funds to another  Eligible  Account in  accordance  with
Section 4.09 hereof;

      (vii) to remove funds inadvertently placed in the Custodial Account by the
Servicer;

      (vi) to clear and terminate the Custodial  Account upon the termination of
this Agreement; and

      (vii) to reimburse  itself for  Nonrecoverable  Advances to the extent not
reimbursed pursuant to clause (ii) or clause (iii).

      Section  4.06  Establishment  of  Escrow  Accounts;   Deposits  in  Escrow
Accounts.

      The Servicer  shall  segregate  and hold all funds  collected and received
pursuant to each Mortgage Loan which  constitute  Escrow  Payments  separate and
apart  from any of its own funds and  general  assets  and shall  establish  and
maintain one or more Escrow  Accounts.  The Escrow  Account shall be an Eligible
Account. Funds deposited in each Escrow Account shall at all times be insured in
a manner to provide  maximum  insurance  under the insurance  limitations of the
FDIC,  or must be invested in  Permitted  Investments.  Funds  deposited  in the
Escrow Account may be drawn on by the Servicer in accordance  with Section 4.07.
The creation of any Escrow  Account shall be evidenced by a letter  agreement in
the form shown in Exhibit C. The  original  of such  letter  agreement  shall be
furnished  to the  Purchaser  on the  Closing  Date,  and  upon  request  to any
subsequent purchaser.

      The Servicer  shall  deposit in the Escrow  Account or Accounts on a daily
basis, and retain therein:


                                       48
<PAGE>

      (i) all Escrow Payments  collected on account of the Mortgage  Loans,  for
the purpose of effecting  timely payment of any such items as required under the
terms of this Agreement;

      (ii) all Insurance  Proceeds which are to be applied to the restoration or
repair of any Mortgaged Property; and

      (iii) all  Servicing  Advances for  Mortgagors  whose Escrow  Payments are
insufficient to cover escrow disbursements.

      The Servicer shall make withdrawals from the Escrow Account only to effect
such payments as are required under this Agreement,  and for such other purposes
as shall be as set forth or in accordance  with Section 4.07. The Servicer shall
be entitled to retain any interest paid on funds deposited in the Escrow Account
by the depository  institution other than interest on escrowed funds required by
law to be paid to the Mortgagor and, to the extent required by law, the Servicer
shall pay interest on escrowed funds to the Mortgagor  notwithstanding  that the
Escrow  Account  is  non-interest  bearing  or that  interest  paid  thereon  is
insufficient  for such purposes.  The Purchaser shall not be responsible for any
losses suffered with respect to investment of funds in the Escrow Account.

      Section 4.07 Permitted Withdrawals From Escrow Account.

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

      (i) to effect timely payments of ground rents, taxes,  assessments,  water
rates,  Primary  Mortgage  Insurance Policy  premiums,  if applicable,  fire and
hazard insurance premiums, condominium assessments and comparable items;

      (ii) to reimburse Servicer for any Servicing Advance made by Servicer with
respect to a related Mortgage Loan but only from amounts received on the related
Mortgage Loan which  represent late payments or  collections of Escrow  Payments
thereunder;

      (iii) to refund to the  Mortgagor  any  funds as may be  determined  to be
overages;

      (iv) for transfer to the Custodial Account in accordance with the terms of
this Agreement;

      (v) for application to restoration or repair of the Mortgaged Property;

      (vi) to pay to the Servicer, or to the Mortgagor to the extent required by
law, any interest paid on the funds deposited in the Escrow Account;

      (vii) to clear and terminate the Escrow Account on the termination of this
Agreement.  As part of its  servicing  duties,  the  Servicer  shall  pay to the
Mortgagors  interest on funds in Escrow Account,  to the extent required by law,
and to the  extent  that  interest  earned  on funds in the  Escrow  Account  is
insufficient,   shall  pay  such  interest  from  its  own  funds,  without  any
reimbursement therefor; and


                                       49
<PAGE>

      (viii)  to pay to the  Mortgagors  or  other  parties  Insurance  Proceeds
deposited in accordance with Section 4.06.

      Section 4.08 Payment of Taxes, Insurance and Other Charges; Maintenance of
Primary Mortgage Insurance Policies; Collections Thereunder.

      With respect to each Mortgage Loan,  the Servicer shall maintain  accurate
records reflecting the status of ground rents, taxes,  assessments,  water rates
and other charges which are or may become a lien upon the Mortgaged Property and
the status of primary mortgage  insurance premiums and fire and hazard insurance
coverage and shall obtain,  from time to time, all bills for the payment of such
charges,  including  renewal  premiums and shall effect payment thereof prior to
the  applicable  penalty  or  termination  date  and at a time  appropriate  for
securing maximum discounts allowable, employing for such purpose deposits of the
Mortgagor in the Escrow Account which shall have been estimated and  accumulated
by the Servicer in amounts  sufficient for such  purposes,  as allowed under the
terms of the Mortgage or  applicable  law. To the extent that the Mortgage  does
not provide for Escrow  Payments,  the Servicer  shall  determine  that any such
payments  are made by the  Mortgagor  at the time they  first  become  due.  The
Servicer  assumes full  responsibility  for the timely payment of all such bills
and  shall  effect  timely  payments  of  all  such  bills  irrespective  of the
Mortgagor's  faithful  performance  in the  payment of same or the making of the
Escrow  Payments  and shall  make  advances  from its own  funds to effect  such
payments.  Notwithstanding  anything else  contained  herein,  it is agreed that
Servicer  will not be  required to pay any such bills for ground  rents,  taxes,
assessments,  water rates and other charges if the Mortgage does not provide for
Escrow Payments until such time at which such unpaid amounts would be considered
delinquent or result in a superior lien being imposed on the Mortgaged  Property
or otherwise impair Purchaser's interest in the Mortgaged Property.

      The  Servicer  will  maintain  in full force and effect  Primary  Mortgage
Insurance  Policies issued by a Qualified  Insurer with respect to each Mortgage
Loan  for  which  such  coverage  is  herein  required.  Such  coverage  will be
terminated only with the approval of Purchaser, or as required by applicable law
or  regulation.  The  Servicer  will not  cancel or refuse to renew any  Primary
Mortgage  Insurance  Policy in effect on the Closing Date that is required to be
kept in force  under  this  Agreement  unless  a  replacement  Primary  Mortgage
Insurance  Policy for such  canceled or  nonrenewed  policy is obtained from and
maintained  with a Qualified  Insurer.  The  Servicer  shall not take any action
which  would  result in  non-coverage  under  any  applicable  Primary  Mortgage
Insurance  Policy of any loss which,  but for the actions of the Servicer  would
have been covered thereunder.  In connection with any assumption or substitution
agreement  entered  into or to be entered  into  pursuant to Section  6.01,  the
Servicer shall promptly  notify the insurer under the related  Primary  Mortgage
Insurance  Policy,  if any, of such  assumption or  substitution of liability in
accordance with the terms of such policy and shall take all actions which may be
required by such insurer as a condition to the  continuation  of coverage  under
the Primary Mortgage Insurance Policy. If such Primary Mortgage Insurance Policy
is terminated as a result of such assumption or  substitution of liability,  the
Servicer  shall  obtain a  replacement  Primary  Mortgage  Insurance  Policy  as
provided above.


                                       50
<PAGE>

      The Servicer  agrees to prepare and  present,  on behalf of itself and the
Purchaser,  claims to the insurer under any Private Mortgage Insurance Policy in
a timely fashion in accordance with the terms of such Primary Mortgage Insurance
Policy and, in this regard,  to take such action as shall be necessary to permit
recovery  under any Primary  Mortgage  Insurance  Policy  respecting a defaulted
Mortgage Loan.  Pursuant to Section 4.04, any amounts  collected by the Servicer
under any Primary Mortgage  Insurance Policy shall be deposited in the Custodial
Account, subject to withdrawal pursuant to Section 4.05.

      Section 4.09 Transfer of Accounts.

      The Servicer may transfer the Custodial Account or the Escrow Account to a
different  Eligible  Account from time to time. Such transfer shall be made only
upon obtaining the prior written  consent of the  Purchaser,  which consent will
not be unreasonably withheld.

      Section 4.10 Maintenance of Hazard Insurance.

      The Servicer  shall cause to be maintained for each Mortgage Loan fire and
hazard insurance with extended  coverage as is acceptable to Fannie Mae or FHLMC
and customary in the area where the  Mortgaged  Property is located in an amount
which  is  equal  to the  lesser  of (i)  the  maximum  insurable  value  of the
improvements  securing  such  Mortgage  Loan  or  (ii)  the  greater  of (a) the
outstanding  principal balance of the Mortgage Loan, and (b) an amount such that
the proceeds  thereof shall be  sufficient  to prevent the Mortgagor  and/or the
mortgagee  from  becoming  a  co-insurer.  If  required  by the  Flood  Disaster
Protection  Act of 1973,  as amended,  each  Mortgage Loan shall be covered by a
flood insurance policy meeting the requirements of the current guidelines of the
Federal Insurance  Administration in effect with an insurance carrier acceptable
to Fannie Mae or FHLMC,  in an amount  representing  coverage  not less than the
least of (i) the  outstanding  principal  balance of the Mortgage Loan, (ii) the
maximum insurable value of the improvements securing such Mortgage Loan or (iii)
the maximum  amount of  insurance  which is available  under the Flood  Disaster
Protection  Act of  1973,  as  amended.  If at any time  during  the term of the
Mortgage Loan,  the Servicer  determines in accordance  with  applicable law and
pursuant  to the Fannie Mae Guides  that a  Mortgaged  Property  is located in a
special flood hazard area and is not covered by flood insurance or is covered in
an amount less than the amount required by the Flood Disaster  Protection Act of
1973,  as amended,  the  Servicer  shall notify the related  Mortgagor  that the
Mortgagor must obtain such flood insurance coverage, and if said Mortgagor fails
to obtain the required flood  insurance  coverage  within  forty-five  (45) days
after such notification, the Servicer shall immediately force place the required
flood insurance on the Mortgagor's  behalf.  The Servicer shall also maintain on
each REO Property, fire and hazard insurance with extended coverage in an amount
which is at least equal to the maximum insurable value of the improvements which
are a part of such property, and, to the extent required and available under the
Flood Disaster Protection Act of 1973, as amended,  flood insurance in an amount
as provided above. Any amounts collected by the Servicer under any such policies
other than  amounts to be  deposited  in the Escrow  Account  and applied to the
restoration or repair of the Mortgaged Property or REO Property,  or released to
the  Mortgagor  in  accordance  with  Accepted  Servicing  Practices,  shall  be
deposited in the Custodial  Account,  subject to withdrawal  pursuant to Section
4.05. It is understood  and agreed that no other  additional  insurance  need be
required by the Servicer of the Mortgagor or maintained on property  acquired in
respect of the Mortgage Loan, other than pursuant to this Agreement,  the Fannie
Mae Guides or such applicable  state or federal laws and regulations as shall at
any time be in force and as shall require such  additional  insurance.  All such
policies shall be endorsed with standard  mortgagee clauses with loss payable to
the Servicer and its  successors  and/or  assigns and shall provide for at least
thirty (30) days prior  written  notice of any  cancellation,  reduction  in the
amount or material  change in coverage to the Servicer.  The Servicer  shall not
interfere  with the  Mortgagor's  freedom  of choice  in  selecting  either  his
insurance  carrier or agent,  provided,  however,  that the  Servicer  shall not
accept  any  such  insurance  policies  from  insurance  companies  unless  such
companies are Qualified Insurers.


                                       51
<PAGE>

      Section 4.11 Maintenance of Mortgage Impairment Insurance Policy.

      In the event that the Servicer  shall obtain and maintain a blanket policy
issued by a  Qualified  Insurer  insuring  against  hazard  losses on all of the
Mortgage Loans,  then, to the extent such policy provides  coverage in an amount
equal to the amount  required  pursuant to Section 4.10 and  otherwise  complies
with all other  requirements of Section 4.10, it shall conclusively be deemed to
have satisfied its obligations as set forth in Section 4.10, it being understood
and agreed that such policy may contain a deductible  clause,  in which case the
Servicer  shall,  in the event that there shall not have been  maintained on the
related Mortgaged Property or REO Property a policy complying with Section 4.10,
and there shall have been a loss which would have been  covered by such  policy,
deposit in the  Custodial  Account the amount not  otherwise  payable  under the
blanket  policy  because  of such  deductible  clause.  In  connection  with its
activities as servicer of the Mortgage Loans, the Servicer agrees to prepare and
present,  on behalf of the Purchaser,  claims under any such blanket policy in a
timely fashion in accordance with the terms of such policy.  Upon request of the
Purchaser, the Servicer shall cause to be delivered to the Purchaser a certified
true copy of such  policy and shall use its best  efforts to obtain a  statement
from the insurer  thereunder that such policy shall in no event be terminated or
materially  modified  without  thirty  (30) days'  prior  written  notice to the
Purchaser.

      Section 4.12 Fidelity Bond, Errors and Omissions Insurance.

      The Servicer shall maintain,  at its own expense,  a blanket fidelity bond
and  an  errors  and  omissions  insurance  policy,  with  broad  coverage  with
responsible companies on all officers,  employees or other persons acting in any
capacity with regard to the Mortgage Loan to handle funds, money,  documents and
papers  relating to the Mortgage Loan. The Fidelity Bond shall be in the form of
the Mortgage  Banker's  Blanket  Bond and shall  protect and insure the Servicer
against  losses,  including  forgery,  theft,  embezzlement  and  fraud  of such
persons.  The  errors  and  omissions  insurance  shall  protect  and insure the
Servicer  against  losses arising out of errors and omissions and negligent acts
of such  persons.  Such errors and  omissions  insurance  shall also protect and
insure the Servicer  against  losses in connection  with the failure to maintain
any insurance  policies  required  pursuant to this Agreement and the release or
satisfaction of a Mortgage Loan without having  obtained  payment in full of the
indebtedness  secured  thereby.  No provision of this Section 4.12 requiring the
Fidelity Bond or errors and omissions  insurance  shall  diminish or relieve the
Servicer from its duties and  obligations  as set forth in this  Agreement.  The
minimum  coverage  under any such bond and  insurance  policy  shall be at least
equal to the  corresponding  amounts  required  by Fannie  Mae in the Fannie Mae
Guides.  Upon  request  by the  Purchaser,  the  Servicer  shall  deliver to the
Purchaser a  certificate  from the surety and the insurer as to the existence of
the Fidelity Bond and errors and omissions  insurance  policy and shall obtain a
statement  from the surety and the insurer that such  Fidelity Bond or insurance
policy shall in no event be  terminated or materially  modified  without  thirty
(30) days' prior written notice to the Purchaser.  The Servicer shall notify the
Purchaser  within five (5) business days of receipt of notice that such Fidelity
Bond  or  insurance  policy  will  be,  or  has  been,  materially  modified  or
terminated.  The  Purchaser  (or  any  party  having  the  status  of  Purchaser
hereunder) and any subsidiary  thereof and their  successors or assigns as their
interests  may appear must be named as loss payees on the  Fidelity  Bond and as
additional  insured  on  the  errors  and  omissions  policy.  Upon  request  by
Purchaser,  Servicer  shall  provide  Purchaser  with an  insurance  certificate
certifying  coverage under this Section 4.12, and will provide an update to such
certificate upon request, or upon renewal or material modification of coverage.


                                       52
<PAGE>

      Section 4.13 Title, Management and Disposition of REO Property.

      In the  event  that  title  to  the  Mortgaged  Property  is  acquired  in
foreclosure or by deed in lieu of  foreclosure,  the deed or certificate of sale
shall be taken in the name of the Purchaser or its designee, or in the event the
Purchaser or its designee is not  authorized  or permitted to hold title to real
property in the state where the REO  Property is located,  or would be adversely
affected  under the  "doing  business"  or tax laws of such  state by so holding
title, the deed or certificate of sale shall be taken in the name of such Person
or Persons as shall be  consistent  with an opinion of counsel  obtained  by the
Servicer  from an attorney  duly licensed to practice law in the state where the
REO Property is located. Any Person or Persons holding such title other than the
Purchaser shall  acknowledge in writing that such title is being held as nominee
for the benefit of the Purchaser.

      The Servicer shall notify the Purchaser in accordance  with the Fannie Mae
Guides of each  acquisition of REO Property upon such  acquisition  (and, in any
event,  shall provide notice of the  consummation of any foreclosure sale within
three  (3)  Business  Days  of  the  date  Servicer   receives  notice  of  such
consummation),  together  with a copy of the drive by appraisal or brokers price
opinion of the Mortgaged  Property obtained in connection with such acquisition,
and  thereafter  assume the  responsibility  for marketing  such REO property in
accordance with Accepted  Servicing  Practices.  Thereafter,  the Servicer shall
continue to provide certain administrative services to the Purchaser relating to
such REO Property as set forth in this Section 4.13.

      The  Servicer  shall,  either  itself or through an agent  selected by the
Servicer, and in accordance with the Fannie Mae Guides manage, conserve, protect
and operate  each REO  Property  in the same manner that it manages,  conserves,
protects and operates other foreclosed property for its own account,  and in the
same manner that  similar  property in the same  locality as the REO Property is
managed.  The Servicer  shall cause each REO  Property to be inspected  promptly
upon the  acquisition  of title  thereto and shall cause each REO Property to be
inspected at least  monthly  thereafter  or more  frequently  as required by the
circumstances.  The Servicer  shall make or cause to be made a written report of
each such  inspection.  Such reports  shall be retained in the Mortgage File and
copies thereof shall be forwarded by the Servicer to the Purchaser.

      The Servicer  shall use its best efforts to dispose of the REO Property as
soon as possible  and shall sell such REO  Property in any event  within one (1)
year  after  title has been  taken to such REO  Property,  unless  the  Servicer
determines,  and gives an  appropriate  notice to the  Purchaser to such effect,
that a longer  period  is  necessary  for the  orderly  liquidation  of such REO
Property.  If a longer period than one (1) year is permitted under the foregoing
sentence and is necessary to sell any REO  Property,  the Servicer  shall report
monthly to the  Purchaser  as to the  progress  being  made in selling  such REO
Property.  No REO Property shall be marketed for less than the Appraised  Value,
without the prior consent of Purchaser.  No REO Property  shall be sold for less
than ninety five percent (95%) of its Appraised Value, without the prior consent
of Purchaser.  All requests for reimbursement of Servicing  Advances shall be in
accordance with the Fannie Mae Guides.  The disposition of REO Property shall be
carried out by the Servicer at such price,  and upon such terms and  conditions,
as the Servicer deems to be in the best  interests of the Purchaser  (subject to
the above  conditions)  only with the prior  written  consent of the  Purchaser.
Servicer shall provide  monthly  reports to Purchaser in reference to the status
of the marketing of the REO Properties.


                                       53
<PAGE>

      Notwithstanding  anything to the contrary  contained herein, the Purchaser
may, at the Purchaser's  sole option,  terminate the Servicer as servicer of any
such REO Property  without payment of any termination fee with respect  thereto,
provided that the Servicer  shall on the date said  termination  takes effect be
reimbursed for any  unreimbursed  advances of the Servicer's funds made pursuant
to Section 5.03 and any  unreimbursed  Servicing  Advances and Servicing Fees in
each  case  relating  to  the  Mortgage  Loan   underlying   such  REO  Property
notwithstanding anything to the contrary set forth in Section 4.05. In the event
of any such  termination,  the provisions of Section 11.01 hereof shall apply to
said termination and the transfer of servicing  responsibilities with respect to
such REO  Property to the  Purchaser or its  designee.  Within five (5) Business
Days of any such  termination,  the Servicer  shall,  if  necessary  convey such
property to the  Purchaser  and shall  further  provide the  Purchaser  with the
following information  regarding the subject REO Property:  the related drive by
appraisal  or  brokers  price  opinion,  and  copies  of  any  related  Mortgage
Impairment Insurance Policy claims. In addition,  within five (5) Business Days,
the Servicer  shall provide the Purchaser  with the  following  information  and
documents  regarding the subject REO Property:  the related  trustee's deed upon
sale and copies of any related hazard insurance claims, or repair bids.

      Section 4.14 Notification of Maturity Date.

      With respect to each Mortgage Loan, the Servicer shall execute and deliver
to the Mortgagor any and all necessary notices required under applicable law and
the terms of the related Mortgage Note and Mortgage  regarding the maturity date
if required under applicable law.

                                    ARTICLE V

                            PAYMENTS TO THE PURCHASER

      Section 5.01 Distributions.

      On each Remittance Date, the Servicer shall distribute by wire transfer of
immediately  available  funds to the Purchaser  (i) all amounts  credited to the
Custodial  Account as of the close of  business on the  preceding  Determination
Date, net of charges against or withdrawals from the Custodial  Account pursuant
to Section 4.05, plus (ii) all Monthly  Advances,  if any, which the Servicer is
obligated to distribute  pursuant to Section 5.03,  plus,  (iii) interest at the
Mortgage Loan Remittance Rate on any Principal  Prepayment from the date of such
Principal Prepayment through the end of the month for which disbursement is made
provided that the Servicer's  obligation as to payment of such interest shall be
limited to the Servicing Fee earned during the month of the distribution,  minus
(iv) any amounts  attributable  to Monthly  Payments  collected but due on a Due
Date or Dates  subsequent to the  preceding  Determination  Date,  which amounts
shall be remitted on the Remittance Date next succeeding the Due Period for such
amounts.  It is understood that, by operation of Section 4.04, the remittance on
the first  Remittance Date with respect to Mortgage Loans purchased  pursuant to
the related Term Sheet is to include principal  collected after the Cut-off Date
through the preceding Determination Date plus interest, adjusted to the Mortgage
Loan Remittance Rate collected through such  Determination Date exclusive of any
portion  thereof  allocable  to the period prior to the Cut-off  Date,  with the
adjustments specified in clauses (ii), (iii) and (iv) above.


                                       54
<PAGE>

      With  respect  to any  remittance  received  by the  Purchaser  after  the
Remittance  Date, the Servicer  shall pay to the Purchaser  interest on any such
late payment at an annual rate equal to the Prime Rate,  adjusted as of the date
of each change,  plus three (3) percentage  points, but in no event greater than
the maximum  amount  permitted by applicable  law. Such interest shall cover the
period  commencing  with the day following the Business Day such payment was due
and ending with the Business Day on which such payment is made to the Purchaser,
both  inclusive.  The payment by the Servicer of any such interest  shall not be
deemed an  extension  of time for payment or a waiver of any Event of Default by
the Servicer.  On each Remittance  Date, the Servicer shall provide a remittance
report detailing all amounts being remitted pursuant to this Section 5.01.

      Section 5.02 Statements to the Purchaser.

      The Servicer  shall  furnish to Purchaser an  individual  loan  accounting
report,  as of the last Business Day of each month,  in the Servicer's  assigned
loan number order to document  Mortgage  Loan payment  activity on an individual
Mortgage Loan basis.  With respect to each month, the  corresponding  individual
loan  accounting  report  shall be received by the  Purchaser  no later than the
fifth  Business  Day  of  the  following  month  on a  disk  or  tape  or  other
computer-readable  format in such format as may be mutually  agreed upon by both
Purchaser  and  Servicer,  and no  later  than  the  fifth  Business  Day of the
following month in hard copy, and shall contain the following:

      (i) with  respect to each  Mortgage  Loan and each  Monthly  Payment,  the
amount of such remittance allocable to principal (including a separate breakdown
of any  Principal  Prepayment,  including the date of such  prepayment,  and any
prepayment  penalties or premiums,  along with a detailed  report of interest on
principal prepayment amounts remitted in accordance with Section 4.04);

      (ii) with  respect to each  Mortgage  Loan and each Monthly  Payment,  the
amount of such remittance allocable to interest;

      (iii)  with  respect  to each  Mortgage  Loan,  the  amount  of  servicing
compensation received by the Servicer during the prior distribution period;

      (iv) the Stated Principal  Balance of each Mortgage Loan and the aggregate
Stated  Principal  Balance  of all  Mortgage  Loans as of the  beginning  of the
distribution period and the ending of the distribution period;


                                       55
<PAGE>

      (v) with respect to each  Mortgage  Loan,  the current  Mortgage  Interest
Rate;

      (vi) with respect to each  Mortgage Loan for which  liquidation  and final
distribution  has  occurred,  the aggregate  amount of any  Insurance  Proceeds,
Condemnation  Proceeds,   Liquidation  Proceeds  and  REO  Disposition  Proceeds
received during the prior distribution period;

      (vii) with respect to each  Mortgage  Loan,  the amount of any  Prepayment
Interest  Shortfalls paid by the Servicer in accordance with Section  4.04(viii)
during the prior distribution period;

      (viii) [RESERVED];

      (ix) the number of Mortgage Loans as of the beginning of the  distribution
period and the ending of the distribution period;

      (x) with respect to each Mortgage  Loan, the Stated  Principal  Balance of
each  Mortgage  Loan that is (A)  delinquent  (exclusive  of  Mortgage  Loans in
foreclosure and bankruptcy) (1) 30 days  delinquent,  (2) 60 days delinquent and
(3) 90 days or more  delinquent;  (B) in foreclosure  and delinquent (1) 30 days
delinquent,  (2) 60 days delinquent and (3) 90 days or more delinquent;  and (C)
in bankruptcy and delinquent (1) 30 days delinquent,  (2) 60 days delinquent and
(3) 90 days or more delinquent,  in each case as of the close of business on the
last day of the calendar month preceding such  Distribution  Date and separately
identifying  such  information for the (1) first lien Mortgage Loans, (2) second
lien Mortgage Loans, and (3) adjustable rate Mortgage Loans;

      (xi) with respect to each  Mortgage  Loan,  the amount and severity of any
realized loss following liquidation of such Mortgage Loan;

      (xii) with respect to each  Mortgage  Loan,  and in the  aggregate for all
Mortgage Loans, the amount of the month end Monthly Advance balances made by the
Servicer during the prior distribution period;

      (xiii) with respect to each Mortgage  Loan, a description of any Servicing
Advances made by the Servicer  with respect to such Mortgage Loan  including the
amount, terms and general purpose of such Servicing Advances,  and the aggregate
amount  of  Servicing   Advances  for  all  Mortgage   Loans  during  the  prior
distribution period;

      (xiv)  with  respect  to  each  Mortgage   Loan,  a  description   of  any
Nonrecoverable  Advances made by the Servicer with respect to such Mortgage Loan
including the amount, terms and general purpose of such Nonrecoverable Advances,
and the  aggregate  amount of  Nonrecoverable  Advances for all  Mortgage  Loans
during the prior distribution period;

      (xv) with  respect to each  Mortgage  Loan, a  description  of any Monthly
Advances,  Servicing  Advances and  Nonrecoverable  Advances  reimbursed  to the
Servicer with respect to such Mortgage Loan during the prior distribution period
pursuant to Section 4.05,  and the source of funds for such  reimbursement,  and
the   aggregate   amount  of  any  Monthly   Advances,   Servicing   Advancesand
Nonrecoverable Advances reimbursed to the Servicer for all Mortgage Loans during
the prior distribution period pursuant to Section 4.05;


                                       56
<PAGE>

      (xvi) with respect to any Mortgage  Loan,  a  description  of any material
modifications,  extensions or waivers to the terms, fees,  penalties or payments
of such  Mortgage  Loan  during  the  prior  distribution  period  or that  have
cumulatively become material over time;

      (xvii)  a  description  of any  material  breach  of a  representation  or
warranty set forth in Section 3.01 or Section 3.02 herein or of any other breach
of a covenant or condition  contained herein and the status of any resolution of
such breach;

      (xviii) [reserved];

      (xix) with respect to each Mortgage Loan, the Stated Principal  Balance of
any Mortgage Loan that has been  repurchased by the Servicer in accordance  with
Section 3.03 herein.

      In  addition,  the  Servicer  shall  provide to the  Purchaser  such other
information  known or available  to the  Servicer  that is necessary in order to
provide the  distribution  and pool  performance  information  as required under
Regulation  AB, as amended from time to time,  as determined by the Purchaser in
its sole  discretion.  The Servicer shall also provide a monthly report,  in the
form of Exhibit E hereto,  or such other form as is mutually  acceptable  to the
Servicer,  the  Purchaser  and any Master  Servicer,  Exhibit F with  respect to
defaulted  mortgage  loans and Exhibit P, with  respect to  realized  losses and
gains, with each such report.

      The Servicer shall prepare and file any and all information  statements or
other filings required to be delivered to any  governmental  taxing authority or
to Purchaser  pursuant to any  applicable law with respect to the Mortgage Loans
and the  transactions  contemplated  hereby.  In addition,  the  Servicer  shall
provide  Purchaser  with such  information  concerning  the Mortgage Loans as is
necessary  for  Purchaser to prepare its federal  income tax return as Purchaser
may reasonably request from time to time.

      In addition,  not more than sixty (60) days after the end of each calendar
year,  the Servicer shall furnish to each Person who was a Purchaser at any time
during  such  calendar  year  an  annual   statement  in  accordance   with  the
requirements  of  applicable  federal  income  tax  law as to the  aggregate  of
remittances for the applicable portion of such year.

      Section 5.03 Monthly Advances by the Servicer.

      Not later than the close of business on the  Business Day  preceding  each
Remittance  Date, the Servicer shall deposit in the Custodial  Account an amount
equal to all payments not  previously  advanced by the Servicer,  whether or not
deferred pursuant to Section 4.01, of principal (due after the Cut-off Date) and
interest not allocable to the period prior to the Cut-off Date,  adjusted to the
Mortgage Loan Remittance  Rate, which were due on a Mortgage Loan and delinquent
at the close of business on the related Determination Date.


                                       57
<PAGE>

      The Servicer's obligation to make such Monthly Advances as to any Mortgage
Loan will continue  through the last Monthly Payment due prior to the payment in
full of the Mortgage Loan, or through the  Remittance  Date prior to the date on
which the Mortgaged Property liquidates (including Insurance Proceeds,  proceeds
from the sale of REO  Property or  Condemnation  Proceeds)  with  respect to the
Mortgage  Loan unless the  Servicer  deems such  advance to be a  Nonrecoverable
Advance. In such event, the Servicer shall deliver to the Purchaser an Officer's
Certificate  of the  Servicer to the effect that an officer of the  Servicer has
reviewed the related  Mortgage  File and has made the  reasonable  determination
that any additional advances are nonrecoverable.

      Section 5.04 Liquidation Reports.

      Upon the  foreclosure  sale of any Mortgaged  Property or the  acquisition
thereof by the Purchaser pursuant to a deed-in-lieu of foreclosure, the Servicer
shall  submit  to the  Purchaser  a  liquidation  report  with  respect  to such
Mortgaged Property in a form mutually  acceptable to the Servicer and Purchaser.
The Servicer shall also provide reports on the status of REO Property containing
such information as Purchaser may reasonably require.

      Section 5.05 Prepayment Interest Shortfalls.

      Not later than the close of business on the  Business Day  preceding  each
Remittance  Date in the month  following  the  related  Prepayment  Period,  the
Servicer  shall  deposit  in  the  Custodial  Account  an  amount  equal  to any
Prepayment Interest Shortfalls with respect to such Prepayment Period,  which in
the aggregate shall not exceed the Servicer's  aggregate  Servicing Fee received
with respect to the related Due Period.

                                   ARTICLE VI

                          GENERAL SERVICING PROCEDURES

      Section 6.01 Assumption Agreements.

      The Servicer  will,  to the extent it has  knowledge of any  conveyance or
prospective  conveyance by any Mortgagor of the Mortgaged  Property  (whether by
absolute  conveyance  or by contract of sale,  and whether or not the  Mortgagor
remains or is to remain  liable  under the Mortgage  Note and/or the  Mortgage),
exercise its rights to  accelerate  the maturity of such Mortgage Loan under any
"due-on-sale" clause to the extent permitted by law; provided, however, that the
Servicer shall not exercise any such rights if prohibited by law or the terms of
the  Mortgage  Note from doing so or if the exercise of such rights would impair
or threaten to impair any recovery under the related Primary Mortgage  Insurance
Policy,  if  any.  If  the  Servicer  reasonably  believes  it is  unable  under
applicable  law to enforce such  "due-on-sale"  clause,  the Servicer,  with the
approval of the  Purchaser,  will enter into an  assumption  agreement  with the
person to whom the  Mortgaged  Property  has been  conveyed or is proposed to be
conveyed,  pursuant to which such person  becomes liable under the Mortgage Note
and, to the extent  permitted by  applicable  state law, the  Mortgagor  remains
liable  thereon.  Where an assumption is allowed  pursuant to this Section 6.01,
the Servicer,  with the prior consent of the Purchaser and the primary  mortgage
insurer,  if any,  is  authorized  to enter  into a  substitution  of  liability
agreement with the person to whom the Mortgaged Property has been conveyed or is
proposed to be conveyed  pursuant to which the  original  mortgagor  is released
from  liability and such Person is  substituted  as mortgagor and becomes liable
under the related  Mortgage Note. Any such  substitution of liability  agreement
shall be in lieu of an assumption agreement.


                                       58
<PAGE>

      In connection with any such  assumption or substitution of liability,  the
Servicer shall follow the underwriting practices and procedures of the Servicer.
With  respect to an  assumption  or  substitution  of  liability,  the  Mortgage
Interest  Rate borne by the  related  Mortgage  Note,  the amount of the Monthly
Payment and the maturity date may not be changed  (except  pursuant to the terms
of the Mortgage  Note).  If the credit of the proposed  transferee does not meet
such  underwriting  criteria,  the  Servicer  diligently  shall,  to the  extent
permitted by the Mortgage or the Mortgage Note and by applicable law, accelerate
the maturity of the Mortgage  Loan. The Servicer shall notify the Purchaser that
any such substitution of liability or assumption agreement has been completed by
forwarding to the Purchaser the original of any such  substitution  of liability
or assumption  agreement,  which document shall be added to the related Mortgage
File and shall, for all purposes,  be considered a part of such Mortgage File to
the same  extent as all other  documents  and  instruments  constituting  a part
thereof.  All fees  collected by the Servicer for entering into an assumption or
substitution of liability agreement shall belong to the Servicer.

      Notwithstanding  the  foregoing  paragraphs  of this  Section or any other
provision of this Agreement,  the Servicer shall not be deemed to be in default,
breach or any other  violation  of its  obligations  hereunder  by reason of any
assumption  of a Mortgage Loan by operation of law or any  assumption  which the
Servicer may be restricted by law from  preventing,  for any reason  whatsoever.
For  purposes of this  Section  6.01,  the term  "assumption"  is deemed to also
include a sale of the  Mortgaged  Property  subject to the Mortgage  that is not
accompanied by an assumption or substitution of liability agreement.

      Section 6.02 Satisfaction of Mortgages and Release of Mortgage Files.

      Upon the  payment  in full of any  Mortgage  Loan,  or the  receipt by the
Servicer  of a  notification  that  payment in full will be escrowed in a manner
customary for such purposes,  the Servicer will immediately notify the Purchaser
by a certification,  which certification shall include a statement to the effect
that all amounts  received or to be received  in  connection  with such  payment
which are required to be deposited in the Custodial  Account pursuant to Section
4.04 have been or will be so deposited, of a Servicing Officer and shall request
delivery to it of the portion of the Mortgage  File held by the  Purchaser.  The
Purchaser  shall no later  than five (5)  Business  Days  after  receipt of such
certification and request,  release or cause to be released to the Servicer, the
related  Mortgage Loan  Documents and, upon its receipt of such  documents,  the
Servicer  shall  promptly  prepare and deliver to the  Purchaser  the  requisite
satisfaction  or release.  No later than five (5) Business  Days  following  its
receipt of such satisfaction or release,  the Purchaser shall deliver,  or cause
to be delivered,  to the Servicer the release or satisfaction  properly executed
by the owner of record of the applicable mortgage or its duly appointed attorney
in fact. No expense  incurred in connection  with any instrument of satisfaction
or deed of reconveyance shall be chargeable to the Custodial Account.

      In the event the Servicer  satisfies or releases a Mortgage without having
obtained payment in full of the  indebtedness  secured by the Mortgage or should
it  otherwise  prejudice  any right the  Purchaser  may have under the  mortgage
instruments,  the  Servicer,  upon  written  demand,  shall remit within two (2)
Business  Days to the Purchaser the then  outstanding  principal  balance of the
related Mortgage Loan by deposit thereof in the Custodial Account.  The Servicer
shall maintain the Fidelity Bond and errors and omissions insurance insuring the
Servicer  against any loss it may sustain with respect to any Mortgage  Loan not
satisfied in accordance with the procedures set forth herein.


                                       59
<PAGE>

      From time to time and as  appropriate  for the servicing or foreclosure of
the Mortgage  Loan,  including for the purpose of  collection  under any Primary
Mortgage Insurance Policy, the Purchaser shall, upon request of the Servicer and
delivery to the Purchaser of a servicing receipt signed by a Servicing  Officer,
release the portion of the Mortgage  File held by the Purchaser to the Servicer.
Such  servicing  receipt  shall  obligate  the  Servicer  to return the  related
Mortgage  documents to the  Purchaser  when the need therefor by the Servicer no
longer exists,  unless the Mortgage Loan has been liquidated and the Liquidation
Proceeds  relating to the Mortgage  Loan have been  deposited  in the  Custodial
Account or the Mortgage File or such document has been delivered to an attorney,
or to a public trustee or other public official as required by law, for purposes
of initiating or pursuing legal action or other  proceedings for the foreclosure
of the Mortgaged Property either judicially or non-judicially,  and the Servicer
has delivered to the Purchaser a certificate of a Servicing  Officer  certifying
as to the name and  address of the Person to which  such  Mortgage  File or such
document  was  delivered  and the  purpose or purposes  of such  delivery.  Upon
receipt of a certificate of a Servicing  Officer stating that such Mortgage Loan
was liquidated,  the servicing receipt shall be released by the Purchaser to the
Servicer.

      Section 6.03 Servicing Compensation.

      As compensation for its services hereunder, the Servicer shall be entitled
to withdraw  from the  Custodial  Account  (to the extent of  interest  payments
collected on the Mortgage Loans) or to retain from interest  payments  collected
on the Mortgage Loans, the amounts provided for as the Servicer's Servicing Fee,
subject to payment of compensating  interest on Principal  Prepayments as capped
by the  Servicing  Fee  pursuant  to Section  5.01 (iii).  Additional  servicing
compensation  in the form of assumption  fees, as provided in Section 6.01, late
payment  charges  and  ancillary  fees or  otherwise  shall be  retained  by the
Servicer to the extent not required to be deposited in the Custodial Account. No
Servicing Fee shall be payable in connection with partial Monthly Payments.  The
Servicer shall be required to pay all expenses incurred by it in connection with
its servicing  activities  hereunder and shall not be entitled to  reimbursement
therefor except as specifically provided for.

      Section 6.04 Annual Statement as to Compliance; Annual Certification.

      (a) The Servicer will deliver to the  Purchaser  and any Master  Servicer,
using best  efforts by March 1st,  but in no event later than March 15th of each
calendar  year  beginning in 2007,  an Officer's  Certificate  acceptable to the
Purchaser (an "Annual  Statement of Compliance")  stating,  as to each signatory
thereof,  that  (i) a  review  of the  activities  of the  Servicer  during  the
preceding  calendar  year  and of  performance  under  this  Agreement  or other
applicable  servicing  agreement has been made under such officer's  supervision
and (ii) to the best of such  officer's  knowledge,  based on such  review,  the
Servicer has  fulfilled  all of its  obligations  under this  Agreement or other
applicable  servicing  agreement in all material respects  throughout such year,
or, if there has been a failure to fulfill any such  obligation  in any material
respect,  specifying  each such failure known to such officer and the nature and
status of cure provisions  thereof.  Such Annual  Statement of Compliance  shall
contain no  restrictions  or  limitations  on its use.  Copies of such statement
shall be  provided  by the  Servicer to the  Purchaser  upon  request and by the
Purchaser to any Person  identified as a  prospective  purchaser of the Mortgage
Loans.   In  the  event  that  the  Servicer   has   delegated   any   servicing
responsibilities  with  respect  to the  Mortgage  Loans to a  Subservicer,  the
Servicer shall deliver an Annual  Statement of Compliance of the  Subservicer as
described above as to each  Subservicer as and when required with respect to the
Servicer.


                                       60
<PAGE>

      (b)  With  respect  to any  Mortgage  Loans  that  are  the  subject  of a
Securitization  Transaction,  using best  efforts by March 1st,  but in no event
later than March 15th of each calendar year beginning in 2007, an officer of the
Servicer  shall  execute  and  deliver  an  officer's  certificate  (an  "Annual
Certification") to the Purchaser,  any Master Servicer and any related Depositor
for the  benefit  of each  such  entity  and such  entity's  affiliates  and the
officers,  directors and agents of any such entity and such entity's affiliates,
in the form  attached  hereto as Exhibit L. In the event that the  Servicer  has
delegated any servicing responsibilities with respect to the Mortgage Loans to a
Subservicer,   the  Servicer  shall  deliver  an  Annual  Certification  of  the
Subservicer as described above as to each  Subservicer as and when required with
respect to the Servicer.

      Failure of the Servicer to timely comply with this Section 6.04 (including
with respect to the cure timeframes required in this section) shall be deemed an
Event of Default, automatically, without notice and without any cure period, and
Purchaser  may,  in addition to  whatever  rights the  Purchaser  may have under
Sections 3.03 and 8.01 and at law or equity or to damages,  including injunctive
relief and specific performance, terminate all the rights and obligations of the
Servicer  under this Agreement and in and to the Mortgage Loans and the proceeds
thereof without  compensating  the Servicer for the same, as provided in Section
9.01. Such termination  shall be considered with cause pursuant to Section 10.01
of this  Agreement.  This paragraph  shall supercede any other provision in this
Agreement or any other agreement to the contrary.

      Section 6.05 [Reserved]

      Section  6.06  Purchaser's  Right  to  Examine  Compnay  and the  Servicer
Records.

      The  Purchaser  shall have the right to examine and audit upon  reasonable
notice to the Company or the Servicer,  as applicable,  during business hours or
at such other times as might be reasonable under applicable  circumstances,  any
and all of the books, records, documentation or other information of the Company
or the  Servicer,  as  applicable,  or held by  another  for the  Company or the
Servicer or on their behalf or otherwise,  which relates to the  performance  or
observance  by the  Company  or  the  Servicer,  as  applicable,  of the  terms,
covenants or conditions of this Agreement.

      The  Company  and the  Servicer  shall  provide to the  Purchaser  and any
supervisory  agents or examiners  representing  a state or federal  governmental
agency having jurisdiction over the Purchaser, including but not limited to OTS,
FDIC and other  similar  entities,  access to any  documentation  regarding  the
Mortgage  Loans in the  possession  of the Company or the Servicer  which may be
required by any applicable  regulations.  Such access shall be afforded  without
charge, upon reasonable request, during normal business hours and at the offices
of the Company or the Servicer, as applicable,  and in accordance with the FDIC,
OTS, or any other similar federal or state regulations, as applicable.


                                       61
<PAGE>

      Section 6.07 Assessment of Compliance with Servicing Criteria.

      On and after January 1, 2006, the Servicer  shall service and  administer,
and shall cause each  subservicer to servicer or administer,  the Mortgage Loans
in accordance with all applicable requirements of the Servicing Criteria.

      With   respect  to  any   Mortgage   Loans  that  are  the  subject  of  a
Securitization  Transaction,  the Servicer shall deliver to the Purchaser or its
designee,  any Master  Servicer and any  Depositor,  using best efforts by March
1st, but in no event later than March 15th of each  calendar  year  beginning in
2007, a report (an  "Assessment of Compliance")  reasonably  satisfactory to the
Purchaser,  any Master  Servicer  and any  Depositor  regarding  the  Servicer's
assessment  of  compliance  with the  Servicing  Criteria  during the  preceding
calendar year as required by Rules 1 3a- 18 and 1 5d- 18 of the Exchange Act and
Item 1122 of  Regulation  AB or as  otherwise  required by the Master  Servicer,
which as of the date hereof,  require a report by an  authorized  officer of the
Servicer that contains the following:

      (a) A  statement  by such  officer  of its  responsibility  for  assessing
compliance with the Servicing Criteria applicable to the Servicer;

      (b) A statement  by such  officer  that such  officer  used the  Servicing
Criteria to assess  compliance  with the  Servicing  Criteria  applicable to the
Servicer;

      (c) An assessment by such officer of the  Servicer's  compliance  with the
applicable  Servicing  Criteria  for  the  period  consisting  of the  preceding
calendar year,  including  disclosure of any material  instance of noncompliance
with respect thereto during such period,  which assessment shall be based on the
activities  it performs  with respect to  asset-backed  securities  transactions
taken as a whole involving the Servicer,  that are backed by the same asset type
as the Mortgage Loans;

      (d) A statement  that a registered  public  accounting  firm has issued an
attestation  report on the  Servicer's  Assessment of Compliance  for the period
consisting of the preceding calendar year; and

      (e) A statement  as to which of the  Servicing  Criteria,  if any, are not
applicable to the Servicer,  which statement shall be based on the activities it
performs with respect to asset-backed  securities  transactions taken as a whole
involving the  Servicer,  that are backed by the same asset type as the Mortgage
Loans.

      Such report at a minimum  shall  address  each of the  Servicing  Criteria
specified  on a  certification  substantially  in the form of  Exhibit  O hereto
delivered to the Servicer concurrently with the execution of this Agreement.

      With   respect  to  any   Mortgage   Loans  that  are  the  subject  of  a
Securitization  Transaction,  using best  efforts by March 1st,  but in no event
later than March 15th of each  calendar  year  beginning  in 2007,  the Servicer
shall  furnish to the  Purchaser or its  designee,  any Master  Servicer and any
Depositor a report (an "Attestation  Report") by a registered  public accounting
firm that attests to, and reports on, the  Assessment of Compliance  made by the
Servicer, as required by Rules 1 3a- 18 and 15d-1 8 of the Exchange Act and Item
1122(b) of Regulation AB or as otherwise required by the Master Servicer,  which
Attestation  Report must be made in accordance  with  standards for  attestation
reports issued or adopted by the Public Servicer Accounting Oversight Board.


                                       62
<PAGE>

      The  Servicer  shall  cause  each  Subservicer,   and  each  Subcontractor
determined by the Servicer pursuant to Section 11.20 to be "participating in the
servicing function" within the meaning of Item 1122 of Regulation AB, to deliver
to the  Purchaser,  any Master  Servicer  and any  Depositor  an  assessment  of
compliance and accountants' attestation as and when provided in Sections 6.07.

      Failure of the  Servicer to timely  comply with this Section 6.07 shall be
deemed an Event of Default,  automatically,  without notice and without any cure
period,  unless  otherwise agreed to by the Purchaser as described  herein,  and
Purchaser  may,  in addition to  whatever  rights the  Purchaser  may have under
Sections 3.03 and 8.01 and at law or equity or to damages,  including injunctive
relief and specific performance, terminate all the rights and obligations of the
Servicer  under this Agreement and in and to the Mortgage Loans and the proceeds
thereof without  compensating  the Servicer for the same, as provided in Section
9.01. Such termination  shall be considered with cause pursuant to Section 10.01
of this  Agreement.  This paragraph  shall supercede any other provision in this
Agreement or any other agreement to the contrary.

      Section 6.08 Intent of the Parties; Reasonableness.

      The Purchaser,  the Company and the Servicer  acknowledge and agree that a
purpose of Sections 3.01(p),  5.02, 6.04, 6.07 and 11.18 of this Agreement is to
facilitate  compliance by the Purchaser and any Depositor with the provisions of
Regulation AB and related rules and regulations of the  Commission.  None of the
Purchaser,  any Master  Servicer or any  Depositor  shall  exercise its right to
request  delivery of information  or other  performance  under these  provisions
other  than in good  faith,  or for  purposes  other  than  compliance  with the
Securities Act, the Exchange Act and the rules and regulations of the Commission
thereunder. The Company and the Servicer acknowledge that interpretations of the
requirements of Regulation AB may change over time,  whether due to interpretive
guidance provided by the Commission or its staff,  consensus among  participants
in the asset-backed  securities markets,  advice of counsel,  or otherwise,  and
agrees to comply with  requests  made by the  Purchaser or any Depositor in good
faith  for  delivery  of  information  under  these  provisions  on the basis of
evolving interpretations of Regulation AB. In connection with any Securitization
Transaction,  the Company shall cooperate fully with the Purchaser to deliver to
the Purchaser  (including  any of its assignees or designees) and any Depositor,
any  and  all  statements,  reports,  certifications,   records  and  any  other
information  necessary in the good faith  determination  of the Purchaser or any
Depositor  to  permit  the  Purchaser  or such  Depositor  to  comply  with  the
provisions of Regulation  AB,  together  with such  disclosures  relating to the
Company,  the Servicer,  any  Subservicer,  any  Third-Party  Originator and the
Mortgage Loans, or the servicing of the Mortgage Loans,  reasonably  believed by
the  Purchaser  or any  Depositor  to be  necessary  in  order  to  effect  such
compliance.


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                                   ARTICLE VII

                 REPORTS TO BE PREPARED BY COMPANY AND SERVICER

      Section 7.01 Company and Servicer Shall Provide  Information as Reasonably
Required.

      The Company and the Servicer  shall  furnish to the  Purchaser  during the
term of this Agreement, such periodic, special or other reports,  information or
documentation,  whether  or not  provided  for  herein,  as shall be  necessary,
reasonable or appropriate  in respect to the Purchaser,  or otherwise in respect
to the Mortgage Loans and the  performance  of the Company and the Servicer,  as
applicable,  under  this  Agreement,   including  any  reports,  information  or
documentation  reasonably required to comply with any regulations  regarding any
supervisory agents or examiners of the Purchaser all such reports or information
to be as provided by and in accordance  with such  applicable  instructions  and
directions as the Purchaser may reasonably request in relation to this Agreement
or the  performance of the Company and the Servicer,  as applicable,  under this
Agreement.  The Company and the  Servicer  agree to execute and deliver all such
instruments  and take all such action as the  Purchaser,  from time to time, may
reasonably request in order to effectuate the purpose and to carry out the terms
of this Agreement.

      In connection  with marketing the Mortgage  Loans,  the Purchaser may make
available to a prospective purchaser audited financial statements of the Company
and the Servicer for the most recently  completed two (2) fiscal years for which
such statements are available,  as well as a Consolidated Statement of Condition
at the  end of the  last  two  (2)  fiscal  years  covered  by any  Consolidated
Statement  of  Operations.  If it has not  already  done so, the Company and the
Servicer  shall furnish  promptly to the  Purchaser or a  prospective  purchaser
copies of the statements specified above.

      The  Servicer  shall make  reasonably  available  to the  Purchaser or any
prospective  Purchaser a knowledgeable  financial or accounting  officer for the
purpose of  answering  questions  and to permit  any  prospective  purchaser  to
inspect the Servicer's  servicing  facilities for the purpose of satisfying such
prospective  purchaser that the Servicer has the ability to service the Mortgage
Loans as provided in this Agreement.


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<PAGE>

                                  ARTICLE VIII

                          THE COMPANY AND THE SERVICER

      Section 8.01 Indemnification; Third Party Claims.

      (a) The Company  agrees to indemnify  the  Purchaser  and hold it harmless
against any and all claims,  losses,  damages,  penalties,  fines,  forfeitures,
legal fees and related costs, judgments,  and any other costs, fees and expenses
that the  Purchaser may sustain in any way related to the failure of the Company
to observe and perform its duties,  obligations,  covenants,  and  agreements in
strict  compliance  with the  terms of this  Agreement.  The  Company  agrees to
indemnify the Purchaser and hold it harmless against any and all claims, losses,
damages, penalties, fines, forfeitures, legal fees and related costs, judgments,
and any other costs, fees and expenses that the Purchaser may sustain in any way
from any claim,  demand,  defense or  assertion  based on or grounded  upon,  or
resulting from any assertion  based on, grounded upon or resulting from a breach
or alleged breach of any of its representation or warranty set forth in Sections
3.01 or 3.02 of  this  Agreement.  The  Company  shall  immediately  notify  the
Purchaser  if a claim is made by a third party  against  Company with respect to
this Agreement or the Mortgage Loans, assume (with the consent of the Purchaser)
the  defense of any such claim and pay all  expenses  in  connection  therewith,
including counsel fees,  whether or not such claim is settled prior to judgment,
and  promptly  pay,  discharge  and satisfy any  judgment or decree which may be
entered against it or the Purchaser in respect of such claim.  The Company shall
follow any written  instructions  received from the Purchaser in connection with
such claim.  The Purchaser shall promptly  reimburse the Company for all amounts
advanced  by it pursuant to the two  preceding  sentences  except when the claim
relates to its breach of  representation  or warranty set forth in Sections 3.01
or 3.02, or the  negligence,  bad faith or willful  misconduct  of Company.  The
provisions of this Section 8.01(a) shall survive termination of this Agreement.

      (b) The Servicer  agrees to indemnify  the  Purchaser and hold it harmless
against any and all claims,  losses,  damages,  penalties,  fines,  forfeitures,
legal fees and related costs, judgments,  and any other costs, fees and expenses
that the Purchaser may sustain in any way related to the failure of the Servicer
to observe and perform its duties,  obligations,  covenants,  and  agreements to
service  the  Mortgage  Loans  in  strict  compliance  with  the  terms  of this
Agreement.  The Servicer  agrees to indemnify the Purchaser and hold it harmless
against any and all claims,  losses,  damages,  penalties,  fines,  forfeitures,
legal fees and related costs, judgments,  and any other costs, fees and expenses
that the  Purchaser  may sustain in any way from any claim,  demand,  defense or
assertion  based on or grounded upon, or resulting from any assertion  based on,
grounded  upon or  resulting  from a  breach  or  alleged  breach  of any of its
representation or warranty set forth in Sections 3.01 or 3.02 of this Agreement.
The  Servicer  shall  immediately  notify the  Purchaser if a claim is made by a
third party  against  Servicer  with  respect to this  Agreement or the Mortgage
Loans,  assume (with the consent of the Purchaser) the defense of any such claim
and pay all expenses in connection therewith, including counsel fees, whether or
not such claim is settled  prior to judgment,  and promptly  pay,  discharge and
satisfy any judgment or decree which may be entered  against it or the Purchaser
in respect of such claim.  The Servicer  shall  follow any written  instructions
received from the Purchaser in connection  with such claim.  The Purchaser shall
promptly  reimburse the Servicer for all amounts  advanced by it pursuant to the
two  preceding  sentences  except  when the claim  relates to the failure of the
Servicer to service and administer the Mortgages in strict  compliance  with the
terms of this Agreement,  its breach of  representation or warranty set forth in
Sections 3.01 or 3.02,  or the  negligence,  bad faith or willful  misconduct of
Servicer.  The provisions of this Section  8.01(b) shall survive  termination of
this Agreement.


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<PAGE>

      Section 8.02 Merger or Consolidation of the Company and the Servicer

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

      Any Person into which the Company  may be merged or  consolidated,  or any
corporation resulting from any merger,  conversion or consolidation to which the
Company  shall be a party,  or any  Person  succeeding  to the  business  of the
Company whether or not related to loan servicing,  shall be the successor of the
Company  hereunder,  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.

      Any Person into which the Servicer may be merged or  consolidated,  or any
corporation resulting from any merger,  conversion or consolidation to which the
Servicer  shall be a party,  or any Person  succeeding  to the  business  of the
Servicer whether or not related to loan servicing, shall be the successor of the
Servicer hereunder,  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; provided, however, that the successor or surviving Person shall
be an institution (i) having a GAAP net worth of not less than $25,000,000, (ii)
the  deposits of which are insured by the FDIC,  SAIF and/or BIF, and which is a
HUD-approved  mortgagee  whose  primary  business is in  servicing of first lien
mortgage loans, and (iii) who is a Fannie Mae or FHLMC approved servicer in good
standing.

      Section 8.03 Limitation on Liability of the Company and Others.

      Neither the Company nor any of the  officers,  employees  or agents of the
Company  shall be under any  liability to the  Purchaser for any action taken or
for  refraining  from the taking of any action in good  faith  pursuant  to this
Agreement, or for errors in judgment made in good faith; provided, however, that
this  provision  shall not protect  the  Company or any such person  against any
breach of warranties or  representations  made herein, or failure to perform its
obligations  in strict  compliance  with any  standard of care set forth in this
Agreement,  or any  liability  which  would  otherwise  be  imposed by reason of
negligence,  bad faith or  willful  misconduct,  or any  breach of the terms and
conditions of this Agreement. The Company and any officer,  employee or agent of
the  Company  may rely in good faith on any  document  of any kind  prima  facie
properly executed and submitted by the Purchaser  respecting any matters arising
hereunder. The Company shall not be under any obligation to appear in, prosecute
or defend any legal action which is not  incidental to its duties to service the
Mortgage  Loans in accordance  with this  Agreement and which in its  reasonable
opinion may involve it in any expenses or liability; provided, however, that the
Company may, with the consent of the Purchaser,  undertake any such action which
it may deem  necessary or desirable in respect to this  Agreement and the rights
and duties of the parties hereto.  In such event,  the reasonable legal expenses
and  costs  of such  action  and any  liability  resulting  therefrom  shall  be
expenses,  costs and liabilities for which the Purchaser will be liable, and the
Company  shall be entitled to be reimbursed  therefor  from the  Purchaser  upon
written demand.


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<PAGE>

      Section 8.04 Company and Servicer Not to Assign or Resign.

      The Company shall not assign this Agreement or resign from the obligations
and duties hereby  imposed on it except by mutual consent of the Company and the
Purchaser  or upon the  determination  that its duties  hereunder  are no longer
permissible  under  applicable  law and such  incapacity  cannot be cured by the
Company. Any such determination  permitting the resignation of the Company shall
be evidenced by an Opinion of Counsel to such effect  delivered to the Purchaser
which Opinion of Counsel shall be in form and substance reasonably acceptable to
the Purchaser.

      The  Servicer   shall  not  assign  this  Agreement  or  resign  from  the
obligations  and duties  hereby  imposed  on it except by mutual  consent of the
Servicer and the Purchaser or upon the  determination  that its duties hereunder
are no longer  permissible  under  applicable law and such incapacity  cannot be
cured by the Servicer. Any such determination  permitting the resignation of the
Servicer shall be evidenced by an Opinion of Counsel to such effect delivered to
the Purchaser which Opinion of Counsel shall be in form and substance reasonably
acceptable to the Purchaser.  No such resignation shall become effective until a
successor  shall have assumed the Servicer's  responsibilities  and  obligations
hereunder in the manner provided in Section 11.01.

      Section 8.05 No Transfer of Servicing.

      With  respect to the  retention  of the  Servicer to service the  Mortgage
Loans  hereunder,  the Servicer  acknowledges  that the  Purchaser  has acted in
reliance upon the Servicer's  independent  status, the adequacy of its servicing
facilities, plan, personnel,  records and procedures, its integrity,  reputation
and financial standing and the continuance thereof.  Without in any way limiting
the  generality  of this  Section,  the  Servicer  shall not either  assign this
Agreement or the servicing  hereunder or delegate its rights or duties hereunder
or any portion thereof, or sell or otherwise dispose of all or substantially all
of its property or assets,  without the prior written approval of the Purchaser,
which consent shall be granted or withheld in the  Purchaser's  sole  reasonable
discretion.

      Without in any way limiting the  generality  of this Section  8.05, in the
event that the  Servicer  either shall  assign this  Agreement or the  servicing
responsibilities  hereunder  or  delegate  its duties  hereunder  or any portion
thereof  without (i)  satisfying the  requirements  set forth herein or (ii) the
prior written consent of the Purchaser,  then the Purchaser shall have the right
to terminate this  Agreement,  without any payment of any penalty or damages and
without any  liability  whatsoever  to the Servicer  (other than with respect to
accrued but unpaid Servicing Fees and Servicing  Advances  remaining  unpaid) or
any third party.


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<PAGE>

                                   ARTICLE IX

                                     DEFAULT

      Section 9.01 Events of Default.

      In case one or more of the  following  Events of Default by the Company or
the Servicer shall occur and be continuing, that is to say:

      (i) any  failure by the  Servicer  to remit to the  Purchaser  any payment
required to be made under the terms of this Agreement which continues unremedied
for a period of one (1) Business Day after notice; or

      (ii) failure on the part of the Company or the  Servicer,  as  applicable,
duly to observe or perform in any material respect any other of the covenants or
agreements on the part of the Company or the Servicer, as applicable,  set forth
in this Agreement  which  continues  unremedied for a period of thirty (30) days
after the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Company by the Purchaser; or

      (iii) a decree  or order of a court or  agency  or  supervisory  authority
having  jurisdiction  for  the  appointment  of a  conservator  or  receiver  or
liquidator in any insolvency,  bankruptcy,  readjustment of debt, marshalling of
assets  and  liabilities  or  similar  proceedings,  or for  the  winding-up  or
liquidation of its affairs,  shall have been entered  against the Company or the
Servicer and such decree or order shall have remained in force  undischarged  or
unstayed for a period of sixty days; or

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

      (v) the Company or the  Servicer  shall admit in writing its  inability to
pay its respective  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

      (vi)  Company  ceases to be  approved  by either  Fannie Mae or FHLMC as a
mortgage  loan seller for more than thirty days,  or the  Servicer  ceases to be
approved by either Fannie Mae or FHLMC as a mortgage loan servicer for more than
thirty days; or

      (vii) the Servicer attempts to assign its right to servicing  compensation
hereunder or the Servicer  attempts,  without the consent of the  Purchaser,  to
sell or otherwise  dispose of all or substantially all of its property or assets
or to assign this  Agreement or the servicing  responsibilities  hereunder or to
delegate its duties hereunder or any portion thereof; or


                                       68
<PAGE>

      (viii)  (a) the  Servicer  ceases to be  licensed  to  service  first lien
residential  mortgage loans in any jurisdiction in which a Mortgaged Property is
located  and such  licensing  is  required,  or (b) either the  Servicer  or the
Company cease to be qualified to transact business in any jurisdiction  where it
is  currently  so  qualified,  but  only to the  extent  such  non-qualification
materially  and  adversely  affects the Company's or the  Servicer's  ability to
perform its obligations hereunder; or

      (ix) the Servicer fails to meet the eligibility  criteria set forth in the
last sentence of Section 8.02.

      Then,  and in each and every  such  case,  so long as an Event of  Default
shall not have been remedied, the Purchaser, by notice in writing to the Company
or the Servicer,  as applicable (except in the case of an Event of Default under
clauses (iii),  (iv) or (v) above, or as otherwise stated herein, in which case,
automatically  and without  notice)  may,  in  addition  to whatever  rights the
Purchaser  may have  under  Sections  3.03 and 8.01 and at law or  equity  or to
damages, including injunctive relief and specific performance, terminate all the
rights and obligations of the Company or the Servicer, as applicable (and if the
Servicer is servicing any of the Mortgage Loans in a Securitization Transaction,
appoint a successor  servicer  reasonably  acceptable to any Master Servicer for
such Securitization Transaction) under this Agreement and in and to the Mortgage
Loans and the proceeds thereof without compensating the Company and the Servicer
for the same. On or after the receipt by the Company or Servicer of such written
notice (or, in the case of an Event of Default under clauses (iii),  (iv) or (v)
above, in which case, automatically and without notice), all authority and power
of the Company or the Servicer,  as applicable,  under this  Agreement,  whether
with respect to the Mortgage Loans or otherwise,  shall pass to and be vested in
the successor appointed pursuant to Section 11.01. Upon written request from the
Purchaser,  the  Servicer  shall  prepare,  execute  and  deliver,  any  and all
documents  and  other  instruments,  place in such  successor's  possession  all
Mortgage  Files,  and do or  accomplish  all other acts or things  necessary  or
appropriate  to effect the  purposes of such notice of  termination,  whether to
complete the transfer and  endorsement  or assignment of the Mortgage  Loans and
related documents,  or otherwise,  at the Servicer's sole expense.  The Servicer
agrees to cooperate  with the  Purchaser  and such  successor  in effecting  the
termination of the Servicer's responsibilities and rights hereunder,  including,
without  limitation,  the transfer to such successor for administration by it of
all cash  amounts  which shall at the time be  credited  by the  Servicer to the
Custodial  Account or Escrow Account or thereafter  received with respect to the
Mortgage Loans or any REO Property.

      The Servicer  shall  promptly  reimburse the Purchaser (or any designee of
the Purchaser, such as a master servicer) and any Depositor, as applicable,  for
all  reasonable  expenses  incurred by the Purchaser (or such  designee) or such
Depositor,  as such are incurred,  in  connection  with the  termination  of the
Servicer as servicer and the  transfer of  servicing of the Mortgage  Loans to a
successor  servicer.  The provisions of this paragraph  shall not limit whatever
rights the Purchaser or any  Depositor  may have under other  provisions of this
Agreement and/or any applicable  Reconstitution Agreement or otherwise,  whether
in equity or at law,  such as an action for  damages,  specific  performance  or
injunctive relief.

      Section 9.02 Waiver of Defaults.


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<PAGE>

      The Purchaser may waive only by written  notice any default by the Company
or the  Servicer  in  the  performance  of its  obligations  hereunder  and  its
consequences.  Upon any such waiver of a past default,  such default shall cease
to exist,  and any Event of Default  arising  therefrom  shall be deemed to have
been remedied for every purpose of this  Agreement.  No such waiver shall extend
to any subsequent or other default or impair any right consequent thereon except
to the extent expressly so waived in writing.


                                       70
<PAGE>

                                    ARTICLE X

                                   TERMINATION

      Section 10.01 Termination.

      The respective  obligations  and  responsibilities  of the Company and the
Servicer  shall  terminate  upon:  (i) the later of the final  payment  or other
liquidation (or any advance with respect  thereto) of the last Mortgage Loan and
the  disposition  of all remaining REO Property and the  remittance of all funds
due hereunder;  or (ii) by mutual  consent of the Company,  the Servicer and the
Purchaser in writing;  or (iii)  termination  with cause under the terms of this
Agreement.  Termination  of the Agreement  pursuant to Section 10.01 (iii) shall
void Purchaser's  obligation to purchase  Mortgage Loans for which Purchaser has
issued  a  Confirmation,  commitment  confirmation  or a  substantially  similar
commitment to purchase Mortgage Loans.

      Section 10.02 [Reserved]

      Section 10.03 Survival.

      Termination of this Agreement  under Section 10.01 shall not affect any of
the   Company's   or   the   Servicer's    obligations   regarding   repurchase,
indemnification  or otherwise,  all of which shall survive such  termination and
remain in full force and effect.

                                   ARTICLE XI

                            MISCELLANEOUS PROVISIONS

      Section 11.01 Successor to the Servicer.

      Prior to termination of Servicer's  responsibilities and duties under this
Agreement  pursuant to  Sections  4.13,  8.04,  9.01,  10.01 (ii) or (iii),  the
Purchaser   shall   (i)   succeed   to  and   assume   all  of  the   Servicer's
responsibilities,  rights,  duties and  obligations  relating to servicing under
this Agreement, or (ii) appoint a successor having the characteristics set forth
in Section  8.02 hereof and which shall  succeed to all rights and assume all of
the  responsibilities,  duties  and  liabilities  of  the  Servicer  under  this
Agreement  prior to the termination of Servicer's  responsibilities,  duties and
liabilities  under this  Agreement.  In  connection  with such  appointment  and
assumption,  the Purchaser may make such  arrangements  for the  compensation of
such  successor  out of  payments on Mortgage  Loans as the  Purchaser  and such
successor shall agree. In the event that the Servicer's duties, responsibilities
and  liabilities  under this  Agreement  should be  terminated  pursuant  to the
aforementioned   Sections,   the  Servicer  shall   discharge  such  duties  and
responsibilities  during the period from the date it acquires  knowledge of such
termination  until the effective  date thereof with the same degree of diligence
and prudence which it is obligated to exercise under this  Agreement,  and shall
take no action whatsoever that might impair or prejudice the rights or financial
condition of its successor.  The resignation or removal of Servicer  pursuant to
the  aforementioned  Sections shall not become effective until a successor shall
be appointed  pursuant to this Section and shall in no event relieve the Company
or the Servicer of the  representations and warranties made pursuant to Sections
3.01, 3.02 and 3.03 and the remedies  available to the Purchaser  thereunder and
under Section 8.01, it being  understood  and agreed that the provisions of such
Sections  3.01,  3.02,  3.03 and 8.01 shall be applicable to the Company and the
Servicer notwithstanding any such resignation or termination of the Servicer, or
the termination of this Agreement.


                                       71
<PAGE>

      Any successor appointed as provided herein shall execute,  acknowledge and
deliver to the  Servicer  and to the  Purchaser  an  instrument  accepting  such
appointment,  whereupon  such  successor  shall become fully vested with all the
rights,  powers,  duties,  responsibilities,  obligations and liabilities of the
Servicer,  with like effect as if originally named as a party to this Agreement.
Any  termination or  resignation  of the Servicer or this Agreement  pursuant to
Section 4.13, 8.04, 9.01 or 10.01 shall not affect any claims that the Purchaser
may  have  against  the  Servicer  arising  prior  to any  such  termination  or
resignation.

      The Servicer  shall  promptly  deliver to the  successor  the funds in the
Custodial  Account  and the Escrow  Account and the  Mortgage  Files and related
documents and statements held by it hereunder and the Servicer shall account for
all funds.  The Servicer shall execute and deliver such  instruments and do such
other things all as may reasonably be required to more fully and definitely vest
and confirm in the successor all such rights, powers, duties,  responsibilities,
obligations  and   liabilities  of  the  Servicer.   The  successor  shall  make
arrangements  as  it  may  deem   appropriate  to  reimburse  the  Servicer  for
unrecovered  Servicing  Advances which the successor retains hereunder and which
would  otherwise have been recovered by the Servicer  pursuant to this Agreement
but for the appointment of the successor servicer.

      Upon a successor's  acceptance of  appointment as such, the Servicer shall
notify by mail the Purchaser of such appointment.

      Section 11.02 Amendment.

      This  Agreement  may be  amended  from  time to time by the  Company,  the
Servicer and the  Purchaser  by written  agreement  signed by the  Company,  the
Servicer and the Purchaser.


                                       72
<PAGE>

      Section 11.03 Recordation of Agreement.

      To the extent  permitted by applicable  law, this  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 the properties
subject to the  Mortgages  are  situated,  and in any other  appropriate  public
recording  office or elsewhere,  such recordation to be effected by the Servicer
at the  Servicer's  expense on  direction  of the  Purchaser  accompanied  by an
opinion  of  counsel  to  the  effect  that  such  recordation   materially  and
beneficially  affects the  interest of the  Purchaser  or is  necessary  for the
administration or servicing of the Mortgage Loans.

      Section 11.04 Governing Law.

      This  Agreement  and the  related  Term  Sheet  shall be  governed  by and
construed in accordance  with the laws of the State of New York (without  giving
effect to its choice of law rules and principles) except to the extent preempted
by Federal law. The  obligations,  rights and remedies of the parties  hereunder
shall be determined in accordance with such laws.

      Section 11.05 Notices.

      Any  demands,  notices  or  other  communications  permitted  or  required
hereunder  shall be in  writing  and shall be deemed  conclusively  to have been
given if personally  delivered at or mailed by registered mail, postage prepaid,
and return receipt  requested or certified mail,  return receipt  requested,  or
transmitted by telex,  telegraph or telecopier and confirmed by a similar mailed
writing, as follows:

      (i) if to the Purchaser:

          EMC Mortgage Corporation
          Mac Arthur Ridge II,
          909 Hidden Ridge Drive, Suite 200
          Irving, Texas 75038
          Attention: Ms. Ralene Ruyle
          Telecopier No.: (972) 444-2810

          With a copy to:

          Bear Stearns Mortgage Capital Corporation
          383 Madison Avenue
          New York, New York 10179
          Attention: Mary Haggerty

     (ii) if to the Servicer:

          David Friedman
          American Home Mortgage Servicing, Inc.
          4600 Regent Boulevard, Suite 200
          Irving, Texas 75063


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<PAGE>

          With a copy to:

          Alan Horn, General Counsel
          American Home Mortgage Corp.
          538 Broadhollow Road
          Melville, New York 11747
          Telecopier No. (800) 209-7276

    (iii) if to the Company:

          Robert F. Johnson, Jr.
          American Home Mortgage Corp.
          538 Broadhollow Road
          Melville, New York 11747
          Telecopier No. (866) 822-3288

          With a copy to:

          Alan Horn, General Counsel
          American Home Mortgage Corp.
          538 Broadhollow Road
          Melville, New York 11747
          Telecopier No. (800) 209-7276

or such other  address as may  hereafter  be  furnished  to the other  party by
like  notice.  Any such  demand,  notice or  communication  hereunder  shall be
deemed  to have been  received  on the date  delivered  to or  received  at the
premises  of  the  addressee  (as  evidenced,  in the  case  of  registered  or
certified mail, by the date noted on the return receipt).

      Section 11.06 Severability of Provisions.

      Any part, provision,  representation or warranty of this Agreement and the
related  Term  Sheet  which  is  prohibited  or  which  is  held  to be  void or
unenforceable  shall  be  ineffective  to the  extent  of  such  prohibition  or
unenforceability without invalidating the remaining provisions hereof. Any part,
provision,  representation  or warranty of this Agreement which is prohibited or
unenforceable or is held to be void or  unenforceable in any jurisdiction  shall
be ineffective,  as to such  jurisdiction,  to the extent of such prohibition or
unenforceability  without  invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction as to any Mortgage Loan
shall  not  invalidate  or  render  unenforceable  such  provision  in any other
jurisdiction.  To the extent  permitted by  applicable  law, the parties  hereto
waive any provision of law that prohibits or renders void or  unenforceable  any
provision  hereof. If the invalidity of any part,  provision,  representation or
warranty  of this  Agreement  shall  deprive any party of the  economic  benefit
intended to be conferred by this Agreement, the parties shall negotiate, in good
faith, to develop a structure the economic effect of which is nearly as possible
the  same as the  economic  effect  of this  Agreement  without  regard  to such
invalidity.


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<PAGE>

      Section 11.07 Exhibits.

      The exhibits to this  Agreement  are hereby  incorporated  and made a part
hereof and are an integral part of this Agreement.

      Section 11.08 General Interpretive Principles.

      For purposes of this Agreement,  except as otherwise expressly provided or
unless the context otherwise requires:

      (i) the terms defined in this Agreement have the meanings assigned to them
in this Agreement and include the plural as well as the singular, and the use of
any gender herein shall be deemed to include the other gender;

      (ii)  accounting  terms not  otherwise  defined  herein have the  meanings
assigned to them in accordance with generally accepted accounting principles;

      (iii)   references   herein  to  "Articles",   "Sections",   Subsections",
"Paragraphs",  and other  subdivisions  without  reference  to a document are to
designated Articles, Sections, Subsections, Paragraphs and other subdivisions of
this Agreement;

      (iv) a reference to a Subsection without further reference to a Section is
a reference  to such  Subsection  as  contained in the same Section in which the
reference  appears,  and this rule  shall  also  apply to  Paragraphs  and other
subdivisions;

      (v) the words "herein",  "hereof ", "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular provision;

      (vi) the term  "include" or "including"  shall mean without  limitation by
reason of enumeration; and

      (viii)  headings of the Articles and  Sections in this  Agreement  are for
reference purposes only and shall not be deemed to have any substantive effect.

      Section 11.09 Reproduction of Documents.

      This  Agreement and all documents  relating  thereto,  including,  without
limitation,  (i)  consents,  waivers and  modifications  which may  hereafter be
executed,  (ii)  documents  received  by any  party at the  closing,  and  (iii)
financial statements, certificates and other information previously or hereafter
furnished,  may be  reproduced  by  any  photographic,  photostatic,  microfilm,
micro-card,  miniature  photographic or other similar process. The parties agree
that any such  reproduction  shall be  admissible  in evidence  as the  original
itself in any judicial or administrative proceeding, whether or not the original
is in existence and whether or not such  reproduction was made by a party hereto
in the  regular  course of  business,  and that any  enlargement,  facsimile  or
further  reproduction  of such  reproduction  shall  likewise be  admissible  in
evidence.


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<PAGE>

      Section 11.10 Confidentiality of Information.

      Each party  recognizes  that, in connection  with this  Agreement,  it may
become  privy to  non-public  information  regarding  the  financial  condition,
operations  and  prospects  of the other  party.  Each party  agrees to keep all
non-public information regarding the other party strictly  confidential,  and to
use all such  information  solely  in order to  effectuate  the  purpose  of the
Agreement,  provided that each party may provide confidential information to (i)
its employees, agents and affiliates who have a need to know such information in
order  to  effectuate  the  transaction,   (ii)  a  regulatory   authority  with
supervisory power over Purchaser,  the Servicer or the Company,  or (iii) to any
Person that the disclosing party reasonably believes to be necessary relating to
the  enforcement  of such party's rights  hereunder,  provided in all cases that
such information is identified as confidential non-public information.

      Notwithstanding  other  provisions  of this  Section  11.10  or any  other
express or implied agreement, arrangement, or understanding to the contrary, the
Company,  the Servicer and Purchaser (the "Parties") agree that the Parties (and
their employees,  representatives  and other agents) may disclose to any and all
persons,  without  limitation of any kind from the  commencement of discussions,
the  purported or claimed U.S.  federal  income tax treatment of the purchase of
the Mortgage  Loans and related  transactions  covered by this letter  agreement
("tax  treatment")  and any fact that may be relevant to  understanding  the tax
treatment ("tax structure") and all materials of any kind (including opinions or
other tax  analyses)  that are  provided  to the  Parties  relating  to such tax
treatment  and  tax  structure,   except  where  confidentiality  is  reasonably
necessary to comply with securities laws.

      The Company and the Servicer each agree that the Company and Servicer,  as
applicable,  (i) shall comply with any applicable laws and regulations regarding
the privacy and security of Consumer Information  including,  but not limited to
the  Gramm-Leach-Bliley  Act,  Title V, Subtitle A, 15 U.S.C.  ss. 6801 et seq.,
(ii) shall not use  Consumer  Information  in any manner  inconsistent  with any
applicable laws and  regulations  regarding the privacy and security of Consumer
Information,  (iii) shall not disclose  Consumer  Information  to third  parties
except at the specific written  direction of the Purchaser,  (iv) shall maintain
adequate physical,  technical and administrative  safeguards to protect Consumer
Information  from  unauthorized  access as provided by the  applicable  laws and
regulations,  and (v) shall  immediately  notify the  Purchaser of any actual or
suspected breach of the confidentiality of Consumer  Information that would have
a material and adverse effect on the Purchaser.

      The Company and the Servicer each agree that the Company and the Servicer,
as applicable,  shall indemnify, defend and hold the Purchaser harmless from and
against any loss,  claim or liability  the Purchaser may suffer by reason of the
Company's or the Servicer's,  as applicable,  failure to perform the obligations
set forth in this Section 11.10.

      Section 11.11 Recordation of Assignments of Mortgage.


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<PAGE>

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

      Section 11.12 Assignment.

      The Purchaser shall have the right,  without the consent of the Company or
the Servicer,  to assign, in whole or in part, its interest under this Agreement
with respect to some or all of the Mortgage  Loans,  and designate any person to
exercise any rights of the Purchaser  hereunder,  by executing an Assignment and
Assumption  Agreement  substantially  in the form of  Exhibit  D hereto  and the
assignee or designee shall accede to the rights and obligations hereunder of the
Purchaser with respect to such Mortgage  Loans. In no event shall Purchaser sell
a partial  interest in any Mortgage  Loan without the prior  written  consent of
Company,  which consent shall not be unreasonably  denied. All references to the
Purchaser in this Agreement shall be deemed to include its assignee or designee.
The  Company  shall have the right,  only with the consent of the  Purchaser  or
otherwise in accordance with this Agreement, to assign, in whole or in part, its
interest under this Agreement with respect to some or all of the Mortgage Loans.

      Section 11.13 No Partnership.

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

      Section 11.14 Signature Pages/Counterparts; Successors and Assigns.

      This  Agreement  and/or any Term Sheet shall be executed by each party (i)
in one or more fully  executed  copies,  each of which shall  constitute a fully
executed  original  Agreement,  and/or (ii) in  counterparts  having one or more
original  signatures,   and  all  such  counterparts   containing  the  original
signatures of all of the parties hereto taken together shall  constitute a fully
executed  original  Agreement  or Term Sheet,  as  applicable,  and/or  (iii) by
delivery of one or more  original  signed  signature  pages to the other parties
hereto (x) by mail or courier, and/or (y) by electronic transmission,  including
without  limitation  by  telecopier,  facsimile  or  email  of a  scanned  image
("Electronic Transmission"),  each of which as received shall constitute for all
purposes an executed  original  signature page of such party.  The Purchaser may
deliver a copy of this  Agreement  and/or  any Term  Sheet,  fully  executed  as
provided  herein,  to each other  party  hereto by mail  and/or  courier  and/or
Electronic Transmission,  and such copy as so delivered shall constitute a fully
executed original Agreement or Term Sheet, as applicable,  superseding any prior
form of the Agreement or Term Sheet,  as applicable,  that differs  therefrom in
any respect.  This  Agreement  shall inure to the benefit of and be binding upon
the Company and the Purchaser and their respective successor and assigns.


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<PAGE>

      Section 11.15 Entire Agreement.

      The Company  acknowledges that no representations,  agreements or promises
were made to the Company by the  Purchaser  or any of its  employees  other than
those representations,  agreements or promises specifically contained herein and
in the  Confirmation.  The  Confirmation and this Agreement and the related Term
Sheet sets forth the entire understanding between the parties hereto;  provided,
however,  only this  Agreement  and the related Term Sheet shall be binding upon
all successors of both parties.  In the event of any  inconsistency  between the
Confirmation and this Agreement, this Agreement and the related Term Sheet shall
control.

      Section 11.16. No Solicitation.

      From and after the related  Closing  Date,  the  Company and the  Servicer
agree  that  each will not take any  action or permit or cause any  action to be
taken by any of its agents or affiliates,  to personally,  by telephone or mail,
solicit  the  borrower  or obligor  under any  Mortgage  Loan to  refinance  the
Mortgage  Loan, in whole or in part,  without the prior  written  consent of the
Purchaser.  Notwithstanding the foregoing,  it is understood and agreed that (i)
promotions  undertaken  by the Company or the  Servicer or any  affiliate of the
Company or the Servicer  which are directed to the general  public at large,  or
segments  thereof,  provided  that no segment  shall  consist  primarily  of the
Mortgage  Loans,   including,   without   limitation,   mass  mailing  based  on
commercially   acquired   mailing   lists,   newspaper,   radio  and  television
advertisements and (ii) responses to unsolicited requests or inquiries made by a
Mortgagor or an agent of a Mortgagor,  shall not constitute  solicitation  under
this  Section  11.16.  This  Section  11.16 shall not be deemed to preclude  the
Company or the Servicer or any of their  respective  affiliates  from soliciting
any Mortgagor for any other financial products or services.  The Company and the
Servicer  shall each use its best efforts to prevent the sale of the name of any
Mortgagor to any Person who is not affiliate of the Company or the Servicer,  as
applicable.

      Section 11.17. Closing.

      The closing for the  purchase  and sale of the  Mortgage  Loans shall take
place on the related  Closing Date.  The closing shall be either:  by telephone,
confirmed by letter or wire as the parties shall agree,  or conducted in person,
at such place as the parties shall agree.

      The closing for the Mortgage Loans to be purchased on the related  Closing
Date shall be subject to each of the following conditions:

      (a) at least one (1) Business Day prior to the related  Closing Date,  the
Company  shall  deliver to the  Purchaser  a magnetic  diskette,  or transmit by
modem,  a listing on a  loan-level  basis of the  information  contained  in the
related Mortgage Loan Schedule attached to the related Term Sheet;

      (b) all of the  representations  and  warranties  of the  Company  and the
Servicer  under this  Agreement  shall be materially  true and correct as of the
related Closing Date and no event shall have occurred which,  with notice or the
passage of time, would constitute a material default under this Agreement;


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<PAGE>

      (c) the Purchaser shall have received,  or the Purchaser's attorneys shall
have received in escrow, all documents required pursuant to this Agreement,  the
related Term Sheet, an opinion of counsel and an officer's  certificate,  all in
such forms as are agreed upon and acceptable to the Purchaser,  duly executed by
all  signatories  other than the  Purchaser  as  required  pursuant to the terms
hereof;

      (d) the Company and the Servicer shall have each delivered and released to
the  Purchaser  (or its  designee)  on or prior to the related  Closing Date all
documents  required pursuant to the terms of this Agreement and the related Term
Sheet; and

      (e) all other terms and  conditions  of this  Agreement,  the related Term
Sheet and the Confirmation shall have been materially complied with.

      Subject  to the  foregoing  conditions,  the  Purchaser  shall  pay to the
Company on the related  Closing Date the Purchase Price,  plus accrued  interest
pursuant to Section  2.02 of this  Agreement,  by wire  transfer of  immediately
available funds to the account designated by the Company.

      Section 11.18. Cooperation of Company with a Reconstitution.

      The Company,  the Servicer  and the  Purchaser  agree that with respect to
some or all of the Mortgage  Loans, on or after the related Closing Date, on one
or more dates (each a "Reconstitution Date") at the Purchaser's sole option, the
Purchaser  may effect a sale (each,  a  "Reconstitution")  of some or all of the
Mortgage Loans then subject to this Agreement, without recourse, to:

      (a) one or more  third  party  purchasers  in one or  more in  whole  loan
transfers (each, a "Whole Loan Transfer"); or

      (b) one or more  trusts or other  entities  to be formed as part of one or
more Securitization Transactions.

      The  Company  and the  Servicer  agree to execute in  connection  with any
agreements  among the Purchaser,  the Company,  the Servicer and any servicer in
connection with a Whole Loan Transfer, an Assignment, Assumption and Recognition
Agreement  substantially  in the form of  Exhibit D hereto,  or, at  Purchaser's
request,  a seller's  warranties and servicing  agreement or a participation and
servicing  agreement  or  similar  agreement  in form and  substance  reasonably
acceptable to the parties, and in connection with a Securitization  Transaction,
a pooling and servicing agreement in form and substance reasonably acceptable to
the parties, (collectively the agreements referred to herein are designated, the
"Reconstitution  Agreements").  It is  understood  that any such  Reconstitution
Agreements  will not contain any greater  obligations  on the part of Company or
the Servicer than are contained in this Agreement.  Notwithstanding  anything to
the contrary in this Section 11.18,  the Servicer  agrees that it is required to
perform the obligations described in Exhibit K hereto.

      With  respect  to  each  Whole  Loan  Transfer  and  each   Securitization
Transaction  entered into by the  Purchaser,  the Company and the Servicer agree
(1) to cooperate  fully with the Purchaser and any  prospective  purchaser  with
respect to all reasonable requests and due diligence procedures; (2) to execute,
deliver and perform all Reconstitution Agreements required by the Purchaser; (3)
to restate the  representations and warranties set forth in this Agreement as of
the settlement or closing date in connection with such  Reconstitution  (each, a
"Reconstitution Date").


                                       79
<PAGE>

      In addition,  the Company and the Servicer  shall provide to such servicer
or  issuer,   as  the  case  may  be,  and  any  other   participants   in  such
Reconstitution:

      (i) any and all information  and  appropriate  verification of information
which may be  reasonably  available  to the  Company  or the  Servicer,  whether
through  letters of its auditors and counsel or  otherwise,  as the Purchaser or
any such other participant shall request upon reasonable demand;

      (ii) such additional representations,  warranties,  covenants, opinions of
counsel, letters from auditors, and certificates of public officials or officers
of the Company or the Servicer as are  reasonably  agreed upon by the Company or
the Servicer, as applicable, and the Purchaser or any such other participant;

      (iii) within five (5) Business  Days after request by the  Purchaser,  the
information  with respect to the Company (as  originator)  and each  Third-Party
Originator  of the  Mortgage  Loans as  required  under Item  1110(a) and (b) of
Regulation AB, a summary of the  requirements of which has of the date hereof is
attached hereto as Exhibit N for convenience of reference only, as determined by
Purchaser  in its sole  discretion.  If requested  by the  Purchaser,  this will
include  information  about  the  applicable   credit-granting  or  underwriting
criteria;

      (iv) within five (5) Business  Days after  request by the  Purchaser,  the
Company shall provide (or, as applicable,  cause each Third-Party  Originator to
provide)  Static  Pool  Information  with  respect to the  mortgage  loans (of a
similar type as the Mortgage Loans, as reasonably identified by the Purchaser as
provided below)  originated by (i) the Company,  if the Company is an originator
of Mortgage  Loans  (including as an acquirer of Mortgage Loans from a Qualified
Correspondent),  and/or  (ii) each  Third-Party  Originator.  Such  Static  Pool
Information shall be prepared by the Company (or Third-Party  Originator) on the
basis of its reasonable, good faith interpretation of the requirements of Item 1
105(a)(1)-(3)  and (c) of Regulation  AB. To the extent that there is reasonably
available to the Company (or  Third-Party  Originator)  Static Pool  Information
with respect to more than one mortgage loan type, the Purchaser or any Depositor
shall be entitled to specify  whether some or all of such  information  shall be
provided pursuant to this paragraph. The content of such Static Pool Information
may be in  the  form  customarily  provided  by the  Company,  and  need  not be
customized for the Purchaser or any Depositor.  Such Static Pool Information for
each vintage origination year or prior securitized pool, as applicable, shall be
presented in increments no less  frequently  than quarterly over the life of the
mortgage loans  included in the vintage  origination  year or prior  securitized
pool. The most recent periodic  increment must be as of a date no later than 135
days prior to the date of the prospectus or other offering document in which the
Static Pool  Information  is to be included or  incorporated  by reference.  The
Static Pool Information  shall be provided in an electronic format that provides
a permanent  record of the  information  provided,  such as a portable  document
format (pdf) file, or other such electronic  format  reasonably  required by the
Purchaser or the Depositor, as applicable;


                                       80
<PAGE>

      (v)  within  five  (5)  Business  Days  after  request  by the  Purchaser,
information  with  respect to the  Servicer  (as  servicer)  as required by Item
1108(b) and (c) of Regulation AB, a summary of the  requirements  of which as of
the date hereof is attached  hereto as Exhibit N for  convenience  of  reference
only, as determined by Purchaser in its sole  discretion.  In the event that the
Servicer  has  delegated  any  servicing  responsibilities  with  respect to the
Mortgage  Loans to a  Subservicer,  the Servicer  shall provide the  information
required pursuant to this clause with respect to the Subservicer;

      (vi) within five (5) Business Days after request by the Purchaser,

            (a) information regarding any legal proceedings pending (or known to
      be  contemplated)  against the Company (as  originator)  and  Servicer (as
      servicer)  and  each  other  originator  of the  Mortgage  Loans  and each
      Subservicer  as required by Item 1117 of  Regulation  AB, a summary of the
      requirements  of which as of the date hereof is attached hereto as Exhibit
      N for  convenience  of reference  only,  as determined by Purchaser in its
      sole discretion,

            (b) information  regarding  affiliations with respect to the Company
      (as  originator)  and Servicer (as servicer) and each other  originator of
      the  Mortgage  Loans and each  Subservicer  as required by Item 1119(a) of
      Regulation  AB,  a  summary  of the  requirements  of which as of the date
      hereof is attached  hereto as Exhibit N for convenience of reference only,
      as determined by Purchaser in its sole discretion, and

            (c)  information  regarding   relationships  and  transactions  with
      respect to the Company (as originator) and Servicer (as servicer) and each
      other originator of the Mortgage Loans and each Subservicer as required by
      Item 1119(b) and (c) of Regulation  AB, a summary of the  requirements  of
      which  as  of  the  date  hereof  is  attached  hereto  as  Exhibit  N for
      convenience  of reference  only,  as  determined  by Purchaser in its sole
      discretion;

      (vii) if so requested by the Purchaser,  the Company shall provide (or, as
applicable, cause each Third-Party Originator to provide), at the expense of the
requesting party (to the extent of any additional incremental expense associated
with delivery  pursuant to this  Agreement),  such  statements  and  agreed-upon
procedures letters of certified public accountants  reasonably acceptable to the
Purchaser or Depositor,  as  applicable,  pertaining to Static Pool  Information
relating  to prior  securitized  pools  for  securitizations  closed on or after
January 1, 2006 or, in the case of Static Pool  Information  with respect to the
Company's or Third-Party  Originator's  originations  or purchases,  to calendar
months commencing January 1, 2006, or to any financial  information  included in
any other disclosure provided under this Section 11.18, as the Purchaser or such
Depositor  shall  reasonably  request.  Such  statements  and  letters  shall be
addressed  to and be for the benefit of such  parties as the  Purchaser  or such
Depositor shall designate,  which may include,  by way of example,  any Sponsor,
any Depositor and any broker dealer acting as  underwriter,  placement  agent or
initial  purchaser  with  respect  to a  Securitization  Transaction.  Any  such
statement  or  letter  may  take the form of a  standard,  generally  applicable
document accompanied by a reliance letter authorizing reliance by the addressees
designated by the Purchaser or such Depositor;

      (viii) For the purpose of satisfying  the reporting  obligation  under the
Exchange Act with respect to any class of asset-backed  securities,  the Company
and the Servicer  shall each (or shall cause each  Subservicer  and  Third-Party
Originator to), in accordance with Section 3.01(r), (i) provide immediate notice
to the  Purchaser,  any Master  Servicer and any Depositor in writing of (A) any
material  litigation or  governmental  proceedings  involving  the Company,  the
Servicer any Subservicer or any Third-Party Originator,  (B) any affiliations or
relationships  that  develop  following  the  closing  date of a  Securitization
Transaction  between  the  Company,   the  Servicer,   any  Subservicer  or  any
Third-Party  Originator  and  any of the  parties  specified  in  clause  (D) of
paragraph  (a) of this Section (and any other  parties  identified in writing by
the requesting party) with respect to such Securitization  Transaction,  (C) any
Event of  Default  under  the  terms  of this  Agreement  or any  Reconstitution
Agreement,  (D) any merger,  consolidation or sale of  substantially  all of the
assets of the  Company or the  Servicer,  and (E) the  Servicer's  entry into an
agreement with a Subservicer  to perform or assist in the  performance of any of
the Company's  obligations under this Agreement or any Reconstitution  Agreement
and (ii)  provide to the  Purchaser  and any  Depositor  a  description  of such
proceedings, affiliations or relationships;


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<PAGE>

      (ix) As a condition to the  succession to the Servicer or any  Subservicer
as servicer or subservicer under this Agreement or any Reconstitution  Agreement
by any Person (i) into which the Servicer or such  Subservicer  may be merged or
consolidated,  or (ii) which may be  appointed as a successor to the Servicer or
any  Subservicer,  the  Servicer  shall  provide  to the  Purchaser,  any Master
Servicer,  and any  Depositor,  at least 15 calendar days prior to the effective
date of such succession or appointment,  (x) written notice to the Purchaser and
any Depositor of such  succession or appointment  and (y) in writing and in form
and substance reasonably  satisfactory to the Purchaser and such Depositor,  all
information  reasonably  requested by the Purchaser or any Depositor in order to
comply with its reporting obligation under Item 6.02 of Form 8-K with respect to
any class of asset-backed securities;

      (x) In addition to such  information  as the  Servicer,  as  servicer,  is
obligated to provide pursuant to other  provisions of this Agreement,  not later
than ten (10) days  prior to the  deadline  for the  filing of any  distribution
report on Form 10-D in respect of any  Securitization  Transaction that includes
any of the  Mortgage  Loans  serviced by the  Servicer or any  Subservicer,  the
Servicer or such Subservicer,  as applicable,  shall, to the extent the Servicer
or such Subservicer has knowledge,  provide to the party  responsible for filing
such  report  (including,  if  applicable,  the Master  Servicer)  notice of the
occurrence of any of the following events along with all information,  data, and
materials  related  thereto as may be  required  to be  included  in the related
distribution  report on Form 10-D (as specified in the  provisions of Regulation
AB referenced below):

            (A) any material modifications,  extensions or waivers of pool asset
      terms, fees,  penalties or payments during the distribution period or that
      have  cumulatively  become  material  over  time  (Item  1121  (a)(1 1) of
      Regulation AB);

            (B) material breaches of pool asset representations or warranties or
      transaction covenants (Item 1121 (a)(1 2) of Regulation AB); and

            (C)  information  regarding new  asset-backed  securities  issuances
      backed  by the  same  pool  assets,  any  pool  asset  changes  (such  as,
      additions,  substitutions  or  repurchases),  and any material  changes in
      origination,  underwriting  or other criteria for acquisition or selection
      of pool assets (Item 1121 (a)(14) of Regulation AB); and


                                       82
<PAGE>

      (xi) The Servicer shall provide to the Purchaser,  any Master Servicer and
any  Depositor,  evidence  of  the  authorization  of  the  person  signing  any
certification or statement,  copies or other evidence of Fidelity Bond Insurance
and Errors and Omission Insurance policy, financial information and reports, and
such  other  information  related  to the  Servicer  or any  Subservicer  or the
Servicer or such Subservicer's performance hereunder.

      In the event of a conflict or inconsistency between the terms of Exhibit N
and the text of the applicable Item of Regulation AB as cited above, the text of
Regulation AB, its adopting release and other public statements of the SEC shall
control.

      The  Company  shall  indemnify  the  Purchaser,   each  affiliate  of  the
Purchaser,  and each of the following parties  participating in a Securitization
Transaction:  each sponsor and issuing entity;  each Person (including,  but not
limited to, any Master Servicer, if applicable) responsible for the preparation,
execution or filing of any report  required to be filed with the Commission with
respect to such Securitization  Transaction, or for execution of a certification
pursuant to Rule 13a-14(d) or Rule 15d-14(d) under the Exchange Act with respect
to such  Securitization  Transaction;  each broker dealer acting as underwriter,
placement  agent or initial  purchaser,  each  Person who  controls  any of such
parties or the Depositor (within the meaning of Section 15 of the Securities Act
and  Section 20 of the  Exchange  Act);  and the  respective  present and former
directors,  officers,  employees, agents and affiliates of each of the foregoing
and of the Depositor (each, an "Indemnified Party"), and shall hold each of them
harmless  from and  against  any  claims,  losses,  damages,  penalties,  fines,
forfeitures, legal fees and expenses and related costs, judgments, and any other
costs,  fees and expenses  that any of them may sustain  arising out of or based
upon:

      (i)(A) any untrue  statement of a material fact contained or alleged to be
contained in any information,  report, certification,  data, accountants' letter
or other  material  provided  under  this  Section  11.18 by or on behalf of the
Company,  or provided  under this Section 11.18 by or on behalf of the Servicer,
or any Subservicer,  Subcontractor or Third-Party Originator (collectively,  the
"Company Information"),  or (B) the omission or alleged omission to state in the
Company  Information  a  material  fact  required  to be stated  in the  Company
Information or necessary in order to make the statements  therein,  in the light
of the circumstances  under which they were made, not misleading;  provided,  by
way of  clarification,  that  clause (B) of this  paragraph  shall be  construed
solely by reference to the Company  Information and not to any other information
communicated in connection with a sale or purchase of securities, without regard
to whether the Company  Information or any portion thereof is presented together
with or separately from such other information;

      (ii) any breach by the  Company  of its  obligations  under  this  Section
11.18,  including  particularly  any failure by the Company,  the Servicer,  any
Subservicer,  any  Subcontractor  or any  Third-Party  Originator to deliver any
information,  report, certification,  accountants' letter or other material when
and as required under this Section  11.18,  including any failure by the Company
to identify  pursuant to Section 11.20 any  Subcontractor  "participating in the
servicing function" within the meaning of Item 1122 of Regulation AB;

      (iii) any breach by the Company of a representation  or warranty set forth
in Section 3.01 or in a writing  furnished  pursuant to Section 3.01(q) and made
as  of  a  date  prior  to  the  closing  date  of  the  related  Securitization
Transaction,  to the extent that such breach is not cured by such closing  date,
or any  breach by the  Company  of a  representation  or  warranty  in a writing
furnished pursuant to Section 3.01(q) to the extent made as of a date subsequent
to such closing date; or


                                       83
<PAGE>

      (iv) the  negligence  bad faith or willful  misconduct  of the  Company in
connection with its performance under this Section 11.18.

      If the indemnification  provided for herein is unavailable or insufficient
to hold harmless an  Indemnified  Party,  then the Company  agrees that it shall
contribute to the amount paid or payable by such  Indemnified  Party as a result
of any claims, losses, damages or liabilities incurred by such Indemnified Party
in such  proportion  as is  appropriate  to reflect the  relative  fault of such
Indemnified Party on the one hand and the Company on the other.

      In the case of any failure of  performance  described  above,  the Company
shall promptly reimburse the Purchaser,  any Depositor, as applicable,  and each
Person  responsible  for the  preparation,  execution  or filing  of any  report
required to be filed with the  Commission  with  respect to such  Securitization
Transaction,  or for execution of a certification  pursuant to Rule 13a-14(d) or
Rule 1 5d- 14(d)  under the  Exchange  Act with  respect to such  Securitization
Transaction,  for all costs  reasonably  incurred by each such party in order to
obtain the  information,  report,  certification,  accountants'  letter or other
material  not  delivered  as  required  by  the  Company,   the  Servicer,   any
Subservicer, any Subcontractor or any Third-Party Originator.

      This  indemnification  shall survive the  termination of this Agreement or
the termination of any party to this Agreement.

      The  Servicer  shall  indemnify  the  Purchaser,  each  affiliate  of  the
Purchaser,  and each of the following parties  participating in a Securitization
Transaction:  each sponsor and issuing entity;  each Person (including,  but not
limited to, any Master Servicer, if applicable) responsible for the preparation,
execution or filing of any report  required to be filed with the Commission with
respect to such Securitization  Transaction, or for execution of a certification
pursuant to Rule 13a-14(d) or Rule 15d-14(d) under the Exchange Act with respect
to such  Securitization  Transaction;  each broker dealer acting as underwriter,
placement  agent or initial  purchaser,  each  Person who  controls  any of such
parties or the Depositor (within the meaning of Section 15 of the Securities Act
and  Section 20 of the  Exchange  Act);  and the  respective  present and former
directors,  officers,  employees, agents and affiliates of each of the foregoing
and of the Depositor (each, an "Indemnified Party"), and shall hold each of them
harmless  from and  against  any  claims,  losses,  damages,  penalties,  fines,
forfeitures, legal fees and expenses and related costs, judgments, and any other
costs,  fees and expenses  that any of them may sustain  arising out of or based
upon:

      (i)(A) any untrue  statement of a material fact contained or alleged to be
contained in any information,  report, certification,  data, accountants' letter
or other  material  provided  under  this  Section  11.18 by or on behalf of the
Servicer,  or  provided  under  this  Section  11.18  by or  on  behalf  of  any
Subservicer or Subcontractor (collectively,  the "Servicer Information"), or (B)
the omission or alleged omission to state in the Servicer Information a material
fact required to be stated in the Servicer  Information or necessary in order to
make the statements  therein, in the light of the circumstances under which they
were made, not misleading; provided, by way of clarification, that clause (B) of
this  paragraph  shall  be  construed   solely  by  reference  to  the  Servicer
Information and not to any other  information  communicated in connection with a
sale  or  purchase  of  securities,  without  regard  to  whether  the  Servicer
Information or any portion thereof is presented together with or separately from
such other information;


                                       84
<PAGE>

      (ii) any breach by the  Servicer  of its  obligations  under this  Section
11.18,  including  particularly any failure by the Servicer,  any Subservicer or
any   Subcontractor   to  deliver  any   information,   report,   certification,
accountants'  letter or other  material when and as required  under this Section
11.18,  including  any failure by the  Servicer to identify  pursuant to Section
11.20 any  Subcontractor  "participating  in the servicing  function" within the
meaning of Item 1122 of Regulation AB;

      (iii) any breach by the Servicer of a representation or warranty set forth
in Section 3.01 or in a writing  furnished  pursuant to Section 3.01(q) and made
as  of  a  date  prior  to  the  closing  date  of  the  related  Securitization
Transaction,  to the extent that such breach is not cured by such closing  date,
or any breach by the  Servicer  of a  representation  or  warranty  in a writing
furnished pursuant to Section 3.01(q) to the extent made as of a date subsequent
to such closing date; or

      (iv) the  negligence  bad faith or willful  misconduct  of the Servicer in
connection with its performance under this Section 11.18.

      If the indemnification  provided for herein is unavailable or insufficient
to hold harmless an Indemnified  Party,  then the Servicer  agrees that it shall
contribute to the amount paid or payable by such  Indemnified  Party as a result
of any claims, losses, damages or liabilities incurred by such Indemnified Party
in such  proportion  as is  appropriate  to reflect the  relative  fault of such
Indemnified Party on the one hand and the Servicer on the other.

      In the case of any failure of performance  described  above,  the Servicer
shall promptly reimburse the Purchaser,  any Depositor, as applicable,  and each
Person  responsible  for the  preparation,  execution  or filing  of any  report
required to be filed with the  Commission  with  respect to such  Securitization
Transaction,  or for execution of a certification  pursuant to Rule 13a-14(d) or
Rule 1 5d- 14(d)  under the  Exchange  Act with  respect to such  Securitization
Transaction,  for all costs  reasonably  incurred by each such party in order to
obtain the  information,  report,  certification,  accountants'  letter or other
material  not  delivered as required by the  Servicer,  any  Subservicer  or any
Subcontractor.

      This  indemnification  shall survive the  termination of this Agreement or
the termination of any party to this Agreement.

      All Mortgage  Loans not sold or transferred  pursuant to a  Reconstitution
shall  remain  subject to, and  serviced in  accordance  with the terms of, this
Agreement and the related Term Sheet,  and with respect  thereto this  Agreement
and the related Term Sheet shall remain in full force and effect.


                                       85
<PAGE>

      Section 11.19. Monthly Reporting with Respect to a Reconstitution.

      As long as the Servicer  continues to service Mortgage Loans, the Servicer
agrees that with respect to any Mortgage Loan sold or transferred  pursuant to a
Reconstitution as described in Section 11.18 of this Agreement (a "Reconstituted
Mortgage Loan"), the Servicer, at its expense,  shall provide the Purchaser with
the information  set forth in Exhibit J attached  hereto for each  Reconstituted
Mortgage  Loan in Excel  or such  electronic  delimited  file  format  as may be
mutually agreed upon by both Purchaser and Servicer.  Such information  shall be
provided  monthly  for all  Reconstituted  Mortgage  Loans  on the  fifth  (5th)
Business Day of each month for the immediately  preceding  monthly  period,  and
shall be transmitted to fast.data@bear.com.

      Section  11.20.  Unpaid  Fees and  Expenses  and  other  Amounts  Owing to
Purchaser; Offset.

      It is  understood  that this  Agreement  creates an  ongoing  relationship
between  the  parties.  As a result,  there may be various  fees,  charges,  and
expenses  assessed by Purchaser on each sale. In addition,  there may be amounts
owed to Purchaser as a result of certain  obligations  relating to repurchase of
Mortgage Loans,  premium recapture or indemnification  of Purchaser,  all as set
forth in the  Agreement or in each  related  Term Sheet.  If any such amount due
Purchaser from Company remains  outstanding  more than thirty (30) days after it
is due, Company then hereby  authorizes  Purchaser to deduct from any subsequent
purchase  proceeds  hereunder  such  amounts  (which  amounts  may be an initial
payment of amounts owed Purchaser, subject to further adjustment) due Purchaser,
plus  interest  at an  annual  rate  equal to the  Prime  Rate from the due date
through the date of payment.  Furthermore,  Company authorizes  Purchaser to set
off any funds or other assets of Company in  possession  of Bear,  Stearns & Co.
Inc. or any of its affiliates  against any loss, damage or expense Purchaser may
incur as a result of  Company's  breach of its  obligations  hereunder or in the
related Term Sheet.

      Section 11.21. Use of Subservicers and Subcontractors.

      (a) The Servicer  shall not hire or otherwise  utilize the services of any
Subservicer to fulfill any of the  obligations of the Servicer as servicer under
this Agreement or any Reconstitution Agreement unless the Servicer complies with
the provisions of paragraph (b) of this Section.  The Servicer shall not hire or
otherwise  utilize the services of any  Subcontractor,  and shall not permit any
Subservicer to hire or otherwise utilize the services of any  Subcontractor,  to
fulfill any of the  obligations of the Servicer as servicer under this Agreement
or any Reconstitution Agreement unless the Servicer complies with the provisions
of paragraph (d) of this Section.

      (b) The Servicer shall cause any  Subservicer  used by the Servicer (or by
any  Subservicer)  for the benefit of the  Purchaser and any Depositor to comply
with the provisions of this Section and with Sections  3.01(p),  3.01(s),  6.04,
6.07 and 11.18 of this Agreement to the same extent as if such  Subservicer were
the  Servicer,  and to provide the  information  required  with  respect to such
Subservicer  under  Section  3.01(r) of this  Agreement.  The Servicer  shall be
responsible for obtaining from each Subservicer and delivering to the Purchaser,
any Master  Servicer  and any  Depositor  any  Annual  Statement  of  Compliance
required  to be  delivered  by  such  Subservicer  under  Section  6.04(a),  any
Assessment of Compliance and Attestation Report required to be delivered by such
Subservicer  under  Section  6.07 and any Annual  Certification  required  under
Section 6.04(b) as and when required to be delivered.


                                       86
<PAGE>

      (c) The Servicer shall promptly upon request provide to the Purchaser, any
Master Servicer and any Depositor (or any designee of the Depositor,  such as an
administrator)  a  written   description  (in  form  and  substance   reasonably
satisfactory  to the Purchaser,  any Master  Servicer and such Depositor) of the
role  and  function  of  each  Subcontractor  utilized  by the  Servicer  or any
Subservicer,  specifying (i) the identity of each such Subcontractor, (ii) which
(if any) of such  Subcontractors are  "participating in the servicing  function"
within the meaning of Item 1122 of  Regulation  AB, and (iii) which  elements of
the Servicing  Criteria will be addressed in assessments of compliance  provided
by each Subcontractor identified pursuant to clause (ii) of this paragraph.

      (d) As a condition to the utilization of any  Subcontractor  determined to
be "participating in the servicing  function" within the meaning of Item 1122 of
Regulation  AB, the  Servicer  shall  cause any such  Subcontractor  used by the
Servicer  (or by any  Subservicer)  for the  benefit  of the  Purchaser  and any
Depositor  to comply  with the  provisions  of  Sections  6.07 and 11.18 of this
Agreement to the same extent as if such  Subcontractor  were the  Servicer.  The
Servicer  shall  be  responsible  for  obtaining  from  each  Subcontractor  and
delivering to the Purchaser and any Depositor any  Assessment of Compliance  and
Attestation Report and the other  certificates  required to be delivered by such
Subservicer and such Subcontractor  under Section 6.07, in each case as and when
required to be delivered.

      Section 11.22. Third Party Beneficiary.

      For purposes of this Agreement, each Master Servicer shall be considered a
third  party  beneficiary  to this  Agreement,  entitled  to all the  rights and
benefits hereof as if it were a direct party to this Agreement.


                                       87
<PAGE>

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


                                   EMC MORTGAGE CORPORATION
                                           Purchaser

                                   By:
                                   Name:
                                   Title:


                                   AMERICAN HOME MORTGAGE CORP.
                                            Company

                                   By:
                                   Name:
                                   Title:


                                   AMERICAN HOME MORTGAGE SERVICING, INC.
                                            Servicer

                                   By:
                                   Name:
                                   Title:


                                       88
<PAGE>

                                   EXHIBIT A

                           CONTENTS OF MORTGAGE FILE

      With respect to each Mortgage  Loan,  the Mortgage File shall include each
of  the  following  items,  which  shall  be  available  for  inspection  by the
Purchaser,  and which shall be retained by the Company in the Servicing  File or
delivered to the Purchaser or its designee pursuant to Sections 2.04 and 2.05 of
the Purchase, Warranties and Servicing Agreement.

      1. The  original  Mortgage  Note  endorsed  "Pay to the order of,  without
recourse,"  and signed via  original  signature in the name of the Company by an
authorized officer,  with all intervening  endorsements showing a complete chain
of title  from the  originator  to the  Company,  together  with any  applicable
riders.  In no event  may an  endorsement  be a  facsimile  endorsement.  If the
Mortgage Loan was acquired by the Company in a merger,  the endorsement  must be
by  "[Company],  successor  by  merger  to the  [name of  predecessor]".  If the
Mortgage Loan was acquired or  originated  by the Company  while doing  business
under another name,  the  endorsement  must be by "[Company]  formerly  known as
[previous  name]".  Mortgage  Notes may be in the form of a lost note  affidavit
subject to Purchaser acceptability.

      2.  The  original  Mortgage  (together  with a  standard  adjustable  rate
mortgage rider) with evidence of recording thereon,  or a copy thereof certified
by the public  recording  office in which such mortgage has been recorded or, if
the original Mortgage has not been returned from the applicable public recording
office, a true certified copy, certified by the Company.

      3. The  original or  certified  copy,  certified  by the  Company,  of the
Primary Mortgage Insurance Policy, if required.

      4. The original  Assignment,  from the Company to, or in  accordance  with
Purchaser's  instructions,  which assignment shall, but for any blanks requested
by Purchaser, be in form and substance acceptable for recording. If the Mortgage
Loan was  acquired or  originated  by the Company  while  doing  business  under
another name, the Assignment  must be by "[Company]  formerly known as [previous
name]".  If the  Mortgage  Loan was  acquired  by the  Company in a merger,  the
endorsement  must  be by  "[Company],  successor  by  merger  to  the  [name  of
predecessor]". None of the Assignments are blanket assignments of mortgage.

      5.  The  original  policy  of  title   insurance,   including  riders  and
endorsements  thereto,  or if the  policy  has not yet been  issued,  a  written
commitment or interim binder or preliminary  report of title issued by the title
insurance or escrow company.

      6. Originals of all recorded intervening  Assignments,  or copies thereof,
certified by the public  recording  office in which such  Assignments  have been
recorded  showing a complete  chain of title from the originator to the Company,
with evidence of recording  thereon,  or a copy thereof  certified by the public
recording  office in which such Assignment has been recorded or, if the original
Assignment has not been returned from the applicable  public recording office, a
true certified copy, certified by the Company.


                                       89
<PAGE>

      7. Originals,  or copies thereof  certified by the public recording office
in which such  documents  have been  recorded,  of each  assumption,  extension,
modification, written assurance or substitution agreements, if applicable, or if
the original of such document has not been returned from the  applicable  public
recording office, a true certified copy, certified by the Company.

      8. If the  Mortgage  Note or  Mortgage or any other  material  document or
instrument  relating to the Mortgage  Loan has been signed by a person on behalf
of the Mortgagor,  the original or copy of power of attorney or other instrument
that  authorized  and empowered  such person to sign bearing  evidence that such
instrument has been  recorded,  if so required in the  appropriate  jurisdiction
where the  Mortgaged  Property is located,  or a copy  thereof  certified by the
public  recording  office in which such  instrument has been recorded or, if the
original  instrument has not been returned from the applicable  public recording
office, a true certified copy, certified by the Company.

      9. reserved.

      10.   Mortgage  Loan  closing   statement   (Form  HUD-1)  and  any  other
truth-in-lending or real estate settlement procedure forms required by law.

      11. Residential loan application.

      12. Uniform  underwriter and transmittal summary (Fannie Mae Form 1008) or
reasonable equivalent.

      13. Credit report on the mortgagor.

      14. Business credit report, if applicable.

      15. Residential appraisal report and attachments thereto.

      16. The original of any guarantee executed in connection with the Mortgage
Note.

      17.  Verification  of  employment  and income  except for  Mortgage  Loans
originated  under  a  limited  documentation  program,  all in  accordance  with
Company's underwriting guidelines.

      18.  Verification  of  acceptable  evidence  of source  and amount of down
payment, in accordance with Company's underwriting guidelines.

      19. Photograph of the Mortgaged Property (may be part of appraisal).

      20. Survey of the Mortgaged Property, if any.

      21. Sales contract, if applicable.


                                       90
<PAGE>

      22. If available,  termite report,  structural  engineer's  report,  water
portability and septic certification.

      23. Any  original  security  agreement,  chattel  mortgage  or  equivalent
executed in connection with the Mortgage.

      24. Name affidavit, if applicable.

      Notwithstanding  anything to the contrary herein,  Company may provide one
certificate  for all of the Mortgage  Loans  indicating  that the documents were
delivered for recording.


                                       91
<PAGE>

                                    EXHIBIT C

                     ESCROW ACCOUNT LETTER AGREEMENT , 2005

To: [___________________] (the "Depository")

      As "Company" under the Purchase, Warranties and Servicing Agreement, dated
as of [______________________] 1, 200[_] (the "Agreement"),  we hereby authorize
and request you to  establish  an account,  as a Custodial  Account  pursuant to
Section     4.04     of    the     Agreement,     to    be     designated     as
"[_____________________________________________________________],  in trust  for
the [Purchaser],  Owner of Adjustable Rate Mortgage Loans".  All deposits in the
account shall be subject to withdrawal therefrom by order signed by the Company.
This letter is  submitted  to you in  duplicate.  Please  execute and return one
original to us.

                                                      [________________________]


                                                   By:

                                                   Name:

                                                   Title:_______________________

      The  undersigned,  as  "Depository",   hereby  certifies  that  the  above
described  account has been established  under Account Number [ ], at the office
of the  depository  indicated  above,  and agrees to honor  withdrawals  on such
account as provided above.  The full amount deposited at any time in the account
will be  insured  up to  applicable  limits  by the  Federal  Deposit  Insurance
Corporation through the Bank Insurance Fund or the Savings Association Insurance
Fund or will be invested in Permitted Investments as defined in the Agreement.

                                                      [________________________]


                                                   By:

                                                   Name:

                                                   Title:_______________________


                                       92
<PAGE>

                                    EXHIBIT C

                     ESCROW ACCOUNT LETTER AGREEMENT , 2005

To: [___________________] (the "Depository")

      As "Company" under the Purchase Warranties and Servicing Agreement,  dated
as of [__________________________________]1, 200[_] (the "Agreement"), we hereby
authorize and request you to establish an account, as an Escrow Account pursuant
to    Section    4.06    of    the    Agreement,    to    be    designated    as
"[_______________________________________________],    in    trust    for    the
[Purchaser],  Owner of Adjustable Rate Mortgage Loans, and various  Mortgagors."
All deposits in the account  shall be subject to  withdrawal  therefrom by order
signed by the  Company.  This letter is submitted  to you in  duplicate.  Please
execute and return one original to us.

                                                      [________________________]


                                                   By:

                                                   Name:

                                                   Title:_______________________

      The  undersigned,  as  "Depository",   hereby  certifies  that  the  above
described  account has been established  under Account Number , at the office of
the depository  indicated above, and agrees to honor withdrawals on such account
as provided above.  The full amount deposited at any time in the account will be
insured up to applicable  limits by the Federal  Deposit  Insurance  Corporation
through the Bank  Insurance  Fund or the Savings  Association  Insurance Fund or
will be invested in Permitted Investments as defined in the Agreement.

                                                      [________________________]


                                                   By:

                                                   Name:

                                                   Title:_______________________


                                       93
<PAGE>

                                   EXHIBIT D

           FORM OF ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT

      This is a Purchase, Assignment, Assumption and Recognition Agreement (this
"PAAR  Agreement") made as  of______________________________,  200__,  among EMC
Mortgage      Corporation     (the      "Assignor"),      (the      "Assignee"),
and______________________________________(the "Company").

      In  consideration  of the mutual  promises  contained  herein the  parties
hereto agree that the residential  mortgage loans (the "Assigned  Loans") listed
on Attachment 1 annexed hereto (the  "Assigned  Loan  Schedule") now serviced by
Company for Assignor and its  successors  and assigns  pursuant to the Purchase,
Warranties  and  Servicing  Agreement,  dated  as  of__________________________,
200__, between Assignor and Company (the "Purchase  Agreement") shall be subject
to the terms of this PAAR  Agreement.  Capitalized  terms  used  herein  but not
defined shall have the meanings ascribed to them in the Purchase Agreement.

                       Purchase, Assignment and Assumption

      1._______Assignor  hereby grants, transfers and assigns to Assignee all of
the right,  title and  interest of Assignor in the  Assigned  Loans and, as they
relate to the Assigned  Loans,  all of its right,  title and interest in, to and
under the Purchase Agreement.

      2.  Simultaneously  with the execution  hereof,  (i) Assignee shall pay to
Assignor the "Funding  Amount" as set forth in that  certain  letter  agreement,
dated  as   of__________________________________   ____,  between  Assignee  and
Assignor (the  "Confirmation")  and (ii)  Assignor,  at its expense,  shall have
caused to be delivered  to Assignee or its  designee the Mortgage  File for each
Assigned Loan in Assignor's or its custodian's  possession,  as set forth in the
Purchase  Agreement,  along with,  for each Assigned Loan, an endorsement of the
Mortgage  Note from the  Company,  in blank,  and an  assignment  of mortgage in
recordable  form from the  Company,  in blank.  Assignee  shall pay the  Funding
Amount by wire transfer of immediately  available funds to the account specified
by Assignor.  Assignee  shall be entitled to all  scheduled  payments due on the
Assigned  Loans  after         , 200__  and all  unscheduled  payments  or other
proceeds or other  recoveries  on the Assigned  Loans  received on and after___,
200__.

                    Representations, Warranties and Covenants

      3. Assignor warrants and represents to Assignee and Company as of the date
hereof:

      (a) Attached  hereto as  Attachment  2 is a true and accurate  copy of the
Purchase  Agreement,  which agreement is in full force and effect as of the date
hereof and the provisions of which have not been waived,  amended or modified in
any respect, nor has any notice of termination been given thereunder;

      (b) Assignor is the lawful owner of the Assigned  Loans with full right to
transfer  the  Assigned  Loans  and  any and all of its  interests,  rights  and
obligations  under the Purchase  Agreement as they relate to the Assigned Loans,
free and clear from any and all claims and  encumbrances;  and upon the transfer
of the Assigned Loans to Assignee as  contemplated  herein,  Assignee shall have
good title to each and every Assigned Loan, as well as any and all of Assignee's
interests, rights and obligations under the Purchase Agreement as they relate to
the  Assigned  Loans,  free  and  clear  of  any  and  all  liens,   claims  and
encumbrances;


                                       94
<PAGE>

      (c) There are no offsets,  counterclaims  or other  defenses  available to
Company with respect to the Assigned Loans or the Purchase Agreement;

      (d)  Assignor has no  knowledge  of, and has not  received  notice of, any
waivers under, or any modification of, any Assigned Loan;

      (e) Assignor is duly  organized,  validly  existing  and in good  standing
under the laws of the jurisdiction of its  incorporation,  and has all requisite
power and authority to acquire, own and sell the Assigned Loans;

      (f) Assignor has full  corporate  power and authority to execute,  deliver
and perform its  obligations  under this PAAR  Agreement,  and to consummate the
transactions set forth herein. The consummation of the transactions contemplated
by this PAAR Agreement is in the ordinary course of Assignor's business and will
not conflict  with,  or result in a breach of, any of the terms,  conditions  or
provisions of  Assignor's  charter or by-laws or any legal  restriction,  or any
material agreement or instrument to which Assignor is now a party or by which it
is bound,  or result  in the  violation  of any law,  rule,  regulation,  order,
judgment or decree to which Assignor or its property is subject.  The execution,
delivery and performance by Assignor of this PAAR Agreement and the consummation
by it of the transactions  contemplated hereby, have been duly authorized by all
necessary  corporate  action on part of Assignor.  This PAAR  Agreement has been
duly  executed  and  delivered  by  Assignor  and,  upon the due  authorization,
execution and delivery by Assignee and Company,  will  constitute  the valid and
legally  binding  obligation  of  Assignor   enforceable   against  Assignor  in
accordance with its terms except as enforceability may be limited by bankruptcy,
reorganization, insolvency, moratorium or other similar laws now or hereafter in
effect relating to creditors'  rights  generally,  and by general  principles of
equity  regardless  of whether  enforceability  is considered in a proceeding in
equity or at law;

      (g) No  consent,  approval,  order or  authorization  of, or  declaration,
filing or registration with, any governmental  entity is required to be obtained
or made by Assignor in connection with the execution, delivery or performance by
Assignor of this PAAR Agreement,  or the  consummation by it of the transactions
contemplated hereby; and

      (h)  Neither  Assignor  nor  anyone  acting  on its  behalf  has  offered,
transferred,  pledged,  sold or otherwise  disposed of the Assigned Loans or any
interest  in the  Assigned  Loans,  or  solicited  any  offer to buy or accept a
transfer,  pledge or other disposition of the Assigned Loans, or any interest in
the Assigned  Loans or otherwise  approached or  negotiated  with respect to the
Assigned  Loans,  or any interest in the  Assigned  Loans with any Person in any
manner, or made any general  solicitation by means of general  advertising or in
any  other  manner,   or  taken  any  other  action  which  would  constitute  a
distribution  of the Assigned Loans under the Securities Act of 1933, as amended
(the "1933 Act") or which would render the  disposition  of the Assigned Loans a
violation of Section 5 of the 1933 Act or require registration pursuant thereto.


                                       95
<PAGE>

      4. Assignee  warrants and represents to, and covenants with,  Assignor and
Company as of the date hereof:

      (a) Assignee is duly  organized,  validly  existing  and in good  standing
under the laws of the  jurisdiction  of its  organization  and has all requisite
power and authority to acquire, own and purchase the Assigned Loans;

      (b) Assignee has full  corporate  power and authority to execute,  deliver
and perform its  obligations  under this PAAR  Agreement,  and to consummate the
transactions set forth herein. The consummation of the transactions contemplated
by this PAAR Agreement is in the ordinary course of Assignee's business and will
not conflict  with,  or result in a breach of, any of the terms,  conditions  or
provisions of  Assignee's  charter or by-laws or any legal  restriction,  or any
material agreement or instrument to which Assignee is now a party or by which it
is bound,  or result  in the  violation  of any law,  rule,  regulation,  order,
judgment or decree to which Assignee or its property is subject.  The execution,
delivery and performance by Assignee of this PAAR Agreement and the consummation
by it of the transactions  contemplated hereby, have been duly authorized by all
necessary  corporate  action on part of Assignee.  This PAAR  Agreement has been
duly  executed  and  delivered  by  Assignee  and,  upon the due  authorization,
execution and delivery by Assignor and Company,  will  constitute  the valid and
legally  binding  obligation  of  Assignee   enforceable   against  Assignee  in
accordance with its terms except as enforceability may be limited by bankruptcy,
reorganization, insolvency, moratorium or other similar laws now or hereafter in
effect relating to creditors'  rights  generally,  and by general  principles of
equity  regardless  of whether  enforceability  is considered in a proceeding in
equity or at law;

      (c) No  consent,  approval,  order or  authorization  of, or  declaration,
filing or registration with, any governmental  entity is required to be obtained
or made by Assignee in connection with the execution, delivery or performance by
Assignee of this PAAR Agreement,  or the  consummation by it of the transactions
contemplated hereby; and

      (d)  Assignee  agrees  to be bound  as  "Purchaser"  by all of the  terms,
covenants and conditions of the Purchase  Agreement with respect to the Assigned
Loans,  and from and after the date hereof,  Assignee assumes for the benefit of
each of Assignor  and  Company  all of  Assignor's  obligations  as  "Purchaser"
thereunder but solely with respect to such Assigned Loans.

      5. Company  warrants and represents  to, and covenant  with,  Assignor and
Assignee as of the date hereof:

      (a) Attached  hereto as  Attachment  2 is a true and accurate  copy of the
Purchase  Agreement,  which agreement is in full force and effect as of the date
hereof and the provisions of which have not been waived,  amended or modified in
any respect, nor has any notice of termination been given thereunder;


                                       96
<PAGE>

      (b) Company is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its  incorporation,  and has all requisite power
and  authority  to service  the  Assigned  Loans and  otherwise  to perform  its
obligations under the Purchase Agreement;

      (c) Company has full corporate power and authority to execute, deliver and
perform  its  obligations  under  this PAAR  Agreement,  and to  consummate  the
transactions set forth herein. The consummation of the transactions contemplated
by this PAAR Agreement is in the ordinary course of Company's  business and will
not conflict  with,  or result in a breach of, any of the terms,  conditions  or
provisions  of  Company's  charter or by-laws or any legal  restriction,  or any
material  agreement or instrument to which Company is now a party or by which it
is bound,  or result  in the  violation  of any law,  rule,  regulation,  order,
judgment or decree to which Company or its property is subject.  The  execution,
delivery and performance by Company of this PAAR Agreement and the  consummation
by it of the transactions  contemplated hereby, have been duly authorized by all
necessary corporate action on part of Company. This PAAR Agreement has been duly
executed and delivered by Company,  and, upon the due  authorization,  execution
and delivery by Assignor and  Assignee,  will  constitute  the valid and legally
binding  obligation of Company,  enforceable  against Company in accordance with
its terms except as enforceability may be limited by bankruptcy, reorganization,
insolvency, moratorium or other similar laws now or hereafter in effect relating
to creditors' rights generally,  and by general  principles of equity regardless
of whether enforceability is considered in a proceeding in equity or at law;

      (d) No  consent,  approval,  order or  authorization  of, or  declaration,
filing or registration with, any governmental  entity is required to be obtained
or made by Assignee in connection with the execution, delivery or performance by
Company of this PAAR Agreement,  or the  consummation by it of the  transactions
contemplated hereby; and

      (e) No event has  occurred  from the Closing Date to the date hereof which
would render the representations and warranties as to the related Assigned Loans
made by the Company in Sections  3.01 and 3.02 of the  Purchase  Agreement to be
untrue in any material respect.

      (f) Neither this AAR Agreement nor any certification, statement, report or
other  agreement,  document or  instrument  furnished  or to be furnished by the
Company  pursuant to this AAR Agreement  contains or will contain any materially
untrue statement of fact or omits or will omit to state a fact necessary to make
the statements contained therein not misleading.

                             Recognition of Assignee

      6. From and after the date hereof,  Company  shall  recognize  Assignee as
owner of the Assigned  Loans and will service the Assigned  Loans in  accordance
with the  Purchase  Agreement.  It is the  intention  of  Assignor,  Company and
Assignee that this PAAR  Agreement  shall be binding upon and for the benefit of
the respective successors and assigns of the parties hereto. Neither Company nor
Assignor shall amend or agree to amend,  modify,  waiver, or otherwise alter any
of  the  terms  or  provisions  of  the  Purchase   Agreement  which  amendment,
modification,  waiver or other  alteration  would in any way affect the Assigned
Loans without the prior written consent of Assignee.


                                       97
<PAGE>

                                  Miscellaneous

      7. All demands,  notices and communications related to the Assigned Loans,
the Purchase  Agreement and this PAAR Agreement shall be in writing and shall be
deemed  to have  been  duly  given  if  personally  delivered  at or  mailed  by
registered mail, postage prepaid, as follows:

      (a) In the case of Company,

          _______________________

          _______________________

          _______________________

          _______________________

          _______________________

          With a copy to________________________.

      (b) In the case of Assignor,

          _______________________

          _______________________

          _______________________

          _______________________

          _______________________

      (c) In the case of Assignee,

          EMC Mortgage Corporation
          Mac Arthur Ridge II
          909 Hidden Ridge Drive, Suite 200
          Irving, Texas 75038
          Attention: Raylene Ruyle
          Telecopier No.: (972) 444-2810

          with a copy to:

          _________________________
          383 Madison Avenue
          New York, New York 10179
          Attention:_______________________
          Telecopier No.: (212) 272-_______


                                       98
<PAGE>

      8. Each party will pay any commissions it has incurred and the fees of its
attorneys in connection with the negotiations for, documenting of and closing of
the transactions contemplated by this PAAR Agreement.

      9. This PAAR Agreement  shall be construed in accordance  with the laws of
the State of New York,  without regard to conflicts of law  principles,  and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.

      10. No term or provision of this PAAR  Agreement may be waived or modified
unless such waiver or modification is in writing and signed by the party against
whom such waiver or modification is sought to be enforced.

      11. This PAAR  Agreement  shall inure to the benefit of the successors and
assigns of the  parties  hereto.  Any entity  into which  Assignor,  Assignee or
Company may be merged or  consolidated  shall,  without the  requirement for any
further  writing,  be  deemed  Assignor,  Assignee  or  Company,   respectively,
hereunder.

      12. This PAAR  Agreement  shall  survive the  conveyance  of the  Assigned
Loans,  the  assignment of the Purchase  Agreement to the extent of the Assigned
Loans by Assignor to Assignee and the termination of the Purchase Agreement.

      13. This PAAR  Agreement may be executed  simultaneously  in any number of
counterparts.  Each  counterpart  shall be deemed to be an original and all such
counterparts shall constitute one and the same instrument.

      14. In the event that any provision of this PAAR Agreement  conflicts with
any provision of the Purchase  Agreement with respect to the Assigned Loans, the
terms of this PAAR Agreement  shall control.  In the event that any provision of
this PAAR  Agreement  conflicts  with any  provision  of the  Confirmation  with
respect to the Assigned Loans, the terms of this PAAR Agreement shall control.

                       [Modification of Purchase Agreement

      15. The  Company and  Assignor  hereby  amend the  Purchase  Agreement  as
follows:

      (a) The  following  definitions  are added to Section 1.01 of the Purchase
Agreement:

      Securities Administrator:

      Supplemental PMI Insurer:

      Supplemental  PMI Policy:  The primary  guarantee  insurance policy of the
Supplemental  PMI  Insurer  attached  hereto  as  Exhibit  J,  or any  successor
Supplemental PMI Policy given to the Servicer by the Assignee.


                                       99
<PAGE>

      Trustee:

      (b) The following definition is amended and restated:

      Insurance Proceeds: Proceeds of any Primary Mortgage Insurance Policy, the
Supplemental  PMI Policy,  any title policy,  any hazard insurance policy or any
other  insurance  policy  covering a Mortgage  Loan or other  related  Mortgaged
Property,  including  any amounts  required  to be  deposited  in the  Custodial
Account  pursuant to Section  4.04,  to the extent such  proceeds  are not to be
applied to the restoration of the related Mortgaged  Property or released to the
Mortgagor in accordance with Accepted Servicing Practices.

      (c) The following are added as the fourth,  fifth and sixth  paragraphs of
Section 4.08:

      "In  connection  with its  activities as servicer,  the Company  agrees to
prepare  and  present,  on  behalf of itself  and the  Purchaser,  claims to the
Supplemental  PMI Insurer  with respect to the  Supplemental  PMI Policy and, in
this regard,  to take such action as shall be necessary to permit recovery under
any Supplemental PMI Policy  respecting a defaulted  Mortgage Loan.  Pursuant to
Section 4.04, any amounts  collected by the Company under any  Supplemental  PMI
Policy  shall be  deposited  in the  Custodial  Account,  subject to  withdrawal
pursuant to Section 4.05.

      In accordance with the Supplemental PMI Policy,  the Company shall provide
to the Supplemental PMI Insurer any required information  regarding the Mortgage
Loans.

      The Company shall provide to the [Securities  Administrator]  on a monthly
basis via  computer  tape,  or other  mutually  acceptable  format,  the  unpaid
principal balance,  insurer certificate number,  lender loan number, and premium
due  the  Supplemental  PMI  Insurer  for  each  Mortgage  Loan  covered  by the
Supplemental  PMI Policy.  In  addition,  the  Company  agrees to forward to the
Purchaser and the  [Securities  Administrator]  any  statements or other reports
given by the Supplemental PMI Insurer to the Servicer in connection with a claim
under the Supplemental PMI Policy."

      (d) Clause (vi) of Section 6.1 is amended to read as follows:

      "Company ceases to be approved by either Fannie Mae or FHLMC as a mortgage
loan seller or servicer for more than thirty days,  or the Company fails to meet
the servicer eligibility requirements of the Supplemental PMI Insurer; or"]


                                      100
<PAGE>

      IN WITNESS  WHEREOF,  the parties hereto have executed this PAAR Agreement
as of the day and year first above written.

                                                    EMC MORTGAGE CORPORATION
                                                    Assignor

                                                    By:
                                                    Name:
                                                    Title:


                                                    ____________________________
                                                    Assignee

                                                    By:
                                                    Name:
                                                    Title:


                                                    ____________________________
                                                    Company

                                                    By:
                                                    Name:
                                                    Title:


                                      101
<PAGE>

                                   EXHIBIT ___

                          FORM OF COMPANY CERTIFICATION

I, [identify certifying individual], certify to the [Trustee] [Seller]
[Securities Administrator] [Mortgage Loan Seller] [Purchaser] and [Master
Servicer] that:

      1. I have  reviewed  the  servicing  reports  prepared by  [COMPANY]  (the
"Company")  pursuant to the [Servicing  Agreement] (the "Servicing  Agreement"),
dated                 as                 of_____________________________________
between____________________________________and  the Company (as  modified by the
AAR Agreement (as defined below) and delivered to [MASTER SERVICER] (the "Master
Servicer") pursuant to the Assignment, Assumption and Recognition Agreement (the
"AAR   Agreement"),   dated  as   of_______________________________________among
[ASSIGNOR] as Assignor, Company and [ASSIGNEE], as Assignee.

      2._______ Based on my knowledge,  the information in these reports,  taken
as a whole,  does not contain any untrue statement of a material fact or omit to
state a material  fact  necessary to make the  statements  made, in light of the
circumstances  under which such  statements  were made, not misleading as of the
last day of the period covered by such servicing reports.

      3.  Based  on my  knowledge,  the  servicing  information  required  to be
provided  to the  Master  Servicer  under the  Servicing  Agreement  and the AAR
Agreement is included in these reports.

      4. I am  responsible  for reviewing the  activities  performed the Company
under the  Servicing  Agreement  and the AAR Agreement and based upon the review
required  under the  Servicing  Agreement and the AAR  Agreement,  and except as
disclosed in the Annual  Statement of Compliance,  the Company has fulfilled its
obligations under the Servicing Agreement and the AAR Agreement.

      5. I have disclosed to the Master Servicer's  certified public accountants
all  significant  deficiencies  relating to the  Company's  compliance  with the
minimum  servicing  standards in accordance with a review conduced in compliance
with the Uniform  Single  Attestation  Program for  Mortgage  Bankers or similar
standard as set forth in the Servicing Agreement and the AAR Agreement.

      Capitalized  terms used but not defined herein have the meanings  ascribed
to them in the AAR Agreement.

Date: _____________


_______________________
[Signature]
[Title]


                                      102
<PAGE>

                                  ATTACHMENT 1

                             ASSIGNED LOAN SCHEDULE


                                      103
<PAGE>

                                  ATTACHMENT 2

                  PURCHASE, WARRANTIES AND SERVICING AGREEMENT


                                      104
<PAGE>

                                    EXHIBIT E

                        REPORTING DATA FOR MONTHLY REPORT

                     Standard File Layout - Master Servicing

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                                                           Max
         Column Name                           Description                      Decimal       Format Comment               Size
-----------------------------------------------------------------------------------------------------------------------------------
<S>                          <C>                                                <C>           <C>                          <C>
 SER_INVESTOR_NBR             A value assigned by the Servicer to define a                 Text up to 10 digits             20
                              group of loans.
-----------------------------------------------------------------------------------------------------------------------------------
 LOAN_N BR                    A unique identifier assigned to each loan by                 Text up to 10 digits             10
                              the investor.
-----------------------------------------------------------------------------------------------------------------------------------
 SERVICER_LOAN_NBR            A unique number assigned to a loan by the                    Text up to 10 digits             10
                              Servicer. This may be different than the
                              LOAN_NBR.
-----------------------------------------------------------------------------------------------------------------------------------
 BORROWER_NAME                The borrower name as received in the file. It                Maximum length of 30 (Last,      30
                              is not separated by first and last name.                     First)
-----------------------------------------------------------------------------------------------------------------------------------
 SCHED_PAY_AMT                Scheduled monthly principal and scheduled            2       No commas(,) or dollar signs     11
                              interest payment that a borrower is expected                 ($)
                              to pay, P&I constant.
-----------------------------------------------------------------------------------------------------------------------------------
 NOTE_INT_RATE                The loan interest rate as reported by the            4       Max length of 6                   6
                              Servicer.
-----------------------------------------------------------------------------------------------------------------------------------
 NET_INT_RATE                 The loan gross interest rate less the service        4                                         6
                              fee rate as reported by the Servicer.                        Max length of 6
-----------------------------------------------------------------------------------------------------------------------------------
 SERV_FEE_RATE                The servicer's fee rate for a loan as reported       4       Max length of 6                   6
                              by the Servicer.
-----------------------------------------------------------------------------------------------------------------------------------
 SERV_FEE_AMT                 The servicer's fee amount for a loan as              2       No commas(,) or dollar signs     11
                              reported by the Servicer.                                    ($)
-----------------------------------------------------------------------------------------------------------------------------------
 NEW_PAY_AMT                  The new loan payment amount as reported by the       2       No commas(,) or dollar signs     11
                              Servicer.                                                    ($)
-----------------------------------------------------------------------------------------------------------------------------------
 NEW_LOAN_RATE                The new loan rate as reported by the Servicer.       4       Max length of 6                   6
-----------------------------------------------------------------------------------------------------------------------------------
 ARM_INDEX_RATE               The index the Servicer is using to calculate a       4       Max length of 6                   6
                              forecasted rate.
-----------------------------------------------------------------------------------------------------------------------------------
 ACTL_BEG_PRIN_BAL            The borrower's actual principal balance at the       2       No commas(,) or dollar signs     11
                              beginning of the processing cycle.                           ($)
-----------------------------------------------------------------------------------------------------------------------------------
 ACTL_END_PRIN_BAL            The borrower's actual principal balance at the       2                                        11
                              end of the processing cycle.                                 No commas(,) or dollar signs
                                                                                           ($)
-----------------------------------------------------------------------------------------------------------------------------------
 BORR_NEXT_PAY_DUE_DA         The date at the end of processing cycle that                                                  10
 TE                           the borrower's next payment is due to the
                              Servicer, as reported by Servicer.                           MM/DD/YYYY
-----------------------------------------------------------------------------------------------------------------------------------
 SERV_CURT_AMT_1              The first curtailment amount to be applied.          2       No commas(,) or dollar signs     11
                                                                                           ($)
-----------------------------------------------------------------------------------------------------------------------------------
 SERV_CURT_DATE_1             The curtailment date associated with the first               MM/DD/YYYY                       10
                              curtailment amount.
-----------------------------------------------------------------------------------------------------------------------------------
 CURT_ADJ_ AMT_1              The curtailment interest on the first                2       No commas(,) or dollar signs     11
                              curtailment amount, if applicable.                           ($)
-----------------------------------------------------------------------------------------------------------------------------------
 SERV_CURT_AMT_2              The second curtailment amount to be applied.         2       No commas(,) or dollar signs     11
                                                                                           ($)
-----------------------------------------------------------------------------------------------------------------------------------
 SERV_CURT_DATE_2             The curtailment date associated with the                     MM/DD/YYYY                       10
                              second curtailment amount.
-----------------------------------------------------------------------------------------------------------------------------------
 CURT_ADJ_ AMT_2              The curtailment interest on the second               2                                        11
                              curtailment amount, if applicable.                           No commas(,) or dollar signs
                                                                                           ($)
-----------------------------------------------------------------------------------------------------------------------------------
 SERV_CURT_AMT_3              The third curtailment amount to be applied.          2       No commas(,) or dollar signs     11
                                                                                           ($)
-----------------------------------------------------------------------------------------------------------------------------------
 SERV_CURT_DATE_3             The curtailment date associated with the third               MM/DD/YYYY                       10
                              curtailment amount.
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                      105
<PAGE>

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                                                           Max
         Column Name                           Description                      Decimal       Format Comment               Size
-----------------------------------------------------------------------------------------------------------------------------------
<S>                          <C>                                                <C>           <C>                          <C>
CURT_ADJ_AMT_3                The curtailment interest on the third                2        No commas(,) or dollar signs    11
                              curtailment amount, if applicable.                                        ($)
-----------------------------------------------------------------------------------------------------------------------------------
PIF_AMT                       The loan "paid in full" amount as reported by        2        No commas(,) or dollar signs    11
                              the Servicer.                                                             ($)
-----------------------------------------------------------------------------------------------------------------------------------
PIF_DATE                      The paid in full date as reported by the                      MM/DD/YYYY                      10
                              Servicer.
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                            Action Code Key: 1               2
                                                                                            5=Bankruptcy,
                               The standard FNMA numeric code used to                       30=Foreclosure, , 60=PIF,
ACTION_CODE                    indicate the default/delinquent status of a                  63=Substitution,
                               particular loan.                                             65=Repurchase,70=REO
-----------------------------------------------------------------------------------------------------------------------------------
 INT_ADJ_AMT                  The amount of the interest adjustment as              2       No commas(,) or dollar signs    11
                              reported by the Servicer.                                     ($)
-----------------------------------------------------------------------------------------------------------------------------------
 SOLDIER_SAILOR_ADJ_AMT       The Soldier and Sailor Adjustment amount, if          2       No commas(,) or dollar signs    11
                              applicable.                                                   ($)
-----------------------------------------------------------------------------------------------------------------------------------
 NON_ADV_LOAN_AMT             The Non Recoverable Loan Amount, if applicable.       2       No commas(,) or dollar signs    11
                                                                                            ($)
-----------------------------------------------------------------------------------------------------------------------------------
 LOAN_LOSS_AMT                The amount the Servicer is passing as a loss,         2       No commas(,) or dollar signs    11
                              if applicable.                                                ($)
-----------------------------------------------------------------------------------------------------------------------------------
 SCHED_BEG_PRIN_BAL           The scheduled outstanding principal amount due        2       No commas(,) or dollar signs    11
                              at the beginning of the cycle date to be                      ($)
                              passed through to investors.
-----------------------------------------------------------------------------------------------------------------------------------
 SCHED_END_PRIN_BAL           The scheduled principal balance due to                2       No commas(,) or dollar signs    11
                              investors at the end of a processing cycle.                   ($)
-----------------------------------------------------------------------------------------------------------------------------------
 SCHED_PRIN_AMT               The scheduled principal amount as reported by         2       No commas(,) or dollar signs    11
                              the Servicer for the current cycle -- only                    ($)
                              applicable for Scheduled/Scheduled Loans.
-----------------------------------------------------------------------------------------------------------------------------------
 SCHED_NET_INT                The scheduled gross interest amount less the          2       No commas(,) or dollar signs    11
                              service fee amount for the current cycle as                   ($)
                              reported by the Servicer -- only applicable
                              for Scheduled/Scheduled Loans.
-----------------------------------------------------------------------------------------------------------------------------------
 ACTL_PRIN_AMT                The actual principal amount collected by the          2       No commas(,) or dollar signs    11
                              Servicer for the current reporting cycle --                   ($)
                              only applicable for Actual/Actual Loans.
-----------------------------------------------------------------------------------------------------------------------------------
 ACTL_NET_INT                 The actual gross interest amount less the             2       No commas(,) or dollar signs    11
                              service fee amount for the current reporting                  ($)
                              cycle as reported by the Servicer -- only
                              applicable for Actual/Actual Loans.
-----------------------------------------------------------------------------------------------------------------------------------
 PREPAY_PENALTY_ AMT          The penalty amount received when a borrower           2       No commas(,) or dollar signs    11
                              prepays on his loan as reported by the                        ($)
                              Servicer.
-----------------------------------------------------------------------------------------------------------------------------------
 PREPAY_PENALTY_ WAIVED       The prepayment penalty amount for the loan            2       No commas(,) or dollar signs    11
                              waived by the servicer.                                       ($)
-----------------------------------------------------------------------------------------------------------------------------------
 MOD_DATE                     The Effective Payment Date of the Modification                MM/DD/YYYY                      10
                              for the loan.
-----------------------------------------------------------------------------------------------------------------------------------
 MOD_TYPE                     The Modification Type.                                        Varchar - value can be alpha    30
                                                                                            or numeric
-----------------------------------------------------------------------------------------------------------------------------------
 DELI NQ_P&I_ADVANCE_AM T     The current outstanding principal and interest        2       No commas(,) or dollar signs    11
                              advances made by Servicer.                                    ($)
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                      106
<PAGE>

                                    EXHIBIT F
                       REPORTING DATA FOR DEFAULTED LOANS
                  Standard File Layout - Delinquency Reporting

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
          Column/Header Name                                  Description                           Decimal      Format Comment
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                     <C>                                                        <C>           <C>
SERVICER_LOAN_N BR                      A unique number assigned to a loan by the Servicer.
                                        This may be different than the LOAN_N BR
-----------------------------------------------------------------------------------------------------------------------------------
LOAN_N BR                               A unique identifier assigned to each loan by the
                                        originator.
-----------------------------------------------------------------------------------------------------------------------------------
CLIENT_NBR                              Servicer Client Number
-----------------------------------------------------------------------------------------------------------------------------------
SERV_INVESTOR_NBR                       Contains a unique number as assigned by an external
                                        servicer to identify a group of loans in their system.
-----------------------------------------------------------------------------------------------------------------------------------
BORROWER_FIRST_NAME                     First Name of the Borrower.
-----------------------------------------------------------------------------------------------------------------------------------
BORROWER_LAST_NAME                      Last name of the borrower.
-----------------------------------------------------------------------------------------------------------------------------------
PROP_ADDRESS                            Street Name and Number of Property
-----------------------------------------------------------------------------------------------------------------------------------
PROP_STATE                              The state where the property located.
-----------------------------------------------------------------------------------------------------------------------------------
PROP_ZIP                                Zip code where the property is located.
-----------------------------------------------------------------------------------------------------------------------------------
BORR_NEXT_PAY_DUE_DATE                  The date that the borrower's next payment is due to the                 MM/DD/YYYY
                                        servicer at the end of processing cycle, as reported by
                                        Servicer.
-----------------------------------------------------------------------------------------------------------------------------------
LOAN_TYPE                               Loan Type (i.e. FHA, VA, Conv)
-----------------------------------------------------------------------------------------------------------------------------------
BANKRUPTCY_FILED_DATE                   The date a particular bankruptcy claim was filed.                       MM/DD/YYYY
-----------------------------------------------------------------------------------------------------------------------------------
BANKRUPTCY_CHAPTER_CODE                 The chapter under which the bankruptcy was filed.
-----------------------------------------------------------------------------------------------------------------------------------
BANKRUPTCY_CASE_NBR                     The case number assigned by the court to the bankruptcy
                                        filing.
-----------------------------------------------------------------------------------------------------------------------------------
POST_PETITION_DUE_DATE                  The payment due date once the bankruptcy has been                       MM/DD/YYYY
                                        approved by the courts
-----------------------------------------------------------------------------------------------------------------------------------
BANKRUPTCY_DCHRG_DISM_DATE              The Date The Loan Is Removed From Bankruptcy. Either by                 MM/DD/YYYY
                                        Dismissal, Discharged and/or a Motion For Relief Was
                                        Granted.
-----------------------------------------------------------------------------------------------------------------------------------
LOSS_MIT_APPR_DATE                      The Date The Loss Mitigation Was Approved By The                        MM/DD/YYYY
                                        Servicer
-----------------------------------------------------------------------------------------------------------------------------------
LOSS_MIT_TYPE                           The Type Of Loss Mitigation Approved For A Loan Such As;
-----------------------------------------------------------------------------------------------------------------------------------
LOSS_MIT_EST_COMP_DATE                  The Date The Loss Mitigation /Plan Is Scheduled To                      MM/DD/YYYY
                                        End/Close
-----------------------------------------------------------------------------------------------------------------------------------
LOSS_MIT_ACT_COMP_DATE                  The Date The Loss Mitigation Is Actually Completed                      MM/DD/YYYY
-----------------------------------------------------------------------------------------------------------------------------------
FRCLSR_APPROVED_DATE                    The date DA Admin sends a letter to the servicer with                   MM/DD/YYYY
                                        instructions to begin foreclosure proceedings.
-----------------------------------------------------------------------------------------------------------------------------------
ATTORNEY_REFERRAL_DATE                  Date File Was Referred To Attorney to Pursue Foreclosure                MM/DD/YYYY
-----------------------------------------------------------------------------------------------------------------------------------
FIRST_LEGAL_DATE                        Notice of 1st legal filed by an Attorney in a                           MM/DD/YYYY
                                        Foreclosure Action
-----------------------------------------------------------------------------------------------------------------------------------
FRCLSR_SALE_EXPECTED_DATE               The date by which a foreclosure sale is expected to                     MM/DD/YYYY
                                        occur.
-----------------------------------------------------------------------------------------------------------------------------------
FRCLSR_SALE_DATE                        The actual date of the foreclosure sale.                                MM/DD/YYYY
-----------------------------------------------------------------------------------------------------------------------------------
FRCLSR_SALE_AMT                         The amount a property sold for at the foreclosure sale.         2       No commas(,) or
                                                                                                                dollar signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
EVICTION_START_DATE                     The date the servicer initiates eviction of the                         MM/DD/YYYY
                                        borrower.
-----------------------------------------------------------------------------------------------------------------------------------
EVICTION_COMPLETED_DATE                 The date the court revokes legal possession of the                      MM/DD/YYYY
                                        property from the borrower.
-----------------------------------------------------------------------------------------------------------------------------------
LIST_PRICE                              The price at which an REO property is marketed.                 2       No commas(,) or
                                                                                                                dollar signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                      107
<PAGE>

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
          Column/Header Name                                  Description                           Decimal      Format Comment
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>                                                        <C>           <C>
LIST_DATE                              The date an REO property is listed at a particular                       MM/DD/YYYY
                                       price.
---------------------------------------------------------------------------------------------------------------------------------
OFFER_AMT                              The dollar value of an offer for an REO property.             2          No commas(,)
                                                                                                                or dollar
                                                                                                                signs ($)
---------------------------------------------------------------------------------------------------------------------------------
OFFER_DATE_TIME                        The date an offer is received by DA Admin or by the                      MM/DD/YYYY
                                       Servicer.
-----------------------------------------------------------------------------------------------------------------------------------
REO_CLOSING_DATE                       The date the REO sale of the property is scheduled to                    MM/DD/YYYY
                                       close.
-----------------------------------------------------------------------------------------------------------------------------------
REO_ACTUAL_CLOSING_DATE                Actual Date Of REO Sale                                                  MM/DD/YYYY
-----------------------------------------------------------------------------------------------------------------------------------
OCCUPANT_CODE                          Classification of how the property is occupied.
-----------------------------------------------------------------------------------------------------------------------------------
PROP_CONDITION_CODE                    A code that indicates the condition of the property.
-----------------------------------------------------------------------------------------------------------------------------------
PROP_INSPECTION_DATE                   The date a property inspection is performed.                             MM/DD/YYYY
-----------------------------------------------------------------------------------------------------------------------------------
APPRAISAL_DATE                         The date the appraisal was done.                                         MM/DD/YYYY
-----------------------------------------------------------------------------------------------------------------------------------
CURR_PROP_VAL                          The current "as is" value of the property based on               2
                                       brokers price opinion or appraisal.
-----------------------------------------------------------------------------------------------------------------------------------
REPAIRED_PROP_VAL                      The amount the property would be worth if repairs are            2
                                       completed pursuant to a broker's price opinion or
                                       appraisal.
-----------------------------------------------------------------------------------------------------------------------------------
If applicable:
-----------------------------------------------------------------------------------------------------------------------------------
DELI NQ_STATUS_CODE                    FNMA Code Describing Status of Loan
-----------------------------------------------------------------------------------------------------------------------------------
DELINQ_REASON_CODE                     The circumstances which caused a borrower to stop paying
                                       on a loan.        Code indicates the reason why the loan
                                       is in default for this cycle.
-----------------------------------------------------------------------------------------------------------------------------------
MI_CLAIM_FILED_DATE                    Date Mortgage Insurance Claim Was Filed With Mortgage                    MM/DD/YYYY
                                       Insurance Company.
-----------------------------------------------------------------------------------------------------------------------------------
MI_CLAIM_AMT                           Amount of Mortgage Insurance Claim Filed                                 No commas(,) or
                                                                                                                dollar signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
MI_CLAIM_PAID_DATE                     Date Mortgage Insurance Company Disbursed Claim Payment                  MM/DD/YYYY
-----------------------------------------------------------------------------------------------------------------------------------
MI_CLAIM_AMT_PAID                      Amount Mortgage Insurance Company Paid On Claim                  2       No commas(,) or
                                                                                                                dollar signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
POOL_CLAIM_FILED_DATE                  Date Claim Was Filed With Pool Insurance Company                         MM/DD/YYYY
-----------------------------------------------------------------------------------------------------------------------------------
POOL_CLAIM_AMT                         Amount of Claim Filed With Pool Insurance Company                2       No commas(,) or
                                                                                                                dollar signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
POOL_CLAIM_PAID_DATE                   Date Claim Was Settled and The Check Was Issued By The                   MM/DD/YYYY
                                       Pool Insurer
-----------------------------------------------------------------------------------------------------------------------------------
POOL_CLAIM_AMT_PAID                    Amount Paid On Claim By Pool Insurance Company                   2       No commas(,) or
                                                                                                                dollar signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
FHA_PART_A_CLAIM_FILED_DATE            Date FHA Part A Claim Was Filed With HUD                                 MM/DD/YYYY
-----------------------------------------------------------------------------------------------------------------------------------
FHA_PART_A_CLAIM_AMT                   Amount of FHA Part A Claim Filed                                 2       No commas(,) or
                                                                                                                dollar signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
FHA_PART_A_CLAIM_PAID_DATE             Date HUD Disbursed Part A Claim Payment                                  MM/DD/YYYY
-----------------------------------------------------------------------------------------------------------------------------------
FHA_PART_A_CLAIM_PAID_AMT              Amount HUD Paid on Part A Claim                                  2       No commas(,) or
                                                                                                                dollar signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
FHA_PART_B_CLAIM_FILED_DATE            Date FHA Part B Claim Was Filed With HUD                                 MM/DD/YYYY
-----------------------------------------------------------------------------------------------------------------------------------
FHA_PART_B_CLAIM_AMT                   Amount of FHA Part B Claim Filed                                 2       No commas(,) or
                                                                                                                dollar signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
FHA_PART_B_CLAIM_PAID_DATE             Date HUD Disbursed Part B Claim Payment                                  MM/DD/YYYY
-----------------------------------------------------------------------------------------------------------------------------------
FHA_PART_B_CLAIM_PAID_AMT              Amount HUD Paid on Part B Claim                                  2       No commas(,) or
                                                                                                                dollar signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                      108
<PAGE>

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
          Column/Header Name                                  Description                           Decimal      Format Comment
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                     <C>                                                        <C>           <C>
VA_CLAIM_FILED_DATE                    Date VA Claim Was Filed With the Veterans Admin                           MM/DD/YYYY
-----------------------------------------------------------------------------------------------------------------------------------
VA_CLAIM_PAID_DATE                     Date Veterans Admin. Disbursed VA Claim Payment                           MM/DD/YYYY
-----------------------------------------------------------------------------------------------------------------------------------
VA_CLAIM_PAID_AMT                      Amount Veterans Admin. Paid on VA Claim                          2        No commas(,) or
                                                                                                                 dollar signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Exhibit 2: Standard File Codes - Delinquency Reporting

The  Loss Mit Type  field  should  show the  approved  Loss  Mitigation  Code as
follows:
         o    ASUM-    Approved Assumption
         o    BAP-     Borrower Assistance Program
         o    CO-      Charge Off
         o    DIL-     Deed-in-Lieu
         o    FFA-     Formal Forbearance Agreement
         o    MOD-     Loan Modification
         o    PRE-     Pre-Sale
         o    SS-      Short Sale
         o    MISC-    Anything else approved by the PMI or Pool Insurer

NOTE:  Wells Fargo Bank will accept  alternative  Loss Mitigation Types to those
above,  provided  that they are  consistent  with  industry  standards.  If Loss
Mitigation Types other than those above are used, the Servicer must supply Wells
Fargo Bank with a  description  of each of the Loss  Mitigation  Types  prior to
sending the file.

The Occupant  Code field should show the current  status of the property code as
follows:
         o   Mortgagor
         o   Tenant
         o   Unknown
         o   Vacant

The  Property  Condition  field should show the last  reported  condition of the
property as follows:
         o   Damaged
         o   Excellent
         o   Fair
         o   Gone
         o   Good
         o   Poor
         o   Special Hazard
         o   Unknown


                                      109
<PAGE>

Exhibit 2: Standard File Codes - Delinquency Reporting Continued

The FNMA Delinquent  Reason Code field should show the Reason for Delinquency as
follows:

--------------------------------------------------------------------------------
 Delinquency             Delinquency Description
 Code
--------------------------------------------------------------------------------
 001                     FNMA-Death of principal mortgagor
--------------------------------------------------------------------------------
 002                     FNMA-Illness of principal mortgagor
--------------------------------------------------------------------------------
 003                     FNMA-Illness of mortgagor's family member
--------------------------------------------------------------------------------
 004                     FNMA-Death of mortgagor's family member
--------------------------------------------------------------------------------
 005                     FNMA-Marital difficulties
--------------------------------------------------------------------------------
 006                     FNMA-Curtailment of income
--------------------------------------------------------------------------------
 007                     FNMA-Excessive Obligation
--------------------------------------------------------------------------------
 008                     FNMA-Abandonment of property
--------------------------------------------------------------------------------
 009                     FNMA-Distant employee transfer
--------------------------------------------------------------------------------
 011                     FNMA-Property problem
--------------------------------------------------------------------------------
 012                     FNMA-Inability to sell property
--------------------------------------------------------------------------------
 013                     FNMA-Inability to rent property
--------------------------------------------------------------------------------
 014                     FNMA-Military Service
--------------------------------------------------------------------------------
 015                     FNMA-Other
--------------------------------------------------------------------------------
 016                     FNMA-Unemployment
--------------------------------------------------------------------------------
 017                     FNMA-Business failure
--------------------------------------------------------------------------------
 019                     FNMA-Casualty loss
--------------------------------------------------------------------------------
 022                     FNMA-Energy environment costs
--------------------------------------------------------------------------------
 023                     FNMA-Servicing problems
--------------------------------------------------------------------------------
 026                     FNMA-Payment adjustment
--------------------------------------------------------------------------------
 027                     FNMA-Payment dispute
--------------------------------------------------------------------------------
 029                     FNMA-Transfer of ownership pending
--------------------------------------------------------------------------------
 030                     FNMA-Fraud
--------------------------------------------------------------------------------
 031                     FNMA-Unable to contact borrower
--------------------------------------------------------------------------------
 INC                     FNMA-Incarceration
--------------------------------------------------------------------------------


                                      110
<PAGE>

Exhibit 2: Standard File Codes - Delinquency Reporting Continued

The FNMA  Delinquent  Status  Code  field  should  show the Status of Default as
follows:

--------------------------------------------------------------------------------
      Status Code         Status Description
--------------------------------------------------------------------------------
           09            Forbearance
--------------------------------------------------------------------------------
           17            Pre-foreclosure Sale Closing Plan Accepted
--------------------------------------------------------------------------------
           24            Government Seizure
--------------------------------------------------------------------------------
           26            Refinance
--------------------------------------------------------------------------------
           27            Assumption
--------------------------------------------------------------------------------
           28            Modification
--------------------------------------------------------------------------------
           29            Charge-Off
--------------------------------------------------------------------------------
           30            Third Party Sale
--------------------------------------------------------------------------------
           31            Probate
--------------------------------------------------------------------------------
           32            Military Indulgence
--------------------------------------------------------------------------------
           43            Foreclosure Started
--------------------------------------------------------------------------------
           44            Deed-in-Lieu Started
--------------------------------------------------------------------------------
           49            Assignment Completed
--------------------------------------------------------------------------------
           61            Second Lien Considerations
--------------------------------------------------------------------------------
           62            Veteran's Affairs-No Bid
--------------------------------------------------------------------------------
           63            Veteran's Affairs-Refund
--------------------------------------------------------------------------------
           64            Veteran's Affairs-Buydown
--------------------------------------------------------------------------------
           65            Chapter 7 Bankruptcy
--------------------------------------------------------------------------------
           66            Chapter 11 Bankruptcy
--------------------------------------------------------------------------------
           67            Chapter 13 Bankruptcy
--------------------------------------------------------------------------------


                                      111
<PAGE>

                                    EXHIBIT G

                  REQUEST FOR RELEASE OF DOCUMENTS AND RECEIPT

RE: Mortgage Loan #
BORROWER:                              PROPERTY:________________________________

Pursuant to a Purchase,  Warranties and Servicing  Agreement  (the  "Agreement")
between the Company and the Purchaser,  the undersigned hereby certifies that he
or she is an officer of the Company  requesting release of the documents for the
reason specified below. The undersigned further certifies that:

(Check one of the items below)

      On___________________________,  the above captioned mortgage loan was paid
in full or that the Company has been  notified  that payment in full has been or
will be escrowed.  The Company hereby certifies that all amounts with respect to
this loan which are required  under the Agreement have been or will be deposited
in the Custodial Account as required.

      The above captioned loan is being repurchased pursuant to the terms of the
Agreement.  The Company  hereby  certifies  that the  repurchase  price has been
credited to the Custodial Account as required under the Agreement.

      The above  captioned loan is being placed in foreclosure  and the original
documents  are  required to proceed  with the  foreclosure  action.  The Company
hereby  certifies  that the  documents  will be returned to the Purchaser in the
event of reinstatement.

      Other (explain)

______________________________________________________________

______________________________________________________________


All  capitalized  terms used  herein  and not  defined  shall have the  meanings
assigned to them in the Agreement.

      Based  on this  certification  and  the  indemnities  provided  for in the
Agreement, please release to the Company all original mortgage documents in your
possession relating to this loan.

Dated: _____________

By: _______________________________
Signature

___________________________________
              Title


                                      112
<PAGE>

Send documents to: _________________________________________

____________________________________________________________

____________________________________________________________

Acknowledgement:

      Purchaser  hereby  acknowledges  that all  original  documents  previously
released on the above captioned mortgage loan have been returned and received by
the Purchaser.

Dated: _____________

By: ______________________
Signature

___________________________________
              Title


                                      113
<PAGE>

                                    EXHIBIT H

                        COMPANY'S UNDERWRITING GUIDELINES


                                      114
<PAGE>

                                    EXHIBIT I

                                   TERM SHEET

      This         TERM         SHEET         (the         "Term         Sheet")
dated___________________________________,  by and among  American  Home Mortgage
Corporation,  with offices located at 520 Broadhollow Road,  Melville,  New York
11747 (the  "Company"),  American Home Mortgage  Servicing,  Inc.,  with offices
located  at  4600  Regent  Boulevard,   Suite  200,  Irving,  Texas  75063  (the
"Servicer"),  and EMC Mortgage Corporation,  a Delaware corporation,  located at
909 Hidden Ridge Drive,  Suite 200,  Irving,  Texas 7503 8 (the  "Purchaser") is
made pursuant to the terms and conditions of that certain  Purchase,  Warranties
and  Servicing  Agreement  (the  "Agreement")  dated as of March 1, 2006, by and
among the Company,  the Servicer and the Purchaser,  the provisions of which are
incorporated herein as if set forth in full herein, as such terms and conditions
may be modified or supplemented  hereby.  All initially  capitalized  terms used
herein unless otherwise  defined shall have the meanings ascribed thereto in the
Agreement.

      The Purchaser  hereby  purchases  from the Company and the Company  hereby
sells to the Purchaser, all of the Company's right, title and interest in and to
the Mortgage Loans on a servicing  retained basis described on the Mortgage Loan
Schedule  annexed  hereto as Schedule I, pursuant to and in accordance  with the
terms and conditions set forth in the Agreement,  as same may be supplemented or
modified hereby. Hereinafter,  the Servicer shall service the Mortgage Loans for
the benefit of the  Purchaser  and all  subsequent  transferees  of the Mortgage
Loans  pursuant to and in accordance  with the terms and conditions set forth in
the Agreement.

1. Definitions

      For purposes of the Mortgage Loans to be sold pursuant to this Term Sheet,
the following terms shall have the following meanings:

Aggregate Principal Balance (as of the
Cut-Off Date):

Closing Date:

Custodian:

Cut-off Date:

Initial Weighted Average Mortgage Loan
Remittance Rate:

Mortgage Loan:

Purchase Price Percentage:


                                      115
<PAGE>

Servicing Fee Rate:
Additional Closing Conditions:

In addition to the conditions specified in the Agreement, the obligation of each
of the Company and the Purchaser is subject to the  fulfillment,  on or prior to
the applicable Closing Date, of the following additional conditions: [None].

Additional Loan Documents:

In addition to the contents of the Mortgage File specified in the Agreement, the
following  documents  shall be delivered  with  respect to the  Mortgage  Loans:
[None]

[Additional] [Modification] of Representations and Warranties:

      [In  addition  to the  representations  and  warranties  set  forth in the
Agreement,  as of the date hereof,  the Company makes the  following  additional
representations  and  warranties  with  respect to the Mortgage  Loans:  [None].
[Notwithstanding  anything  to the  contrary  set forth in the  Agreement,  with
respect to each Mortgage Loan to be sold on the Closing Date, the representation
and warranty set forth in Section of the Agreement  shall be modified to read as
follows:]

      Except  as  modified   herein,   Section__________________________of   the
Agreement shall remain in full force and effect as of the date hereof.


                                      116
<PAGE>

      IN WITNESS  WHEREOF,  the parties  hereto  have  caused  their names to be
signed hereto by their respective duly authorized  officers as of the date first
above written.


                                    AMERICAN HOME MORTGAGE CORPORATION

                                    By:
                                    Name:
                                    Title:


                                    EMC MORTGAGE CORPORATION

                                    By:_________________________________________
                                    Name:
                                    Title:______________________________________


                                    AMERICAN HOME MORTGAGE SERVICING, INC.

                                    By:
                                    Name:
                                    Title:


                                      117
<PAGE>

                                   SCHEDULE I
                             MORTGAGE LOAN SCHEDULE


                                      118
<PAGE>

                                    EXHIBIT J

                      RECONSTITUTED MORTGAGE LOAN REPORTING

     (a) Servicer Mortgage Loan Number
     (b) FNMA Mortgage Loan Number (if applicable)
     (c) Lender/Seller Mortgage Loan Number (plus any other loan number)
     (d) Month end date/ date file created
     (e) Scheduled Beginning Balance
     (f) Actual Beginning Balance
     (g) Scheduled Ending Balance
     (h) Actual Ending Balance
     (i) Gross Rate (current gross rate) Net Rate (current passthrough)
     (j) Last Payment Date (LPI_DATE in Fannie's Laser Reporting)
     (k) Next Due Date
     (l) Delinquency Month (if available)
     (m) Default Flag, i.e. FC, REO, etc. (if applicable)
     (n) Pay-In-Full Date (Mortgage Loan paid off by Mortgagor)
     (o) Foreclosure start date
     (p) Foreclosure end date
     (q) REO Property date
     (r) With respect to Liquidated Mortgage Loans:
     (s) (i)   claim date
         (ii)  claim amount
         (iii) proceeds
         (iv)  amount of loss or gain (as applicable)
         (v)   the date of the loss or gain.
         (vi)  the liquidation  reason (paid in full or repurchased out of deal)
               Fannie's Laser Reporting (For FNMA loans)
         (i)   Action Code (for default or paid off Mortgage Loans; i.e. 60, 65,
               etc.)
         (ii)  Action Date
         (iii) Remit Prin (submitted principal amount)
         (iv)  Remit Int (submitted interest amount)
         (v)   Pool/Invest   indicator    (indicating    Schedule/Schedule   or
               Actual/Actual pool)


                                      119
<PAGE>

                                    EXHIBIT K

                       COMPANY'S OBLIGATIONS IN CONNECTION
                              WITH A RECONSTITUTION

      o  The   Servicer   shall  (i)   possess  the  ability  to  service  to  a
securitization  documents;  (ii)  service on a  "Scheduled/Scheduled"  reporting
basis  (advancing  through  the  liquidation  of an REO  Property),  (iii)  make
compensating  interest  payments on payoffs and  curtailments,  (iv) report to a
Master  Servicer  in  format  acceptable  to such  Master  Servicer  by the 10th
calendar  day of each  month,  and (v)  remit to a  Master  Servicer  in  format
acceptable to such Master  Servicer by the 18th calendar day of each month,  and
if such 18th  calendar day is not a Business  Day, the Business Day  immediately
preceding the 18th calendar day)..

      o The Servicer shall provide an acceptable annual certification (officer's
certificate)  to the Master Servicer (as required by the  Sarbanes-Oxley  Act of
2002)  as  well  as  any  other  annual   certifications   required   under  the
securitization  documents  (i.e.  the annual  statement as to  compliance/annual
independent  certified public  accountants'  servicing report due by March 15 of
each year).

      o The Servicer shall allow for the Purchaser, the Master Servicer or their
designee  to  perform  a  review  of  audited  financials  and net  worth of the
Servicer.

      o  The  Servicer  shall  provide  a  Uniform  Single  Attestation  Program
certificate and Management  Assertion as requested by the Master Servicer or the
Purchaser.

      o The Servicer  shall provide  information  on each  Custodial  Account as
requested by the Master Servicer or the Purchaser,  and each Custodial  Accounts
shall  comply  with the  requirements  for  such  accounts  as set  forth in the
securitization documents.

      o The Servicer shall maintain its servicing  system in accordance with the
requirements of the Master Servicer.


                                      120
<PAGE>

                                    EXHIBIT L

                          FORM OF COMPANY CERTIFICATION

Re: The [ ] agreement dated as of [ l, 200[ ] (the "Agreement"), among [IDENTIFY
PARTIES]


      I,___________________________________________,
the_____________________________________  of [NAME OF COMPANY] (the  "Company"),
certify  to  [the  Purchaser],   [the  Depositor],  and  the  [Master  Servicer]
[Securities Administrator] [Trustee], and their officers, with the knowledge and
intent that they will rely upon this certification, that:

            I have  reviewed  the servicer  compliance  statement of the Company
      provided in accordance  with Item 1123 of  Regulation AB (the  "Compliance
      Statement"), the report on assessment of the Company's compliance with the
      servicing  criteria  set  forth  in Item  1122(d)  of  Regulation  AB (the
      "Servicing  Criteria"),  provided in accordance  with Rules 1 3a- 18 and 1
      5d- 18 under  Securities  Exchange Act of 1934, as amended (the  "Exchange
      Act") and Item 1122 of Regulation  AB (the  "Servicing  Assessment"),  the
      registered  public  accounting  firm's   attestation  report  provided  in
      accordance with Rules 13a-18 and 15d-18 under the Exchange Act and Section
      1122(b) of Regulation  AB (the  "Attestation  Report"),  and all servicing
      reports,  officer's  certificates  and other  information  relating to the
      servicing  of the  Mortgage  Loans by the Company  during 200[ ] that were
      delivered by the Company to the [Depositor] [Master Servicer]  [Securities
      Administrator]  [Trustee]  pursuant to the  Agreement  (collectively,  the
      "Company Servicing Information");

            Based on my knowledge, the Company Servicing Information, taken as a
      whole, does not contain any untrue statement of a material fact or omit to
      state a material fact necessary to make the statements  made, in the light
      of the circumstances under which such statements were made, not misleading
      with  respect  to the  period of time  covered  by the  Company  Servicing
      Information;

            Based on my  knowledge,  all of the  Company  Servicing  Information
      required  to be  provided  by the  Company  under the  Agreement  has been
      provided to the [Depositor] [Master Servicer]  [Securities  Administrator]
      [Trustee];

            I am  responsible  for  reviewing  the  activities  performed by the
      Company as servicer under the Agreement, and based on my knowledge and the
      compliance  review  conducted in preparing  the  Compliance  Statement and
      except as disclosed in the Compliance Statement,  the Servicing Assessment
      or the Attestation Report, the Company has fulfilled its obligations under
      the Agreement in all material respects; and

The  Compliance  Statement  required to be delivered by the Company  pursuant to
this Agreement,  and the Servicing Assessment and Attestation Report required to
be provided by the Company and by any Subservicer and Subcontractor  pursuant to
the Agreement,  have been provided to the  [Depositor]  [Master  Servicer].  Any
material  instances  of  noncompliance  described  in  such  reports  have  been
disclosed  to the  [Depositor]  [Master  Servicer].  Any  material  instance  of
noncompliance with the Servicing Criteria has been disclosed in such reports.


                                      121
<PAGE>

                                    EXHIBIT M

                            SUMMARY OF REGULATION AB
                               SERVICING CRITERIA

NOTE: This Exhibit M is provided for convenience of reference only. In the event
of a conflict or inconsistency  between the terms of this Exhibit M and the text
of  Regulation  AB, the text of  Regulation  AB, its adopting  release and other
public statements of the SEC shall control.

Item 1122(d)

      (a) General servicing considerations.

            (1)  Policies  and   procedures   are   instituted  to  monitor  any
      performance or other triggers and events of default in accordance with the
      transaction agreements.

            (2) If any material  servicing  activities  are  outsourced to third
      parties,  policies  and  procedures  are  instituted  to monitor the third
      party's performance and compliance with such servicing activities.

            (3) Any  requirements  in the  transaction  agreements to maintain a
      back-up servicer for the mortgage loans are maintained.

            (4) A fidelity bond and errors and omissions  policy is in effect on
      the party participating in the servicing function throughout the reporting
      period in the amount of coverage  required by and  otherwise in accordance
      with the terms of the transaction agreements.

      (b) Cash collection and administration.

            (1) Payments on mortgage  loans are deposited  into the  appropriate
      custodial  bank accounts and related bank  clearing  accounts no more than
      two  business  days  following  receipt,  or  such  other  number  of days
      specified in the transaction agreements.

            (2) Disbursements  made via wire transfer on behalf of an obligor or
      to an investor are made only by authorized personnel.

            (3)  Advances of funds or  guarantees  regarding  collections,  cash
      flows or  distributions,  and any  interest or other fees charged for such
      advances,  are made, reviewed and approved as specified in the transaction
      agreements.

            (4) The related accounts for the  transaction,  such as cash reserve
      accounts or accounts established as a form of  overcollateralization,  are
      separately  maintained  (e.g., with respect to commingling of cash) as set
      forth in the transaction agreements.

            (5) Each  custodial  account is  maintained  at a federally  insured
      depository  institution as set forth in the  transaction  agreements.  For
      purposes of this criterion,  "federally  insured  depository  institution"
      with respect to a foreign financial  institution means a foreign financial
      institution  that  meets  the  requirements  of Rule  13k-1(b)(  1) of the
      Securities Exchange Act.


                                      122
<PAGE>

            (6) Unissued  checks are  safeguarded so as to prevent  unauthorized
      access.

            (7)  Reconciliations  are  prepared  on  a  monthly  basis  for  all
      asset-backed   securities  related  bank  accounts,   including  custodial
      accounts and related bank clearing accounts. These reconciliations are (A)
      mathematically  accurate;  (B) prepared  within 30 calendar days after the
      bank statement  cutoff date, or such other number of days specified in the
      transaction  agreements;  (C) reviewed and approved by someone  other than
      the person who prepared the reconciliation;  and (D) contain  explanations
      for  reconciling  items.  These  reconciling  items are resolved within 90
      calendar days of their  original  identification,  or such other number of
      days specified in the transaction agreements.

      (c) Investor remittances and reporting.

            (1)  Reports  to  investors,  including  those to be filed  with the
      Commission,  are maintained in accordance with the transaction  agreements
      and applicable Commission requirements. Specifically, such reports (A) are
      prepared in accordance  with  timeframes  and other terms set forth in the
      transaction  agreements;  (B) provide information calculated in accordance
      with the terms specified in the transaction agreements; (C) are filed with
      the  Commission  as required by its rules and  regulations;  and (D) agree
      with investors' or the trustee's  records as to the total unpaid principal
      balance and number of mortgage loans serviced by the Servicer.

            (2)  Amounts  due  to  investors   are  allocated  and  remitted  in
      accordance  with  timeframes,  distribution  priority  and other terms set
      forth in the transaction agreements.

            (3) Disbursements made to an investor are posted within two business
      days to the  Servicer's  investor  records,  or such other  number of days
      specified in the transaction agreements.

            (4) Amounts  remitted to investors  per the investor  reports  agree
      with  cancelled  checks,  or other  form of  payment,  or  custodial  bank
      statements.

      (d) Mortgage Loan administration.

            (1)  Collateral  or  security  on mortgage  loans is  maintained  as
      required by the transaction agreements or related mortgage loan documents.

            (2) Mortgage loan and related  documents are safeguarded as required
      by the transaction agreements.

            (3) Any additions,  removals or  substitutions to the asset pool are
      made,   reviewed  and  approved  in  accordance  with  any  conditions  or
      requirements in the transaction agreements.

            (4)  Payments on mortgage  loans,  including  any  payoffs,  made in
      accordance  with the related  mortgage  loan  documents  are posted to the
      Servicer's obligor records maintained no more than two business days after
      receipt,  or such  other  number  of  days  specified  in the  transaction
      agreements,  and  allocated to  principal,  interest or other items (e.g.,
      escrow) in accordance with the related mortgage loan documents.


                                      123
<PAGE>

            (5) The Servicer's  records  regarding the mortgage loans agree with
      the  Servicer's  records  with respect to an  obligor's  unpaid  principal
      balance.

            (6)  Changes  with  respect  to the terms or status of an  obligor's
      mortgage loans (e.g., loan modifications or re-agings) are made,  reviewed
      and approved by authorized  personnel in accordance  with the  transaction
      agreements and related mortgage loan documents.

            (7) Loss mitigation or recovery  actions (e.g.,  forbearance  plans,
      modifications   and  deeds  in  lieu  of  foreclosure,   foreclosures  and
      repossessions,  as applicable)  are initiated,  conducted and concluded in
      accordance  with the timeframes or other  requirements  established by the
      transaction agreements.

            (8) Records documenting collection efforts are maintained during the
      period a mortgage loan is delinquent  in accordance  with the  transaction
      agreements.  Such records are maintained on at least a monthly  basis,  or
      such other period  specified in the transaction  agreements,  and describe
      the entity's activities in monitoring delinquent mortgage loans including,
      for example,  phone calls, letters and payment rescheduling plans in cases
      where delinquency is deemed temporary (e.g., illness or unemployment).

            (9)  Adjustments  to interest  rates or rates of return for mortgage
      loans with variable rates are computed based on the related  mortgage loan
      documents.

            (10)  Regarding  any  funds  held in trust for an  obligor  (such as
      escrow  accounts):  (A) such funds are analyzed,  in  accordance  with the
      obligor's  mortgage loan  documents,  on at least an annual basis, or such
      other period specified in the transaction agreements; (B) interest on such
      funds is paid,  or credited,  to obligors in  accordance  with  applicable
      mortgage loan documents and state laws; and (C) such funds are returned to
      the  obligor  within 30  calendar  days of full  repayment  of the related
      mortgage  loans, or such other number of days specified in the transaction
      agreements.

            (11) Payments made on behalf of an obligor (such as tax or insurance
      payments) are made on or before the related  penalty or expiration  dates,
      as  indicated  on the  appropriate  bills or  notices  for such  payments,
      provided  that such support has been  received by the Servicer at least 30
      calendar days prior to these dates, or such other number of days specified
      in the transaction agreements.

            (12) Any late payment penalties in connection with any payment to be
      made on behalf of an obligor  are paid from the  Servicer's  funds and not
      charged to the obligor,  unless the late payment was due to the  obligor's
      error or  omission.

            (13)  Disbursements  made on behalf of an obligor are posted  within
      two business days to the obligor's records maintained by the Servicer,  or
      such other number of days specified in the transaction agreements.

            (14)  Delinquencies,  charge-offs  and  uncollectable  accounts  are
      recognized and recorded in accordance with the transaction agreements.


                                      124
<PAGE>

            (15) Any external  enhancement or other support,  identified in Item
      111 4(a)(1)  through (3) or Item 1115 of  Regulation  AB, is maintained as
      set forth in the transaction agreements.


                                      125
<PAGE>

                                    EXHIBIT N

                SUMMARY OF APPLICABLE REGULATION AB REQUIREMENTS

NOTE: This Exhibit N is provided for convenience of reference only. In the event
of a conflict or inconsistency  between the terms of this Exhibit N and the text
of  Regulation  AB, the text of  Regulation  AB, its adopting  release and other
public statements of the SEC shall control.

Item 1105(a)(1)-(3) and (c)

      -Provide static pool  information with respect to mortgage loans that were
originated  or  purchased  by the  Company and which are of the same type as the
Mortgage Loans.

      -Provide  static  pool  information  regarding  delinquencies,  cumulative
losses and prepayments for prior securitized pools of the Company.

      -If the Company has less than 3 years  experience  securitizing  assets of
the same type as the  Mortgage  Loans,  provide the static pool  information  by
vintage  origination  years  regarding  loans  originated  or  purchased  by the
Company,  instead  of by prior  securitized  pool.  A vintage  origination  year
represents mortgage loans originated during the same year.

      -Such static pool information shall be for the prior five years, or for so
long as the Company has been  originating  or purchasing (in the case of data by
vintage  origination  year)  or  securitizing  (in the  case  of  data by  prior
securitized pools) such mortgage loans if for less than five years.

      -The static pool  information for each vintage  origination  year or prior
securitized pool, as applicable,  shall be presented in monthly  increments over
the life of the mortgage loans included in the vintage origination year or prior
securitized pool.

      -Provide summary information for the original characteristics of the prior
securitized  pools or vintage  origination  years,  as applicable  and material,
including:  number of pool  assets,  original  pool  balance,  weighted  average
initial loan balance,  weighted  average  mortgage  rate,  weighted  average and
minimum and maximum FICO,  product  type,  loan  purpose,  weighted  average and
minimum and maximum LTV,  distribution of loans by mortgage rate, and geographic
concentrations of 5% or more.

Item 1108(b) and (c)

      Provide the following  information with respect to each servicer that will
service,  including  interim  service,  20% or more of the mortgage loans in any
loan group in the securitization issued in the Securitization Transaction:

      -a description of the Company's form of organization;

      -a  description  of how long the  Company has been  servicing  residential
mortgage  loans; a general  discussion of the Company's  experience in servicing
assets  of any  type as  well as a more  detailed  discussion  of the  Company's
experience in, and  procedures for the servicing  function it will perform under
this  Agreement and any  Reconstitution  Agreements;  information  regarding the
size, composition and growth of the Company's portfolio of mortgage loans of the
type similar to the Mortgage  Loans and  information  on factors  related to the
Company  that may be material to any  analysis of the  servicing of the Mortgage
Loans or the related asset-backed securities,  as applicable,  including whether
any default or  servicing  related  performance  trigger has  occurred as to any
other  securitization  due to any act or failure to act of the Company,  whether
any material  noncompliance  with applicable  servicing criteria as to any other
securitization has been disclosed or reported by the Company,  and the extent of
outsourcing the Company uses;


                                      126
<PAGE>

      -a  description  of any  material  changes to the  Company's  policies  or
procedures  in the servicing  function it will perform under this  Agreement and
any  Reconstitution  Agreements  for  mortgage  loans of the type similar to the
Mortgage Loans during the past three years;

      -information  regarding  the Company's  financial  condition to the extent
that  there  is a  material  risk  that the  effect  on one or more  aspects  of
servicing  resulting from such financial  condition could have a material impact
on the performance of the securities issued in the  Securitization  Transaction,
or on servicing of mortgage loans of the same asset type as the Mortgage Loans;

      -any special or unique  factors  involved in  servicing  loans of the same
type as the Mortgage Loans, and the Company's  processes and procedures designed
to address such factors;

      -statistical information regarding principal and interest advances made by
the Company on the Mortgage Loans and the Company's overall servicing  portfolio
for the past three years; and

      -the Company's process for handling  delinquencies,  losses,  bankruptcies
and recoveries, such as through liquidation of REO Properties, foreclosure, sale
of the Mortgage Loans or workouts.

Item 1110(a)

      -Identify  any  originator  or  group  of  affiliated   originators   that
originated,  or is expected to originate,  10% or more of the mortgage  loans in
any loan group in the securitization issued in the Securitization Transaction.

Item 1110(b)

      Provide the following  information with respect to any originator or group
of affiliated originators that originated,  or is expected to originate,  20% or
more of the mortgage loans in any loan group in the securitization issued in the
Securitization Transaction:

      -the Company's form of organization; and

      -a  description  of the  Company's  origination  program  and how long the
Company  has been  engaged in  originating  residential  mortgage  loans,  which
description must include a discussion of the Company's experience in originating
mortgage loans of the same type as the Mortgage Loans and information  regarding
the size and  composition  of the  Company's  origination  portfolio  as well as
information  that may be  material  to an  analysis  of the  performance  of the
Mortgage Loans, such as the Company's  credit-granting or underwriting  criteria
for mortgage loans of the same type as the Mortgage Loans.


                                      127
<PAGE>

Item 1117

      -describe any legal proceedings pending against the Company or against any
of  its  property,  including  any  proceedings  known  to  be  contemplated  by
governmental authorities,  that may be material to the holders of the securities
issued in the Securitization Transaction.

Item 1119(a)

      -describe any  affiliations of the Company,  each other  originator of the
Mortgage Loans and each Subservicer with the sponsor, depositor, issuing entity,
trustee,   any  originator,   any  other  servicer,   any  significant  obligor,
enhancement  or support  provider or any other material  parties  related to the
Securitization Transaction.

Item 1119(b)

      -describe any business relationship,  agreement, arrangement,  transaction
or  understanding  entered into outside of the ordinary course of business or on
terms other than those obtained in an arm's length transaction with an unrelated
third party,  apart from the  Securitization  Transaction,  between the Company,
each other  originator  of the  Mortgage  Loans and each  Subservicer,  or their
respective  affiliates,  and the sponsor,  depositor or issuing  entity or their
respective affiliates,  that exists currently or has existed during the past two
years,  that  may  be  material  to  the  understanding  of an  investor  in the
securities issued in the Securitization Transaction.

Item 1119(c)

      -describe any business relationship,  agreement, arrangement,  transaction
or   understanding   involving  or  relating  to  the  Mortgage   Loans  or  the
Securitization Transaction,  including the material terms and approximate dollar
amount  involved,  between the Company,  each other  originator  of the Mortgage
Loans and each  Subservicer,  or their  respective  affiliates  and the sponsor,
depositor  or  issuing  entity  or  their  respective  affiliates,  that  exists
currently or has existed during the past two years.


                                      128
<PAGE>

                                   EXHIBIT O

         SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE

      The  assessment of  compliance  to be delivered by [the Company]  [Name of
Subservicer] shall address,  at a minimum,  the criteria  identified as below as
"Applicable Servicing Criteria":


                                      129
<PAGE>

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
                                                                                                Applicable
                                                                                                Servicing
                                       Servicing Criteria                                        Criteria
-------------------------------------------------------------------------------------------------------------
  Reference                                  Criteria
-------------------------------------------------------------------------------------------------------------
                                         General Servicing Considerations
-------------------------------------------------------------------------------------------------------------
<S>                    <C>                                                                            <C>
                       Policies and procedures are instituted to monitor any performance              X
                       or other triggers and events of default in accordance with the
1122(d)(1 )(i)         transaction agreements.
-------------------------------------------------------------------------------------------------------------
                       If any material servicing activities are outsourced to third
                       parties, policies and procedures are instituted to monitor the                 X
                       third party's performance and compliance with such servicing
11 22(d)(1 )(ii)       activities.
-------------------------------------------------------------------------------------------------------------
                       Any requirements in the transaction agreements to maintain a
1122(d)(1 )(iii)       back up servicer for the mortgage loans are maintained.
-------------------------------------------------------------------------------------------------------------
                       A fidelity bond and errors and omissions policy is in effect on the
                       party participating in the servicing function throughout the
                       reporting period in the amount of coverage required by and otherwise           X
11 22(d)(1 )(iv)       in accordance with the terms of the transaction agreements.
-------------------------------------------------------------------------------------------------------------
                                        Cash Collection and Administration
-------------------------------------------------------------------------------------------------------------
                       Payments on mortgage loans are deposited into the appropriate
                       custodial bank accounts and related bank clearing accounts no more             X
                       than two business days following receipt, or such other number of
1122(d)(2)(i)          days specified in the transaction agreements.
-------------------------------------------------------------------------------------------------------------
                       Disbursements made via wire transfer on behalf of an obligor or to             X
11 22(d)(2)(ii)        an investor are made only by authorized personnel.
-------------------------------------------------------------------------------------------------------------
                       Advances of funds or guarantees regarding collections, cash flows or
                       distributions, and any interest or other fees charged for such                 X
                       advances, are made, reviewed and approved as specified in the
11 22(d)(2)(iii)       transaction agreements.
-------------------------------------------------------------------------------------------------------------
                       The related accounts for the transaction, such as cash reserve
                       accounts or accounts established as a form of overcollateralization,           X
                       are separately maintained (e.g., with respect to commingling of
11 22(d)(2)(iv)        cash) as set forth in the transaction agreements.
-------------------------------------------------------------------------------------------------------------
                       Each custodial account is maintained at a federally insured
                       depository institution as set forth in the transaction agreements.
                       For purposes of this criterion, "federally insured depository                  X
                       institution" with respect to a foreign financial institution means a
                       foreign financial institution that meets the requirements of Rule
1122(d)(2)(v)          13k 1(b)(1) of the Securities Exchange Act.
-------------------------------------------------------------------------------------------------------------
                       Unissued checks are safeguarded so as to prevent unauthorized                  X
11 22(d)(2)(vi)        access.
-------------------------------------------------------------------------------------------------------------
                       Reconciliations are prepared on a monthly basis for all asset backed
                       securities related bank accounts, including custodial accounts and
                       related bank clearing accounts. These reconciliations are (A)
                       mathematically accurate; (B) prepared within 30 calendar days after
                       the bank statement cutoff date, or such other number of days
                       specified in the transaction agreements; (C) reviewed and approved             X
                       by someone other than the person who prepared the reconciliation;
                       and (D) contain explanations for reconciling items. These
                       reconciling items are resolved within 90 calendar days of their
                       original identification, or such other number of days specified in
1122(d)(2)(vii)        the transaction agreements.

</TABLE>


                                      130
<PAGE>

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------

                                                                                               Applicable
                                                                                                Servicing
                                         Servicing Criteria                                      Criteria
-------------------------------------------------------------------------------------------------------------
  Reference                                  Criteria
-------------------------------------------------------------------------------------------------------------
                                   Investor Remittances and Reporting
-------------------------------------------------------------------------------------------------------------
<S>                    <C>                                                                            <C>
                       Reports to investors, including those to be filed with the
                       Commission, are maintained in accordance with the transaction
                       agreements and applicable Commission requirements. Specifically,
                       such reports (A) are prepared in accordance with timeframes and
                       other terms set forth in the transaction agreements; (B) provide
                       information calculated in accordance with the terms specified in the           X
                       transaction agreements; (C) are filed with the Commission as
                       required by its rules and regulations; and (D) agree with investors'
                       or the trustee's records as to the total unpaid principal balance
1122(d)(3)(i)          and number of mortgage loans serviced by the Servicer.
-------------------------------------------------------------------------------------------------------------
                       Amounts due to investors are allocated and remitted in accordance
                       with timeframes, distribution priority and other terms set forth in            X
1122(d)(3)(ii)         the transaction agreements.
-------------------------------------------------------------------------------------------------------------
                       Disbursements made to an investor are posted within two business
                       days to the Servicer's investor records, or such other number of               X
11 22(d)(3)(iii)       days specified in the transaction agreements.
-------------------------------------------------------------------------------------------------------------
                       Amounts remitted to investors per the investor reports agree with
                       cancelled checks, or other form of payment, or custodial bank                  X
11 22(d)(3)(iv)        statements.
-------------------------------------------------------------------------------------------------------------
                                        Pool Asset Administration
-------------------------------------------------------------------------------------------------------------
                       Collateral or security on mortgage loans is maintained as required             X
11 22(d)(4)(i)         by the transaction agreements or related mortgage loan documents.
-------------------------------------------------------------------------------------------------------------
                       Mortgage loan and related documents are safeguarded as required by             X
11 22(d)(4)(ii)        the transaction agreements
-------------------------------------------------------------------------------------------------------------
                       Any additions, removals or substitutions to the asset pool are made,
                       reviewed and approved in accordance with any conditions or                     X
1122(d)(4)(iii)        requirements in the transaction agreements.
-------------------------------------------------------------------------------------------------------------
                       Payments on mortgage loans, including any payoffs, made in
                       accordance with the related mortgage loan documents are posted to
                       the Servicer's obligor records maintained no more than two business
                       days after receipt, or such other number of days specified in the              X
                       transaction agreements, and allocated to principal, interest or
                       other items (e.g., escrow) in accordance with the related mortgage
1122(d)(4)(iv)         loan documents.
-------------------------------------------------------------------------------------------------------------
                       The Servicer's records regarding the mortgage loans agree with the
                       Servicer's records with respect to an obligor's unpaid principal               X
11 22(d)(4)(v)         balance.
-------------------------------------------------------------------------------------------------------------
                       Changes with respect to the terms or status of an obligor's mortgage
                       loans (e.g., X loan modifications or re agings) are made, reviewed             X
                       and approved by authorized personnel in accordance with the
1122(d)(4)(vi)         transaction agreements and related pool asset documents.
-------------------------------------------------------------------------------------------------------------
                       Loss mitigation or recovery actions (e.g., forbearance plans,
                       modifications and deeds in lieu of foreclosure, foreclosures and
                       repossessions, as applicable) are initiated, conducted and concluded           X
                       in accordance with the timeframes or other requirements established
1122(d)(4)( vii)       by the transaction agreements.
-------------------------------------------------------------------------------------------------------------
                       Records documenting collection efforts are maintained during the
                       period a mortgage loan is delinquent in accordance with the
                       transaction agreements. Such records are maintained on at least a
                       monthly basis, or such other period specified in the transaction               X
                       agreements, and describe the entity's activities in monitoring
                       delinquent mortgage loans including, for example, phone calls,
                       letters and payment rescheduling plans in cases where delinquency is
1122(d)(4)(viii)       deemed temporary (e.g., illness or unemployment).
-------------------------------------------------------------------------------------------------------------
                       Adjustments to interest rates or rates of return for mortgage loans
                       with variable rates are computed based on the related mortgage loan            X
1122(d)(4)(ix)         documents.
-------------------------------------------------------------------------------------------------------------
</TABLE>


                                      131
<PAGE>

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------

                                                                                               Applicable
                                                                                                Servicing
                                         Servicing Criteria                                      Criteria
-------------------------------------------------------------------------------------------------------------
  Reference                                  Criteria
-------------------------------------------------------------------------------------------------------------
<S>                    <C>                                                                            <C>
                       Regarding any funds held in trust for an obligor (such as escrow
                       accounts): (A) such funds are analyzed, in accordance with the
                       obligor's mortgage loan documents, on at least an annual basis, or
                       such other period specified in the transaction agreements; (B)
                       interest on such funds is paid, or credited, to obligors in                    X
                       accordance with applicable mortgage loan documents and state laws;
                       and (C) such funds are returned to the obligor within 30 calendar
                       days of full repayment of the related mortgage loans, or such other
11 22(d)(4)(x)         number of days specified in the transaction agreements.
-------------------------------------------------------------------------------------------------------------
                       Payments made on behalf of an obligor (such as tax or insurance
                       payments) are made on or before the related penalty or expiration
                       dates, as indicated on the appropriate bills or notices for such
                       payments, provided that such support has been received by the                  X
                       servicer at least 30 calendar days prior to these dates, or such
11 22(d)(4)(xi)        other number of days specified in the transaction agreements.
-------------------------------------------------------------------------------------------------------------
                       Any late payment penalties in connection with any payment to be made
                       on behalf of an obligor are paid from the servicer's funds and not             X
                       charged to the obligor, unless the late payment was due to the
11 22(d)(4)(xii)       obligor's error or omission.
-------------------------------------------------------------------------------------------------------------
                       Disbursements made on behalf of an obligor are posted within two
                       business days to the obligor's records maintained by the servicer,             X
                       or such other number of days specified in the transaction
11 22(d)(4)(xiii)      agreements.
-------------------------------------------------------------------------------------------------------------
                       Delinquencies, charge offs and uncollectible accounts are recognized           X
11 22(d)(4)(xiv)       and recorded in accordance with the transaction agreements.
-------------------------------------------------------------------------------------------------------------
                       Any external enhancement or other support, identified in
                       Item 11 14(a)(1) through (3) or Item 1115 of Regulation                        X
                       AB, is maintained as set forth in the transaction
11 22(d)(4)(xv)        agreements.
-------------------------------------------------------------------------------------------------------------
</TABLE>

                                                 [NAME OF COMPANY] [NAME OF SUB
                                                 SERVICER]

                                                 Date:
                                                        ------------------------

                                                 By:
                                                        ------------------------
                                                 Name:
                                                 Title:


                                      132
<PAGE>

                                EXHIBIT P

               REPORTING DATA FOR REALIZED LOSSES AND GAINS

   Calculation of Realized Loss/Gain Form 332- Instruction Sheet

NOTE: Do not net or combine items. Show all expenses individually and all
credits as separate line items. Claim packages are due on the remittance
report date. Late submissions may result in claims not being passed until the
following month. The Servicer is responsible to remit all funds pending loss
approval and /or resolution of any disputed items.

            The numbers on the 332 form correspond with the numbers listed
            below.

Liquidation and Acquisition Expenses:
1.    The Actual Unpaid Principal Balance of the Mortgage Loan. For
      documentation, an Amortization Schedule from date of default through
      liquidation breaking out the net interest and servicing fees advanced
      is required.

2.    The Total  Interest Due less the  aggregate  amount of servicing  fee that
      would  have  been  earned  if all  delinquent  payments  had been  made as
      agreed. For documentation,  an Amortization  Schedule from date of default
      through  liquidation  breaking  out the net interest  and  servicing  fees
      advanced is required.

3.    Accrued  Servicing Fees based upon the Scheduled  Principal Balance of the
      Mortgage Loan as  calculated on a monthly  basis.  For  documentation,  an
      Amortization  Schedule from date of default through  liquidation  breaking
      out the net interest and servicing fees advanced is required.
4-12.       Complete as applicable. Required documentation:
            * For taxes and insurance advances - see page 2 of 332 form -
      breakdown required showing period of coverage, base tax, interest,
      penalty. Advances prior to
        default require evidence of servicer efforts to recover advances.
            * For escrow advances - complete payment history
              (to calculate advances from last positive escrow balance forward)
            * Other expenses - copies of corporate advance history showing all
            payments
            * REO repairs > $1500 require explanation
            * REO repairs >$3000 require evidence of at least 2 bids.
            *  Short Sale or Charge Off require P&L supporting the decision
      and WFB's approved Officer Certificate
            * Unusual or extraordinary items may require further documentation.
13.                The total of lines 1 through 12.
Credits:

14-2 1.     Complete as applicable. Required documentation:
            * Copy of the HUD 1 from the REO sale. If a 3rd Party Sale, bid
      instructions and Escrow Agent / Attorney
             Letter of Proceeds Breakdown.
            * Copy of EOB for any MI or gov't guarantee
            * All other credits need to be clearly defined on the 332 form


                                      133
<PAGE>

      22.   The total of lines 14 through 21.

      Please Note: For HUD/VA loans, use line (18a) for Part A/Initial
                  proceeds and line (18b) for Part B/Supplemental proceeds.

      Total Realized Loss (or Amount of Any Gain)
      23.   The total derived from subtracting line 22 from 13. If the amount
            represents a realized gain, show the amount in parenthesis ( ).

                   Calculation of Realized Loss/Gain Form 332

Prepared by:  __________________    Date:  _______________
Phone:  ________________________    Email Address:_____________________

--------------------------  ----------------------------   ---------------------
Servicer Loan No.           Servicer Name                  Servicer Address

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

WELLS FARGO BANK, N.A. Loan No._____________________________

Borrower's Name: _________________________________________________________

Property Address: _________________________________________________________

Liquidation Type: REO Sale    3rd Party Sale    Short Sale    Charge Off

Was this loan granted a Bankruptcy deficiency or cramdown     Yes       No
If "Yes", provide deficiency or cramdown amount _______________________________

<TABLE>
<S>                                                       <C>
Liquidation and Acquisition Expenses:
(1)  Actual Unpaid Principal Balance of Mortgage Loan     $ ______________  (1)
(2)  Interest accrued at Net Rate                         ________________  (2)
(3)  Accrued Servicing Fees                               ________________  (3)
(4)  Attorney's Fees                                      ________________  (4)
(5)  Taxes (see page 2)                                   ________________  (5)
(6)  Property Maintenance                                 ________________  (6)
(7)  MI/Hazard Insurance Premiums (see page 2)            ________________  (7)
(8)  Utility Expenses                                     ________________  (8)
(9)  Appraisal/BPO                                        ________________  (9)
(10) Property Inspections                                 ________________  (10)
(11) FC Costs/Other Legal Expenses                        ________________  (11)
(12) Other (itemize)                                      ________________  (12)
         Cash for Keys________________________            ________________  (12)
         HOA/Condo Fees_______________________            ________________  (12)
         _____________________________________            ________________  (12)
</TABLE>


                                      134
<PAGE>

<TABLE>
<S>                                                       <C>
         Total Expenses                                   $ ______________  (13)
Credits:
(14) Escrow Balance                                       $ ______________  (14)
(15) HIP Refund                                           ________________  (15)
(16) Rental Receipts                                      ________________  (16)
(17) Hazard Loss Proceeds                                 ________________  (17)
(18) Primary Mortgage Insurance / Gov't Insurance         ________________  (18a) HUD Part A
                                                          ________________  (18b) HUD Part B
(19) Pool Insurance Proceeds                              ________________  (19)
(20) Proceeds from Sale of Acquired Property              ________________  (20)
(21) Other (itemize)                                      ________________  (21)
     _________________________________________            ________________  (21)

     Total Credits                                        $_______________  (22)
Total Realized Loss (or Amount of Gain)                   $_______________  (23)
</TABLE>

Escrow Disbursement Detail

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
      Type           Date Paid        Period of       Total Paid       Base Amount      Penalties        Interest
   (Tax /Ins.)                        Coverage
----------------------------------------------------------------------------------------------------------------------
<S>                  <C>              <C>             <C>              <C>              <C>              <C>

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

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

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

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

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

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

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

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

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

----------------------------------------------------------------------------------------------------------------------
</TABLE>


                                      135








================================================================================

                            EMC Mortgage Corporation,

                                                        Purchaser

                                       and

                          Countrywide Home Loans, Inc.,

                                                        Company

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

                   SELLER'S WARRANTIES AND SERVICING AGREEMENT

                          Dated as of September 1, 2002

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

                   Residential Adjustable Rate Mortgage Loans

================================================================================

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                          Page
                                                                                          ----
<S>                                                                                        <C>
                                    ARTICLE I

                                   DEFINITIONS

                                   ARTICLE II

           CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES;
                    BOOKS AND RECORDS; DELIVERY OF DOCUMENTS

Section 2.01   Conveyance of Mortgage Loans; Possession of Mortgage Files;
                 Maintenance of Servicing Files ......................................     13
Section 2.02   Books and Records; Transfers of Mortgage Loans ........................     14
Section 2.03   Delivery of Documents .................................................     15

                                   ARTICLE III

                         REPRESENTATIONS AND WARRANTIES;
                               REMEDIES AND BREACH

Section 3.01   Company Representations and Warranties ................................     16
Section 3.02   Representations and Warranties Regarding Individual Mortgage Loans ....     18
Section 3.03   Remedies for Breach of Representations and Warranties .................     28
Section 3.04   Indemnification .......................................................     29
Section 3.05   Repurchase Upon Conversion ............................................     30
Section 3.06   Restrictions and Requirements Applicable in the Event
                 that a Mortgage Loan is Acquired by a REMIC .........................     30
Section 3.07   Review of Mortgage Loans ..............................................     31

                                   ARTICLE IV

                 ADMINISTRATION AND SERVICING OF MORTGAGE LOANS

Section 4.01   Company to Act as Servicer ............................................     32
Section 4.02   Liquidation of Mortgage Loans .........................................     34
Section 4.03   Collection of Mortgage Loan Payments ..................................     35
Section 4.04   Establishment of and Deposits to Custodial Account ....................     35
Section 4.05   Permitted Withdrawals From Custodial Account ..........................     37
Section 4.06   Establishment of and Deposits to Escrow Account .......................     38
Section 4.07   Permitted Withdrawals From Escrow Account .............................     38
Section 4.08   Payment of Taxes, Insurance and Other Charges .........................     39
Section 4.09   Protection of Accounts ................................................     39
</TABLE>


                                     - i -
<PAGE>

<TABLE>
<S>                                                                                        <C>
Section 4.10   Maintenance of Hazard Insurance .......................................     40
Section 4.11   Maintenance of Mortgage Impairment Insurance ..........................     42
Section 4.12   Maintenance of Fidelity Bond and Errors and Omissions Insurance .......     42
Section 4.13   Inspections ...........................................................     42
Section 4.14   Restoration of Mortgaged Property .....................................     43
Section 4.15   Maintenance of PMI and LPMI Policy; Claims ............................     43
Section 4.16   Title, Management and Disposition of REO Property .....................     45
Section 4.17   Real Estate Owned Reports .............................................     46
Section 4.18   Liquidation Reports ...................................................     46
Section 4.19   Reports of Foreclosures and Abandonments of Mortgaged Property ........     46
Section 4.20   Notification of Adjustments ...........................................     46

                                    ARTICLE V

                              PAYMENTS TO PURCHASER

Section 5.01   Remittances ...........................................................     47
Section 5.02   Statements to Purchaser ...............................................     47
Section 5.03   Monthly Advances by Company ...........................................     48

                                   ARTICLE VI

                          GENERAL SERVICING PROCEDURES

Section 6.01   Transfers of Mortgaged Property .......................................     48
Section 6.02   Satisfaction of Mortgages and Release of Mortgage Files ...............     49
Section 6.03   Servicing Compensation ................................................     50
Section 6.04   Annual Statement as to Compliance .....................................     50
Section 6.05   Annual Independent Public Accountants' Servicing Report ...............     51
Section 6.06   Right to Examine Company Records ......................................     51

                                   ARTICLE VII

                     AGENCY TRANSFER; PASS-THROUGH TRANSFER

Section 7.01   Removal of Mortgage Loans from Inclusion Under this Agreement
                 Upon an Agency Transfer, or a Pass-Through Transfer on One or
                 More Reconstitution Dates ...........................................     51
Section 7.02   Purchaser's Repurchase and Indemnification Obligations ................     52

                                  ARTICLE VIII

                              COMPANY TO COOPERATE

Section 8.01   Provision of Information ..............................................     53
Section 8.02   Financial Statements; Servicing Facility ..............................     53
</TABLE>


                                     - ii -
<PAGE>

<TABLE>
<S>                                                                                        <C>
                                   ARTICLE IX

                                   THE COMPANY

Section 9.01   Indemnification; Third Party Claims ...................................     54
Section 9.02   Merger or Consolidation of the Company ................................     54
Section 9.03   Limitation on Liability of Company and Others .........................     55
Section 9.04   Limitation on Resignation and Assignment by Company ...................     55

                                    ARTICLE X

                                     DEFAULT

Section 10.01  Events of Default .....................................................     56
Section 10.02  Waiver of Defaults ....................................................     57

                                   ARTICLE XI

                                   TERMINATION

Section 11.01  Termination ...........................................................     57
Section 11.02  Termination Without Cause .............................................     58

                                   ARTICLE XII

                            MISCELLANEOUS PROVISIONS

Section 12.01  Successor to Company ..................................................     58
Section 12.02  Amendment .............................................................     59
Section 12.03  Governing Law .........................................................     59
Section 12.04  Duration of Agreement .................................................     59
Section 12.05  Notices ...............................................................     59
Section 12.06  Severability of Provisions ............................................     60
Section 12.07  Relationship of Parties ...............................................     60
Section 12.08  Execution; Successors and Assigns .....................................     60
Section 12.09  Recordation of Assignments of Mortgage ................................     60
Section 12.10  Assignment by Purchaser ...............................................     61
Section 12.11  No Personal Solicitation ..............................................     61
</TABLE>


                                     - iii -
<PAGE>

                                    EXHIBITS

EXHIBIT A        MORTGAGE LOAN SCHEDULE
EXHIBIT B        CONTENTS OF EACH MORTGAGE FILE
EXHIBIT C        MORTGAGE LOAN DOCUMENTS
EXHIBIT D-1      FORM OF CUSTODIAL ACCOUNT
                 CERTIFICATION
EXHIBIT D-2      FORM OF CUSTODIAL ACCOUNT
                 LETTER AGREEMENT
EXHIBIT E-1      FORM OF ESCROW ACCOUNT CERTIFICATION
EXHIBIT E-2      FORM OF ESCROW ACCOUNT
                 LETTER AGREEMENT
EXHIBIT F        FORM OF MONTHLY REMITTANCE ADVICE
EXHIBIT G        FORM OF ASSIGNMENT AND ASSUMPTION
EXHIBIT H        UNDERWRITING GUIDELINES


                                     - iv -
<PAGE>

            This  is  a  Seller's   Warranties  and  Servicing  Agreement  for
residential  adjustable rate first lien mortgage loans, dated and effective as
of September 1, 2002,  and is executed  between EMC Mortgage  Corporation,  as
purchaser (the  "Purchaser"),  and Countrywide Home Loans, Inc., as seller and
servicer (the "Company").

                              W I T N E S S E T H:

            WHEREAS,  from time to time the  Purchaser  has agreed to purchase
from the  Company  and from time to time the Company has agreed to sell to the
Purchaser  certain Mortgage Loans (excluding the right to service the Mortgage
Loans which the Company expressly retains);

            WHEREAS, each of the Mortgage Loans is secured by a mortgage, deed
of trust or other security  instrument  creating a first lien on a residential
dwelling  located in the  jurisdiction  indicated on the related Mortgage Loan
Schedule, which is annexed hereto as Exhibit A;

      WHEREAS,  the Company has agreed to service,  from time to time, certain
of the Mortgage Loans  acquired by the Purchaser in accordance  with the terms
and provisions of this Agreement; and

      WHEREAS,  the  Purchaser and the Company wish to prescribe the manner of
purchase of the Mortgage  Loans and the  management,  servicing and control of
the Mortgage Loans which from time to time are subject to this Agreement.

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

                                    ARTICLE I

                                   DEFINITIONS

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

            Accepted Servicing  Practices:  With respect to any Mortgage Loan,
those mortgage  servicing  practices of prudent mortgage lending  institutions
which  service  mortgage  loans of the same type as such  Mortgage Loan in the
jurisdiction where the related Mortgaged Property is located.

            Agency Transfer:  The sale or transfer by Purchaser of some or all
of the Mortgage Loans to Fannie Mae under its Cash Purchase Program or its MBS
Swap Program  (Special  Servicing  Option) or to Freddie Mac under its Freddie
Mac Cash  Program or Gold PC  Program,  retaining  the  Company  as  "servicer
thereunder".

<PAGE>

            Agreement:  This Seller's  Warranties and Servicing  Agreement and
all amendments hereof and supplements hereto.

            ALTA:  The  American  Land  Title  Association  or  any  successor
thereto.

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

            Approved Flood Certification  Provider: Any provider acceptable to
Fannie Mae and Freddie Mac.

            Assignment  and  Conveyance:  An Assignment  and Conveyance in the
form of Exhibit 6 to the Mortgage Loan Purchase Agreement dated as of the date
hereof, by and between the Seller and the Purchaser.

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

            BIF: The Bank Insurance Fund, or any successor thereto.

            Business Day: Any day other than (i) a Saturday or Sunday, or (ii)
a day on which banking and savings and loan  institutions  in the State of New
York or California are authorized or obligated by law or executive order to be
closed.

            Closing Date:  The date set forth on the related  Confirmation  on
which the Purchaser from time to time shall purchase and the Company from time
to time shall sell,  the Mortgage  Loans listed on the related  Mortgage  Loan
Schedule.

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

            Company:  Countrywide  Home  Loans,  Inc.,  or  its  successor  in
interest or assigns,  or any  successor  to the Company  under this  Agreement
appointed as herein provided.

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

            Confirmation:  The trade  confirmation  letter between the parties
hereto which relates to the Mortgage Loans on the related Closing Date.

            Convertible  Mortgage Loan: Any individual Mortgage Loan purchased
pursuant to this Agreement which contains a provision whereby the Mortgagor is
permitted to convert the Mortgage  Loan to a fixed-rate  mortgage  loan at any
time  between  the  first   anniversary  and  the  fifth  anniversary  of  the
origination of the mortgage loan.


                                     - 2 -
<PAGE>

            Custodial  Account:  The separate  account or accounts created and
maintained pursuant to Section 4.04.

            Custodial Agreement: That certain Custodial Agreement, dated as of
November  23,1999 by and between the Purchaser and Wells Fargo Bank Minnesota,
N.A.

            Custodian:  The Custodian  under the Custodial  Agreement,  or its
successor in interest or assigns or any successor to the  Custodian  under the
Custodial Agreement as provided therein.

            Cut-off Date: The date set forth on the related Confirmation.

            Deleted Mortgage Loan: A Mortgage Loan which is repurchased by the
Company in  accordance  with the terms of this  Agreement and which is, in the
case of a  substitution  pursuant to Section 3.03,  replaced or to be replaced
with a Qualified Substitute Mortgage Loan.

            Determination  Date:  The 15th  day (or if such  15th day is not a
Business  Day, the Business Day  immediately  preceding  such 15th day) of the
month of the related Remittance Date.

            Disqualified  Organization:  An  organization  defined  as such in
Section 860E(e) of the Code.

            Due Date: The day of the month on which the Monthly Payment is due
on a  Mortgage  Loan,  exclusive  of any days of grace.  With  respect  to the
Mortgage Loans for which payment from the Mortgagor is due on a day other than
the first day of the  month,  such  Mortgage  Loans  will be treated as if the
Monthly Payment is due on the first day of the month of such Due Date.

            Due  Period:  With  respect  to each  Remittance  Date,  the prior
calendar month.

            Eligible  Investments:  Any  one or more  of the  obligations  and
securities  listed below which investment  provides for a date of maturity not
later than the Determination Date in each month:

            (i) direct  obligations of, and obligations  fully  guaranteed by,
      the United States of America,  or any agency or  instrumentality  of the
      United States of America the obligations of which are backed by the full
      faith and credit of the United States of America; and

            (ii) federal funds,  demand and time deposits in,  certificates of
      deposits  of,  or  bankers'   acceptances   issued  by,  any  depository
      institution or trust company incorporated or organized under the laws of
      the  United  States of  America  or any state  thereof  and  subject  to
      supervision and examination by federal and/or state banking authorities,
      so long as at the  time of such  investment  or  contractual  commitment
      providing for such investment the commercial  paper or other  short-term
      debt obligations of such depository institution or trust company (or, in
      the  case of a  depository  institution  or trust  company  which is the
      principal subsidiary of a holding company, the commercial paper or other
      short-term debt  obligations of such holding company) are rated "P-1" by
      Moody's  Investors  Service,  Inc. and the long-term debt obligations of
      such holding company) are rated "P-1" by Moody's Investors Service, Inc.
      and the long-term  debt  obligations of such  depository  institution or
      trust  company  (or, in the case of a  depository  institution  or trust
      company which is the  principal  subsidiary  of a holding  company,  the
      long-term debt  obligations of such holding  company) are rated at least
      "Aa" by Moody's Investors Service, Inc.;


                                     - 3 -
<PAGE>

            (iii)  investments and securities  otherwise  acceptable to Fannie
      Mae and Freddie Mac.

provided,  however, that no such instrument shall be an Eligible Investment if
such instrument evidences either (i) a right to receive only interest payments
with  respect to the  obligations  underlying  such  instrument,  or (ii) both
principal  and interest  payments  derived from  obligations  underlying  such
instrument  and the  principal  and  interest  payments  with  respect to such
instrument  provide a yield to maturity  of greater  than 120% of the yield to
maturity at par of such underlying obligations.

            Errors and  Omissions  Insurance  Policy:  An errors and omissions
insurance policy to be maintained by the Company pursuant to Section 4.12.

            Escrow  Account:  The  separate  account or  accounts  created and
maintained pursuant to Section 4.06.

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

            Event  of  Default:  Any one of the  conditions  or  circumstances
enumerated in Section 10.01.

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

            Fannie Mae Guides:  The Fannie Mae  Sellers'  Guide and the Fannie
Mae Servicers' Guide and all amendments or additions thereto.

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

            Fidelity  Bond: A fidelity  bond to be  maintained  by the Company
pursuant to Section 4.12.

            First  Remittance  Date:  As stated in the related  Mortgage  Loan
Purchase Agreement.


                                     - 4 -
<PAGE>

            5/1 ARM Mortgage  Loan:  Any  individual  Mortgage Loan  purchased
pursuant to this  Agreement  which  contains a provision  whereby the interest
rate on such  Mortgage  Loan is fixed for the first five (5) years of the term
of the related  Mortgage Loan and which  thereafter is converted to a Treasury
Rate Mortgage Loan or a LIBOR  Mortgage Loan except that the Periodic Rate Cap
does not apply to the initial  Interest Rate  Adjustment  Date for the related
Mortgage Loan.

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

            GEMICO:  General Electric  Mortgage  Insurance  Corporation or any
successor thereto.

            Gross  Margin:  With  respect  to each  Mortgage  Loan,  the fixed
percentage  amount set forth on the related  Mortgage  Note,  which  amount is
added to the Index in accordance  with the terms of the related  Mortgage Note
to determine on each Interest Rate Adjustment Date, the Mortgage Interest Rate
for such Mortgage Loan.

            Index: With respect to any individual Treasury Rate Mortgage Loan,
and with respect to any  individual  10/1 ARM Mortgage  Loan, 5/1 ARM Mortgage
Loan or 3/1 ARM  Mortgage  Loan  commencing  from and after the 120th  Monthly
Payment,  sixtieth  Monthly  Payment,  or  the  thirty-sixth  Monthly  Payment
thereof,  respectively,  Index shall mean a rate per annum equal to the weekly
average yield on U.S. Treasury  securities  adjusted to a constant maturity of
one year as published by the Federal Reserve Board in statistical  release No.
H 15  (519) or any  similar  publication  as  available  45 days  prior to the
Interest Rate Adjustment  Date. With respect to any individual  LIBOR Mortgage
Loan,  Index  shall mean a rate per annum  equal to the  average of  interbank
offered rates for twelve month U.S. dollar denominated  deposits in the London
market as determined as set forth in the related  Mortgage Note.  With respect
to any individual CD Mortgage Loan, Index shall mean a rate per annum equal to
the weekly  average yield on  certificates  of deposit  adjusted to a constant
maturity  of  six  months  as  published  by  the  Federal  Reserve  Board  in
statistical release No. H 15 (519) or similar publication as available 45 days
prior to the Interest Rate Adjustment Date.

            Initial  Rate Cap:  With  respect  to each  Mortgage  Loan and the
initial Interest Rate Adjustment Date therefor,  a number of percentage points
per annum that is set forth in the related  Mortgage  Loan Schedule and in the
related  Mortgage  Note,  which is the  maximum  amount by which the  Mortgage
Interest  Rate for  such  Mortgage  Loan may  increase  or  decrease  from the
Mortgage  Interest  Rate in effect  immediately  prior to such  Interest  Rate
Adjustment Date.

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

            Interest Rate Adjustment  Date: The date on which an adjustment to
the Mortgage Interest Rate on a Mortgage Note becomes effective.

            LIBOR  Mortgage  Loan:  Any  individual  Mortgage  Loan  purchased
pursuant to this  Agreement  which  contains a provision  whereby the interest
rate on such Mortgage Loan is adjusted  annually based upon the rate per annum
equal to the average of interbank  offered rates for twelve month U.S.  dollar
denominated  deposits  in the London  market as  published  in The Wall Street
Journal.


                                     - 5 -
<PAGE>

            Lifetime Mortgage Interest Rate Cap: With respect to each Mortgage
Loan, the absolute  maximum  Mortgage  Interest Rate payable,  above which the
Mortgage  Interest Rate cannot be adjusted.  The Mortgage Interest Rate during
the term of a Mortgage Loan shall not at any time exceed the Mortgage Interest
Rate at the time of origination of such Mortgage Loan by more than 5% per

            Liquidation  Proceeds:   Cash  received  in  connection  with  the
liquidation  of a  defaulted  Mortgage  Loan,  whether  through  the  sale  or
assignment  of  such  Mortgage  Loan,  trustee's  sale,  foreclosure  sale  or
otherwise,  or the sale of the related  Mortgaged  Property  if the  Mortgaged
Property is acquired in satisfaction of the Mortgage Loan.

            Loan-to-Value Ratio or LTV: With respect to any Mortgage Loan, the
ratio of the Stated  Principal  Balance of the Mortgage Loan as of the related
Cut-off Date (unless  otherwise  indicated) to the lesser of (a) the Appraised
Value  of the  Mortgaged  Property  and (b) if the  Mortgage  Loan was made to
finance the acquisition of the related Mortgaged Property,  the purchase price
of the Mortgaged Property, expressed as a percentage.

            LPMI Loan: A Mortgage Loan with a LPMI Policy.

            LPMI  Policy:  A policy of  primary  mortgage  guaranty  insurance
issued by another  Qualified  Insurer pursuant to which the related premium is
to be paid by the  Servicer  of the  related  Mortgage  Loan from  payments of
interest  made by the  Mortgagor  in an amount as is set forth in the  related
Confirmation and related Mortgage Loan Schedule.

            LPMI Fee:  With  respect  to each LPMI  Loan,  the  portion of the
Mortgage  Interest  Rate as set forth on the related  Mortgage  Loan  Schedule
(which shall be payable solely from the interest portion of Monthly  Payments,
Insurance Proceeds,  Condemnation  Proceeds or Liquidation  Proceeds),  which,
during such period  prior to the  required  cancellation  of the LPMI  Policy,
shall be used to pay the premium due on the related LPMI Policy.

            MERS:   Mortgage   Electronic   Registration   Systems,   Inc.,  a
corporation organized and existing under the laws of the State of Delaware, or
any successor thereto.

            MERS Mortgage Loan: Any Mortgage Loan  registered with MERS on the
MERS System.

            MERS  System:  The  system of  recording  transfers  of  mortgages
electronically maintained by MERS.

            MIN:  The  Mortgage  Identification  Number for any MERS  Mortgage
Loan.

            Monthly  Advance:  The portion of Monthly Payment  delinquent with
respect to each  Mortgage  Loan at the close of business on the  Determination
Date  required to be advanced by the Company  pursuant to Section  5.03 on the
Business Day immediately preceding the Remittance Date of the related month.


                                     - 6 -
<PAGE>

            Monthly  Payment:  The scheduled  monthly payment of principal and
interest on a Mortgage Loan.

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

            Mortgage File: The items pertaining to a particular  Mortgage Loan
referred to in Exhibit B annexed hereto, and any additional documents required
to be added to the Mortgage File pursuant to this Agreement.

            Mortgage  Impairment  Insurance  Policy: A mortgage  impairment or
blanket hazard insurance policy as described in Section 4.11.

            Mortgage  Interest Rate: The annual rate at which Interest accrues
on any  Mortgage  Loan as adjusted  from time to time in  accordance  with the
provisions of the related  Mortgage  Note and in  compliance  with the related
Initial Rate Cap,  Lifetime  Mortgage Interest Rate Cap and Periodic Rate Cap,
if any, of the related Mortgage Note.

            Mortgage  Loan:  An  individual  Convertible  or  Non-Convertible,
Treasury Rate,  LIBOR,  5/1 ARM, or 3/1 ARM Mortgage Loan which is the subject
of this  Agreement,  each  Mortgage Loan  originally  sold and subject to this
Agreement being identified on the Mortgage Loan Schedule,  which Mortgage Loan
includes without limitation the Mortgage File, the Monthly Payments, Principal
Prepayments,  Liquidation Proceeds, condemnation proceeds, Insurance Proceeds,
REO  disposition  proceeds,  and all  other  rights,  benefits,  proceeds  and
obligations arising from or in connection with such Mortgage Loan.

            Mortgage Loan Documents: The documents listed in Exhibit B hereto.

            Mortgage  Loan  Package:  A pool  of  Mortgage  Loans  sold to the
Purchaser by the Company on a Closing Date.

            Mortgage Loan Remittance Rate: With respect to each Mortgage Loan,
the annual rate of interest remitted to the Purchaser, which shall be equal to
the  Mortgage  Interest  Rate minus (i) the  Servicing  Fee Rate and (ii) with
respect to LPMI Loans, the LPMI Fee.

            Mortgage  Loan  Schedule:  With  respect  to  each  Mortgage  Loan
Package, a schedule of Mortgage Loans annexed hereto as Annex A, such schedule
setting forth the following  information  with respect to each Mortgage  Loan:
(1) the Company's Mortgage Loan identifying  number; (2) the Mortgagor's name;
(3) the street address of the Mortgaged Property including the city, state and
zip  code;  (4)  a  code   indicating   whether  the  Mortgaged   Property  is
owner-occupied  a second home, or an investment  property;  (5) the number and
type  of  residential  units  constituting  the  Mortgaged  Property;  (6) the
original months to maturity;  (7) the Loan-to-Value Ratio at origination;  (8)
the Mortgage  Interest Rate as of the Cut-off Date;  (9) the date on which the
initial Monthly Payment was due on the Mortgage Loan; (10) the stated maturity
date;  (11) the amount of the Monthly Payment as of the Cut-off Date; (12) the
last payment date on which a payment was actually  applied to the  outstanding
principal  balance;  (13) the original  principal amount of the Mortgage Loan;
(14) the principal balance of the Mortgage Loan as of the close of business on
the Cut-off  Date,  after  deduction of payments of principal due on or before
the Cut-off Date whether or not collected;  (15) a code indicating the purpose
of the  loan  (i.e.,  purchase,  rate  and  term  refinance,  equity  take-out
refinance);  (16)  a code  indicating  the  documentation  style  (i.e.  full,
alternative  or reduced);  (17) the Interest Rate  Adjustment  Date;  (18) the
Gross Margin; (19) the lifetime maximum Mortgage Interest Rate under the terms
of the Mortgage Note; (20) the date the Mortgage Loan was originated; (21) the
Periodic  Rate Cap;  (22) a code  indicating  the  company  providing  private
mortgage   insurance;   (23)  a  code  indicating  if  the  Mortgage  Loan  is
convertible;  (24) the Servicing Fee Rate; (25) the LPMI Fee, if any; and (26)
the Initial Rate Cap. With respect to the Mortgage Loans in the aggregate, the
Mortgage Loan Schedule  shall set forth the following  information,  as of the
Cut-off  Date:  (1) the number of Mortgage  Loans;  (2) the current  aggregate
outstanding  principal balance of the Mortgage Loans; (3) the weighted average
Mortgage  Interest Rate of the Mortgage  Loans;  and (4) the weighted  average
maturity of the  Mortgage  Loans.  The Mortgage  Loan  Schedule may consist of
multiple reports that collectively set forth all of the required information.


                                     - 7 -
<PAGE>

            Mortgage Note: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.

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

            Mortgagor: The obligor on a Mortgage Note.

            Non-Convertible   Mortgage  Loan:  Any  individual  Mortgage  Loan
purchased  pursuant  to this  Agreement  which  does not  contain a  provision
whereby the Mortgagor  may convert the Mortgage Loan to a fixed-rate  mortgage
loan.

            Officer's Certificate: A certificate signed by the Chairman of the
Board or the Vice Chairman of the Board or the  President or a Vice  President
or an assistant Vice President and by the Treasurer or the Secretary or one of
the  Assistant  Treasurers  or  Assistant  Secretaries  of  the  Company,  and
delivered to the Purchaser as required by this Agreement.

            Opinion of Counsel:  A written  opinion of counsel,  who may be an
employee of the Company, reasonably acceptable to the Purchaser, provided that
any Opinion of Counsel relating to compliance with the REMIC Provisions,  must
be an opinion of counsel who (i) is in fact independent of the Company and any
master servicer of the Mortgage Loans,  (ii) does not have any material direct
or indirect  financial  interest in the Company or any master  servicer of the
Mortgage  Loans or in an affiliate of either and (iii) is not  connected  with
the  Company or any  master  servicer  of the  Mortgage  Loans as an  officer,
employee, director or person performing similar functions.

            Pass-Through  Transfer: The sale or transfer of some or all of the
Mortgage  Loans to a trust to be  formed as part of a  publicly-issued  and/or
privately  placed,  rated  or  unrated,   mortgage  pass-through  transaction,
retaining  the  Company  as  "servicer"  (with or  without a master  servicer)
thereunder.


                                     - 8 -
<PAGE>

            Periodic  Rate  Cap:  With  respect  to each  Mortgage  Loan,  the
provision of each Mortgage Note which provides for an absolute  maximum amount
by which the  Mortgage  Interest  Rate  therein may increase or decrease on an
Interest Rate Adjustment  Date above the Mortgage  Interest Rate previously in
effect,  equal  to the  rate  set  forth on the  Mortgage  Loan  Schedule  per
adjustment.

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

            PMI: PMI Mortgage Insurance Co., or any successor thereto.

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

            Pool Insurer: Any of GEMICO, PMI or UGI.

            Prepayment Interest Shortfall Amount: With respect to any Mortgage
Loan that was subject to a Principal  Prepayment in full or in part during any
Due Period, which Principal Prepayment was applied to such Mortgage Loan prior
to such  Mortgage  Loan's Due Date in such Due Period,  the amount of interest
(net the related  Servicing Fee) that would have accrued on the amount of such
Principal Prepayment during the period commencing on the date as of which such
Principal  Prepayment  was applied to such Mortgage Loan and ending on the day
immediately preceding such Due Date, inclusive.

            Prime Rate:  The prime rate announced to be in effect from time to
time,  as published as the average  rate in the "Money  Rates"  section of The
Wall Street Journal.

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

            Principal  Prepayment  Period:  The month  preceding  the month in
which the related Remittance Date occurs.

            Purchaser:  EMC Mortgage  Corporation or its successor in interest
or any successor to the Purchaser under this Agreement as herein provided.

            Qualified  Depository:  A  depository  the  accounts  of which are
insured by the FDIC  through  the BIF or the SAIF or the debt  obligations  of
which are rated AA (or the equivalent  rating  category) or better by national
recognized statistical rating organization.


                                     - 9 -
<PAGE>

            Qualified  Insurer:  A mortgage  guaranty  insurance  company duly
authorized and licensed where  required by law to transact  mortgage  guaranty
insurance business and approved as an insurer by Fannie Mae or Freddie Mac.

            Qualified Substitute Mortgage Loan: A mortgage loan eligible to be
substituted by the Company for a Deleted Mortgage Loan which must, on the date
of  such  substitution,  (i)  have an  outstanding  principal  balance,  after
deduction of all scheduled  payments due in the month of  substitution  (or in
the case of a  substitution  of more  than  one  mortgage  loan for a  Deleted
Mortgage Loan, an aggregate  principal  balance),  not in excess of the Stated
Principal  Balance of the Deleted  Mortgage  Loan;  (ii) have a Mortgage  Loan
Remittance  Rate not less than and not more than 2% greater  than the Mortgage
Loan Remittance Rate of the Deleted Mortgage Loan; (iii) have a remaining term
to maturity  not greater than and not more than one year less than that of the
Deleted  Mortgage  Loan;  (iv) have a Gross  Margin  not less than that of the
Deleted  Mortgage Loan; (v) comply with each  representation  and warranty set
forth in Sections 3.01 and 3.02;  (v) use the same Index for  determining  the
Mortgage  Interest  Rate as the  Deleted  Mortgage  Loan;  (vi)  have the same
provision  with respect to  convertibility  as the Deleted  Mortgage Loan; and
(viii) be a REMIC Eligible Mortgage Loan.

            Rating Agency: Any of Fitch, Moody's or Standard & Poor's or their
respective successors designed by the Purchaser.

            Reconstitution  Agreements:  The agreement or  agreements  entered
into by the Purchaser, the Company, Fannie Mae or Freddie Mac or certain third
parties  on  the  Reconstitution  Date(s)  with  respect  to any or all of the
Mortgage Loans serviced hereunder,  in connection with a Pass-Through Transfer
or an Agency Transfer as set forth in Section 7.01, including, but not limited
to, (i) a Fannie Mae Mortgage Selling and Servicing Contract,  a Pool Purchase
Contract,  and any and  all  servicing  agreements  and  tri-party  agreements
reasonably required by Fannie Mae with respect to a Fannie Mae Transfer,  (ii)
a Purchase  Contract and all purchase  documents  associated  therewith as set
forth  in the  Freddie  Mac  Sellers'  &  Servicers'  Guide,  and  any and all
servicing agreements and tri-party  agreements  reasonably required by Freddie
Mac with respect to a Freddie Mac Transfer,  and (iii) a Pooling and Servicing
Agreement  and/or  a  subservicing/master   servicing  agreement  and  related
custodial/trust agreement and related documents with respect to a Pass-Through
Transfer.  Such  agreement  or  agreements  shall  prescribe  the  rights  and
obligations  of the Company in servicing the related  Mortgage Loans and shall
provide for servicing  compensation  to the Company  (calculated on a weighted
average  basis for all the  related  Mortgage  Loans as of the  Reconstitution
Date), net of any guarantee fees due Fannie Mae or Freddie Mac, if applicable,
at least equal to the Servicing  Fee due the Company in  accordance  with this
Agreement  or the  servicing  fee  required  pursuant  to  the  Reconstitution
Agreement. The form of relevant Reconstitution Agreement to be entered into by
the Purchaser  and/or master  servicer or trustee and the Company with respect
to  Pass-Through  Transfers  shall  be  reasonably  satisfactory  in form  and
substance to the  Purchaser and the Company,  shall not material  increase the
Company's  obligations  or diminish the  Company's  rights  hereunder  and the
representations  and warranties  and servicing  provisions  contained  therein
shall be  substantially  similar to those contained in this Agreement,  unless
otherwise mutually agreed by the parties.


                                     - 10 -
<PAGE>

            Reconstitution  Date: The date or dates on which any or all of the
Mortgage  Loans  serviced  under this  Agreement  shall be  removed  from this
Agreement and  reconstituted  as part of an Agency  Transfer or a Pass-Through
Transfer  pursuant to Section 7.01 hereof. On such date or dates, the Mortgage
Loans  transferred  shall  cease  to be  covered  by  this  Agreement  and the
Company's  servicing  responsibilities  shall cease under this  Agreement with
respect to the related transferred Mortgage Loans.

            Record Date: The close of business of the last Business Day of the
month preceding the month of the related Remittance Date.

            REMIC:  A "real estate  mortgage  investment  conduit"  within the
meaning of Section 860D of the Code.

            REMIC Documents:  The document or documents creating and governing
the administration of a REMIC.

            REMIC  Eligible  Mortgage  Loan:  A Mortgage  Loan held by a REMIC
which satisfies and/or complies with all applicable REMIC Provisions.

            REMIC  Provisions:  Provisions  of  the  federal  income  tax  law
relating to a REMIC, which appear at Section 860A through 86OG of Subchapter M
of Chapter 1, Subtitle A of the Code, and related provisions, and regulations,
rulings or pronouncements  promulgated thereunder,  as the foregoing may be in
effect from time to time.

            Remittance  Date:  The  18th  day  (or if such  18th  day is not a
Business  Day, the first  Business Day  immediately  following)  of any month,
beginning with the First Remittance Date.

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

            REO Disposition Proceeds:  All amounts received with respect to an
REO Disposition pursuant to Section 4.16.

            REO  Property:  A  Mortgaged  Property  acquired by the Company on
behalf  of  the  Purchasers  through   foreclosure  or  by  deed  in  lieu  of
foreclosure, as described in Section 4.16.

            Repurchase Price: With respect to any Mortgage Loan, a price equal
to (i) the Stated Principal Balance of the Mortgage Loan plus (ii) interest on
such Stated  Principal  Balance at the Mortgage Loan  Remittance Rate from the
date on which interest has last been paid and  distributed to the Purchaser to
the date of repurchase,  less amounts  received or advanced in respect of such
repurchased  Mortgage Loan which are being held in the  Custodial  Account for
distribution in the month of repurchase.

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

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


                                     - 11 -
<PAGE>

            Servicing Advances:  All customary,  reasonable and necessary "out
of  pocket"  costs  and  expenses  other  than  Monthly  Advances   (including
reasonable  attorneys' fees and disbursements)  incurred in the performance by
the Company of its servicing obligations,  including,  but not limited to, the
cost of (a) the  preservation,  restoration  and  protection  of the Mortgaged
Property,  (b) any  enforcement  or judicial  proceedings,  including  without
limitation,  foreclosures,  (c)  the  management  and  liquidation  of any REO
Property and (d) compliance with the obligations under Section 4.08.

            Servicing  Fee: With respect to each Mortgage  Loan, the amount of
the annual fee the  Purchaser  shall pay to the Company,  which  shall,  for a
period of one full month,  be equal to  one-twelfth  of the product of (a) the
Servicing Fee Rate and (b) the outstanding  principal balance of such Mortgage
Loan.  Such fee shall be payable  monthly,  computed  on the basis of the same
principal amount and period respecting which any related interest payment on a
Mortgage  Loan  is  computed.  The  obligation  of the  Purchaser  to pay  the
Servicing Fee is limited to, and the Servicing Fee is payable solely from, the
interest  portion   (including   recoveries  with  respect  to  interest  from
Liquidation Proceeds, to the extent permitted by Section 4.05) of such Monthly
Payment collected by the Company, or as otherwise provided under Section 4.05.

            Servicing  Fee Rate:  0.25% per annum  with  respect to the period
prior to the initial  Interest  Adjustment  Date and, for the 5/1 7/1 and 10/1
ARM Loans 0.375% thereafter.

            Servicing  File:  With  respect to each  Mortgage  Loan,  the file
retained  by the Company  consisting  of  originals  of all  documents  in the
Mortgage  File  which are not  delivered  to the  Custodian  and copies of the
Mortgage  Loan  Documents  listed  in  Exhibit  B the  originals  of which are
delivered to the Custodian pursuant to Section 2.01.

            Servicing  Officer:  Any  officer of the  Company  involved  in or
responsible for, the  administration and servicing of the Mortgage Loans whose
name appears on a list of servicing  officers  furnished by the Company to the
Purchaser upon request, as such list may from time to time be amended.

            7/1 ARM Mortgage  Loan:  Any  individual  Mortgage Loan  purchased
pursuant to this  Agreement  which  contains a provision  whereby the interest
rate on such  Mortgage Loan is fixed for the first seven (7) years of the term
of the related  Mortgage Loan and which  thereafter is converted to a Treasury
Rate Mortgage Loan or a LIBOR  Mortgage Loan except that the Periodic Rate Cap
does not apply to the initial  Interest Rate  Adjustment  Date for the related
Mortgage Loan.

            Stated  Principal  Balance:  As to  each  Mortgage  Loan,  (i) the
principal  balance of the  Mortgage  Loan at the  related  Cut-off  Date after
giving effect to payments of principal due on or before such date,  whether or
not received,  minus (ii) all amounts previously  distributed to the Purchaser
with respect to the related Mortgage Loan representing  payments or recoveries
of principal or advances in lieu thereof.

            Subservicer:  Any Subservicer  which is subservicing  the Mortgage
Loans pursuant to a Subservicing  Agreement.  Any  subservicer  shall meet the
qualifications set forth in Section 4.01.


                                     - 12 -
<PAGE>

            Subservicing  Agreement:  An  agreement  between the Company and a
Subservicer for the servicing of the Mortgage Loans.

            10/1 ARM Mortgage  Loan:  Any  individual  Mortgage Loan purchased
pursuant to this  Agreement  which  contains a provision  whereby the interest
rate on such  Mortgage  Loan is fixed for the first ten (10) years of the term
of the related  Mortgage Loan and which  thereafter is converted to a Treasury
Rate Mortgage Loan or a LIBOR  Mortgage Loan except that the Periodic Rate Cap
does not apply to the initial  Interest Rate  Adjustment  Date for the related
Mortgage Loan.

            3/1 ARM Mortgage  Loan:  Any  individual  Mortgage Loan  purchased
pursuant to this  Agreement  which  contains a provision  whereby the interest
rate on such  Mortgage Loan is fixed for the first three (3) years of the term
of the related  Mortgage Loan and which  thereafter is converted to a Treasury
Rate Mortgage Loan or a LIBOR Mortgage Loan.

            Treasury  Rate  Mortgage  Loan:   Any  individual   Mortgage  Loan
purchased  pursuant to this Agreement  which contains a provision  whereby the
interest rate on such Mortgage Loan is adjusted  based upon the weekly average
yield on U.S. Treasury securities.

            Underwriting  Guidelines:   The  underwriting  guidelines  of  the
Company with respect to mortgage loans similar to the Mortgage Loans, attached
hereto as Exhibit H.

            UGI:  United  Guaranty   Residential   Insurance  Company  or  any
successor thereto.

                                   ARTICLE II

           CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES;
                    BOOKS AND RECORDS; DELIVERY OF DOCUMENTS

                  Section 2.01  Conveyance of Mortgage Loans; Possession of
                                Mortgage Files; Maintenance of Servicing Files.

            The Company,  on each Closing  Date,  does hereby sell,  transfer,
assign, set over and convey to the Purchaser, without recourse, but subject to
the terms of this Agreement,  all the right, title and interest of the Company
in and to the Mortgage Loans in the related  Mortgage Loan Package,  excluding
the right to service the Mortgage Loans which the Company  expressly  retains.
Pursuant  to Section  2.03,  the  Company  has  delivered  the  Mortgage  Loan
Documents  for  each  Mortgage  Loan  in  the  Mortgage  Loan  Package  to the
Custodian.

            The contents of each  Mortgage File not delivered to the Custodian
are and shall be held in trust by the Company for the benefit of the Purchaser
as the owner thereof.  The Company shall maintain a Servicing File  consisting
of a copy of the  contents  of each  Mortgage  File and the  originals  of the
documents in each Mortgage File not delivered to the Custodian. The possession
of each  Servicing File by the Company is at the will of the Purchaser for the
sole purpose of servicing the related  Mortgage  Loan,  and such retention and
possession by the Company is in a custodial  capacity  only.  Upon the sale of
the Mortgage Loans the ownership of each Mortgage  Note, the related  Mortgage
and the related Mortgage File and Servicing File shall vest immediately in the
Purchaser,  and the ownership of all records and documents with respect to the
related  Mortgage  Loan  prepared by or which come into the  possession of the
Company  shall vest  immediately  in the  Purchaser  and shall be retained and
maintained by the Company,  in trust, at the will of the Purchaser and only in
such custodial  capacity.  Each  Servicing  File shall be segregated  from the
other books and records of the  Company and shall be marked  appropriately  to
reflect  clearly the sale of the related  Mortgage Loan to the Purchaser.  The
Company shall  release its custody of the contents of any Servicing  File only
in  accordance  with  written  instructions  from the  Purchaser,  unless such
release is required as incidental  to the Company's  servicing of the Mortgage
Loans or is in  connection  with a repurchase of any Mortgage Loan pursuant to
Section 3.03, 3.05, 3.07, or 6.02.


                                     - 13 -
<PAGE>

            Section 2.02 Books and Records; Transfers of Mortgage Loans.

            From and after the sale of the Mortgage Loans to the Purchaser all
rights arising out of the Mortgage Loans in a Mortgage Loan Package  including
but not limited to all funds  received on or in  connection  with the Mortgage
Loan,  shall be  received  and held by the Company in trust for the benefit of
the  Purchaser as owner of the Mortgage  Loans,  and the Company  shall retain
record title to the related Mortgages for the sole purpose of facilitating the
servicing and the supervision of the servicing of the Mortgage Loans.

            The sale of each Mortgage Loan in a Mortgage Loan Package shall be
reflected on the Company's  balance sheet and other financial  statements as a
sale  of  assets  by  the  Company.  The  Company  shall  be  responsible  for
maintaining,  and shall maintain, a complete set of books and records for each
Mortgage  Loan which shall be marked  clearly to reflect the ownership of each
Mortgage Loan by the Purchaser.  In particular,  the Company shall maintain in
its possession, available for inspection by the Purchaser, or its designee and
shall deliver to the Purchaser  upon demand,  evidence of compliance  with all
federal,  state and local laws,  rules and  regulations,  and  requirements of
Fannie Mae or Freddie Mac,  including but not limited to  documentation  as to
the method used in  determining  the  applicability  of the  provisions of the
Flood Disaster  Protection Act of 1973, as amended, to the Mortgaged Property,
documentation evidencing insurance coverage and eligibility of any condominium
project for approval by Fannie Mae and periodic inspection reports as required
by Section 4.13.  To the extent that  original  documents are not required for
purposes  of  realization  of  Liquidation  Proceeds  or  Insurance  Proceeds,
documents  maintained  by the  Company  may be in the  form  of  microfilm  or
microfiche  or such other  reliable  means of recreating  original  documents,
including  but not  limited  to,  optical  imagery  techniques  so long as the
Company complies with the requirements of the Fannie Mae Selling and Servicing
Guide, as amended from time to time.

            The Company shall  maintain with respect to each Mortgage Loan and
shall make  available  for  inspection  by any  Purchaser  or its designee the
related  Servicing File during the time the Purchaser  retains  ownership of a
Mortgage  Loan  and  thereafter  in  accordance   with   applicable  laws  and
regulations.

            The Company shall keep at its  servicing  office books and records
in which,  subject to such  reasonable  regulations as it may  prescribe,  the
Company shall note transfers of Mortgage Loans. No transfer of a Mortgage Loan
may be made unless such transfer is in compliance  with the terms hereof.  For
the purposes of this  Agreement,  the Company  shall be under no obligation to
deal with any person with  respect to this  agreement  or the  Mortgage  Loans
unless the books and  records  show such  person as the owner of the  Mortgage
Loan.  The Purchaser  may,  subject to the terms of this  Agreement,  sell and
transfer one or more of the Mortgage Loans,  provided,  however,  that (i) the
transferee  will not be deemed to be a Purchaser  hereunder  binding  upon the
Company unless such transferee shall agree in writing to be bound by the terms
of this  Agreement and an original  counterpart  of the instrument of transfer
and an assignment  and  assumption of this  Agreement in the form of Exhibit G
hereto  executed by the  transferee  shall have been delivered to the Company,
and (ii) with respect to each Mortgage  Loan Package,  in no event shall there
be more than five  Persons at any given time having the status of  "Purchaser"
hereunder.  The Purchaser also shall advise the Company of the transfer.  Upon
receipt  of notice  of the  transfer,  the  Company  shall  mark its books and
records to reflect the ownership of the Mortgage Loans of such  assignee,  and
shall  release the previous  Purchaser  from its  obligations  hereunder  with
respect to the  Mortgage  Loans sold or  transferred.  Purchaser  shall not to
transfer  to any  assignee  any  pool  of  Mortgage  Loans  with  a  aggregate
outstanding  principal balance of less than $10,000,000 without the consent of
the  Company;  provided,  however,  if the  Company  fails to  consent  to the
transfer  of a pool of  Mortgage  Loans  as  contemplated  in  this  sentence,
Purchaser  shall have the right to purchase the  servicing  rights  associated
with such  Mortgage  Loans at a price to mutually  agreed to by Purchaser  and
Company, exercising good faith.


                                     - 14 -
<PAGE>

            Section 2.03 Delivery of Documents.

            On or before the date which is agreed  upon by the  Purchaser  and
the Company in the related Confirmation, the Company shall deliver and release
to the Custodian  those  Mortgage Loan Documents as required by this Agreement
with respect to each Mortgage Loan in the related Mortgage Loan Package a list
of which is attached to the related Assignment and Conveyance.

            On or prior to the  related  Closing  Date,  the  Custodian  shall
certify  its  receipt  of all such  Mortgage  Loan  Documents  required  to be
delivered  pursuant to the  Custodial  Agreement,  as evidenced by the Initial
Certification of the Custodian in the form annexed to the Custodial Agreement.
The Company shall be responsible for  maintaining the Custodial  Agreement for
the benefit of the Purchaser. Purchaser shall pay all fees and expenses of the
Custodian.

            The Company  shall  forward to the  Custodian  original  documents
evidencing  an  assumption,  modification,  consolidation  or extension of any
Mortgage Loan entered into in accordance  with Section 4.01 or 6.01 within one
week of their execution, provided, however, that the Company shall provide the
Custodian  with a  certified  true  copy of any such  document  submitted  for
recordation  within one week of its execution,  and shall provide the original
of any document submitted for recordation or a copy of such document certified
by the appropriate  public  recording office to be a true and complete copy of
the original within 180 days of its submission for recordation.

            In the event an Officer's  Certificate of the Company is delivered
to the Custodian  because of a delay caused by the public  recording office in
returning any recorded  document,  the Company shall deliver to the Custodian,
within 180 days of the related  Closing Date, an Officer's  Certificate  which
shall (i)  identify  the  recorded  document,  (ii)  state  that the  recorded
document has not been  delivered to the Custodian due solely to a delay caused
by the public  recording  office,  (iii)  state the  amount of time  generally
required by the  applicable  recording  office to record and return a document
submitted for recordation,  and (iv) specify the date the applicable  recorded
document will be delivered to the Custodian.  The Company shall be required to
deliver  to the  Custodian  the  applicable  recorded  document  by  the  date
specified in (iv) above.  An extension of the date specified in (iv) above may
be requested  from the  Purchaser,  which  consent  shall not be  unreasonably
withheld.


                                     - 15 -
<PAGE>

            On or prior to the date which is three  Business Days prior to the
related  Closing Date,  the Company shall deliver to the Purchaser the related
Mortgage Loan Schedule.

                                   ARTICLE III

                         REPRESENTATIONS AND WARRANTIES;
                               REMEDIES AND BREACH

            Section 3.01 Company Representations and Warranties.

            The Company  represents  and warrants to the Purchaser  that as of
each Closing Date:

            (a) Due Organization  and Authority.  The Company is a corporation
duly  organized,  validly  existing and in good standing under the laws of the
State of New York and has all  licenses  necessary to carry on its business as
now being  conducted  and is licensed,  qualified and in good standing in each
state where a Mortgaged  Property is located if the laws of such state require
licensing or  qualification in order to conduct business of the type conducted
by the Company, and in any event the Company is in compliance with the laws of
any such state to the extent  necessary  to ensure the  enforceability  of the
related  Mortgage  Loan and the  servicing of such Mortgage Loan in accordance
with the terms of this Agreement; the Company has the full corporate power and
authority to execute and deliver this  Agreement  and to perform in accordance
herewith; the execution, delivery and performance of this Agreement (including
all instruments of transfer to be delivered pursuant to this Agreement) by the
Company and the consummation of the transactions contemplated hereby have been
duly and validly authorized;  this Agreement evidences the valid,  binding and
enforceable  obligation of the Company; and all requisite corporate action has
been taken by the Company to make this  Agreement  valid and binding  upon the
Company in accordance with its terms;

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

            (c) No  Conflicts.  Neither  the  execution  and  delivery of this
Agreement,  the acquisition of the Mortgage Loans by the Company,  the sale of
the Mortgage Loans to the Purchaser or the transactions  contemplated  hereby,
nor the  fulfillment  of or compliance  with the terms and  conditions of this
Agreement,  will  conflict  with or result  in a breach  of any of the  terms,
conditions  or  provisions  of the  Company's  charter or by-laws or any legal
restriction or any agreement or instrument to which the Company is now a party
or by which it is bound,  or constitute a default or result in an acceleration
under  any of the  foregoing,  or result in the  violation  of any law,  rule,
regulation,  order, judgment or decree to which the Company or its property is
subject,  or impair the ability of the  Purchaser  to realize on the  Mortgage
Loans, or impair the value of the Mortgage Loans;


                                     - 16 -
<PAGE>

            (d) Ability to Service. The Company is an approved seller/servicer
of conventional residential mortgage loans for Fannie Mae or Freddie Mac, with
the facilities,  procedures, and experienced personnel necessary for the sound
servicing  of  mortgage  loans of the same  type as the  Mortgage  Loans.  The
Company is in good  standing to sell  mortgage  loans to and service  mortgage
loans for Fannie Mae or Freddie Mac, and no event has occurred,  including but
not limited to a change in  insurance  coverage,  which would make the Company
unable to comply with Fannie Mae or Freddie Mac  eligibility  requirements  or
which would require notification to either Fannie Mae or Freddie Mac;

            (e) Reasonable  Servicing Fee. The Company acknowledges and agrees
that the Servicing  Fee, as  calculated at the Servicing Fee Rate,  represents
reasonable  compensation  for  performing  such  services  and that the entire
Servicing  Fee  shall  be  treated  by the  Company,  for  accounting  and tax
purposes, as compensation for the servicing and administration of the Mortgage
Loans pursuant to this Agreement.

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

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

            (h) No Consent Required.  No consent,  approval,  authorization or
order  of any  court  or  governmental  agency  or  body is  required  for the
execution,  delivery and  performance  by the Company of or  compliance by the
Company with this  Agreement or the sale of the Mortgage Loans as evidenced by
the  consummation of the  transactions  contemplated by this Agreement,  or if
required, such approval has been obtained prior to the related Closing Date;

            (i) Selection Process. The Mortgage Loans were selected from among
the  adjustable  rate  one- to  four-family  mortgage  loans in the  Company's
portfolio  at the related  Closing  Date as to which the  representations  and
warranties  set forth in Section 3.02 could be made and such selection was not
made in a manner so as to affect adversely the interests of the Purchaser;


                                     - 17 -
<PAGE>

            (j) Pool  Characteristics.  With  respect  to each  Mortgage  Loan
Package,  the  Mortgage  Loan  characteristics  set forth on  Exhibit 2 to the
related Assignment and Conveyance are true and complete.

            (k)  No  Untrue  Information.   Neither  this  Agreement  nor  any
statement,  report or other document  furnished or to be furnished pursuant to
this  Agreement or in connection  with the  transactions  contemplated  hereby
contains any untrue  statement  of fact or omits to state a fact  necessary to
make the statements contained therein not misleading;

            (l)  Sale   Treatment.   The  Company  has  determined   that  the
disposition  of the Mortgage Loans pursuant to this Agreement will be afforded
sale treatment for accounting and tax purposes;

            (m)  Financial  Statements.  There  has  been  no  change  in  the
business, operations, financial condition, properties or assets of the Company
since the date of the Company's most recent  financial  statements  that would
have a material adverse effect on its ability to perform its obligations under
this Agreement;

            (n) No Brokers'  Fees.  The Company has not dealt with any broker,
investment  banker,  agent  or  other  person  that  may  be  entitled  to any
commission or compensation in connection with the sale of the Mortgage Loans;

            (o) Origination.  The Company's decision to originate any mortgage
loan or to deny any mortgage loan application is an independent decision based
upon Company's Underwriting  Guidelines,  and is in no way made as a result of
Purchaser's decision to purchase,  or not to purchase,  or the price Purchaser
may offer to pay for, any such mortgage loan, if originated; and

            (p) MERS.  The Company is a member of MERS in good  standing,  and
will comply in all material  respects with the rules and procedures of MERS in
connection  with the servicing of the MERS Mortgage  Loans for as long as such
Mortgage Loans are registered with MERS;

                  Section 3.02  Representations and Warranties Regarding
                                Individual Mortgage Loans.

            As to each  Mortgage  Loan,  the  Company  hereby  represents  and
warrants to the Purchaser that as of the related Closing Date:

            (a) Mortgage Loans as Described. The information set forth in each
Mortgage Loan Schedule is complete, true and correct in all material respects;

            (b) Payments  Current.  All payments required to be made up to the
related  Closing  Date for the  Mortgage  Loan under the terms of the Mortgage
Note have been made and credited.  No payment required under the Mortgage Loan
has been more than 30 days  delinquent  at any time in the twelve months prior
to the related  Closing  Date.  The first  Monthly  Payment shall be made with
respect to the Mortgage Loan on its Due Date or within the grace  period,  all
in accordance with the terms of the related Mortgage Note;


                                     - 18 -
<PAGE>

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

            (d) Original Terms Unmodified.  The terms of the Mortgage Note and
Mortgage have not been impaired,  waived,  altered or modified in any respect,
except by a  written  instrument  which has been  recorded,  if  necessary  to
protect the  interests of the  Purchaser  and which has been  delivered to the
Custodian.  The substance of any such waiver,  alteration or modification  has
been  approved by the issuer of any related PMI Policy and the title  insurer,
to the extent  required  by the  policy,  and its terms are  reflected  on the
related Mortgage Loan Schedule. No Mortgagor has been released, in whole or in
part, except in connection with an assumption agreement approved by the issuer
of any related PMI Policy and the title insurer, to the extent required by the
policy,  and which  assumption  agreement  is part of the  Mortgage  Loan File
delivered to the Custodian and the terms of which are reflected in the related
Mortgage Loan Schedule;

            (e) No Defenses.  The Mortgage Loan is not subject to any right of
rescission, set-off, counterclaim or defense, including without limitation the
defense of usury,  nor will the  operation of any of the terms of the Mortgage
Note or the Mortgage,  or the exercise of any right thereunder,  render either
the  Mortgage  Note or the  Mortgage  unenforceable,  in whole or in part,  or
subject  to  any  right  of  rescission,  set-off,  counterclaim  or  defense,
including  without  limitation  the  defense  of usury,  and no such  right of
rescission,  set-off,  counterclaim  or defense has been asserted with respect
thereto,  and no Mortgagor was a debtor in any state or federal  bankruptcy or
insolvency proceeding at the time the Mortgage Loan was originated;

            (f) Hazard Insurance.  Pursuant to the terms of the Mortgage,  all
buildings or other  improvements upon the Mortgaged  Property are insured by a
generally  acceptable  insurer  against  loss by  fire,  hazards  of  extended
coverage  and such  other  hazards  as are  customary  in the area  where  the
Mortgaged Property is located pursuant to insurance policies conforming to the
requirements  of Section 4.10. If upon  origination  of the Mortgage Loan, the
Mortgaged  Property was in an area  identified in the Federal  Register by the
Federal Emergency  Management Agency as having special flood hazards (and such
flood insurance has been made available) a flood insurance  policy meeting the
requirements  of  the  current  guidelines  of  the  Federal  Flood  Insurance
Administration  is in effect  which  policy  conforms to the  requirements  of
Section 4.10. All individual  insurance  policies contain a standard mortgagee
clause naming the Company and its successors and assigns as mortgagee, and all
premiums  thereon  have  been  paid.  The  Mortgage  obligates  the  Mortgagor
thereunder to maintain the hazard insurance policy at the Mortgagor's cost and
expense, and on the Mortgagor's failure to do so, authorizes the holder of the
Mortgage to obtain and maintain such  insurance at such  Mortgagor's  cost and
expense, and to seek reimbursement therefor from the Mortgagor. Where required
by state law or  regulation,  the Mortgagor has been given an  opportunity  to
choose the carrier of the required  hazard  insurance,  provided the policy is
not a "master"  or  "blanket"  hazard  insurance  policy  covering  the common
facilities of a planned unit  development.  The hazard insurance policy is the
valid and binding obligation of the insurer,  is in full force and effect, and
will be in full  force and effect  and inure to the  benefit of the  Purchaser
upon the consummation of the transactions  contemplated by this Agreement. The
Company has not engaged in, and has no  knowledge  of the  Mortgagor's  or any
Subservicer's  having  engaged in, any act or omission  which would impair the
coverage of any such  policy,  the  benefits of the  endorsement  provided for
herein,  or the  validity  and  binding  effect of either,  including  without
limitation,  no unlawful fee, unlawful commission,  unlawful kickback or other
unlawful  compensation  or value  of any  kind  has been or will be  received,
retained or realized by any attorney,  firm or other person or entity,  and no
such unlawful items have been received, retained or realized by the Company;


                                     - 19 -
<PAGE>

            (g) Compliance with Applicable  Laws. Any and all  requirements of
any  federal,  state  or  local  law  including,  without  limitation,  usury,
truth-in-lending,   real  estate   settlement   procedures,   consumer  credit
protection,  equal credit  opportunity  or disclosure  laws  applicable to the
Mortgage Loan have been complied  with,  and the Company shall maintain in its
possession, available for the Purchaser's inspection, and shall deliver to the
Purchaser upon demand, evidence of compliance with all such requirements;

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

            (i)  Location  and  Type  of  Mortgaged  Property.  The  Mortgaged
Property  is a fee  simple  property  located in the state  identified  in the
related  Mortgage Loan Schedule and consists of a parcel of real property with
a  detached  single  family  residence  erected  thereon,   or  an  individual
condominium unit in a low-rise condominium project, or an individual unit in a
planned unit development,  provided,  however, that any condominium project or
planned  unit  development  shall  conform  with  the  Company's  Underwriting
Guidelines regarding such dwellings,  and no residence or dwelling is a mobile
home or a manufactured  dwelling. No portion of the Mortgaged Property is used
for commercial purposes;


                                     - 20 -
<PAGE>

            (j)  Valid  First  Lien.  The  Mortgage  is a  valid,  subsisting,
enforceable and perfected first lien on the Mortgaged Property,  including all
buildings and  improvements  on the  Mortgaged  Property,  and all  additions,
alterations and  replacements  made at any time with respect to the foregoing.
The lien of the Mortgage is subject only to:

            (1) the lien of current real property  taxes and  assessments  not
      yet due and payable;

            (2)  covenants,  conditions  and  restrictions,   rights  of  way,
      easements  and  other  matters  of the  public  record as of the date of
      recording  acceptable  to mortgage  lending  institutions  generally and
      specifically   referred  to  in  the  lender's  title  insurance  policy
      delivered to the  originator of the Mortgage Loan and (i) referred to or
      to otherwise  considered in the appraisal made for the originator of the
      Mortgage Loan or (ii) which do not adversely  affect the Appraised Value
      of the Mortgaged Property set forth in such appraisal; and

            (3) other matters to which like  properties  are commonly  subject
      which do not  materially  interfere  with the  benefits of the  security
      intended to be provided by the mortgage or the use, enjoyment,  value or
      marketability of the related Mortgaged Property.

Any security agreement, chattel mortgage or equivalent document related to and
delivered in  connection  with the  Mortgage  Loan  establishes  and creates a
valid,  subsisting  and  enforceable  first lien and first  priority  security
interest on the property  described  therein and the Company has full right to
sell and assign the same to the Purchaser.  The Mortgaged Property was not, as
of the date of origination of the Mortgage Loan,  subject to a mortgage,  deed
of trust,  deed to secured debt or other security  instrument  creating a lien
subordinate to the lien of the Mortgage;

            (k)  Validity of Mortgage  Documents.  The  Mortgage  Note and the
Mortgage are genuine,  and each is the legal,  valid and binding obligation of
the maker thereof enforceable in accordance with its terms. All parties to the
Mortgage  Note and the  Mortgage  and any other  related  agreement  had legal
capacity  to enter into the  Mortgage  Loan and to  execute  and  deliver  the
Mortgage  Note and the  Mortgage  and any  other  related  agreement,  and the
Mortgage  Note and the Mortgage  have been duly and properly  executed by such
parties.  No fraud was committed by the Company, or to the Company's knowledge
by  any  other  person  including  the  Mortgagor,   in  connection  with  the
origination or servicing of the Mortgage Loan. The Company has reviewed all of
the documents  constituting  the Servicing File and has made such inquiries as
it deems necessary to make and confirm the accuracy of the representations set
forth herein;

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


                                     - 21 -
<PAGE>

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

            (n) Doing Business. All parties which have had any interest in the
Mortgage Loan, whether as mortgagee,  assignee, pledgee or otherwise, are (or,
during the period in which they held and disposed of such interest,  were) (1)
in compliance with any and all applicable  licensing  requirements of the laws
of the state  wherein the  Mortgaged  Property is located,  and (2)  organized
under the laws of such state,  or (3)  qualified to do business in such state,
or (4)  federal  savings  and  loan  associations  or  national  banks  having
principal offices in such state, or (5) not doing business in such state;

            (o) LTV, PMI Policy.  Any Mortgage Loan with an LTV over 80% has a
PMI Policy insuring, as to payment defaults,  the excess LTV over 71% (or such
other percentage as stated in the related Confirmation) of the Appraised Value
until the LTV of such Mortgage Loan is reduced to 80%. All  provisions of such
PMI Policy have been and are being complied with, such policy is in full force
and  effect,  and all  premiums  due  thereunder  have been  paid.  No action,
inaction, or event has occurred and no state of facts exists that has, or will
result in the exclusion from, denial of, or defense to coverage.  Any Mortgage
Loan subject to a PMI Policy  obligates the  Mortgagor  thereunder to maintain
the PMI Policy and to pay all  premiums and charges in  connection  therewith;
provided,  that,  with  respect  to  LPMI  Loans,  the  Company  is  obligated
thereunder  to maintain the LPMI Policy and to pay all premiums and charges in
connection therewith.  The Mortgage Interest Rate for the Mortgage Loan as set
forth on the Mortgage Loan Schedule is net of any insurance  premium  excluded
any premium for the LPMI Policy;

            (p) Title Insurance. The Mortgage Loan is covered by either (i) an
attorney's  opinion of title and  abstract of title the form and  substance of
which is acceptable to mortgage lending  institutions making mortgage loans in
the area where the  Mortgaged  Property  is  located or (ii) an ALTA  lender's
title  insurance  policy  or other  generally  acceptable  form of  policy  of
insurance  acceptable to Fannie Mae or Freddie Mac,  issued by a title insurer
acceptable  to Fannie Mae or Freddie Mac and  qualified  to do business in the
jurisdiction  where the Mortgaged  Property is located,  insuring the Company,
its successors  and assigns,  as to the first priority lien of the Mortgage in
the original  principal  amount of the Mortgage  Loan (or to the extent that a
Mortgage  Note  provides  for  negative  amortization,  the maximum  amount of
negative  amortization in accordance with the Mortgage),  and against any loss
by reason of the invalidity or unenforceability of the lien resulting from the
provisions of the Mortgage  providing for adjustment in the Mortgage  Interest
Rate and Monthly Payment,  subject only to the exceptions contained in clauses
(1), (2) and (3) of  paragraph  (j) of this Section  3.02.  Where  required by
state law or  regulation,  the  Mortgagor  has been given the  opportunity  to
choose the carrier of the required  mortgage  title  insurance.  Additionally,
such lender's title insurance policy affirmatively insures ingress and egress,
and against  encroachments  by or upon the Mortgaged  Property or any interest
therein.  The Company is the sole  insured of such  lender's  title  insurance
policy,  and such lender's title insurance  policy is in full force and effect
and will be in force and  effect  upon the  consummation  of the  transactions
contemplated by this  Agreement.  No claims have been made under such lender's
title  insurance  policy,  and no prior holder of the Mortgage,  including the
Company,  has done,  by act or  omission,  anything  which  would  impair  the
coverage of such lender's title insurance policy including without limitation,
no unlawful fee, commission,  kickback or other unlawful compensation or value
of any  kind  has  been or will  be  received,  retained  or  realized  by any
attorney, firm or other person or entity, and no such unlawful items have been
received, retained or realized by the Company;


                                     - 22 -
<PAGE>

            (q) No Defaults.  There is no default,  breach, violation or event
of acceleration  existing under the Mortgage or the Mortgage Note and no event
which, with the passage of time or with notice and the expiration of any grace
or cure  period,  would  constitute a default,  breach,  violation or event of
acceleration,  and neither the  Company nor its  predecessors  have waived any
default, breach, violation or event of acceleration;

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

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

            (t)  Origination;  Payment Terms. The Mortgage Loan was originated
by  either  i) the  Company,  which  is a  FNMA-approved,  FHLMC-approved  and
HUD-approved  mortgage  banker,  or ii) an  entity  that  is a  FNMA-approved,
FHLMC-approved  and  HUD-approved  mortgage  banker,  or a  savings  and  loan
association,  a savings bank, a commercial bank or similar banking institution
which is supervised and examined by a Federal or state authority. The interest
rate on the related Mortgage Note is adjusted annually in the case of Treasury
Rate Mortgage Loans and LIBOR Mortgage Loans on each Interest Rate  Adjustment
Date to equal the Index plus the Gross  Margin,  subject to the  Initial  Rate
Cap,  Periodic  Rate Cap and the Lifetime  Mortgage  Interest  Rate Cap as set
forth in the Mortgage Note. The Mortgage  Interest Rate for a 5/1 ARM Mortgage
Loan and a 3/1 ARM  Mortgage  Loan is adjusted  annually  commencing  from and
after the  sixtieth  Monthly  Payment and the  thirty-sixth  Monthly  Payment,
respectively,  in the same manner as a Treasury  Rate  Mortgage Loan and LIBOR
Mortgage Loan, provided, however, that the Periodic Rate Cap does not apply to
the initial  Interest Rate Adjustment Date for such 5/1 ARM Mortgage Loan (the
Initial  Rate Cap does  apply).  The  Mortgage  Note is payable  each month in
monthly installments of principal and interest,  with interest in arrears, and
requires  Monthly  Payments  sufficient  to amortize  the  original  principal
balance  of the  Mortgage  Loan  over a term of no more  than 30  years.  Each
Convertible  Mortgage  Loan  contains a  provision  whereby the  Mortgagor  is
permitted to convert the Mortgage  Loan to a fixed-rate  mortgage  loan at any
time  between  the first  and  fifth  anniversary  of the  origination  of the
Mortgage Loan. No Mortgage Loan has a provision for negative amortization;


                                     - 23 -
<PAGE>

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

            (v) Conformance with  Underwriting  Guidelines.  The Mortgage Loan
was underwritten in accordance with the Company's  Underwriting  Guidelines in
effect at the time the Mortgage Loan was originated.;

            (w) Occupancy of the Mortgaged Property. As of the related Closing
Date the Mortgaged  Property is lawfully  occupied under  applicable  law. All
inspections,  licenses  and  certificates  required  to be made or issued with
respect to all occupied  portions of the Mortgaged  Property and, with respect
to  the  use  and  occupancy  of  the  same,  including  but  not  limited  to
certificates of occupancy and fire underwriting  certificates,  have been made
or obtained from the appropriate authorities. The Mortgagor represented at the
time of origination  of the Mortgage Loan that the Mortgagor  would occupy the
Mortgaged Property as the Mortgagor's primary residence;

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

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

            (z)  Acceptable  Investment.  The Company has no  knowledge of any
circumstances  or  conditions  with  respect to the  Mortgage,  the  Mortgaged
Property, the Mortgagor or the Mortgagor's credit standing that can reasonably
be expected to cause  private  institutional  investors to regard the Mortgage
Loan  as an  unacceptable  investment,  cause  the  Mortgage  Loan  to  become
delinquent,  or adversely  affect the value or  marketability  of the Mortgage
Loan;

            (aa)  Delivery of  Mortgage  Documents.  The  Mortgage  Note,  the
Mortgage,  the Assignment of Mortgage and any other  documents  required to be
delivered  for the Mortgage  Loan by the Company  under this  Agreement as set
forth in Exhibit C attached  hereto have been delivered to the Custodian.  The
Company is in  possession  of a complete,  true and accurate  Mortgage File in
compliance  with Exhibit B, except for such  documents  the originals of which
have been delivered to the Custodian;


                                     - 24 -
<PAGE>

            (bb)  Condominiums/Planned  Unit  Developments.  If the  Mortgaged
Property is a condominium unit or a planned unit development  (other than a de
minimus planned unit development) such condominium or planned unit development
project  meets  Company's   Underwriting   Guidelines  with  respect  to  such
condominium or planned unit development;

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

            (dd) Due on Sale. The Mortgage  contains an enforceable  provision
for the  acceleration  of the payment of the unpaid  principal  balance of the
Mortgage Loan in the event that the Mortgaged  Property is sold or transferred
without the prior written consent of the Mortgagor thereunder;

            (ee) No Buydown  Provisions;  No Graduated  Payments or Contingent
Interests.  The Mortgage  Loan does not contain  provisions  pursuant to which
Monthly  Payments  are paid or  partially  paid with  funds  deposited  in any
separate account established by the Company, the Mortgagor or anyone on behalf
of the  Mortgagor,  or paid by any source other than the Mortgagor nor does it
contain any other similar provisions  currently in effect which may constitute
a "buydown"  provision.  The Mortgage Loan is not a graduated payment mortgage
loan and the  Mortgage  Loan  does not  have a  shared  appreciation  or other
contingent interest feature;

            (ff)  Consolidation of Future  Advances.  Any future advances made
prior to the related Cut-off Date have been  consolidated with the outstanding
principal amount secured by the Mortgage, and the secured principal amount, as
consolidated, bears a single interest rate and single repayment term. The lien
of the  Mortgage  securing  the  consolidated  principal  amount is  expressly
insured  as  having  first  lien  priority  by a title  insurance  policy,  an
endorsement to the policy insuring the mortgagee's consolidated interest or by
other  title   evidence   acceptable  to  Fannie  Mae  and  Freddie  Mac.  The
consolidated principal amount does not exceed the original principal amount of
the Mortgage Loan;

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

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


                                     - 25 -
<PAGE>

            (ii)  Appraisal.  The Mortgage  File  contains an appraisal of the
related  Mortgage  Property  signed prior to the approval of the Mortgage Loan
application by a qualified  appraiser,  duly appointed by the Company, who had
no interest,  direct or indirect in the Mortgaged Property or in any loan made
on the  security  thereof;  and  whose  compensation  is not  affected  by the
approval or  disapproval of the Mortgage Loan, and the appraisal and appraiser
both satisfy the  requirements  of Fannie Mae,  Freddie Mac or Title XI of the
Federal  Institutions  Reform,  Recovery,  and Enforcement Act of 1989 and the
regulations promulgated thereunder,  all as in effect on the date the Mortgage
Loan was originated;

            (jj)  Soldiers'  and Sailors'  Relief Act. The  Mortgagor  has not
notified the Company, and the Company has no knowledge of any relief requested
or allowed to the Mortgagor  under the Soldiers' and Sailors' Civil Relief Act
of 1940;

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

            (ll)  No  Construction   Loans.  No  Mortgage  Loan  was  made  in
connection with (i) the construction or rehabilitation of a Mortgaged Property
or (ii) facilitating the trade-in or exchange of a Mortgaged Property;

            (mm)  Insurance.  The  Company  has  caused  or will  cause  to be
performed any and all acts required to preserve the rights and remedies of the
Purchaser  in  any  insurance  policies   applicable  to  the  Mortgage  Loans
including,  without  limitation,  any  necessary  notifications  of  insurers,
assignments of policies or interests therein, and establishments of coinsured,
joint loss payee and mortgagee  rights in favor of the  Purchaser;  No action,
inaction,  or event has  occurred  and no state of fact  exists or has existed
that has resulted or will result in the exclusion from,  denial of, or defense
to  coverage  under any  applicable  pool  insurance  policy,  special  hazard
insurance policy, PMI Policy or bankruptcy bond,  irrespective of the cause of
such  failure  of  coverage.  In  connection  with the  placement  of any such
insurance,  no  commission,  fee,  or other  compensation  has been or will be
received by the Company or any designee of the Company or any  corporation  in
which the  Company or any  officer,  director,  or  employee  had a  financial
interest at the time of placement of such insurance;


                                     - 26 -
<PAGE>

            (nn) Regarding the Mortgagor. The Mortgagor is one or more natural
persons  and/or  trustees  for an  Illinois  land  trust or a trustee  under a
"living  trust"  and such  "living  trust" is in  compliance  with  Fannie Mae
guidelines for such trusts.

            (oo) Predatory Lending  Regulations;  High Cost Loans. None of the
Mortgage  Loans  are  classified  as (a)  "high  cost"  loans  under  the Home
Ownership and Equity  Protection Act of 1994 or (b) "high cost,"  "threshold,"
or "predatory" loans under any other applicable state, federal or local law.

            (pp) Simple Interest  Mortgage  Loans.  None of the Mortgage Loans
are simple interest Mortgage Loans.

            (qq) Single Premium Credit Life Insurance. None of the proceeds of
the Mortgage Loan were used to finance  single-premium  credit life  insurance
policies.

            (rr) Tax Service Contract The Company has obtained a life of loan,
transferable  real estate Tax Service  Contract on each Mortgage Loan and such
contract is assignable without penalty, premium or cost to the Purchaser;

            (ss) Flood Certification Contract. The Company has obtained a life
of loan,  transferable  flood  certification  contract  with a Approved  Flood
Certification  Provider for each Mortgage Loan and such contract is assignable
without penalty, premium or cost to the Purchaser;

            (tt) FICO Scores. Each Mortgage Loan has a non-zero FICO score;

            (uu) Prepayment Fee. With respect to each Mortgage Loan that has a
prepayment fee feature,  each such  prepayment fee is enforceable  and will be
enforced by the Company,  and each prepayment penalty in permitted pursuant to
federal,  state and local  law.  No  Mortgage  Loan will  impose a  prepayment
penalty  for a term in excess of five years from the date such  Mortgage  Loan
was  originated.  Except as otherwise  set forth in the related  Mortgage Loan
Schedule,  with respect to each Mortgage Loan that contains a prepayment  fee,
such  prepayment fee is at least equal to the lesser of (A) the maximum amount
permitted  under  applicable  law and (B) six months  interest  at the related
Mortgage  Interest Rate on the amount prepaid in excess of 20% of the original
principal balance of such Mortgage Loan; and

            (vv) Recordation.  Each original Mortgage was recorded and, except
for those  Mortgage  Loans  subject  to the MERS  identification  system,  all
subsequent  assignments of the original Mortgage (other than the assignment to
the Purchaser)  have been recorded in the  appropriate  jurisdictions  wherein
such recordation is necessary to perfect the lien thereof as against creditors
of the Company, or is in the process of being recorded;

            (ww) Leaseholds.  If the Mortgaged Property is subject to a ground
lease or any other  type of  leasehold  interest,  the  ground  lease or other
leasehold interest exceeds the remaining term of the related Mortgage Loan.


                                     - 27 -
<PAGE>

            Section   3.03   Remedies  for  Breach  of   Representations   and
Warranties.

            It  is  understood  and  agreed  that  the   representations   and
warranties  set forth in Sections  3.01 and 3.02 shall survive the sale of the
Mortgage  Loans  to the  Purchaser  and  the  delivery  of the  Mortgage  Loan
Documents to the  Custodian  and shall inure to the benefit of the  Purchaser,
notwithstanding any restrictive or qualified  endorsement on any Mortgage Note
or  Assignment  of  Mortgage  or the  examination  or failure  to examine  any
Mortgage  File.  Upon  discovery  by either the Company or the  Purchaser of a
breach of any of the foregoing representations and warranties which materially
and adversely  affects the value of the Mortgage  Loans or the interest of the
Purchaser,  or  which  materially  and  adversely  affects  the  interests  of
Purchaser in the related  Mortgage  Loan in the case of a  representation  and
warranty  relating to a  particular  Mortgage  Loan (in the case of any of the
foregoing,  a "Breach"),  the party  discovering such Breach shall give prompt
written notice to the other.

            With respect to those  representations  and  warranties  which are
made to the  best  of the  Company's  knowledge,  if it is  discovered  by the
Company  or the  Purchaser  that  the  substance  of such  representation  and
warranty is inaccurate and such  inaccuracy  materially and adversely  affects
the value of the related  Mortgage  Loan or the interest of the  Purchaser (or
which  materially  and  adversely  affects the value of a Mortgage Loan or the
interests  of the  Purchaser  in the  related  Mortgage  Loan in the case of a
representation   and  warranty  relating  to  a  particular   Mortgage  Loan),
notwithstanding  the Company's lack of knowledge with respect to the substance
of such representation and warranty,  such inaccuracy shall be deemed a breach
of the applicable representation and warranty.

            Within 60 days of the earlier of either  discovery by or notice to
the Company of any Breach of a representation  or warranty,  the Company shall
use its best  efforts  promptly to cure such Breach in all  material  respects
and, if such Breach cannot be cured,  the Company  shall,  at the  Purchaser's
option and  subject to Section  3.06,  repurchase  such  Mortgage  Loan at the
Repurchase Price. In the event that a Breach shall involve any  representation
or warranty set forth in Section 3.01,  and such Breach cannot be cured within
60 days of the earlier of either discovery by or notice to the Company of such
Breach, all of the Mortgage Loans shall, at the Purchaser's option and subject
to Section  3.06,  be  repurchased  by the  Company at the  Repurchase  Price.
However, if the Breach shall involve a representation or warranty set forth in
Section 3.02 and the Company  discovers or receives  notice of any such Breach
within  120 days of the  related  Closing  Date,  the  Company  shall,  at the
Purchaser's  option and provided  that the Company has a Qualified  Substitute
Mortgage Loan,  rather than  repurchase  the Mortgage Loan as provided  above,
remove such Mortgage Loan (a "Deleted  Mortgage  Loan") and  substitute in its
place a Qualified  Substitute  Mortgage Loan or Loans,  provided that any such
substitution  shall be  effected  not later  than 120 days  after the  related
Closing Date.  If the Company has no Qualified  Substitute  Mortgage  Loan, it
shall  repurchase  the deficient  Mortgage  Loan. Any repurchase of a Mortgage
Loan or Loans pursuant to the foregoing  provisions of this Section 3.03 shall
be  accomplished  by  deposit  in the  Custodial  Account of the amount of the
Repurchase   Price  for  distribution  to  Purchaser  on  the  next  scheduled
Remittance Date,  after deducting  therefrom any amount received in respect of
such  repurchased  Mortgage  Loan or Loans  and  being  held in the  Custodial
Account for future distribution.


                                     - 28 -
<PAGE>

            At the time of repurchase or  substitution,  the Purchaser and the
Company shall arrange for the reassignment of the Deleted Mortgage Loan to the
Company and the delivery to the Company of any documents held by the Custodian
relating  to the  Deleted  Mortgage  Loan.  In the  event of a  repurchase  or
substitution,  the Company shall, simultaneously with such reassignment,  give
written notice to the Purchaser that such repurchase or substitution has taken
place,  amend the related  Mortgage Loan Schedule to reflect the withdrawal of
the  Deleted  Mortgage  Loan  from  this  Agreement,   and,  in  the  case  of
substitution,  identify a  Qualified  Substitute  Mortgage  Loan and amend the
related  Mortgage  Loan  Schedule  to reflect the  addition of such  Qualified
Substitute  Mortgage  Loan to this  Agreement.  In  connection  with  any such
substitution,  the Company  shall be deemed to have made as to such  Qualified
Substitute  Mortgage Loan the representations and warranties set forth in this
Agreement  except that all such  representations  and  warranties set forth in
this Agreement shall be deemed made as of the date of such  substitution.  The
Company shall effect such substitution by delivering to the Custodian for such
Qualified  Substitute  Mortgage Loan the  documents  required by Section 2.03,
with the Mortgage Note  endorsed as required by Section 2.03. No  substitution
will be made in any  calendar  month  after  the  Determination  Date for such
month. The Company shall deposit in the Custodial  Account the Monthly Payment
less the Servicing Fee due on such Qualified Substitute Mortgage Loan or Loans
in the month  following the date of such  substitution.  Monthly  Payments due
with  respect  to  Qualified   Substitute  Mortgage  Loans  in  the  month  of
substitution shall be retained by the Company.  For the month of substitution,
distributions  to  Purchaser  shall  include  the  Monthly  Payment due on any
Deleted  Mortgage  Loan in the month of  substitution,  and the Company  shall
thereafter  be  entitled to retain all  amounts  subsequently  received by the
Company in respect of such Deleted Mortgage Loan.

            For any  month  in  which  the  Company  substitutes  a  Qualified
Substitute  Mortgage  Loan for a Deleted  Mortgage  Loan,  the  Company  shall
determine the amount (if any) by which the aggregate  principal balance of all
Qualified  Substitute  Mortgage Loans as of the date of  substitution  is less
than the aggregate  Stated  Principal  Balance of all Deleted  Mortgage  Loans
(after  application  of  scheduled  principal  payments  due in the  month  of
substitution)  . The  amount of such  shortfall  shall be  distributed  by the
Company in the month of substitution pursuant to Section 5.01. Accordingly, on
the date of such  substitution,  the Company  shall deposit from its own funds
into the Custodial Account an amount equal to the amount of such shortfall.

            Any cause of action against the Company relating to or arising out
of the Breach of any  representations and warranties made in Sections 3.01 and
3.02 shall accrue as to any Mortgage Loan upon (i) discovery of such Breach by
the Purchaser or notice thereof by the Company to the Purchaser,  (ii) failure
by the  Company  to cure  such  Breach or  repurchase  such  Mortgage  Loan as
specified  above,  and (iii)  demand  upon the  Company by the  Purchaser  for
compliance with this Agreement.

            Section 3.04 Indemnification.

            The Company agrees to indemnify the Purchaser and hold it harmless
from and  against  any and all  claims,  losses,  damages,  penalties,  fines,
forfeitures,  legal fees and related  costs,  judgments,  and any other costs,
fees and  expenses  that the  Purchaser  may  sustain in any way  related  any
assertion  based  on,  grounded  upon  resulting  from a Breach  of any of the
Company's  representations and warranties contained herein. In addition to the
obligations  of the Company set forth in this Section 3.04,  the Purchaser may
pursue  any  and  all  remedies  otherwise  available  at  law  or in  equity,
including,  but not limited to, the right to seek damages.  The  provisions of
this Section 3.04 shall survive termination of this Agreement.


                                     - 29 -
<PAGE>

            It is understood  and agreed that the  obligations  of the Company
set forth in Sections  3.03 and 3.04 to cure,  substitute  for or repurchase a
defective  Mortgage Loan and to indemnify the  Purchaser  constitute  the sole
remedies of the Purchaser respecting a Breach of the foregoing representations
and warranties.

            Section 3.05 Repurchase Upon Conversion.

            In the event the  Mortgagor  under any  Convertible  Mortgage Loan
elects to  convert  said  Mortgage  Loan to a fixed  rate  mortgage  loan,  as
provided in the related  Mortgage Note, then the Company shall  repurchase the
related  Mortgage  Loan in the month  the  conversion  takes  place and in the
manner prescribed in Section 3.04 at the Repurchase Price.

            Section 3.06 Restrictions and Requirements Applicable in the Event
                         that a Mortgage Loan is Acquired by a REMIC

            In  the  event  that  any  Mortgage  Loan  is  held  by  a  REMIC,
notwithstanding  any  contrary  provision  of this  Agreement,  the  following
provisions shall be applicable to such Mortgage Loan:

            (A) Repurchase of Mortgage Loans.

            With respect to any Mortgage  Loan that is not in default or as to
which no default is  imminent,  no  repurchase  or  substitution  pursuant  to
Subsection 3.03, 3.05, 3.07 or 7.02 shall be made,  unless,  if so required by
the applicable  REMIC Documents the Company has obtained an Opinion of Counsel
to the effect that such  repurchase  will not (i) result in the  imposition of
taxes on "prohibited  transactions"  of such REMIC (as defined in Section 860F
of the Code) or otherwise subject the REMIC to tax, or (ii) cause the REMIC to
fail to qualify as a REMIC at any time.

            (B) General Servicing Obligations.

            The Company shall sell any REO Property within two years after its
acquisition  by the REMIC  unless (i) the Company  applies for an extension of
such two-year period from the Internal  Revenue Service  pursuant to the REMIC
Provisions and Code Section 856(e) (3), in which event such REO Property shall
be sold within the applicable  extension  period,  or (ii) the Company obtains
for the  Purchaser an Opinion of Counsel,  addressed to the  Purchaser and the
Company,  to the effect  that the  holding  by the REMIC of such REO  Property
subsequent to such two year period will not result in the  imposition of taxes
on "prohibited  transactions"  as defined in Section 860F of the Code or cause
the  REMIC  to fail to  qualify  as a REMIC  under  the  REMIC  Provisions  or
comparable  provisions of relevant  state laws at any time.  The Company shall
manage,  conserve,  protect and operate each REO  Property  for the  Purchaser
solely for the purpose of its prompt  disposition  and sale in a manner  which
does not cause such REO Property to fail to qualify as "foreclosure  property"
within  the  meaning of Section  860G(a)  (8) or result in the  receipt by the
REMIC of any "income from non-permitted  assets" within the meaning of Section
860F(a)  (2) (B) of the Code or any "net  income  from  foreclosure  property"
which is subject to taxation under Section  860G(a) (1) of the Code.  Pursuant
to its efforts to sell such REO  Property,  the Company shall either itself or
through  an agent  selected  by the  Company  protect  and  conserve  such REO
Property in the same manner and to such extent as is customary in the locality
where such REO Property is located and may,  incident to its  conservation and
protection  of the  interests  of the  Purchaser,  rent the same,  or any part
thereof,  as the Company  deems to be in the best  interest of the Company and
the Purchaser for the period prior to the sale of such REO Property; provided,
however,  that any rent  received or accrued with respect to such REO Property
qualifies as "rents from real  property"  as defined in Section  856(d) of the
Code.


                                     - 30 -
<PAGE>

            (C) Additional Covenants.

            In addition to the  provision set forth in this Section 3.06, if a
REMIC election is made with respect to the arrangement  under which any of the
Mortgage Loans or REO Properties are held, then, with respect to such Mortgage
Loans and/or REO Properties,  and notwithstanding the terms of this Agreement,
the Company  shall not take any action,  cause the REMIC to take any action or
fail to take (or fail to cause to be taken) any action  that,  under the REMIC
Provisions,  if taken or not taken, as the case may be, could (i) endanger the
status of the REMIC as a REMIC or (ii) result in the  imposition of a tax upon
the REMIC  (including but not limited to the tax on "prohibited  transactions"
as defined in Section  860F(a) (2) of the Code and the tax on  "contributions"
to a REMIC set forth in Section  860G(d) of the Code)  unless the  Company has
received an Opinion of Counsel  (at the  expense of the party  seeking to take
such action) to the effect that the contemplated action will not endanger such
REMIC status or result in the imposition of any such tax.

            If a REMIC election is made with respect to the arrangement  under
which any Mortgage  Loans or REO  Properties are held, the Company shall amend
this Agreement such that it will meet all Rating Agency requirements.

            Section 3.07 Review of Mortgage Loans

            From the  related  Closing  Date  until the date 15 days after the
related  Closing  Date,  the  Purchaser  shall  have the right to  review  the
Mortgage Files and obtain BPOs and other property evaluations on the Mortgaged
Properties  relating to the Mortgage  Loans  purchased on the related  Closing
Date,  with the  results  of such BPO or  property  evaluation  reviews  to be
communicated  to the  Company  for a period up to 15 days  after  the  related
Closing  Date. In addition,  the Purchaser  shall have the right to reject any
Mortgage Loan which in the Purchaser's sole determination (i) fails to conform
to the  Underwriting  Guidelines,  (ii) the  value of the  Mortgaged  Property
pursuant to any BPO or property  evaluation  varies by more than plus or minus
15%  from the  lesser  of (A) the  original  appraised  value of the  Mortgage
Property or (B) the purchase price of the Mortgaged Property as of the date of
origination (a "Value Issue"), (iii) the Mortgage Loan is underwritten without
verification of the Borrower's income and assets and there is no credit report
and credit score or (iv) the  Purchaser  deems the Mortgage  Loan not to be an
acceptable  credit risk. The Company shall  repurchase  the rejected  Mortgage
Loan in the manner  prescribed in Section 3.03 upon receipt of notice from the
Purchaser of the rejection of such Mortgage Loan; provided, that, in the event
that the Purchaser  rejects a Mortgage Loan due to a Value Issue,  the Company
may submit to the Purchaser an additional  property evaluation for purposes of
demonstrating  that the  Mortgage  Loan  does not have a Value  Issue.  If the
Purchaser and the Company fail to resolve such Value Issue within two weeks of
the Purchaser  presenting such Value Issue to the Company,  then Company shall
have the right to promptly (a) substitute  such Mortgage Loan with a Qualified
Substitute  Mortgage Loan meeting all the terms hereof, or (b) repurchase such
Mortgage Loan in the manner  prescribed in Section 3.03. Any rejected Mortgage
Loan shall be removed from the terms of this Agreement. The Company shall make
available  all files  required by  Purchaser  in order to complete its review,
including capturing all CRA/HMDA required data fields. Any review performed by
the Purchaser prior to the related Closing Date does not limit the Purchaser's
rights or the Company's obligations under this section. To the extent that the
Purchaser's  review  discloses  that the Mortgage  Loans do not conform to the
Underwriting  Guidelines  or the terms set  forth in the  Purchaser  Price and
Terms  Letter,  the  Purchaser  may in its sole  discretion  increase  its due
diligence review and obtain  additional  BPO's or other property  evaluations.
The  additional  review may be for any  reason  including  but not  limited to
credit quality, property valuations, and data integrity.


                                     - 31 -
<PAGE>

                                   ARTICLE IV

                 ADMINISTRATION AND SERVICING OF MORTGAGE LOANS

            Section 4.01 Company to Act as Servicer.

            The Company shall service and  administer  the Mortgage  Loans and
shall have full power and authority, acting alone, to do any and all things in
connection with such servicing and  administration  which the Company may deem
necessary or desirable,  consistent  with the terms of this Agreement and with
Accepted Servicing Practices.

            Consistent  with the  terms of this  Agreement,  the  Company  may
waive,  modify  or vary  any  term of any  Mortgage  Loan  or  consent  to the
postponement  of strict  compliance  with any such term or in any manner grant
indulgence  to  any  Mortgagor  if in the  Company's  reasonable  and  prudent
determination  such waiver,  modification,  postponement  or indulgence is not
materially  adverse to the  Purchasers,  provided,  however,  that the Company
shall not make any future advances with respect to a Mortgage Loan and (unless
the  Mortgagor is in default with respect to the Mortgage Loan or such default
is, in the judgment of the Company,  imminent and the Company has obtained the
prior  written  consent of the  Purchaser)  the  Company  shall not permit any
modification  of  any  material  term  of  any  Mortgage  Loan  including  any
modifications  that would change the Mortgage  Interest Rate change the Index,
Lifetime  Mortgage  Interest Rate Cap, Initial Rate Cap or Gross Margin of any
Mortgage Loan,  defer or forgive the payment of principal or interest,  reduce
or increase the outstanding  principal  balance (except for actual payments of
principal) or change the final  maturity  date on such  Mortgage  Loan. In the
event of any such  modification  which  permits  the  deferral  of interest or
principal  payments on any Mortgage Loan,  the Company shall,  on the Business
Day  immediately  preceding the Remittance Date in any month in which any such
principal  or interest  payment has been  deferred,  deposit in the  Custodial
Account from its own funds,  in accordance  with Section 5.03,  the difference
between (a) such month's  principal  and one month's  interest at the Mortgage
Loan Remittance Rate on the unpaid principal balance of such Mortgage Loan and
(b) the  amount  paid by the  Mortgagor.  The  Company  shall be  entitled  to
reimbursement  for such advances to the same extent as for all other  advances
made  pursuant  to  Section  5.03.  Without  limiting  the  generality  of the
foregoing, the Company shall continue, and is hereby authorized and empowered,
to execute and deliver on behalf of itself and the Purchasers, all instruments
of satisfaction or cancellation,  or of partial or full release, discharge and
all other comparable instruments,  with respect to the Mortgage Loans and with
respect to the Mortgaged  Properties.  If reasonably  required by the Company,
the Purchaser  shall furnish the Company with any powers of attorney and other
documents  necessary  or  appropriate  to enable the  Company to carry out its
servicing and administrative duties under this Agreement.


                                     - 32 -
<PAGE>

            In servicing and  administering  the Mortgage  Loans,  the Company
shall employ  procedures  (including  collection  procedures) and exercise the
same  care  that  it  customarily  employs  and  exercises  in  servicing  and
administering mortgage loans for its own account,  giving due consideration to
Accepted  Servicing  Practices  where such  practices do not conflict with the
requirements of this Agreement, and the Purchaser's reliance on the Company.

            The Mortgage Loans may be subserviced by the Subservicer on behalf
of the Company provided that the Subservicer is a Fannie  Mae-approved  lender
or a Freddie Mac seller/servicer in good standing,  and no event has occurred,
including but not limited to a change in insurance coverage,  which would make
it unable to comply with the eligibility  requirements  for lenders imposed by
Fannie Mae or for  seller/servicers  imposed by Freddie  Mac,  or which  would
require notification to Fannie Mae or Freddie Mac. The Company may perform any
of its servicing  responsibilities  hereunder or may cause the  Subservicer to
perform any such servicing  responsibilities on its behalf, but the use by the
Company of the  Subservicer  shall not  release  the  Company  from any of its
obligations  hereunder and the Company shall remain responsible  hereunder for
all acts  and  omissions  of the  Subservicer  as  fully  as if such  acts and
omissions  were  those of the  Company.  The  Company  shall  pay all fees and
expenses of the  Subservicer  from its own funds,  and the  Subservicer's  fee
shall not exceed the Servicing Fee.

            At the cost and  expense  of the  Company,  without  any  right of
reimbursement  from the  Custodial  Account,  the Company shall be entitled to
terminate the rights and  responsibilities  of the Subservicer and arrange for
any  servicing  responsibilities  to be performed  by a successor  Subservicer
meeting the requirements in the preceding paragraph,  provided,  however, that
nothing  contained  herein shall be deemed to prevent or prohibit the Company,
at the Company's  option,  from electing to service the related Mortgage Loans
itself. In the event that the Company's responsibilities and duties under this
Agreement  are  terminated  pursuant to Section 9.04,  10.01 or 11.02,  and if
requested  to do so by the  Purchaser,  the Company  shall at its own cost and
expense terminate the rights and  responsibilities  of the Subservicer as soon
as is  reasonably  possible.  The  Company  shall  pay all fees,  expenses  or
penalties  necessary in order to terminate the rights and  responsibilities of
the Subservicer  from the Company's own funds without  reimbursement  from the
Purchaser.

            Notwithstanding  any of the provisions of this Agreement  relating
to agreements or  arrangements  between the Company and the Subservicer or any
reference  herein to actions taken through the  Subservicer or otherwise,  the
Company shall not be relieved of its obligations to the Purchaser and shall be
obligated to the same extent and under the same terms and  conditions as if it
alone were servicing and  administering  the Mortgage Loans. The Company shall
be   entitled  to  enter  into  an   agreement   with  the   Subservicer   for
indemnification  of the Company by the  Subservicer  and nothing  contained in
this Agreement shall be deemed to limit or modify such indemnification.


                                     - 33 -
<PAGE>

            Any Subservicing  Agreement and any other transactions or services
relating to the Mortgage Loans involving the Subservicer shall be deemed to be
between the  Subservicer  and Company alone,  and the Purchaser  shall have no
obligations,  duties or liabilities with respect to the Subservicer  including
no obligation,  duty or liability of Purchaser to pay the  Subservicer's  fees
and  expenses.  For  purposes  of  distributions  and  advances by the Company
pursuant to this  Agreement,  the Company  shall be deemed to have  received a
payment on a Mortgage Loan when the Subservicer has received such payment.

            Section 4.02 Liquidation of Mortgage Loans.

            In the event that any payment due under any Mortgage  Loan and not
postponed  pursuant to Section  4.01 is not paid when the same becomes due and
payable,  or in the event the Mortgagor fails to perform any other covenant or
obligation  under the  Mortgage  Loan and such  failure  continues  beyond any
applicable grace period, the Company shall take such action as (1) the Company
would take under similar circumstances with respect to a similar mortgage loan
held for its own account for investment, (2) shall be consistent with Accepted
Servicing  Practices,  (3) the Company shall determine  prudently to be in the
best interest of Purchaser, and (4) is consistent with any related PMI Policy.
In the event that any payment  due under any  Mortgage  Loan is not  postponed
pursuant to Section 4.01 and remains delinquent for a period of 90 days or any
other default  continues for a period of 90 days beyond the  expiration of any
grace or cure period,  the Company  shall  commence  foreclosure  proceedings,
provided that, prior to commencing foreclosure proceedings,  the Company shall
notify the Purchaser in writing of the  Company's  intention to do so, and the
Company shall not commence foreclosure proceedings if the Purchaser objects to
such action within 10 Business Days of receiving such notice. In the event the
Purchaser  objects  to such  foreclosure  action,  the  Company  shall  not be
required to make Monthly Advances with respect to such Mortgage Loan, pursuant
to Section 5.03,  and the Company's  obligation to make such Monthly  Advances
shall  terminate on the 90th day referred to above.  In such  connection,  the
Company  shall from its own funds  make all  necessary  and  proper  Servicing
Advances,  provided, however, that the Company shall not be required to expend
its own funds in connection with any foreclosure or towards the restoration or
preservation  of any Mortgaged  Property,  unless it shall  determine (a) that
such  preservation,  restoration and/or foreclosure will increase the proceeds
of liquidation of the Mortgage Loan to Purchaser after reimbursement to itself
for such expenses and (b) that such expenses will be  recoverable by it either
through  Liquidation  Proceeds  (respecting  which it shall have  priority for
purposes of withdrawals  from the Custodial  Account pursuant to Section 4.05)
or  through  Insurance  Proceeds  (respecting  which  it  shall  have  similar
priority) .

            Notwithstanding  anything to the  contrary  contained  herein,  in
connection  with a foreclosure or acceptance of a deed in lieu of foreclosure,
in the event the  Company  has  reasonable  cause to believe  that a Mortgaged
Property is contaminated by hazardous or toxic substances or wastes, or if the
Purchaser  otherwise  requests an  environmental  inspection or review of such
Mortgaged Property to be conducted by a qualified  inspector.  Upon completion
of the  inspection,  the Company shall  promptly  provide the Purchaser with a
written report of the environmental inspection.


                                     - 34 -
<PAGE>

            After reviewing the environmental inspection report, the Purchaser
shall  determine  how the Company  shall proceed with respect to the Mortgaged
Property. In the event (a) the environmental  inspection report indicates that
the Mortgaged  Property is  contaminated  by hazardous or toxic  substances or
wastes and (b) the Purchaser  directs the Company to proceed with  foreclosure
or  acceptance  of a deed  in  lieu  of  foreclosure,  the  Company  shall  be
reimbursed for all costs  associated with such  foreclosure or acceptance of a
deed in lieu of foreclosure and any related  environmental  clean up costs, as
applicable,  from the  related  Liquidation  Proceeds,  or if the  Liquidation
Proceeds are insufficient to fully reimburse the Company, the Company shall be
entitled to be reimbursed  from amounts in the Custodial  Account  pursuant to
Section 4.05  hereof.  In the event the  Purchaser  directs the Company not to
proceed with  foreclosure or acceptance of a deed in lieu of foreclosure,  the
Company  shall be reimbursed  for all Servicing  Advances made with respect to
the related Mortgaged  Property from the Custodial Account pursuant to Section
4.05 hereof.

            Section 4.03 Collection of Mortgage Loan Payments.

            Continuously from the date hereof until the principal and interest
on all Mortgage Loans are paid in full,  the Company shall proceed  diligently
to collect all  payments  due under each of the  Mortgage  Loans when the same
shall become due and payable and shall take special care in  ascertaining  and
estimating  Escrow  Payments  and all other  charges  that will become due and
payable with respect to the Mortgage Loan and the Mortgaged  Property,  to the
end that the installments  payable by the Mortgagors will be sufficient to pay
such charges as and when they become due and payable.

            Section 4.04 Establishment of and Deposits to Custodial Account.

            The  Company  shall  segregate  and hold all funds  collected  and
received  pursuant to a Mortgage  Loan  separate and apart from any of its own
funds  and  general  assets  and  shall  establish  and  maintain  one or more
Custodial  Accounts,  in the form of time deposit or demand  accounts,  titled
"Countrywide  Home  Loans,  Inc.  in trust for EMC  Mortgage  Corporation,  as
purchaser  of   Residential   Adjustable   Rate  Mortgage  Loans  and  various
Mortgagors".  The  Custodial  Account  shall be  established  with a Qualified
Depository  acceptable to the Purchaser.  Any funds deposited in the Custodial
Account shall at all times be fully insured to the full extent permitted under
applicable  law. Funds  deposited in the Custodial  Account may be drawn on by
the Company in  accordance  with Section  4.05.  The creation of any Custodial
Account  shall be  evidenced  by a  certification  in the form of Exhibit  D-1
hereto, in the case of an account established with the Company, or by a letter
agreement in the form of Exhibit D-2 hereto, in the case of an account held by
a depository  other than the Company.  A copy of such  certification or letter
agreement  shall be furnished  to the  Purchaser  and,  upon  request,  to any
subsequent Purchaser.

            The Company  shall  deposit in the  Custodial  Account  within two
Business  Days of  receipt,  and retain  therein,  the  following  collections
received  by the Company and  payments  made by the Company  after the related
Cut-off Date,  (other than payments of principal and interest due on or before
the related  Cut-off  Date,  or  received by the Company  prior to the related
Cut-off Date but allocable to a period  subsequent  thereto or with respect to
each LPMI Loan, in the amount of the LPMI Fee) :


                                     - 35 -
<PAGE>

            (i) all payments on account of  principal  on the Mortgage  Loans,
      including all Principal Prepayments;

            (ii) all  payments on account of interest  on the  Mortgage  Loans
      adjusted to the Mortgage Loan Remittance Rate;

            (iii) all Liquidation Proceeds;

            (iv) all  Insurance  Proceeds  including  amounts  required  to be
      deposited  pursuant to Section  4.10,  Section  4.11,  Section  4.14 and
      Section 4.15;

            (v)  all  Condemnation  Proceeds  which  are  not  applied  to the
      restoration  or repair of the  Mortgaged  Property  or  released  to the
      Mortgagor in accordance with Section 4.14;

            (vi) any amount required to be deposited in the Custodial  Account
      pursuant to Section 4.01, 4.09, 5.03, 6.01 or 6.02;

            (vii) any amounts payable in connection with the repurchase of any
      Mortgage  Loan  pursuant to Section  3.03,  3.05 or 3.07 and all amounts
      required to be deposited by the Company in  connection  with a shortfall
      in principal amount of any Qualified  Substitute  Mortgage Loan pursuant
      to Section 3.03;

            (viii) with  respect to each  Principal  Prepayment  in full or in
      part, the Prepayment Interest Shortfall Amount, if any, for the month of
      distribution.  Such deposit  shall be made from the Company's own funds,
      without  reimbursement  therefor up to a maximum amount per month of the
      Servicing Fee actually received for such month for the Mortgage Loans;

            (ix) any amounts  required to be deposited by the Company pursuant
      to Section 4.11 in connection with the deductible  clause in any blanket
      hazard insurance policy; and

            (x) any  amounts  received  with  respect to or related to any REO
      Property and all REO Disposition Proceeds pursuant to Section 4.16.

            The foregoing  requirements for deposit into the Custodial Account
shall be exclusive,  it being understood and agreed that, without limiting the
generality of the  foregoing,  payments in the nature of late payment  charges
and  assumption  fees, to the extent  permitted by Section  6.01,  need not be
deposited  by the Company into the  Custodial  Account.  Any interest  paid on
funds deposited in the Custodial  Account by the depository  institution shall
accrue to the  benefit of the  Company  and the  Company  shall be entitled to
retain and withdraw  such  interest  from the  Custodial  Account  pursuant to
Section 4.05.


                                     - 36 -
<PAGE>

            Section 4.05 Permitted Withdrawals From Custodial Account.

            The  Company  shall,  from time to time,  withdraw  funds from the
Custodial Account for the following purposes:

            (i) to make  payments to the  Purchaser  in the amounts and in the
      manner provided for in Section 5.01;

            (ii) to  reimburse  itself for Monthly  Advances of the  Company's
      funds made  pursuant to Section 5.03,  the Company's  right to reimburse
      itself pursuant to this subclause (ii) being limited to amounts received
      on the related  Mortgage Loan which represent late payments of principal
      and/or  interest  respecting  which any such advance was made,  it being
      understood  that, in the case of any such  reimbursement,  the Company's
      right thereto  shall be prior to the rights of  Purchaser,  except that,
      where the Company is required to  repurchase a Mortgage Loan pursuant to
      Section  3.03,   3.05,  3.07  or  6.02,  the  Company's  right  to  such
      reimbursement shall be subsequent to the payment to the Purchaser of the
      Repurchase  Price  pursuant  to  such  sections  and all  other  amounts
      required to be paid to the Purchaser with respect to such Mortgage Loan;

            (iii) to reimburse itself for unreimbursed Servicing Advances, and
      for any unpaid  Servicing Fees, the Company's right to reimburse  itself
      pursuant to this subclause (iii) with respect to any Mortgage Loan being
      limited  to  related  Liquidation   Proceeds,   Condemnation   Proceeds,
      Insurance  Proceeds  and such other  amounts as may be  collected by the
      Company from the Mortgagor or otherwise  relating to the Mortgage  Loan,
      it being  understood  that, in the case of any such  reimbursement,  the
      Company's right thereto shall be prior to the rights of Purchaser except
      where the Company is required to  repurchase a Mortgage Loan pursuant to
      Section 3.03,  3.05,  3.07 or 6.02, in which case the Company's right to
      such reimbursement  shall be subsequent to the payment to the Purchasers
      of the Repurchase  Price pursuant to such sections and all other amounts
      required  to be paid to the  Purchasers  with  respect to such  Mortgage
      Loan;

            (iv) to pay itself  interest on funds  deposited in the  Custodial
      Account;

            (v) to reimburse itself for expenses  incurred and reimbursable to
      it pursuant to Section 9.01;

            (vi) to pay any amount  required  to be paid  pursuant  to Section
      4.16 related to any REO Property,  it being  understood that in the case
      of any such  expenditure  or  withdrawal  related  to a  particular  REO
      Property,  the  amount  of  such  expenditure  or  withdrawal  from  the
      Custodial  Account  shall  be  limited  to  amounts  on  deposit  in the
      Custodial Account with respect to the related REO Property;

            (vii)  to clear  and  terminate  the  Custodial  Account  upon the
      termination of this Agreement; and

            (viii) to withdraw funds deposited in error.


                                     - 37 -
<PAGE>

            In the event that the Custodial  Account is interest  bearing,  on
each Remittance  Date, the Company shall withdraw all funds from the Custodial
Account except for those amounts which,  pursuant to Section 5.01, the Company
is not obligated to remit on such  Remittance  Date.  The Company may use such
withdrawn funds only for the purposes described in this Section 4.05.

            Section 4.06 Establishment of and Deposits to Escrow Account.

            The  Company  shall  segregate  and hold all funds  collected  and
received pursuant to a Mortgage Loan constituting Escrow Payments separate and
apart from any of its own funds and  general  assets and shall  establish  and
maintain  one or more Escrow  Accounts,  in the form of time deposit or demand
accounts, titled, "Countrywide Home Loans, Inc., in trust for the EMC Mortgage
Corporation,  as purchaser of Residential  Adjustable  Rate Mortgage Loans and
various Mortgagors". The Escrow Accounts shall be established with a Qualified
Depository,  in a manner  which  shall  provide  maximum  available  insurance
thereunder.  Funds  deposited  in the  Escrow  Account  may be drawn on by the
Company in accordance  with Section 4.07.  The creation of any Escrow  Account
shall be evidenced by a  certification  in the form of Exhibit E-1 hereto,  in
the case of an account  established with the Company, or by a letter agreement
in the  form of  Exhibit  E-2  hereto,  in the  case of an  account  held by a
depository  other  than the  Company.  A copy of such  certification  shall be
furnished to the Purchaser and, upon request, to any subsequent Purchaser.

            The Company shall deposit in the Escrow Account or Accounts within
two Business Days of receipt, and retain therein:

            (i) all Escrow  Payments  collected  on  account  of the  Mortgage
      Loans,  for the purpose of effecting timely payment of any such items as
      required under the terms of this Agreement; and

            (ii) all amounts  representing  Insurance Proceeds or Condemnation
      Proceeds  which are to be  applied to the  restoration  or repair of any
      Mortgaged Property.

            The Company shall make withdrawals from the Escrow Account only to
effect such  payments as are required  under this  Agreement,  as set forth in
Section  4.07.  The Company  shall be entitled to retain any interest  paid on
funds  deposited in the Escrow  Account by the depository  institution,  other
than interest on escrowed  funds  required by law to be paid to the Mortgagor.
To the extent  required  by law,  the Company  shall pay  interest on escrowed
funds  to  the  Mortgagor  notwithstanding  that  the  Escrow  Account  may be
non-interest  bearing or that interest paid thereon is  insufficient  for such
purposes.

            Section 4.07 Permitted Withdrawals From Escrow Account.

            Withdrawals from the Escrow Account or Accounts may be made by the
Company only:

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


                                     - 38 -
<PAGE>

            (ii) to reimburse the Company for any  Servicing  Advances made by
      the Company  pursuant to Section 4.08 with respect to a related Mortgage
      Loan, but only from amounts  received on the related Mortgage Loan which
      represent late collections of Escrow Payments thereunder;

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

            (iv) for  transfer to the  Custodial  Account and  application  to
      reduce the principal balance of the Mortgage Loan in accordance with the
      terms of the related Mortgage and Mortgage Note;

            (v) for  application  to  restoration  or repair of the  Mortgaged
      Property in accordance with the procedures outlined in Section 4.14;

            (vi)  to pay to  the  Company,  or  any  Mortgagor  to the  extent
      required by law, any interest paid on the funds  deposited in the Escrow
      Account;

            (vii) to clear and terminate the Escrow Account on the termination
      of this Agreement; and

            (viii) to withdraw funds deposited in error.

            Section 4.08 Payment of Taxes, Insurance and Other Charges.

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

            Section 4.09 Protection of Accounts.

            The  Company  may  transfer  the  Custodial  Account or the Escrow
Account to a different  Qualified  Depository from time to time. Upon any such
transfer,  the Company shall promptly  notify the Purchaser and deliver to the
Purchaser a Custodial  Account  Certification or Escrow Account  Certification
(as applicable) in the form of Exhibit D-1 or E-1 to this agreement.


                                     - 39 -
<PAGE>

            The Company shall bear any expenses,  losses or damages  sustained
by the Purchaser  because the Custodial  Account and/or the Escrow Account are
not demand deposit accounts.

            Amounts on deposit in the Custodial Account and the Escrow Account
may at the option of the Company be invested in Eligible Investments; provided
that in the event that  amounts on  deposit  in the  Custodial  Account or the
Escrow  Account  exceed the  amount  fully  insured by the FDIC (the  "Insured
Amount") the Company  shall be obligated to invest the excess  amount over the
Insured Amount in Eligible Investments on the same Business Day as such excess
amount becomes  present in the Custodial  Account or the Escrow  Account.  Any
such Eligible  Investment  shall mature no later than the  Determination  Date
next following the date of such Eligible Investment,  provided,  however, that
if such Eligible Investment is an obligation of a Qualified  Depository (other
than the Company) that maintains the Custodial  Account or the Escrow Account,
then such Eligible  Investment  may mature on such  Remittance  Date. Any such
Eligible  Investment shall be made in the name of the Company in trust for the
benefit  of the  Purchaser.  All  income  on or gain  realized  from  any such
Eligible  Investment  shall  be for  the  benefit  of the  Company  and may be
withdrawn  at any time by the Company.  Any losses  incurred in respect of any
such  investment  shall be  deposited in the  Custodial  Account or the Escrow
Account, by the Company out of its own funds immediately as realized.

            Section 4.10 Maintenance of Hazard Insurance.

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

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


                                     - 40 -
<PAGE>

            If a Mortgage is secured by a unit in a condominium  project,  the
Company  shall verify that the coverage  required of the owner's  association,
including hazard, flood, liability, and fidelity coverage, is being maintained
in accordance with then current Fannie Mae  requirements,  and secure from the
owner's association its agreement to notify the Company promptly of any change
in the  insurance  coverage or of any  condemnation  or casualty loss that may
have a material effect on the value of the Mortgaged Property as security.

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

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

            All  policies  required  hereunder  shall name the Company as loss
payee and shall be endorsed with standard or union mortgagee clauses,  without
contribution, which shall provide for at least 30 days prior written notice of
any cancellation, reduction in amount or material change in coverage.

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

            Pursuant to Section  4.04,  any amounts  collected  by the Company
under any such  policies  (other than  amounts to be  deposited  in the Escrow
Account and  applied to the  restoration  or repair of the  related  Mortgaged
Property,  or property  acquired in liquidation of the Mortgage Loan, or to be
released to the Mortgagor,  in accordance with the Company's  normal servicing
procedures  as specified in Section  4.14) shall be deposited in the Custodial
Account subject to withdrawal pursuant to Section 4.05.


                                     - 41 -
<PAGE>

            Section 4.11 Maintenance of Mortgage Impairment Insurance.

            In the event that the Company  shall obtain and maintain a blanket
policy  insuring  against losses  arising from fire and hazards  covered under
extended  coverage  on all of the  Mortgage  Loans,  then,  to the extent such
policy provides coverage in an amount equal to the amount required pursuant to
Section 4.10 and  otherwise  complies with all other  requirements  of Section
4.10, it shall conclusively be deemed to have satisfied its obligations as set
forth in Section  4.10.  Any amounts  collected by the Company  under any such
policy relating to a Mortgage Loan shall be deposited in the Custodial Account
subject to  withdrawal  pursuant  to Section  4.05.  Such policy may contain a
deductible  clause, in which case, in the event that there shall not have been
maintained on the related  Mortgaged  Property a policy complying with Section
4.10,  and there shall have been a loss which would have been  covered by such
policy, the Company shall deposit in the Custodial Account at the time of such
loss the amount not otherwise payable under the blanket policy because of such
deductible clause, such amount to deposited from the Company's funds,  without
reimbursement therefor. Upon request of any Purchaser, the Company shall cause
to be delivered to such  Purchaser a certified  true copy of such policy and a
statement  from the insurer  thereunder  that such policy shall in no event be
terminated or  materially  modified  without 30 days' prior written  notice to
such Purchaser.

            Section 4.12 Maintenance of Fidelity Bond and Errors and Omissions
                         Insurance.

            The Company shall maintain with responsible companies,  at its own
expense, a blanket Fidelity Bond and an Errors and Omissions Insurance Policy,
with broad coverage on all officers,  employees or other persons acting in any
capacity  requiring such persons to handle funds,  money,  documents or papers
relating to the Mortgage Loans ("Company  Employees").  Any such Fidelity Bond
and Errors and Omissions Insurance Policy shall be in the form of the Mortgage
Banker's Blanket Bond and shall protect and insure the Company against losses,
including  forgery,  theft,  embezzlement,  fraud,  errors and  omissions  and
negligent  acts of such Company  Employees.  Such Fidelity Bond and Errors and
Omissions  Insurance  Policy also shall protect and insure the Company against
losses in  connection  with the  release or  satisfaction  of a Mortgage  Loan
without having obtained payment in full of the  indebtedness  secured thereby.
No provision of this Section 4.12  requiring such Fidelity Bond and Errors and
Omissions  Insurance  Policy  shall  diminish or relieve the Company  from its
duties and  obligations as set forth in this Agreement.  The minimum  coverage
under any such bond and insurance  policy shall be acceptable to Fannie Mae or
Freddie Mac. Upon the request of any Purchaser,  the Company shall cause to be
delivered to such  Purchaser a certified  true copy of such  fidelity bond and
insurance  policy and a statement  from the surety and the  insurer  that such
fidelity  bond  and  insurance  policy  shall in no  event  be  terminated  or
materially modified without 30 days' prior written notice to the Purchaser.

            Section 4.13 Inspections.

            The  Company  shall  inspect  the  Mortgaged  Property as often as
deemed  necessary  by the  Company  to  assure  itself  that the  value of the
Mortgaged  Property is being preserved.  In addition,  if any Mortgage Loan is
more than 60 days  delinquent,  the  Company  immediately  shall  inspect  the
Mortgaged Property and shall conduct subsequent inspections in accordance with
Accepted  Servicing  Practices  or as may be required by the primary  mortgage
guaranty  insurer.  The  Company  shall  keep a  written  report  of each such
inspection.


                                     - 42 -
<PAGE>

            Section 4.14 Restoration of Mortgaged Property.

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

            (i)   the   Company   shall   receive   satisfactory   independent
      verification  of  completion  of repairs and  issuance  of any  required
      approvals with respect thereto;

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

            (iii) the Company  shall verify that the  Mortgage  Loan is not in
      default; and

            (iv) pending repairs or  restoration,  the Company shall place the
      Insurance Proceeds or Condemnation Proceeds in the Custodial Account.

            If the Purchaser is named as an additional loss payee, the Company
is hereby  empowered  to endorse  any loss  draft  issued in respect of such a
claim in the name of the Purchaser.

            Section 4.15 Maintenance of PMI and LPMI Policy; Claims.

            (a) With  respect  to each  Mortgage  Loan with a LTV in excess of
95%, the Company shall:

            (i) with  respect to Mortgage  Loans which are not LPMI Loans,  in
accordance  with state and federal laws and without any cost to the Purchaser,
maintain  or cause the  Mortgagor  to  maintain in full force and effect a PMI
Policy with a minimum of 35%  coverage  insuring  that portion of the Mortgage
Loan in  excess of 68% (or such  other  percentage  as  stated in the  related
Acknowledgment Agreement) of value, and shall pay or shall cause the Mortgagor
to pay the premium  thereon on a timely basis,  until the LTV of such Mortgage
Loan is reduced to 80%. In the event that such PMI Policy shall be terminated,
the  Company  shall  obtain  from  another   Qualified  Insurer  a  comparable
replacement  policy,  with a total coverage equal to the remaining coverage of
such  terminated  PMI  Policy,  at  substantially  the same fee level.  If the
insurer shall cease to be a Qualified  Insurer,  the Company  shall  determine
whether recoveries under the PMI Policy are jeopardized for reasons related to
the financial  condition of such insurer, it being understood that the Company
shall in no event have any  responsibility  or  liability  for any  failure to
recover under the PMI Policy for such reason.  If the Company  determines that
recoveries  are  so  jeopardized,  it  shall  notify  the  Purchaser  and  the
Mortgagor,   if  required,   and  obtain  from  another  Qualified  Insurer  a
replacement  insurance  policy.  The Company  shall not take any action  which
would result in noncoverage under any applicable PMI Policy of any loss which,
but for the  actions of the Company  would have been  covered  thereunder.  In
connection with any assumption or substitution agreement entered into or to be
entered into pursuant to Section 4.01, the Company shall  promptly  notify the
insurer  under  the  related  PMI  Policy,  if  any,  of  such  assumption  or
substitution  of liability in accordance with the terms of such PMI Policy and
shall take all actions which may be required by such insurer as a condition to
the  continuation  of coverage  under such PMI  Policy.  If such PMI Policy is
terminated as a result of such assumption or  substitution  of liability,  the
Company shall obtain a replacement PMI Policy as provided above.


                                     - 43 -
<PAGE>

            (ii) with respect to LPMI Loans, maintain in full force and effect
an LPMI Policy  insuring  that portion of the Mortgage  Loan with a minimum of
35% coverage  insuring  that portion of the Mortgage Loan in excess of 68% (or
such other  percentage as stated in the related  Acknowledgment  Agreement) of
value, and from time to time,  withdraw the LPMI Fee with respect to such LPMI
Loan from the  Custodial  Account  in order to pay the  premium  thereon  on a
timely  basis,  until the LTV of such  Mortgage Loan is reduced to 80%. In the
event that the interest  payments  made with respect to any LPMI Loan are less
than the LPMI Fee, the Company  shall advance from its own funds the amount of
any such  shortfall  in the LPMI Fee, in payment of the premium on the related
LPMI  Policy.  Any  such  advance  shall be a  Servicing  Advance  subject  to
reimbursement  pursuant to the  provisions  on Section 2.05. In the event that
such LPMI Policy shall be  terminated,  the Company  shall obtain from another
Qualified Insurer a comparable replacement policy, with a total coverage equal
to the remaining coverage of such terminated LPMI Policy, at substantially the
same fee level.  If the insurer  shall cease to be a  Qualified  Insurer,  the
Company  shall  determine  whether   recoveries  under  the  LPMI  Policy  are
jeopardized for reasons related to the financial condition of such insurer, it
being understood that the Company shall in no event have any responsibility or
liability for any failure to recover under the LPMI Policy for such reason. If
the Company determines that recoveries are so jeopardized, it shall notify the
Purchaser and the Mortgagor,  if required,  and obtain from another  Qualified
Insurer a replacement  insurance policy. The Company shall not take any action
which would result in noncoverage under any applicable LPMI Policy of any loss
which, but for the actions of the Company would have been covered  thereunder.
In connection with any assumption or substitution agreement entered into or to
be entered into pursuant to Section 6.01,  the Company shall  promptly  notify
the insurer  under the related  LPMI  Policy,  if any, of such  assumption  or
substitution of liability in accordance with the terms of such LPMI Policy and
shall take all actions which may be required by such insurer as a condition to
the  continuation  of coverage  under such PMI Policy.  If such LPMI Policy is
terminated as a result of such assumption or  substitution  of liability,  the
Company shall obtain a replacement LPMI Policy as provided above.

            (b) In connection  with its  activities  as servicer,  the Company
agrees to prepare and present,  on behalf of itself and the Purchaser,  claims
to the  insurer  under any PMI  Policy or LPMI  Policy in a timely  fashion in
accordance  with the terms of such PMI  Policy  or LPMI  Policy  and,  in this
regard, to take such action as shall be necessary to permit recovery under any
PMI Policy or LPMI Policy  respecting a defaulted  Mortgage Loan.  Pursuant to
Section  4.04,  any amounts  collected by the Company  under any PMI Policy or
LPMI Policy shall be deposited in the Custodial Account, subject to withdrawal
pursuant to Section 4.05.

            (c) Purchaser, in its sole discretion, at any time, may (i) either
obtain an  additional  PMI Policy on any Mortgage Loan which already has a PMI
Policy in place,  or (ii) obtain a PMI Policy for any Mortgage Loan which does
not already have a PMI Policy in place.  In any event,  the Company  agrees to
administer  such  PMI  Policies  in  accordance  with  the  Agreement  or  any
Reconstitution Agreement.


                                     - 44 -
<PAGE>

            Section 4.16 Title, Management and Disposition of REO Property.

            In the event that title to any  Mortgaged  Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be taken in the name of the Purchaser,  or in the event the Purchaser is
not  authorized or permitted to hold title to real property in the state where
the REO Property is located,  or would be adversely  affected under the "doing
business"  or tax  laws  of  such  state  by so  holding  title,  the  deed or
certificate  of sale  shall be taken in the name of such  Person or Persons as
shall be  consistent  with an Opinion of Counsel  obtained by the Company from
any attorney duly licensed to practice law in the state where the REO Property
is located.  The Person or Persons holding such title other than the Purchaser
shall  acknowledge in writing that such title is being held as nominee for the
Purchaser.

            The Company shall manage,  conserve,  protect and operate each REO
Property for the  Purchaser  solely for the purpose of its prompt  disposition
and sale.  The  Company,  either  itself or through an agent  selected  by the
Company, shall manage,  conserve,  protect and operate the REO Property in the
same manner that it manages, conserves, protects and operates other foreclosed
property for its own account,  and in the same manner that similar property in
the same locality as the REO Property is managed. The Company shall attempt to
sell the same (and may temporarily rent the same for a period not greater than
one year, except as otherwise  provided below) on such terms and conditions as
the Company deems to be in the best interest of the Purchaser.

            The  Company  shall use its best  efforts  to  dispose  of the REO
Property  as soon as  possible  and shall sell such REO  Property in any event
within one year after  title has been taken to such REO  Property,  unless (i)
(A) a REMIC election has not been made with respect to the  arrangement  under
which the Mortgage  Loans and the REO Property are held,  and (ii) the Company
determines,  and gives an appropriate  notice to the Purchaser to such effect,
that a longer  period is  necessary  for the orderly  liquidation  of such REO
Property.  If a period  longer than one year is permitted  under the foregoing
sentence and is  necessary  to sell any REO Property the Company  shall report
monthly to the  Purchaser  as to the  progress  being made in selling such REO
Property.

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

            The  disposition  of REO  Property  shall  be  carried  out by the
Company at such  price,  and upon such terms and  conditions,  as the  Company
deems to be in the best  interests of the  Purchaser.  The proceeds of sale of
the REO Property shall be promptly deposited in the Custodial Account. As soon
as  practical  thereafter  the  expenses  of such  sale  shall be paid and the
Company  shall  reimburse  itself  for  any  related  unreimbursed   Servicing
Advances,  unpaid  Servicing Fees and  unreimbursed  advances made pursuant to
Section 5.03, and on the Remittance Date  immediately  following the Principal
Prepayment  Period  in which  such sale  proceeds  are  received  the net cash
proceeds of such sale remaining in the Custodial  Account shall be distributed
to the Purchaser.


                                     - 45 -
<PAGE>

            The Company shall withdraw the Custodial  Account funds  necessary
for the proper  operation,  management  and  maintenance  of the REO Property,
including the cost of  maintaining  any hazard  insurance  pursuant to Section
4.10 and the fees of any managing agent of the Company, a Subservicer,  or the
Company  itself.  The REO management fee shall be an amount that is reasonable
and customary in the area where the Mortgaged Property is located. The Company
shall make monthly  distributions on each Remittance Date to the Purchasers of
the net cash flow from the REO Property  (which shall equal the revenues  from
such REO Property  net of the  expenses  described in this Section 4.16 and of
any reserves reasonably required from time to time to be maintained to satisfy
anticipated liabilities for such expenses) .

            Section 4.17 Real Estate Owned Reports.

            Together  with the statement  furnished  pursuant to Section 5.02,
the Company shall furnish to the  Purchaser on or before the  Remittance  Date
each month a statement with respect to any REO Property covering the operation
of such REO  Property  for the  previous  month and the  Company's  efforts in
connection  with the  sale of such REO  Property  and any  rental  of such REO
Property incidental to the sale thereof for the previous month. That statement
shall  be  accompanied  by  such  other  information  as the  Purchaser  shall
reasonably request.

            Section 4.18 Liquidation Reports.

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

            Section 4.19 Reports of Foreclosures and Abandonments of Mortgaged
                         Property.

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

            Section 4.20 Notification of Adjustments.

            With respect to each Mortgage  Loan,  the Company shall adjust the
Mortgage  Interest Rate on the related Interest Rate Adjustment Date and shall
adjust  the  Monthly  Payment  on  the  related  Payment  Adjustment  Date  in
compliance with the  requirements  of applicable law and the related  Mortgage
and Mortgage  Note. If,  pursuant to the terms of the Mortgage  Note,  another
index is selected for determining  the Mortgage  Interest Rate, the same index
will be used with respect to each Mortgage Note which  requires a new index to
be selected,  provided that such selection does not conflict with the terms of
the related  Mortgage  Note. The Company shall execute and deliver any and all
necessary  notices  required under applicable law and the terms of the related
Mortgage  Note and  Mortgage  regarding  the  Mortgage  Interest  Rate and the
Monthly Payment  adjustments.  The Company shall promptly upon written request
thereof,  deliver  to the  Purchaser  such  notifications  and any  additional
applicable  data regarding such  adjustments and the methods used to calculate
and implement  such  adjustments.  Upon the  discovery by the Company,  or the
Purchaser that the Company has failed to adjust a Mortgage  Interest Rate or a
Monthly  Payment  pursuant  to the  terms  of the  related  Mortgage  Note and
Mortgage,  the Company shall immediately deposit in the Custodial Account from
its own funds the amount of any interest loss caused the Purchaser thereby.


                                     - 46 -
<PAGE>

                                    ARTICLE V

                              PAYMENTS TO PURCHASER

            Section 5.01 Remittances.

            On each  Remittance  Date the Company shall remit by wire transfer
of immediately  available funds to the Purchaser (a) all amounts  deposited in
the Custodial  Account as of the close of business on the  Determination  Date
(net of charges against or withdrawals from the Custodial  Account pursuant to
Section 4.05), plus (b) all amounts, if any, which the Company is obligated to
distribute  pursuant to Section 5.03,  minus (c) any amounts  attributable  to
Principal  Prepayments  received  after the  applicable  Principal  Prepayment
Period  which  amounts  shall be remitted on the  following  Remittance  Date,
together  with  any  additional  interest  required  to be  deposited  in  the
Custodial  Account in connection with such Principal  Prepayment in accordance
with Section  4.04(viii),  and minus (d) any amounts  attributable  to Monthly
Payments  collected but due on a Due Date or Dates subsequent to the first day
of the month of the  Remittance  Date,  which amounts shall be remitted on the
Remittance Date next succeeding the Due Period for such amounts.

            With respect to any remittance received by the Purchaser after the
second  Business Day following the Business Day on which such payment was due,
the Company shall pay to the Purchaser interest on any such late payment at an
annual rate equal to the Prime Rate,  adjusted as of the date of each  change,
plus three percentage  points, but in no event greater than the maximum amount
permitted by applicable law. Such interest shall be deposited in the Custodial
Account by the  Company on the date such late  payment is made and shall cover
the period  commencing  with the day  following  such second  Business Day and
ending with the Business Day on which such  payment is made,  both  inclusive.
Such interest  shall be remitted  along with the  distribution  payable on the
next  succeeding  Remittance  Date.  The  payment  by the  Company of any such
interest  shall not be deemed an  extension of time for payment or a waiver of
any Event of Default by the Company.

            Section 5.02 Statements to Purchaser.

            Not later than the 10th day of each  calendar  month,  the Company
shall  furnish to the  Purchaser  a Monthly  Remittance  Advice,  with a trial
balance  report  attached  thereto,  in the form of  Exhibit F annexed  hereto
electronic  medium  mutually  acceptable  to the  parties as to the  preceding
calendar month and the Due Period in the month of remittance


                                     - 47 -
<PAGE>

            In addition,  not more than 60 days after the end of each calendar
year, the Company shall furnish to each Person who was a Purchaser at any time
during  such  calendar  year  an  annual  statement  in  accordance  with  the
requirements  of  applicable  federal  income tax law as to the  aggregate  of
remittances for the applicable  portion of such year.  Nothing in this Section
5.02 shall be deemed to require the Company to prepare any federal  income tax
return on Internal  Revenue  Service  Form 1066,  U.S.  Real  Estate  Mortgage
Investment Conduit Income Tax Return, including Schedule Q thereto,  Quarterly
Notice  to  Residual  Interest  Holders  of REMIC  Taxable  Income or Net Loss
Allocation,  or any successor  forms, to be filed on behalf of any REMIC under
the REMIC Provisions.

            Section 5.03 Monthly Advances by Company.

            On the Business Day immediately  preceding each  Remittance  Date,
either (a) the Company  shall  deposit in the  Custodial  Account from its own
funds or (b) if funds are on deposit in the  Custodial  Account  which are not
required to be remitted on the related  Remittance  Date, the Company may make
an  appropriate  entry in its records that such funds shall be applied  toward
the related  Monthly  Advance  (provided,  that any funds so applied  shall be
replaced by the Company no later than the Business Day  immediately  preceding
the next Remittance  Date), in each case, in an aggregate  amount equal to all
Monthly Payments (with interest adjusted to the Mortgage Loan Remittance Rate)
which were due on the  Mortgage  Loans  during the  applicable  Due Period and
which were  delinquent at the close of business on the  immediately  preceding
Determination  Date or which  were  deferred  pursuant  to Section  4.01.  The
Company's  obligation  to make such Monthly  Advances as to any Mortgage  Loan
will  continue  through the last  Monthly  Payment due prior to the payment in
full of the Mortgage  Loan, or through the last  Remittance  Date prior to the
Remittance Date for the  distribution  of all  Liquidation  Proceeds and other
payments  or  recoveries   (including   Insurance  Proceeds  and  Condemnation
Proceeds) with respect to the Mortgage Loan.

            In no event  shall the  Company  be  obligated  to make an advance
under this  section  5.03 if at the time of such advance it deems such advance
to be  non-recoverable.  The  Company  shall  promptly  deliver  an  officer's
certificate   to  the  Purchaser   upon   determining   that  any  advance  is
non-recoverable.  In the event that upon liquidation of the Mortgage Loan, the
Liquidation Proceeds are insufficient to reimburse the Company for any Monthly
Advances,  the Company shall notify the related Purchaser of such shortfall by
registered mail with sufficient  supporting  documentation  and shall have the
right to deduct  such  shortfall  from the next  remittance  to be paid to the
related Purchaser.

                                   ARTICLE VI

                          GENERAL SERVICING PROCEDURES

            Section 6.01 Transfers of Mortgaged Property.

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


                                     - 48 -
<PAGE>

            If the Company  reasonably  believes it is unable under applicable
law to enforce such "due-on-sale"  clause, the Company shall enter into (i) an
assumption  and  modification  agreement with the person to whom such property
has been  conveyed,  pursuant to which such person  becomes  liable  under the
Mortgage Note and the original Mortgagor remains liable thereon or (ii) in the
event the Company is unable under  applicable law to require that the original
Mortgagor  remain liable under the Mortgage Note and the Company has the prior
consent of the primary mortgage guaranty insurer,  a substitution of liability
agreement with the purchaser of the Mortgaged  Property  pursuant to which the
original  Mortgagor  is  released  from  liability  and the  purchaser  of the
Mortgaged  Property is  substituted  as Mortgagor and becomes liable under the
Mortgage  Note. If an assumption  fee is collected by the Company for entering
into an assumption agreement,  a portion of such fee, up to an amount equal to
one  percent  (1.0%)  of the  outstanding  principal  balance  of the  related
Mortgage  Loan,  will be  retained  by the  Company  as  additional  servicing
compensation,  and any portion  thereof in excess one percent  (1.0%) shall be
deposited  in the  Custodial  Account  for the  benefit of the  Purchaser.  In
connection with any such assumption or substitution of liability,  neither the
Mortgage  Interest Rate borne by the related  Mortgage  Note,  the term of the
Mortgage Loan, the Index, the Lifetime Mortgage Interest Rate Cap, the Initial
Rate  Cap or the  Gross  Margin  of any  Mortgage  Loan,  nor the  outstanding
principal amount of the Mortgage Loan shall be changed.

            To the extent that any  Mortgage  Loan is  assumable,  the Company
shall inquire diligently into the creditworthiness of the proposed transferee,
and  shall use the  underwriting  criteria  for  approving  the  credit of the
proposed  transferee which are used by Fannie Mae with respect to underwriting
mortgage  loans of the same type as the Mortgage  Loans.  If the credit of the
proposed  transferee  does not meet such  underwriting  criteria,  the Company
diligently shall, to the extent permitted by the Mortgage or the Mortgage Note
and by applicable law, accelerate the maturity of the Mortgage Loan.

            Section 6.02 Satisfaction of Mortgages and Release of Mortgage
                         Files.

            Upon the payment in full of any Mortgage  Loan,  or the receipt by
the  Company of a  notification  that  payment in full will be  escrowed  in a
manner customary for such purposes,  the Company shall notify the Purchaser in
the Monthly Remittance Advice as provided in Section 5.02, and may request the
release of any Mortgage Loan Documents. In connection with any such prepayment
in  full,  the  Company  shall  comply  with  all  applicable  laws  regarding
satisfaction, release or reconveyance with respect to the Mortgage.

            If the  Company  satisfies  or releases a Mortgage  without  first
having obtained payment in full of the indebtedness secured by the Mortgage or
should the Company otherwise prejudice any rights the Purchaser may have under
the mortgage  instruments,  upon written demand of the Purchaser,  the Company
shall  repurchase the related Mortgage Loan at the Repurchase Price by deposit
thereof in the  Custodial  Account  within 2 Business  Days of receipt of such
demand by the  Purchaser.  The Company  shall  maintain the Fidelity  Bond and
Errors and Omissions Insurance Policy as provided for in Section 4.12 insuring
the Company  against any loss it may sustain with respect to any Mortgage Loan
not satisfied in accordance with the procedures set forth herein.


                                     - 49 -
<PAGE>

            Section 6.03 Servicing Compensation.

            As compensation for its services  hereunder,  the Company shall be
entitled to withdraw  from the  Custodial  Account or to retain from  interest
payments on the Mortgage  Loans the amount of its Servicing Fee. The Servicing
Fee shall be payable  monthly  and shall be  computed on the basis of the same
unpaid  principal  balance  and for the period  respecting  which any  related
interest  payment on a Mortgage  Loan is computed.  The Servicing Fee shall be
payable only at the time of and with respect to those Mortgage Loans for which
payment  is in fact made of the  entire  amount of the  Monthly  Payment.  The
obligation  of the  Purchaser  to pay the  Servicing  Fee is  limited  to, and
payable solely from, the interest portion of such Monthly  Payments  collected
by the Company.

            Additional servicing  compensation in the form of assumption fees,
to the  extent  provided  in  Section  6.01,  and  late  payment  charges  and
Prepayment  Penalties,  shall be  retained  by the  Company  to the extent not
required to be  deposited  in the  Custodial  Account.  The  Company  shall be
required to pay all expenses  incurred by it in connection  with its servicing
activities hereunder and shall not be entitled to reimbursement thereof except
as  specifically  provided  for  herein.   Notwithstanding  anything  in  this
Agreement to the contrary, in the event of a Principal Prepayment in full, the
Company  shall not waive,  and shall not permit the waiver of, any  Prepayment
Penalty or portion thereof  required by the terms of the related Mortgage Note
unless (i) the Company  determines that such waiver would maximize recovery of
Liquidations Proceeds for such Mortgage Loan, taking into account the value of
such Prepayment Penalty, or (ii) (A) the enforeceability  therefore is limited
(1) by bankruptcy, insolvency, moratorium,  receivership, or other similar law
relating  to  creditors'  rights  generally  or  (2)  due to  acceleration  in
connection  with a  foreclosure  or  other  involuntary  payment  or  (B)  the
enforceability is otherwise limited or prohibited by applicable law.

            Section 6.04 Annual Statement as to Compliance.

            The Company  shall deliver to the  Purchaser,  on or before May 31
each year beginning May 31, 2003, an Officer's Certificate, stating that (i) a
review of the activities of the Company during the preceding calendar year and
of  performance  under  this  Agreement  has been made  under  such  officer's
supervision,  and (ii) the Company has complied  fully with the  provisions of
Article II and Article IV, and (iii) to the best of such officer's  knowledge,
based on such review, the Company has fulfilled all its obligations under this
Agreement  throughout  such  year,  or,  if there  has been a  default  in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status  thereof  and the action  being taken by the
Company to cure such default.


                                     - 50 -
<PAGE>

            Section 6.05 Annual Independent Public Accountants' Servicing
Report.

            On or before May 31st of each year  beginning  May 31,  2003,  the
Company, at its expense,  shall cause a firm of independent public accountants
which is a member of the American Institute of Certified Public Accountants to
furnish  a  statement  to each  Purchaser  to the  effect  that  such firm has
examined  certain  documents  and  records  relating to the  servicing  of the
Mortgage  Loans and this  Agreement  and that such firm is of the opinion that
the provisions of Article II and Article IV have been complied with, and that,
on the basis of such  examination  conducted  substantially in compliance with
the Single Attestation Program for Mortgage Bankers, nothing has come to their
attention  which would  indicate that such servicing has not been conducted in
compliance  therewith,  except  for (i) such  exceptions  as such  firm  shall
believe to be immaterial, and (ii) such other exceptions as shall be set forth
in such statement.

            Section 6.06 Right to Examine Company Records.

            The  Purchaser  shall have the right to examine  and audit any and
all of the books,  records, or other information of the Company,  whether held
by the Company or by another on its behalf, with respect to or concerning this
Agreement or the Mortgage Loans,  during business hours or at such other times
as may be reasonable under applicable  circumstances,  upon reasonable advance
notice.

                                   ARTICLE VII

                     AGENCY TRANSFER; PASS-THROUGH TRANSFER

            Section 7.01 Removal of Mortgage Loans from Inclusion Under this
                         Agreement Upon an Agency Transfer, or a Pass-Through
                         Transfer on One or More Reconstitution Dates.

            The  Purchaser  and the  Company  agree  that with  respect to any
Pass-Through Transfer, Whole Loan Transfer or Agency Transfers, as applicable,
the Company shall cooperate with the Purchaser in effecting such transfers and
shall  negotiate  in good  faith  and  execute  any  Reconstitution  Agreement
required to effectuate  the  foregoing;  provided  that,  such  Reconstitution
Agreement  shall  not  materially   increase  the  Company's   obligations  or
liabilities  hereunder,  nor diminish any of the Company's rights, and provide
to any master servicer or the trustee, as applicable, and/or the Purchaser any
and  all  publicly  available  information  and  appropriate  verification  of
information which may be reasonably available to the Company,  whether through
letters of its auditors and counsel or otherwise, as the Purchaser, trustee or
a master servicer shall  reasonable  request as to the related Mortgage Loans.
Purchaser shall reimburse  Company for any and all costs or expenses  incurred
by Company (i) in  obtaining  "accountant  comfort  letters"  with  respect to
information  supplied in response to Purchaser  requests,  (ii) in  connection
with any due diligence  performed in connection  with a Pass-Through  or Whole
Loan Transfer or (iii) making the Mortgage Loan  Documents or Servicing  Files
available to parties  participating  in a Pass-Through or Whole Loan Transfer,
including without limitation, shipping costs. Such information may be included
in any  disclosure  document  prepared  in  connection  with the  Pass-Through
Transfer,  Whole Loan Transfer or Agency  Transfer,  as applicable;  provided,
however,  that Company shall  indemnify  the  Purchaser  against any liability
arising  from any  material  omissions  or  misstatements  in any  information
supplied by the Company and included in a disclosure  document;  and provided,
further,  that the Purchaser shall indemnify the Company against any liability
arising from any  information  included in a disclosure  document that was not
supplied  by  the  Company.  The  Company  shall  execute  any  Reconstitution
Agreements  required within a reasonable  period of time after receipt of such
agreements  which time shall be  sufficient  for the Company and the Company's
counsel  to review  such  agreements.  Company  shall use its Best  Efforts to
complete such review  within ten (10) Business Days after mutual  agreement as
to the terms  thereof,  but such time shall not exceed  fifteen (15)  Business
Days after mutual agreement as to the terms thereof.


                                     - 51 -
<PAGE>

            The Company  shall not be required to restate any  representations
and  warranties  as of the  date  of any  Pass-Through  Transfer,  Whole  Loan
Transfer or Agency Transfers other than the representations and warranties set
forth in Section  3.01  (provided,  that the Company  shall not be required to
restate the representation and warranty set forth in Section 3.01(j) ) .

            In the event of any Agency  Transfer,  Pass-Through  or Whole Loan
Transfer,  the Company  shall have no  obligation  to pay any  custodial  fees
charged by the Agency.

            Section 7.02 Purchaser's Repurchase and Indemnification Obligations.

            Upon receipt by the Company of notice from Fannie Mae, Freddie Mac
or the  trustee  of a  breach  of any  Purchaser  representation  or  warranty
contained in any Reconstitution  Agreement or a request by Fannie Mae, Freddie
Mac or the  trustee,  as the case may be, for the  repurchase  of any Mortgage
Loan  transferred to Fannie Mae or Freddie Mac pursuant to an Agency  Transfer
or to a  trustee  pursuant  to a  Pass-Through  Transfer,  the  Company  shall
promptly  notify the  Purchaser  of same and shall,  at the  direction  of the
Purchaser,  use its best  efforts to cure and  correct  any such breach and to
satisfy the  requests or concerns of Fannie Mae,  Freddie  Mac, or the trustee
related to such  deficiencies  of the related  Mortgage  Loans  transferred to
Fannie Mae, Freddie Mac, or the trustee.

            The Purchaser shall  repurchase from the Company any Mortgage Loan
transferred to Fannie Mae or Freddie Mac pursuant to an Agency  Transfer or to
a trustee  pursuant  to a  Pass-Through  Transfer  with  respect  to which the
Company  has been  required  by Fannie  Mae,  Freddie  Mac,  or the trustee to
repurchase  due to a  breach  of a  representation  or  warranty  made  by the
Purchaser with respect to the Mortgage Loans,  or the servicing  thereof prior
to the  transfer  date to Fannie  Mae,  Freddie  Mac,  or the  trustee  in any
Reconstitution   Agreement   and  not  due  to  a  breach  of  the   Company's
representations or obligations  thereunder or pursuant to this Agreement.  The
repurchase  price to be paid by the  Purchaser to the Company shall equal that
repurchase  price paid by the Company to Fannie Mae, Freddie Mac, or the third
party purchaser plus all reasonable costs and expenses borne by the Company in
connection with the cure of said breach of a  representation  or warranty made
by the Purchaser and in connection  with the  repurchase of such Mortgage Loan
from Fannie Mae, Freddie Mac, or the trustee,  including,  but not limited to,
reasonable and necessary attorneys' fees.

            At the time of  repurchase,  the  Custodian  and the Company shall
arrange for the reassignment of the repurchased Mortgage Loan to the Purchaser
according to the Purchaser's instructions and the delivery to the Custodian of
any documents held by Fannie Mae,  Freddie Mac, or the trustee with respect to
the  repurchased   Mortgage  Loan  pursuant  to  the  related   Reconstitution
Agreement.  In the event of a repurchase,  the Company  shall,  simultaneously
with  such  reassignment,  give  written  notice  to the  Purchaser  that such
repurchase  has taken place,  and amend the related  Mortgage Loan Schedule to
reflect the addition of the repurchased  Mortgage Loan to this  Agreement.  In
connection  with any such  addition,  the Company and the  Purchaser  shall be
deemed to have made as to such repurchased  Mortgage Loan the  representations
and warranties set forth in this Agreement.


                                     - 52 -
<PAGE>

                                  ARTICLE VIII

                              COMPANY TO COOPERATE

            Section 8.01 Provision of Information.

            During the term of this  Agreement  and provided such request will
cause the Company to violate any applicable law or statute,  the Company shall
furnish  to  the  Purchaser  such  periodic,  special,  or  other  reports  or
information  and  copies  or  originals  of  any  documents  contained  in the
Servicing File for each Mortgage Loan,  whether or not provided for herein, as
shall be necessary,  reasonable, or appropriate with respect to the Purchaser,
any regulatory requirement pertaining to the Purchaser or the purposes of this
Agreement. All such reports, documents or information shall be provided by and
in  accordance  with all  reasonable  instructions  and  directions  which the
Purchaser  may give.  Purchaser  shall pay any costs  related  to any  special
reports.

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

            Section 8.02 Financial Statements; Servicing Facility.

            In connection with marketing the Mortgage Loans, the Purchaser may
make  available  to  a  prospective  Purchaser  a  Consolidated  Statement  of
Operations  of the Company for the most recently  completed  five fiscal years
for which such a statement is available,  as well as a Consolidated  Statement
of  Condition  at the  end of the  last  two  fiscal  years  covered  by  such
Consolidated  Statement of  Operations.  The Company also shall make available
any comparable  interim statements to the extent any such statements have been
prepared by or on behalf of the Company  (and are  available  upon  request to
members or stockholders  of the Company or to the public at large).  If it has
not  already  done so, the Company  shall  furnish  promptly to the  Purchaser
copies of the statement specified above.  Unless requested the Purchaser,  the
Company  shall not be  required to deliver any  documents  which are  publicly
available on EDGAR.

            The Company also shall make  available to Purchaser or prospective
Purchaser a knowledgeable  financial or accounting  officer for the purpose of
answering questions  respecting recent  developments  affecting the Company or
the  financial  statements  of the  Company,  and to  permit  any  prospective
Purchaser  to  inspect  the  Company's  servicing  facilities  or those of any
Subservicer for the purpose of satisfying such prospective  Purchaser that the
Company and any Subservicer  have the ability to service the Mortgage Loans as
provided in this Agreement.


                                     - 53 -
<PAGE>

                                   ARTICLE IX

                                   THE COMPANY

            Section 9.01 Indemnification; Third Party Claims.

            The Company  shall  indemnify  the  Purchaser and hold it harmless
against  any  and  all  claims,  losses,   damages,   penalties,   fines,  and
forfeitures, including, but not limited to reasonable and necessary legal fees
and related costs, judgments,  and any other costs, fees and expenses that the
Purchaser  may sustain in any way related to the failure of the Company to (a)
perform its duties and service the Mortgage  Loans in strict  compliance  with
the terms of this  Agreement  or any  Reconstitution  Agreement  entered  into
pursuant to Section 7.01,  and/or (b) comply with  applicable law. The Company
immediately  shall  notify the  Purchaser  if a claim is made by a third party
with respect to this Agreement or any Reconstitution Agreement or the Mortgage
Loans,  shall  promptly  notify  Fannie Mae,  Freddie Mac, or the trustee with
respect to any claim made by a third party with respect to any  Reconstitution
Agreement,  assume  (with the prior  written  consent  of the  Purchaser)  the
defense  of any such  claim  and pay all  expenses  in  connection  therewith,
including  counsel fees, and promptly pay,  discharge and satisfy any judgment
or decree in the amount of $5,000 or less,  which may be entered against it or
the  Purchaser in respect of such claim.  The Company shall follow any written
instructions  received from the Purchaser in connection  with such claim.  The
Purchaser  promptly shall reimburse the Company for all amounts advanced by it
pursuant to the preceding sentence except when the claim is in any way related
to the Company's  indemnification  pursuant to Section 3.03, or the failure of
the  Company  to (a)  service  and  administer  the  Mortgage  Loans in strict
compliance with the terms of this Agreement or any  Reconstitution  Agreement,
and/or (b) comply with applicable law.

            Section 9.02 Merger or Consolidation of the Company.

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

            Any person into which the  Company may be merged or  consolidated,
or any corporation  resulting from any merger,  conversion or consolidation to
which the Company shall be a party,  or any Person  succeeding to the business
of the Company,  shall be the successor of the Company hereunder,  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,  provided,
however,  that the successor or surviving  Person shall be an institution  (i)
having a net worth of not less  than  $25,000,000,  (ii)  whose  deposits  are
insured by the FDIC  through the BIF or the SAIF,  and (iii) which is a Fannie
Mae-approved company in good standing.


                                     - 54 -
<PAGE>

            Section 9.03 Limitation on Liability of Company and Others.

            Neither the Company nor any of the directors,  officers, employees
or agents of the Company shall be under any liability to the Purchaser for any
action  taken or for  refraining  from the  taking of any action in good faith
pursuant to this Agreement, or for errors in judgment, provided, however, that
this  provision  shall not protect the Company or any such person  against any
Breach of warranties or representations made herein, or failure to perform its
obligations in strict  compliance  with any standard of care set forth in this
Agreement,  or any liability which would otherwise be imposed by reason of any
breach of the terms and  conditions  of this  Agreement.  The  Company and any
director,  officer, employee or agent of the Company may rely in good faith on
any document of any kind prima facie  properly  executed and  submitted by any
Person  respecting  any matters  arising  hereunder.  The Company shall not be
under any obligation to appear in,  prosecute or defend any legal action which
is not  incidental  to its duties to service the Mortgage  Loans in accordance
with this  Agreement and which in its opinion may involve it in any expense or
liability,  provided,  however,  that the Company may, with the consent of the
Purchaser,  undertake any such action which it may deem necessary or desirable
in respect to this Agreement and the rights and duties of the parties  hereto.
In such  event,  the  Company  shall be  entitled  to  reimbursement  from the
Purchaser of the reasonable legal expenses and costs of such action.

            Section 9.04 Limitation on Resignation and Assignment by Company.

            The Purchaser has entered into this Agreement with the Company and
subsequent  Purchasers  will purchase the Mortgage  Loans in reliance upon the
independent status of the Company,  and the representations as to the adequacy
of its servicing facilities,  plant,  personnel,  records and procedures,  its
integrity,  reputation and financial  standing,  and the continuance  thereof.
Therefore,  the Company shall neither  assign this  Agreement or the servicing
hereunder or delegate its rights or duties hereunder or any portion hereof (to
other than a Subservicer) or sell or otherwise dispose of all or substantially
all of its  property  or assets  without  the  prior  written  consent  of the
Purchaser,  which consent shall be granted or withheld in the sole  discretion
of the Purchaser; provided, however, that the Company may assign its right and
obligations  hereunder to any entity that is directly or  indirectly  owned or
controlled by the Company and the Company  guarantees the  performance by such
entity of all obligations hereunder.

            The  Company  shall not  resign  from the  obligations  and duties
hereby imposed on it except by mutual consent of the Company and the Purchaser
or upon the determination  that its duties hereunder are no longer permissible
under applicable law and such incapacity  cannot be cured by the Company.  Any
such  determination  permitting  the  resignation  of  the  Company  shall  be
evidenced by an Opinion of Counsel to such effect  delivered to the  Purchaser
which  Opinion of Counsel  shall be in form and  substance  acceptable  to the
Purchaser.  No such resignation shall become effective until a successor shall
have assumed the Company's  responsibilities and obligations  hereunder in the
manner provided in Section 12.01.

            Without in any way limiting the  generality  of this Section 9.04,
in the event that the  Company  either  shall  assign  this  Agreement  or the
servicing  responsibilities  hereunder or delegate its duties hereunder or any
portion thereof (to other than a Subservicer) or sell or otherwise  dispose of
all or substantially all of its property or assets,  without the prior written
consent of the Purchaser, then the Purchaser shall have the right to terminate
this Agreement  upon notice given as set forth in Section  10.01,  without any
payment of any penalty or damages and without any liability  whatsoever to the
Company or any third party.


                                     - 55 -
<PAGE>

                                    ARTICLE X

                                     DEFAULT

            Section 10.01 Events of Default.

            Each of the following shall  constitute an Event of Default on the
part of the Company:

            (i) any  failure  by the  Company  to remit to the  Purchaser  any
      payment  required  to be made  under the terms of this  Agreement  which
      continues  unremedied  for a period  of three  days  after the date upon
      which written notice of such failure, requiring the same to be remedied,
      shall have been given to the Company by the Purchaser; or

            (ii)  failure  by the  Company  duly to  observe or perform in any
      material respect any other of the covenants or agreements on the part of
      the Company set forth in this Agreement which continues 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
      Company by the Purchaser; or

            (iii)  failure  by the  Company  to  maintain  its  license  to do
      business in any jurisdiction  where the Mortgage  Property is located if
      such license is necessary for the Company to legally service the related
      Mortgage Loan; or

            (iv) a  decree  or  order  of a court  or  agency  or  supervisory
      authority  having  jurisdiction  for the appointment of a conservator or
      receiver  or  liquidator  in  any  insolvency,   readjustment  of  debt,
      including  bankruptcy,  marshaling of assets and  liabilities or similar
      proceedings,  or for the winding-up or liquidation of its affairs, shall
      have been  entered  against  the  Company and such decree or order shall
      have remained in force undischarged or unstayed for a period of 60 days;
      or

            (v) the Company 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  proceedings  of or
      relating to the Company or of or relating to all or substantially all of
      its property; or

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


                                     - 56 -
<PAGE>

            (vii) the Company  ceases to meet the  qualifications  of a Fannie
      Mae lender or servicer; or

            (viii)  the  Company  fails to  maintain  a  minimum  net worth of
      $25,000,000; or

            (ix) the  Company  attempts  to  assign  its  right  to  servicing
      compensation  hereunder or the Company attempts,  without the consent of
      the Purchaser,  to sell or otherwise dispose of all or substantially all
      of its property or assets or to assign this  Agreement or the  servicing
      responsibilities  hereunder or to delegate  its duties  hereunder or any
      portion  thereof (to other than a  Subservicer)  in violation of Section
      9.04.

            In each and every such case,  so long as an Event of Default shall
not have been  remedied,  in addition to  whatsoever  rights the Purchaser may
have at law or equity to damages,  including  injunctive  relief and  specific
performance, the Purchaser, by notice in writing to the Company, may terminate
all the rights and  obligations of the Company under this Agreement and in and
to the Mortgage Loans and the proceeds thereof.

            Upon receipt by the Company of such written notice,  all authority
and power of the Company  under this  Agreement,  whether  with respect to the
Mortgage  Loans or  otherwise,  shall  pass to and be vested in the  successor
appointed  pursuant to Section 12.01. Upon written request from any Purchaser,
the  Company  shall  prepare,  execute  and  deliver to the  successor  entity
designated by the Purchaser any and all documents and other instruments, place
in such successor's  possession all Mortgage Files, and do or cause to be done
all other acts or things  necessary or  appropriate  to effect the purposes of
such notice of  termination,  including  but not limited to the  transfer  and
endorsement or assignment of the Mortgage Loans and related documents,  at the
Company's  sole expense.  The Company shall  cooperate  with the Purchaser and
such successor in effecting the termination of the Company's  responsibilities
and rights  hereunder,  including  without  limitation,  the  transfer to such
successor for administration by it of all cash amounts which shall at the time
be  credited  by the  Company to the  Custodial  Account or Escrow  Account or
thereafter received with respect to the Mortgage Loans.

            Section 10.02 Waiver of Defaults.

            By a written  notice,  the  Purchaser may waive any default by the
Company in the performance of its obligations  hereunder and its consequences.
Upon any waiver of a past default,  such default shall cease to exist, and any
Event of Default  arising  therefrom shall be deemed to have been remedied for
every purpose of this Agreement. No such waiver shall extend to any subsequent
or other default or impair any right  consequent  thereon except to the extent
expressly so waived.

                                   ARTICLE XI

                                   TERMINATION

            Section 11.01 Termination.


                                     - 57 -
<PAGE>

            This Agreement shall  terminate upon either:  (i) the later of the
final payment or other  liquidation  (or any advance with respect  thereto) of
the last Mortgage Loan or the  disposition of any REO Property with respect to
the last Mortgage Loan and the remittance of all funds due hereunder;  or (ii)
mutual consent of the Company and the Purchaser in writing.

            Section 11.02 Termination Without Cause.

            The Purchaser may  terminate,  at its sole option,  any rights the
Company may have hereunder,  without cause, as provided in this Section 11.02.
Any such  notice of  termination  shall be in  writing  and  delivered  to the
Company by registered mail as provided in Section 12.05.

            In the event the Purchaser  terminates  the Company  without cause
with  respect to some or all of the Mortgage  Loans,  the  Purchaser  shall be
required to pay to the Company a Termination Fee in an amount equal to 2.0% of
the outstanding  principal balance of the terminated  Mortgage Loans as of the
date of such termination.

                                   ARTICLE XII

                            MISCELLANEOUS PROVISIONS

            Section 12.01 Successor to Company.

            Prior to termination of the Company's  responsibilities and duties
under this Agreement  pursuant to Sections 9.04, 10.01, 11.01 (ii) or pursuant
to Section 11.02 after the 90 day period has expired, the Purchaser shall, (i)
succeed to and assume all of the Company's  responsibilities,  rights,  duties
and obligations  under this Agreement,  or (ii) appoint a successor having the
characteristics  set forth in clauses  (i) through  (iii) of Section  9.02 and
which  shall  succeed to all  rights  and assume all of the  responsibilities,
duties  and  liabilities  of the  Company  under this  Agreement  prior to the
termination of Company's  responsibilities,  duties and liabilities under this
Agreement.  In connection with such appointment and assumption,  the Purchaser
may make such  arrangements  for the  compensation  of such  successor  out of
payments on Mortgage Loans as it and such successor  shall agree. In the event
that  the  Company's  duties,  responsibilities  and  liabilities  under  this
Agreement should be terminated  pursuant to the aforementioned  sections,  the
Company shall  discharge  such duties and  responsibilities  during the period
from the date it acquires  knowledge of such  termination  until the effective
date  thereof  with the same  degree of  diligence  and  prudence  which it is
obligated  to  exercise  under  this  Agreement,  and  shall  take  no  action
whatsoever that might impair or prejudice the rights or financial condition of
its  successor.  The  resignation  or removal of the  Company  pursuant to the
aforementioned  sections shall not become effective until a successor shall be
appointed  pursuant to this  Section  12.01 and shall in no event  relieve the
Company of the  representations  and warranties made pursuant to Sections 3.01
and 3.02 and the remedies  available to the  Purchaser  under  Sections  3.03,
3.04,  3.05 and 3.07, it being  understood  and agreed that the  provisions of
such Sections 3.01, 3.02, 3.03, 3.04, 3.05 and 3.07 shall be applicable to the
Company notwithstanding any such sale, assignment,  resignation or termination
of the Company, or the termination of this Agreement.


                                     - 58 -
<PAGE>

            Any  successor   appointed  as  provided   herein  shall  execute,
acknowledge  and  deliver to the Company and to the  Purchaser  an  instrument
accepting   such   appointment,   wherein   the   successor   shall  make  the
representations   and  warranties  set  forth  in  Section  3.01,  except  for
subsections  (f), (h), (i) and (k) thereof,  whereupon  such  successor  shall
become fully  vested with all the rights,  powers,  duties,  responsibilities,
obligations and liabilities of the Company,  with like effect as if originally
named as a party to this  Agreement.  Any  termination  or  resignation of the
Company or  termination  of this  Agreement  pursuant to Section 9.04,  10.01,
11.01 or 11.02 shall not affect any claims that any Purchaser may have against
the Company  arising out of the  Company's  actions or failure to act prior to
any such termination or resignation.

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

            Upon a successor's  acceptance of appointment as such, the Company
shall notify by mail the Purchaser of such  appointment in accordance with the
procedures set forth in Section 12.05.

            Section 12.02 Amendment.

            This Agreement may be amended from time to time by the Company and
the Purchaser by written agreement signed by the Company and the Purchaser.

            Section 12.03 Governing Law.

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

            Section 12.04 Duration of Agreement.

            This  Agreement  shall  continue  in  existence  and effect  until
terminated as herein provided.  This Agreement shall continue  notwithstanding
transfers of the Mortgage Loans by the Purchaser.

            Section 12.05 Notices.

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


                                     - 59 -
<PAGE>

            (i)   if to the Company:

                  Countrywide Home Loans, Inc.,
                  4500 Park Grenada
                  Calabasas, CA 91302
                  Attention: David Spector

      or such other  address as may hereafter be furnished to the Purchaser in
      writing by the Company;

            (ii)  if to Purchaser:

                  EMC Mortgage Corporation
                  Mac Arthur Ridge II
                  909 Hidden Ridge Drive, Suite 200
                  Irving, Texas 75014-1358
                  Attention: Ralene Ruyle

            Section 12.06 Severability of Provisions.

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

            Section 12.07 Relationship of Parties.

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

            Section 12.08 Execution; Successors and Assigns.

            This Agreement may be executed in one or more  counterparts and by
the different parties hereto on separate counterparts,  each of which, when so
executed,  shall be deemed to be an  original;  such  counterparts,  together,
shall  constitute one and the same  agreement.  Subject to Section 8.04,  this
Agreement  shall inure to the  benefit of and be binding  upon the Company and
the Purchaser and their respective successors and assigns.

            Section 12.09 Recordation of Assignments of Mortgage.

            To the extent permitted by applicable law, each of the Assignments
of Mortgage is subject to  recordation in all  appropriate  public offices for
real property records in all the counties or other comparable jurisdictions in
which any or all of the Mortgaged  Properties  are situated,  and in any other
appropriate  public  recording  office or elsewhere,  such  recordation  to be
effected at the Company's expense in the event recordation is either necessary
under  applicable  law or  requested  by the  Purchaser  at  its  sole  option
accordance with Section 14 of the Purchase Agreement.


                                     - 60 -
<PAGE>

            Section 12.10 Assignment by Purchaser.

            The  Purchaser  shall have the right,  without  the consent of the
Company but subject to the limit set forth in Section 2.02 hereof,  to assign,
in whole or in part, its interest under this Agreement with respect to some or
all of the Mortgage Loans,  and designate any person to exercise any rights of
the Purchaser  hereunder,  by executing an Assignment and Assumption Agreement
substantially in the form of Exhibit G hereto.  Upon such assignment of rights
and  assumption of  obligations,  the assignee or designee shall accede to the
rights  and  obligations  hereunder  of the  Purchaser  with  respect  to such
Mortgage  Loans and the  Purchaser  as  assignor  shall be  released  from all
obligations  hereunder  with respect to such Mortgage Loans from and after the
date of such  assignment  and  assumption.  All references to the Purchaser in
this Agreement shall be deemed to include its assignee or designee.

            Section 12.11 No Personal Solicitation.

            From and after the related Closing Date, the Company hereby agrees
that it will not take any  action or permit or cause any action to be taken by
any  of  its  agents  or  affiliates,  or by any  independent  contractors  or
independent   mortgage  brokerage   companies  on  the  Company's  behalf,  to
personally,  by telephone or mail,  solicit the  Mortgagor  under any Mortgage
Loan for the purpose of  refinancing  such Mortgage Loan;  provided,  that the
Company may solicit any  Mortgagor for whom the Company has received a request
for  verification  of mortgage,  a request for demand for payoff,  a mortgagor
initiated  written or verbal  communication  indicating a desire to prepay the
related  Mortgage  Loan, or the mortgagor  initiates a title search,  provided
further, it is understood and agreed that promotions undertaken by the Company
or any of its  affiliates  which (i) concern  optional  insurance  products or
other additional  projects,  (ii) are directed to the general public at large,
including,  without limitation,  mass mailings based on commercially  acquired
mailing  lists,  newspaper,  radio and  television  advertisements,  (iii) are
directed to  mortgagors  who have a specific type of mortgage  (i.e.,  balloon
Mortgage  Loans,  LIBOR  Mortgage  Loans,  etc.)  or (iv)  directed  to  those
mortgagors whose mortgages fall within specific interest rate ranges shall not
constitute solicitation under this Section 12.11 nor is the Company prohibited
from responding to unsolicited requests or inquiries made by a Mortgagor or an
agent  of  a  Mortgagor.   Notwithstanding   the   foregoing,   the  following
solicitations,  if  undertaken by the Company or any affiliate of the Company,
shall not be prohibited under this Section 12.11: (i)  solicitations  that are
directed to the general public at large, including,  without limitation,  mass
mailings based on commercially  acquired  mailing lists and newspaper,  radio,
television  and  other  mass  media  advertisements;  (ii)  borrower  messages
included on, and statement inserts provided with, the monthly  statements sent
to Mortgagors;  provided,  however, that similar messages and inserts are sent
to the borrowers of other mortgage loans serviced by the Company.


                                     - 61 -
<PAGE>

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


                                        EMC MORTGAGE CORPORATION

                                        By: ____________________________________

                                        Name: Ralene Ruyle

                                        Title:   President


                                        COUNTRYWIDE HOME LOANS, INC.

                                        By: ____________________________________

                                        Name: __________________________________

                                        Title: _________________________________

<PAGE>

STATE OF NEW YORK    )
                     ) ss.:
COUNTY OF __________ )


            On the __ day of ________,  200_ before me, a Notary Public in and
for said State, personally appeared ________, known to me to be Vice President
of EMC Mortgage Corporation, the federal savings association that executed the
within  instrument  and also known to me to be the person who  executed  it on
behalf of said  corporation,  and  acknowledged  to me that  such  corporation
executed the within instrument.

            IN WITNESS WHEREOF,  I have hereunto set my hand affixed my office
seal the day and year in this certificate first above written.


                                        ________________________________________
                                        Notary Public

                                        My Commission expires __________________

<PAGE>

STATE OF             )
                     ) ss.:
COUNTY OF __________ )


            On the __ day of _______,  200_ before me, a Notary  Public in and
for  said  State,   personally  appeared   __________,   known  to  me  to  be
______________  of Countrywide Home Loans,  Inc. the corporation that executed
the within instrument and also known to me to be the person who executed it on
behalf of said  corporation,  and  acknowledged  to me that  such  corporation
executed the within instrument.

            IN WITNESS WHEREOF,  I have hereunto set my hand affixed my office
seal the day and year in this certificate first above written.


                                        ________________________________________
                                        Notary Public

                                        My Commission expires __________________

<PAGE>

                                    EXHIBIT A

                             MORTGAGE LOAN SCHEDULE


                                      A-1
<PAGE>

                                    EXHIBIT B

                         CONTENTS OF EACH MORTGAGE FILE

            With  respect  to each  Mortgage  Loan,  the  Mortgage  File shall
include each of the following  items,  which shall be available for inspection
by the Purchaser and any prospective Purchaser, and which shall be retained by
the Company in the Servicing  File or delivered to the  Custodian  pursuant to
Section 2.01 and 2.03 of the Seller's  Warranties  and Servicing  Agreement to
which this Exhibit is attached (the "Agreement") :

      1.    The original  Mortgage Note bearing all intervening  endorsements,
            endorsed  "Pay to the order of  _________  without  recourse"  and
            signed in the name of the Company by an authorized officer (in the
            event that the  Mortgage  Loan was  acquired  by the  Company in a
            merger, the signature must be in the following form:  "Countrywide
            Home Loans,  Inc.,  successor by merger to [name of predecessor]";
            and in the event that the Mortgage Loan was acquired or originated
            by the Company  while  doing  business  under  another  name,  the
            signature must be in the following form:  "Countrywide Home Loans,
            Inc., formerly known as [previous name]") .

      2.    The  original of any  guarantee  executed in  connection  with the
            Mortgage Note (if any) .

      3.    The original Mortgage,  with evidence of recording thereon.  If in
            connection  with any Mortgage  Loan, the Company cannot deliver or
            cause to be  delivered  the  original  Mortgage  with  evidence of
            recording  thereon on or prior to the related Closing Date because
            of a delay  caused  by the  public  recording  office  where  such
            Mortgage  has been  delivered  for  recordation  or  because  such
            Mortgage  has been lost or because  such public  recording  office
            retains the original recorded Mortgage,  the Company shall deliver
            or cause to be  delivered  to the  Custodian,  a photocopy of such
            Mortgage,  together  with (i) in the case of a delay caused by the
            public recording office,  an Officer's  Certificate of the Company
            stating that such Mortgage has been  dispatched to the appropriate
            public  recording  office for  recordation  and that the  original
            recorded  Mortgage or a copy of such  Mortgage  certified  by such
            public  recording  office  to be a true and  complete  copy of the
            original  recorded  Mortgage  will be  promptly  delivered  to the
            Custodian upon receipt thereof by the Company; or (ii) in the case
            of a Mortgage where a public recording office retains the original
            recorded  Mortgage  or in the case where a Mortgage  is lost after
            recordation in a public recording  office, a copy of such Mortgage
            certified  by  such  public  recording  office  or  by  the  title
            insurance  company  that issued the title  policy to be a true and
            complete copy of the original recorded Mortgage.

      4.    The originals of all assumption,  modification,  consolidation  or
            extension agreements, with evidence of recording thereon.


                                      B-1
<PAGE>

      5.    The original  Assignment  of Mortgage for each  Mortgage  Loan, in
            form and substance  acceptable for recording,  delivered in blank.
            If the Mortgage Loan was acquired by the Company in a merger,  the
            Assignment  of Mortgage must be made by  "Countrywide  Home Loans,
            Inc.,  successor  by  merger  to  [name of  predecessor]."  If the
            Mortgage  Loan was  acquired or  originated  by the Company  while
            doing business under another name, the Assignment of Mortgage must
            be by "Countrywide Home Loans,  Inc.,  formerly known as [previous
            name]."

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

      7.    The original  mortgagee  policy of title  insurance or  attorney's
            opinion of title and abstract of title.

      8.    Any security agreement, chattel mortgage or equivalent executed in
            connection with the Mortgage.

      9.    The  original  hazard  insurance  policy  and, if required by law,
            flood  insurance  policy,  in accordance  with Section 4.10 of the
            Agreement.

      10.   Residential loan application.

      11.   Mortgage Loan closing statement.

      12.   Verification of employment and income.

      13.   Verification  of  acceptable  evidence  of  source  and  amount of
            downpayment.

      14.   Credit report on the Mortgagor.

      15.   Residential appraisal report.


                                      B-2
<PAGE>

      16.   Photograph of the Mortgaged Property.

      17.   Survey of the Mortgaged Property.

      18.   Copy of each instrument  necessary to complete  identification  of
            any  exception  set forth in the  exception  schedule in the title
            policy,  i.e.,  map  or  plat,  restrictions,   easements,   sewer
            agreements, home association declarations, etc.

      19.   All required disclosure statements.

      20.   If available,  termite report, structural engineer's report, water
            potability and septic certification.

      21.   Sales contract.

      22.   Tax receipts,  insurance premium receipts,  ledger sheets, payment
            history  from  date  of   origination,   insurance   claim  files,
            correspondence,  current and historical  computerized  data files,
            and all other  processing,  underwriting  and  closing  papers and
            records  which are  customarily  contained in a mortgage loan file
            and which are required to document the Mortgage Loan or to service
            the Mortgage Loan.

            In the event an Officer's  Certificate of the Company is delivered
to the Custodian  because of a delay caused by the public  recording office in
returning any recorded  document,  the Company shall deliver to the Custodian,
within 180 days of the related  Closing Date, an Officer's  Certificate  which
shall (i)  identify  the  recorded  document,  (ii)  state  that the  recorded
document has not been  delivered to the Custodian due solely to a delay caused
by the public  recording  office,  (iii)  state the  amount of time  generally
required by the  applicable  recording  office to record and return a document
submitted for recordation,  and (iv) specify the date the applicable  recorded
document will be delivered to the Custodian.  The Company shall be required to
deliver  to the  Custodian  the  applicable  recorded  document  by  the  date
specified in (iv) above.  An extension of the date specified in (iv) above may
be requested  from the  Purchaser,  which  consent  shall not be  unreasonably
withheld.


                                      B-3
<PAGE>

                                    EXHIBIT C

                             MORTGAGE LOAN DOCUMENTS

            The Mortgage  Loan  Documents for each Mortgage Loan shall include
each of the  following  items,  which  shall  be  delivered  to the  Custodian
pursuant to Section 2.01 of the Seller's Warranties and Servicing Agreement to
which this Exhibit is annexed (the "Agreement") :

            (a)  the   original   Mortgage   Note   bearing  all   intervening
endorsements, endorsed "Pay to the order of ___________, without recourse" and
signed in the name of the Company by an authorized officer. To the extent that
there  is no room on the  face of the  Mortgage  Note  for  endorsements,  the
endorsement  may be  contained on an allonge,  if state law so allows.  If the
Mortgage Loan was acquired by the Company in a merger, the endorsement must be
by  "Countrywide   Home  Loans,   Inc.,   successor  by  merger  to  [name  of
predecessor]."  If the Mortgage Loan was acquired or originated by the Company
while  doing  business  under  another  name,  the  endorsement   must  be  by
"Countrywide Home Loans, Inc., formerly known as [previous name]";

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

            (c) the original Mortgage with evidence of recording thereon,  and
the original recorded power of attorney, if the Mortgage was executed pursuant
to a power of attorney, with evidence of recording thereon;

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

            (e) the original Assignment of Mortgage for each Mortgage Loan, in
form and  substance  acceptable  for  recording,  delivered  in blank,  or the
original  Assignment of Mortgage in recordable form into MERS. If the Mortgage
Loan was acquired by the Company in a merger,  the Assignment of Mortgage must
be made by  "Countrywide  Home Loans,  Inc.,  successor  by merger to [name of
predecessor]."  If the Mortgage Loan was acquired or originated by the Company
while doing business under another name, the Assignment of Mortgage must be by
"Countrywide Home Loans, Inc., formerly known as [previous name];"

            (f) the originals of all intervening  assignments of mortgage with
evidence of recording thereon, including warehousing assignments, if any;

            (g) the original mortgagee title insurance policy;

            (h) such other documents as the Purchaser may require.


                                      C-4-1
<PAGE>

                                   EXHIBIT D-1

                         CUSTODIAL ACCOUNT CERTIFICATION

                                                     _____________________, 200_

            Countrywide  Home  Loans,   Inc.  hereby  certifies  that  it  has
established  the account  described below as a Custodial  Account  pursuant to
Section 4.04 of the Seller's Warranties and Servicing  Agreement,  dated as of
September 1, 2002, Residential Adjustable Rate Mortgage Loans.

Title of Account:_Countrywide Home Loans, Inc. in trust for the Purchaser

Account Number:__________________

Address of office or branch
of the Company at
which Account is maintained:            ________________________________________

                                        ________________________________________

                                        ________________________________________

                                        ________________________________________


                                        Countrywide Home Loans, Inc.

                                        Company

                                        By: ____________________________________

                                        Name: __________________________________

                                        Title: _________________________________


                                      D-1-1
<PAGE>

                                   EXHIBIT D-2

                       CUSTODIAL ACCOUNT LETTER AGREEMENT

                                                         _________________, 200_

To: ____________________________________

    ____________________________________

    ____________________________________
    (the "Depository")

            As Company under the Seller's Warranties and Servicing  Agreement,
dated as of September 1, 2002, Residential Adjustable Rate Mortgage Loans (the
"Agreement"),  we hereby authorize and request you to establish an account, as
a  Custodial  Account  pursuant  to  Section  4.04  of  the  Agreement,  to be
designated as "[Servicer] in trust for the Purchaser - Residential  Adjustable
Rate  Mortgage  Loans."  All  deposits  in the  account  shall be  subject  to
withdrawal  therefrom  by order  signed by the  Company.  You may  refuse  any
deposit which would result in violation of the requirement that the account be
fully  insured  as  described  below.  This  letter  is  submitted  to  you in
duplicate. Please execute and return one original to us.

                                        [COUNTRYWIDE HOME LOANS, INC.]


                                        By: ____________________________________

                                        Name: __________________________________

                                        Title: _________________________________

                                        Date: __________________________________


                                      D-2-1
<PAGE>

            The  undersigned,  as Depository,  hereby certifies that the above
described account has been established under Account Number __________, at the
office of the Depository  indicated above, and agrees to honor  withdrawals on
such account as provided above.  The full amount  deposited at any time in the
account will be insured by the Federal Deposit Insurance  Corporation  through
the Bank  Insurance  Fund ("BIF") or the Savings  Association  Insurance  Fund
("SAIF") .

                                        ________________________________________
                                        Depository


                                        By: ____________________________________

                                        Name: __________________________________

                                        Title: _________________________________

                                        Date: __________________________________


                                      D-2-2
<PAGE>

                                   EXHIBIT E-1

                          ESCROW ACCOUNT CERTIFICATION

                                                        __________________, 200_

            Countrywide  Home  Loans,   Inc.  hereby  certifies  that  it  has
established  the  account  described  below as an Escrow  Account  pursuant to
Section 4.06 of the Seller's Warranties and Servicing  Agreement,  dated as of
September 1, 2002, Residential Adjustable Rate Mortgage Loans.

Title of Account: "Countrywide Home Loans, Inc. in trust for the Purchaser and
                  various Mortgagors."

Account Number: __________________

Address of office or branch
of the Company at
which Account is maintained:            ________________________________________

                                        ________________________________________

                                        ________________________________________

                                        ________________________________________


                                        [COUNTRYWIDE HOME LOANS, INC.]


                                        By: ____________________________________

                                        Name: __________________________________

                                        Title: _________________________________


                                     E-1-1
<PAGE>

                                   EXHIBIT E-2

                         ESCROW ACCOUNT LETTER AGREEMENT

                                                       ___________________, 200_

To: ____________________________________

    ____________________________________

    ____________________________________
    (the "Depository")

            As Company under the Seller's Warranties and Servicing  Agreement,
dated as of September 1, 2002 Residential  Adjustable Rate Mortgage Loans (the
"Agreement"),  we hereby authorize and request you to establish an account, as
an Escrow Account pursuant to Section 4.07 of the Agreement,  to be designated
as  "[Servicer],  in trust for the  Purchaser -  Residential  Adjustable  Rate
Mortgage  Loans." All deposits in the account  shall be subject to  withdrawal
therefrom  by order signed by the  Company.  You may refuse any deposit  which
would result in violation of the requirement that the account be fully insured
as  described  below.  This letter is submitted  to you in  duplicate.  Please
execute and return one original to us.

                                        [COUNTRYWIDE HOME LOANS, INC.]


                                        By: ____________________________________

                                        Name: __________________________________

                                        Title: _________________________________

                                        Date: __________________________________


                                     E-2-1
<PAGE>

            The  undersigned,  as Depository,  hereby certifies that the above
described  account has been  established  under Account Number ______,  at the
office of the Depository  indicated above, and agrees to honor  withdrawals on
such account as provided above.  The full amount  deposited at any time in the
account will be insured by the Federal Deposit Insurance  Corporation  through
the Bank  Insurance  Fund ("BIF") or the Savings  Association  Insurance  Fund
("SAIF") .


                                        ________________________________________
                                        Depository


                                        By: ____________________________________

                                        Name: __________________________________

                                        Title: _________________________________

                                        Date: __________________________________


                                     E-2-1
<PAGE>

                                    EXHIBIT F

                            MONTHLY REMITTANCE ADVICE


                                      F-1
<PAGE>

                                    EXHIBIT G

                            ASSIGNMENT AND ASSUMPTION

                                                         _________________, 200_

            ASSIGNMENT   AND    ASSUMPTION,    dated    __________,    between
__________________________________,  a ___________________  corporation having
an       office       at       __________________       ("Assignor")       and
_________________________________,  a __________________ corporation having an
office at __________________ ("Assignee") :

            For and in  consideration  of the sum of TEN DOLLARS  ($10.00) and
other valuable  consideration  the receipt and sufficiency of which hereby are
acknowledged, and of the mutual covenants herein contained, the parties hereto
hereby agree as follows:

            1. The Assignor  hereby grants,  transfers and assigns to Assignee
all of the right,  title and interest of Assignor,  as  purchaser,  in, to and
under that certain Seller's  Warranties and Servicing  Agreement,  Residential
Adjustable  Rate  Mortgage  Loans  (the  "Seller's  Warranties  and  Servicing
Agreement"),  dated as of  September  1, 2002,  by and  between  EMC  Mortgage
Corporation  (the   "Purchaser"),   and  Countrywide  Home  Loans,  Inc.  (the
"Company") , and the Mortgage Loans delivered thereunder by the Company to the
Assignor.

            2. The Assignor  warrants and represents  to, and covenants  with,
the Assignee that:

            a. The Assignor is the lawful owner of the Mortgage Loans with the
full right to  transfer  the  Mortgage  Loans free from any and all claims and
encumbrances whatsoever;

            b. The Assignor  has not received  notice of, and has no knowledge
of, any offsets, counterclaims or other defenses available to the Company with
respect to the Seller's  Warranties  and  Servicing  Agreement or the Mortgage
Loans;

            c. The Assignor has not waived or agreed to any waiver  under,  or
agreed to any amendment or other modification of, the Seller's  Warranties and
Servicing Agreement,  the Custodial Agreement or the Mortgage Loans, including
without  limitation  the  transfer  of the  servicing  obligations  under  the
Seller's Warranties and Servicing Agreement. The Assignor has no knowledge of,
and has not  received  notice of, any  waivers  under or  amendments  or other
modifications of, or assignments of rights or obligations  under, the Seller's
Warranties and Servicing Agreement or the Mortgage Loans; and

            d.  Neither  the  Assignor  nor  anyone  acting on its  behalf has
offered,  transferred,  pledged,  sold or  otherwise  disposed of the Mortgage
Loans, any interest in the Mortgage Loans or any other similar security to, or
solicited any offer to buy or accept a transfer,  pledge or other  disposition
of the Mortgage Loans, any interest in the Mortgage Loans or any other similar
security  from,  or otherwise  approached  or  negotiated  with respect to the
Mortgage  Loans,  any  interest  in the  Mortgage  Loans or any other  similar
security with, any person in any manner,  or made any general  solicitation by
means of general advertising or in any other manner, or taken any other action
which  would  constitute  a  distribution  of the  Mortgage  Loans  under  the
Securities Act of 1933 (the "33 Act") or which would render the disposition of
the  Mortgage  Loans  a  violation  of  Section  5 of the  33  Act or  require
registration pursuant thereto.


                                      G-1
<PAGE>

            3. The Assignee  warrants and represents  to, and covenants  with,
the Assignor and the Company that:

            a. The Assignee  agrees to be bound,  as Purchaser,  by all of the
terms,  covenants  and  conditions  of the Seller's  Warranties  and Servicing
Agreement,  the Mortgage Loans and the Custodial Agreement, and from and after
the date hereof,  the Assignee  assumes for the benefit of each of the Company
and the Assignor all of the Assignor's obligations as Purchaser thereunder;

            b. The Assignee  understands that the Mortgage Loans have not been
registered under the 33 Act or the securities laws of any state;

            c. The purchase  price being paid by the Assignee for the Mortgage
Loans are in excess of  $250,000  and will be paid by cash  remittance  of the
full purchase price within 60 days of the sale;

            d. The Assignee is acquiring the Mortgage Loans for investment for
its own account only and not for any other person. In this connection, neither
the  Assignee  nor any Person  authorized  to act  therefor  has  offered  the
Mortgage  Loans by means of any general  advertising  or general  solicitation
within the meaning of Rule 502(c) of U.S.  Securities and Exchange  Commission
Regulation D, promulgated under the 1933 Act;

            e. The  Assignee  considers  itself a  substantial,  sophisticated
institutional  investor  having such knowledge and experience in financial and
business  matters  that it is  capable of  evaluating  the merits and risks of
investment in the Mortgage Loans;

            f. The Assignee has been furnished with all information  regarding
the Mortgage Loans that it has requested from the Assignor or the Company;

            g.  Neither  the  Assignee  nor  anyone  acting on its  behalf has
offered,  transferred,  pledged,  sold or  otherwise  disposed of the Mortgage
Loans, any interest in the Mortgage Loans or any other similar security to, or
solicited any offer to buy or accept a transfer,  pledge or other  disposition
of the Mortgage Loans, any interest in the Mortgage Loans or any other similar
security  from,  or otherwise  approached  or  negotiated  with respect to the
Mortgage  Loans,  any  interest  in the  Mortgage  Loans or any other  similar
security with, any person in any manner which would  constitute a distribution
of the Mortgage  Loans under the 33 Act or which would render the  disposition
of the  Mortgage  Loans a  violation  of  Section  5 of the 33 Act or  require
registration  pursuant thereto, nor will it act, nor has it authorized or will
it  authorize  any person to act, in such manner with  respect to the Mortgage
Loans; and

            h.  Either:  (1) the  Assignee  is not an  employee  benefit  plan
("Plan") within the meaning of section 3(3) of the Employee  Retirement Income
Security Act of 1974, as amended  ("ERISA") or a plan (also "Plan") within the
meaning of section 4975(e) (1) of the Internal  Revenue Code of 1986 ("Code"),
and the Assignee is not directly or indirectly  purchasing  the Mortgage Loans
on behalf of, investment  manager of, as named fiduciary of, as Trustee of, or
with assets of, a Plan; or (2) the  Assignee's  purchase of the Mortgage Loans
will not result in a  prohibited  transaction  under  section  406 of ERISA or
section 4975 of the Code.


                                     G-2
<PAGE>

            i.  The  Assignee's  address  for  purposes  of  all  notices  and
correspondence  related to the Mortgage Loans and the Seller's  Warranties and
Servicing Agreement is:

            __________________
            __________________
            __________________

            Attention: _______

            The  Assignee's  wire  transfer  instructions  for purposes of all
remittances  and  payments  related  to the  Mortgage  Loans and the  Seller's
Warranties and Servicing Agreement are:

            __________________
            __________________
            __________________


                                     G-3
<PAGE>

            IN WITNESS  WHEREOF,  the parties have caused this  Assignment and
Assumption  to be  executed by their duly  authorized  officers as of the date
first above written.


_____________________________________   ________________________________________
Assignor                                Assignee


By:__________________________________   By:_____________________________________

Its:_________________________________   Its:____________________________________


                                     G-4
<PAGE>

                                    EXHIBIT H

                             UNDERWRITING GUIDELINES


                                      H-1
<PAGE>

                                    EXHIBIT I

                            ACKNOWLEDGMENT AGREEMENT

            On this ____ day of ____________,  200_, EMC Mortgage Corporation,
(the "Purchaser") as the Purchaser under that certain Seller's  Warranties and
Servicing  Agreement  dated as of September 1, 2002, (the  "Agreement"),  does
hereby  contract with  Countrywide  Home Loans Inc. (the "Company") as Company
under  the  Agreement,  for  the  servicing  responsibilities  related  to the
Mortgage Loans listed on the related  Mortgage Loan Schedule  attached hereto.
The Company hereby accepts the servicing  responsibilities  transferred hereby
and on the date hereof assumes all servicing  responsibilities  related to the
Mortgage  Loans  identified  on the  related  Mortgage  Loan  Schedule  all in
accordance with the Agreement. The contents of each Servicing File required to
be delivered to service the Mortgage Loans pursuant to the Agreement have been
or shall be delivered to the Company by the Purchaser in  accordance  with the
terms of the Agreement.

            With respect to the Mortgage  Loans made subject to the  Agreement
hereby, the related Closing Date shall be ___________________.

            All  other  terms  and  conditions  of this  transaction  shall be
governed by the Agreement.

            Capitalized terms used herein and not otherwise defined shall have
the meanings set forth in the Agreement.

            This  Acknowledgment  Agreement may be executed  simultaneously in
any  number  of  counterparts.  Each  counterpart  shall  be  deemed  to be an
original,  and all  such  counterparts  shall  constitute  one  and  the  same
instrument.

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

                                        PURCHASER:
                                        EMC MORTGAGE CORPORATION

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        SELLER:
                                        COUNTRYWIDE HOME LOANS, INC.

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________


                                      I-1







                                                                 Execution Copy

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

                 STRUCTURED ASSET MORTGAGE INVESTMENTS II INC.
                                     Owner

                                      and

                           EMC MORTGAGE CORPORATION
                                   Servicer

                              SERVICING AGREEMENT

                          Dated as of October 1, 2006

            Structured Asset Mortgage Investments II Trust 2006-AR8
                      Mortgage Pass-Through Certificates

                                Series 2006-AR8

------------------------------------------------------------------------------
<PAGE>

Article I DEFINITIONS..........................................................1

     Section 1.01.    Defined Terms............................................1

Article II SERVICING OF MORTGAGE LOANS; POSSESSION OF SERVICING
     FILES; BOOKS AND RECORDS; DELIVERY OF MORTGAGE LOAN DOCUMENTS............11

     Section 2.01.    Servicing of Mortgage Loans.............................11
     Section 2.02.    Maintenance of Servicing Files..........................11
     Section 2.03.    Books and Records.......................................11
     Section 2.04.    Transfer of Mortgage Loans..............................12
     Section 2.05.    Delivery of Mortgage Loan Documents.....................12

Article III REPRESENTATIONS AND WARRANTIES OF THE SERVICER....................13


Article IV ADMINISTRATION AND SERVICING OF MORTGAGE LOANS.....................15

     Section 4.01.    Servicer to Act as Servicer.............................15
     Section 4.02.    Collection of Mortgage Loan Payments....................17
     Section 4.03.    Realization Upon Defaulted Mortgage Loans...............18
     Section 4.04.    Establishment of Custodial Accounts; Deposits
                      in Custodial Accounts...................................18
     Section 4.05.    Permitted Withdrawals From the Custodial Account........20
     Section 4.06.    Establishment of Escrow Accounts; Deposits in
                      Escrow Accounts.........................................20
     Section 4.07.    Permitted Withdrawals From Escrow Account...............21
     Section 4.08.    Payment of Taxes, Insurance and Other Charges,
                      Maintenance of Primary Mortgage Insurance
                      Policies, Collections Thereunder........................22
     Section 4.09.    Transfer of Accounts....................................23
     Section 4.10.    Maintenance of Hazard Insurance.........................23
     Section 4.11.    Maintenance of Mortgage Impairment Insurance
                      Policy..................................................24
     Section 4.12.    Fidelity Bond, Errors and Omissions Insurance...........24
     Section 4.13.    Title, Management and Disposition of REO
                      Property................................................25
     Section 4.14.    Notification of Adjustments.............................26

Article V PAYMENTS TO THE OWNER...............................................27

     Section 5.01.    Remittances.............................................27
     Section 5.02.    Statements to the Owner and the Master Servicer.........27
     Section 5.03.    Monthly Advances by the Servicer........................28
     Section 5.04.    Liquidation Reports.....................................29

Article VI GENERAL SERVICING PROCEDURES.......................................29

     Section 6.01.    Assumption Agreements...................................29
     Section 6.02.    Satisfaction of Mortgages and Release of
                      Mortgage Loan Documents.................................30
     Section 6.03.    Servicing Compensation..................................31
     Section 6.04.    Annual Statement as to Compliance; Annual
                      Certification...........................................31
     Section 6.05.    [Reserved]..............................................32


                                       i
<PAGE>

     Section 6.06.    Owner's Right to Examine Servicer Records...............32
     Section 6.07.    Compliance with REMIC Provisions........................32
     Section 6.08.    Non-solicitation........................................33
     Section 6.09.    Assessment of Compliance with Servicing Criteria........33
     Section 6.10.    Intent of the Parties; Reasonableness...................34

Article VII REPORTS TO BE PREPARED BY SERVICER................................35

     Section 7.01.    Servicer Shall Provide Information as
                      Reasonably Required.....................................35

Article VIII THE SERVICER.....................................................35

     Section 8.01.    Indemnification; Third Party Claims.....................35
     Section 8.02.    Merger or Consolidation of the Servicer.................35
     Section 8.03.    Limitation on Liability of the Servicer and Others......36
     Section 8.04.    Servicer Not to Resign..................................36
     Section 8.05.    No Transfer of Servicing................................37

Article IX DEFAULT............................................................37

     Section 9.01.    Events of Default.......................................37
     Section 9.02.    Waiver of Defaults......................................39

Article X TERMINATION.........................................................39

     Section 10.01.   Termination.............................................39
     Section 10.02.   Cooperation of Servicer with a Reconstitution...........39
     Section 10.03.   Master Servicer.........................................43

Article XI MISCELLANEOUS PROVISIONS...........................................44

     Section 11.01.   Successor to the Servicer...............................44
     Section 11.02.   Amendment...............................................45
     Section 11.03.   Recordation of Agreement................................45
     Section 11.04.   Governing Law...........................................45
     Section 11.05.   Notices.................................................45
     Section 11.06.   Severability of Provisions..............................46
     Section 11.07.   Exhibits................................................47
     Section 11.08.   General Interpretive Principles.........................47
     Section 11.09.   Reproduction of Documents...............................47
     Section 11.10.   Confidentiality of Information..........................48
     Section 11.11.   Assignment by the Owner.................................48
     Section 11.12.   No Partnership..........................................48
     Section 11.13.   Execution, Successors and Assigns.......................48
     Section 11.14.   Entire Agreement........................................48
     Section 11.15.   Use of Subservicers and Subcontractors..................48
     Section 11.16.   Third Party Beneficiary.................................49


                                      ii
<PAGE>


EXHIBITS

Exhibit A   Mortgage Loan Schedule
Exhibit B   Custodial Account Letter Agreement
Exhibit C   Escrow Account Letter Agreement
Exhibit D   Form of Request for Release
Exhibit E   Reporting Data for Monthly Report
Exhibit F   Reporting Data for Defaulted Loans
Exhibit G   Form of Owner Certification
Exhibit H   Summary of Regulation AB Servicing Criteria
Exhibit I   Summary of Applicable Regulation AB Requirements
Exhibit J   Servicing Criteria to be Addressed in Assessment of Compliance
Exhibit K   Reporting Data for Realized Losses and Gains


                                      iii
<PAGE>

      THIS IS A  SERVICING  AGREEMENT,  dated as of  October  1,  2006,  and is
executed between  Structured  Asset Mortgage  Investments II Inc. (the "Owner")
and EMC Mortgage Corporation (the "Servicer").

                             W I T N E S S E T H :

      WHEREAS, the Owner is the owner of the Mortgage Loans;

      WHEREAS,  the Owner and the  Servicer  wish to  prescribe  the  permanent
management, servicing and control of the Mortgage Loans;

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

                                   ARTICLE I
                                  DEFINITIONS

      Section 1.01.     Defined Terms.

      Whenever  used  in this  Agreement,  the  following  words  and  phrases,
unless  the  context  otherwise  requires,  shall  have the  following  meaning
specified in this Article:

      Accepted   Servicing   Practices:   The  procedures,   including  prudent
collection  and loan  administration  procedures,  and the standard of care (i)
employed by prudent  mortgage  servicers  which service  mortgage  loans of the
same type as the  Mortgage  Loans in the  jurisdictions  in which  the  related
Mortgage  Properties  are  located  or (ii) in  accordance  with the Fannie Mae
Guide or Freddie Mac Guide,  subject to any  variances  negotiated  with Fannie
Mae or Freddie  Mac and subject to the express  provisions  of this  Agreement.
Such  standard  of care shall not be lower than that the  Servicer  customarily
employs and exercises in servicing and  administering  similar  mortgage  loans
for its own account and shall be in full  compliance  with all federal,  state,
and local laws, ordinances, rules and regulations.

      Adjustment  Date:  As to each ARM Loan,  the date on which  the  Mortgage
Interest  Rate  is  adjusted  in  accordance  with  the  terms  of the  related
Mortgage Note.

      Agreement:  This  Servicing  Agreement  including  all  exhibits  hereto,
amendments hereof and supplements hereto.

      ARM Loans:  First lien,  conventional,  1-4 family  residential  Mortgage
Loans with  interest  rates which adjust from time to time in  accordance  with
the  related  Index and are  subject to Periodic  Rate Caps and  Lifetime  Rate
Caps and which may permit conversion to fixed interest rates.

      Business  Day:  Any day other  than (i) a Saturday  or Sunday,  or (ii) a
legal  holiday  in  the  States  of  Maryland,   Minnesota,  New  York  or  the
jurisdiction  in which the  Servicer  conducts  its  servicing  activities,  or
(iii) a day on which banks in the States of  Maryland,  Minnesota,  New York or
the  jurisdiction in which the Servicer  conducts its servicing  activities are
authorized or obligated by law or executive order to be closed.


                                       1
<PAGE>

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

      Commission or SEC:  The Securities and Exchange Commission.

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

      Custodial  Account:  One or more demand  account or accounts  created and
maintained  pursuant to Section  4.04 which shall be  entitled  "EMC  Custodial
Account  in trust  for SAMI II,  Owner of  Whole  Loan  Mortgages  and  various
Mortgagors"  established  at a  Qualified  Depository,  each of which  accounts
shall be held by such Qualified  Depository in a fiduciary  capacity,  separate
and apart from its funds and general assets.

      Custodian:  Wells  Fargo  Bank,  National  Association,   or  such  other
custodian as Owner shall designate.

      Cut-off  Date:  With  respect  to  any  Mortgage  Loan,  the  opening  of
business on the first day of the month in which the related  closing  date with
respect to such Mortgage Loan occurs.

      Delinquent:  A Mortgage Loan is "delinquent" if any payment due thereon
is not made pursuant to the terms of such Mortgage Loan by the close of
business on the day such payment is scheduled to be due. A Mortgage Loan is
"30 days delinquent" if such payment has not been received by the close of
business on the last day of the month in which such payment was due. For
example, a Mortgage Loan with a payment due on December 1 that remained
unpaid as of the close of business on December 31 would then be considered to
be 30 to 59 days delinquent. Similarly for "60 days delinquent," "90 days
delinquent" and so on. The determination as to whether a Mortgage Loan falls
into these categories is made as of the close of business on the last
Business Day of each month. This method of determining delinquencies is also
referred to as the MBA method.

      Depositor:  The  depositor,  as such term is  defined in  Regulation  AB,
with respect to any Pass-Through Transfer.

      Determination  Date:  The  15th  day  (or  if  such  15th  day  is  not a
Business  Day,  the Business Day  immediately  preceding  such 15th day) of the
month of the Remittance Date.

      Due Date:  Each day on which  payments  of  principal  and  interest  are
required  to be paid in  accordance  with  the  terms of the  related  Mortgage
Note, exclusive of any days of grace.


                                       2
<PAGE>

      Due  Period:   With  respect  to  each   Remittance   Date,   the  period
commencing  on  the  second  day of the  month  preceding  the  month  of  such
Remittance  Date and  ending on the  first  day of the month of the  Remittance
Date.

      Escrow  Account:  The  separate  trust  account or  accounts  created and
maintained  pursuant  to  Section  4.06 which  shall be  entitled  "EMC  Escrow
Account,  in trust  for SAMI II,  Owner of Whole  Loan  Mortgages  and  various
Mortgagors" and shall be established at a Qualified  Depository,  each of which
accounts  shall  in no event  contain  funds in  excess  of the FDIC  insurance
limits.

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

      Event  of  Default:   Any  one  of  the   conditions   or   circumstances
enumerated in Section 9.01.

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

      Fannie Mae:  Fannie Mae, or any successor thereto.

      Fannie  Mae  Guide:  The  Fannie  Mae  Selling  Guide and the  Fannie Mae
Servicing Guide and all amendments or additions thereto.

      Fidelity  Bond:  A  fidelity  bond  to  be  maintained  by  the  Servicer
pursuant to Section 4.12.

      FIRREA:  The Financial  Institutions  Reform,  Recovery,  and Enforcement
Act of 1989, as amended from time to time.

      Freddie Mac:  Freddie Mac, or any successor thereto.

      Freddie Mac Guide:  The  Freddie  Mac  Selling  Guide and the Freddie Mac
Servicing Guide and all amendments or additions thereto.

      Full Principal  Prepayment:  A Principal  Prepayment  made by a Mortgagor
of the entire principal balance of a Mortgage Loan.

      GAAP:  Generally accepted accounting procedures, consistently applied.

      HUD: The United  States  Department of Housing and Urban  Development  or
any successor.

      Index:  With respect to each ARM Loan,  on the related  Adjustment  Date,
the index used to determine the Mortgage Interest Rate on each such ARM Loan.


                                       3
<PAGE>

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

      Lifetime  Rate Cap: With respect to each ARM Loan,  the maximum  Mortgage
Interest  Rate  over  the  term of such  Mortgage  Loan,  as  specified  in the
related Mortgage Note.

      Liquidation  Proceeds:   Amounts,   other  than  Insurance  Proceeds  and
Condemnation  Proceeds,  received  in  connection  with  the  liquidation  of a
defaulted  Mortgage  Loan,  whether  through  the  sale or  assignment  of such
Mortgage  Loan,  trustee's  sale,  foreclosure  sale or  otherwise,  other than
amounts  received  following  the  acquisition  of an REO Property  pursuant to
Section 4.13.

      Margin:  With respect to each ARM Loan, the fixed  percentage  amount set
forth in each  related  Mortgage  Note  which is added to the Index in order to
determine the related Mortgage Interest Rate.

      Master   Servicer:   Wells  Fargo   Bank,   National   Association,   its
successors  in interest and assigns,  or any  successor  thereto  designated by
the Owner.

      Monthly  Advance:  The  aggregate of the advances made by the Servicer on
any Remittance Date pursuant to Section 5.03.

      Monthly  Payment:  With  respect to each  Mortgage  Loan,  the  scheduled
monthly  payment of  principal  and  interest  thereon  which is payable by the
related Mortgagor under the related Mortgage Note.

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

      Mortgage  Interest  Rate:  The annual rate at which  interest  accrues on
any Mortgage Loan in  accordance  with the  provisions of the related  Mortgage
Note,  and in the case of an ARM Loan,  as  adjusted  from time to time on each
Adjustment  Date for such  Mortgage  Loan to equal the Index for such  Mortgage
Loan plus the Margin for such  Mortgage  Loan,  and subject to the  limitations
on such  interest  rate imposed by the Periodic  Rate Cap and the Lifetime Rate
Cap.

      Mortgage  Loan:  An  individual  Mortgage  Loan  described  herein and as
further  identified  on  the  Mortgage  Loan  Schedule,   which  Mortgage  Loan
includes   without   limitation  the  Mortgage  Loan  Documents,   the  Monthly
Payments, Principal Prepayments,  Liquidation Proceeds,  Condemnation Proceeds,
Insurance Proceeds, REO Disposition Proceeds,  and all other rights,  benefits,
proceeds and  obligations  arising  from or in  connection  with such  Mortgage
Loan.

      Mortgage  Loan  Documents:  The original  mortgage  loan legal  documents
held by the Custodian.

      Mortgage Loan  Remittance  Rate:  With respect to each Mortgage Loan, the
annual  rate of  interest  remitted  to the Owner,  which shall be equal to the
related Mortgage Interest Rate minus the Servicing Fee Rate.


                                       4
<PAGE>

      Mortgage Loan Schedule:  The schedule of Mortgage  Loans attached  hereto
as Exhibit A, such schedule being acceptable to the Owner and the Servicer.

      Mortgage  Note:  The  note or other  evidence  of the  indebtedness  of a
Mortgagor secured by a Mortgage.

      Mortgaged  Property:  The underlying real property securing  repayment of
a Mortgage Note.

      Mortgagor:  The obligor on a Mortgage Note.

      Negative  Amortization:  The portion of interest  accrued at the Mortgage
Interest  Rate in any month which  exceeds  the  Monthly  Payment on a Mortgage
Loan,  including  an Option  ARM  Mortgage  Loan,  for such  month  and  which,
pursuant to the terms of the Mortgage  Note, is added to the principal  balance
of the related Mortgage Loan.

      Net  Liquidation   Proceeds:   As  to  any  Mortgage  Loan,   Liquidation
Proceeds net of  unreimbursed  Servicing  Advances,  Servicing Fees and Monthly
Advances  and  expenses  incurred  by  the  Servicer  in  connection  with  the
liquidation of the Mortgage Loan and the related Mortgaged Property.

      Nonrecoverable  Advance:  Any  advance  previously  made by the  Servicer
pursuant to Section 5.03 or any  Servicing  Advance  proposed to be made by the
Servicer  in respect  of a Mortgage  Loan or REO  Property  which,  in the good
faith  judgment  of the  Servicer,  may not be  ultimately  recoverable  by the
Servicer  from  Liquidation  Proceeds or  Insurance  Proceeds on such  Mortgage
Loan or REO  Property as provided  herein.  The  determination  by the Servicer
that it has made a  Nonrecoverable  Advance,  or that a  proposed  advance  may
constitute  a  Nonrecoverable  Advance,  shall  be  evidenced  by an  Officer's
Certificate  of the Servicer  delivered to the Owner and  detailing the reasons
for such determination.

      Officer's  Certificate:  A  certificate  signed  by the  Chairman  of the
Board, the Vice Chairman of the Board,  the President,  a Senior Vice President
or a  Vice  President  or by  the  Treasurer  or  the  Secretary  or one of the
Assistant  Treasurers or Assistant  Secretaries of the Servicer,  and delivered
to the Owner as required by this Agreement.

      Opinion  of  Counsel:  A  written  opinion  of  counsel,  who  may  be an
employee  of  the  party  on  behalf  of  whom  the  opinion  is  being  given,
reasonably acceptable to the Owner.

      Option ARM Mortgage  Loan:  An ARM Loan which (i) provides the  Mortgagor
with  multiple  Monthly  Payment  options  and  (ii)  may  result  in  Negative
Amortization, as set forth in the Servicer's underwriting guidelines.

      Owner:  Structured  Asset  Mortgage  Investments  II Inc., its successors
in  interest  and  assigns   (including  the  Trustee  in  connection   with  a
Pass-Through Transfer).

      Partial Principal  Prepayment:  A Principal  Prepayment by a Mortgagor of
a partial principal balance of a Mortgage Loan.


                                       5
<PAGE>

      Pass-Through  Transfer:  Any transaction  involving  either (1) a sale or
other  transfer of some or all of the Mortgage  Loans directly or indirectly to
an  issuing  entity in  connection  with an  issuance  of  publicly  offered or
privately  placed,  rated  or  unrated  mortgage-backed  securities  or  (2) an
issuance  of  publicly   offered  or   privately   placed,   rated  or  unrated
securities,  the  payments on which are  determined  primarily  by reference to
one or more portfolios of residential  mortgage loans  consisting,  in whole or
in part, of some or all of the Mortgage Loans.

      Periodic  Rate Cap: With respect to each ARM Loan,  the maximum  increase
or decrease in the Mortgage Interest Rate on any Adjustment Date.

      Permitted  Investments:  Any one or more of the following  obligations or
securities:

            (i)   direct  obligations  of, and  obligations  the timely payment
            of which are fully  guaranteed  by the United  States of America or
            any agency or  instrumentality  of the United States of America the
            obligations  of which are  backed by the full  faith and  credit of
            the United States of America;

            (ii)  (a)  demand  or time  deposits,  federal  funds  or  bankers'
            acceptances  issued by any depository  institution or trust company
            incorporated  under the laws of the  United  States of  America  or
            any state thereof  (including  any Trustee or the Master  Servicer)
            and  subject to  supervision  and  examination  by  federal  and/or
            state  banking  authorities,  provided  that the  commercial  paper
            and/or  the   short-term   deposit   rating  and/or  the  long-term
            unsecured  debt   obligations   or  deposits  of  such   depository
            institution  or trust  company  at the time of such  investment  or
            contractual  commitment  providing for such investment are rated in
            one of the two highest  rating  categories  by each  Rating  Agency
            and  (b) any  other  demand  or  time  deposit  or  certificate  of
            deposit  that is fully  insured by the  Federal  Deposit  Insurance
            Corporation;

            (iii) repurchase  obligations  with  respect  to (a)  any  security
            described in clause (i) above or (b) any other  security  issued or
            guaranteed  by an agency or  instrumentality  of the United  States
            of America,  the  obligations of which are backed by the full faith
            and  credit  of the  United  States  of  America,  in  either  case
            entered  into  with  a  depository  institution  or  trust  company
            (acting as principal) described in clause (ii)(a) above;

            (iv)  securities  bearing  interest or sold at a discount issued by
            any  corporation  (including  any  Trustee or the Master  Servicer)
            incorporated  under the laws of the  United  States of  America  or
            any state  thereof that are rated in one of the two highest  rating
            categories  by each  Rating  Agency at the time of such  investment
            or   contractual   commitment   providing   for  such   investment;
            provided,   however,  that  securities  issued  by  any  particular
            corporation  will not be Permitted  Investments  to the extent that
            investments  therein  will  cause  the then  outstanding  principal
            amount  of  securities  issued  by  such  corporation  and  held as
            Permitted  Investments  to exceed 10% of the aggregate  outstanding
            principal balances and amounts of all the Permitted Investments;


                                       6
<PAGE>

            (v)   commercial   paper   (including   both   non-interest-bearing
            discount  obligations and  interest-bearing  obligations payable on
            demand  or on a  specified  date not more  than one year  after the
            date  of  issuance  thereof)  which  are  rated  in one of the  two
            highest  rating  categories  by each  Rating  Agency at the time of
            such investment;

            (vi)  any other demand,  money market or time deposit,  obligation,
            security  or  investment  as  may  be  acceptable  to  each  Rating
            Agency; and

            (vii) any money market funds the  collateral  of which  consists of
            obligations  fully  guaranteed  by the United  States of America or
            any agency or  instrumentality  of the United States of America the
            obligations  of which are  backed by the full  faith and  credit of
            the  United  States  of  America  (which  may  include   repurchase
            obligations  secured by  collateral  described  in clause  (i)) and
            other  securities  (including  money  market or common  trust funds
            for which any  Trustee  or the  Master  Servicer  or any  affiliate
            thereof  acts as a manager or an advisor)  and which  money  market
            funds  are rated in one of the two  highest  rating  categories  by
            each Rating Agency;

provided,  however,  that  no  instrument  or  security  shall  be a  Permitted
Investment  if such  instrument  or security  evidences a right to receive only
interest  payments with respect to the  obligations  underlying such instrument
or if such  security  provides for payment of both  principal and interest with
a yield to maturity in excess of 120% of the yield to maturity at par.

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

      Prepayment  Charge:  Any  prepayment  premium,  penalty or charge payable
by a Mortgagor in connection  with any Principal  Prepayment on a Mortgage Loan
pursuant to the terms of the related Mortgage Note.

      Prepayment  Interest  Excess:  With respect to any  Remittance  Date, for
each  Mortgage  Loan that was the  subject  of a Partial  Principal  Prepayment
during the preceding  calendar month or a Full Principal  Prepayment during the
portion of the related  Prepayment  Period  occurring  between the first day of
the calendar month in which such Remittance  Date occurs and the  Determination
Date of the calendar  month in which such  Remittance  Date  occurs,  an amount
equal to interest (to the extent  received)  at the  applicable  Mortgage  Loan
Remittance  Rate on the amount of such  Principal  Prepayment for the number of
days  commencing  on  the  first  day of  the  calendar  month  in  which  such
Remittance  Date occurs and ending on the last date through  which  interest is
collected from the related Mortgagor.

      Prepayment  Interest  Shortfall:  With  respect to any  Remittance  Date,
for each  such  Mortgage  Loan  that was the  subject  of a  Partial  Principal
Prepayment during the preceding  calendar month or a Full Principal  Prepayment
during the  portion of the  related  Prepayment  Period  occurring  between the
first day of the  related  Prepayment  Period and the last day of the  calendar
month  preceding  the month in which such  Remittance  Date  occurs,  an amount
equal to  interest  (to be paid by the  Servicer  out of its own funds  without
reimbursement  therefor) at the  applicable  Mortgage Loan  Remittance  Rate on
the amount of such Principal  Prepayment  for the number of days  commencing on
the date on which the  prepayment  is applied and ending on the last day of the
calendar month preceding such Remittance Date.


                                       7
<PAGE>

      Prepayment  Period:  As to any  Remittance  Date, (a) in the case of Full
Principal  Prepayments,  the  period  commencing  on the 16th day of the  month
prior to the month in which the  related  Remittance  Date occurs and ending on
the 15th day of the month in which  such  Remittance  Date  occurs,  and (b) in
the case of Partial Principal  Prepayments or other  recoveries,  the preceding
calendar month.

      Primary  Mortgage  Insurance  Policy:  Each  primary  policy of  mortgage
insurance,  or  any  replacement  policy  therefor  obtained  by  the  Servicer
pursuant to Section 4.08.

      Prime  Rate:  The prime  rate of U.S.  money  center  banks as  published
from time to time in The Wall Street Journal.

      Principal  Prepayment:  Any payment or other  recovery of  principal on a
Mortgage  Loan full or partial  which is received  in advance of its  scheduled
Due Date,  including any Prepayment  Charge, and which is not accompanied by an
amount of interest  representing  scheduled  interest  due on any date or dates
in any month or months subsequent to the month of prepayment.

      Qualified Appraiser:  An appraiser,  duly appointed by the Servicer,  who
had no interest,  direct or indirect in the  Mortgaged  Property or in any loan
made on the security  thereof,  and whose  compensation  is not affected by the
approval  or  disapproval  of  the  Mortgage  Loan,  which  appraiser  and  the
appraisal made by such appraiser both satisfy the  requirements  of Title XI of
FIRREA  and the  regulations  promulgated  thereunder,  all as in effect on the
date the Mortgage Loan was originated.

      Qualified  Depository:   (a)  The  Custodian,   (b)  a  depository,   the
accounts of which are  insured by the FDIC and the short term debt  ratings and
the long term  deposit  ratings  of which  are rated in one of the two  highest
rating  categories  by either of  Moody's  Investors  Service,  Inc.  or Fitch,
Inc.,  or  (c)  a  depository,  the  short-term  debt  obligations,   or  other
short-term  deposits  of  which  are  rated at least  'A-2'  and the  long-term
unsecured  debt  obligations  of which are rated at least  'AA-' by  Standard &
Poor's Ratings Service, a division of The McGraw Hill Companies Inc.

      Qualified  Insurer:  An insurance  company  duly  qualified as such under
the laws of the states in which the  Mortgaged  Properties  are  located,  duly
authorized  and  licensed in such states to transact the  applicable  insurance
business  and to write  the  insurance  provided,  approved  as an  insurer  by
Fannie Mae and Freddie Mac.

      Rating  Agency:  Standard & Poor's  Ratings  Service,  a division  of The
McGraw Hill Companies Inc., and Moody's Investors Service, Inc.

      Reconstitution   Agreement:  Any  agreement  involving  any  Pass-Through
Transfer or Whole Loan Transfer.


                                       8
<PAGE>

      Regulation AB:  Subpart  229.1100 - Asset Backed  Securities  (Regulation
AB),  17 C.F.R.  ss.ss.229.1100-229.1123,  as  amended  from time to time,  and
subject to such  clarification and  interpretation as have been provided by the
Commission in the adopting  release  (Asset-Backed  Securities,  Securities Act
Release No. 33-8518,  70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the staff
of the  Commission,  or as may be provided by the  Commission or its staff from
time to time.

      REMIC: A "real estate  mortgage  investment  conduit"  within the meaning
of Section 860D of the Code.

      REMIC   Provisions:   The  provisions  of  the  Federal  income  tax  law
relating to a REMIC,  which  appear at Section  860A  through 860G of the Code,
and   related   provisions,   and   regulations,   rulings  or   pronouncements
promulgated thereunder, as the foregoing may be in effect from time to time.

      Remittance  Date:  The  Remittance  Date  shall  be the  18th  day of any
month,  or if such  18th day is not a  Business  Day,  the first  Business  Day
immediately preceding such 18th day.

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

      REO   Disposition   Proceeds:   Amounts   received  by  the  Servicer  in
connection with a related REO Disposition.

      REO  Property:  A Mortgaged  Property  acquired by the Servicer on behalf
of the Owner as described in Section 4.13.

      SAMI II:  Structured Asset Mortgage Investments II Inc.

      Sarbanes   Certification:   A  certification  required  pursuant  to  The
Sarbanes-Oxley  Act of 2002 and the rules  and  regulations  of the  Commission
promulgated  thereunder  (including any  interpretations  or amendments thereof
by the Commission's staff).

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

      Securities  Administrator:  The securities  administrator with respect to
any Pass-Through Transfer.

      Servicer:  EMC  Mortgage  Corporation,   or  any  of  its  successors  in
interest or any successor under this Agreement appointed as herein provided.

      Servicing  Advances:  All  customary,  reasonable  and necessary  "out of
pocket"  costs  and  expenses   (including   reasonable   attorneys'  fees  and
disbursements)  incurred in the  performance  by the Servicer of its  servicing
obligations  relating to each  Mortgage  Loan,  including,  but not limited to,
the cost of (a) the  preservation,  restoration and protection of the Mortgaged
Property, (b) any enforcement,  administrative or judicial proceedings,  or any
legal work or advice  specifically  related to servicing  the  Mortgage  Loans,
including but not limited to, foreclosures,  bankruptcies,  condemnations, drug
seizures,  elections,  foreclosures by subordinate or superior lienholders, and
other  legal  actions  incidental  to  the  servicing  of  the  Mortgage  Loans
(provided  that such expenses are  reasonable  and that the Servicer  specifies
the Mortgage  Loan(s) to which such expenses  relate),  (c) the  management and
liquidation  of the Mortgaged  Property if the  Mortgaged  Property is acquired
in full or  partial  satisfaction  of the  Mortgage,  (d)  taxes,  assessments,
water  rates,  sewer  rates and other  charges  which are or may  become a lien
upon the Mortgaged  Property,  and Primary  Mortgage  Insurance Policy premiums
and  fire  and  hazard   insurance   coverage  and  (e)  compliance   with  the
obligations under Section 4.08.


                                       9
<PAGE>

      Servicing  Criteria:  As of any  date of  determination,  the  "servicing
criteria"  set  forth in Item  1122(d)  of  Regulation  AB,  or any  amendments
thereto,  a  summary  of the  requirements  of which as of the date  hereof  is
attached  hereto as Exhibit H for  convenience of reference  only. In the event
of a conflict or  inconsistency  between the terms of Exhibit H and the text of
Item  1122(d) of  Regulation  AB, the text of Item  1122(d)  of  Regulation  AB
shall control (or those  Servicing  Criteria  otherwise  mutually  agreed to by
the Owner,  the  Servicer and any Person that will be  responsible  for signing
any  Sarbanes   Certification  with  respect  to  a  Pass-Through  Transfer  in
response to evolving  interpretations  of Regulation AB and incorporated into a
revised Exhibit H).

      Servicing  Fee:  With respect to each  Mortgage  Loan,  the amount of the
annual  servicing fee the Owner shall pay to the Servicer,  which shall,  for a
period of one full  month,  be equal to  one-twelfth  of the product of (a) the
applicable  Servicing  Fee Rate and (b) the  outstanding  principal  balance of
the Mortgage  Loan.  Such fee shall be payable  monthly,  computed on the basis
of the same principal  amount and period  respecting which any related interest
payment on a Mortgage  Loan is  computed.  The  obligation  of the Owner to pay
the  Servicing  Fee is limited to, and the  Servicing  Fee is payable  from the
interest  portion of such  Monthly  Payment  collected  by the  Servicer  or as
otherwise provided under Section 4.05.

      Servicing  Fee Rate:  The  Servicing  Fee Rate  shall be a rate per annum
equal to 0.375%.

      Servicing  File: The documents,  records and other items  pertaining to a
particular  Mortgage  Loan  and  any  additional  documents  relating  to  such
Mortgage  Loan  as are  in,  or as  may  from  time  to  time  come  into,  the
Servicer's possession.

      Servicing   Officer:   Any  officer  of  the  Servicer  involved  in,  or
responsible for, the  administration  and servicing of the Mortgage Loans whose
name appears on a list of servicing  officers  furnished by the Servicer to the
Owner upon request, as such list may from time to time be amended.

      Stated  Principal  Balance:  As to each  Mortgage  Loan as of any date of
determination,  (i) the  principal  balance of such  Mortgage Loan after giving
effect  to  payments  of  principal  due and  received  or for  which a Monthly
Advance has been made,  minus (ii) all amounts  previously  distributed  to the
Owner with respect to the Mortgage Loan representing Principal Prepayments.

      Subcontractor:  Any  vendor,  subcontractor  or other  Person that is not
responsible for the overall  servicing (as  "servicing" is commonly  understood
by participants  in the  mortgage-backed  securities  market) of Mortgage Loans
but  performs  one or more  discrete  functions  identified  in Item 1122(d) of
Regulation  AB with respect to Mortgage  Loans under the direction or authority
of the Servicer or a Subservicer.


                                      10
<PAGE>

      Subservicer:  Any Person that  services  Mortgage  Loans on behalf of the
Servicer or any Subservicer  and is responsible  for the  performance  (whether
directly or through  Subservicers or Subcontractors)  of a substantial  portion
of the material  servicing  functions  required to be performed by the Servicer
under this  Agreement or any  Reconstitution  Agreement  that are identified in
Item 1122(d) of Regulation AB.

      Trustee:   The  Person  appointed  as  trustee  in  connection  with  any
Pass-Through Transfer.

      Whole  Loan  Transfer:  The  sale  or  transfer  of  some  or  all of the
ownership  interest  in the  Mortgage  Loans by the Owner to one or more  third
parties  in whole  loan or  participation  format,  which  third  party  may be
Fannie Mae or Freddie Mac.

                                  ARTICLE II
     SERVICING OF MORTGAGE LOANS; POSSESSION OF SERVICING FILES; BOOKS AND
                 RECORDS; DELIVERY OF MORTGAGE LOAN DOCUMENTS

      Section 2.01.     Servicing of Mortgage Loans.

      The  Servicer  does  hereby  agree  to  service  the  Mortgage  Loans  in
accordance  with the  terms  of this  Agreement.  The  rights  of the  Owner to
receive  payments  with respect to the Mortgage  Loans shall be as set forth in
this Agreement.

      Section 2.02.     Maintenance of Servicing Files.

      The  Servicer  shall   maintain  a  Servicing  File   consisting  of  all
documents  necessary  to service the Mortgage  Loans.  The  possession  of each
Servicing  File by the  Servicer  is for the  sole  purpose  of  servicing  the
Mortgage  Loan,  and such  retention  and  possession  by the  Servicer is in a
custodial  capacity  only.  The  Servicer  acknowledges  that the  ownership of
each Mortgage Loan,  including the Note, the Mortgage,  all other Mortgage Loan
Documents  and  all  rights,   benefits,   proceeds  and  obligations   arising
therefrom  or in  connection  therewith,  has been  vested  in the  Owner.  All
rights  arising out of the Mortgage  Loans  including,  but not limited to, all
funds  received on or in connection  with the Mortgage Loans and all records or
documents  with  respect to the Mortgage  Loans  prepared by or which come into
the  possession  of the Servicer  shall be received and held by the Servicer in
trust  for the  exclusive  benefit  of the  Owner as the  owner of the  related
Mortgage  Loans.  Any portion of the related  Servicing  Files  retained by the
Servicer shall be  appropriately  identified in the Servicer's  computer system
to clearly  reflect the ownership of the related  Mortgage  Loans by the Owner.
The  Servicer  shall  release  its  custody  of the  contents  of  the  related
Servicing  Files only in  accordance  with written  instructions  of the Owner,
except  when  such  release  is  required  as  incidental  to  the   Servicer's
servicing  of the  Mortgage  Loans,  such  written  instructions  shall  not be
required.

      Section 2.03.     Books and Records.

      The Servicer shall be responsible  for  maintaining,  and shall maintain,
a complete  set of books and  records  for the  Mortgage  Loans  which shall be
appropriately  identified in the Servicer's  computer system to clearly reflect
the ownership of the Mortgage Loan by the Owner.  In  particular,  the Servicer
shall maintain in its  possession,  available for  inspection by the Owner,  or
its  designee  and  shall  deliver  to  the  Owner  upon  demand,  evidence  of
compliance with all federal,  state and local laws, rules and regulations,  and
requirements  of Fannie Mae or Freddie Mac, as  applicable,  including  but not
limited  to   documentation   as  to  the  method  used  in   determining   the
applicability  of the provisions of the Flood Disaster  Protection Act of 1973,
as amended,  to the  Mortgaged  Property,  documentation  evidencing  insurance
coverage  and  eligibility  of any  condominium  project for approval by Fannie
Mae and  periodic  inspection  reports  as  required  by Section  4.13.  To the
extent that  original  documents  are not required for purposes of  realization
of  Liquidation  Proceeds or Insurance  Proceeds,  documents  maintained by the
Servicer may be in the form of microfilm or microfiche  or such other  reliable
means of recreating original  documents,  including but not limited to, optical
imagery  techniques so long as the Servicer  complies with the  requirements of
the Fannie Mae Guide.


                                      11
<PAGE>

      The  Servicer  shall  maintain  with  respect to each  Mortgage  Loan and
shall make  available  for  inspection by any Owner or its designee the related
Servicing  File  (or  copies   thereof)  during  the  time  the  Owner  retains
ownership of a Mortgage  Loan and  thereafter  in  accordance  with  applicable
laws and regulations.

      Section 2.04.     Transfer of Mortgage Loans.

      No  transfer of a Mortgage  Loan may be made  unless such  transfer is in
compliance  with the terms  hereof.  For the  purposes of this  Agreement,  the
Servicer  shall be under no  obligation to deal with any person with respect to
this  Agreement  or any  Mortgage  Loan unless a notice of the transfer of such
Mortgage  Loan has been  delivered  to the  Servicer  in  accordance  with this
Section  2.04.  The Owner  may,  subject to the terms of this  Agreement,  sell
and transfer  one or more of the Mortgage  Loans in  accordance  with  Sections
10.02 and 11.12,  provided,  however, that the transferee will not be deemed to
be an Owner hereunder  binding upon the Servicer  unless such transferee  shall
agree in writing to be bound by the terms of this  Agreement  and an assignment
and assumption of this  Agreement  reasonably  acceptable to the Servicer.  The
Owner shall  advise the  Servicer in writing of the  transfer.  Upon receipt of
notice  of the  permitted  transfer,  the  Servicer  shall  mark its  books and
records to reflect the ownership of the Mortgage  Loans of such  assignee,  and
shall release the previous  Owner from its  obligations  hereunder with respect
to the Mortgage Loans sold or transferred.

      Section 2.05.     Delivery of Mortgage Loan Documents.

      The  Servicer  shall  forward  to the  Custodian  on  behalf of the Owner
original  documents  evidencing an assumption,  modification,  consolidation or
extension of any Mortgage  Loan  entered into in  accordance  with Section 4.01
or 6.01  within 4  week(s)  of their  execution;  provided,  however,  that the
Servicer  shall  provide the  Custodian on behalf of the Owner with a certified
true  copy of any such  document  submitted  for  recordation  within 4 week(s)
after its execution,  and shall provide the original of any document  submitted
for  recordation  or a copy  of  such  document  certified  by the  appropriate
public  recording  office to be a true and complete copy of the original within
180  days of its  execution.  If  delivery  is not  completed  within  180 days
solely due to delays in making  such  delivery  by reason of the fact that such
documents  shall not have been returned by the  appropriate  recording  office,
the  Servicer  shall  continue  to use its best  efforts to effect  delivery as
soon as possible thereafter.


                                      12
<PAGE>

      From  time to  time  the  Servicer  may  have a need  for  Mortgage  Loan
Documents to be released by the  Custodian.  If the Servicer  shall require any
of the Mortgage  Loan  Documents,  the Servicer  shall notify the  Custodian in
writing  of such  request  in the  form of the  request  for  release  attached
hereto as Exhibit D. The Custodian  shall  deliver to the Servicer  within five
(5) Business Days, any requested  Mortgage Loan Document  previously  delivered
to the  Custodian,  provided that such  documentation  is promptly  returned to
the  Custodian  when  the  Servicer  no  longer  requires   possession  of  the
document,  and  provided  that during the time that any such  documentation  is
held by the  Servicer,  such  possession  is in trust  for the  benefit  of the
Owner.

                                  ARTICLE III
                REPRESENTATIONS AND WARRANTIES OF THE SERVICER

      The Servicer  represents,  warrants and covenants to the Owner that as of
the date hereof or as of such date specifically provided herein:

      (a)   The Servicer is a validly  existing  corporation  in good  standing
under the laws of the State of its  organization  and is  qualified to transact
business  in,  is in good  standing  under  the  laws  of,  and  possesses  all
licenses  necessary  for the  conduct of its  business  in, each state in which
any  Mortgaged  Property  is located  or is  otherwise  exempt or not  required
under  applicable  law to effect  such  qualification  or license and no demand
for such  qualification  or license has been made upon the Servicer by any such
state,  and in any event the  Servicer is in  compliance  with the laws of each
such  State to the  extent  necessary  to  ensure  the  enforceability  of each
Mortgage  Loan and the servicing of the Mortgage  Loans in accordance  with the
terms of this Agreement;

      (b)   The Servicer has full power and  authority to execute,  deliver and
perform,  and to enter into and consummate  all  transactions  contemplated  by
this  Agreement  and to conduct its business as presently  conducted,  has duly
authorized  the execution,  delivery and  performance  of this  Agreement,  has
duly executed and delivered this  Agreement,  and this Agreement  constitutes a
legal,  valid and binding  obligation of the Servicer,  enforceable  against it
in  accordance  with its terms  subject to  bankruptcy  laws and other  similar
laws of general  application  affecting  rights of creditors and subject to the
application   of  the  rules  of  equity,   including   those   respecting  the
availability of specific performance;

      (c)   None  of  the  execution  and  delivery  of  this  Agreement,   the
consummation  of the  transactions  contemplated  thereby  and  hereby,  or the
fulfillment  of or compliance  with the terms and  conditions of this Agreement
will  conflict  with  any  of  the  terms,  conditions  or  provisions  of  the
Servicer's  articles of  incorporation  or by-laws or materially  conflict with
or result in a breach of any of the  terms,  conditions  or  provisions  of any
legal  restriction  or any agreement or instrument to which the Servicer is now
a party or by which it is  bound,  or  constitute  a  default  or  result in an
acceleration  under any of the foregoing,  or result in the material  violation
of any law, rule,  regulation,  order, judgment or decree to which the Servicer
or its property is subject;

      (d)   There is no  litigation  pending or, to the  Servicer's  knowledge,
threatened  with respect to the Servicer  which is reasonably  likely to have a
material adverse effect on the execution,  delivery or  enforceability  of this
Agreement,  or which is reasonably  likely to have a material adverse effect on
the financial condition of the Servicer;


                                      13
<PAGE>

      (e)   No  consent,  approval,  authorization  or  order  of any  court or
governmental  agency  or  body is  required  for the  execution,  delivery  and
performance  by the  Servicer  of or  compliance  by  the  Servicer  with  this
Agreement  or  the  consummation  of  the  transactions  contemplated  by  this
Agreement  except for  consents,  approvals,  authorizations  and orders  which
have been obtained;

      (f)   The  Servicer  is  an  approved   seller/servicer   of  residential
mortgage  loans  for  Fannie  Mae and  Freddie  Mac.  The  Servicer  is in good
standing  to  service  mortgage  loans for Fannie  Mae and  Freddie  Mac and no
event has  occurred  which  would  make the  Servicer  unable  to  comply  with
eligibility  requirements or which would require  notification to either Fannie
Mae or Freddie Mac;

      (g)   As of the date of each  Pass-Through  Transfer,  and  except as has
been otherwise  disclosed to the Owner,  the Master Servicer and any Depositor,
or  disclosed  in any  public  filing:  (1) no  default  or  servicing  related
performance  trigger has occurred as to any other Pass-Through  Transfer due to
any act or failure to act of the Servicer;  (2) no material  noncompliance with
applicable  servicing  criteria  as to  any  other  Pass-Through  Transfer  has
occurred,  been  disclosed  or reported by the  Servicer;  (3) the Servicer has
not been  terminated  as servicer in a residential  mortgage loan  Pass-Through
Transfer,  either due to a servicing  default or to  application of a servicing
performance  test  or  trigger;  (4) no  material  changes  to  the  Servicer's
servicing  policies  and  procedures  for  similar  loans have  occurred in the
preceding  three years;  (5) there are no aspects of the  Servicer's  financial
condition that could have a material  adverse impact on the  performance by the
Servicer  of its  obligations  hereunder;  (6) there  are no legal  proceedings
pending, or known to be contemplated by governmental  authorities,  against the
Servicer that could be material to investors in the  securities  issued in such
Pass-Through  Transfer;  and (7) there are no  affiliations,  relationships  or
transactions  relating to the Servicer of a type that are described  under Item
1119 of Regulation AB;

      (h)   If  so  requested  by  the  Owner,   the  Master  Servicer  or  any
Depositor  on  any  date,  the  Servicer  shall,   within  five  Business  Days
following   such   request,   confirm   in   writing   the   accuracy   of  the
representations  and  warranties set forth in clause (g) of this Article or, if
any such  representation  and  warranty is not  accurate as of the date of such
request,  provide  reasonably  adequate  disclosure of the pertinent  facts, in
writing, to the requesting party;

      (i)   Notwithstanding  anything  to the  contrary in the  Agreement,  the
Servicer shall (or shall cause each  Subservicer)  (i)  immediately  notify the
Owner,  the Master  Servicer  and any  Depositor in writing of (A) any material
litigation  or  governmental  proceedings  pending  against the Servicer or any
Subservicer,  (B) any affiliations or relationships  that develop following the
closing  date  of  a  Pass-Through   Transfer   between  the  Servicer  or  any
Subservicer  and any of the parties  specified in clause (7) of  paragraph  (g)
of  this  Article  (and  any  other  parties   identified  in  writing  by  the
requesting  party) with respect to such  Pass-Through  Transfer,  (C) any Event
of Default under the terms of this Agreement or any  Reconstitution  Agreement,
(D) any merger,  consolidation  or sale of  substantially  all of the assets of
the  Servicer,   and  (E)  the  Servicer's  entry  into  an  agreement  with  a
Subservicer  to perform or assist in the  performance  of any of the Servicer's
obligations  under this  Agreement  or any  Reconstitution  Agreement  and (ii)
provide  to the Owner and any  Depositor  a  description  of such  proceedings,
affiliations or relationships;


                                      14
<PAGE>

      (j)   As  a  condition  to  the   succession   to  the  Servicer  or  any
Subservicer   as  servicer  or   subservicer   under  this   Agreement  or  any
Reconstitution  Agreement  by any Person (i) into  which the  Servicer  or such
Subservicer  may be merged or  consolidated,  or (ii) which may be appointed as
a successor to the Servicer or any  Subservicer,  the Servicer shall provide to
the Owner,  the Master  Servicer and any  Depositor,  at least 15 calendar days
prior to the  effective  date of such  succession or  appointment,  (x) written
notice to the Owner,  the Master  Servicer and any Depositor of such succession
or  appointment  and  (y) in  writing  and in  form  and  substance  reasonably
satisfactory  to the  Owner,  the  Master  Servicer  and  such  Depositor,  all
information  reasonably  requested  by the Owner,  the Master  Servicer  or any
Depositor in order to comply with its reporting  obligation  under Item 6.02 of
Form 8-K with respect to any class of asset-backed securities; and

      (k)   Servicer  has  delivered  to the  Owner  and  the  Master  Servicer
financial  statements  of its parent,  for its last two complete  fiscal years.
All such  financial  information  fairly  presents  the  pertinent  results  of
operations  and  financial  position  for the  period  identified  and has been
prepared in accordance with GAAP  consistently  applied  throughout the periods
involved,  except as set forth in the notes  thereto.  There has been no change
in the  servicing  policies and  procedures,  business,  operations,  financial
condition,  properties  or  assets  of  the  Servicer  since  the  date  of the
Servicer's  financial  information that would have a material adverse effect on
its ability to perform its obligations under this Agreement.

                                  ARTICLE IV
                ADMINISTRATION AND SERVICING OF MORTGAGE LOANS

      Section 4.01.     Servicer to Act as Servicer.

      The  Servicer,  as  independent  contract  servicer,  shall  service  and
administer  the  Mortgage  Loans in  accordance  with this  Agreement  and with
Accepted   Servicing   Practices  (giving  due  consideration  to  the  Owner's
reliance  on the  Servicer),  and shall have full power and  authority,  acting
alone,  to do or cause to be done any and all  things in  connection  with such
servicing  and  administration   which  the  Servicer  may  deem  necessary  or
desirable  and  consistent  with the terms of this  Agreement and with Accepted
Servicing  Practices  and shall  exercise  the same  care  that it  customarily
employs  for  its  own  account.  In  addition,   the  Servicer  shall  furnish
information  regarding the borrower  credit files related to such Mortgage Loan
to credit  reporting  agencies in  compliance  with the  provisions of the Fair
Credit  Reporting Act and the applicable  implementing  regulations.  Except as
set forth in this  Agreement,  the Servicer shall service the Mortgage Loans in
accordance with Accepted  Servicing  Practices in compliance with the servicing
provisions  of the Fannie Mae Guide,  which  include,  but are not  limited to,
provisions  regarding the  liquidation  of Mortgage  Loans,  the  collection of
Mortgage Loan  payments,  the payment of taxes,  insurance  and other  charges,
the maintenance of hazard insurance with a Qualified  Insurer,  the maintenance
of  fidelity  bond  and  errors  and  omissions  insurance,   inspections,  the
restoration  of  Mortgaged  Property,   the  maintenance  of  Primary  Mortgage
Insurance  Policies,  insurance claims, and title insurance,  management of REO
Property,  permitted  withdrawals  with  respect to REO  Property,  liquidation
reports,  and reports of foreclosures and  abandonments of Mortgaged  Property,
the transfer of Mortgaged  Property,  the release of Mortgage  Loan  Documents,
annual  statements,  and  examination of records and  facilities.  In the event
of any  conflict,  inconsistency  or  discrepancy  between any of the servicing
provisions  of  this  Agreement  and  any of the  servicing  provisions  of the
Fannie Mae  Guide,  the  provisions  of this  Agreement  shall  control  and be
binding  upon the  Owner  and the  Servicer.  The  Owner  may,  at its  option,
deliver  powers-of-attorney  to the Servicer  sufficient  to allow the Servicer
as servicer  to execute  all  documentation  requiring  execution  on behalf of
Owner  with  respect  to  the  servicing  of  the  Mortgage  Loans,   including
satisfactions,  partial releases,  modifications and foreclosure  documentation
or, in the alternative,  shall as promptly as reasonably possible,  execute and
return such documentation to the Servicer.


                                      15
<PAGE>

      Consistent  with the terms of this  Agreement,  the  Servicer  may waive,
modify or vary any term of any  Mortgage  Loan or consent  to the  postponement
of any such term or in any manner grant  indulgence  to any Mortgagor if in the
Servicer's  reasonable  and prudent  determination  such waiver,  modification,
postponement  or indulgence is not materially  adverse to the Owner,  provided,
however,  that with respect to any  Mortgage  Loan that is not in default or if
default is not  reasonably  forseeable,  unless the  Servicer  has  provided to
the  Owner  a  certification  addressed to  the  Owner,  based on the advice of
counsel or certified public  accountants  that have a national  reputation with
respect to taxation of REMICs that a  modification  of such  Mortgage Loan will
not result in the  imposition of taxes on or  disqualify  from REMIC status any
of  the REMICs and  has obtained the prior  written  consent of the Owner,  the
Servicer  shall not permit any  modification  with respect to any Mortgage Loan
that  would  change  the  Mortgage  Interest  Rate,   forgive  the  payment  of
principal or interest,  reduce or increase the  outstanding  principal  balance
(except for actual  payments of  principal),  change the final maturity date on
such  Mortgage  Loan or waive a prepayment  penalty or charge.  In the event of
any such  modification  which has been  agreed to in  writing  by the Owner and
which  permits the deferral of interest or  principal  payments on any Mortgage
Loan,  the  Servicer  shall,  on the  Business Day  immediately  preceding  the
related  Remittance  Date in any month in which any such  principal or interest
payment  has been  deferred,  deposit  in the  Custodial  Account  from its own
funds,  in  accordance  with  Section  4.04 and Section  5.03,  the  difference
between (a) such  month's  principal  and one  month's  interest at the related
Mortgage  Loan  Remittance  Rate  on  the  unpaid  principal  balance  of  such
Mortgage  Loan and (b) the amount paid by the  Mortgagor.  The  Servicer  shall
be entitled to  reimbursement  for such  advances to the same extent as for all
other  advances  pursuant to Section 4.05.  Without  limiting the generality of
the  foregoing,  the Servicer  shall  continue,  and is hereby  authorized  and
empowered,  to prepare,  execute and deliver,  all  instruments of satisfaction
or  cancellation,  or of  partial  or full  release,  discharge  and all  other
comparable  instruments,  with respect to the  Mortgage  Loans and with respect
to the Mortgaged Properties.

      The  Servicer  shall  perform  all  of  its  servicing   responsibilities
hereunder  or  may  cause  a   subservicer   to  perform  any  such   servicing
responsibilities  on its behalf,  but the use by the Servicer of a  subservicer
shall not release the Servicer  from any of its  obligations  hereunder and the
Servicer  shall  remain  responsible  hereunder  for all acts and  omissions of
each  subservicer  as fully as if such  acts and  omissions  were  those of the
Servicer.  Any such subservicer  must be a Fannie Mae approved  seller/servicer
or a Freddie  Mac  seller/servicer  in good  standing  and no event  shall have
occurred,  including but not limited to, a change in insurance coverage,  which
would make it unable to comply with the  eligibility  requirements  for lenders
imposed by Fannie Mae or for  seller/servicers  by Freddie  Mac, or which would
require  notification  to Fannie Mae or Freddie  Mac.  The  Servicer  shall pay
all  fees  and  expenses  of  each  subservicer  from  its  own  funds,  and  a
subservicer's fee shall not exceed the Servicing Fee.


                                      16
<PAGE>

      At  the  cost  and  expense  of  the  Servicer,   without  any  right  of
reimbursement  from the Custodial  Account,  the Servicer  shall be entitled to
terminate  the rights and  responsibilities  of a  subservicer  and arrange for
any  servicing  responsibilities  to be  performed  by a successor  subservicer
meeting the requirements in the preceding paragraph,  provided,  however,  that
nothing  contained  herein shall be deemed to prevent or prohibit the Servicer,
at the Servicer's  option,  from electing to service the related Mortgage Loans
itself.  In the event that the  Servicer's  responsibilities  and duties  under
this Agreement are terminated  pursuant to Section 8.04, 9.01 or 10.01,  and if
requested  to do so by the  Owner,  the  Servicer  shall  at its own  cost  and
expense  terminate  the  rights  and   responsibilities   of  each  subservicer
effective as of the date of  termination  of the Servicer.  The Servicer  shall
pay all  fees,  expenses  or  penalties  necessary  in order to  terminate  the
rights and  responsibilities  of each subservicer from the Servicer's own funds
without reimbursement from the Owner.

      Notwithstanding  any of the  provisions  of this  Agreement  relating  to
agreements  or  arrangements  between the  Servicer  and a  subservicer  or any
reference  herein to actions  taken through a  subservicer  or  otherwise,  the
Servicer  shall not be  relieved of its  obligations  to the Owner and shall be
obligated to the same extent and under the same terms and  conditions  as if it
alone were  servicing  and  administering  the  Mortgage  Loans.  The  Servicer
shall  be  entitled  to  enter  into  an  agreement  with  a  subservicer   for
indemnification  of the Servicer by the  subservicer  and nothing  contained in
this Agreement shall be deemed to limit or modify such indemnification.

      Any  subservicing  agreement  and  any  other  transactions  or  services
relating to the Mortgage  Loans  involving a subservicer  shall be deemed to be
between  such  subservicer  and  Servicer  alone,  and the Owner  shall have no
obligations,  duties or liabilities with respect to such Subservicer  including
no obligation,  duty or liability of Owner to pay such  subservicer's  fees and
expenses.   For  purposes  of  distributions   and  advances  by  the  Servicer
pursuant to this  Agreement,  the Servicer  shall be deemed to have  received a
payment on a Mortgage Loan when a subservicer has received such payment.

      Section 4.02.     Collection of Mortgage Loan Payments.

      Continuously  from the date  hereof  until  the date each  Mortgage  Loan
ceases  to be  subject  to this  Agreement,  the  Servicer  will  proceed  with
diligence to collect all payments  due under each  Mortgage  Loan when the same
shall  become due and payable and shall,  to the extent such  procedures  shall
be  consistent  with this  Agreement  and the terms and  provisions  of related
Primary  Mortgage  Insurance  Policy,  follow such collection  procedures as it
follows with respect to mortgage  loans  comparable  to the Mortgage  Loans and
held for its own account.  Further,  the Servicer will take  reasonable care in
ascertaining  and estimating  annual ground rents,  taxes,  assessments,  water
rates, fire and hazard insurance  premiums,  mortgage insurance  premiums,  and
all other  charges  that,  as  provided  in the  Mortgage,  will become due and
payable  to the end that the  installments  payable by the  Mortgagors  will be
sufficient to pay such charges as and when they become due and payable.

      The  Servicer  shall not  waive any  Prepayment  Charge  unless:  (i) the
enforceability  thereof  shall  have been  limited by  bankruptcy,  insolvency,
moratorium,  receivership and other similar laws relating to creditors'  rights
generally,  (ii) the  enforcement  thereof is illegal,  or any local,  state or
federal  agency  has  threatened  legal  action if the  prepayment  penalty  is
enforced,  (iii) the mortgage debt has been  accelerated  in connection  with a
foreclosure  or other  involuntary  payment or (iv) such waiver is standard and
customary in  servicing  similar  Mortgage  Loans and relates to a default or a
reasonably  foreseeable  default and would,  in the reasonable  judgment of the
Servicer,  maximize  recovery of total  proceeds  taking into account the value
of such  Prepayment  Charge and the  related  Mortgage  Loan.  If a  Prepayment
Charge is waived,  but does not meet the standards  described  above,  then the
Servicer  is required  to pay the amount of such  waived  Prepayment  Charge by
remitting such amount to the Owner by the Remittance Date.


                                      17
<PAGE>

      Section 4.03.     Realization Upon Defaulted Mortgage Loans.

      The  Servicer  shall  use its  reasonable  efforts,  consistent  with the
procedures  that the Servicer would use in servicing  loans for its own account
and the  requirements  of the Fannie Mae Guide,  to foreclose upon or otherwise
comparably  convert the ownership of  properties  securing such of the Mortgage
Loans as come into and  continue  in  default  and as to which no  satisfactory
arrangements  can be made for  collection  of delinquent  payments  pursuant to
Section 4.01. In determining the  delinquency  status of any Mortgage Loan, the
Servicer  will  apply the  definition  of  Delinquent  as such term is  defined
under the related  pooling and  servicing  agreement.  The  Servicer  shall use
its  reasonable  efforts  to  realize  upon  defaulted  Mortgage  Loans in such
manner as will  maximize  the receipt of  principal  and interest by the Owner,
taking  into   account,   among  other  things,   the  timing  of   foreclosure
proceedings.  The foregoing is subject to the  provisions  that, in any case in
which  Mortgaged  Property shall have suffered  damage,  the Servicer shall not
be required to expend its own funds  toward the  restoration  of such  property
unless it shall  determine in its  discretion  (i) that such  restoration  will
increase  the  proceeds  of  liquidation  of the related  Mortgage  Loan to the
Owner  after  reimbursement  to itself  for such  expenses,  and (ii) that such
expenses will be  recoverable  by the Servicer  through  Insurance  Proceeds or
Liquidation  Proceeds from the related Mortgaged  Property,  as contemplated in
Section  4.05.  The Servicer  shall be  responsible  for all costs and expenses
incurred by it in any such  proceedings  or functions  as  Servicing  Advances;
provided,  however,  that it shall be  entitled  to  reimbursement  therefor as
provided in Section 4.05.  Notwithstanding  anything to the contrary  contained
herein,  in connection  with a  foreclosure  or acceptance of a deed in lieu of
foreclosure,  in the event the Servicer has reasonable  cause to believe that a
Mortgaged  Property  is  contaminated  by  hazardous  or  toxic  substances  or
wastes,  or if the Owner  otherwise  requests an  environmental  inspection  or
review  of such  Mortgaged  Property,  such an  inspection  or  review is to be
conducted by a qualified  inspector.  Upon  completion of the  inspection,  the
Servicer  shall  promptly  provide  the  Owner  with a  written  report  of the
environmental   inspection.   After  reviewing  the  environmental   inspection
report,  the Owner shall  determine how the Servicer shall proceed with respect
to the Mortgaged Property.

      Section 4.04.     Establishment  of  Custodial   Accounts;   Deposits  in
Custodial Accounts.

      The Servicer  shall  segregate and hold all funds  collected and received
pursuant to each  Mortgage  Loan  separate  and apart from any of its own funds
and general  assets and shall  establish  and  maintain  one or more  Custodial
Accounts.  Each  Custodial  Account  shall  be  established  with  a  Qualified
Depository.  To  the  extent  such  funds  are  not  deposited  in a  Custodial
Account,  such funds may be invested in Permitted  Investments  for the benefit
of  the  Owner  (with  any  income  earned  thereon  for  the  benefit  of  the
Servicer).  Custodial  Accounts  will  be  reconciled  within  45  days.  Funds
deposited  in  the  Custodial  Account  may be  drawn  on by  the  Servicer  in
accordance  with Section 4.05.  The creation of any Custodial  Account shall be
evidenced  by a letter  agreement  in the form shown in  Exhibit B hereto.  The
original  of such  letter  agreement  shall  be  furnished  to the  Owner  upon
request.  The Servicer  acknowledges  and agrees that the  Servicer  shall bear
any losses  incurred with respect to Permitted  Investments.  The amount of any
such losses shall be  immediately  deposited  by the Servicer in the  Custodial
Account,  out of the  Servicer's  own  funds,  with no right  to  reimbursement
therefor.


                                      18
<PAGE>

      The  Servicer  shall  deposit in a mortgage  clearing  account on a daily
basis,  and in the  Custodial  Account or Accounts no later than 48 hours after
receipt and  identification of funds and retain therein the following  payments
and collections:

            (i)   all  payments on account of  principal,  including  Principal
      Prepayments  (inclusive  of any  Prepayment  Charges),  on  the  Mortgage
      Loans received after the Cut-off Date;

            (ii)  all  payments on account of interest  on the  Mortgage  Loans
      adjusted to the related  Mortgage Loan  Remittance  Rate  received  after
      the Cut-off Date;

            (iii) all Net  Liquidation  Proceeds  received  after  the  Cut-off
      Date;

            (iv)  any net amounts  received by the  Servicer  after the Cut-off
      Date in connection with any REO Property pursuant to Section 4.13;

            (v)   all  Insurance  Proceeds  received  after  the  Cut-off  Date
      including  amounts  required to be  deposited  pursuant to Sections  4.08
      and 4.10,  other  than  proceeds  to be held in the  Escrow  Account  and
      applied  to the  restoration  or  repair  of the  Mortgaged  Property  or
      released  to the  Mortgagor  in  accordance  with the  Servicer's  normal
      servicing procedures, the loan documents or applicable law;

            (vi)  all Condemnation  Proceeds  affecting any Mortgaged  Property
      received  after the  Cut-off  Date other than  proceeds to be held in the
      Escrow  Account  and  applied  to  the   restoration  or  repair  of  the
      Mortgaged  Property or released to the Mortgagor in  accordance  with the
      Servicer's   normal   servicing   procedures,   the  loan   documents  or
      applicable law;

            (vii) any Monthly Advances as provided in Section 5.03;

            (viii)      any  amounts   received  after  the  Cut-off  Date  and
      required to be deposited  in the  Custodial  Account  pursuant to Section
      6.02; and

            (ix)  with  respect  to each full or partial  Principal  Prepayment
      received after the Cut-off Date, any Prepayment Interest  Shortfalls,  to
      the  extent of the  Servicer's  aggregate  Servicing  Fee  received  with
      respect to the related Due Period.

      The foregoing  requirements  for deposit in the  Custodial  Account shall
be  exclusive,  it being  understood  and agreed  that,  without  limiting  the
generality  of the  foregoing,  payments in the nature of late payment  charges
and  assumption  fees,  to the  extent  permitted  by  Section  6.01,  and  all
Prepayment  Interest  Excess  need  not be  deposited  by the  Servicer  in the
Custodial Account.


                                      19
<PAGE>

      Section 4.05.     Permitted Withdrawals From the Custodial Account.

      The  Servicer  may,  from  time  to  time,  make   withdrawals  from  the
Custodial Account for the following purposes:

            (i)   to make  payments  to the  Owner  in the  amounts  and in the
      manner provided for in Section 5.01;

            (ii)  to  reimburse  itself for Monthly  Advances,  the  Servicer's
      right to reimburse  itself  pursuant to this subclause (ii) being limited
      to amounts  received on the related  Mortgage Loan which  represent  late
      collections  (net of the  related  Servicing  Fees) of  principal  and/or
      interest respecting which any such advance was made;

            (iii) to reimburse itself for unreimbursed  Servicing  Advances and
      Monthly  Advances,  the Servicer's  right to reimburse itself pursuant to
      this  subclause  (iii) with respect to any Mortgage Loan being limited to
      Liquidation  Proceeds,   Condemnation  Proceeds  and  Insurance  Proceeds
      received after the Cut-off Date related to such Mortgage Loan;

            (iv)  to pay to itself as servicing  compensation  (a) any interest
      earned  on  funds in the  Custodial  Account  (all  such  interest  to be
      withdrawn  monthly  not  later  than  each  Remittance  Date) and (b) the
      Servicing Fee from that portion of any payment  recovery  attributable to
      interest on a particular Mortgage Loan;

            (v)   to reimburse itself for any Nonrecoverable Advances;

            (vi)  to  transfer  funds  to  another   Qualified   Depository  in
      accordance with Section 4.09 hereof;

            (vii) to reimburse itself as provided in Section 8.03 hereof;

            (viii)      to remove funds  inadvertently  placed in the Custodial
      Account in error by the Servicer; and

            (ix)  to  clear  and  terminate  the  Custodial  Account  upon  the
      termination of this Agreement.

      Section 4.06.     Establishment  of Escrow  Accounts;  Deposits in Escrow
Accounts.

      The Servicer  shall  segregate and hold all funds  collected and received
pursuant to each Mortgage Loan which  constitute  Escrow Payments  separate and
apart  from any of its own funds and  general  assets and shall  establish  and
maintain  one  or  more  Escrow   Accounts.   Each  Escrow   Account  shall  be
established  with a  Qualified  Depository.  To the  extent  such funds are not
deposited  in an Escrow  Account,  such  funds  may be  invested  in  Permitted
Investments.  Funds  deposited  in an  Escrow  Account  may be  drawn on by the
Servicer in accordance  with Section 4.07.  The creation of any Escrow  Account
shall be  evidenced  by a letter  agreement in the form shown in Exhibit C. The
original  of such  letter  agreement  shall  be  furnished  to the  Owner  upon
request.  The Servicer  acknowledges  and agrees that the  Servicer  shall bear
any losses  incurred with respect to Permitted  Investments.  The amount of any
such  losses  shall be  immediately  deposited  by the  Servicer  in the Escrow
Account,  as  appropriate,  out of the Servicer's  own funds,  with no right to
reimbursement therefor.


                                      20
<PAGE>

      The  Servicer  shall  deposit in a mortgage  clearing  account on a daily
basis,  and in the Escrow  Account  or  Accounts  no later than 48 hours  after
receipt of funds and retain therein:

            (i)   all Escrow  Payments  collected  on  account of the  Mortgage
      Loans,  for the purpose of effecting  timely  payment of any items as are
      required under the terms of this Agreement;

            (ii)  all  Insurance  Proceeds  which  are  to be  applied  to  the
      restoration or repair of any Mortgaged Property; and

            (iii) all Servicing  Advances for Mortgagors  whose Escrow Payments
      are insufficient to cover escrow disbursements.

      The  Servicer  shall  make  withdrawals  from an Escrow  Account  only to
effect such payments as are required under this  Agreement,  and for such other
purposes  as shall be as set  forth in and in  accordance  with  Section  4.07.
Except as provided in Section  4.07,  the Servicer  shall be entitled to retain
any  interest  paid on funds  deposited in an Escrow  Account by the  Qualified
Depository.

      Section 4.07.     Permitted Withdrawals From Escrow Account.

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

            (i)   to  effect   timely   payments   of  ground   rents,   taxes,
      assessments,  water rates,  fire and hazard insurance  premiums,  Primary
      Mortgage Insurance Policy premiums, if applicable, and comparable items;

            (ii)  to  reimburse  Servicer  for any  Servicing  Advance  made by
      Servicer  with respect to a related  Mortgage  Loan but only from amounts
      received on the related  Mortgage Loan which  represent  late payments or
      collections of Escrow Payments thereunder;

            (iii) to refund  to the  Mortgagor  any funds as may be  determined
      to be overages;

            (iv)  for transfer to the Custodial  Account in connection  with an
      acquisition of REO Property;

            (v)   for  application  to  restoration  or repair of the Mortgaged
      Property;


                                      21
<PAGE>

            (vi)  to pay to the  Servicer,  or to the  Mortgagor  to the extent
      required by law, any interest  paid on the funds  deposited in the Escrow
      Account;

            (vii) to  pay  to  the   Mortgagors  or  other  parties   Insurance
      Proceeds deposited in accordance with Section 4.06;

            (viii)      to  remove  funds  inadvertently  placed  in an  Escrow
      Account in error by the Servicer; and

            (ix)  to  clear  and   terminate   the   Escrow   Account   on  the
      termination of this Agreement.

      As  part  of  its  servicing  duties,  the  Servicer  shall  pay  to  the
Mortgagors  interest on funds in an Escrow  Account,  to the extent required by
law, and to the extent that interest  earned on funds in the Escrow  Account is
insufficient,  shall  pay  such  interest  from  its  own  funds,  without  any
reimbursement therefor.

      Section 4.08.     Payment  of  Taxes,   Insurance   and  Other   Charges,
Maintenance of Primary Mortgage Insurance Policies, Collections Thereunder.

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

      The  Servicer  will  maintain in full force and effect  Primary  Mortgage
Insurance  Policies  issued  by  a  Qualified  Insurer  with  respect  to  each
Mortgage  Loan for which such coverage is herein  required.  Such coverage will
be maintained until the ratio of the current  outstanding  principal balance of
the related  Mortgage  Loan to the  appraised  value of the  related  Mortgaged
Property,  based  on  the  most  recent  appraisal  of the  Mortgaged  Property
performed  by a  Qualified  Appraiser,  such  appraisal  to be  included in the
Servicing  File,  is  reduced  to an  amount  for  which  Fannie  Mae no longer
requires  such  insurance to be  maintained.  The  Servicer  will not cancel or
refuse to renew any Primary  Mortgage  Insurance  Policy that is required to be
kept in force  under  this  Agreement  unless a  replacement  Primary  Mortgage
Insurance  Policy for such canceled or  nonrenewed  policy is obtained from and
maintained  with a Qualified  Insurer.  The Servicer  shall not take any action
which  would  result in  noncoverage  under  any  applicable  Primary  Mortgage
Insurance  Policy of any loss which,  but for the actions of the Servicer would
have  been  covered   thereunder.   In  connection   with  any   assumption  or
substitution  agreement  entered into or to be entered into pursuant to Section
6.01,  the  Servicer  shall  promptly  notify  the  insurer  under the  related
Primary Mortgage  Insurance  Policy, if any, of such assumption or substitution
of  liability  in  accordance  with the terms of such policy and shall take all
actions  which  may  be  required  by  such  insurer  as  a  condition  to  the
continuation  of  coverage  under the Primary  Mortgage  Insurance  Policy.  If
such  Primary  Mortgage  Insurance  Policy  is  terminated  as a result of such
assumption  or  substitution   of  liability,   the  Servicer  shall  obtain  a
replacement Primary Mortgage Insurance Policy as provided above.


                                      22
<PAGE>

      In connection  with its  activities as servicer,  the Servicer  agrees to
prepare and present,  on behalf of itself and the Owner,  claims to the insurer
under any Private  Mortgage  Insurance Policy in a timely fashion in accordance
with the terms of such Primary  Mortgage  Insurance Policy and, in this regard,
to take  such  action  as shall be  necessary  to  permit  recovery  under  any
Primary  Mortgage  Insurance  Policy  respecting  a  defaulted  Mortgage  Loan.
Pursuant to Section  4.04,  any amounts  collected  by the  Servicer  under any
Primary  Mortgage   Insurance  Policy  shall  be  deposited  in  the  Custodial
Account, subject to withdrawal pursuant to Section 4.05.

      Section 4.09.     Transfer of Accounts.

      The Servicer may transfer  the  Custodial  Account or the Escrow  Account
to a different  Qualified  Depository  from time to time.  The  Servicer  shall
notify the Owner of any such transfer  within 15 Business Days of transfer.  If
any one of the investment  ratings of a Qualified  Depository  holding funds or
Eligible  Investments in the Custodial  Account or Escrow Account is downgraded
by the issuing rating  agency,  the Servicer  shall,  within three (3) Business
Days of  receipt  of notice of the  downgrading,  transfer  all such  accounts,
funds  and  Permitted  Investments  to  a  different  Qualified  Depository  in
accordance with this Agreement.

      Section 4.10.     Maintenance of Hazard Insurance.

      The Servicer  shall cause to be  maintained  for each  Mortgage Loan fire
and hazard  insurance with extended  coverage as is customary in the area where
the  Mortgaged  Property  is located in an amount  which is equal to the lesser
of (i) the maximum  insurable value of the improvements  securing such Mortgage
Loan or (ii)  the  greater  of (a) the  outstanding  principal  balance  of the
Mortgage Loan, and (b) the percentage  such that the proceeds  thereof shall be
sufficient  to prevent  the  Mortgagor  and/or the  Mortgagee  from  becoming a
co-insurer.  If  the  Mortgaged  Property  is  in an  area  identified  in  the
Federal  Register  by the  Federal  Emergency  Management  Agency  as  being  a
special  flood  hazard  area  that  has   federally-mandated   flood  insurance
requirements,  the  Servicer  will  cause to be  maintained  a flood  insurance
policy  meeting  the  requirements  of the  current  guidelines  of the Federal
Insurance  Administration with a generally  acceptable insurance carrier, in an
amount  representing  coverage  not less than the least of (i) the  outstanding
principal  balance of the Mortgage Loan,  (ii) the maximum  insurable  value of
the  improvements  securing such  Mortgage Loan or (iii) the maximum  amount of
insurance which is available  under the Flood Disaster  Protection Act of 1973,
as amended.  The Servicer  shall also  maintain on the REO  Property,  fire and
hazard  insurance  with extended  coverage in an amount which is at least equal
to the maximum  insurable  value of the  improvements  which are a part of such
property,  liability  insurance and, to the extent required and available under
the Flood Disaster  Protection Act of 1973, as amended,  flood  insurance in an
amount as provided  above.  Any amounts  collected  by the  Servicer  under any
such  policies  other than amounts to be  deposited  in the Escrow  Account and
applied  to  the  restoration  or  repair  of  the  Mortgaged  Property  or REO
Property,  or released  to the  Mortgagor  in  accordance  with the  Servicer's
normal  servicing  procedures,  shall be  deposited in the  Custodial  Account,
subject to withdrawal  pursuant to Section  4.05.  It is understood  and agreed
that no other  additional  insurance  need be required  by the  Servicer or the
Mortgagor  or  maintained  on  property  acquired  in respect  of the  Mortgage
Loans,  other than  pursuant to the Fannie Mae Guide or such  applicable  state
or federal laws and  regulations  as shall at any time be in force and as shall
require such  additional  insurance.  All such policies  shall be endorsed with
standard   mortgagee  clauses  with  loss  payable  to  the  Servicer  and  its
successors  and/or  assigns and shall  provide  for at least  thirty days prior
written  notice  of any  cancellation,  reduction  in the  amount  or  material
change in coverage to the  Servicer.  The  Servicer  shall not  interfere  with
the  Mortgagor's  freedom of choice in selecting  either his insurance  carrier
or agent,  provided,  however,  that the  Servicer  shall not  accept  any such
insurance  policies from insurance  companies  unless such companies  currently
reflect  a  General  Policy  Rating  in  Best's  Key  Rating  Guide   currently
acceptable  to Fannie Mae and are licensed to do business in the state  wherein
the property subject to the policy is located.


                                      23
<PAGE>

      Section 4.11.     Maintenance of Mortgage Impairment Insurance Policy.

      In the event  that the  Servicer  shall  obtain  and  maintain a mortgage
impairment  or blanket  policy  issued by an issuer  that has a Best  rating of
A:VI insuring  against  hazard losses on all of Mortgaged  Properties  securing
the Mortgage  Loans,  then, to the extent such policy  provides  coverage in an
amount  equal to the amount  required  pursuant to Section  4.10 and  otherwise
complies  with all other  requirements  of Section  4.10,  the  Servicer  shall
conclusively  be  deemed  to have  satisfied  its  obligations  as set forth in
Section  4.10,  it being  understood  and agreed that such policy may contain a
deductible  clause,  in which case the Servicer  shall, in the event that there
shall  not have  been  maintained  on the  related  Mortgaged  Property  or REO
Property a policy  complying  with Section 4.10,  and there shall have been one
or more losses  which would have been  covered by such  policy,  deposit in the
Custodial  Account the amount not otherwise  payable  under the blanket  policy
because  of such  deductible  clause.  In  connection  with its  activities  as
Servicer of the Mortgage  Loans,  the  Servicer  agrees to prepare and present,
on behalf  of the  Owner,  claims  under  any such  blanket  policy in a timely
fashion  in  accordance  with the terms of such  policy.  Upon  request  of the
Owner,  the Servicer  shall cause to be delivered to the Owner a certified true
copy of such  policy and a  statement  from the  insurer  thereunder  that such
policy shall in no event be terminated or materially  modified  without  thirty
(30) days prior written notice to the Owner.

      Section 4.12.     Fidelity Bond, Errors and Omissions Insurance.

      The  Servicer  shall  maintain,  at its own expense,  a blanket  fidelity
bond and an errors and omissions  insurance  policy,  with broad  coverage with
responsible  companies  that  would  meet the  requirements  of  Fannie  Mae or
Freddie  Mac  on  all  officers,  employees  or  other  persons  acting  in any
capacity  with  regard to the  Mortgage  Loans  and who  handle  funds,  money,
documents  and papers  relating to the Mortgage  Loans.  The Fidelity  Bond and
errors and omissions  insurance  shall be in the form of the Mortgage  Banker's
Blanket  Bond and  shall  protect  and  insure  the  Servicer  against  losses,
including  forgery,  theft,  embezzlement,  fraud,  errors  and  omissions  and
negligent  acts of such  persons.  Such  Fidelity Bond and errors and omissions
insurance  shall  also  protect  and  insure  the  Servicer  against  losses in
connection  with the  failure  to  maintain  any  insurance  policies  required
pursuant to this Agreement and the release or  satisfaction  of a Mortgage Loan
without having obtained  payment in full of the  indebtedness  secured thereby.
No provision of this Section 4.12  requiring  the Fidelity  Bond and errors and
omissions  insurance  shall  diminish or relieve the  Servicer  from its duties
and  obligations  as set forth in this  Agreement.  The minimum  coverage under
any such  Fidelity  Bond and  insurance  policy  shall be at least equal to the
corresponding  amounts  required  by Fannie  Mae in the  Fannie Mae Guide or by
Freddie Mac in the Freddie  Mac Guide.  The  Servicer  shall,  upon  request of
Owner,  deliver to the Owner a  certificate  from the surety and the insurer as
to the  existence  of the  Fidelity  Bond and  errors and  omissions  insurance
policy and shall  obtain a statement  from the surety and the insurer that such
Fidelity  Bond  or  insurance  policy  shall  in  no  event  be  terminated  or
materially  modified  without  thirty days prior  written  notice to the Owner.
The Servicer  shall notify the Owner  within five  Business  Days of receipt of
notice  that  such  Fidelity  Bond or  insurance  policy  will be, or has been,
materially  modified or  terminated.  The Owner and its  successors  or assigns
as their  interests  may appear  must be named as loss  payees on the  Fidelity
Bond and as additional insured on the errors and omissions policy.


                                      24
<PAGE>

      Section 4.13.     Title, Management and Disposition of REO Property.

      In the  event  that  title  to any  Mortgaged  Property  is  acquired  in
foreclosure  or by deed in lieu of  foreclosure,  the  deed or  certificate  of
sale  shall  be  taken  in the  name of the  Owner  or its  designee.  Any such
Person or Persons  holding  such title other than the Owner  shall  acknowledge
in writing  that such title is being  held as  nominee  for the  benefit of the
Owner.

      The  Servicer  shall assume the  responsibility  for  marketing  each REO
Property in  accordance  with Accepted  Servicing  Practices.  Thereafter,  the
Servicer  shall  continue  to provide  certain  administrative  services to the
Owner  relating to such REO  Property as set forth in this  Section  4.13.  The
REO  Property  must  be  sold  within  three  years  following  the  end of the
calendar  year of the date of  acquisition,  unless a REMIC  election  has been
made with respect to the  arrangement  under which the  Mortgage  Loans and REO
Property  are held and (i) the Owner shall have been  supplied  with an Opinion
of Counsel  (at the  Servicer's  expense) to the effect that the holding by the
related trust of such Mortgaged  Property  subsequent to such three-year period
(and  specifying  the  period  beyond  such  three-year  period  for  which the
Mortgaged  Property may be held) will not result in the  imposition of taxes on
"prohibited  transactions"  of the related  trust as defined in Section 860F of
the Code,  or cause the related  REMIC to fail to qualify as a REMIC,  in which
case the related trust may continue to hold such  Mortgaged  Property  (subject
to any  conditions  contained in such  Opinion of  Counsel),  or (ii) the Owner
(at the  Servicer's  expense) or the Servicer  shall have applied for, prior to
the  expiration  of such  three-year  period,  an extension of such  three-year
period in the manner  contemplated  by Section  856(e)(3) of the Code, in which
case the  three-year  period shall be extended by the applicable  period.  If a
period longer than three years is permitted  under the  foregoing  sentence and
is necessary to sell any REO  Property,  the Servicer  shall report  monthly to
the Owner as to progress being made in selling such REO Property.


                                      25
<PAGE>

      Notwithstanding  any  other  provision  of  this  Agreement,  if a  REMIC
election has been made,  no Mortgaged  Property held by a REMIC shall be rented
(or allowed to continue to be rented) or otherwise  used for the  production of
income  by or on  behalf  of the  related  trust or sold or  managed  in such a
manner or  pursuant to any terms that would (i) cause such  Mortgaged  Property
to fail to qualify at any time as  "foreclosure  property"  within a meaning of
Section  860G(a)(8)  of  the  Code,  (ii)  subject  the  related  trust  to the
imposition   of  any  federal  or  state  income  taxes  on  "net  income  from
foreclosure  property"  with  respect  to such  Mortgaged  Property  within the
meaning  of  Section  860G(c)  of the  Code,  or (iii)  cause  the sale of such
Mortgaged  Property  to  result  in the  receipt  by the  related  trust or any
income from  non-permitted  assets as  described in Section  860F(a)  (2)(B) of
the Code,  unless the Servicer has agreed to  indemnify  and hold  harmless the
related trust with respect to the imposition of any such taxes.

      The Servicer  shall  deposit or cause to be  deposited,  on a daily basis
in each  Custodial  Account all revenues  received  with respect to the related
REO  Property  and shall  withdraw  therefrom  funds  necessary  for the proper
operation,  management and maintenance of the REO Property,  including the cost
of  maintaining  any hazard  insurance  pursuant to Section  4.10  hereof.  The
Servicer  shall  maintain  separate  records  with respect to each REO Property
identifying  all deposits and withdrawals  from the Custodial  Account for each
REO Property.

      The  Servicer  shall  furnish to the Owner on each  Remittance  Date,  an
operating  statement  for each REO Property  covering the operation of each REO
Property  for  the  previous   month.   Such  operating   statement   shall  be
accompanied by such other information as the Owner shall reasonably request.

      The Servicer  shall,  either  itself or through an agent  selected by the
Servicer,  and in  accordance  with the  Fannie Mae  Guide,  manage,  conserve,
protect  and  operate  each REO  Property  in the same  manner that it manages,
conserves,  protects  and  operates  other  foreclosed  property  for  its  own
account,  and in the same manner that similar  property in the same locality as
the REO Property is managed.  Each REO Disposition  shall be carried out by the
Servicer  at such  price and upon such  terms and  conditions  as the  Servicer
deems to be in the best  interest of the Owner.  The REO  Disposition  Proceeds
from  the  sale  of  the  REO  Property  shall  be  promptly  deposited  in the
Custodial  Account.  As soon as  practical  thereafter,  the  expenses  of such
sale shall be paid and the  Servicer  shall  reimburse  itself for any  related
Servicing Advances, or Monthly Advances made pursuant to Section 5.03.

      The  Servicer  shall  cause each REO  Property to be  inspected  promptly
upon the  acquisition  of title thereto and shall cause each REO Property to be
inspected at least  monthly  thereafter  or more  frequently as may be required
by the  circumstances.  The Servicer  shall make or cause the inspector to make
a written  report of each such  inspection.  Such reports  shall be retained in
the  Servicing  File and copies  thereof  shall be forwarded by the Servicer to
the Owner.

      Section 4.14.     Notification of Adjustments.

      With  respect  to each  Mortgage  Loan,  the  Servicer  shall  adjust the
Mortgage  Interest  Rate  on the  related  Interest  Rate  Adjustment  Date  in
compliance  with  requirements  of applicable law and the related  Mortgage and
Mortgage  Note.  The Servicer  shall  execute and deliver any and all necessary
notices  required under  applicable  law and the terms of the related  Mortgage
Note and  Mortgage  regarding  the  Mortgage  Interest  Rate  adjustments.  The
Servicer shall promptly,  upon written request  therefor,  deliver to the Owner
such   notifications   and  any  additional   applicable  data  regarding  such
adjustments   and  the  methods   used  to   calculate   and   implement   such
adjustments.  Upon the  discovery  by the  Servicer  or the  receipt  of notice
from the Owner  that the  Servicer  has  failed to adjust a  Mortgage  Interest
Rate in  accordance  with the terms of the related  Mortgage Note and Mortgage,
the Servicer shall  immediately  deposit in the Custodial  Account from its own
funds the amount of any interest loss or deferral caused to the Owner thereby.


                                      26
<PAGE>

                                   ARTICLE V
                             PAYMENTS TO THE OWNER

      Section 5.01.     Remittances.

      On each  Remittance  Date,  the Servicer shall remit to the Owner (i) all
amounts  credited to the  Custodial  Account as of the close of business on the
last  day of the  calendar  month  preceding  the  Determination  Date,  net of
charges against or withdrawals  from the Custodial  Account pursuant to Section
4.05,  except (a) Full  Principal  Prepayments  received  on or before the 15th
day of the month in which a  Remittance  Date  occurs  shall be remitted to the
Owner  on  the  Remittance   Date  of  such  month,   and  (b)  Full  Principal
Prepayments  received  after  the 15th day of the  month in which a  Remittance
Date occurs  shall be remitted  to the Owner on the next  following  Remittance
Date, plus, to the extent not already deposited in the Custodial  Account,  the
sum of (ii) all Monthly  Advances,  if any,  which the Servicer is obligated to
distribute   pursuant  to  Section  5.03  and  (iii)  all  Prepayment  Interest
Shortfalls  the  Servicer is  required  to make up  pursuant  to Section  4.04,
minus (iv) any amounts  attributable  to Monthly  Payments  collected after the
Cut-off Date but due on a Due Date or Dates  subsequent  to the last day of the
related Due Period,  which amounts shall be remitted on the related  Remittance
Date next succeeding the Due Period for such amounts.

      With respect to any  remittance  received by the Owner after the Business
Day on which  such  payment  was  due,  the  Servicer  shall  pay to the  Owner
interest  on any such late  payment at an annual  rate equal to the Prime Rate,
adjusted as of the date of each change,  plus two percentage  points, but in no
event  greater  than the maximum  amount  permitted  by  applicable  law.  Such
interest  shall be remitted to the Owner by the  Servicer on the date such late
payment is made and shall cover the period  commencing  with the day  following
such  Business  Day and ending with the  Business  Day on which such payment is
made,  both  inclusive.  The payment by the Servicer of any such interest shall
not be  deemed an  extension  of time for  payment  or a waiver of any Event of
Default by the Servicer.

      Section 5.02.     Statements to the Owner and the Master Servicer.

      The  Servicer  shall  furnish  to the Owner and the  Master  Servicer  an
individual  Mortgage  Loan  accounting  report  (a  "Report"),  as of the  last
Business  Day of each month and the end of the related  Prepayment  Period,  as
applicable,  in the Servicer's  assigned loan number order to document Mortgage
Loan payment  activity on an individual  Mortgage  Loan basis.  With respect to
each  month,  such  Report  shall  be  received  by the  Owner  and the  Master
Servicer  no later  than the tenth  calendar  day of the  month of the  related
Remittance  Date  (or,  with  respect  to  information  as  to  Full  Principal
Prepayments  and prepayment  penalties no later than one (1) Business Day after
the end of each  Prepayment  Period),  a  report  in an Excel  (or  compatible)
electronic  format,  in such format as may be mutually  agreed upon by both the
Owner and the  Servicer,  and which shall provide the  information  required to
be contained in the monthly  statements to  certificateholders  as specified in
the related pooling and servicing  Agreement,  to the extent  applicable to the
Servicer.


                                      27
<PAGE>

      In addition,  the Servicer  shall provide to the Master  Servicer and the
Owner  such  other  information  known or  available  to the  Servicer  that is
necessary  in  order  to  provide  the   distribution   and  pool   performance
information as required  under  Regulation AB, as amended from time to time, as
determined  by the  Owner in its  sole  discretion.  The  Servicer  shall  also
provide a monthly report,  in the form of Exhibit E hereto,  or such other form
as is mutually  acceptable to the Servicer,  the Owner and the Master Servicer,
Exhibit  F with  respect  to  defaulted  mortgage  loans  and  Exhibit  K, with
respect to realized losses and gains, with each such report.

      The Servicer  shall prepare and file any and all  information  statements
or  other  filings  required  to  be  delivered  to  any  governmental   taxing
authority or to Owner or the Master  Servicer  pursuant to any  applicable  law
with respect to the Mortgage Loans and the  transactions  contemplated  hereby.
In  addition,  the  Servicer  shall  provide the Owner and the Master  Servicer
with such  information  concerning  the Mortgage  Loans as is necessary for the
Owner and the Master  Servicer  to  prepare  its  federal  income tax return as
Owner and the Master Servicer may reasonably request from time to time.

      In addition,  not more than 60 days after the end of each calendar  year,
the  Servicer  shall  furnish  to each  Person  who was an Owner and the Master
Servicer  at any  time  during  such  calendar  year  an  annual  statement  in
accordance  with the  requirements  of applicable  federal income tax law as to
the  aggregate  of  remittances  of principal  and interest for the  applicable
portion of such year.

      Section 5.03.     Monthly Advances by the Servicer.

      Not later than the close of business on the Business Day  preceding  each
Remittance  Date,  the  Servicer  shall  deposit  in the  Custodial  Account an
amount equal to all payments not previously  advanced by the Servicer,  whether
or not deferred  pursuant to Section  4.01,  of Monthly  Payments,  adjusted to
the related  Mortgage Loan Remittance  Rate,  which are delinquent at the close
of business on the related  Determination Date; provided,  however, that in the
case of any  Option  ARM  Mortgage  Loan or  Mortgage  Loan  having a  Negative
Amortization  feature,  such deposit by the Servicer need not exceed  scheduled
monthly payment of interest due thereon;  and provided further,  however,  that
the amount of any such  deposit  may be  reduced by the Amount  Held for Future
Distribution  (as  defined  below)  then on deposit in the  Custodial  Account.
Any  portion of the Amount  Held for Future  Distribution  used to pay  Monthly
Advances  shall be  replaced  by the  Servicer  by deposit  into the  Custodial
Account on any  future  Remittance  Date to the extent  that the funds that are
available  in the  Custodial  Account  for  remittance  to the  Owner  on  such
Remittance  Date are less than the amount of  payments  required  to be made to
the Owner on such Remittance Date.


                                      28
<PAGE>

      The  "Amount  Held for Future  Distribution"  as to any  Remittance  Date
shall be the total of the amounts  held in the  Custodial  Account at the close
of business on the preceding  Determination  Date which were received after the
Cut-off Date on account of (i) Liquidation  Proceeds,  Insurance Proceeds,  and
Principal  Prepayments  received or made in the month of such Remittance  Date,
and (ii)  payments  which  represent  early  receipt of  scheduled  payments of
principal  and  interest due on a date or dates  subsequent  to the related Due
Date.

      The  Servicer's  obligation  to  make  such  Monthly  Advances  as to any
Mortgage Loan will continue  through the final  disposition  or  liquidation of
the  Mortgaged  Property,   unless  the  Servicer  deems  such  advance  to  be
nonrecoverable  from  Liquidation   Proceeds,   REO  Disposition   Proceeds  or
Insurance  Proceeds  with  respect to the  applicable  Mortgage  Loan.  In such
latter   event,   the  Servicer   shall  deliver  to  the  Owner  an  Officer's
Certificate  of the  Servicer to the effect that an officer of the Servicer has
reviewed the related  Servicing  File and has obtained a recent  appraisal  and
has  made  the  reasonable  determination  that  any  additional  advances  are
nonrecoverable  from  Liquidation  or  Insurance  Proceeds  with respect to the
applicable Mortgage Loan.

      Section 5.04.     Liquidation Reports.

      Upon the  foreclosure  sale of any Mortgaged  Property or the acquisition
thereof by the Owner pursuant to a deed-in-lieu  of  foreclosure,  the Servicer
shall submit to the Owner a liquidation  report with respect to such  Mortgaged
Property  in  such  form  as the  Servicer  and  the  Owner  shall  agree.  The
Servicer  shall also provide  reports on the status of REO Property  containing
such information as Owner may reasonably require.

                                  ARTICLE VI
                         GENERAL SERVICING PROCEDURES

      Section 6.01.     Assumption Agreements.

      The Servicer  will, to the extent it has  knowledge of any  conveyance or
prospective  conveyance  by any Mortgagor of a Mortgaged  Property  (whether by
absolute  conveyance or by contract of, sale,  and whether or not the Mortgagor
remains or is to remain  liable under the Mortgage  Note and/or the  Mortgage),
exercise  its rights to  accelerate  the maturity of such  Mortgage  Loan under
any  "due-on-sale"  clause to the extent permitted by law;  provided,  however,
that the Servicer  shall not exercise any such rights if  prohibited  by law or
the  terms  of the  Mortgage  Note  from  doing so or if the  exercise  of such
rights  would  impair or  threaten  to impair any  recovery  under the  related
Primary  Mortgage  Insurance  Policy,  if  any.  If  the  Servicer   reasonably
believes  it is unable  under  applicable  law to  enforce  such  "due-on-sale"
clause, the Servicer,  will enter into an assumption  agreement with the person
to  whom  the  Mortgaged  Property  has  been  conveyed  or is  proposed  to be
conveyed,  pursuant  to which such person  becomes  liable  under the  Mortgage
Note and,  to the extent  permitted  by  applicable  state law,  the  Mortgagor
remains  liable  thereon.  Where an  assumption  is  allowed  pursuant  to this
Section  6.01,  the Servicer,  with the prior  consent of the primary  mortgage
insurer,  if any,  is  authorized  to enter into a  substitution  of  liability
agreement  with the person to whom the Mortgaged  Property has been conveyed or
is  proposed  to be  conveyed  pursuant  to which  the  original  mortgagor  is
released  from  liability  and such  Person is  substituted  as  mortgagor  and
becomes  liable  under the related  Mortgage  Note.  Any such  substitution  of
liability agreement shall be in lieu of an assumption agreement.


                                      29
<PAGE>

      In  connection  with any such  assumption or  substitution  of liability,
the Servicer  shall follow the  underwriting  practices  and  procedures of the
Fannie  Mae  Guide.   With  respect  to  an  assumption  or   substitution   of
liability,  the Mortgage  Interest Rate borne by the related  Mortgage Note and
the amount of the  Monthly  Payment  may not be  changed.  The  Servicer  shall
notify  the  Owner  that any  such  substitution  of  liability  or  assumption
agreement  has been  completed by  forwarding  to the Owner the original of any
such  substitution of liability or assumption  agreement,  which document shall
be added to the related  Mortgage Loan  Documents and shall,  for all purposes,
be  considered a part of such related  mortgage  file to the same extent as all
other  documents  and  instruments   constituting  a  part  thereof.  All  fees
collected by the Servicer for entering into an assumption  or  substitution  of
liability agreement shall belong to the Servicer.

      Notwithstanding  the  foregoing  paragraphs  of this section or any other
provision  of  this  Agreement,  the  Servicer  shall  not be  deemed  to be in
default,  breach or any other violation of its obligations  hereunder by reason
of any  assumption  of a Mortgage  Loan by operation  of law or any  assumption
which the Servicer may be  restricted  by law from  preventing,  for any reason
whatsoever.  For  purposes  of this  Section  6.01,  the term  "assumption"  is
deemed  to  also  include  a sale  of the  Mortgaged  Property  subject  to the
Mortgage  that  is  not   accompanied  by  an  assumption  or  substitution  of
liability agreement.

      Section 6.02.     Satisfaction  of  Mortgages  and  Release  of  Mortgage
Loan Documents.

      Upon  the  payment  in full  of any  Mortgage  Loan,  the  Servicer  will
immediately  notify the Custodian with a certification  and request for release
by a Servicing Officer,  which  certification  shall include a statement to the
effect that all amounts  received in  connection  with such  payment  which are
required to be  deposited  in the  Custodial  Account  pursuant to Section 4.04
have been so  deposited,  and a request  for  delivery  to the  Servicer of the
portion of the Mortgage  Loan  Documents  held by the  Custodian.  Upon receipt
of such  certification  and request,  the Owner shall promptly release or cause
the Custodian to promptly  release the related  Mortgage Loan  Documents to the
Servicer  and the  Servicer  shall  prepare and deliver  for  execution  by the
Owner or at the  Owner's  option  execute  under  the  authority  of a power of
attorney  delivered to the Servicer by the Owner any  satisfaction  or release.
No expense  incurred in connection  with any instrument of satisfaction or deed
of reconveyance shall be chargeable to the Custodial Account.

      In the event the  Servicer  satisfies  or  releases  a  Mortgage  without
having  obtained  payment in full of the  indebtedness  secured by the Mortgage
or  should it  otherwise  prejudice  any  right  the  Owner may have  under the
mortgage  instruments,  the Servicer,  upon written demand,  shall remit within
one Business  Day to the Owner the then  outstanding  principal  balance of the
related  Mortgage  Loan  by  deposit  thereof  in the  Custodial  Account.  The
Servicer  shall  maintain the Fidelity Bond  insuring the Servicer  against any
loss it may  sustain  with  respect  to any  Mortgage  Loan  not  satisfied  in
accordance with the procedures set forth herein.

      From time to time and as  appropriate  for the  servicing or  foreclosure
of the  Mortgage  Loans,  including  for the  purpose of  collection  under any
Primary Mortgage  Insurance  Policy,  upon request of the Servicer and delivery
to the  Custodian of a servicing  receipt  signed by a Servicing  Officer,  the
Custodian  shall  release the portion of the Mortgage  Loan  Documents  held by
the  Custodian to the  Servicer.  Such  servicing  receipt  shall  obligate the
Servicer  to  promptly  return  the  related  Mortgage  Loan  Documents  to the
Custodian,  when the need  therefor by the  Servicer no longer  exists,  unless
the Mortgage Loan has been  liquidated and the  Liquidation  Proceeds  relating
to the  Mortgage  Loan have been  deposited  in the  Custodial  Account or such
documents have been  delivered to an attorney,  or to a public trustee or other
public  official as required by law,  for  purposes of  initiating  or pursuing
legal  action  or  other  proceedings  for  the  foreclosure  of the  Mortgaged
Property  either  judicially or  non-judicially,  and the Servicer has promptly
delivered to the Owner or the  Custodian a certificate  of a Servicing  Officer
certifying  as to the name and  address of the  Person to which such  documents
were  delivered and the purpose or purposes of such  delivery.  Upon receipt of
a  certificate  of a Servicing  Officer  stating  that such  Mortgage  Loan was
liquidated,  the  servicing  receipt  shall  be  released  by the  Owner or the
Custodian, as applicable, to the Servicer.


                                      30
<PAGE>

      Section 6.03.     Servicing Compensation.

      As  compensation  for its  services  hereunder,  the  Servicer  shall  be
entitled  to withdraw  from the  Custodial  Account or to retain from  interest
payments on the  Mortgage  Loans the  amounts  provided  for as the  Servicer's
Servicing  Fee.  Additional  servicing  compensation  in the form of assumption
fees,  as provided in Section  6.01,  late payment  charges  (exclusive  of any
Prepayment  Chargres)  and  other  ancillary  fees  shall  be  retained  by the
Servicer  to  the  extent  not  required  to  be  deposited  in  the  Custodial
Account.  The  Servicer  shall be required to pay all  expenses  incurred by it
in  connection  with  its  servicing  activities  hereunder  and  shall  not be
entitled to reimbursement therefor except as specifically provided for.

      Section 6.04.     Annual    Statement    as   to    Compliance;    Annual
Certification.

      (a)   The  Servicer  will  deliver to the Owner and the Master  Servicer,
not  later  than  March  15th of each  calendar  year  beginning  in  2007,  an
Officer's  Certificate  (an "Annual  Statement of Compliance")  stating,  as to
each  signatory  thereof,  that (i) a review of the  activities of the Servicer
during the preceding  calendar year and of performance  under this Agreement or
other  applicable  servicing  agreement  has been  made  under  such  officer's
supervision  and (ii) to the best of such  officer's  knowledge,  based on such
review,   the  Servicer  has  fulfilled  all  of  its  obligations  under  this
Agreement or other  applicable  servicing  agreement  in all material  respects
throughout  such  year,  or, if there has been a failure  to  fulfill  any such
obligation  in any material  respect,  specifying  each such  failure  known to
such  officer  and the  nature  and  status of cure  provisions  thereof.  Such
Annual  Statement of Compliance  shall contain no  restrictions  or limitations
on its use.  Copies of such  statement  shall be  provided  by the  Servicer to
the  Owner  upon  request  and  by the  Owner  to any  Person  identified  as a
prospective  purchaser  of the Mortgage  Loans.  In the event that the Servicer
has  delegated  any  servicing  responsibilities  with  respect to the Mortgage
Loans to a  Subservicer,  the  Servicer  shall  deliver an Annual  Statement of
Compliance of the  Subservicer  as described  above as to each  Subservicer  as
and when required with respect to the Servicer.

      (b)   With  respect  to  the  Mortgage  Loans,  by  March  15th  of  each
calendar year  beginning in 2007, an officer of the Servicer  shall execute and
deliver an  Officer's  Certificate  (an "Annual  Certification")  to the Owner,
the Master Servicer,  the Securities  Administrator,  and any related Depositor
for the  benefit  of each such  entity  and such  entity's  affiliates  and the
officers,   directors   and  agents  of  any  such  entity  and  such  entity's
affiliates,  in the form  attached  hereto as  Exhibit G. In the event that the
Servicer  has  delegated  any  servicing  responsibilities  with respect to the
Mortgage  Loans  to a  Subservicer  or a  Subcontractor,  to  the  extent  such
Subcontractor is  "participating  in the servicing  function"  pursuant to Item
1122 of Regulation  AB, the Servicer shall deliver an Annual  Certification  as
to each such Subservicer and  Subcontractor,  as and when required with respect
to the Servicer.


                                      31
<PAGE>

      The Servicer  shall  indemnify and hold harmless the Master  Servicer and
its officers,  directors,  agents and  affiliates  from and against any losses,
damages,  penalties,  fines,  forfeitures,  reasonable  legal fees and  related
costs,  judgments  and other costs and expenses  arising out of or based upon a
breach  by  the  Servicer  or  any  of  its  officers,   directors,  agents  or
affiliates  of its  obligations  under this Section 6.04 or Section 6.09 or the
negligence,  bad faith or willful  misconduct  of the  Servicer  in  connection
therewith.  If the  indemnification  provided  for  herein  is  unavailable  or
insufficient  to hold harmless the Master  Servicer,  then the Servicer  agrees
that it shall  contribute to the amount paid or payable by the Master  Servicer
as a result  of the  losses,  claims,  damages  or  liabilities  of the  Master
Servicer in such  proportion as is  appropriate  to reflect the relative  fault
of the  Master  Servicer  on the one  hand  and the  Servicer  on the  other in
connection  with a breach of the  Servicer's  obligations  under  this  Section
6.04 or  Section  6.09 or the  Servicer's  negligence,  bad  faith  or  willful
misconduct in connection therewith.

      Upon  request  by the Owner or the Master  Servicer,  the  Servicer  will
deliver  to such  requesting  party a copy of the  audited  (if such  financial
statements  are available,  otherwise  unaudited)  financial  statements of the
Servicer for the most recent fiscal year of the Servicer.

      Section 6.05.     [Reserved]

      Section 6.06.     Owner's Right to Examine Servicer Records.

      The Owner  shall have the right to examine  and  audit,  at its  expense,
upon  reasonable  notice  to the  Servicer,  during  business  hours or at such
other times as might be  reasonable  under  applicable  circumstances,  any and
all  of  the  books,  records,   documentation  or  other  information  of  the
Servicer,  or held by another for the  Servicer or on its behalf or  otherwise,
which relate to the  performance  or  observance  by the Servicer of the terms,
covenants or conditions of this Agreement.

      The Servicer  shall  provide to the Owner and any  supervisory  agents or
examiners   representing  a  state  or  federal   governmental   agency  having
jurisdiction  over  the  Owner  access  to  any  documentation   regarding  the
Mortgage  Loans in the  possession of the Servicer which may be required by any
applicable  regulations.  Such access shall be afforded  without  charge,  upon
reasonable  request,  during  normal  business  hours and at the offices of the
Servicer,  and in accordance  with the applicable  federal or state  government
regulations.

      Section 6.07.     Compliance with REMIC Provisions.

      If a REMIC election has been made with respect to the  arrangement  under
which the  Mortgage  Loans and REO Property  are held,  the Servicer  shall not
take any  action,  cause the REMIC to take any  action or fail to take (or fail
to cause to be taken) any action  that,  under the REMIC  Provisions,  if taken
or not  taken,  as the case may be could (i)  endanger  the status of the REMIC
as a  REMIC  or  (ii)  result  in  the  imposition  of a  tax  upon  the  REMIC
(including but not limited to the tax on "prohibited  transactions"  as defined
in  Section  860F(a)(2)  of the Code and the tax on  "contribution"  to a REMIC
set forth in Section  860G(d) of the Code unless the  Servicer  has received an
Opinion of Counsel (at the expense of the party  seeking to take such  actions)
to the  effect  that the  contemplated  action  will not  endanger  such  REMIC
status or result in the imposition of any such tax.


                                      32
<PAGE>

      Section 6.08.     Non-solicitation.

      The Servicer  shall not knowingly  conduct any  solicitation  exclusively
targeted to the  Mortgagors  for the purpose of  inducing  or  encouraging  the
early   prepayment  or  refinancing  of  the  related  Mortgage  Loans.  It  is
understood and agreed that  promotions  undertaken by the Servicer or any agent
or  affiliate  of the  Servicer  which are  directed to the  general  public at
large,  including,  without  limitation,  mass mailings  based on  commercially
acquired mailing lists,  newspaper,  radio and television  advertisements shall
not  constitute  solicitation  under this  section.  Nothing  contained  herein
shall  prohibit the Servicer from (i)  distributing  to Mortgagors  any general
advertising  including  information  brochures,  coupon books, or other similar
documentation   which  indicates   services  the  Servicer  offers,   including
refinances  or (ii)  providing  financing of home equity loans to Mortgagors at
the Mortgagor's request.

      Section 6.09.     Assessment of Compliance with Servicing Criteria.

      On  and  after   October  1,  2006,   the  Servicer   shall  service  and
administer,  and shall cause each  subservicer  to service or  administer,  the
Mortgage  Loans  in  accordance   with  all  applicable   requirements  of  the
Servicing Criteria.

      With respect to the Mortgage  Loans,  the Servicer  shall  deliver to the
Owner or its designee, the Master Servicer, the Securities  Administrator,  and
any  Depositor  on or before  March 15th of each  calendar  year  beginning  in
2007,  a report  (an  "Assessment  of  Compliance")  regarding  the  Servicer's
assessment  of  compliance  with the  Servicing  Criteria  during the preceding
calendar  year as required by Rules  13a-18 and 15d-18 of the  Exchange Act and
Item 1122 of Regulation  AB, or as otherwise  required by the Master  Servicer,
which as of the date hereof,  require a report by an authorized  officer of the
Servicer that contains the following:

      (a)   A statement by such  officer of its  responsibility  for  assessing
compliance with the Servicing Criteria applicable to the Servicer;

      (b)   A statement by such  officer  that such officer used the  Servicing
Criteria to assess  compliance  with the Servicing  Criteria  applicable to the
Servicer;

      (c)   An assessment  by such officer of the  Servicer's  compliance  with
the applicable  Servicing  Criteria for the period  consisting of the preceding
calendar year,  including  disclosure of any material instance of noncompliance
with respect  thereto during such period,  which  assessment  shall be based on
the   activities   it  performs   with  respect  to   asset-backed   securities
transactions  taken as a whole  involving the Servicer,  that are backed by the
same asset type as the Mortgage Loans;


                                      33
<PAGE>

      (d)   A statement  that a registered  public  accounting  firm has issued
an  attestation  report on the  Servicer's  Assessment  of  Compliance  for the
period consisting of the preceding calendar year; and

      (e)   A statement  as to which of the  Servicing  Criteria,  if any,  are
not  applicable  to  the  Servicer,  which  statement  shall  be  based  on the
activities it performs  with respect to  asset-backed  securities  transactions
taken as a whole  involving  the  Servicer,  that are  backed by the same asset
type as the Mortgage Loans.

      Such report at a minimum  shall  address each of the  Servicing  Criteria
specified on Exhibit J hereto.

      With  respect  to the  Mortgage  Loans,  on or before  March 15th of each
calendar  year  beginning in 2007,  the Servicer  shall furnish to the Owner or
its  designee,  the  Master  Servicer,  the  Securities  Administrator  and any
Depositor  a  report  (an   "Attestation   Report")  by  a  registered   public
accounting  firm that attests to, and reports on, the  Assessment of Compliance
made by the  Servicer,  as required by Rules  13a-18 and 15d-18 of the Exchange
Act and Item 1122(b) of Regulation  AB, or as otherwise  required by the Master
Servicer,  which  Attestation  Report must be made in accordance with standards
for  attestation  reports  issued or adopted by the Public  Company  Accounting
Oversight Board.

      The  Servicer  shall  cause  each  Subservicer,  and  each  Subcontractor
determined by the Servicer  pursuant to Section 11.15 to be  "participating  in
the servicing  function"  within the meaning of Item 1122 of Regulation  AB, to
deliver to the Owner, the Master  Servicer,  the Securities  Administrator  and
any Depositor an assessment of compliance and  accountants'  attestation as and
when provided in Section 6.09.

      Section 6.10.     Intent of the Parties; Reasonableness.

      The Owner  and the  Servicer  acknowledge  and  agree  that a purpose  of
clause  (g) of  Article  III,  Sections  5.02,  6.04,  6.09  and  10.02 of this
Agreement is to facilitate  compliance by the Owner and any Depositor  with the
provisions  of  Regulation  AB  and  related  rules  and   regulations  of  the
Commission.  None of the Owner,  the Master  Servicer  or any  Depositor  shall
exercise  its right to request  delivery of  information  or other  performance
under these  provisions  other than in good faith,  or for purposes  other than
compliance  with  the  Securities  Act,  the  Exchange  Act and the  rules  and
regulations  of the  Commission  thereunder.  The  Servicer  acknowledges  that
interpretations  of the  requirements  of  Regulation  AB may change over time,
whether due to interpretive  guidance  provided by the Commission or its staff,
consensus among  participants in the asset-backed  securities  markets,  advice
of  counsel,  or  otherwise,  and agrees to comply  with  requests  made by the
Owner or any  Depositor in good faith for delivery of  information  under these
provisions  on the  basis of  evolving  interpretations  of  Regulation  AB. In
connection with any Pass-Through  Transfer,  the Servicer shall cooperate fully
with the Owner to  deliver  to the Owner  (including  any of its  assignees  or
designees)   and   any   Depositor,   any   and   all   statements,    reports,
certifications,  records and any other information  necessary in the good faith
determination  of the  Owner  or any  Depositor  to  permit  the  Owner or such
Depositor to comply with the  provisions of Regulation  AB,  together with such
disclosures  relating to the Servicer,  any Subservicer and the Mortgage Loans,
or the  servicing of the Mortgage  Loans,  reasonably  believed by the Owner or
any Depositor to be necessary in order to effect such compliance.


                                      34
<PAGE>

                                  ARTICLE VII
                      REPORTS TO BE PREPARED BY SERVICER

      Section 7.01.     Servicer   Shall  Provide   Information  as  Reasonably
Required.

      The Servicer  shall  furnish to the Owner upon  request,  during the term
of this  Agreement,  such  periodic,  special or other reports or  information,
whether or not  provided  for  herein,  as shall be  necessary,  reasonable  or
appropriate  with respect to the purposes of this  Agreement.  The Servicer may
negotiate  with the Owner for a  reasonable  fee for  providing  such report or
information,  unless (i) the  Servicer  is  required  to supply  such report or
information  pursuant  to any  other  section  of this  Agreement,  or (ii) the
report or information  has been requested in connection  with Internal  Revenue
Service  or  other  regulatory  agency   requirements.   All  such  reports  or
information  shall  be  provided  by  and in  accordance  with  all  reasonable
instructions  and  directions  given  by the  Owner.  The  Servicer  agrees  to
execute  and  deliver  all such  instruments  and take all such  action  as the
Owner,  from time to time,  may  reasonably  request in order to effectuate the
purpose and to carry out the terms of this Agreement.

                                 ARTICLE VIII
                                 THE SERVICER

      Section 8.01.     Indemnification; Third Party Claims.

      The Servicer  agrees to indemnify the Owner,  its successors and assigns,
any  agent  of the  Owner,  and the  Master  Servicer,  and  hold  each of such
Persons  harmless  from  and  against  any and  all  claims,  losses,  damages,
penalties,  fines,  forfeitures,  legal fees and related costs, judgments,  and
any other  costs,  fees and  expenses  that such  Person may sustain in any way
related  to the  failure of the  Servicer  to perform in any way its duties and
service  the  Mortgage  Loans  in  strict  compliance  with  the  terms of this
Agreement  and for breach of any  representation  or warranty  of the  Servicer
contained  herein.  The Servicer  shall  immediately  notify the Owner or other
indemnified  Person if a claim is made by a third  party  with  respect to this
Agreement  or the  Mortgage  Loans,  assume  (with the consent of the Owner and
such other Indemnified Person and with counsel  reasonably  satisfactory to the
Owner and such  Person) the  defense of any such claim and pay all  expenses in
connection  therewith,  including counsel fees, and promptly pay, discharge and
satisfy any  judgment or decree  which may be entered  against it or such other
indemnified  Person in  respect  of such  claim but  failure  to so notify  the
Owner and such  other  indemnified  Person  shall  not  limit  its  obligations
hereunder.  The Servicer  agrees that it will not enter into any  settlement of
any such claim  without  the  consent  of the Owner and such other  indemnified
Person unless such settlement  includes an  unconditional  release of the Owner
and such  other  indemnified  Person  from all  liability  that is the  subject
matter of such  claim.  The  provisions  of this  Section  8.01  shall  survive
termination of this Agreement.

      Section 8.02.     Merger or Consolidation of the Servicer.

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


                                      35
<PAGE>

      Any Person  into which the  Servicer  may be merged or  consolidated,  or
any  corporation  resulting  from any merger,  conversion or  consolidation  to
which the Servicer shall be a party,  or any Person  succeeding to the business
of the  Servicer  whether  or not  related  to  loan  servicing,  shall  be the
successor of the  Servicer  hereunder,  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;  provided,  however, that the successor
or  surviving  Person  shall be an  institution  (i) having a GAAP net worth of
not less  than  $25,000,000,  (ii) the  deposits  of which are  insured  by the
FDIC,  or  which is a  HUD-approved  mortgagee  whose  primary  business  is in
origination  and servicing of first lien mortgage  loans,  and (iii) which is a
Fannie Mae or Freddie Mac approved seller/servicer in good standing.

      Section 8.03.     Limitation on Liability of the Servicer and Others.

      Neither the  Servicer  nor any of the  officers,  employees  or agents of
the  Servicer  shall be under any  liability  to the Owner for any action taken
or for  refraining  from the  taking of any action in good  faith  pursuant  to
this  Agreement,  or for  errors  in  judgment  made in good  faith;  provided,
however,  that  this  provision  shall not  protect  the  Servicer  or any such
person  against any breach of warranties  or  representations  made herein,  or
failure to perform in any way its  obligations in compliance  with any standard
of care set forth in this  Agreement,  or any liability  which would  otherwise
be  imposed  by  reason  of gross  negligence  or any  breach  of the terms and
conditions  of this  Agreement.  The  Servicer  and any  officer,  employee  or
agent of the  Servicer  may  rely in good  faith  on any  document  of any kind
prima  facie  properly  executed  and  submitted  by the Owner  respecting  any
matters  arising  hereunder.  The Servicer shall not be under any obligation to
appear in,  prosecute  or defend any legal action  which is not  incidental  to
its duties to service the  Mortgage  Loans in  accordance  with this  Agreement
and  which  in its  opinion  may  involve  it in  any  expenses  or  liability;
provided,  however,  that the  Servicer  may,  with the  consent  of the Owner,
which consent  shall not be  unreasonably  withheld,  undertake any such action
which it may deem  necessary or desirable  with respect to this  Agreement  and
the rights and duties of the  parties  hereto.  In such event,  the  reasonable
legal expenses and costs of such action and any liability  resulting  therefrom
shall be expenses,  costs and  liabilities  for which the Owner will be liable,
and  the  Servicer  shall  be  entitled  to be  reimbursed  therefor  from  the
Custodial Account pursuant to Section 4.05.

      Section 8.04.     Servicer Not to Resign.

      The  Servicer  shall not resign from the  obligations  and duties  hereby
imposed on it except by mutual  consent of the  Servicer  and the Owner or upon
the  determination  that its duties hereunder are no longer  permissible  under
applicable law and such  incapacity  cannot be cured by the Servicer.  Any such
determination  permitting  the  resignation  of the Servicer shall be evidenced
by an Opinion of Counsel to such effect  delivered  to the Owner which  Opinion
of Counsel  shall be in form and  substance  acceptable  to the Owner.  No such
resignation  shall become  effective  until a successor  shall have assumed the
Servicer's  responsibilities  and obligations  hereunder in the manner provided
in Section 11.01.


                                      36
<PAGE>

      Section 8.05.     No Transfer of Servicing.

      With  respect to the  retention  of the  Servicer to service the Mortgage
Loans  hereunder,  the  Servicer  acknowledges  that  the  Owner  has  acted in
reliance  upon  the  Servicer's   independent   status,  the  adequacy  of  its
servicing facilities,  plan, personnel,  records and procedures, its integrity,
reputation  and  financial  standing and the  continuance  thereof.  Without in
any way  limiting  the  generality  of this  section,  the  Servicer  shall not
either  assign this  Agreement  or the  servicing  hereunder  or  delegate  its
rights  or  duties  hereunder  or any  portion  thereof,  or sell or  otherwise
dispose of all or  substantially  all of its  property  or assets,  without the
prior written  approval of the Owner,  which approval shall not be unreasonably
withheld;  provided  that  the  Servicer  may  assign  the  Agreement  and  the
servicing  hereunder  without  the  consent  of  Owner to an  affiliate  of the
Servicer  to which all  servicing  of the  Servicer  is assigned so long as (i)
such  affiliate is a Fannie Mae and Freddie Mac  approved  servicer and (ii) if
it is  intended  that such  affiliate  be spun off to the  shareholders  of the
Servicer,  such  affiliate  have a GAAP net worth of at least  $25,000,000  and
(iii) such  affiliate  shall deliver to the Owner a  certification  pursuant to
which such  affiliate  shall agree to be bound by the terms and  conditions  of
this  Agreement  and shall  certify  that such  affiliate  is a Fannie  Mae and
Freddie Mac approved servicer in good standing.

                                  ARTICLE IX
                                    DEFAULT

      Section 9.01.     Events of Default.

      In case one or more of the  following  Events of Default by the  Servicer
shall occur and be continuing, that is to say:

      (i)   any  failure  by the  Servicer  to remit to the Owner  any  payment
required  to be  made  under  the  terms  of  this  Agreement  which  continues
unremedied  for one (1) Business  Day after  written  notice  thereof (it being
understood  that this  subparagraph  shall  not  affect  Servicer's  obligation
pursuant to Section  5.01 to pay default  interest on any  remittance  received
by the Owner after the Business Day on which such payment was due); or

      (ii)  any  failure  on the  part  of the  Servicer  duly  to  observe  or
perform in any material  respect any other of the  covenants or  agreements  on
the  part of the  Servicer  set  forth  in this  Agreement  (other  than  those
described in clause (ix)  hereof),  the breach of which has a material  adverse
effect and which  continue  unremedied for a period of thirty days (except that
such  number  of days  shall be  fifteen  in the case of a  failure  to pay any
premium  for  any  insurance  policy  required  to  be  maintained  under  this
Agreement and such failure shall be deemed to have a material  adverse  effect)
after the date on which written  notice of such failure,  requiring the same to
be remedied, shall have been given to the Servicer by the Owner; or

      (iii) a decree  or order of a court or agency  or  supervisory  authority
having  jurisdiction  for the  appointment  of a  conservator  or  receiver  or
liquidator in any insolvency,  bankruptcy,  readjustment of debt, marshaling of
assets  and  liabilities  or  similar  proceedings,  or for the  winding-up  or
liquidation  of its affairs,  shall have been entered  against the Servicer and
such decree or order  shall have  remained  in force  undischarged  or unstayed
for a period of sixty days; or


                                      37
<PAGE>

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

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

      (vi)  the  Servicer  ceases  to be  approved  by  either  Fannie  Mae  or
Freddie  Mac (to the extent  such  entities  are then  operating  in a capacity
similar to that in which they  operate on the date  hereof) as a mortgage  loan
servicer  for  more  than  thirty  days to the  extent  such  entities  perform
similar functions; or

      (vii) the   Servicer   attempts   to  assign   its  right  to   servicing
compensation  hereunder  or the Servicer  attempts,  without the consent of the
Owner,  to  sell  or  otherwise  dispose  of  all or  substantially  all of its
property   or  assets   or  to  assign   this   Agreement   or  the   servicing
responsibilities  hereunder or to delegate its duties  hereunder or any portion
thereof except as otherwise permitted herein; or

      (viii) the Servicer  ceases to be  qualified  to transact  business in any
jurisdiction  where it is  currently so  qualified,  but only to the extent such
non-qualification  materially and adversely  affects the  Servicer's  ability to
perform its obligations hereunder; or

      (ix)  failure by the Servicer to duly  perform,  within the required time
period,  its  obligations  under  Section  6.04,  6.09  or any of  clauses  (v)
through (viii) of Section 10.02;

then,  and in each and every  such case,  so long as an Event of Default  shall
not have been  remedied,  the Owner,  by notice in writing to the Servicer may,
in  addition to whatever  rights the Owner may have under  Section  8.01 and at
law  or  equity  to  damages,   including   injunctive   relief  and   specific
performance,  terminate all the rights and  obligations of the Servicer (and if
the  Servicer  is  servicing  any  of  the  Mortgage  Loans  in a  Pass-Through
Transfer,  appoint a successor  servicer  reasonably  acceptable  to the Master
Servicer for such  Pass-Through  Transfer)  under this  Agreement and in and to
the Mortgage Loans and the proceeds  thereof without  compensating the Servicer
for the  same.  On or  after  the  receipt  by the  Servicer  of  such  written
notice,  all authority and power of the Servicer under this Agreement,  whether
with respect to the Mortgage  Loans or  otherwise,  shall pass to and be vested
in the successor  appointed  pursuant to Section  11.01.  Upon written  request
from the Owner,  the Servicer shall prepare,  execute and deliver,  any and all
documents  and other  instruments,  place in such  successor's  possession  all
Servicing  Files,  and do or accomplish  all other acts or things  necessary or
appropriate  to effect the purposes of such notice of  termination,  whether to
complete the transfer and  endorsement  or assignment of the Mortgage Loans and
related  documents,   or  otherwise,   at  the  Servicer's  sole  expense.  The
Servicer  agrees to  cooperate  with the Owner and such  successor in effecting
the  termination  of the  Servicer's  responsibilities  and  rights  hereunder,
including,   without   limitation,   the   transfer  to  such   successor   for
administration  by it of all cash  amounts  which shall at the time be credited
by the  Servicer  to the  Custodial  Account or Escrow  Account  or  thereafter
received with respect to the Mortgage Loans or any REO Property.


                                      38
<PAGE>

      The Servicer shall  promptly  reimburse the Owner (or any designee of the
Owner,  such as a master  servicer) and any Depositor,  as applicable,  for all
reasonable   expenses  incurred  by  the  Owner  (or  such  designee)  or  such
Depositor,  as such are incurred,  in connection  with the  termination  of the
Servicer as servicer and the  transfer of servicing of the Mortgage  Loans to a
successor  servicer,  if the  termination  and/or  transfer of servicing is for
cause related to a servicer  default.  The provisions of this  paragraph  shall
not limit  whatever  rights the Owner or any  Depositor  may have  under  other
provisions of this  Agreement  and/or any applicable  Reconstitution  Agreement
or  otherwise,  whether  in equity or at law,  such as an action  for  damages,
specific performance or injunctive relief.

      Section 9.02.     Waiver of Defaults.

      The Owner may waive only by written  notice any  default by the  Servicer
in the  performance of its  obligations  hereunder and its  consequences.  Upon
any such waiver of a past default,  such default shall cease to exist,  and any
Event of Default  arising  therefrom  shall be deemed to have been remedied for
every  purpose  of  this  Agreement.   No  such  waiver  shall  extend  to  any
subsequent or other default or impair any right  consequent  thereon  except to
the extent expressly so waived in writing.

                                   ARTICLE X
                                  TERMINATION

      Section 10.01.    Termination.

      The respective  obligations  and  responsibilities  of the Servicer shall
terminate  upon:  (i) the later of the final payment or other  liquidation  (or
any  advance  with  respect   thereto)  of  the  last   Mortgage  Loan  or  the
disposition   of  all  REO  Property  and  the  remittance  of  all  funds  due
hereunder;  or (ii)  by  mutual  consent  of the  Servicer  and  the  Owner  in
writing;   or  (iii)  termination  by  the  Owner  pursuant  to  Section  9.01.
Simultaneously  with  any  such  termination  and  the  transfer  of  servicing
hereunder,   the  Servicer   shall  be  entitled  to  be  reimbursed   for  any
outstanding Servicing Advances and Monthly Advances.

      Section 10.02.    Cooperation of Servicer with a Reconstitution.

      The  Servicer  and the Owner  agree  that with  respect to some or all of
the  Mortgage  Loans,  on or after the  related  closing  date,  on one or more
dates (each a  "Reconstitution  Date") at the Owner's  sole  option,  the Owner
may effect a sale (each,  a  "Reconstitution")  of some or all of the  Mortgage
Loans then subject to this Agreement, without recourse, to:

      (a)   one or more  third  party  purchasers  in one or more in whole loan
transfers (each, a "Whole Loan Transfer"); or


                                      39
<PAGE>

      (b)   one or more  trusts or other  entities  to be formed as part of one
or more Pass-Through Transfers.

      The Servicer  agrees to execute in connection  with any agreements  among
the Owner,  the  Servicer,  and any  servicer in  connection  with a Whole Loan
Transfer, an assignment,  assumption and recognition agreement,  or, at Owner's
request, a seller's  warranties and servicing  agreement or a participation and
servicing  agreement  or similar  agreement  in form and  substance  reasonably
acceptable to the parties,  and in connection with a Pass-Through  Transfer,  a
pooling and  servicing  agreement in form and substance  reasonably  acceptable
to the  parties.  It is  understood  that  any such  Reconstitution  Agreements
will not  contain  any greater  obligations  on the part of  Servicer  than are
contained in this Agreement.

      With respect to each Whole Loan Transfer and each  Pass-Through  Transfer
entered  into by the Owner,  the Servicer  agrees (1) to  cooperate  fully with
the  Owner  and  any  prospective  purchaser  with  respect  to all  reasonable
requests  and due  diligence  procedures;  (2) to execute,  deliver and perform
all  Reconstitution  Agreements  required  by the  Owner;  (3) to  restate  the
representations   and  warranties  set  forth  in  this  Agreement  as  of  the
settlement  or closing date in connection  with such  Reconstitution  (each,  a
"Reconstitution Date").

      In addition,  the Servicer  shall provide to such servicer or issuer,  as
the case may be, and any other participants in such Reconstitution:

      (i)   any  and  all   information   and   appropriate   verification   of
information  which  may  be  reasonably  available  to  the  Servicer,  whether
through  letters of its auditors and counsel or otherwise,  as the Owner or any
such other participant shall request upon reasonable demand;

      (ii)  such additional representations,  warranties,  covenants,  opinions
of counsel,  letters from auditors,  and  certificates  of public  officials or
officers of the  Servicer as are  reasonably  agreed upon by the  Servicer  and
the Owner or any such other participant;

      (iii) within  5   Business   Days  after   request  by  the  Owner,   the
information  with  respect to the  Servicer  (as  servicer) as required by Item
1108(b) and (c) of  Regulation  AB, a summary of the  requirements  of which as
of the  date  hereof  is  attached  hereto  as  Exhibit  I for  convenience  of
reference  only, as determined  by Owner in its sole  discretion.  In the event
that the Servicer has  delegated any  servicing  responsibilities  with respect
to the  Mortgage  Loans  to a  Subservicer,  the  Servicer  shall  provide  the
information required pursuant to this clause with respect to the Subservicer;

      (iv)  within 5 Business Days after request by the Owner,

            (a)   information  regarding  any  legal  proceedings  pending  (or
known  to  be  contemplated)  against  the  Servicer  (as  servicer)  and  each
Subservicer  as  required  by Item  1117 of  Regulation  AB, a  summary  of the
requirements  of which as of the date  hereof is  attached  hereto as Exhibit I
for  convenience  of  reference  only,  as  determined  by  Owner  in its  sole
discretion,

            (b)   information  regarding   affiliations  with  respect  to  the
Servicer  (as  servicer)  and each  Subservicer  as required by Item 1119(a) of
Regulation  AB, a summary of the  requirements  of which as of the date  hereof
is  attached  hereto  as  Exhibit  I for  convenience  of  reference  only,  as
determined by Owner in its sole discretion, and


                                      40
<PAGE>

            (c)   information  regarding  relationships  and transactions  with
respect to the  Servicer  (as  servicer)  and each  Subservicer  as required by
Item 1119(b) and (c) of Regulation AB, a summary of the  requirements  of which
as of the date  hereof is  attached  hereto as  Exhibit  I for  convenience  of
reference only, as determined by Owner in its sole discretion;

      (v)   for the purpose of satisfying  the reporting  obligation  under the
Exchange  Act  with  respect  to any  class  of  asset-backed  securities,  the
Servicer shall (or shall cause each  Subservicer  to) (i) provide prompt notice
to the  Owner,  the Master  Servicer  and any  Depositor  in writing of (A) any
material litigation or governmental  proceedings  involving the Servicer or any
Subservicer,  (B) any affiliations or relationships  that develop following the
closing  date  of  a  Pass-Through   Transfer   between  the  Servicer  or  any
Subservicer  and any of the parties  specified in clause (D) of  paragraph  (a)
of  this  Section  (and  any  other  parties   identified  in  writing  by  the
requesting  party) with respect to such  Pass-Through  Transfer,  (C) any Event
of Default under the terms of this Agreement or any  Reconstitution  Agreement,
(D) any merger,  consolidation  or sale of  substantially  all of the assets of
the  Servicer,   and  (E)  the  Servicer's  entry  into  an  agreement  with  a
Subservicer  to perform or assist in the  performance  of any of the Servicer's
obligations  under this  Agreement  or any  Reconstitution  Agreement  and (ii)
provide  to the Owner and any  Depositor  a  description  of such  proceedings,
affiliations or relationships;

      (vi)  as  a  condition  to  the   succession   to  the  Servicer  or  any
Subservicer   as  servicer  or   subservicer   under  this   Agreement  or  any
Reconstitution  Agreement  by any Person (i) into  which the  Servicer  or such
Subservicer  may be merged or  consolidated,  or (ii) which may be appointed as
a successor to the Servicer or any  Subservicer,  the Servicer shall provide to
the Owner,  the Master Servicer,  and any Depositor,  at least 15 calendar days
prior to the  effective  date of such  succession or  appointment,  (x) written
notice to the Owner and any  Depositor of such  succession or  appointment  and
(y) in writing and in form and substance  reasonably  satisfactory to the Owner
and such Depositor,  all information  reasonably  requested by the Owner or any
Depositor in order to comply with its reporting  obligation  under Item 6.02 of
Form 8-K with respect to any class of asset-backed securities;

      (vii) in addition to such  information as the Servicer,  as servicer,  is
obligated  to provide  pursuant  to other  provisions  of this  Agreement,  not
later than ten days prior to the  deadline  for the filing of any  distribution
report on Form 10-D in respect of any  Pass-Through  Transfer that includes any
of the  Mortgage  Loans  serviced  by the  Servicer  or  any  Subservicer,  the
Servicer  or  such  Subservicer,  as  applicable,  shall,  to  the  extent  the
Servicer or such  Subservicer has knowledge,  provide to the party  responsible
for filing such report (including,  if applicable,  the Master Servicer) notice
of the  occurrence of any of the following  events along with all  information,
data,  and materials  related  thereto as may be required to be included in the
related  distribution  report on Form 10-D (as  specified in the  provisions of
Regulation AB referenced below):

            (A)   any  material  modifications,  extensions  or waivers of pool
asset terms,  fees,  penalties or payments  during the  distribution  period or
that  have  cumulatively   become  material  over  time  (Item  1121(a)(11)  of
Regulation AB);


                                      41
<PAGE>

            (B)   material   breaches   of  pool   asset   representations   or
warranties or transaction covenants (Item 1121(a)(12) of Regulation AB); and

            (C)   information  regarding new asset-backed  securities issuances
backed by the same pool assets,  any pool asset  changes  (such as,  additions,
substitutions  or  repurchases),  and  any  material  changes  in  origination,
underwriting  or other  criteria  for  acquisition  or selection of pool assets
(Item 1121(a)(14) of Regulation AB); and

      (viii)      the  Servicer   shall  provide  to  the  Owner,   the  Master
Servicer  and  any  Depositor,  evidence  of the  authorization  of the  person
signing any  certification  or statement,  copies or other evidence of Fidelity
Bond   Insurance   and  Errors  and  Omission   Insurance   policy,   financial
information  and reports,  and such other  information  related to the Servicer
or  any  Subservicer  or  the  Servicer  or  such   Subservicer's   performance
hereunder.

      In the  event  of a  conflict  or  inconsistency  between  the  terms  of
Exhibit  I and  the  text of the  applicable  Item of  Regulation  AB as  cited
above,  the text of  Regulation  AB,  its  adopting  release  and other  public
statements of the SEC shall control.

      The Servicer  shall  indemnify  the Owner,  each  affiliate of the Owner,
and each of the following  parties  participating  in a Pass-Through  Transfer:
each issuing  entity;  each Person  (including,  but not limited to, the Master
Servicer, if applicable)  responsible for the preparation,  execution or filing
of any report  required to be filed with the  Commission  with  respect to such
Pass-Through  Transfer,  or for execution of a  certification  pursuant to Rule
13a-14(d)  or Rule  15d-14(d)  under  the  Exchange  Act with  respect  to such
Pass-Through  Transfer;  each broker  dealer acting as  underwriter,  placement
agent or initial  purchaser,  each Person who  controls  any of such parties or
the  Depositor  (within  the  meaning of Section 15 of the  Securities  Act and
Section  20 of the  Exchange  Act);  and  the  respective  present  and  former
directors,   officers,   employees,  agents  and  affiliates  of  each  of  the
foregoing and of the Depositor (each, an "Indemnified  Party"),  and shall hold
each  of  them  harmless  from  and  against  any  claims,   losses,   damages,
penalties,  fines,  forfeitures,  legal fees and  expenses  and related  costs,
judgments,  and any  other  costs,  fees  and  expenses  that  any of them  may
sustain arising out of or based upon:

      (i)(A) any untrue  statement of a material  fact  contained or alleged to
be contained in any  information,  report,  certification,  data,  accountants'
letter or other  material  provided under this Section 10.02 by or on behalf of
the  Servicer,  or provided  under this Section  10.02,  Sections 6.04 and 6.09
and by or on behalf of any  Subservicer  or  Subcontractor  (collectively,  the
"Servicer  Information"),  or (B) the omission or alleged  omission to state in
the  Servicer  Information  a  material  fact  required  to be  stated  in  the
Servicer  Information or necessary in order to make the statements  therein, in
the light of the  circumstances  under  which they were made,  not  misleading;
provided,  by way of clarification,  that clause (B) of this paragraph shall be
construed  solely  by  reference  to the  Servicer  Information  and not to any
other  information  communicated  in  connection  with a sale  or  purchase  of
securities,  without regard to whether the Servicer  Information or any portion
thereof is presented together with or separately from such other information;

      (ii)  any breach by the  Servicer of its  obligations  under this Section
10.02,  including  particularly any failure by the Servicer, any Subservicer or
any   Subcontractor   to  deliver  any  information,   report,   certification,
accountants'  letter or other  material when and as required under this Section
10.02,  including  any failure by the Servicer to identify  pursuant to Section
11.15 any Subcontractor  "participating  in the servicing  function" within the
meaning of Item 1122 of Regulation AB;


                                      42
<PAGE>

      (iii) any breach by the  Servicer of a  representation  or  warranty  set
forth in Section Article III or in a writing  furnished  pursuant to clause (h)
of Article III and made as of a date prior to the  closing  date of the related
Pass-Through  Transfer,  to the  extent  that such  breach is not cured by such
closing  date,  or any breach by the Servicer of a  representation  or warranty
in a writing  furnished  pursuant  to clause (h) of  Article  III to the extent
made as of a date subsequent to such closing date; or

      (iv)  the negligence  bad faith or willful  misconduct of the Servicer in
connection with its performance under this Section 10.02.

      If  the   indemnification   provided   for  herein  is   unavailable   or
insufficient  to hold harmless an Indemnified  Party,  then the Servicer agrees
that it shall  contribute  to the amount  paid or  payable by such  Indemnified
Party as a result of any claims,  losses,  damages or  liabilities  incurred by
such  Indemnified  Party in such  proportion as is  appropriate  to reflect the
relative  fault of such  Indemnified  Party on the one hand and the Servicer on
the other.

      In the case of any failure of performance  described  above, the Servicer
shall  promptly  reimburse the Owner,  any Depositor,  as applicable,  and each
Person  responsible  for the  preparation,  execution  or filing of any  report
required  to be filed with the  Commission  with  respect to such  Pass-Through
Transfer,  or for execution of a  certification  pursuant to Rule  13a-14(d) or
Rule  15d-14(d)  under  the  Exchange  Act with  respect  to such  Pass-Through
Transfer,  for all costs  reasonably  incurred  by each such  party in order to
obtain the information,  report,  certification,  accountants'  letter or other
material  not  delivered  pursuant to this  Section or Section  6.04 or Section
6.09 as required by the Servicer, any Subservicer or any Subcontractor.

      This  indemnification  shall survive the termination of this Agreement or
the termination of any party to this Agreement.

      All  Mortgage  Loans not sold or  transferred  pursuant  to a Whole  Loan
Transfer  or Pass  Through  Transfer  shall be  subject to this  Agreement  and
shall  continue to be serviced in accordance  with the terms of this  Agreement
and with respect thereto this Agreement shall remain in full force and effect.

      Section 10.03.    Master Servicer.

      The  Servicer,  including  any  successor  servicer  hereunder,  shall be
subject  to the  supervision  of the Master  Servicer,  which  Master  Servicer
shall be obligated to ensure that the Servicer  services the Mortgage  Loans in
accordance  with  the  provisions  of  this  Agreement.  The  Master  Servicer,
acting on  behalf  of the  Owner,  shall  have the same  rights as the Owner to
enforce  the  obligations  of the  Servicer  under this  Agreement.  The Master
Servicer  shall be  entitled to  terminate  the rights and  obligations  of the
Servicer  under this  Agreement upon the failure of the Servicer to perform any
of its  obligations  under this Agreement if such failure  constitutes an Event
of  Default  as  provided  in  Article  IX of this  Agreement.  Notwithstanding
anything to the contrary,  in no event shall the Master  Servicer assume any of
the obligations of the Owner under this Agreement.


                                      43
<PAGE>

                                  ARTICLE XI
                           MISCELLANEOUS PROVISIONS

      Section 11.01.    Successor to the Servicer.

      Prior  to  termination  of the  Servicer's  responsibilities  and  duties
under this Agreement  pursuant to Sections 8.04,  9.01 or 10.01(ii),  the Owner
shall  (i)  succeed  to and  assume  all of  the  Servicer's  responsibilities,
rights,  duties  and  obligations  under  this  Agreement,  or (ii)  appoint  a
successor  having  the  characteristics  set forth in Section  8.02  hereof and
which  shall  succeed to all  rights  and  assume all of the  responsibilities,
duties  and  liabilities  of the  Servicer  under this  Agreement  prior to the
termination of the Servicer's  responsibilities,  duties and liabilities  under
this  Agreement.  In  connection  with such  appointment  and  assumption,  the
Owner may make such  arrangements  for the  compensation  of such successor out
of payments  on Mortgage  Loans as the Owner and such  successor  shall  agree.
In the event  that the  Servicer's  duties,  responsibilities  and  liabilities
under  this  Agreement  should be  terminated  pursuant  to the  aforementioned
sections,  the  Servicer  shall  discharge  such  duties  and  responsibilities
during the  period  from the date it  acquires  knowledge  of such  termination
until  the  effective  date  thereof  with the same  degree  of  diligence  and
prudence  which it is obligated  to exercise  under this  Agreement,  and shall
take no  action  whatsoever  that  might  impair  or  prejudice  the  rights or
financial  condition  of its  successor.  The  resignation  or  removal  of the
Servicer  pursuant to the  aforementioned  sections shall not become  effective
until a successor  shall be appointed  pursuant to this section and shall in no
event  relieve  the  Servicer  of  the   representations  and  warranties  made
pursuant to Article III and the remedies  available to the Owner under  Section
8.01, it being  understood  and agreed that the  provisions of such Article III
and Section 8.01 shall be applicable to the Servicer  notwithstanding  any such
resignation  or  termination  of the  Servicer,  or  the  termination  of  this
Agreement.

      Any successor  appointed as provided  herein shall  execute,  acknowledge
and  deliver to the  Servicer  and to the Owner an  instrument  accepting  such
appointment,  whereupon such  successor  shall become fully vested with all the
rights,  powers, duties,  responsibilities,  obligations and liabilities of the
Servicer,  with  like  effect  as  if  originally  named  as a  party  to  this
Agreement.  Any  termination  or  resignation of the Servicer or this Agreement
pursuant  to Section  8.04,  9.01 or 10.01 shall not affect any claims that the
Owner may have against the Servicer  arising prior to any such  termination  or
resignation.

      The Servicer  shall  promptly  deliver to the  successor the funds in the
Custodial  Account and the Escrow  Account and the Servicing  Files and related
documents and  statements  held by it hereunder and the Servicer  shall account
for all funds.  The Servicer  shall  execute and deliver such  instruments  and
do such  other  things  all as may  reasonably  be  required  to more fully and
definitely vest and confirm in the successor all such rights,  powers,  duties,
responsibilities,  obligations and  liabilities of the Servicer.  The successor
shall  make such  arrangements  as it may deem  appropriate  to  reimburse  the
Servicer for  unrecovered  Monthly  Advances and Servicing  Advances  which the
successor  retains  hereunder and which would  otherwise have been recovered by
the  Servicer  pursuant  to  this  Agreement  but for  the  appointment  of the
successor servicer.


                                      44
<PAGE>

      Upon a  successor's  acceptance  of  appointment  as such,  the  Servicer
shall notify the Owner of such appointment.

      All reasonable  costs and expenses  incurred in connection with replacing
the  Servicer  upon its  resignation  or the  termination  of the  Servicer  in
accordance with the terms of this  Agreement,  including,  without  limitation,
(i) all legal  costs and  expenses  and all due  diligence  costs and  expenses
associated  with an evaluation of the potential  termination of the Servicer as
a result of an Event of  Default  and (ii) all costs  and  expenses  associated
with the complete  transfer of servicing,  including  all  servicing  files and
all  servicing  data and the  completion,  correction or  manipulation  of such
servicing  data as may be  required  by the  successor  servicer to correct any
errors or  insufficiencies  in the  servicing  data or  otherwise to enable the
successor  service  to  service  the  Mortgage  Loans in  accordance  with this
Agreement,  shall be payable on demand by the resigning or terminated  Servicer
without any right of reimbursement therefor.

      Section 11.02.    Amendment.

      This  Agreement  may be amended from time to time by the Servicer and the
Owner by written agreement signed by the Servicer and the Owner.

      Section 11.03.    Recordation of Agreement.

      To the extent  permitted by applicable  law, this 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 all the
properties   subject  to  the  Mortgages   are  situated,   and  in  any  other
appropriate  public  recording  office or  elsewhere,  such  recordation  to be
effected  by the  Servicer  at the Owner's  expense on  direction  of the Owner
accompanied  by an  opinion of  counsel  to the  effect  that such  recordation
materially and  beneficially  affects the interest of the Owner or is necessary
for the administration or servicing the Mortgage Loans.

      Section 11.04.    Governing Law.

      THIS  AGREEMENT  SHALL BE GOVERNED BY AND  CONSTRUED IN  ACCORDANCE  WITH
THE  INTERNAL  LAWS  OF  THE  STATE  OF  NEW  YORK  WITHOUT  GIVING  EFFECT  TO
PRINCIPLES OF CONFLICTS OF LAWS.  THE  OBLIGATIONS,  RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

      Section 11.05.    Notices.

      Any  demands,  notices  or other  communications  permitted  or  required
hereunder  shall be in writing  and shall be deemed  conclusively  to have been
given  if  personally  delivered  at or  mailed  by  registered  mail,  postage
prepaid,  and  return  receipt  requested  or  transmitted  by  telecopier  and
confirmed by a similar mailed writing, as follows:


                                      45
<PAGE>

            (i)   if to the Servicer:

                  EMC Mortgage Corporation
                  2780 Lake Vista Drive
                  Lewisville, Texas 75067
                  Attention:  President or General Counsel
                  Telecopier No.:  (469) 759-4714

            (ii)  if to the Owner:

                  Bear, Stearns & Co. Inc.
                  383 Madison Ave.
                  New York, New York 10179
                  Attention:  Global Credit Administration
                  Telecopier No.:  (212) 272-3751

            (iii) if to the Master Servicer:

                  Wells Fargo Bank, National Association
                  P.O. Box 98
                  Columbia, Maryland 21046
                  Attention:  Master Servicing - Bear Stearns

                  And for overnight delivery to:

                  Wells Fargo Bank, National Association
                  9062 Old Annapolis Road
                  Columbia, Maryland 21045
                  Attention:  Client Manager, SAMI 06-AR8
                  Telecopier No.:  (410) 715-2380

or such other  address as may  hereafter  be  furnished  to the other  party by
like notice.  Any such demand,  notice,  or  communication  hereunder  shall be
deemed  to have been  received  on the date  delivered  to or  received  at the
premises of the address (as  evidenced,  in the case of registered or certified
mail, by the date noted on the return receipt).

      Section 11.06.    Severability of Provisions.

      Any part,  provision,  representation or warranty of this Agreement which
is  prohibited  or  which  is  held  to  be  void  or  unenforceable  shall  be
ineffective  to the  extent of such  prohibition  or  unenforceability  without
invalidating   the   remaining   provisions   hereof.   Any  part,   provision,
representation   or  warranty  of  this   Agreement   which  is  prohibited  or
unenforceable  or is  held  to be void  or  unenforceable  in any  jurisdiction
shall  be  ineffective,  as  to  such  jurisdiction,  to  the  extent  of  such
prohibition or unenforceability  without  invalidating the remaining provisions
hereof,  and any such  prohibition or  unenforceability  in any jurisdiction as
to any  Mortgage  Loan  shall  not  invalidate  or  render  unenforceable  such
provision in any other  jurisdiction.  To the extent  permitted  by  applicable
law, the parties  hereto waive any provision of law which  prohibits or renders
void or  unenforceable  any provision  hereof.  If the  invalidity of any part,
provision,  representation  or warranty  of this  Agreement  shall  deprive any
party of the economic benefit  intended to be conferred by this Agreement,  the
parties  shall  negotiate,  in good faith,  to develop a structure the economic
effect of which is nearly as possible the same as the  economic  effect of this
Agreement without regard to such invalidity.


                                      46
<PAGE>

      Section 11.07.    Exhibits

      The exhibits to this  Agreement are hereby  incorporated  and made a part
hereof and are an integral part of this Agreement.

      Section 11.08.    General Interpretive Principles.

      For purposes of this Agreement,  except as otherwise  expressly  provided
or unless the context otherwise requires:

      (i)   the terms defined in this Agreement  have the meanings  assigned to
them in this  Agreement  and  include the plural as well as the  singular,  and
the use of any gender herein shall be deemed to include the other gender;

      (ii)  accounting  terms not  otherwise  defined  herein have the meanings
assigned to them in accordance with generally accepted accounting principles;

      (iii) references   herein  to  "Articles,"   "Sections,"   "Subsections,"
"Paragraphs,"  and other  subdivisions  without  reference to a document are to
designated Articles, Sections,  Subsections,  Paragraphs and other subdivisions
of this Agreement;

      (iv)  a  reference  to  a  Subsection  without  further  reference  to  a
Section is a reference to such  Subsection  as contained in the same Section in
which the reference  appears,  and this rule shall also apply to Paragraphs and
other subdivisions;

      (v)   the  words  "herein,"  "hereof,"  "hereunder"  and  other  words of
similar  import refer to this  Agreement  as a whole and not to any  particular
provision; and

      (vi)  the term  "include" or  "including"  shall mean without  limitation
by reason of enumeration.

      Section 11.09.    Reproduction of Documents.

      This  Agreement and all documents  relating  hereto,  including,  without
limitation,  (i)  consents,  waivers and  modifications  which may hereafter be
executed,  (ii)  documents  received  by any  party at the  closing,  and (iii)
financial  statements,   certificates  and  other  information   previously  or
hereafter  furnished,  may  be  reproduced  by any  photographic,  photostatic,
microfilm,  micro-card,  miniature  photographic or other similar process.  The
parties  agree that any such  reproduction  shall be  admissible in evidence as
the original itself in any judicial or  administrative  proceeding,  whether or
not the  original  is in  existence  and whether or not such  reproduction  was
made by a party in the regular  course of business,  and that any  enlargement,
facsimile  or further  reproduction  of such  reproduction  shall  likewise  be
admissible in evidence.


                                      47
<PAGE>

      Section 11.10.    Confidentiality of Information.

      Each party  recognizes  that, in connection with this  Agreement,  it may
become privy to  non-public  information  regarding  the  financial  condition,
operations  and  prospects  of  the  other  party.  Except  as  required  to be
disclosed  by law,  each  party  agrees  to  keep  all  non-public  information
regarding  the  other  party  strictly  confidential,   and  to  use  all  such
information solely in order to effectuate the purpose of this Agreement.

      Section 11.11.    Assignment by the Owner.

      The Owner  shall  have the right,  without  the  consent of the  Servicer
hereof,  to assign,  in whole or in part,  its  interest  under this  Agreement
with respect to some or all of the Mortgage  Loans,  and  designate  any person
to exercise any rights of the Owner  hereunder,  by executing an assignment and
assumption  agreement  reasonably  acceptable  to the Servicer and the assignee
or designee shall accede to the rights and  obligations  hereunder of the Owner
with  respect to such  Mortgage  Loans.  In no event shall Owner sell a partial
interest in any Mortgage  Loan.  All  references to the Owner in this Agreement
shall be deemed to include its  assignees or designees.  It is  understood  and
agreed  between the Owners and the Servicer  that no more than five (5) Persons
shall have the right of owner under this Agreement at any one time.

      Section 11.12.    No Partnership.

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

      Section 11.13.    Execution, Successors and Assigns.

      This  Agreement  may be executed in one or more  counterparts  and by the
different  parties  hereto on  separate  counterparts,  each of which,  when so
executed,  shall be  deemed to be an  original;  such  counterparts,  together,
shall  constitute  one and the same  agreement.  Subject to Section 8.05,  this
Agreement  shall inure to the benefit of and be binding  upon the  Servicer and
the Owner and their respective successors and assigns.

      Section 11.14.    Entire Agreement.

      Each of the Servicer and the Owner  acknowledge that no  representations,
agreements  or  promises  were  made  to it by the  other  party  or any of its
employees   other   than  those   representations,   agreements   or   promises
specifically   contained   herein.   This   Agreement  sets  forth  the  entire
understanding  between  the  parties  hereto  and  shall  be  binding  upon all
successors of both parties.

      Section 11.15.    Use of Subservicers and Subcontractors.

      (a)   The Servicer  shall not hire or  otherwise  utilize the services of
any  Subservicer to fulfill any of the  obligations of the Servicer as servicer
under this  Agreement  or any  Reconstitution  Agreement  unless  the  Servicer
complies with the  provisions  of paragraph  (b) of this Section.  The Servicer
shall not hire or  otherwise  utilize the  services of any  Subcontractor,  and
shall not permit any  Subservicer  to hire or otherwise  utilize the  servicers
of any  Subcontractor,  to fulfill any of the  obligations  of the  Servicer as
servicer  under  this  Agreement  or any  Reconstitution  Agreement  unless the
Servicer  complies with the  provisions  of paragraph (d) of this Section.  The
Servicer  must  notify the Owner,  the Master  Servicer  and any  Depositor  in
writing  of any  affiliations  or  relationships  that  develop  following  the
closing date between the Servicer or any Subservicer.


                                      48
<PAGE>

      (b)   The Servicer shall cause any  Subservicer  used by the Servicer (or
by any  Subservicer)  for the benefit of the Owner and any  Depositor to comply
with the  provisions  of this  Section and with  clauses (g) and (j) of Article
III,  Sections 6.04,  6.09 and 10.02 of this Agreement to the same extent as if
such Subservicer  were the Owner, and to provide the information  required with
respect  to such  Subservicer  under  Section  3.01(i) of this  Agreement.  The
Servicer  shall  be  responsible  for  obtaining  from  each   Subservicer  and
delivering  to the Owner,  the Master  Servicer  and any  Depositor  any Annual
Statement of  Compliance  required to be delivered  by such  Subservicer  under
Section 6.04(a),  any Assessment of Compliance and Attestation  Report required
to  be  delivered  by  such   Subservicer   under  Section  6.09,   any  Annual
Certification   required  under  Section  6.04(b),  any  Additional  Form  10-D
Disclosure  and any Form 8-K  Disclosure  Information,  as and when required to
be delivered.

      (c)   The Servicer  shall  promptly  upon  request  provide to the Owner,
the Master  Servicer and any Depositor (or any designee of the Depositor,  such
as  an   administrator)   a  written   description   (in  form  and   substance
satisfactory  to the Owner,  the Master  Servicer  and such  Depositor)  of the
role  and  function  of each  Subcontractor  utilized  by the  Servicer  or any
Subservicer,  specifying  (i) the  identity  of each such  Subcontractor,  (ii)
which  (if any) of such  Subcontractors  are  "participating  in the  servicing
function"  within the  meaning of Item 1122 of  Regulation  AB, and (iii) which
elements  of the  Servicing  Criteria  will  be  addressed  in  assessments  of
compliance  provided by each Subcontractor  identified  pursuant to clause (ii)
of this paragraph.

      (d)   As a condition to the utilization of any  Subcontractor  determined
to be  "participating  in the  servicing  function"  within the meaning of Item
1122 of Regulation  AB, the Servicer  shall cause any such  Subcontractor  used
by the  Servicer (or by any  Subservicer)  for the benefit of the Owner and any
Depositor  to comply with the  provisions  of  Sections  6.07 and 10.02 of this
Agreement to the same extent as if such  Subcontractor  were the Servicer.  The
Servicer  shall be  responsible  for  obtaining  from  each  Subcontractor  and
delivering  to the Owner and any Depositor  any  Assessment  of Compliance  and
Attestation  Report and other  certificates  required to be  delivered  by such
Subservicer  and  such  Subcontractor   under  Section  6.09  (and  any  Annual
Certification  required  under  Section  6.09(b)),  in each  case  as and  when
required to be delivered.

      Section 11.16.    Third Party Beneficiary

      For  purposes  of  this   Agreement,   each  Master   Servicer  shall  be
considered a third party  beneficiary  to this  Agreement,  entitled to all the
rights and benefits hereof as if it were a direct party to this Agreement.


                                      49
<PAGE>

      IN WITNESS  WHEREOF,  the  Servicer and the Owner have caused their names
to be signed hereto by their respective  officers  thereunto duly authorized as
of the date and year first above written.

                        EMC MORTGAGE CORPORATION,
                        as Servicer

                        By:
                        Name:
                        Title:

                        STRUCTURED ASSET MORTGAGE INVESTMENTS II INC.,
                        as Owner

                        By:
                        Name:
                        Title:

<PAGE>

                                   EXHIBIT A

                            MORTGAGE LOAN SCHEDULE


                                      A-1
<PAGE>

                                   EXHIBIT B

                      CUSTODIAL ACCOUNT LETTER AGREEMENT
                                    (date)

To:______________________
_________________________
_________________________
       (the "Depository")

      As  "Servicer"  under the  Servicing  Agreement,  dated as of  October 1,
2006, (the  "Agreement"),  we hereby  authorize and request you to establish an
account,  as a Custodial Account pursuant to Section 4.04 of the Agreement,  to
be designated as "EMC Custodial  Account,  in trust for SAMI II, Owner of Whole
Loan  Mortgages,  and various  Mortgagors."  All deposits in the account  shall
be subject to  withdrawal  therefrom by order signed by the  Servicer.  You may
refuse any deposit  which would  result in violation  of the  requirement  that
the account be fully  insured as described  below.  This letter is submitted to
you in duplicate.  Please execute and return one original to us.

              By:____________________
              Name:__________________
              Title:_________________

      The  undersigned,  as  "Depository",  hereby  certifies  that  the  above
described  account has been  established  under Account Number  __________,  at
the office of the depository  indicated above, and agrees to honor  withdrawals
on such  account as provided  above.  The full amount  deposited at any time in
the account  will be insured up to  applicable  limits by the  Federal  Deposit
Insurance   Corporation   through  the  Bank  Insurance  Fund  or  the  Savings
Association  Insurance  Fund or will be invested in  Permitted  Investments  as
defined in the Agreement.

              [                  ]
              (name of Depository)
              By:____________________
              Name:__________________
              Title:_________________


                                      B-1
<PAGE>

                                   EXHIBIT C

                        ESCROW ACCOUNT LETTER AGREEMENT

                                    (date)

To:______________________
_________________________
_________________________
       (the "Depository")

      As  "Servicer"  under the  Servicing  Agreement,  dated as of  October 1,
2006 (the  "Agreement"),  we hereby  authorize  and request you to establish an
account,  as an Escrow Account  pursuant to Section 4.06 of the  Agreement,  to
be  designated  as "EMC Escrow  Account,  in trust for SAMI II,  Owner of Whole
Loan  Mortgages,  and various  Mortgagors."  All deposits in the account  shall
be subject to  withdrawal  therefrom by order signed by the  Servicer.  You may
refuse any deposit  which would  result in violation  of the  requirement  that
the account be fully  insured as described  below.  This letter is submitted to
you in duplicate.  Please execute and return one original to us.

              By:____________________
              Name:__________________
              Title:_________________

      The  undersigned,  as  "Depository",  hereby  certifies  that  the  above
described  account has been  established  under Account Number  __________,  at
the office of the depository  indicated above, and agrees to honor  withdrawals
on such  account as provided  above.  The full amount  deposited at any time in
the account  will be insured up to  applicable  limits by the  Federal  Deposit
Insurance   Corporation   through  the  Bank  Insurance  Fund  or  the  Savings
Association  Insurance  Fund or will be invested in  Permitted  Investments  as
defined in the Agreement.

              [                  ]
              (name of Depository)
              By:____________________
              Name:__________________
              Title:_________________


                                      C-1
<PAGE>

                                   EXHIBIT D

                       REQUEST FOR RELEASE OF DOCUMENTS

      To:   Wells Fargo Bank, National Association
            1015 10th Avenue S.E.
            Mpls., MN  55414
            Attn:  ________________

      Re:   Custodial  Agreement  dated as of October  31,  2006,  between  EMC
            Mortgage  Corporation and Wells Fargo Bank,  National  Association,
            as Custodian

      In connection with the  administration  of the Mortgage Loans held by you
as Custodian for the Owner pursuant to the  above-captioned  Custody Agreement,
we request the release,  and hereby  acknowledge  receipt,  of the  Custodian's
Mortgage File for the Mortgage Loan described below, for the reason indicated.

Mortgage Loan Number:

Mortgagor Name, Address & Zip Code:

      Reason for Requesting Documents (check one):

      _______           1.    Mortgage Paid in Full

      _______           2.    Foreclosure

      _______           3.    Substitution

      _______           4.    Other Liquidation (Repurchases, etc.)

      _______           5.    Nonliquidation
[Reason:_______________________________]

      Address to which Custodian should

      Deliver the Custodian's Mortgage File:

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

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

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

      By:_______________________________________

                                    (authorized signer)

      Issuer:_____________________________________


                                      D-1
<PAGE>

      Address:___________________________________

              ___________________________________

              ___________________________________

              ___________________________________


      Date:______________________________________

Custodian

      Wells Fargo Bank, National Association

Please  acknowledge  the execution of the above  request by your  signature and
date below:

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

      Signature                                 Date

      Documents returned to Custodian:

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

      Custodian                                 Date


                                      D-2
<PAGE>

                                   EXHIBIT E

                       REPORTING DATA FOR MONTHLY REPORT

<TABLE>
<CAPTION>
                    Standard File Layout - Master Servicing
-----------------------------------------------------------------------------------------------------------------------------------
         Column Name                            Description                      Decimal            Format Comment          Max
                                                                                                                            Size
-----------------------------------------------------------------------------------------------------------------------------------
<S>                            <C>                                             <C>           <C>                           <C>
SER_INVESTOR_NBR               A value assigned by the Servicer to define a                  Text up to 10 digits            20
                               group of loans.
-----------------------------------------------------------------------------------------------------------------------------------
LOAN_NBR                       A unique identifier assigned to each loan by                  Text up to 10 digits            10
                               the investor.
-----------------------------------------------------------------------------------------------------------------------------------
SERVICER_LOAN_NBR              A unique number assigned to a loan by the                     Text up to 10 digits            10
                               Servicer.  This may be different than the
                               LOAN_NBR.
-----------------------------------------------------------------------------------------------------------------------------------
BORROWER_NAME                  The borrower name as received in the file.                    Maximum length of 30 (Last,     30
                               It is not separated by first and last name.                   First)
-----------------------------------------------------------------------------------------------------------------------------------
SCHED_PAY_AMT                  Scheduled monthly principal and scheduled            2        No commas(,) or dollar          11
                               interest payment that a borrower is expected                  signs ($)
                               to pay, P&I constant.
-----------------------------------------------------------------------------------------------------------------------------------
NOTE_INT_RATE                  The loan interest rate as reported by the            4        Max length of 6                  6
                               Servicer.
-----------------------------------------------------------------------------------------------------------------------------------
NET_INT_RATE                   The loan gross interest rate less the service        4        Max length of 6                  6
                               fee rate as reported by the Servicer.
-----------------------------------------------------------------------------------------------------------------------------------
SERV_FEE_RATE                  The servicer's fee rate for a loan as                4        Max length of 6                  6
                               reported by the Servicer.
-----------------------------------------------------------------------------------------------------------------------------------
SERV_FEE_AMT                   The servicer's fee amount for a loan as              2        No commas(,) or dollar          11
                               reported by the Servicer.                                     signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
NEW_PAY_AMT                    The new loan payment amount as reported by           2        No commas(,) or dollar          11
                               the Servicer.                                                 signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
NEW_LOAN_RATE                  The new loan rate as reported by the Servicer.       4        Max length of 6                  6
-----------------------------------------------------------------------------------------------------------------------------------
ARM_INDEX_RATE                 The index the Servicer is using to calculate         4        Max length of 6                  6
                               a forecasted rate.
-----------------------------------------------------------------------------------------------------------------------------------
ACTL_BEG_PRIN_BAL              The borrower's actual principal balance at           2        No commas(,) or dollar          11
                               the beginning of the processing cycle.                        signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
ACTL_END_PRIN_BAL              The borrower's actual principal balance at           2        No commas(,) or dollar          11
                               the end of the processing cycle.                              signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
BORR_NEXT_PAY_DUE_DATE         The date at the end of processing cycle that                  MM/DD/YYYY                      10
                               the borrower's next payment is due to the
                               Servicer, as reported by Servicer.
-----------------------------------------------------------------------------------------------------------------------------------
SERV_CURT_AMT_1                The first curtailment amount to be applied.          2        No commas(,) or dollar          11
                                                                                             signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
SERV_CURT_DATE_1               The curtailment date associated with the                      MM/DD/YYYY                      10
                               first curtailment amount.
-----------------------------------------------------------------------------------------------------------------------------------
CURT_ADJ_ AMT_1                The curtailment interest on the first                2        No commas(,) or dollar          11
                               curtailment amount, if applicable.                            signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
SERV_CURT_AMT_2                The second curtailment amount to be applied.         2        No commas(,) or dollar          11
                                                                                             signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
SERV_CURT_DATE_2               The curtailment date associated with the                      MM/DD/YYYY                      10
                               second curtailment amount.
-----------------------------------------------------------------------------------------------------------------------------------
CURT_ADJ_ AMT_2                The curtailment interest on the second               2        No commas(,) or dollar          11
                               curtailment amount, if applicable.                            signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
SERV_CURT_AMT_3                The third curtailment amount to be applied.          2        No commas(,) or dollar          11
                                                                                             signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
SERV_CURT_DATE_3               The curtailment date associated with the                      MM/DD/YYYY                      10
                               third curtailment amount.
-----------------------------------------------------------------------------------------------------------------------------------
CURT_ADJ_AMT_3                 The curtailment interest on the third                2        No commas(,) or dollar          11
                               curtailment amount, if applicable.                            signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
PIF_AMT                        The loan "paid in full" amount as reported by        2        No commas(,) or dollar          11
                               the Servicer.                                                 signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                      E-1
<PAGE>

<TABLE>
<CAPTION>
                                             Standard File Layout - Master Servicing
-----------------------------------------------------------------------------------------------------------------------------------
         Column Name                            Description                      Decimal            Format Comment          Max
                                                                                                                            Size
-----------------------------------------------------------------------------------------------------------------------------------
<S>                            <C>                                             <C>           <C>                           <C>
PIF_DATE                       The paid in full date as reported by the                      MM/DD/YYYY                      10
                               Servicer.
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                             Action Code Key:                 2
                                                                                             15=Bankruptcy,
ACTION_CODE                    The standard FNMA numeric code used to                        30=Foreclosure, , 60=PIF,
                               indicate the default/delinquent status of a                   63=Substitution,
                               particular loan.                                              65=Repurchase,70=REO
-----------------------------------------------------------------------------------------------------------------------------------
INT_ADJ_AMT                    The amount of the interest adjustment as             2        No commas(,) or dollar          11
                               reported by the Servicer.                                     signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
SOLDIER_SAILOR_ADJ_AMT         The Soldier and Sailor Adjustment amount, if         2        No commas(,) or dollar          11
                               applicable.                                                   signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
NON_ADV_LOAN_AMT               The Non Recoverable Loan Amount, if                  2        No commas(,) or dollar          11
                               applicable.                                                   signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
LOAN_LOSS_AMT                  The amount the Servicer is passing as a loss,        2        No commas(,) or dollar          11
                               if applicable.                                                signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
SCHED_BEG_PRIN_BAL             The scheduled outstanding principal amount           2        No commas(,) or dollar          11
                               due at the beginning of the cycle date to be                  signs ($)
                               passed through to investors.
-----------------------------------------------------------------------------------------------------------------------------------
SCHED_END_PRIN_BAL             The scheduled principal balance due to               2        No commas(,) or dollar          11
                               investors at the end of a processing cycle.                   signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
SCHED_PRIN_AMT                 The scheduled principal amount as reported by        2        No commas(,) or dollar          11
                               the Servicer for the current cycle -- only                    signs ($)
                               applicable for Scheduled/Scheduled Loans.
-----------------------------------------------------------------------------------------------------------------------------------
SCHED_NET_INT                  The scheduled gross interest amount less the         2        No commas(,) or dollar          11
                               service fee amount for the current cycle as                   signs ($)
                               reported by the Servicer -- only applicable
                               for Scheduled/Scheduled Loans.
-----------------------------------------------------------------------------------------------------------------------------------
ACTL_PRIN_AMT                  The actual principal amount collected by the         2        No commas(,) or dollar          11
                               Servicer for the current reporting cycle --                   signs ($)
                               only applicable for Actual/Actual Loans.
-----------------------------------------------------------------------------------------------------------------------------------
ACTL_NET_INT                   The actual gross interest amount less the            2        No commas(,) or dollar          11
                               service fee amount for the current reporting                  signs ($)
                               cycle as reported by the Servicer -- only
                               applicable for Actual/Actual Loans.
-----------------------------------------------------------------------------------------------------------------------------------
PREPAY_PENALTY_ AMT            The penalty amount received when a borrower          2        No commas(,) or dollar          11
                               prepays on his loan as reported by the                        signs ($)
                               Servicer.
-----------------------------------------------------------------------------------------------------------------------------------
PREPAY_PENALTY_ WAIVED         The prepayment penalty amount for the loan           2        No commas(,) or dollar          11
                               waived by the servicer.                                       signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
MOD_DATE                       The Effective Payment Date of the                             MM/DD/YYYY                      10
                               Modification for the loan.
-----------------------------------------------------------------------------------------------------------------------------------
MOD_TYPE                       The Modification Type.                                        Varchar - value can be          30
                                                                                             alpha or numeric
-----------------------------------------------------------------------------------------------------------------------------------
DELINQ_P&I_ADVANCE_AMT         The current outstanding principal and                2        No commas(,) or dollar          11
                               interest advances made by Servicer.                           signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                      E-2
<PAGE>

                                   EXHIBIT F

                       REPORTING DATA FOR DEFAULTED LOANS

                  Standard File Layout - Delinquency Reporting

--------------------------------------------------------------------------------
Column/Header Name                   Description        Decimal    Format
                                                                   Comment
--------------------------------------------------------------------------------
SERVICER_LOAN_NBR                    A unique number
                                     assigned to a
                                     loan by the
                                     Servicer.  This
                                     may be different
                                     than the LOAN_NBR
--------------------------------------------------------------------------------
LOAN_NBR                             A unique
                                     identifier
                                     assigned to each
                                     loan by the
                                     originator.
--------------------------------------------------------------------------------
CLIENT_NBR                           Servicer Client
                                     Number
--------------------------------------------------------------------------------
SERV_INVESTOR_NBR                    Contains a
                                     unique number as
                                     assigned by an
                                     external
                                     servicer to
                                     identify a group
                                     of loans in
                                     their system.
--------------------------------------------------------------------------------
BORROWER_FIRST_NAME                  First Name of
                                     the Borrower.
--------------------------------------------------------------------------------
BORROWER_LAST_NAME                   Last name of the
                                     borrower.
--------------------------------------------------------------------------------
PROP_ADDRESS                         Street Name and
                                     Number of
                                     Property
--------------------------------------------------------------------------------
PROP_STATE                           The state where
                                     the  property
                                     located.
--------------------------------------------------------------------------------
PROP_ZIP                             Zip code where
                                     the property is
                                     located.
--------------------------------------------------------------------------------
BORR_NEXT_PAY_DUE_DATE               The date that                 MM/DD/YYYY
                                     the borrower's
                                     next payment is
                                     due to the
                                     servicer at the
                                     end of
                                     processing
                                     cycle, as
                                     reported by
                                     Servicer.
--------------------------------------------------------------------------------
LOAN_TYPE                            Loan Type (i.e.
                                     FHA, VA, Conv)
--------------------------------------------------------------------------------
BANKRUPTCY_FILED_DATE                The date a                    MM/DD/YYYY
                                     particular
                                     bankruptcy claim
                                     was filed.
--------------------------------------------------------------------------------
BANKRUPTCY_CHAPTER_CODE              The chapter
                                     under which the
                                     bankruptcy was
                                     filed.
--------------------------------------------------------------------------------
BANKRUPTCY_CASE_NBR                  The case number
                                     assigned by the
                                     court to the
                                     bankruptcy
                                     filing.
--------------------------------------------------------------------------------
POST_PETITION_DUE_DATE               The payment due               MM/DD/YYYY
                                     date once the
                                     bankruptcy has
                                     been approved by
                                     the courts
--------------------------------------------------------------------------------
BANKRUPTCY_DCHRG_DISM_DATE           The Date The                  MM/DD/YYYY
                                     Loan Is Removed
                                     From Bankruptcy.
                                     Either by
                                     Dismissal,
                                     Discharged
                                     and/or a Motion
                                     For Relief Was
                                     Granted.
--------------------------------------------------------------------------------
LOSS_MIT_APPR_DATE                   The Date The                  MM/DD/YYYY
                                     Loss Mitigation
                                     Was Approved By
                                     The Servicer
--------------------------------------------------------------------------------
LOSS_MIT_TYPE                        The Type Of Loss
                                     Mitigation
                                     Approved For A
                                     Loan Such As;
--------------------------------------------------------------------------------
LOSS_MIT_EST_COMP_DATE               The Date The                  MM/DD/YYYY
                                     Loss Mitigation
                                     /Plan Is
                                     Scheduled To
                                     End/Close
--------------------------------------------------------------------------------
LOSS_MIT_ACT_COMP_DATE               The Date The                  MM/DD/YYYY
                                     Loss Mitigation
                                     Is Actually
                                     Completed
--------------------------------------------------------------------------------
FRCLSR_APPROVED_DATE                 The date DA                   MM/DD/YYYY
                                     Admin sends a
                                     letter to the
                                     servicer with
                                     instructions to
                                     begin
                                     foreclosure
                                     proceedings.
--------------------------------------------------------------------------------
ATTORNEY_REFERRAL_DATE               Date File Was                 MM/DD/YYYY
                                     Referred To
                                     Attorney to
                                     Pursue
                                     Foreclosure
--------------------------------------------------------------------------------
FIRST_LEGAL_DATE                     Notice of 1st                 MM/DD/YYYY
                                     legal filed by
                                     an Attorney in a
                                     Foreclosure
                                     Action
--------------------------------------------------------------------------------
FRCLSR_SALE_EXPECTED_DATE            The date by                   MM/DD/YYYY
                                     which a
                                     foreclosure sale
                                     is expected to
                                     occur.
--------------------------------------------------------------------------------
FRCLSR_SALE_DATE                     The actual date               MM/DD/YYYY
                                     of the
                                     foreclosure sale.
--------------------------------------------------------------------------------
FRCLSR_SALE_AMT                      The amount a       2          No
                                     property sold                 commas(,)
                                     for at the                    or dollar
                                     foreclosure sale.             signs ($)
--------------------------------------------------------------------------------


                                      F-1
<PAGE>

--------------------------------------------------------------------------------
Column/Header Name                   Description        Decimal    Format
                                                                   Comment
--------------------------------------------------------------------------------
EVICTION_START_DATE                  The date the                  MM/DD/YYYY
                                     servicer
                                     initiates
                                     eviction of the
                                     borrower.
--------------------------------------------------------------------------------
EVICTION_COMPLETED_DATE              The date the                  MM/DD/YYYY
                                     court revokes
                                     legal possession
                                     of the property
                                     from the
                                     borrower.
--------------------------------------------------------------------------------
LIST_PRICE                           The price at       2          No
                                     which an REO                  commas(,)
                                     property is                   or dollar
                                     marketed.                     signs ($)
--------------------------------------------------------------------------------
LIST_DATE                            The date an REO               MM/DD/YYYY
                                     property is
                                     listed at a
                                     particular price.
--------------------------------------------------------------------------------
OFFER_AMT                            The dollar value   2          No
                                     of an offer for               commas(,)
                                     an REO property.              or dollar
                                                                   signs ($)
--------------------------------------------------------------------------------
OFFER_DATE_TIME                      The date an                   MM/DD/YYYY
                                     offer is
                                     received by DA
                                     Admin or by the
                                     Servicer.
--------------------------------------------------------------------------------
REO_CLOSING_DATE                     The date the REO              MM/DD/YYYY
                                     sale of the
                                     property is
                                     scheduled to
                                     close.
--------------------------------------------------------------------------------
REO_ACTUAL_CLOSING_DATE              Actual Date Of                MM/DD/YYYY
                                     REO Sale
--------------------------------------------------------------------------------
OCCUPANT_CODE                        Classification
                                     of how the
                                     property is
                                     occupied.
--------------------------------------------------------------------------------
PROP_CONDITION_CODE                  A code that
                                     indicates the
                                     condition of the
                                     property.
--------------------------------------------------------------------------------
PROP_INSPECTION_DATE                 The date a                    MM/DD/YYYY
                                     property
                                     inspection is
                                     performed.
--------------------------------------------------------------------------------
APPRAISAL_DATE                       The date the                  MM/DD/YYYY
                                     appraisal was
                                     done.
--------------------------------------------------------------------------------
CURR_PROP_VAL                        The current "as    2
                                     is" value of the
                                     property based
                                     on brokers price
                                     opinion or
                                     appraisal.
--------------------------------------------------------------------------------
REPAIRED_PROP_VAL                    The amount the     2
                                     property would
                                     be worth if
                                     repairs are
                                     completed
                                     pursuant to a
                                     broker's price
                                     opinion or
                                     appraisal.
--------------------------------------------------------------------------------
If applicable:
--------------------------------------------------------------------------------
DELINQ_STATUS_CODE                   FNMA Code
                                     Describing
                                     Status of Loan
--------------------------------------------------------------------------------
DELINQ_REASON_CODE                   The
                                     circumstances
                                     which caused a
                                     borrower to stop
                                     paying on a
                                     loan.   Code
                                     indicates the
                                     reason why the
                                     loan is in
                                     default for this
                                     cycle.
--------------------------------------------------------------------------------
MI_CLAIM_FILED_DATE                  Date Mortgage                 MM/DD/YYYY
                                     Insurance Claim
                                     Was Filed With
                                     Mortgage
                                     Insurance
                                     Company.
--------------------------------------------------------------------------------
MI_CLAIM_AMT                         Amount of                     No
                                     Mortgage                      commas(,)
                                     Insurance Claim               or dollar
                                     Filed                         signs ($)
--------------------------------------------------------------------------------
MI_CLAIM_PAID_DATE                   Date Mortgage                 MM/DD/YYYY
                                     Insurance
                                     Company
                                     Disbursed Claim
                                     Payment
--------------------------------------------------------------------------------
MI_CLAIM_AMT_PAID                    Amount Mortgage    2          No
                                     Insurance                     commas(,)
                                     Company Paid On               or dollar
                                     Claim                         signs ($)
--------------------------------------------------------------------------------
POOL_CLAIM_FILED_DATE                Date Claim Was                MM/DD/YYYY
                                     Filed With Pool
                                     Insurance Company
--------------------------------------------------------------------------------
POOL_CLAIM_AMT                       Amount of Claim    2          No
                                     Filed With Pool               commas(,)
                                     Insurance Company             or dollar
                                                                   signs ($)
--------------------------------------------------------------------------------
POOL_CLAIM_PAID_DATE                 Date Claim Was                MM/DD/YYYY
                                     Settled and The
                                     Check Was Issued
                                     By The Pool
                                     Insurer
--------------------------------------------------------------------------------
POOL_CLAIM_AMT_PAID                  Amount Paid On     2          No
                                     Claim By Pool                 commas(,)
                                     Insurance Company             or dollar
                                                                   signs ($)
--------------------------------------------------------------------------------
FHA_PART_A_CLAIM_FILED_DATE          Date FHA Part A               MM/DD/YYYY
                                     Claim Was Filed
                                     With HUD
--------------------------------------------------------------------------------


                                      F-2
<PAGE>

--------------------------------------------------------------------------------
Column/Header Name                   Description        Decimal    Format
                                                                   Comment
--------------------------------------------------------------------------------
FHA_PART_A_CLAIM_AMT                 Amount of FHA      2          No
                                     Part A Claim                  commas(,)
                                     Filed                         or dollar
                                                                   signs ($)
--------------------------------------------------------------------------------
FHA_PART_A_CLAIM_PAID_DATE           Date HUD                      MM/DD/YYYY
                                     Disbursed Part A
                                     Claim Payment
--------------------------------------------------------------------------------
FHA_PART_A_CLAIM_PAID_AMT            Amount HUD Paid    2          No
                                     on Part A Claim               commas(,)
                                                                   or dollar
                                                                   signs ($)
--------------------------------------------------------------------------------
FHA_PART_B_CLAIM_FILED_DATE          Date FHA Part B               MM/DD/YYYY
                                     Claim Was Filed
                                     With HUD
--------------------------------------------------------------------------------
FHA_PART_B_CLAIM_AMT                 Amount of FHA      2          No
                                     Part B Claim                  commas(,)
                                     Filed                         or dollar
                                                                   signs ($)
--------------------------------------------------------------------------------
FHA_PART_B_CLAIM_PAID_DATE           Date HUD                      MM/DD/YYYY
                                     Disbursed Part B
                                     Claim Payment
--------------------------------------------------------------------------------
FHA_PART_B_CLAIM_PAID_AMT            Amount HUD Paid    2          No
                                     on Part B Claim               commas(,)
                                                                   or dollar
                                                                   signs ($)
--------------------------------------------------------------------------------
VA_CLAIM_FILED_DATE                  Date VA Claim                 MM/DD/YYYY
                                     Was Filed With
                                     the Veterans
                                     Admin
--------------------------------------------------------------------------------
VA_CLAIM_PAID_DATE                   Date Veterans                 MM/DD/YYYY
                                     Admin. Disbursed
                                     VA Claim Payment
--------------------------------------------------------------------------------
VA_CLAIM_PAID_AMT                    Amount Veterans    2          No
                                     Admin. Paid on                commas(,)
                                     VA Claim                      or dollar
                                                                   signs ($)
--------------------------------------------------------------------------------


Exhibit 2: Standard File Codes - Delinquency Reporting

The Loss Mit Type field should show the approved Loss Mitigation Code as
follows:
      o  ASUM- Approved Assumption
      o  BAP-  Borrower Assistance Program
      o  CO-   Charge Off
      o  DIL-  Deed-in-Lieu
      o  FFA-  Formal Forbearance Agreement
      o  MOD-  Loan Modification
      o  PRE-  Pre-Sale
      o  SS-   Short Sale
      o  MISC- Anything else approved by the PMI or Pool Insurer


                                      F-3
<PAGE>

NOTE: Wells Fargo Bank will accept alternative Loss Mitigation Types to those
above, provided that they are consistent with industry standards.  If Loss
Mitigation Types other than those above are used, the Servicer must supply
Wells Fargo Bank with a description of each of the Loss Mitigation Types
prior to sending the file.

The Occupant Code field should show the current status of the property code
as follows:
       o  Mortgagor
       o  Tenant
       o  Unknown
       o  Vacant

The Property Condition field should show the last reported condition of the
property as follows:
      o  Damaged
      o  Excellent
      o  Fair
      o  Gone
      o  Good
      o  Poor
      o  Special Hazard
      o  Unknown

Exhibit 2: Standard File Codes - Delinquency Reporting, Continued

The FNMA Delinquent Reason Code field should show the Reason for Delinquency
as follows:

--------------------------------------------------------------------------------
Delinquency Code         Delinquency Description
--------------------------------------------------------------------------------
001                      FNMA-Death of principal mortgagor
--------------------------------------------------------------------------------
002                      FNMA-Illness of principal mortgagor
--------------------------------------------------------------------------------
003                      FNMA-Illness of mortgagor's family member
--------------------------------------------------------------------------------
004                      FNMA-Death of mortgagor's family member
--------------------------------------------------------------------------------
005                      FNMA-Marital difficulties
--------------------------------------------------------------------------------
006                      FNMA-Curtailment of income
--------------------------------------------------------------------------------
007                      FNMA-Excessive Obligation
--------------------------------------------------------------------------------
008                      FNMA-Abandonment of property
--------------------------------------------------------------------------------
009                      FNMA-Distant employee transfer
--------------------------------------------------------------------------------
011                      FNMA-Property problem
--------------------------------------------------------------------------------
012                      FNMA-Inability to sell property
--------------------------------------------------------------------------------
013                      FNMA-Inability to rent property
--------------------------------------------------------------------------------
014                      FNMA-Military Service
--------------------------------------------------------------------------------
015                      FNMA-Other
--------------------------------------------------------------------------------
016                      FNMA-Unemployment
--------------------------------------------------------------------------------
017                      FNMA-Business failure
--------------------------------------------------------------------------------
019                      FNMA-Casualty loss
--------------------------------------------------------------------------------
022                      FNMA-Energy environment costs
--------------------------------------------------------------------------------
023                      FNMA-Servicing problems
--------------------------------------------------------------------------------
026                      FNMA-Payment adjustment
--------------------------------------------------------------------------------
027                      FNMA-Payment dispute
--------------------------------------------------------------------------------
029                      FNMA-Transfer of ownership pending
--------------------------------------------------------------------------------
030                      FNMA-Fraud
--------------------------------------------------------------------------------
031                      FNMA-Unable to contact borrower
--------------------------------------------------------------------------------
INC                      FNMA-Incarceration
--------------------------------------------------------------------------------


                                      F-4
<PAGE>

Exhibit 2: Standard File Codes - Delinquency Reporting, Continued

The FNMA  Delinquent  Status  Code field  should  show the Status of Default as
follows:

--------------------------------------------------------------------------------
      Status Code        Status Description
--------------------------------------------------------------------------------
          09             Forbearance
--------------------------------------------------------------------------------
          17             Pre-foreclosure Sale Closing Plan Accepted
--------------------------------------------------------------------------------
          24             Government Seizure
--------------------------------------------------------------------------------
          26             Refinance
--------------------------------------------------------------------------------
          27             Assumption
--------------------------------------------------------------------------------
          28             Modification
--------------------------------------------------------------------------------
          29             Charge-Off
--------------------------------------------------------------------------------
          30             Third Party Sale
--------------------------------------------------------------------------------
          31             Probate
--------------------------------------------------------------------------------
          32             Military Indulgence
--------------------------------------------------------------------------------
          43             Foreclosure Started
--------------------------------------------------------------------------------
          44             Deed-in-Lieu Started
--------------------------------------------------------------------------------
          49             Assignment Completed
--------------------------------------------------------------------------------
          61             Second Lien Considerations
--------------------------------------------------------------------------------
          62             Veteran's Affairs-No Bid
--------------------------------------------------------------------------------
          63             Veteran's Affairs-Refund
--------------------------------------------------------------------------------
          64             Veteran's Affairs-Buydown
--------------------------------------------------------------------------------
          65             Chapter 7 Bankruptcy
--------------------------------------------------------------------------------
          66             Chapter 11 Bankruptcy
--------------------------------------------------------------------------------
          67             Chapter 13 Bankruptcy
--------------------------------------------------------------------------------


                                      F-5
<PAGE>

                                   EXHIBIT G

                         FORM OF SERVICER CERTIFICATION

Re:   The [ ] agreement dated as of [     l, 200[ ] (the "Agreement"), among
[IDENTIFY PARTIES]

      I,  ____________________________,  the  _______________________  of [NAME
OF COMPANY] (the "Company"),  certify to [the Purchaser],  [the Depositor], and
the  [Master  Servicer]  [Securities   Administrator]   [Trustee],   and  their
officers,  with the  knowledge  and  intent  that  they  will  rely  upon  this
certification, that:

      I  have  reviewed  the  servicer  compliance  statement  of  the  Company
provided  in  accordance  with  Item  1123 of  Regulation  AB (the  "Compliance
Statement"),  the report on  assessment of the  Company's  compliance  with the
servicing  criteria set forth in Item 1122(d) of Regulation AB (the  "Servicing
Criteria"),   provided  in  accordance  with  Rules  13a-18  and  15d-18  under
Securities  Exchange  Act of 1934,  as amended  (the  "Exchange  Act") and Item
1122 of Regulation  AB (the  "Servicing  Assessment"),  the  registered  public
accounting firm's  attestation  report provided in accordance with Rules 13a-18
and 15d-18  under the Exchange Act and Section  1122(b) of  Regulation  AB (the
"Attestation  Report"),  and all servicing reports,  Officer's Certificates and
other  information  relating  to the  servicing  of the  Mortgage  Loans by the
Company  during 200[ ] that were  delivered  by the Company to the  [Depositor]
[Master  Servicer]  [Securities   Administrator]   [Trustee]  pursuant  to  the
Agreement (collectively, the "Company Servicing Information");

      Based on my  knowledge,  the Company  Servicing  Information,  taken as a
whole,  does not contain  any untrue  statement  of a material  fact or omit to
state a material fact  necessary to make the  statements  made, in the light of
the  circumstances  under which such  statements were made, not misleading with
respect to the period of time covered by the Company Servicing Information;

      Based  on  my  knowledge,   all  of  the  Company  Servicing  Information
required to be provided by the Company  under the  Agreement  has been provided
to the [Depositor] [Master Servicer] [Securities Administrator] [Trustee];

      I am responsible  for reviewing the  activities  performed by the Company
as servicer under the  Agreement,  and based on my knowledge and the compliance
review   conducted  in  preparing  the  Compliance   Statement  and  except  as
disclosed  in  the  Compliance  Statement,  the  Servicing  Assessment  or  the
Attestation  Report,  the  Company  has  fulfilled  its  obligations  under the
Agreement in all material respects; and

      The  Compliance  Statement  required  to  be  delivered  by  the  Company
pursuant  to this  Agreement,  and the  Servicing  Assessment  and  Attestation
Report  required  to be provided  by the  Company  and by any  Subservicer  and
Subcontractor   pursuant  to  the   Agreement,   have  been   provided  to  the
[Depositor]   [Master  Servicer].   Any  material  instances  of  noncompliance
described  in such  reports  have been  disclosed  to the  [Depositor]  [Master
Servicer].  Any material instance of noncompliance  with the Servicing Criteria
has been disclosed in such reports.


                                      G-1
<PAGE>

                                   EXHIBIT H

                           SUMMARY OF REGULATION AB
                              SERVICING CRITERIA

      NOTE:  This Exhibit H is provided for  convenience of reference  only. In
the event of a conflict or  inconsistency  between the terms of this  Exhibit H
and the  text of  Regulation  AB,  the  text of  Regulation  AB,  its  adopting
release and other public statements of the SEC shall control.

Item 1122(d)

      (b)   General servicing considerations.

            (1)   Policies  and   procedures  are  instituted  to  monitor  any
performance  or other  triggers  and events of default in  accordance  with the
transaction agreements.

            (2)   If  any  material  servicing  activities  are  outsourced  to
third  parties,  policies and  procedures  are  instituted to monitor the third
party's performance and compliance with such servicing activities.

            (3)   Any  requirements in the  transaction  agreements to maintain
a back-up servicer for the mortgage loans are maintained.

            (4)   A  fidelity  bond  and  errors  and  omissions  policy  is in
effect on the party  participating  in the servicing  function  throughout  the
reporting  period in the  amount  of  coverage  required  by and  otherwise  in
accordance with the terms of the transaction agreements.

      (c)   Cash collection and administration.

            (1)   Payments   on   mortgage   loans  are   deposited   into  the
appropriate  custodial  bank  accounts  and related bank  clearing  accounts no
more than two business  days  following  receipt,  or such other number of days
specified in the transaction agreements.

            (2)   Disbursements   made  via  wire  transfer  on  behalf  of  an
obligor or to an investor are made only by authorized personnel.

            (3)   Advances of funds or guarantees regarding  collections,  cash
flows or  distributions,  and any  interest  or  other  fees  charged  for such
advances,  are made,  reviewed and  approved as  specified  in the  transaction
agreements.

            (4)   The  related  accounts  for  the  transaction,  such  as cash
reserve  accounts or accounts  established as a form of  overcollateralization,
are separately  maintained  (e.g.,  with respect to commingling of cash) as set
forth in the transaction agreements.

            (5)   Each custodial  account is maintained at a federally  insured
depository  institution  as  set  forth  in  the  transaction  agreements.  For
purposes of this criterion,  "federally  insured  depository  institution" with
respect  to  a  foreign   financial   institution  means  a  foreign  financial
institution  that meets the  requirements of Rule 13k-1(b)(1) of the Securities
Exchange Act.


                                      H-1
<PAGE>

            (6)   Unissued   checks   are   safeguarded   so  as   to   prevent
unauthorized access.

            (7)   Reconciliations  are  prepared  on a  monthly  basis  for all
asset-backed  securities  related bank accounts,  including  custodial accounts
and  related   bank   clearing   accounts.   These   reconciliations   are  (A)
mathematically  accurate;  (B) prepared  within 30 calendar days after the bank
statement  cutoff  date,  or  such  other  number  of  days  specified  in  the
transaction  agreements;  (C) reviewed  and approved by someone  other than the
person who  prepared  the  reconciliation;  and (D)  contain  explanations  for
reconciling  items.  These  reconciling  items are resolved  within 90 calendar
days of their original  identification,  or such other number of days specified
in the transaction agreements.

      (d)   Investor remittances and reporting.

            (1)   Reports to  investors,  including  those to be filed with the
Commission,  are maintained in accordance with the  transaction  agreements and
applicable  Commission  requirements.   Specifically,   such  reports  (A)  are
prepared  in  accordance  with  timeframes  and  other  terms  set forth in the
transaction  agreements;  (B) provide information calculated in accordance with
the terms  specified  in the  transaction  agreements;  (C) are filed  with the
Commission  as  required  by its rules  and  regulations;  and (D)  agree  with
investors' or the trustee's  records as to the total unpaid  principal  balance
and number of mortgage loans serviced by the Servicer.

            (2)   Amounts  due to  investors  are  allocated  and  remitted  in
accordance  with  timeframes,  distribution  priority and other terms set forth
in the transaction agreements.

            (3)   Disbursements  made to an  investor  are  posted  within  two
business  days to the  Servicer's  investor  records,  or such other  number of
days specified in the transaction agreements.

            (4)   Amounts  remitted  to  investors  per  the  investor  reports
agree with  cancelled  checks,  or other form of  payment,  or  custodial  bank
statements.

      (e)   Mortgage Loan administration.

            (1)   Collateral  or security on mortgage  loans is  maintained  as
required by the transaction agreements or related mortgage loan documents.

            (2)   Mortgage  loan  and  related  documents  are  safeguarded  as
required by the transaction agreements.

            (3)   Any additions,  removals or  substitutions  to the asset pool
are  made,   reviewed  and  approved  in  accordance  with  any  conditions  or
requirements in the transaction agreements.


                                      H-2
<PAGE>

            (4)   Payments on mortgage  loans,  including any payoffs,  made in
accordance  with  the  related  mortgage  loan  documents  are  posted  to  the
Servicer's  obligor  records  maintained  no more than two business  days after
receipt,   or  such  other  number  of  days   specified  in  the   transaction
agreements,  and  allocated  to  principal,  interest  or  other  items  (e.g.,
escrow) in accordance with the related mortgage loan documents.

            (5)   The  Servicer's  records  regarding the mortgage  loans agree
with the  Servicer's  records  with respect to an  obligor's  unpaid  principal
balance.

            (6)   Changes  with  respect to the terms or status of an obligor's
mortgage loans (e.g., loan  modifications or re-agings) are made,  reviewed and
approved  by   authorized   personnel  in  accordance   with  the   transaction
agreements and related mortgage loan documents.

            (7)   Loss  mitigation  or  recovery  actions  (e.g.,   forbearance
plans,  modifications  and  deeds  in lieu  of  foreclosure,  foreclosures  and
repossessions,  as  applicable)  are  initiated,  conducted  and  concluded  in
accordance  with  the  timeframes  or  other  requirements  established  by the
transaction agreements.

            (8)   Records   documenting   collection   efforts  are  maintained
during  the  period  a  mortgage  loan is  delinquent  in  accordance  with the
transaction  agreements.  Such  records  are  maintained  on at least a monthly
basis,  or such other  period  specified  in the  transaction  agreements,  and
describe  the entity's  activities  in  monitoring  delinquent  mortgage  loans
including,  for example,  phone calls,  letters and payment  rescheduling plans
in  cases   where   delinquency   is  deemed   temporary   (e.g.,   illness  or
unemployment).

            (9)   Adjustments   to  interest  rates  or  rates  of  return  for
mortgage loans with variable  rates are computed based on the related  mortgage
loan documents.

            (10)  Regarding  any funds  held in trust for an  obligor  (such as
escrow  accounts):  (A)  such  funds  are  analyzed,  in  accordance  with  the
obligor's  mortgage loan documents,  on at least an annual basis, or such other
period specified in the transaction  agreements;  (B) interest on such funds is
paid, or credited,  to obligors in  accordance  with  applicable  mortgage loan
documents  and state  laws;  and (C) such  funds are  returned  to the  obligor
within 30 calendar days of full  repayment of the related  mortgage  loans,  or
such other number of days specified in the transaction agreements.

            (11)  Payments  made  on  behalf  of an  obligor  (such  as  tax or
insurance  payments)  are made on or before the related  penalty or  expiration
dates,  as indicated  on the  appropriate  bills or notices for such  payments,
provided  that such  support  has been  received  by the  Servicer  at least 30
calendar days prior to these dates,  or such other number of days  specified in
the transaction agreements.

            (12)  Any late  payment  penalties in  connection  with any payment
to be made on behalf of an obligor are paid from the  Servicer's  funds and not
charged  to the  obligor,  unless  the late  payment  was due to the  obligor's
error or omission.


                                      H-3
<PAGE>

            (13)  Disbursements  made  on  behalf  of  an  obligor  are  posted
within two business days to the obligor's  records  maintained by the Servicer,
or such other number of days specified in the transaction agreements.

            (14)  Delinquencies,  charge-offs  and  uncollectable  accounts are
recognized and recorded in accordance with the transaction agreements.
            (15)  Any external  enhancement  or other  support,  identified  in
Item  1114(a)(1)  through (3) or Item 1115 of  Regulation AB,  is maintained as
set forth in the transaction agreements.


                                      H-4
<PAGE>

                                   EXHIBIT I

                SUMMARY OF APPLICABLE REGULATION AB REQUIREMENTS

      NOTE:  This Exhibit I is provided for  convenience of reference  only. In
the event of a conflict or  inconsistency  between the terms of this  Exhibit I
and the  text of  Regulation  AB,  the  text of  Regulation  AB,  its  adopting
release and other public statements of the SEC shall control.

      Item 1108(b) and (c)

      Provide the  following  information  with respect to each  servicer  that
will service,  including interim service,  20% or more of the mortgage loans in
any loan group in the securitization issued in the Pass-Through Transfer:

      -a description of the Owner's form of organization;

      -a description  of how long the Servicer has been  servicing  residential
mortgage  loans;  a  general   discussion  of  the  Servicer's   experience  in
servicing  assets  of any  type as well as a more  detailed  discussion  of the
Servicer's  experience in, and  procedures  for the servicing  function it will
perform under this  Agreement and any  Reconstitution  Agreements;  information
regarding  the size,  composition  and growth of the  Servicer's  portfolio  of
mortgage  loans of the type similar to the Mortgage  Loans and  information  on
factors  related to the  Servicer  that may be material to any  analysis of the
servicing  of the Mortgage  Loans or the related  asset-backed  securities,  as
applicable,  including  whether any default or  servicing  related  performance
trigger has occurred as to any other  securitization  due to any act or failure
to act of the  Servicer,  whether any material  noncompliance  with  applicable
servicing  criteria  as to any  other  securitization  has  been  disclosed  or
reported by the Servicer, and the extent of outsourcing the Servicer uses;

      -a  description  of any material  changes to the  Servicer's  policies or
procedures in the servicing  function it will perform under this  Agreement and
any  Reconstitution  Agreements  for mortgage  loans of the type similar to the
Mortgage Loans during the past three years;

      -information  regarding the Servicer's  financial condition to the extent
that  there is a  material  risk  that the  effect  on one or more  aspects  of
servicing  resulting  from  such  financial  condition  could  have a  material
impact  on  the  performance  of the  securities  issued  in  the  Pass-Through
Transfer,  or on  servicing  of  mortgage  loans of the same  asset type as the
Mortgage Loans;

      -any special or unique  factors  involved in servicing  loans of the same
type  as the  Mortgage  Loans,  and the  Servicer's  processes  and  procedures
designed to address such factors;

      -statistical  information  regarding principal and interest advances made
by the  Servicer on the Mortgage  Loans and the  Servicer's  overall  servicing
portfolio for the past three years; and

      -the Owner's  process for handling  delinquencies,  losses,  bankruptcies
and recoveries,  such as through  liquidation of REO  Properties,  foreclosure,
sale of the Mortgage Loans or workouts.


                                      I-1
<PAGE>

Item 1117

      -describe any legal  proceedings  pending against the Servicer or against
any of its property,  including any  proceedings  known to be  contemplated  by
governmental  authorities,   that  may  be  material  to  the  holders  of  the
securities issued in the Pass-Through Transfer.

      Item 1119(a)

      -describe  any  affiliations  of the Servicer,  each other  originator of
the Mortgage Loans and each  Subservicer with the sponsor,  depositor,  issuing
entity,  trustee, any originator,  any other servicer, any significant obligor,
enhancement or support  provider or any other material  parties  related to the
Pass-Through Transfer.

      Item 1119(b)

      -describe   any   business    relationship,    agreement,    arrangement,
transaction  or  understanding  entered into outside of the ordinary  course of
business or on terms other than those  obtained in an arm's length  transaction
with an unrelated third party,  apart from the Pass-Through  Transfer,  between
the  Servicer,   each  other   originator  of  the  Mortgage   Loans  and  each
Subservicer,  or their  respective  affiliates,  and the sponsor,  depositor or
issuing entity or their  respective  affiliates,  that exists  currently or has
existed  during the past two years,  that may be material to the  understanding
of an investor in the securities issued in the Pass-Through Transfer.

      Item 1119(c)

      -describe   any   business    relationship,    agreement,    arrangement,
transaction  or  understanding  involving or relating to the Mortgage  Loans or
the  Pass-Through  Transfer,  including  the  material  terms  and  approximate
dollar  amount  involved,  between the Servicer,  each other  originator of the
Mortgage Loans and each  Subservicer,  or their  respective  affiliates and the
sponsor,  depositor  or issuing  entity or their  respective  affiliates,  that
exists currently or has existed during the past two years.


                                      I-2
<PAGE>

                                   EXHIBIT J

        SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE

                         SERVICING CRITERIA TO BE ADDRESSED
                             IN ASSESSMENT OF COMPLIANCE
                            (RMBS unless otherwise noted)

      Key:
      X - obligation

      Where there are multiple  checks for criteria  the  attesting  party will
identify in their  management  assertion  that they are  attesting  only to the
portion of the  distribution  chain  they are  responsible  for in the  related
transaction agreements.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
RegAB Reference                Servicing Criteria                                                                    Servicers
-----------------------------------------------------------------------------------------------------------------------------------
                               General Servicing Considerations
-----------------------------------------------------------------------------------------------------------------------------------
<S>                   <C>                                                                                            <C>
                      Policies and  procedures  are  instituted to monitor any  performance  or other  triggers and           X
22(d)(1)(i)           events of default in accordance with the transaction agreements.
-----------------------------------------------------------------------------------------------------------------------------------
                      If  any  material  servicing  activities  are  outsourced  to  third  parties,  policies  and           X
                      procedures are instituted to monitor the third party's  performance  and compliance with such
1122(d)(1)(ii)        servicing activities.
-----------------------------------------------------------------------------------------------------------------------------------
                      Any  requirements in the transaction  agreements to maintain a back-up  servicer for the Pool
1122(d)(1)(iii)       Assets are maintained.
-----------------------------------------------------------------------------------------------------------------------------------
                      A fidelity bond and errors and omissions  policy is in effect on the party  participating  in           X
                      the servicing function  throughout the reporting period in the amount of coverage required by
1122(d)(1)(iv)        and otherwise in accordance with the terms of the transaction agreements.
-----------------------------------------------------------------------------------------------------------------------------------
                      Cash Collection and Administration
-----------------------------------------------------------------------------------------------------------------------------------
                      Payments on pool assets are  deposited  into the  appropriate  custodial  bank  accounts  and           X
                      related bank clearing  accounts no more than two business  days  following  receipt,  or such
1122(d)(2)(i)         other number of days specified in the transaction agreements.
-----------------------------------------------------------------------------------------------------------------------------------
                      Disbursements  made via wire transfer on behalf of an obligor or to an investor are made only           X
1122(d)(2)(ii)        by authorized personnel.
-----------------------------------------------------------------------------------------------------------------------------------
                      Advances of funds or guarantees regarding collections,  cash flows or distributions,  and any           X
                      interest  or other fees  charged  for such  advances,  are made,  reviewed  and  approved  as
1122(d)(2)(iii)       specified in the transaction agreements.
-----------------------------------------------------------------------------------------------------------------------------------
                      The  related  accounts  for the  transaction,  such  as cash  reserve  accounts  or  accounts           X
                      established  as a form of over  collateralization,  are  separately  maintained  (e.g.,  with
1122(d)(2)(iv)        respect to commingling of cash) as set forth in the transaction agreements.
-----------------------------------------------------------------------------------------------------------------------------------
                      Each custodial  account is maintained at a federally  insured  depository  institution as set           X
                      forth in the  transaction  agreements.  For purposes of this  criterion,  "federally  insured
                      depository  institution"  with  respect to a foreign  financial  institution  means a foreign
                      financial  institution  that meets the  requirements  of Rule  13k-1(b)(1)  of the Securities
1122(d)(2)(v)         Exchange Act.
-----------------------------------------------------------------------------------------------------------------------------------
1122(d)(2)(vi)        Unissued checks are safeguarded so as to prevent unauthorized access.                                   X
-----------------------------------------------------------------------------------------------------------------------------------
                      Reconciliations are prepared on a monthly basis for all asset-backed  securities related bank           X
                      accounts,   including   custodial  accounts  and  related  bank  clearing   accounts.   These
                      reconciliations are (A) mathematically  accurate;  (B) prepared within 30 calendar days after
                      the bank  statement  cutoff date, or such other number of days  specified in the  transaction
                      agreements;  (C)  reviewed  and  approved by someone  other than the person who  prepared the
                      reconciliation;  and (D) contain  explanations for reconciling items. These reconciling items
                      are resolved within 90 calendar days of their original  identification,  or such other number
1122(d)(2)(vii)       of days specified in the transaction agreements.
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                      J-1
<PAGE>

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
RegAB Reference                Servicing Criteria                                                                    Servicers
-----------------------------------------------------------------------------------------------------------------------------------
                               General Servicing Considerations
-----------------------------------------------------------------------------------------------------------------------------------
<S>                   <C>                                                                                            <C>
                      Investor Remittances and Reporting
-----------------------------------------------------------------------------------------------------------------------------------
                      Reports to investors,  including  those to be filed with the  Commission,  are  maintained in           X
                      accordance  with  the  transaction   agreements  and  applicable   Commission   requirements.
                      Specifically,  such reports (A) are prepared in accordance  with  timeframes  and other terms
                      set forth in the transaction  agreements;  (B) provide  information  calculated in accordance
                      with the terms specified in the transaction agreements;  (C) are filed with the Commission as
                      required  by its rules  and  regulations;  and (D) agree  with  investors'  or the  trustee's
                      records as to the total unpaid  principal  balance and number of Pool Assets  serviced by the
1122(d)(3)(i)         Servicer.
-----------------------------------------------------------------------------------------------------------------------------------
                      Amounts  due  to  investors  are  allocated  and  remitted  in  accordance  with  timeframes,           X
1122(d)(3)(ii)        distribution priority and other terms set forth in the transaction agreements.
-----------------------------------------------------------------------------------------------------------------------------------
                      Disbursements  made to an investor  are posted  within two  business  days to the  Servicer's           X
1122(d)(3)(iii)       investor records, or such other number of days specified in the transaction agreements.
-----------------------------------------------------------------------------------------------------------------------------------
                      Amounts remitted to investors per the investor reports agree with cancelled  checks, or other           X
1122(d)(3)(iv)        form of payment, or custodial bank statements.
-----------------------------------------------------------------------------------------------------------------------------------
                      Pool Asset Administration
-----------------------------------------------------------------------------------------------------------------------------------
                      Collateral  or  security  on  pool  assets  is  maintained  as  required  by the  transaction           X
1122(d)(4)(i)         agreements or related pool asset documents.
-----------------------------------------------------------------------------------------------------------------------------------
1122(d)(4)(ii)        Pool assets  and related documents are safeguarded as required by the transaction agreements            X
-----------------------------------------------------------------------------------------------------------------------------------
                      Any additions,  removals or substitutions  to the asset pool are made,  reviewed and approved           X
1122(d)(4)(iii)       in accordance with any conditions or requirements in the transaction agreements.
-----------------------------------------------------------------------------------------------------------------------------------
1122(d)(4)(iv)        Payments on pool assets,  including  any payoffs,  made in  accordance  with the related pool           X
                      asset  documents are posted to the  Servicer's  obligor  records  maintained no more than two
                      business  days after  receipt,  or such other  number of days  specified  in the  transaction
                      agreements, and allocated to principal,  interest or other items (e.g., escrow) in accordance
                      with the related pool asset documents.
-----------------------------------------------------------------------------------------------------------------------------------
                      The  Servicer's  records  regarding  the pool assets agree with the  Servicer's  records with           X
1122(d)(4)(v)         respect to an obligor's unpaid principal balance.
-----------------------------------------------------------------------------------------------------------------------------------
                      Changes  with  respect  to the  terms or status  of an  obligor's  pool  assets  (e.g.,  loan           X
                      modifications  or  re-agings)  are made,  reviewed  and approved by  authorized  personnel in
1122(d)(4)(vi)        accordance with the transaction agreements and related pool asset documents.
-----------------------------------------------------------------------------------------------------------------------------------
                      Loss mitigation or recovery  actions (e.g.,  forbearance  plans,  modifications  and deeds in           X
                      lieu of foreclosure,  foreclosures and repossessions, as applicable) are initiated, conducted
                      and concluded in accordance  with the  timeframes or other  requirements  established  by the
1122(d)(4)(vii)       transaction agreements.
-----------------------------------------------------------------------------------------------------------------------------------
                      Records  documenting  collection  efforts  are  maintained  during the period a pool asset is           X
                      delinquent in accordance with the transaction  agreements.  Such records are maintained on at
                      least a monthly basis,  or such other period  specified in the  transaction  agreements,  and
                      describe  the  entity's  activities  in  monitoring  delinquent  pool assets  including,  for
                      example,  phone calls,  letters and payment  rescheduling plans in cases where delinquency is
1122(d)(4)(viii)      deemed temporary (e.g., illness or unemployment).
-----------------------------------------------------------------------------------------------------------------------------------
1122(d)(4)(ix)        Adjustments  to interest  rates or rates of return for pool assets  with  variable  rates are           X
                      computed based on the related pool asset documents.
-----------------------------------------------------------------------------------------------------------------------------------
1122(d)(4)(x)         Regarding  any funds held in trust for an obligor (such as escrow  accounts):  (A) such funds           X
                      are analyzed,  in accordance with the obligor's pool asset  documents,  on at least an annual
                      basis,  or such other period  specified in the transaction  agreements;  (B) interest on such
                      funds is paid, or credited,  to obligors in accordance  with  applicable pool asset documents
                      and state laws;  and (C) such funds are  returned to the obligor  within 30 calendar  days of
                      full  repayment  of the related pool  assets,  or such other number of days  specified in the
                      transaction agreements.
-----------------------------------------------------------------------------------------------------------------------------------
                      Payments  made on behalf of an obligor  (such as tax or  insurance  payments)  are made on or           X
                      before the related  penalty or expiration  dates,  as indicated on the  appropriate  bills or
                      notices for such  payments,  provided  that such support has been received by the servicer at
                      least 30 calendar  days prior to these dates,  or such other number of days  specified in the
1122(d)(4)(xi)        transaction agreements.
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                      J-2
<PAGE>

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
RegAB Reference                Servicing Criteria                                                                    Servicers
-----------------------------------------------------------------------------------------------------------------------------------
                               General Servicing Considerations
-----------------------------------------------------------------------------------------------------------------------------------
<S>                   <C>                                                                                            <C>
                      Any late payment  penalties in connection with any payment to be made on behalf of an obligor           X
                      are paid from the  Servicer's  funds and not charged to the obligor,  unless the late payment
1122(d)(4)(xii)       was due to the obligor's error or omission.
-----------------------------------------------------------------------------------------------------------------------------------
                      Disbursements  made on behalf of an  obligor  are  posted  within  two  business  days to the           X
                      obligor's records  maintained by the servicer,  or such other number of days specified in the
1122(d)(4)(xiii)      transaction agreements.
-----------------------------------------------------------------------------------------------------------------------------------
                      Delinquencies,  charge-offs  and  uncollectible  accounts  are  recognized  and  recorded  in           X
1122(d)(4)(xiv)       accordance with the transaction agreements.
-----------------------------------------------------------------------------------------------------------------------------------
                      Any external enhancement or other support,  identified in Item 1114(a)(1) through (3) or Item
1122(d)(4)(xv)        1115 of Regulation AB, is maintained as set forth in the transaction agreements.
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                    [NAME OF OWNER] [NAME OF SUBSERVICER]

                                    Date: _________________________

                                    By:   _________________________
                                    Name:
                                    Title:


                                      J-3
<PAGE>

                                   EXHIBIT K

                    REPORTING DATA FOR REALIZED LOSSES AND GAINS

         Calculation of Realized Loss/Gain Form 332- Instruction Sheet

      NOTE:  Do not net or combine items.  Show all expenses individually and
      all credits as separate line items.  Claim packages are due within 90
      days of liquidation.  Late submissions may result in claims not being
      passed until the following month.  The Servicer is responsible to remit
      all funds pending loss approval and /or resolution of any disputed
      items.

            The numbers on the 332 form correspond with the numbers listed
      below.

      Liquidation and Acquisition Expenses:
      1.    The Actual Unpaid Principal Balance of the Mortgage Loan.  For
            documentation, an Amortization Schedule from date of default
            through liquidation breaking out the net interest and servicing
            fees advanced is required.

      2.    The Total  Interest Due less the aggregate  amount of servicing fee
            that would have been  earned if all  delinquent  payments  had been
            made as agreed.  For documentation,  an Amortization  Schedule from
            date of default through  liquidation  breaking out the net interest
            and servicing fees advanced is required.
      3.    Accrued  Servicing Fees based upon the Scheduled  Principal Balance
            of  the  Mortgage  Loan  as  calculated  on a  monthly  basis.  For
            documentation,  an  Amortization  Schedule  from  date  of  default
            through  liquidation  breaking out the net  interest and  servicing
            fees advanced is required.
      4-12. Complete as applicable.  Required documentation:
                  * For  taxes  and  insurance  advances  - see  page  2 of 332
            form - breakdown required showing period
                  of coverage,  base tax,  interest,  penalty.  Advances  prior
            to  default  require   evidence  of  servicer  efforts  to  recover
            advances.
                   *  For escrow advances - complete payment history
                      (to  calculate   advances   from  last  positive   escrow
            balance forward)
                  * Other  expenses  -  copies  of  corporate  advance  history
            showing all payments
                  *  REO repairs > $1500 require explanation
                  *  REO repairs >$3000 require evidence of at least 2 bids.
                  *  Short  Sale or  Charge  Off  require  P&L  supporting  the
            decision and WFB's approved Officer Certificate
                  *  Unusual  or   extraordinary   items  may  require  further
            documentation.
      13.   The total of lines 1 through 12.
      Credits:

      14-21.      Complete as applicable.  Required documentation:
                  * Copy  of the  HUD 1  from  the  REO  sale.  If a 3rd  Party
            Sale, bid instructions and Escrow Agent / Attorney
                     Letter of Proceeds Breakdown.
                  *  Copy of EOB for any MI or gov't guarantee
                  * All other  credits  need to be  clearly  defined on the 332
            form
      22.   The total of lines 14 through 21.

      Please Note:  For HUD/VA loans, use line (18a) for Part A/Initial
                    proceeds and line (18b) for Part B/Supplemental proceeds.

      Total Realized Loss (or Amount of Any Gain)


                                      K-1
<PAGE>

      23.   The  total  derived  from  subtracting  line  22  from  13.  If the
            amount  represents a realized gain,  show the amount in parenthesis
            (   ).

                  Calculation of Realized Loss/Gain Form 332

Prepared by:  __________________                Date:  _______________
Phone:  ______________________   Email Address:_____________________

------------------------  --------------------------  ---------------------
Servicer Loan No.         Servicer Name               Servicer Address

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

WELLS FARGO BANK, N.A. Loan No._____________________________

Borrower's Name: _______________________________________________________

Property Address: _______________________________________________________

Liquidation Type:  REO Sale      3rd Party Sale      Short Sale       Charge Off

Was this loan granted a Bankruptcy deficiency or cramdown        Yes         No
If "Yes", provide deficiency or cramdown amount _______________________________

Liquidation and Acquisition Expenses:
(1)  Actual Unpaid Principal Balance of Mortgage Loan   $ ______________ (1)
(2)  Interest accrued at Net Rate                       ________________ (2)
(3)  Accrued Servicing Fees                             ________________ (3)
(4)  Attorney's Fees                                    ________________ (4)
(5)  Taxes (see page 2)                                 ________________ (5)
(6)  Property Maintenance                               ________________ (6)
(7)  MI/Hazard Insurance Premiums (see page 2)          ________________ (7)
(8)  Utility Expenses                                   ________________ (8)
(9)  Appraisal/BPO                                      ________________ (9)
(10) Property Inspections                               ________________ (10)
(11) FC Costs/Other Legal Expenses                      ________________ (11)
(12) Other (itemize)                                    ________________ (12)
         Cash for Keys__________________________        ________________ (12)
         HOA/Condo Fees_______________________          ________________ (12)
         ______________________________________         ________________ (12)

         Total Expenses                                 $ _______________(13)
Credits:
(14) Escrow Balance                                     $ _______________(14)
(15) HIP Refund                                         ________________ (15)
(16) Rental Receipts                                    ________________ (16)
(17) Hazard Loss Proceeds                               ________________ (17)
(18) Primary Mortgage Insurance / Gov't Insurance       ________________ (18a)
 HUD Part A
 HUD Part B                                             ________________ (18b)
(19) Pool Insurance Proceeds                            ________________ (19)
(20) Proceeds from Sale of Acquired Property            ________________ (20)
(21) Other (itemize)                                    ________________ (21)
     _________________________________________          ________________ (21)

     Total Credits                                      $________________(22)
Total Realized Loss (or Amount of Gain)                 $________________(23)


                                      K-2
<PAGE>

Escrow Disbursement Detail

--------------------------------------------------------------------------------
   Type       Date     Period of    Total     Base        Penalties    Interest
(Tax /Ins.)   Paid     Coverage     Paid     Amount
--------------------------------------------------------------------------------

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

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

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

--------------------------------------------------------------------------------
                                      K-3








                                                                EXECUTION COPY


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

                             SERVICING AGREEMENT



                                By and Between



                            WASHINGTON MUTUAL BANK
                                  (Servicer)


                                     and


                           EMC MORTGAGE CORPORATION

                                   (Owner)




                          Dated as of April 1, 2005



                    Residential First Lien Mortgage Loans
                         Schedule/Schedule Remittance

------------------------------------------------------------------------------
<PAGE>

                              TABLE OF CONTENTS

                                                                          Page


ARTICLE 1. DEFINITIONS.......................................................1


ARTICLE 2. ADMINISTRATION AND SERVICING OF MORTGAGE LOANS....................9

   Section 2.1.   Identification of Mortgage Loans; Servicer to Act as
                  Servicer...................................................9
   Section 2.2.   Liquidation of Mortgage Loans.............................11
   Section 2.3.   Collection of Mortgage Loan Payments......................12
   Section 2.4.   Establishment of Account; Deposits in Account.............13
   Section 2.5.   Permitted Withdrawals from the Account....................14
   Section 2.6.   Establishment of Escrow Account; Deposits in Escrow
                  Account; Escrow Analysis..................................15
   Section 2.7.   Permitted Withdrawals from the Escrow Account.............15
   Section 2.8.   Payment of Taxes, Insurance and Other Charges.............16
   Section 2.9.   Transfer of Accounts......................................16
   Section 2.10.  Maintenance of Hazard Insurance...........................16
   Section 2.11.  Fidelity Bond; Errors and Omissions Insurance.............18
   Section 2.12.  Title, Management and Disposition of Real Estate Owned....18
   Section 2.13.  Application of Proceeds of Insurance to Repair or
                  Restoration...............................................20
   Section 2.14.  Inspections...............................................20
   Section 2.15.  Maintenance of Primary Mortgage Insurance Policies;
                  Collections Thereunder....................................20
   Section 2.16.  Monthly Advances by the Servicer..........................21
   Section 2.17.  Compliance With REMIC Provisions..........................21
   Section 2.18.  Owner to Cooperate; Release of Collateral Files...........22

ARTICLE 3. PAYMENTS TO THE OWNER............................................22

   Section 3.1.   Distributions.............................................22
   Section 3.2.   Reports...................................................23
   Section 3.3.   Delinquency and Foreclosure Statements....................25

ARTICLE 4. GENERAL SERVICING PROCEDURE; COVENANTS; REPRESENTATIONS AND
            WARRANTIES......................................................25

   Section 4.1.   Assumption Agreements.....................................25
   Section 4.2.   Satisfaction of Mortgages and Release of Collateral Files.25
   Section 4.3.   Servicing Compensation....................................27
   Section 4.4.   Statements as to Compliance...............................27
   Section 4.5.   Annual Independent Public Accountants' Servicing Report...28
   Section 4.6.   Owner's Right to Examine Servicer Records, etc............28
   Section 4.7.   Cooperation...............................................29


                                      i
<PAGE>

   Section 4.8.   Consents and Approvals....................................29

ARTICLE 5. THE SERVICER.....................................................29

   Section 5.1.   Indemnification; Third Party Claims.......................29
   Section 5.2.   Servicer Covenants; Merger or Consolidation of the
                  Servicer .................................................30
   Section 5.3.   Limitation on Liability of the Servicer and Others........31
   Section 5.4.   Servicer Not to Resign....................................31
   Section 5.5.   Transfer of Servicing.....................................31
   Section 5.6.   Transfer of Mortgage Loans................................32
   Section 5.7.   Representations and Warranties of the Servicer............32

ARTICLE 6. DEFAULT..........................................................33

   Section 6.1.   Events of Default.........................................33
   Section 6.2.   Waiver of Defaults........................................35
   Section 6.3.   Survival of Certain Obligations and Liabilities of the
                  Defaulted Servicer........................................35

ARTICLE 7. TERMINATION......................................................35

   Section 7.1.   Termination of Agreement..................................35
   Section 7.2.   Termination of the Servicer Upon Unremedied Event of
                  Default ..................................................36

ARTICLE 8. PASS-THROUGH AND WHOLE LOAN TRANSFER.............................36

   Section 8.1.   Pass-Through Transfers or Whole-Loan Transfers............36
   Section 8.2.   Designation of a Master Servicer..........................38

ARTICLE 9. MISCELLANEOUS PROVISIONS.........................................39

   Section 9.1.   Successor to the Servicer.................................39
   Section 9.2.   Amendment.................................................40
   Section 9.3.   Recordation of Agreement; Perfection of Security Interest;
                  Further Assurances........................................40
   Section 9.4.   Duration of Agreement.....................................40
   Section 9.5.   Governing Law.............................................40
   Section 9.6.   General Interpretive Principles...........................41
   Section 9.7.   Reproduction of Documents.................................41
   Section 9.8.   Notices...................................................41
   Section 9.9.   Severability of Provisions................................42
   Section 9.10.  Exhibits and Schedules....................................42
   Section 9.11.  Counterparts; Successors and Assigns......................43
   Section 9.12.  Effect of Headings........................................43
   Section 9.13.  Other Agreements Superseded; Entire Agreement.............43
   Section 9.14.  Attorneys' Fees...........................................43


                                      ii
<PAGE>

   Section 9.15.  Non-Solicitation..........................................43
   Section 9.16.  Confidential Information..................................44


                                     iii
<PAGE>


                          DESCRIPTION OF ATTACHMENTS


Exhibit A   FORM OF REQUEST FOR RELEASE OF DOCUMENTS AND RECEIPT

Exhibit B   ACCOUNT LETTER AGREEMENT

Exhibit C   ESCROW ACCOUNT LETTER AGREEMENT

Exhibit D   FORM OF OFFICER'S CERTIFICATE

Exhibit E   CONTENTS OF CREDIT FILE

Exhibit F   FORM OF CONFIRMATION AGREEMENT

Schedule 1  MORTGAGE LOAN SCHEDULE


                                      iv
<PAGE>


                             SERVICING AGREEMENT

      This SERVICING AGREEMENT (this "Agreement") dated as of April 1, 2005,
is between Washington Mutual Bank, a savings bank organized under the laws of
the United States, in its capacity as servicer (the "Servicer"), and EMC
Mortgage Corporation, a Delaware corporation, and its successors and assigns,
in its capacity as owner (the "Owner").

                            PRELIMINARY STATEMENT

      WHEREAS, the Owner owns certain residential, first lien mortgage loans;

      WHEREAS, the Servicer holds the servicing rights related to the
Mortgage Loans and has agreed to service such Mortgage Loans for the Owner;

      WHEREAS, the Servicer and the Owner desire to prescribe the terms and
conditions regarding the management, servicing, and control of the Mortgage
Loans; and

      WHEREAS, the Servicer and the Owner intend that, with respect to each
Mortgage Loan serviced hereunder, the terms and conditions of this Agreement
replace and supercede, as of the related Closing Date (as defined herein),
all of the terms and conditions of any other servicing agreement to which the
Servicer is bound that purports to govern the servicing of such Mortgage Loan;

      NOW, THEREFORE, in consideration of the mutual agreements and covenants
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Servicer and the Owner
agree as follows:

                                  ARTICLE 1.

                                 DEFINITIONS

      Capitalized terms used in this Agreement shall have the following
meanings, unless the context otherwise requires:

      Acceptable Servicing Procedures:  The procedures, including prudent
collection and loan administration procedures, and the standard of care
employed by prudent mortgage servicers that service mortgage loans of the
same type as the Mortgage Loans in the jurisdictions in which the related
Mortgaged Properties are located.  Such standard of care shall not be lower
than that the Servicer customarily employs and exercises in servicing and
administering similar mortgage loans for its own account and shall be in full
compliance with all applicable federal, state and local laws, ordinances,
rules and regulations.

      Account:  The account or accounts created and maintained pursuant to
Section 2.4 of this Agreement.


                                      1
<PAGE>

      Agreement:  This Servicing Agreement, including all exhibits and
schedules hereto, and all amendments hereof and supplements hereto.

      Applicable Requirements:  With respect to each Mortgage Loan, (i) the
terms of the related Mortgage and Mortgage Note, (ii) the federal, state and
local laws, statutes, rules, regulations, ordinances, standards,
requirements, administrative rulings, orders and processes pertaining to such
Mortgage Loan, including but not limited to those pertaining to the
processing, origination and servicing of the Mortgage Loan, (iii) the
requirements of the Owner as set forth in this Agreement and (iv) Acceptable
Servicing Procedures.

      ARM Loan:  A Mortgage Loan as to which the related Mortgage Note
provides that the Mortgage Interest Rate may be adjusted periodically.

      BIF:  The Bank Insurance Fund.

      Business Day:  Any day other than (i) a Saturday or Sunday, or (ii) a
day on which banking or savings and loan institutions are authorized or
obligated by law or executive order to be closed in the State of New York,
the State of Washington or any state in which the Servicer operates.

      Certification Cure Deadline:  The date occurring ten (10) days after
the date on which written notice of the Servicer's failure to duly perform
its obligations under Sections 4.4 and 4.5 shall have been given to the
Servicer by the Owner, or if the related Mortgage Loans are subject to
securitization and the registrant (or its agent) has obtained an extension to
the Securities and Exchange Commission filing deadline for the related 10-K,
the date occurring five (5) days prior to the extended filing deadline.

      Closing Date:  With respect to each Mortgage Loan in a Pool of Mortgage
Loans, the date on which such Mortgage Loan becomes subject to this
Agreement, as specified in the related Confirmation Agreement.

      Code:  The Internal Revenue Code of 1986, as amended from time to time,
or any successor statute thereto.

      Collateral Documents:  With respect to any Mortgage Loan, the mortgage
loan documents pertaining to such Mortgage Loan delivered to and held by the
Custodian from time to time in connection with the purchase and sale of such
Mortgage Loan.

      Collateral File:  With respect to any Mortgage Loan, a file pertaining
to such Mortgage Loan that contains each of the related Collateral Documents.

      Compensating Interest Cap:  An amount equal to 1/12 of the sum of:

            (i)   the aggregate Unpaid Principal Balance of all (A) fixed
rate Mortgage Loans and (B) Hybrid ARM Loans that bear interest at the
initial fixed rate (other than 3/1 Hybrid ARM Loans), multiplied by 0.25%, and


                                      2
<PAGE>

            (ii)  the aggregate Unpaid Principal Balance of all (A) ARM
Loans, (B) Hybrid ARM Loans that bear interest at an adjustable rate and (C)
3/1 Hybrid ARM Loans, multiplied by 0.375%.

      Condemnation Proceeds:  All awards or settlements in respect of a
taking of all or part of a Mortgaged Property by exercise of the power of
eminent domain or condemnation.

      Confirmation Agreement:  An agreement substantially in the form of
Exhibit F attached hereto, executed by the Owner and the Servicer, which
agreement shall confirm the addition of a Pool of Mortgage Loans subject to
the terms and conditions of this Agreement.

      Credit File:  With respect to any Mortgage Loan, a file pertaining to
such Mortgage Loan which may contain the mortgage loan documents described on
Exhibit E attached hereto, which file shall be retained by the Servicer and
may be maintained on microfilm or any other comparable medium.

      Custodian:  With respect to any Mortgage Loan, Wells Fargo Bank, N.A.,
any successor custodian, or any other custodian designated by the Owner from
time to time.

      Cut-off Date:  With respect to any Mortgage Loan, the first day of the
month in which the related Closing Date occurs, except as otherwise specified
in the related Confirmation Agreement.

      Cut-off Date Principal Balance:  As to each Mortgage Loan, the
outstanding principal balance of such Mortgage Loan as of the close of
business on the related Cut-off Date, after deduction and application of all
payments of principal due on or before such Cut-off Date, whether or not
received.

      Defaulted Servicer:  As defined in Section 6.1.

      Determination Date:  The thirteenth (13th) day of each month (or if
such day is not a Business Day, the next Business Day), commencing in the
month following the end of the calendar month in which the related Closing
Date occurs.  A Determination Date is related to a Monthly Remittance Date if
such Determination Date and such Monthly Remittance Date occur in the same
calendar month.

      Disclosure Document:  As defined in Section 8.1(d).

      Due Date:  With respect to any Mortgage Loan, the day of the month on
which Monthly Payments on such Mortgage Loan are due, exclusive of any days
of grace, which day shall be the first day of the month unless otherwise
specified on the related Mortgage Loan Schedule.

      Due Period:  With respect to any Mortgage Loan, the period beginning on
the first day of any month and ending on the last day of such month.

      Eligible Account:  An account or accounts maintained with a Qualified
Depository.


                                      3
<PAGE>

      Escrow Account:  The separate account or accounts created and
maintained pursuant to Section 2.6.

      Escrow Payments:  The amounts constituting ground rents, taxes,
assessments, water rates, sewer rents, municipal charges, Primary Mortgage
Insurance Policy premiums, if any, fire and hazard insurance premiums,
condominium charges and other payments required to be escrowed by the
Mortgagor with the mortgagee pursuant to any Mortgage Loan.

      Event of Default:  Any one of the conditions or circumstances
enumerated in Section 6.1.

      Fannie Mae:  Fannie Mae (formerly known as the Federal National
Mortgage Association) and any successor thereto.

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

      Fidelity Bond:  A fidelity bond to be obtained by the Servicer pursuant
to Section 2.11.

      Final Recovery Determination:  With respect to any defaulted Mortgage
Loan or any REO Property, a determination made by the Servicer that all
related Condemnation Proceeds, Insurance Proceeds, Liquidation Proceeds and
other payments or recoveries that the Servicer, in its reasonable good faith
judgment, expects to be finally recoverable have been so recovered.  The
Servicer shall maintain records, prepared by a servicing officer of the
Servicer, of each Final Recovery Determination.

      Freddie Mac:  Freddie Mac (formerly known as The Federal Home Loan
Mortgage Corporation) and any successor thereto.

      GAAP:  Generally Accepted Accounting Principles, as promulgated by the
Financial Accounting Standards Board from time to time.

      Gross Margin:  With respect to any ARM Loan, the fixed percentage
amount set forth in the related Mortgage Note and described in the related
Mortgage Loan Schedule, which amount is added to the Index in accordance with
the terms of the related Mortgage Note to determine on each Interest Rate
Adjustment Date the Mortgage Interest Rate for such Mortgage Loan.

      Indemnified Party:  As defined in Section 8.1(d).

      Indemnitee:  As defined in Section 4.4(c).

      Index:  With respect to any ARM Loan, the index set forth in each
adjustable rate Mortgage Note, which index is added to the Gross Margin to
determine the Mortgage Interest Rate on each Interest Rate Adjustment Date.

      Insurance Proceeds:  Proceeds of any Primary Mortgage Insurance Policy,
title policy, hazard insurance policy or any other insurance policy covering
a Mortgage Loan or the related Mortgaged Property, including any amounts
required to be deposited in the Account pursuant to Section 2.10, to the
extent such proceeds are not to be applied to the restoration of the related
Mortgaged Property or released to the Mortgagor in accordance with Applicable
Requirements.


                                      4
<PAGE>

      Interest Rate Adjustment Date:  With respect to any ARM Loan, the date
specified in the related Mortgage Note as the date on which the Mortgage
Interest Rate for the related Mortgage Loan is subject to adjustment.

      Late Collections:  With respect to any Mortgage Loan, all amounts
received during any Due Period, whether as late payments of Monthly Payments,
or as Insurance Proceeds, Liquidation Proceeds, Condemnation Proceeds or
otherwise, which amounts represent late payments or collections of Monthly
Payments due but delinquent for a previous Due Period and not previously
recovered.

      Liquidation Proceeds:  Cash received in connection with (i) the
liquidation of a defaulted Mortgage Loan (whether through the sale or
assignment of the Mortgage Loan, trustee's sale, foreclosure sale or
otherwise) or (ii) the sale of the Mortgaged Property, if the Mortgaged
Property is acquired in satisfaction of the Mortgage.

      Losses:  As defined in Section 5.1(a).

      Management Assertion:  As defined in Section 4.5.

      Master Servicer:  As defined in Section 8.2(a).

      Master Servicing Agreement:  As defined in Section 8.2(a).

      Maturity Date:  With respect to each Mortgage Loan, the maturity date
of the related Mortgage Note, as specified therein.

      MERS:  Mortgage Electronic Registration Systems, Inc., a Delaware
corporation, and any successor thereto.

      MERS Loan:  Any Mortgage Loan registered on the MERS(R) System and for
which MERS is listed as the record mortgagee or beneficiary on the related
Mortgage or assignment thereof.

      MERS(R) System: The system of electronically recording transfers of
mortgage loans maintained by MERS.

      Monthly Advance:  The aggregate of the advances made by the Servicer on
any Monthly Remittance Date pursuant to Section 2.16(a).

      Monthly Payment:  The scheduled monthly payment of principal and
interest on a Mortgage Loan which is payable by a Mortgagor from time to time
under the related Mortgage Note.


                                      5
<PAGE>

      Monthly Remittance Date:  The eighteenth (18th) day of each month (or
if such day is not a Business Day, the next Business Day) commencing in the
month following the end of the calendar month in which the related Closing
Date occurs.  A Determination Date is related to a Monthly Remittance Date if
such Determination Date and such Monthly Remittance Date occur in the same
calendar month.

      Moody's:  Moody's Investors Service, Inc. or any successor thereto.

      Mortgage:  The mortgage, deed of trust, or other instrument creating a
first lien on or first priority ownership interest in real property,
including any riders, addenda, assumption agreements, or modifications
relating thereto.

      Mortgage Interest Rate:  With respect to each Mortgage Loan, the annual
rate at which interest accrues on such Mortgage Loan.

      Mortgage Loan:  An individual mortgage loan subject to this Agreement,
each as identified on the related Mortgage Loan Schedule.

      Mortgage Loan Schedule:  With respect to the Mortgage Loans, the
schedule or schedules of Mortgage Loans attached hereto as Schedule I, or to
any Confirmation Agreement.

      Mortgage Note:  The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage, including any riders or addenda thereto.

      Mortgaged Property:  The property securing a Mortgage Note pursuant to
the related Mortgage.

      Mortgagor:  The obligor(s) on a Mortgage Note.

      Net Rate:  With respect to each Mortgage Loan, the annual rate at which
interest thereon shall be remitted to the Owner (in each case computed on the
basis of a 360-day year consisting of twelve 30-day months), which annual
rate shall be equal to the Mortgage Interest Rate less the Servicing Fee Rate.

      Nonrecoverable Advance:  Any portion of any Servicing Advance or
Monthly Advance previously made or proposed to be made in respect of a
Mortgage Loan by the Servicer hereunder that the Servicer determines in its
good faith judgment will not be ultimately recoverable from Late
Collections.  The determination by the Servicer that it has made a
Nonrecoverable Advance shall be evidenced by an Officer's Certificate of the
Servicer delivered to the Owner and detailing the reasons for such
determination.

      Officer's Certificate:  A certificate signed by a Vice President or
other authorized officer and delivered to the Owner as required by this
Agreement.

      Opinion of Counsel:  A written opinion of counsel, who may be an
employee of the Servicer, reasonably acceptable to the Owner.


                                      6
<PAGE>

      OTS:  The Office of Thrift Supervision, or any successor thereto.

      Owner:  EMC Mortgage Corporation, a Delaware corporation, and any
successor owner of any of the Mortgage Loans.

      Pass-Through Transfer:  The sale or transfer of some or all of the
Mortgage Loans by the Owner to a trust to be formed as part of a publicly
issued or privately placed mortgage backed securities transaction.

      Permitted Investments:  Any one or more of the following obligations or
securities:

            (i)   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;

            (ii)  repurchase obligations with respect to any security
described in clause (i) above, provided that the unsecured long-term
obligations of the party agreeing to repurchase such obligations are at the
time rated by S&P or Moody's in one of its two highest rating categories;

            (iii) federal funds, certificates of deposit, time deposits, and
bankers' acceptances of any bank or trust company incorporated under the laws
of the United States or any state, provided that the long-term debt
obligations of such bank or trust company (or, in the case of the principal
bank in a bank holding company system, the long-term debt obligations of the
bank holding company) at the date of acquisition thereof have been rated by
S&P or Moody's in one of its two highest rating categories; and

            (iv)  commercial paper of any corporation incorporated under the
laws of the United States or any state thereof that on the date of
acquisition has been rated by S&P or Moody's in its highest short-term rating
category.

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

      Pool of Mortgage Loans:  A pool of Mortgage Loans made subject to this
Agreement pursuant to a Confirmation Agreement.

      Prepayment Charge:  With respect to any Mortgage Loan, the prepayment
premium or charge, if any, required under the terms of the related Mortgage
Note to be paid in connection with a Principal Prepayment in Full or a
Principal Prepayment in Part, to the extent permitted by applicable law.

      Primary Mortgage Insurance Policy:  With respect to each Mortgage Loan,
the policy of primary mortgage insurance (including all endorsements thereto)
issued with respect to such Mortgage Loan, if any, or any replacement policy.


                                      7
<PAGE>

      Prime:  As of any date of determination, the annual interest rate,
adjusted daily, published from time to time in The Wall Street Journal
(Western Edition) as the "PRIME RATE" in the "MONEY RATES" section.  In the
event that more than one such rate is specified, "Prime" shall mean the
greatest of such rates.

      Principal Prepayment:  Any payment or other recovery of principal in
full ( a "Principal Prepayment in Full") or in part (a "Principal Prepayment
in Part") of the then-outstanding principal on a Mortgage Loan (other than
Condemnation Proceeds, Insurance Proceeds, and Liquidation Proceeds) that is
received in advance of its scheduled Due Date and not accompanied by an
amount of interest representing scheduled interest due on any date or dates
in any month or months subsequent to the month of prepayment.  The term
"Principal Prepayment" shall not refer to any related Prepayment Charge.

      Qualified Depository:  Any of the following: (i) a depository, the
short-term unsecured debt obligations of which are rated by Moody's or S&P
(or a comparable rating agency) in one of its two highest rating categories,
(ii) the corporate trust department of a national bank, (iii) a depository
that fully insures the Account and the Escrow Account with insurance provided
by the FDIC, or (iv) the Servicer.

      REMIC:  A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.

      REMIC Provisions:  Provisions of the federal income tax law relating to
REMICs, which appear at Section 860G of Subchapter M of Chapter 1 of the Code
and related provisions, and regulations promulgated thereunder, as in effect
from time to time.

      REO Management Fee:  With respect to each REO Property, an amount equal
to $1,500.

      REO Property:  A Mortgaged Property acquired in foreclosure or by deed
in lieu of foreclosure, as described in Section 2.12.

      SAIF:  The Savings Association Insurance Fund.

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

      Servicer:  Washington Mutual Bank, a savings bank organized under the
laws of the United States, or its permitted successor in interest, or any
successor to the Servicer under this Agreement appointed as herein provided.

      Servicer's Information:  As defined in Section 8.1(d).

      Servicing Advances:  All customary, reasonable, and necessary "out of
pocket" costs and expenses, including reasonable attorneys' fees and
disbursements, incurred by the Servicer in the performance of its servicing
obligations hereunder, including, without limitation, costs related to
(i) the preservation, restoration, and protection of the Mortgaged Property,
(ii) any enforcement or judicial proceedings, including foreclosures,
(iii) the management and liquidation of the Mortgaged Property if the
Mortgaged Property is acquired in satisfaction of the Mortgage and
(iv) Servicer's compliance with the obligations set forth in Sections 2.2,
2.3, 2.8, 2.10, 2.12 and 2.15 of this Agreement.


                                      8
<PAGE>

      Servicing Fee:  With respect to each Mortgage Loan, the amount of the
annual fee payable to the Servicer pursuant to Section 4.3 as compensation
for servicing and administering such Mortgage Loan.  Such fee shall, for a
period of one full month, be equal to one-twelfth of the product of (i) the
related Servicing Fee Rate, multiplied by (ii) the outstanding Unpaid
Principal Balance of such Mortgage Loan.  Such fee shall be payable monthly
and shall be computed on the basis of the same principal amount and period
respecting which any related interest payment on such Mortgage Loan is
computed.

      Servicing Fee Rate:  With respect to each Mortgage Loan, the annual
rate at which the Servicing Fee shall be calculated, which annual rate is set
forth in the related Confirmation Agreement.  In the event that the Index and
Gross Margin of an ARM Loan are adjusted pursuant to the terms of the related
Mortgage Note, the Servicing Fee Rate for such ARM Loan shall be the annual
rate of the Servicing Fee in effect immediately prior to such adjustment.

      Unpaid Principal Balance:  With respect to each Mortgage Loan, as of
any date of determination, (i) the Cut-off Date Principal Balance, minus (ii)
the principal portion of all payments made by or on behalf of the Mortgagor
after the related Cut-off Date and received by the Owner, plus (iii) in the
case of a Mortgage Loan subject to negative amortization, any capitalized
interest.

      USAP:  As defined in Section 4.5.

      Whole Loan Transfer:  Any sale or transfer of some or all of the
Mortgage Loans by the Owner to a third party, which sale or transfer is not a
Pass-Through Transfer.

                                  ARTICLE 2.

                ADMINISTRATION AND SERVICING OF MORTGAGE LOANS

      Section 2.1.      Identification of Mortgage Loans; Servicer to Act as
Servicer

            (a)   As of the related Closing Date, the Servicer, as
independent contract servicer, shall service and administer the Mortgage
Loans in accordance with this Agreement and Acceptable Servicing Procedures.
Except as otherwise expressly provided in this Agreement, the Servicer shall
have full power and authority, acting alone, to do any and all things in
connection with such servicing and administration that the Servicer may deem
necessary or desirable and consistent with the terms of this Agreement,
including, without limitation, all action permitted or required to be taken
under any related Primary Mortgage Insurance Policy.  In servicing and
administering the Mortgage Loans, the Servicer shall employ Acceptable
Servicing Procedures, except that the Servicer shall employ the procedures
set forth in this Agreement whenever the Acceptable Servicing Procedures
conflict with the requirements under this Agreement (provided that in no
event shall the Servicer act in conflict with any applicable federal, state
and local laws, ordinances, rules or regulations).  The Servicer shall at all
times act in the best interests of the Owner in performing hereunder.


                                      9
<PAGE>

            (b)   The documents comprising the Collateral File and the Credit
File with respect to each Mortgage Loan serviced hereunder and that are
delivered to the Servicer, together with all other documents with respect to
each such Mortgage Loan that are prepared by or that come into the possession
of the Servicer, shall immediately vest in the Owner and shall be held and
maintained in trust by the Servicer at the will of the Owner and in a
custodial capacity only for the sole purpose of servicing or supervising the
servicing of the related Mortgage Loans.  The documents comprising each
Collateral File and each Credit File and all related documents that come into
the possession of the Servicer and are so held by the Servicer shall be
appropriately marked to clearly reflect the ownership interest of the Owner
in such Collateral File and Credit File and related documents.  The Servicer
shall release its custody of any such documents only in accordance with
written instructions from the Owner, unless such release is required as
incidental to the Servicer's servicing of the Mortgage Loans.

            (c)   Subject to Section 2.17 of this Agreement, the Servicer may
waive, modify or vary any term of any Mortgage Loan or consent to the
postponement of strict compliance with any such term or in any manner grant
indulgence to any Mortgagor if, in the Servicer's reasonable and prudent
determination, such waiver, modification, variation, postponement or
indulgence is in the best interests of the Owner; provided, however, that the
Servicer shall not permit any modification with respect to any Mortgage Loan
that would change the Mortgage Interest Rate, defer or forgive the payment of
any principal or interest payments, reduce the outstanding principal amount
(except for actual payments of principal) or extend the related Maturity Date
(unless the Mortgagor is in default with respect to the Mortgage Loan or such
default is, in the judgment of the Servicer, imminent and the Servicer has
obtained the prior written consent of the Owner).  Without limiting the
generality of the foregoing, the Servicer is hereby authorized and empowered
to execute and deliver on behalf of itself and the Owner all instruments of
satisfaction, cancellation, full release, or partial release or discharge,
and all other comparable instruments with respect to the Mortgage Loans and
the Mortgaged Properties.  If reasonably required by the Servicer, the Owner
shall furnish the Servicer with any powers of attorney and other documents
necessary or appropriate to enable the Servicer to carry out its servicing
and administrative duties under this Agreement.

            (d)   As to each ARM Loan, the Servicer shall make periodic
Mortgage Interest Rate and Monthly Payment adjustments, as applicable, and
execute and deliver all appropriate notices regarding the same, in strict
compliance with Applicable Requirements.  The Servicer shall establish
procedures to monitor the Index in order to ensure that it uses the
appropriate value for the Index in determining an interest rate change.  If
the Servicer fails to make a timely and correct Mortgage Interest Rate
adjustment or Monthly Payment adjustment, the Servicer shall use its own
funds to satisfy any shortage in the Mortgagor's Monthly Payment for so long
as such shortage continues.  In the event the Index, as specified in the
related Mortgage Note, becomes unavailable for any reason, the Servicer shall
select an alternative index based on comparable information, in accordance
with the terms of the Mortgage Note, and such alternative index shall
thereafter be the Index for such Mortgage Loan.  In such event, the Servicer
shall also determine a new Gross Margin.  The new Gross Margin shall be the
difference between (x) the average of the original Index for the most recent
three-year period that ends on the last date the original Index was available
plus the Gross Margin on the last date the original Index was available and
(y) the average of the new Index for the most recent three-year period that
ends on that date (or if not available for such three-year period, for such
time as it is available), rounded as provided in the Mortgage Note.


                                      10
<PAGE>

            (e)   In connection with the servicing and administration of the
Mortgage Loans and consistent with Acceptable Servicing Procedures and this
Agreement, the Servicer shall have full power and authority to execute and
deliver or cause to be executed and delivered on behalf of the Owner such
instruments of assignment or other comparable instruments as the Servicer
shall deem appropriate in order to register any Mortgage Loan on the MERS(R)
System or cause the removal of any Mortgage Loan from registration on the
MERS(R) System.

      Section 2.2.      Liquidation of Mortgage Loans

            (a)   In the event that any payment due under any Mortgage Loan
is not paid when the same becomes due and payable, or in the event the
Mortgagor fails to perform any other covenant or obligation under the
Mortgage Loan and such failure continues beyond any applicable grace period,
the Servicer shall proceed diligently to collect all payments due and shall
take such action, including commencing foreclosure, as it shall reasonably
deem to be in the best interests of the Owner and in accordance with
Acceptable Servicing Procedures.  The Servicer shall use commercially
reasonable efforts, consistent with Acceptable Servicing Procedures, any
Primary Mortgage Insurance Policies and the best interest of Owner, to
foreclose upon or otherwise comparably convert the ownership of properties
securing such of the Mortgage Loans as come into and continue in default and
as to which no satisfactory arrangements can be made for collection of
delinquent payments pursuant to Section 2.1.  Any foreclosure or comparable
proceedings shall be initiated within ninety (90) days of default for
Mortgaged Properties for which no satisfactory arrangements can be made for
collection of delinquent payments.  In any case in which a Mortgaged Property
shall have suffered damage, the Servicer shall not be required to expend its
own funds toward the restoration of such property.  Servicer shall obtain
prior approval of Owner as to restoration expenses in excess of ten thousand
dollars ($10,000).  The Servicer shall notify the Owner in writing of the
commencement of foreclosure proceedings and prior to the acceptance or
rejection of any offer of reinstatement.  The Servicer shall be responsible
for all costs and expenses incurred by it in any such proceedings or
functions; provided, however, that it shall be entitled to reimbursement
thereof from the related property, as contemplated in Section 2.5.

            (b)   Notwithstanding the foregoing provisions of this
Section 2.2, with respect to any Mortgage Loan as to which the Servicer has
received actual notice of, or has actual knowledge of, the presence of any
toxic or hazardous substance on the related Mortgaged Property, the Servicer
shall neither (i) obtain title to such Mortgaged Property as a result of or
in lieu of foreclosure or otherwise, (ii) acquire possession of, nor (iii)
take any other action with respect to, such Mortgaged Property if, as a
result of any such action, the Owner would be considered to hold title to, to
be a mortgagee-in-possession of, or to be an owner or operator of such
Mortgaged Property within the meaning of the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended from time to
time, or any comparable law, unless the Servicer has either (x) obtained the
written consent of the Owner, or (y) previously determined, based on its
reasonable judgment and a prudent report prepared by a Person who regularly
conducts environmental audits using customary industry standards, that:


                                      11
<PAGE>

                  (i)   such Mortgaged Property is in compliance with
applicable environmental laws or, if not, that it would be in the best
economic interest of the Owner to take such actions as are necessary to bring
the Mortgaged Property into compliance therewith; and

                  (ii)  there are no circumstances present at such Mortgaged
Property relating to the use, management or disposal of any hazardous
substances, hazardous materials, hazardous wastes, or petroleum-based
materials for which investigation, testing, monitoring, containment, clean-up
or remediation could be required under any federal, state or local law or
regulation, or that if any such materials are present for which such action
could be required, that it would be in the best economic interest of the
Owner to take such actions with respect to the affected Mortgaged Property.

The cost of the environmental audit report contemplated by this
Section 2.2(b) shall be advanced by the Servicer as a Servicing Advance,
subject to the Servicer's right to be reimbursed therefor from the Account
and the Servicer's right to make a judgment about whether any such advance
would be a Nonrecoverable Advance.

            (c)   If the Servicer has (i) determined that it is in the best
economic interest of the Owner to take such actions as are necessary to bring
any such Mortgaged Property into compliance with applicable environmental
laws, or to take such action with respect to the containment, clean-up or
remediation of hazardous substances, hazardous materials, hazardous wastes,
or petroleum-based materials affecting any such Mortgaged Property, or (ii)
obtained the written consent of the Owner, in each case as described above,
then the Servicer shall take such action as it deems to be in the best
economic interest of the Owner (or as otherwise directed by the Owner).  The
cost of any such compliance, containment, clean-up or remediation shall be
advanced by the Servicer as a Servicing Advance, subject to the Servicer's
right to be reimbursed therefor from the Account and the Servicer's right to
make a judgment about whether any such advance would be a Nonrecoverable
Advance.

      Section 2.3.      Collection of Mortgage Loan Payments

      Continuously from the related Closing Date until the principal and
interest on all of the Mortgage Loans are paid in full, the Servicer shall
proceed diligently to collect all payments due under each of the Mortgage
Loans when the same shall become due and payable.  With respect to those
Mortgage Loans, if any, as to which the Servicer collects Escrow Payments,
the Servicer shall ascertain or estimate annual ground rents, taxes,
assessments, water rates, sewer rents, municipal charges, fire and hazard
insurance premiums, condominium charges, Primary Mortgage Insurance Policy
premiums and all other charges that, as provided in any Mortgage, shall
become due and payable, to the end that the Escrow Payments payable by the
Mortgagors shall be sufficient to pay such charges as and when they become
due and payable.  The Servicer shall not be required to institute or join in
litigation with respect to collection of any payment (whether under a
Mortgage, Mortgage Note, Primary Mortgage Insurance Policy or otherwise or
against any public or governmental authority with respect to a taking or
condemnation) if in the Servicer's reasonable judgment the Servicer believes
that the costs and expenses relating thereto would be Nonrecoverable
Advances.  The Servicer shall be entitled to be reimbursed from the Account
for any costs, expenses or other liabilities incurred by the Servicer in
connection with any such litigation.  The Servicer's right to such
reimbursement shall be prior to the Owner's right to such proceeds.


                                      12
<PAGE>

      Section 2.4.      Establishment of Account; Deposits in Account

            (a)   The Servicer shall establish and maintain one or more
Accounts (collectively, the "Account") entitled "Washington Mutual Bank, in
trust for EMC Mortgage Corporation, as Owner, and any successor Owner."  The
Account shall be an Eligible Account, established with an institution that is
a Qualified Depository and maintained as a segregated account separate and
apart from any of the Servicer's own funds and general assets.  If the
Account is established with an institution other than the Servicer, the
Account shall be evidenced by a letter agreement substantially in the form of
Exhibit B attached hereto.

            (b)   The Servicer shall, upon receipt (and in all events by not
later than the end of the second Business Day following receipt thereof),
deposit in the Account and retain therein, the following payments and
collections either received or made by the Servicer subsequent to the related
Cut-off Date (other than payments due on or before such Cut-off Date), or
otherwise allocable to a period subsequent to such Cut-off Date:

                  (i)   the principal portion of all Monthly Payments on the
Mortgage Loans;

                  (ii)  the interest portion of all Monthly Payments on the
Mortgage Loans less the Servicing Fee;

                  (iii) all Principal Prepayments in Part and Principal
Prepayments in Full;

                  (iv)  all Liquidation Proceeds;

                  (v)   all Insurance Proceeds, other than Insurance Proceeds
to be held in the Escrow Account and applied to the restoration and repair of
the Mortgaged Property or released to the Mortgagor in accordance with
Applicable Requirements;

                  (vi)  all Condemnation Proceeds that are not released to
the Mortgagor in accordance with the Owner's written consent or Applicable
Requirements;

                  (vii) any amount required to be deposited in the Account
pursuant to Sections 2.4(d), 2.10, 2.12(c), 2.12(e) or 4.2(b);

                  (viii)      [Reserved]; and


                                      13
<PAGE>

                  (ix)  with respect to each Principal Prepayment in Full, an
amount (to be paid by the Servicer out of its own funds without reimbursement
therefor) that, when added to all amounts allocable to interest received in
connection with such Principal Prepayment in Full, equals one month's
interest on the amount of principal so prepaid at the Net Rate, provided,
however, that the aggregate of deposits made by the Servicer pursuant to this
clause (ix) in respect of any Monthly Remittance Date shall not exceed the
Compensating Interest Cap.

            (c)    The Servicer shall, no later than twenty-four (24) hours
prior to each Monthly Remittance Date, deposit in the Account all Monthly
Advances.

            (d)   The Servicer may cause the funds on deposit from time to
time in the Account to be invested in Permitted Investments, which Permitted
Investments shall mature not later than the Business Day immediately
preceding the next Monthly Remittance Date following the date such funds are
invested.  All Permitted Investments shall be made in the name of the
Servicer or its nominee.  All income and gain realized from any Permitted
Investment shall be for the benefit of the Servicer and shall be subject to
its withdrawal or order from time to time.  The Servicer shall indemnify the
Owner for any loss incurred in respect of any Permitted Investment by such
Servicer, and the amount of such loss shall be deposited in the Account by
the Servicer out if its own funds, without reimbursement therefor, no later
than twenty-four (24) hours prior to the next Monthly Remittance Date
following the date of such loss.

      Section 2.5.      Permitted Withdrawals from the Account

      The Servicer may, from time to time, withdraw funds from the Account
for the following purposes:

                  (i)   to make payments and distributions to the Owner in
the amounts and in the manner provided for in Section 3.1, and to pay itself
any unpaid Servicing Fees, unpaid REO Management Fees and other servicing
compensation in accordance with Section 4.3;

                  (ii)  to reimburse itself for any unreimbursed Servicing
Advances or Monthly Advances made with respect to any Mortgage Loan; provided
that the Servicer's right to reimburse itself pursuant to this clause (ii) is
limited to any amounts collected or received by the Servicer with respect to
such Mortgage Loan;

                  (iii) to pay to itself any interest earned on funds
deposited in the Account;

                  (iv)  to make any payment or reimburse itself for any
amount pursuant to Sections 2.2(a), 2.12(c), 2.12(e), 5.1(a) or 5.3;

                  (v)   to reimburse itself for any Monthly Advance or
Servicing Advance previously made that it has determined to be a
Nonrecoverable Advance;

                  (vi)  if there shall be amounts deposited in error or there
shall be amounts deposited in the Account not required to be deposited
therein, including the Servicing Fee and other servicing compensation, to
withdraw such amount from the Account any provision herein to the contrary
notwithstanding;


                                      14
<PAGE>

                  (vii) to transfer funds to another Qualified Depository in
accordance with Section 2.9; and

                  (viii) to clear and terminate the Account upon the
termination of this Agreement in accordance with Article 7.

      Section 2.6.      Establishment of Escrow Account; Deposits in Escrow
Account; Escrow Analysis

            (a)   The Servicer shall segregate and hold separate and apart
from any of its own funds and general assets all Escrow Payments collected
and received pursuant to the Mortgage Loans and shall establish and maintain
one or more Escrow Accounts (collectively, the "Escrow Account"), in the form
of time deposit or demand accounts, which may be interest bearing, entitled
"Washington Mutual Bank, in trust for EMC Mortgage Corporation, as Owner, and
any successor Owner, and certain Mortgagors."  The Escrow Account shall be an
Eligible Account established with a Qualified Depository.  If the Escrow
Account is established with an institution other than the Servicer, the
Escrow Account shall be evidenced by a letter agreement substantially in the
form of Exhibit C attached hereto.

            (b)   The Servicer shall, upon receipt (and in all events by not
later than the end of the second Business Day following receipt thereof, or
sooner if required by applicable law), deposit in the Escrow Account and
retain therein: (i) all Escrow Payments collected on account of the Mortgage
Loans for the purpose of effecting timely payment of escrow items as required
under the terms of this Agreement and (ii) all amounts representing proceeds
of any hazard insurance policy that are to be applied to the restoration or
repair of the related Mortgaged Property.  The Servicer shall make
withdrawals from the Escrow Account only in accordance with Section 2.7.  The
Servicer shall be entitled to retain any interest earned on funds deposited
in the Escrow Account other than interest on escrowed funds required by law
to be paid to the Mortgagor and, to the extent required by law, the Servicer
shall pay interest on escrowed funds to the Mortgagor without right of
reimbursement therefor notwithstanding that the Escrow Account maintained by
the Servicer may not bear interest or that the interest earned on such
escrowed funds is insufficient for such purpose.

      Section 2.7.      Permitted Withdrawals from the Escrow Account

      Withdrawals from the Escrow Account maintained by the Servicer may be
made by the Servicer only (i) to effect timely payments of ground rents,
taxes, assessments, sewer rents, municipal charges, water rates, insurance
premiums, condominium charges, fire and hazard insurance premiums or other
items constituting Escrow Payments for the related Mortgage, (ii) to
reimburse the Servicer for any Servicing Advance made by the Servicer
pursuant to Sections 2.8 and 2.10 with respect to a related Mortgage Loan,
(iii) to refund to any Mortgagor any funds found to be in excess of the
amounts required under the terms of the related Mortgage Loan, (iv) for
transfer to the Account in accordance with the terms of this Agreement,
(v) for restoration or repair of a Mortgaged Property, provided the
provisions of Section 2.13 have been complied with, (vi) to pay to the
Mortgagor, to the extent required by Applicable Requirements, interest on the
funds deposited in the Escrow Account, (vii) to pay to itself any interest
earned on funds deposited in the Escrow Account (and not required to be paid
to the Mortgagor), (viii) to remove funds inadvertently placed in the Escrow
Account by the Servicer, or (ix) to clear and terminate the Escrow Account
upon the termination of this Agreement, in accordance with Article 7.


                                      15
<PAGE>

      Section 2.8.      Payment of Taxes, Insurance and Other Charges

      With respect to each Mortgage Loan, the Servicer shall maintain
accurate records reflecting the status of property taxes, assessments and
other charges that are or may become a lien upon the related Mortgaged
Property, the status of Primary Mortgage Insurance Policy premiums, if any,
and the status of fire and hazard insurance coverage and flood insurance, all
as required hereunder.  If a Mortgage Loan requires Escrow Payments, the
Servicer shall obtain, from time to time, all bills for the payment of such
charges (including renewal premiums) and shall effect payment thereof prior
to the applicable penalty or termination date in a manner consistent with
Acceptable Servicing Procedures, employing for such purpose deposits of the
Mortgagor in the Escrow Account that shall have been estimated and
accumulated by the Servicer in amounts sufficient for such purposes, as
allowed under the terms of the Mortgage.  If a Mortgage Loan does not require
Escrow Payments, or if there are insufficient funds in the related Escrow
Account, the Servicer shall cause all such bills to be paid on a timely basis
and shall from its own funds (if necessary) make a Servicing Advance for
timely payment of all such bills. The Servicer shall monitor the payment
status of such charges (including renewal premiums) by the related
Mortgagor.  The Servicer shall effect payment of such charges in a manner
consistent with Acceptable Servicing Procedures and, in all events, prior to
the foreclosure of any lien against the Mortgaged Property resulting from
non-payment of such property taxes, assessments and other charges and prior
to the termination of any such insurance coverage.

      Section 2.9.      Transfer of Accounts

      The Servicer may, from time to time, transfer the Account or the Escrow
Account to a different Qualified Depository.  The Servicer shall notify the
Owner of any such transfer within ten (10) Business Days of transfer.

      Section 2.10.     Maintenance of Hazard Insurance

            (a)   The Servicer shall cause to be maintained for each Mortgage
Loan serviced by it fire and hazard insurance with extended coverage
customary in the area where the related Mortgaged Property is located, in an
amount that is at least equal to the lesser of (i) 100% of the replacement
value of the improvements securing the Mortgage Loan, or (ii) the Unpaid
Principal Balance of the Mortgage Loan (so long as it equals 80% of the
insurable value of the improvements); provided that in any case such amount
shall be sufficient to prevent either the Mortgagor or the mortgagee from
becoming a co-insurer.  If the Mortgaged Property is in an area identified on
a flood hazard boundary map or flood insurance rate map issued by the Federal
Emergency Management Agency as having special flood hazards (and such flood
insurance was then available), the Servicer shall cause to be maintained a
flood insurance policy meeting the requirements of the current guidelines of
the Federal Insurance Administration with a generally acceptable insurance
carrier, if such insurance is available.  Such flood insurance shall be in an
amount representing coverage not less than the least of (i) the Unpaid
Principal Balance of the Mortgage Loan, (ii) the full insurable value of the
improvements securing such Mortgage Loan and (iii) the maximum amount of
insurance available under the National Flood Insurance Act of 1968 and the
Flood Disaster Protection Act of 1973, each as amended.  The Servicer shall
also maintain on each REO Property (x) fire and hazard insurance with
extended coverage in an amount that is at least equal to the maximum
insurable value of the improvements that are a part of such property, (y)
liability insurance and (z) to the extent required and available under the
National Flood Insurance Act of 1968 and the Flood Disaster Protection Act of
1973, each as amended, flood insurance in an amount as provided above.  Any
amounts collected by the Servicer under any such policies shall be paid over
or applied by the Servicer in accordance with Applicable Requirements whether
(i) for the restoration or repair of the Mortgaged Property, subject to the
related Mortgage, (ii) for release to the Mortgagor, or (iii) for application
in reduction of the Mortgage Loan, in which event such amounts shall be
deposited in the Account, as provided in Section 2.4.  It is understood and
agreed that no earthquake or other additional insurance need be maintained by
the Servicer on any Mortgage Loan or property acquired in respect of a
Mortgage Loan, other than as required under applicable laws and regulations
as shall at any time be in force.  All policies required hereunder shall be
endorsed with standard mortgagee clauses with loss payable to the Servicer
and shall provide for at least thirty (30) days prior written notice to the
Servicer of any cancellation, reduction in amount, or material change in
coverage.  The Servicer shall not interfere with the Mortgagor's freedom of
choice in selecting either the Mortgagor's insurance carrier or agent upon
any policy renewal; provided, however, that upon any such policy renewal, the
Servicer shall accept such insurance policies only from insurance companies
that (A) have a rating of B:III or better in Best's Key Rating Guide or a
financial performance index rating of 6 or better in Best's Insurance Reports
and (B) are licensed to do business in the jurisdiction in which the related
Mortgaged Property is located.


                                      16
<PAGE>

            (b)   If the Servicer, as servicer for the benefit of the Owner,
shall obtain and maintain a blanket policy that would meet the requirements
of Fannie Mae if Fannie Mae were the purchaser of the Mortgage Loans,
insuring against loss to the Owner as mortgagee from damage to any or all of
the Mortgaged Properties, then, to the extent such blanket policy
(i) provides coverage, without coinsurance, in an amount equal to the
aggregate outstanding Unpaid Principal Balance of the Mortgage Loans,
(ii) otherwise complies with the requirements of Section 2.10(a) and
(iii) contains a deductible not greater than $10,000, the Servicer shall be
deemed conclusively to have satisfied its obligations under Section 2.10(a);
provided, however, that if there shall have been one or more of such losses
the Servicer shall deposit in the Account, as provided in Section 2.4, out of
the Servicer's own funds and without reimbursement therefor, the difference,
if any, between the amount that would have been payable under a policy
complying with Section 2.10(a) and the amount paid under the blanket policy
permitted under this Section 2.10(b).  At the request of the Owner, the
Servicer shall cause to be delivered to the Owner a certified true copy of
such policy and a statement from the insurer thereunder that such policy
shall not be terminated or materially modified without thirty (30) days'
prior written notice to the Owner.


                                      17
<PAGE>

      Section 2.11.     Fidelity Bond; Errors and Omissions Insurance

      The Servicer shall maintain, at its own expense, with companies that
meet the requirements of Fannie Mae or Freddie Mac, a blanket fidelity bond
and an errors and omissions insurance policy, with broad coverage on all
officers, employees, agents and other persons acting in any capacity that
would require such persons to handle funds, money, documents or papers
relating to the Mortgage Loans (collectively, the "Servicer Employees").  Any
such fidelity bond and errors and omissions insurance shall be in the form of
the Mortgage Banker's Blanket Bond and shall protect and insure the Servicer
against losses relating to forgery, theft, embezzlement, fraud, errors and
omissions, failure to maintain any insurance policies required under this
Agreement and negligent acts of Servicer Employees.  Such fidelity bond shall
also protect and insure the Servicer against losses relating to the release
or satisfaction of a Mortgage without having obtained payment in full of the
indebtedness secured thereby.  No provision of this Section 2.11 requiring
such fidelity bond and errors and omissions insurance shall diminish or
relieve the Servicer from its duties and obligations as set forth in this
Agreement.  The terms of any such fidelity bond and errors and omissions
insurance policy shall be at least equal to the corresponding amounts
required by Fannie Mae in the Fannie Mae Single Family Servicing Guide, or by
Freddie Mac in the Freddie Mac Seller's and Servicer's Guides, each as
amended or restated from time to time.  At the request of the Owner, the
Servicer shall cause to be delivered to the Owner a certified true copy of
such fidelity bond and errors and omissions insurance policy and a statement
from the surety and the insurer that such fidelity bond and errors and
omissions insurance policy shall not be terminated or materially modified
without thirty (30) days' prior written notice to the Owner.

      Section 2.12.     Title, Management and Disposition of Real Estate
Owned

            (a)   If title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure ("REO Property"), the deed or
certificate of sale shall be taken in the name of the Owner, or in the name
of such Person or Persons designated by the Owner; provided, however, that
(i) the Owner shall not designate the Servicer as holder without the
Servicer's prior written consent and (ii) such designated Person or Persons
shall acknowledge in writing that such title is to be held as nominee for the
Owner.  The Servicer shall provide written notice to the Owner after any REO
Property is acquired in foreclosure or by deed in lieu of foreclosure.  Upon
vacancy of such REO Property, the Servicer shall obtain and furnish to the
Owner a copy of the full appraisal or full broker's price opinion of the
Mortgaged Property.

            (b)   The Servicer, shall manage, conserve, protect, and operate
each REO Property solely for the purpose of its prompt disposition and sale.
The Servicer shall either itself, or through an agent selected by the
Servicer, manage, conserve, protect and operate the REO Property in
accordance with Acceptable Servicing Procedures.  The Servicer shall attempt
to sell the same (and may temporarily rent the same) on such terms and
conditions as the Servicer deems to be in the best interests of the Owner.
No REO Property shall be marketed for less than the full appraisal value or
full broker's price opinion referenced in Section 2.12.(a), without the prior
written consent of Owner.  No REO Property shall be sold for less than 95% of
the full appraisal value or full broker's price opinion referenced in Section
2.12(a), without the prior written consent of Owner.  If a REMIC election has
been made with respect to the arrangement under which the related Mortgage
Loan is held and the Servicer has been provided with reasonable advance
notice of such REMIC election, the Servicer shall use commercially reasonable
efforts to dispose of the REO Property as soon as practicable and shall sell
such REO Property, in any event, within three (3) years after title has been
taken to such REO Property (unless the Servicer determines, and gives the
Owner appropriate notice that a longer period is necessary for the orderly
liquidation of such REO Property).  The Servicer shall cause each REO
Property to be inspected promptly upon the acquisition of title and shall
cause each REO Property to be inspected at least monthly thereafter or more
frequently as required by the circumstances.  The Servicer shall make a
written report of each such inspection.  Such reports shall be retained in
the Mortgage File and copies shall be forwarded by the Servicer to the Owner
at Owner's request.


                                      18
<PAGE>

            (c)   The Servicer shall collect all revenues arising from the
operation of REO Property.  The Servicer shall deposit, or cause to be
deposited, all such revenues in the Account in accordance with Section 2.4.
The Servicer may use all such revenues and, if any thereof have been
deposited in the Account, withdraw such revenues therefrom as is necessary
for the proper operation, management and maintenance of any REO Property,
including, but not limited to, the cost of maintaining any hazard insurance
pursuant to Section 2.10 and the fees of any managing agent acting on behalf
of the Servicer.

            (d)   The Servicer shall also maintain on each REO Property fire
and hazard insurance with extended coverage, liability insurance, and flood
insurance in accordance with the provisions of Section 2.10.

            (e)   The proceeds of sale of an REO Property shall be deposited
in the Account in accordance with Section 2.4.  The Servicer shall apply the
sale proceeds of any REO Property (i) first to pay the expenses of such sale,
(ii) second to reimburse itself for any related unpaid Servicing Fees, unpaid
REO Management Fees and unreimbursed Servicing Advances and Monthly Advances
and (iii) the balance to be distributed to the Owner.  If the sale proceeds
have been deposited in the Account, the Servicer may withdraw from the
Account the amounts necessary to make such payments and reimbursements.

            (f)   Upon request, with respect to any REO Property, the
Servicer shall furnish to the Owner a statement covering the Servicer's
efforts in connection with the sale of that REO Property and any rental of
the REO Property incidental to the sale thereof for the previous month
(together with an operating statement for such REO Property).  Such statement
shall be accompanied by such other information as the Owner shall reasonably
request.  The Servicer shall maintain separate accounting for each REO
Property.

            (g)   The Owner hereby constitutes and appoints the Servicer as
its true and lawful attorney-in-fact, with full power and authority to sign,
execute, acknowledge, deliver, file for record and record any instrument on
its behalf and to perform such other act or acts as may be customarily and
reasonably necessary and appropriate to effectuate the transactions
contemplated by this Section 2.12, in each case as fully as the Owner might
or could do.  The Owner ratifies and confirms each action that the Servicer,
as such attorney-in-fact, shall lawfully take or cause to be taken by
authority hereof.  Third parties without actual notice may rely upon the
exercise of the power granted under this power of attorney, and may be
satisfied that this power of attorney shall continue in full force and effect
and has not been revoked unless this Agreement is terminated as provided
herein.  If requested by the Servicer, the Owner shall furnish the Servicer
with any instrument or document necessary or appropriate to evidence or
confirm the power of attorney granted in this Section 2.12(g), including one
(1) or more separate instruments or documents in recordable form for
recordation in any jurisdiction in which any Mortgaged Property is located.


                                      19
<PAGE>

            (h)   Notwithstanding anything to the contrary contained in this
Agreement, the Owner may, at the Owner's sole option, terminate the Servicer
as servicer of any REO Property without payment of any termination fee,
provided that the Servicer shall on the date said termination takes effect be
reimbursed for any unreimbursed advances of the Servicer's funds made
pursuant to Section 2.16 and any unreimbursed Servicing Advances and
Servicing Fees in each case relating to the Mortgage Loan underlying such REO
Property.  In the event of any such termination, the provisions of
Section 9.1 shall apply to said termination and the transfer of servicing
responsibilities with respect to such REO Property to the Owner or its
designees.

      Section 2.13.     Application of Proceeds of Insurance to Repair or
Restoration

      The Servicer shall collect the proceeds from all policies of insurance
required to be maintained pursuant to Section 2.10 with respect to all losses
that may occur.  The Servicer may remit such proceeds to the Mortgagor for
the restoration or repair of the related property and shall otherwise take
such actions in connection with such restoration and repair in a manner
consistent with Acceptable Servicing Procedures.

      Section 2.14.     Inspections

      The Servicer shall conduct inspections of the Mortgaged Properties at
such times and in a manner consistent with Acceptable Servicing Procedures
and shall maintain a written report of all such inspections and shall provide
a copy to the Owner upon Owner's request.

      Section 2.15.     Maintenance of Primary Mortgage Insurance Policies;
Collections Thereunder

            (a)   The Servicer shall maintain in full force and effect any
Primary Mortgage Insurance Policy covering a Mortgage Loan serviced by the
Servicer.  The Servicer shall cause the premium for any such Primary Mortgage
Insurance Policy to be paid on a timely basis and shall from its own funds,
if necessary, make a Servicing Advance to pay the premium on a timely basis.
The Servicer shall not cancel or refuse to renew any such Primary Mortgage
Insurance Policy in effect on the related Closing Date, unless cancellation
or non-renewal is required by applicable law or regulation.  The Servicer
shall not take any action or fail to take any action that would result in
non-coverage under any applicable Primary Mortgage Insurance Policy of any
loss that, but for the actions of the Servicer, would have been covered
thereunder.  In connection with any assumption or substitution agreement
entered into or to be entered into pursuant to Section 4.1, the Servicer
shall promptly notify the insurer under the related Primary Mortgage
Insurance Policy, if any, of such assumption or substitution of liability in
accordance with the terms of such policy and shall take all actions that may
be required by such insurer as a condition to the continuation of coverage
under such Primary Mortgage Insurance Policy.  If such Primary Mortgage
Insurance Policy is terminated as a result of such assumption or substitution
of liability, the Servicer shall obtain a replacement Primary Mortgage
Insurance Policy as provided above.


                                      20
<PAGE>

            (b)   As part of its activities as servicer of the Mortgage
Loans, the Servicer agrees to prepare and present, on behalf of itself and
the Owner, claims under any Primary Mortgage Insurance Policy in a timely
fashion in accordance with the terms thereof and, in this regard, to take
such reasonable action as shall be necessary to permit recovery under any
Primary Mortgage Insurance Policy respecting a defaulted Mortgage Loan.

      Section 2.16.     Monthly Advances by the Servicer

            (a)   Not later than the close of business on the Business Day
preceding each Monthly Remittance Date, the Servicer shall deposit in the
Account an amount equal to all payments not previously advanced by the
Servicer of principal and interest at the Net Rate that were (i) due on any
Mortgage Loan during the Due Period that commences in the same month in which
such Monthly Remittance Date occurs, (ii) not received as of the close of
business on the related Determination Date (whether or not deferred) and
(iii) not due on or prior to the related Cut-off Date (the aggregate of all
such amounts, the "Monthly Advance").  In lieu of making all or a portion of
any Monthly Advance, the Servicer may cause to be made an appropriate entry
in its records relating to the Account that funds in such account, including
but not limited to any amounts received in respect of scheduled principal and
interest on any Mortgage Loan due after the related Due Period for the
related Monthly Remittance Date, have been used by the Servicer in discharge
of its obligation to make any such Monthly Advance.  Any funds so applied
shall be replaced by the Servicer by deposit, in the manner set forth above,
in the Account no later than the close of business on the Business Day
immediately preceding the next Monthly Remittance Date to the extent that
funds in the Account on such date are less than the amounts required to be
distributed on such Monthly Remittance Date.  The Servicer shall be entitled
to be reimbursed from the Account for all Monthly Advances of its own funds
made pursuant to this Section as provided in Section 2.5.

            (b)   The obligation of the Servicer to make such Monthly
Advances is mandatory, and, with respect to any Mortgage Loan or REO
Property, shall continue through the earlier of (i) the date on which a Final
Recovery Determination in connection with such Mortgage Loan is made and (ii)
the due date of the last Monthly Payment due prior to the payment in full of
such Mortgage Loan.

            (c)   Notwithstanding anything herein to the contrary, no Monthly
Advance shall be required to be made hereunder by the Servicer if such
Monthly Advance would, if made, constitute a Nonrecoverable Advance.

      Section 2.17.     Compliance With REMIC Provisions

      If the Servicer has received written notice from the Owner that a REMIC
election has been made with respect to the arrangement under which any
Mortgage Loans and REO Property are held, the Servicer shall not take any
action, cause the REMIC to take any action or fail to take (or fail to cause
to be taken) any action that, under the REMIC Provisions, if taken or not
taken, as the case may be, could (i) endanger the status of the REMIC as a
REMIC, or (ii) result in the imposition of a tax upon the REMIC (including
but not limited to the tax on "prohibited transactions" as defined in
Section 860F(a)(2) of the Code and the tax on "contributions" to a REMIC set
forth in Section 860G(d) of the Code) unless the Servicer has received an
Opinion of Counsel (at the expense of the party seeking to take such action)
to the effect that the contemplated action will not endanger such REMIC
status or result in the imposition of any such tax.


                                      21
<PAGE>

      Section 2.18.     Owner to Cooperate; Release of Collateral Files

      If, at any time prior to termination of this Agreement, the Servicer
shall require the use of any Collateral File (or any portion thereof) to
perform its servicing activities as set forth in this Agreement, the Owner,
within five (5) Business Days of the written request of the Servicer in the
form of Exhibit A hereto (or within such shorter period as may be necessary
for the Servicer to perform its obligations hereunder in compliance with all
Acceptable Servicing Procedures), shall release or shall cause the Custodian
to release such Collateral File, or portion thereof, to the Servicer.  Within
five (5) Business Days of the Servicer's request therefor (or, within such
shorter period as may be necessary for the Servicer to perform obligations
hereunder in compliance with all Acceptable Servicing Procedures), the Owner
shall execute and deliver to the Servicer, in the form supplied to the Owner
by the Servicer, any court pleadings, requests for trustee's sale or other
documents reasonably necessary to perform the servicing activities with
respect to any Mortgage Loan, including the foreclosure or sale in respect of
any Mortgaged Property, the commencement and prosecution of any legal action
to enforce the related Mortgage Note and Mortgage and the defense of any
legal action or counterclaim filed against the Owner or the Servicer.  The
Servicer may execute and deliver any or all of such pleadings or documents on
behalf of the Owner pursuant to the power of attorney granted pursuant to
Section 2.12(g).

                                  ARTICLE 3.

                            PAYMENTS TO THE OWNER

      Section 3.1.      Distributions

            (a)   On each Monthly Remittance Date, the Servicer shall
distribute to the Owner all amounts credited to the Account as of the close
of business on the preceding Determination Date, net of charges against or
withdrawals from the Account pursuant to Section 2.5, plus all Monthly
Advances deposited in the Account prior to such Monthly Remittance Date
pursuant to Section 2.4, minus (i) any amounts attributable to Principal
Prepayments received after the last day of the Due Period immediately
preceding the related Monthly Remittance Date and (ii) any amounts
attributable to Monthly Payments collected but due on a Due Date(s)
subsequent to the preceding Determination Date.

            (b)   All distributions made to the Owner on each Monthly
Remittance Date shall be made to the Owner of record, based on the Mortgage
Loans owned and held by the Owner.  All distributions shall be made by wire
transfer of immediately available funds to the account of the Owner at a bank
or other entity having appropriate facilities therefor, if the Owner shall
have so notified the Servicer, or by check mailed to the address of the
Owner.  Distributions on each Monthly Remittance Date may be made by more
than one (1) wire transfer or check, as the case may be.


                                      22
<PAGE>

            (c)   With respect to any remittance received by the Owner on or
after the second Business Day following the Business Day on which such
payment was due, the Owner shall send written notice thereof to the
Servicer.  The Servicer shall pay to the Owner interest on any such late
payment at an annual rate equal to Prime plus two percentage points, but in
no event greater than the maximum amount permitted by applicable law.  Such
interest shall be paid by the Servicer to the Owner on the date such late
payment is made and shall cover the period commencing with the day following
such second Business Day and ending with the Business Day on which such
payment is made, both inclusive.  The payment by the Servicer of any such
interest, or the failure of the Owner to notify the Servicer of such
interest, shall not be deemed an extension of time for payment or a waiver of
any Event of Default by the Servicer.

      Section 3.2.      Reports

            (a)   On or before the 10th day of each month starting in the
month of the first related Monthly Remittance Date, or if such day is not a
Business Day, the next Business Day, the Servicer shall provide to the Owner
or its designee an electronically transmitted data file, with respect to the
Due Period immediately preceding such Monthly Remittance Date, the data set
forth below on an individual loan basis:

                  (i)     mortgage loan number;

                  (ii)    interest rate;

                  (iii)   pending rate;

                  (iv)    scheduled principal and interest payment;

                  (v)     scheduled principal;

                  (vi)    gross interest;

                  (vii)   curtailment collected;

                  (viii)  curtailment adjustment;

                  (ix)    PIF principal;

                  (x)     PIF interest difference;

                  (xi)    ARM Index;

                  (xii)   pending Index;


                                      23
<PAGE>

                  (xiii)  ending scheduled balance;

                  (xiv)   investor loan number;

                  (xv)    Servicing Fee Rate;

                  (xvi)   due date;

                  (xvii)  yield rate;

                  (xviii) beginning balance;

                  (xix)   ending balance;

                  (xx)    beginning scheduled balance;

                  (xxi)   principal collected;

                  (xxii)  scheduled net interest;

                  (xxiii) scheduled buydown;

                  (xxiv)  Servicing Fee collected; and

                  (xxv)   remittance amount.

The Servicer may submit the foregoing information in more than one (1)
report.  Requests for additional data regarding the Mortgage Loans or
alternative means for delivering such reports shall be accommodated at the
discretion of the Servicer and at the Owner's expense.

            (b)   Upon reasonable advance notice in writing, the Servicer
shall provide to any Owner that is a savings and loan association, a bank, an
insurance company or other regulated or supervised entity reports and access
to information and documentation regarding the Mortgage Loans and the
transactions contemplated hereby sufficient to permit the Owner to comply
with the applicable regulations of relevant regulatory or supervisory
authorities with respect to its investment in the Mortgage Loans and Owner's
internal and third-party audit requirements.

            (c)   The Servicer shall prepare and file any and all information
statements or other filings required to be delivered to any governmental
taxing authority or to Owner pursuant to any applicable law with respect to
the Mortgage Loans and the transactions contemplated hereby.  In addition,
the Servicer shall provide Owner with such information concerning the
Mortgage Loans as is necessary for Owner to prepare its federal income tax
return as Owner may reasonably request from time to time.  In addition, not
more than 120 days after the end of each calendar year, the Servicer shall
furnish to each Person who was an Owner at any time during such calendar year
an annual statement in accordance with the requirement of applicable federal
income tax law as to the aggregate of remittances for the applicable portion
of such year.


                                      24
<PAGE>

      Section 3.3.      Delinquency and Foreclosure Statements

      The Servicer shall provide a monthly statement of delinquents and a
delinquency report on all Mortgage Loans more than thirty (30) days
delinquent.  The Servicer shall also provide a monthly statement regarding
foreclosure status and status of REO Property containing such information as
mutually agreed upon by the Owner and the Seller.

                                  ARTICLE 4.

                   GENERAL SERVICING PROCEDURE; COVENANTS;
                        REPRESENTATIONS AND WARRANTIES

      Section 4.1.      Assumption Agreements

            (a)   The Servicer shall use commercially reasonable efforts to
enforce any "due-on-sale" provision contained in any Mortgage or Mortgage
Note and to deny assumption by the person to whom the Mortgaged Property has
been or is about to be sold, whether by absolute conveyance or by contract of
sale and whether or not the Mortgagor remains liable on the Mortgage and the
Mortgage Note, provided that in accordance with the terms of the Mortgage
Note, the Servicer may permit an assumption (i) if the Servicer reasonably
believes it is unable under Applicable Requirements to enforce such
"due-on-sale" clause, or (ii) if the enforcement of such rights would impair
or threaten to impair any recovery under the related Primary Mortgage
Insurance Policy, if any.  In connection with any such assumption, the
related Mortgage Interest Rate, the Unpaid Principal Balance and the term of
the Mortgage Loan may not be changed.  If an assumption is allowed pursuant
to this Section 4.1(a), the Servicer is authorized, at the Servicer's
discretion, to prepare a substitution of liability agreement to be entered
into by the Owner and the purchaser of the Mortgaged Property pursuant to
which the original Mortgagor is released from liability and the purchaser of
the Mortgaged Property is substituted as Mortgagor and becomes liable under
the Mortgage Note.  Any such substitution of liability agreement shall be in
lieu of an assumption agreement.  If an assumption fee is collected by the
Servicer for entering into an assumption agreement the entire amount of such
fee may be retained by the Servicer as additional servicing compensation.

            (b)   The Servicer shall follow Acceptable Servicing Procedures
with respect to any such assumption or substitution of liability (taking into
account the Servicer's then current underwriting guidelines applicable to
mortgage loans of the same type as the related Mortgage Loan).  The Servicer
shall notify the Owner that any such substitution of liability or assumption
agreement has been completed by forwarding to the Owner a copy of any such
substitution of liability or assumption agreement, which document shall be
added to the related Collateral File and shall for all purposes be considered
a part of such Collateral File to the same extent as all other documents and
instruments constituting a part thereof.

      Section 4.2.      Satisfaction of Mortgages and Release of Collateral
Files

            (a)   Upon the payment in full of any Mortgage Loan or the
receipt by the Servicer of a notification that payment in full will be
escrowed in a manner customary for such purposes, the Servicer shall prepare
the appropriate documents and instruments required to satisfy or release the
lien of the Mortgage in accordance with applicable state law requirements.
The Servicer, promptly and within the applicable legal deadlines appropriate
to process the satisfaction or release, shall notify the Owner of such event.


                                      25
<PAGE>

            (b)   The Servicer shall not grant a satisfaction or release of a
Mortgage without having obtained payment in full of the indebtedness secured
by the Mortgage.  In the event the Servicer grants a satisfaction or release
of a Mortgage without having obtained payment in full of the indebtedness
secured by the Mortgage, the Servicer, upon becoming aware of the foregoing,
shall remit to the Owner the Unpaid Principal Balance of the related Mortgage
Loan plus accrued and unpaid interest by deposit thereof in the Account
pursuant to Section 2.4.  The Owner shall assign the related Mortgage and
endorse the related Mortgage Note to the Servicer and shall do all things
necessary to transfer ownership of the Mortgage Loan to the Servicer.  The
Servicer shall maintain the Fidelity Bond as provided for in Section 2.11
protecting and insuring the Servicer against, losses sustained with respect
to any Mortgage Loan satisfied or released other than in accordance with the
procedures set forth herein.

            (c)   The Owner shall, within five (5) Business Days following
receipt of any request from the Servicer (or within such shorter period as is
necessary for the Servicer to perform its obligations hereunder in compliance
with all Acceptable Servicing Procedures) deliver or cause to be delivered to
the Servicer the Collateral File (or any portion thereof) required by the
Servicer to process any satisfaction or release of any Mortgage pursuant to
this Section 4.2.  In addition, if any Mortgage Loan has been paid in full
and the Owner has recorded the related Assignment of Mortgage designating the
Owner as the holder of record of the Mortgage, the Servicer shall prepare and
deliver to the Owner, together with a request for execution, the documents
and instruments necessary to satisfy or release the lien of the Mortgage.
The Owner shall, within five (5) Business Days following its receipt of any
such request, send to the Servicer the fully-executed documents that were
prepared and requested by the Servicer.  In the event that applicable state
law requires that a satisfaction or release be recorded within a shorter time
period than the foregoing procedure permits, the Servicer shall advise the
Owner accordingly and shall use commercially reasonable efforts to ensure
that the lien of the Mortgage is released or satisfied in accordance with
applicable state law requirements, and the Owner shall assist therewith by,
to the extent reasonably practicable, returning to the Servicer the required
portion of the Collateral File and, if applicable, the executed satisfaction
and release documents and instruments within the time periods reasonably
specified by the Servicer.

            (d)   If a Mortgage Loan that has been paid in full is a MERS
Loan, the Servicer may cause the removal of such Mortgage Loan from
registration on the MERS(R) System and execute and deliver, on behalf of the
Owner, any and all related instruments of satisfaction or release.  No
expense incurred in connection with the delivery of any instrument of
satisfaction or deed or reconveyance shall be chargeable to the Account or
the Owner.


                                      26
<PAGE>

      Section 4.3.      Servicing Compensation

      The Servicer shall be entitled to pay itself a Servicing Fee for each
Mortgage Loan serviced hereunder.  The obligation of the Owner to pay such
Servicing Fee is limited to, and payable solely from, the interest portion of
the Monthly Payments and Late Collections collected by the Servicer with
respect to the related Mortgage Loan.  Additional servicing compensation in
the form of non-sufficient funds check fees, assumption fees, conversion
fees, other related administrative fees, late payment charges, Prepayment
Charges and other similar types of ancillary fees and charges that are
actually received by the Servicer may be retained by the Servicer to the
extent not required to be deposited into the Account pursuant to the terms of
this Agreement.  In addition to the Servicing Fee payable hereunder, the
Servicer shall be entitled to pay itself an REO Management Fee for each REO
Property managed by the Servicer or its agent.  The Servicer shall be
required to pay all expenses incurred by it in connection with its servicing
activities hereunder and shall not be entitled to reimbursement therefor
except as specifically provided for in this Agreement.  Any Late Collections
shall be applied by the Servicer in the following order of priority:  (i)
first to pay the expenses incurred in connection with collection of such Late
Collections, (ii) second to reimburse itself for any related unpaid Servicing
Fees, unpaid REO Management Fees and unreimbursed Servicing Advances and
Monthly Advances and (iii) the balance to be distributed to the Owner.

      Section 4.4.      Statements as to Compliance

            (a)   Not later than March 15 of each year (or if such day is not
a Business Day, the next succeeding Business Day), the Servicer will deliver
to the Owner and, with respect to any Mortgage Loans subject to a
Pass-Through Transfer, each other Person entitled to receive servicing
reports provided pursuant to Section 3.2(a) an Officer's Certificate for the
prior calendar year, beginning with the calendar year ending December 31,
2005, stating (i) a review of the activities of the Servicer during the
preceding year and of performance under this Agreement has been made under
such officer's supervision, and (ii) to the best of such officer's knowledge,
based on such review, the Servicer has fulfilled all of its obligations under
this Agreement throughout such year or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to
such officer and the nature and status thereof.

            (b)   Not later than March 15 of each year (or if such day is not
a Business Day, the next succeeding Business Day), with respect to any
Mortgage Loans subject to a Pass-Through Transfer, the Servicer will deliver
to the Owner and each other Person entitled to receive servicing reports
provided pursuant to Section 3.2(a) an Officer's Certificate for the prior
calendar year, beginning with the calendar year ending December 31, 2005, in
substantially the form of Exhibit D to this Agreement.

            (c)   The Servicer agrees to indemnify and hold harmless each of
the Owner, each other Person entitled to receive servicing reports provided
pursuant to Section 3.2(a), each Person, if any, who "controls" the Owner or
such other Person within the meaning of the Securities Act of 1933, as
amended, and their respective officers and directors against any and all
losses, penalties, fines, forfeitures, legal fees and related costs,
judgments and any other costs, fees and expenses that such Person may sustain
arising out of third party claims based on (i) the failure of the Servicer to
deliver or cause to be delivered when required any Officer's Certificate
required pursuant to Section 4.4(a) or Section 4.4(b), or the accountants'
statement required pursuant to Section 4.5, or (ii) any material misstatement
or omission in any certification pursuant to Section 302(a) of the
Sarbanes-Oxley Act of 2002 and Rules 13a-14 and 15d-14 promulgated by the
Securities and Exchange Commission thereunder made in reliance on any
material misstatement or omission contained in any Officer's Certificate
provided pursuant to Section 4.4(a) or Section 4.4(b).  If the
indemnification provided for herein is unavailable or insufficient to hold
harmless any person indemnified pursuant to this Section 4.4(c)
("Indemnitee"), then the Servicer agrees that it shall contribute to the
amount paid or payable by the Indemnitee as a result of the losses, claims,
damages or liabilities of the Indemnitee arising out of clause (i) or (ii) of
the preceding sentence in such proportion as is appropriate to reflect the
relative fault of the Indemnitee on the one hand and the Servicer on the
other.


                                      27
<PAGE>

            (d)   For purposes of paragraph (c), "third party claims" shall
include claims brought against an Indemnitee by any agent or affiliate of
such Indemnitee where such claims arise out of, or are based on, (A) the
failure of the Servicer to deliver or cause to be delivered when required any
Officer's Certificate required pursuant to paragraphs (a) and (b) of this
Section 4.4 or (B) any material misstatement or omission in any certification
pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 and Rules 13a-14
and 15d-14 promulgated by the Securities and Exchange Commission thereunder
made in reliance on any material misstatement or omission contained in any
Officer's Certificate provided pursuant to paragraphs (a) or (b) of this
Section 4.4.

      Section 4.5.      Annual Independent Public Accountants' Servicing
Report

      Not later than March 15 of each year (or if such day is not a Business
Day, the next succeeding Business Day), the Servicer will, at its expense,
cause a firm of independent public accountants that is a member of the
American Institute of Certified Public Accountants to furnish to the Owner
and, with respect to any Mortgage Loans subject to a Pass-Through Transfer,
each other Person entitled to receive servicing reports provided pursuant to
Section 3.2(a), a statement to the effect that, based on an examination
conducted by such firm in compliance with the Uniform Single Attestation
Program for Mortgage Bankers ("USAP"), the assertion of management (the
"Management Assertion") of the Servicer regarding compliance with the minimum
servicing standards identified in the USAP is fairly stated in all material
respects, except for (i) such exceptions as such firm shall believe to be
immaterial, and (ii) such other exceptions as shall be set forth in such
statement or such Management Assertion.

      Section 4.6.      Owner's Right to Examine Servicer Records, etc.

            (a)   The Owner shall have the right, at its expense, to
(i) examine and audit the Servicer's books of account, records, reports and
other papers relating to (x) the performance by the Servicer of its
obligations and duties under this Agreement, or (y) the Mortgage Loans,
(ii) make copies and extracts therefrom and (iii) discuss the affairs,
finances, and accounts of the Servicer relating to such performance with the
Servicer's officers and employees, all at such times and places, and with
such frequency, as may be reasonably requested.


                                      28
<PAGE>

            (b)   The Servicer shall provide to the Owner and any supervisory
agents or examiners representing a state or federal governmental agency
having jurisdiction over the Owner, including without limitation the OTS, the
FDIC and other similar entities, access to any documentation regarding the
Mortgage Loans in the possession of the Servicer that is required by any
applicable regulations.  Such access shall be afforded without charge, upon
reasonable request, during normal business hours, at the offices of the
Servicer and in accordance with any applicable regulations.

      Section 4.7.      Cooperation

      The Servicer and the Owner shall cooperate fully with one another and
their respective counsel and other representatives and advisors in connection
with the steps required to be taken as part of their respective obligations
under this Agreement.

      Section 4.8.      Consents and Approvals

      The Servicer shall timely obtain, at its sole cost and expense, the
consents and approvals required by law or pursuant to contract to consummate
the transactions contemplated hereby.  All such consents shall be obtained
without any cost or expense to the Owner and shall be obtained without any
adverse modification in the terms of any of the agreements relating to the
Mortgage Loans or the imposition of any burdensome provisions or conditions
on the Owner.

                                  ARTICLE 5.

                                 THE SERVICER

      Section 5.1.      Indemnification; Third Party Claims

            (a)   (i)  The Servicer agrees to indemnify and hold harmless the
Owner against any and all losses, penalties, fines, forfeitures, legal fees
and related costs, judgments and any other costs, fees and expenses
("Losses") resulting from the failure of the Servicer to service the Mortgage
Loans in compliance with the terms of this Agreement; provided, however, the
Servicer shall not be liable hereunder with respect to (A) any action or
inaction resulting from the written direction or consent of the Owner, (B)
any action or inaction resulting from the Owner's failure to cause any
Collateral File (or portion thereof) to be released to the Servicer pursuant
to Sections 2.18 or 4.2(c), or (C) any action or inaction resulting from the
Owner's failure to comply with Section 5.1(b) or Section 5.6, or (D) any
indirect, special or consequential damages, losses, costs or expenses
incurred by Owner; provided, further, that with respect to Losses related to
claims other than third party claims, the Servicer shall only be liable to
the Owner for the fees and expenses of the Owner's legal counsel to the
extent that such fees and expenses are required to be reimbursed pursuant to
Section 9.14 hereof.  (ii)  The Servicer shall notify the Owner if a claim is
made by a third party with respect to this Agreement or the Mortgage Loans
that the Servicer determines in its good faith judgment will materially
affect the Owner's interest in such Mortgage Loans.  The Servicer shall
assume (with the written consent of the Owner) the defense of any such claim
and, subject to clause (iii) of this Section 5.1, pay all reasonable expenses
in connection therewith, including counsel fees, and promptly pay, discharge
and satisfy any judgment or decree that may be entered against the Servicer
or the Owner in respect of such claim.  The Servicer shall follow any written
instructions received from the Owner in connection with any such claim.  The
Servicer shall have the right to reimburse itself from the Account for all
expenses, advances and liabilities incurred by the Servicer in respect of any
such claim (whether or not the Servicer has assumed the defense thereof),
except when the claim (x) is related to the Servicer's obligations to
indemnify the Owner pursuant hereto, (y)  results from the failure of the
Servicer to service the Mortgage Loans in compliance with the terms of this
Agreement, or (z) results from the Servicer's willful misconduct, bad faith
or negligence in performing its duties under this Agreement.  (iii)  If the
Owner receives service of a summons or other first legal process, the
Servicer shall not be liable for any costs or expenses pursuant to the
indemnity in this Section 5.1 unless the Owner provides written notice to the
Servicer that describes the nature of the claim within a reasonable time
after service of such summons or other first legal process upon the Owner;
provided, however, that the Owner's failure to notify the Servicer pursuant
to this paragraph shall not relieve the Servicer from any liability that the
Servicer may have to the Owner otherwise than on account of this indemnity.
The Servicer shall not be required to indemnify any person for any settlement
of any claim effected without the Servicer's consent, which consent shall not
be unreasonably withheld.


                                      29
<PAGE>

            (b)   With respect to any Mortgage Loan, if the Owner records or
causes to be recorded the related Assignment of Mortgage designating the
Owner as the holder of record of the Mortgage in the appropriate public
recording office of the jurisdiction in which the related Mortgaged Property
is located, and the Owner, in its capacity as the holder of record, receives
written notice of any action with respect to the related Mortgage or
Mortgaged Property, the Owner shall promptly send a copy of such notice to
the Servicer in accordance with Section 9.8.  The Servicer shall have no
liability to the Owner for claims, losses, penalties, fines, forfeitures,
legal fees and related costs, judgments, or any other costs or expenses, that
result from the Owner's failure to comply with the provisions set forth in
this paragraph.

      Section 5.2.      Servicer Covenants; Merger or Consolidation of the
Servicer

            (a)   The Servicer covenants that, subject to Section 5.2(b), it
shall keep in full force and effect its existence, rights and franchises as a
corporation and its status as a Fannie Mae  or Freddie Mac approved servicer
in good standing and will obtain and preserve its qualification to do
business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement or any of the Mortgage Loans and to perform
its duties under this Agreement.

            (b)   Any Person into which the Servicer may be merged or
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Servicer shall be a party, or any Person
succeeding to all, or substantially all, of the business or assets of the
Servicer (whether or not related to loan servicing), shall be the successor
of the Servicer hereunder, 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; provided, however, that the Servicer shall not
be a party to any such merger, consolidation or conversion, or sell or
otherwise dispose of all, or substantially all, of its business or assets,
unless the successor or surviving Person shall be an institution that is a
Fannie Mae or Freddie Mac approved servicer in good standing and a member of
MERS in good standing.  In addition, the successor or surviving Person shall
be an institution (i) having a GAAP net worth of not less than $25,000,000
and (ii) the deposits of which are insured by the FDIC, SAIF and/or BIF, or
which is a HUD-approved mortgagee whose primary business is in origination
and servicing of first lien mortgage loans.


                                      30
<PAGE>

      Section 5.3.      Limitation on Liability of the Servicer and Others

      The Servicer and the directors, officers, employees or agents of the
Servicer shall not be under any liability to the Owner (i) for any action
taken, or for refraining from the taking of any action, in good faith
pursuant to this Agreement, (ii) for errors in judgment made in good faith,
(iii) for any action or inaction in accordance with the written direction or
consent of the Owner, (iv) for any action or inaction resulting from the
Owner's failure to cause any Collateral File (or portion thereof) to be
released to the Servicer pursuant to Sections 2.18 or 4.2(c), or (v) for any
action or inaction resulting from the Owner's failure to comply with
Section 5.1(b) or Section 5.6; provided, however, this provision shall not
protect the Servicer against any breach of warranties or representations made
herein, any failure to perform its obligations in accordance with any
standard of care set forth in this Agreement (unless in accordance with the
written direction or consent of the Owner) or any liability that would
otherwise be imposed by reason of willful misconduct, bad faith or negligence
in the performance of duties.  The Servicer and any officer, employee or
agent of the Servicer may rely in good faith on any document of any kind that
appears, on its face, to be properly executed and submitted by any Person
respecting any matters arising hereunder.  Subject to Section 5.1(a), the
Servicer shall not be under any obligation to appear in, prosecute or defend
any legal action that is not incidental to its duties under this Agreement
and that may result in any expense or liability to the Servicer; provided,
however, that the Servicer may, with the written consent of the Owner,
undertake any such action that it may deem necessary or desirable with
respect to this Agreement and the rights, duties, and the interests of the
parties hereto.  In such event, the legal expenses and costs of such action
and any liability resulting therefrom shall be expenses, costs, and
liabilities for which the Owner shall be liable and the Servicer shall be
entitled to be reimbursed therefor from the Account, unless any such costs or
liabilities shall result from the negligence, bad faith or willful
misfeasance of the Servicer in performing such action.

      Section 5.4.      Servicer Not to Resign

      The Servicer shall not resign from the obligations and duties hereby
imposed on it except upon the determination that such Servicer's duties
hereunder are no longer permissible under Applicable Requirements and such
incapacity cannot be cured by such Servicer.  Any such determination
permitting the resignation of the Servicer shall be evidenced by an Opinion
of Counsel to such effect delivered to the Owner.  No such resignation shall
become effective until a successor that satisfies the requirements set forth
in Section 9.1 has assumed the Servicer's responsibilities and obligations
hereunder in accordance with such Section.

      Section 5.5.      Transfer of Servicing

      The Servicer acknowledges that the Owner has entered into this
Agreement in reliance upon the adequacy of the Servicer's servicing
facilities, plan, personnel, records and procedures, its integrity,
reputation and financial standing and the continuance thereof.  Without in
any way limiting the generality of this Section 5.5, the Servicer shall not
either assign this Agreement or any of the servicing rights or obligations
hereunder except (i) in connection with a merger or consolidation permitted
under Section 5.2(b), or (ii) with the prior written consent of the Owner,
which consent shall not be unreasonably withheld or delayed.


                                      31
<PAGE>

      Section 5.6.      Transfer of Mortgage Loans

            (a)   The Owner shall have the right, without the consent of the
Servicer, to assign its interest under this Agreement with respect to any
Mortgage Loans; provided, however, that (i) the Owner shall give the Servicer
written notice ten (10) days prior to any such assignment of its interest
under this Agreement and (ii) in connection with any Pass-Through Transfer or
Whole Loan Transfer, the Owner shall comply with the provisions of Section
8.1(a) hereof.  The Owner shall also have the right to designate any Person
to exercise the rights of Owner hereunder to the extent provided in
Section 8.2 of this Agreement.

            (b)   The Servicer shall keep books and records in which, subject
to such reasonable regulations as it may prescribe, the Servicer shall note
transfers of Mortgage Loans.  For the purposes of this Agreement, the
Servicer shall be under no obligation to deal with any Person with respect to
this Agreement or any Mortgage Loan unless the books and records show such
person as the owner of such Mortgage Loan.  Upon receipt of a written notice
from the Owner of any assignment of any Mortgage Loan, the Servicer shall
mark its books and records to reflect the ownership of such Mortgage Loan by
such assignee.

      Section 5.7.      Representations and Warranties of the Servicer

      The Servicer hereby represents and warrants to the Owner as of the
related Closing Date as follows:

            (a)   The Servicer is a federally chartered savings bank, duly
organized, validly existing and in good standing under the laws of the United
States and has all licenses necessary to carry on its business as now being
conducted and is licensed, qualified and in good standing in the states where
the Mortgaged Properties are located, if the laws of such states require
licensing or qualification in order to conduct business of the type conducted
by the Servicer and to the extent necessary to ensure the servicing of each
Mortgage Loan in accordance with this Agreement.  The Servicer has the
corporate power and authority to enter into, execute and deliver this
Agreement and all documents and instruments executed and delivered pursuant
hereto and to perform its obligations in accordance therewith.  The
execution, delivery and performance of this Agreement by the Servicer and the
consummation of the transactions contemplated hereby have been duly and
validly authorized.  This Agreement evidences the valid, binding and
enforceable obligations of the Servicer, subject as to enforcement, (i) to
bankruptcy, insolvency, receivership, conservatorship, reorganization,
arrangement, moratorium and other laws of general applicability relating to
or affecting creditors' rights and (ii) to general principles of equity,
whether such enforcement is considered in a proceeding in equity or at law.
All requisite corporate action has been taken by the Servicer to make this
Agreement valid and binding upon the Servicer in accordance with its terms.


                                      32
<PAGE>

            (b)   No consent, approval, authorization, or order of any court
or governmental agency or body relating to the transactions contemplated by
this Agreement is required as to the Servicer or, if required, such consent,
approval, authorization, or order has been obtained.

            (c)   The consummation of the transactions contemplated by this
Agreement, including without limitation the fulfillment of, or compliance
with, the terms and conditions of this Agreement, are in the ordinary course
of business of the Servicer and shall not (i) result in the breach of any
term or provision of the charter or by-laws of the Servicer, (ii) result in
the breach of any term or provision of, or conflict with or constitute a
default under, or result in the acceleration of any obligation under, any
material agreement, indenture, loan or credit agreement, or other instrument
to which the Servicer or its property is subject, or (iii) result in the
violation of any law, rule, regulation, order, judgment, or decree to which
the Servicer or its property is subject.

            (d)   There is no action, suit, proceeding or investigation
pending or, to the best of the Servicer's knowledge, threatened against the
Servicer that, either in any one instance or in the aggregate, is likely (in
the Servicer's judgment), to result in any material impairment of the right
or ability of the Servicer to carry on its business substantially as now
conducted, or that would adversely affect the validity of this Agreement, or
of any action taken or to be taken in connection with the obligations of the
Servicer contemplated herein, or that would be likely to materially impair
the ability of the Servicer to perform its obligations hereunder.

            (e)   The Servicer is an approved servicer of mortgage loans for
Fannie Mae in good standing.  No event has occurred, including but not
limited to a change in insurance coverage, that would make the Servicer
unable to comply with Fannie Mae eligibility requirements.

            (f)   The Servicer is a member of MERS in good standing.  The
Servicer shall comply in all material respects with the rules and procedures
of MERS in connection with the servicing of each MERS Loan for as long as
each such Mortgage Loan is registered on the MERS(R) System.

                                  ARTICLE 6.

                                   DEFAULT

      Section 6.1.      Events of Default

      In case one or more of the following Events of Default by the Servicer
shall occur and be continuing:

                  (i)   any failure by the Servicer to remit to the Owner
when due any payment required to be made under the terms of this Agreement,
which failure continues unremedied for a period of three (3) Business Days
after the date on which written notice of such failure, requiring the same to
be remedied, shall have been received by the Servicer, from the Owner; or


                                      33
<PAGE>

                  (ii)  any failure by the Servicer to duly observe or
perform, in any material respect, any other covenant, obligation or agreement
of the Servicer as set forth in this Agreement, which failure continues
unremedied for a period of forty-five (45) (or, in the case of any failure to
pay the premium for any insurance policy that is required to be maintained
hereunder, fifteen (15)) days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to the
Servicer by the Owner; or

                  (iii) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshaling of
assets and liabilities, or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Servicer and
such decree or order shall have remained in force, undischarged or unstayed
for a period of sixty (60) days; or

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

                  (v)   the Servicer shall admit in writing its inability to
pay its debts 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

                  (vi)  the Servicer shall fail to be an approved servicer of
mortgage loans for Fannie Mae in good standing; or

                  (vii) the Servicer shall fail to be in compliance with the
"doing business" or licensing laws of any jurisdiction where a Mortgaged
Property is located; or

                  (viii)      the Servicer shall attempt to assign this
Agreement or the servicing responsibilities hereunder in contravention of
this Agreement; or

                  (ix)  failure by the Servicer to duly perform within the
required time period, its obligations under Sections 4.4 and 4.5, which
failure continues unremedied after the Certification Cure Deadline;

then, and in each and every such case, so long as such Event of Default shall
not have been remedied, the Owner, by notice in writing to the Servicer (in
each such instance, the "Defaulted Servicer"), may, in addition to whatever
rights the Owner may have at law or equity, including injunctive relief and
specific performance, commence termination of all of the rights and
obligations of the Defaulted Servicer under this Agreement pursuant to
Section 7.2, and may exercise any and all other remedies available at law or
at equity.  Upon receipt by the Defaulted Servicer of such written notice
from the Owner stating the intent to terminate the Defaulted Servicer as
servicer under this Agreement as a result of such Event of Default, all
authority and power of the Defaulted Servicer under this Agreement, whether
with respect to the Mortgage Loans or otherwise, shall pass to and be vested
in the successor appointed pursuant to Section 9.1.  Upon written request
from the Owner, the Defaulted Servicer shall, at its sole expense, prepare,
execute, and place in such successor's possession or control all Collateral
Files and Credit Files, and do or cause to be done all other acts or things
necessary or appropriate to effect the purposes of such notice of
termination, all of which shall be undertaken immediately and shall be
completed as soon as possible and in all events by not later than forty-five
(45) Business Days following the Owner's request therefor.  The Defaulted
Servicer agrees to cooperate with the Owner and such successor in effecting
the termination of the Defaulted Servicer's responsibilities and rights
hereunder, including, without limitation, the transfer to such successor of
all cash amounts that have been credited by the Defaulted Servicer to the
Account or the Escrow Account at the time of transfer, and all other amounts
that may thereafter be received with respect to the Mortgage Loans and to
which the Defaulted Servicer is not entitled pursuant to the terms of this
Agreement.


                                      34
<PAGE>

      Section 6.2.      Waiver of Defaults

      The Owner may waive any default by the Defaulted Servicer in the
performance of its obligations hereunder and its consequences.  Any such
waiver must be in writing to be effective.  Upon any waiver of a past
default, such default shall cease to exist, and any Event of Default arising
therefrom shall, unless otherwise specified in such waiver, be deemed to have
been remedied for every purpose of this Agreement unless the Defaulted
Servicer fails to comply with the terms of such waiver.  No such waiver shall
extend to any subsequent or other default or impair any right consequent
thereto except to the extent expressly so waived.

      Section 6.3.      Survival of Certain Obligations and Liabilities of
the Defaulted Servicer

      The representations, warranties, covenants, indemnities and agreements
of the parties provided in this Agreement and the parties' obligations
hereunder shall survive the execution and delivery and the termination or
expiration of this Agreement.  Notwithstanding any termination of the rights
and obligations of the Servicer pursuant to this Article 6, the Defaulted
Servicer shall remain liable for any actions of the Defaulted Servicer taken
prior to the effective time of such termination.

                                  ARTICLE 7.

                                 TERMINATION

      Section 7.1.      Termination of Agreement

      This Agreement shall terminate upon either (i) the later of the
distribution to the Owner of final payment or liquidation with respect to the
last Mortgage Loan subject to this Agreement and each REO Property or the
disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure with respect to the last Mortgage Loan subject to this Agreement
and the remittance of all funds due hereunder, or (ii) the mutual written
consent of the parties.


                                      35
<PAGE>

      Section 7.2.      Termination of the Servicer Upon Unremedied Event of
Default

      The Owner may, at its sole option, following an unremedied Event of
Default and in accordance with Section 6.1, terminate any rights the Servicer
may have hereunder.  The Owner, with full cooperation of the Servicer, shall
arrange for the transfer of servicing, at the Owner's option, to the Owner or
a third party successor servicer pursuant to Section 9.1, and the Servicer
shall continue servicing the Mortgage Loans under this Agreement, for the
Servicing Fee provided herein, until the Owner gives the Servicer notice of
such transfer.

                                  ARTICLE 8.

                     PASS-THROUGH AND WHOLE LOAN TRANSFER

      Section 8.1.      Pass-Through Transfers or Whole-Loan Transfers

            (a)   The Owner and the Servicer agree that in connection with
any Whole Loan Transfer or Pass-Through Transfer, the Owner may, in its sole
discretion, assign its rights under this Agreement with respect to the
Mortgage Loans subject to such Whole Loan Transfer or Pass-Through Transfer
provided that: (i) the Owner provides the Servicer with fifteen (15) calendar
days' prior written notice of its intent to effect such Whole Loan Transfer
or Pass-Through Transfer; (ii) no more than three (3) investors would own
Mortgage Loans subject to such Whole Loan Transfer or Pass-Through Transfer;
(iii) the Owner provides the Servicer with initial drafts of all documents
for which the Servicer is requested to become a party in connection with such
Whole Loan Transfer or Pass-Through Transfer at least ten (10) days prior to
the related settlement date (the "Subsequent Transfer Settlement Date"); (iv)
the Owner provides the Servicer with a final list of the Mortgage Loans
subject to such Whole Loan Transfer or Pass-Through Transfer at least two (2)
Business Days prior to the related Subsequent Transfer Settlement Date; and
(v) no Mortgage Loan shall be subject to more than one (1) Whole Loan
Transfer or Pass-Through Transfer in any given Due Period.

            (b)   The Owner shall reimburse the Servicer for all reasonable
out-of-pocket expenses, including attorneys' fees, incurred by the Servicer
in connection with any Whole Loan Transfer or Pass-Through Transfer.

            (c)   In connection with each Whole Loan Transfer or Pass-Through
Transfer permitted under Section 8.1(a), the Servicer shall: (i) provide the
Owner with information and appropriate verification of information in its
possession or control as may reasonably be necessary in order to effect such
Whole Loan Transfer or Pass-Through Transfer (and, to the extent any such
information is in the possession or control of any third party, use
commercially reasonable efforts to cause such third party to provide such
information); (ii) cooperate with all reasonable requests and due diligence
procedures not otherwise addressed herein; and (iii) execute an Assignment,
Assumption and Recognition Agreement, provided that each of the Servicer and
the Owner is given an opportunity to review and reasonably negotiate in good
faith the content of such document.

            (d)   With respect to any Whole Loan Transfer or Pass-Through
Transfer permitted under Section 8.1(a) in which a prospectus, prospectus
supplement or other disclosure document (a "Disclosure Document") is prepared
in connection therewith, and in which 10% or more of the mortgage loans in
the related transaction (measured as of the closing of such transaction)
consist of Mortgage Loans if such Whole Loan Transfer or Pass Through
Transfer occurs prior to April 1, 2006, and in which 20% or more of the
mortgage loans in the related transaction (measured as of the closing of such
transaction) consist of Mortgage Loans if such Whole Loan Transfer or
Pass-Through Transfer occurs on or after April 1, 2006, the Servicer shall:


                                      36
<PAGE>

                  (i)   provide for inclusion as part of such Disclosure
Document (A) the regulatory status of the Servicer and its affiliates and (B)
delinquency and foreclosure information of the type typically provided by the
Servicer in connection with mortgage loans originated by the Servicer and
securitized by third parties (the information referred to in this sentence,
in the form provided to the Owner, being "Servicer's Information");

                  (ii)  provide the Owner with an accountants comfort letter
addressing the delinquency and foreclosure statistics of the Servicer; and

                  (iii) (A) indemnify and hold harmless the transferee under
any permitted Pass-Through Transfer, the Owner and each Person, if any, who
"controls" such transferee, if any, or the Owner within the meaning of the
Securities Act of 1933, as amended (an "Indemnified Party"), against any
losses, claims, damages or liabilities to which such Indemnified Party may
become subject, under the Securities Act of 1933, as amended, or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) (x) arise out of or are based upon any untrue statement of any
material fact contained in Servicer's Information provided by such Servicer
and included in a Disclosure Document, or (y) arise out of or are based upon
the omission to state in such Servicer's Information a material fact required
to be stated in the Servicer's Information or necessary to make the
statements in the Servicer's Information not misleading, and (B) reimburse
each Indemnified Party for any legal or other expenses reasonably incurred by
such Indemnified Party in connection with investigating or defending any such
loss, claim, damage, liability or action.

            (e)   With respect to any Pass-Through Transfer permitted under
Section 8.1(a) in which all or substantially all of the mortgage loans in the
related transaction consist of Mortgage Loans, the Servicer shall:

                  (i)   execute and deliver a pooling and servicing agreement
containing terms and conditions that are consistent with the terms and
conditions set forth herein and that are customary for public, rated
transactions for the issuance of pass-through certificates backed by mortgage
loans similar to the Mortgage Loans included in such Pass-Through Transfer,
provided, that (A) any servicing reporting requirements must be consistent
with the standard practices of the Servicer and (B) each of the parties to
such pooling and servicing agreement negotiates in good faith any terms or
conditions in such pooling and servicing agreement not specifically
referenced or provided for under this Agreement; and

                  (ii)  provide Owner with opinions of counsel as to the
Servicer's corporate authority and the enforceability of the pooling and
servicing agreement against the Servicer, audit letters addressing the
delinquency and foreclosure statistics of the Servicer and certificates from
public officials, each as the Servicer and the Owner shall mutually agree to
be necessary to effect such Pass-Through Transfer.


                                      37
<PAGE>

            (f)   With respect to any Whole Loan Transfer or Pass-Through
Transfer in which a Disclosure Document is prepared in connection therewith,
the Owner shall:

                  (i)   provide the Servicer with all drafts of the
Servicer's Information when produced and revise the Servicer's Information in
accordance with the Servicer's comments to correct any information therein at
the Owner's cost; and

                  (ii)  (A) indemnify and hold harmless the Servicer against
any losses, claims, damages or liabilities to which the Servicer may become
subject, under the Securities Act of 1933, as amended, or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect
thereof) (x) arise out of or are based upon any untrue statement of any
material fact contained in such Disclosure Document (other than an untrue
statement of material fact contained in the Servicer's Information), or (y)
arise out of or are based upon the omission to state in such Disclosure
Document a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they
were made, not misleading (unless the material fact omitted would constitute
Servicer's Information) and (B) reimburse the Servicer for any legal or other
expenses reasonably incurred by the Servicer in connection with investigating
or defending any such loss, claim, damage, liability or action.

      Section 8.2.      Designation of a Master Servicer

            (a)   Notwithstanding anything to the contrary contained in this
Agreement, the Owner shall have the right, in its sole discretion, upon
thirty (30) days' prior written notice to the Servicer, to appoint and
designate a master servicer (the "Master Servicer"), as master servicer of
Mortgage Loans subject to a permitted Whole Loan Transfer or Pass-Through
Transfer.  Upon receipt of written notice of such appointment, the Servicer
shall promptly enter into a servicing agreement or an Assignment, Assumption
and Recognition Agreement (a "Master Servicing Agreement") to service the
Mortgage Loans for the Master Servicer in accordance with the Master
Servicer's requirements; provided, however, that the Servicer shall be under
no obligation to enter into any Master Servicing Agreement unless the
obligations and duties of the Servicer as a subservicer thereunder (i) are
not materially different from than those set forth herein, (ii) do not cause
undue burden on the Servicer, (iii) do not expand in any material respect any
of the obligations, duties or liabilities of the Servicer hereunder and (iv)
will not result in any increased cost to the Servicer.  If the Servicer and
the Master Servicer enter into a Master Servicing Agreement, the Servicer
shall service the Mortgage Loans, and remit and report to the Master
Servicer, in accordance with the terms of the Master Servicing Agreement and,
to the extent inconsistent therewith, the servicing provisions set forth in
this Agreement shall be superseded by the Master Servicing Agreement.  If the
Servicer and the Master Servicer do not enter into a Master Servicing
Agreement, the Servicer shall service the Mortgage Loans, and remit and
report to the Master Servicer, in accordance with the terms of this Agreement.


                                      38
<PAGE>

            (b)   Upon appointment of a Master Servicer in accordance with
Section 8.2(a), the Servicer shall correspond and communicate solely with the
Master Servicer regarding the servicing of the Mortgage Loans.  The Master
Servicer shall have the right as designee of the Owner, unless otherwise
agreed among the Owner, the Master Servicer and the Servicer, to enforce the
covenants and conditions set forth in this Agreement, and the Servicer shall
follow and shall be entitled to rely on the instructions of the Master
Servicer under this Agreement as if such instructions were the instructions
of the Owner.  The Master Servicer shall have the right to give any waivers
or consents required or allowed under this Agreement on behalf of the Owner,
and the Servicer shall be entitled to rely on such waivers and consents as if
such waivers or consents were the waivers or consents of the Owner.  The
Master Servicer is empowered to enter into and execute and deliver any
amendments or modifications to this Agreement as the Owner's designee
hereunder, and such amendments or modifications shall be binding upon the
Owner as if the Owner had executed and delivered the same.

            (c)   Upon receipt of notice of termination of the Master
Servicer, the Servicer shall no longer deal with the Master Servicer and
shall instead deal directly with the Owner.  From and after receipt of such
notice of termination of the Master Servicer, the Servicer shall service the
applicable Mortgage Loans in accordance with the provisions of this Agreement
and shall give no effect to any Master Servicing Agreement entered into with
the Master Servicer.




                                  ARTICLE 9.

                           MISCELLANEOUS PROVISIONS

      Section 9.1.      Successor to the Servicer

            (a)   Prior to termination of the Servicer's responsibilities and
duties under this Agreement pursuant to Sections 5.4, 6.1, 7.1, or 7.2, the
Owner shall either (i) succeed to and assume all of the Servicer's
responsibilities, rights, duties, and obligations under this Agreement from
and after the date of such succession, or (ii) appoint a successor to the
Servicer that shall succeed to all rights and assume all of the
responsibilities, duties and liabilities of the Servicer under this Agreement
prior to the termination of the Servicer's responsibilities, duties, and
liabilities under this Agreement.  If the Servicer's duties,
responsibilities, and liabilities under this Agreement shall be terminated
pursuant to any of the foregoing Sections, the Servicer shall discharge such
duties and responsibilities with the same degree of diligence and prudence
that it is obligated to exercise under this Agreement, from the date it
acquires knowledge of such termination until the effective date thereof.

            (b)   The Servicer shall promptly deliver to its successor (i)
the funds in the Account and the Escrow Account to which the Owner is
entitled pursuant to the terms of this Agreement and all other amounts that
may thereafter be received with respect to the Mortgage Loans and to which
the Servicer is not entitled pursuant to the terms of this Agreement and (ii)
all Collateral Files and Credit Files and related documents and statements
held by it hereunder.  The Servicer shall account for all funds and shall
execute and deliver such instruments and do such other things as may
reasonably be required to more fully and definitively vest in the successor
all such rights, powers, duties, responsibilities, obligations and
liabilities of the Servicer.


                                      39
<PAGE>

            (c)   Upon a successor's acceptance of appointment as such, the
Owner shall notify the Servicer of such appointment.

            (d)   Notwithstanding any termination pursuant to this Agreement,
the Servicer shall continue to be entitled to receive all amounts accrued or
owing to it under this Agreement on or prior to the effective date of such
termination, whether in respect of (i) unreimbursed Servicing Advances or
Monthly Advances, (ii) unpaid Servicing Fees or REO Management Fees, or
(iii) other servicing compensation, and shall continue to be entitled to the
benefits of Section 5.3 notwithstanding any such termination, with respect to
events occurring prior to such termination.

      Section 9.2.      Amendment

      This Agreement may be amended from time to time solely by written
agreement signed by each of the parties.


      Section 9.3.      Recordation of Agreement; Perfection of Security
Interest; Further Assurances

            (a)   To the extent necessary under applicable law to protect the
interests of the Owner, this Agreement, or a memorandum thereof, is subject
to recordation in all appropriate public offices for real property records in
all the counties or other comparable jurisdictions in which any or all of the
Mortgaged Properties are situated, and in any other appropriate public
recording office or elsewhere, such recordation to be effected by the Owner
at the Owner's expense.

            (b)   The Servicer agrees to execute or cause to be executed such
documents and take or cause to be taken such actions as may be necessary to
effect the intent of this Agreement, including, without limitation, the
execution and delivery of instruments of further assurance and the execution
and delivery of such other documents, and the taking of such other actions,
as may be reasonably requested by the Owner.

      Section 9.4.      Duration of Agreement

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

      Section 9.5.      Governing Law

      This Agreement shall be governed by and construed in accordance with
the laws of the State of New York (including Section 5-1401 of the New York
General Obligations Law) and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws without
giving effect to conflict of laws principles other than Section 5-1401 of the
New York General Obligations Law.


                                      40
<PAGE>

      Section 9.6.      General Interpretive Principles

      For purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires:

                  (i)   the terms defined in this Agreement have the meanings
assigned to them in this Agreement and include the plural as well as the
singular, and the use of any gender herein shall be deemed to include the
other gender;

                  (ii)  accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with generally accepted
accounting principles;

                  (iii) references herein to "Articles," "Sections,"
"Subsections," "Paragraphs," and other subdivisions without reference to a
document are to designated Articles, Sections, Subsections, Paragraphs, and
other subdivisions of this Agreement;

                  (iv)  a reference to a Subsection without further reference
to a Section is a reference to such Subsection as contained in the same
Section in which the reference appears, and this rule shall also apply to
Paragraphs and other subdivisions;

                  (v)   the words "herein," "hereof," "hereunder," and other
words of similar import refer to this Agreement as a whole and not to any
particular provision; and

                  (vi)  the term "include" or "including" shall mean without
limitation by reason of enumeration.

      Section 9.7.      Reproduction of Documents

      This Agreement and all documents relating hereto, including, without
limitation, (i) consents, waivers, and modifications that may hereafter be
executed, (ii) documents received by any party on any Closing Date, and
(iii) financial statements, certificates, and other information previously or
hereafter furnished, may be reproduced by any photographic, photostatic,
microfilm, microcard, miniature photographic, or other similar process.  Any
such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding, whether or not the original is in
existence and whether or not such reproduction was made by a party in the
regular course of business.  Any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.

      Section 9.8.      Notices

      All demands, notices, consents, waivers and other communications
hereunder shall be in writing and shall be deemed to have been duly given
upon receipt (x) in the case of any notice of an Event of Default, if mailed
by registered mail, postage prepaid and (y) in the case of any other demand,
notice, consent, waiver or other communication, if personally delivered,
mailed by registered mail, postage prepaid, delivered by air courier or sent
by facsimile to:


                                      41
<PAGE>

                  (i)   in the case of the Servicer, at the address set forth
below or such other address as may hereafter be furnished to the Owner in
writing by the Servicer:

      Washington Mutual Bank
      9401 Oakdale Avenue (Mail Stop N080108)
      Chatsworth, CA  91311
      Attention:  Vice President, Investor Reporting
      Telephone:  (818) 775-2278
      Facsimile:  (818) 775-2819

                  (ii)  in the case of the Owner, at the address set forth
below, or such other address as may hereafter be furnished to the Servicer by
the Owner:

      EMC Mortgage Corporation
      MacArthur Ridge II
      909 Hidden Ridge Drive, Suite 200
      Attention:  Ms. Ralene Ruyle
      Facsimile:  (972) 442-2810


and in the case of any subsequent Owner, as set forth in written notice
supplied to the Servicer by such subsequent Owner.

      Notwithstanding the foregoing any demand, notice, consent, waiver or
communication (other than those referred to in clause (x) above) may be given
by any other means if the parties hereto agree to such alternative means in
writing.

      Section 9.9.      Severability of Provisions

      If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be held invalid for any reason, then such covenants,
agreements, provisions or terms shall be deemed severable from the remaining
covenants, agreements, provisions or terms of this Agreement and shall in no
way affect the validity or enforceability of the other covenants, agreements,
provisions or terms of this Agreement or the rights of the Owner hereunder.
If the invalidity of any part, provision, representation or warranty of this
Agreement shall deprive any party of the economic benefit intended to be
conferred by this Agreement, the parties shall negotiate in good faith to
develop a new structure, the economic effect of which is nearly as possible
the same as the economic effect of this Agreement without regard to such
invalidity.

      Section 9.10.     Exhibits and Schedules

      The exhibits and schedules to this Agreement are hereby incorporated
and made an integral part of this Agreement.


                                      42
<PAGE>

      Section 9.11.     Counterparts; Successors and Assigns

      This Agreement may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together,
shall constitute one and the same agreement.  Subject to Sections 5.4, 5.5,
5.6, 6.1, 7.1, 7.2 and 8.1, this Agreement shall inure to the benefit of and
be binding upon the Servicer, the Owner and their respective successors and
assigns.

      Section 9.12.     Effect of Headings

      The headings in this Agreement are for purposes of reference only and
shall not limit or otherwise affect the meaning hereof.

      Section 9.13.     Other Agreements Superseded; Entire Agreement

      This Agreement supersedes all prior agreements and understandings
relating to the subject matter hereof.  This Agreement also replaces and
supercedes, with respect to each Mortgage Loan, as of the related Closing
Date, all of the terms and conditions of any other servicing agreement to
which the Servicer is bound that purports to govern the servicing of any such
Mortgage Loan.  This Agreement constitutes the entire agreement of the
parties with respect to the subject matter hereof.

      Section 9.14.     Attorneys' Fees

      If either party retains an attorney to enforce any of the provisions of
this Agreement, the prevailing party shall be entitled to reasonable
attorneys' fees from the other party, including, without limitation, fees
incurred in arbitration and in trial and appellate courts, fees incurred
without suit, and all arbitration, court and accounting costs.

      Section 9.15.     Non-Solicitation

      Following the related Closing Date, the Servicer shall not take any
action to solicit the refinancing of any Mortgage Loan, or provide
information to any other entity to solicit the refinancing of any Mortgage
Loan; provided that, the foregoing shall not preclude the Servicer, or any of
its affiliates, from (a) engaging in general solicitations to its customer
base, including by mass mailing or as part of monthly or periodic statements
mailed to its borrowers or to holders of deposit or other accounts, (b)
engaging in solicitations to the general public, including without limitation
by mass mailing, newspaper, radio, television or other media which are not
specifically directed toward the Mortgagors, (c) engaging in solicitations of
optional insurance or other bank products (not including mortgage loans) (d)
refinancing the Mortgage Loan of any Mortgagor who, without solicitation,
contacts the Servicer to request the refinancing of the related Mortgage
Loan, or (e) engaging in any action to solicit the refinancing of any
Mortgage Loan to the extent such action would be permitted under the Fannie
Mae Selling Guide or the Fannie Mae Servicing Guide.


                                      43
<PAGE>

      Section 9.16.     Confidential Information

      Each party understands that certain information that has been furnished
and shall be furnished in connection with the transactions contemplated under
this Agreement is required by applicable law (including, without limitation,
the Gramm-Leach-Bliley Act and the regulations promulgated thereunder) to be
kept confidential.  Each party shall maintain the confidentiality of such
information and shall not, without the written consent of the party
furnishing such information, disclose it to third parties or use it except in
connection with the transactions contemplated by this Agreement or as
permitted by applicable law.

                                [signatures follow]


                                      44
<PAGE>

      TO WITNESS THIS, the Servicer and the Owner have caused their names to
be signed to this Servicing Agreement by their respective officers duly
authorized as of the day and year first written above.



      SERVICER:

                                    WASHINGTON MUTUAL BANK
                                    a federally chartered savings bank

                                    By:________________________________

                                    Name: David Beck

                                    Title:  Executive Vice President




      OWNER:

                                    EMC MORTGAGE CORPORATION
                                    a Delaware corporation

                                    By:________________________________

                                    Name:______________________________

                                    Title:_____________________________
<PAGE>


STATE OF WASHINGTON                    )
                                       ) ss.
COUNTY OF KING                         )


      This instrument was acknowledged before me on ______________________,
2005, by _____________________ as _________________________ of Washington
Mutual Bank.




                                       ________________________________________
                                       [Print Name]_________________________
                                       NOTARY PUBLIC in and for the State of
                                       Washington, residing at ________________
                                       My commission expires __________________
<PAGE>

STATE OF ________                      )
                                       ) ss.
COUNTY OF ______                       )


      This instrument was acknowledged before me on ______________________,
2005, by _____________________ as _________________________ of EMC Mortgage
Corporation.



                                       ________________________________________
                                       [Print Name]_________________________
                                       NOTARY PUBLIC in and for the State of
                                       _________, residing at _________________
                                       My commission expires __________________
<PAGE>

                                  EXHIBIT A

             FORM OF REQUEST FOR RELEASE OF DOCUMENTS AND RECEIPT


To:   [Name/Address of Owner]
      Attention:____________________________
                Telephone:__________________
                Facsimile:__________________

            Re:   Servicing Agreement dated as of __________, 200_ (the
                  "Servicing Agreement") between EMC Mortgage Corporation (the
                  "Owner") and Washington Mutual Bank (the "Servicer")

      In  connection  with the  administration  of the Mortgage  Loans that we
service on your behalf  pursuant to the  Servicing  Agreement,  we request the
release, and acknowledge receipt of the Collateral  File/[specify  documents])
for the Mortgage Loan described below, for the reason indicated.


Mortgagor's Name, Address and Zip Code:

Mortgage Loan Number:

Reason for Requesting Documents:  (check one)

      _____ 1. Mortgage  Loan paid in full.  (The  Servicer  hereby  certifies
               that all amounts  received in  connection  therewith  have been
               credited  to  the   Account  as   provided  in  the   Servicing
               Agreement.)

      _____ 2. Mortgage Loan in foreclosure.

      _____ 3. Repurchase.   (The   Servicer   hereby   certifies   that   the
               repurchase price has been credited to the Account.)

      _____ 4. Mortgage Loan liquidated by _____________________________.
               (The Servicer hereby certifies that all proceeds of the
               foreclosure, insurance, condemnation or other liquidation have
               been finally received and credited to the Account pursuant to
               the Servicing Agreement.)

      _____ 5. Other (Explain): _____________________

      If  box  1,  2 or 3  above  is  checked,  and  if  all  or  part  of the
Collateral  File was  previously  released  to us,  please  release  to us our
previous  request  and  receipt  on file with you,  as well as any  additional
documents in your possession relating to the specified Mortgage Loan.


                                      A-1
<PAGE>

      If box 4 or 5 above is  checked,  upon our  return  of all of the  above
documents to you,  please  acknowledge  your reception by signing in the space
indicated below and returning this form.

                                    WASHINGTON MUTUAL BANK



                                    By:___________________________

                                    Name:_________________________

                                    Title:________________________

Acknowledgment of Documents
returned to the Owner:

[_____________________________]

By:___________________________

Name:_________________________

Title:________________________

Date:_________________________


                                     A-2
<PAGE>

                                  EXHIBIT B

                           ACCOUNT LETTER AGREEMENT


                                                       _______________, ______

To:  ___________________
     ___________________
     ___________________
     ___________________
      (the "Depository")

      As  the   "Servicer"   under  the  Servicing   Agreement   dated  as  of
_________________,  200_,  between the  Servicer  and the Owner named  therein
(the  "Agreement"),  we hereby  authorize  and  request  you to  establish  an
account,  as an  Account  pursuant  to  Section 2.4  of the  Agreement,  to be
designated as  "Washington  Mutual Bank, in trust for  ______________________,
as Owner,  and any  successor  Owner." All  deposits  in the account  shall be
subject to  withdrawal  therefrom  by order  signed by the  Servicer.  You may
refuse any deposit that would result in violation of the requirement  that the
account be fully insured as described  below.  This letter is submitted to you
in duplicate.  Please execute and return one original to us.

                                _________________________________________

                                By:______________________________________

                                Name:____________________________________

                                Title:___________________________________

      The  undersigned,   as  the  "Depository,"  hereby  certifies  that  the
above-described   account   has  been   established   under   Account   Number
_________________,  at the  office  of the  Depository  indicated  above,  and
agrees to honor  withdrawals  on such  account  as  provided  above.  The full
amount  deposited  at any time in the  account  will be insured by the Federal
Deposit Insurance Corporation.

                                _________________________________________
                                (Name of Depository)

                                By:______________________________________

                                Name:____________________________________

                                Title:___________________________________


                                     B-1
<PAGE>

                                  EXHIBIT C

                       ESCROW ACCOUNT LETTER AGREEMENT


                                                     ____________________, ___

To:  ___________________
     ___________________
     ___________________
     ___________________
      (the "Depository")

      As  the   "Servicer"   under  the  Servicing   Agreement   dated  as  of
_________________,  200_,  between the  Servicer  and the Owner named  therein
(the  "Agreement"),  we hereby  authorize  and  request  you to  establish  an
account, as an Escrow Account pursuant to Section 2.6 of the Agreement,  to be
designated     as     "Washington     Mutual     Bank,     in    trust     for
___________________________,  as Owner,  and any successor  Owner, and certain
Mortgagors."  All deposits in the account  pursuant to the Agreement  shall be
subject to  withdrawal  therefrom  by order  signed by the  Servicer.  You may
refuse any deposit that would result in violation of the requirement  that the
account by fully insured as described  below.  This letter is submitted to you
in duplicate.  Please execute and return one original to us.

                                _________________________________________

                                By:______________________________________

                                Name:____________________________________

                                Title:___________________________________

      The  undersigned,   as  the  "Depository,"  hereby  certifies  that  the
above-described   account   has  been   established   under   Account   Number
_________________,  at the  office  of the  Depository  indicated  above,  and
agrees to honor  withdrawals  on such  account  as  provided  above.  The full
amount  deposited  at any time in the  account  will be insured by the Federal
Deposit Insurance Corporation.

                                _________________________________________
                                (Name of Depository)

                                By:______________________________________

                                Name:____________________________________

                                Title:___________________________________


                                     C-1
<PAGE>

                                  EXHIBIT D

                        FORM OF OFFICER'S CERTIFICATE

      I, [name of certifying  individual],  a duly elected and acting  officer
of  Washington  Mutual  Bank (the  "Servicer"),  certify  pursuant  to Section
4.4(b) of the Servicing Agreement dated as of ___________,  200_ (as from time
to time amended or replaced by a  reconstituted  servicing or other  successor
servicing agreement,  the "Servicing  Agreement") between the Servicer and EMC
Mortgage  Corporation  (the  "Owner")  to the  Owner  and  each  other  Person
entitled to receive  servicing  reports provided pursuant to Section 3.2(a) of
the Servicing  Agreement (the "Servicing  Reports"),  each Person, if any, who
"controls"  the  Owner  or  such  other  Person  within  the  meaning  of  the
Securities  Act of  1933,  as  amended,  and  their  respective  officers  and
directors,  with respect to the calendar year  immediately  preceding the date
of this Certificate (the "Relevant Year"), as follows:

      1.    For purposes of this  Certificate,  "Relevant  Information"  means
the information in the certificate  provided pursuant to Section 4.4(a) of the
Servicing  Agreement (the "Annual  Compliance  Certificate")  for the Relevant
Year and the  information  in all Servicing  Reports  provided by the Servicer
during the Relevant  Year.  Based on my knowledge,  the Relevant  Information,
taken as a whole,  does not contain any untrue statement of a material fact or
omit  to  state a  material  fact  required  to be  stated  therein  which  is
necessary to make the statements made therein,  in light of the  circumstances
under which such  statements  were made,  not misleading as of the last day of
the Relevant Year.

      2.    The  Relevant  Information  has been  provided  to  those  Persons
entitled to receive it.

      3.    I am  responsible  for reviewing the  activities  performed by the
Servicer under the Servicing  Agreement  during the Relevant Year.  Based upon
the review required by the Servicing  Agreement and except as disclosed in the
Annual Compliance  Certificate or the accountants' statement provided pursuant
to Section 4.5, to the best of my  knowledge,  the Servicer has  fulfilled its
obligations under the Servicing Agreement throughout the Relevant Year.

DATED as of ________ __. 200_.


                                _________________________________________

                                Name:____________________________________

                                Title:___________________________________


                                     D-1
<PAGE>

                                  EXHIBIT E

                           CONTENTS OF CREDIT FILE

      With respect to each Mortgage Loan, unless otherwise agreed by the
Servicer and the Owner, the Credit File may include each of the following
items, which such items may be originals, copies or documents stored on
microfilm or any other comparable medium:

            1.    Survey of the Mortgaged Property, if available.

            2.    Each instrument necessary to complete identification of any
                  exception set forth in the exception schedule in the title
                  policy (i.e., map or plat, restrictions, easements, sewer
                  agreements, home association declarations, etc.).

            3.    Evidence of a hazard insurance policy and, if required by
                  law, a flood insurance policy, with extended coverage of
                  the hazard insurance policy.

            4.    Mortgage Loan closing statement (Form HUD-1) and any other
                  truth-in-lending or real estate settlement procedure forms
                  required by law.

            5.    Residential loan application.

            6.    Verification of employment and income (if required pursuant
                  to the seller's underwriting criteria).

            7.    Verification of acceptable evidence of source and amount of
                  down payment (to the extent required under the seller's
                  underwriting guidelines).

            8.    Credit report on the Mortgagor.

            9.    Residential appraisal report.

            10.   Photograph of the property.

            11.   Executed disclosure statement.

            12.   Tax receipts, insurance premium receipts, ledger sheets,
                  payment records, insurance claim files and correspondence,
                  correspondence, current and historical computerized data
                  files, underwriting standards used for origination, and all
                  other papers and records developed or originated by the
                  applicable seller or others required to document the
                  Mortgage Loan or to service the Mortgage Loan.

            13.   A copy of the policy of title insurance, including any
                  endorsements thereto.


                                      E-1
<PAGE>

            14.   The executed Power of Attorney, if any.

            15.   A copy of the original Primary Mortgage Insurance Policy,
                  if any.


                                     E-2
<PAGE>

                                  EXHIBIT F

                        FORM OF CONFIRMATION AGREEMENT

      This Confirmation Agreement (the "Confirmation Agreement") dated as of
__________, 200_ is by and between Washington Mutual Bank, a savings bank
organized under the laws of the United States, in its capacity as servicer
(the "Servicer"), and EMC Mortgage Corporation, a Delaware corporation, and
its successors and assigns, in its capacity as owner (the "Owner").

      Reference is made to that certain Servicing Agreement (the "Servicing
Agreement"), dated as of _________, 200_, among the Servicer and the Owner,
the provisions of which are incorporated herein, as such terms may be
modified or supplemented.  All capitalized terms shall have the meanings
ascribed to them in the Servicing Agreement, unless otherwise defined here.

      1.    As of the Closing Date (defined below), Washington Mutual Bank
shall service the Mortgage Loans described on the Mortgage Loan Schedule
attached hereto as Schedule 1 (each a "Mortgage Loan," and collectively, the
"Mortgage Loans") for the benefit of the Owner and all subsequent transferees
of the Mortgage Loans in accordance with the terms and conditions of the
Servicing Agreement.  The parties to this Confirmation Agreement hereby
acknowledge and agree that, with respect to each Mortgage Loan, the terms and
conditions of the Servicing Agreement shall replace and supercede, as of the
Closing Date (defined below), all of the terms and conditions of any other
servicing agreement to which the Servicer is bound that purports to govern
the servicing of any such Mortgage Loan.

      2.    For purposes of the Mortgage Loans to be serviced pursuant to
this Confirmation Agreement, the following terms shall have the following
meanings:

      Closing Date:                             [_______________________]

      Custodian:                                [_______________________]

      Cut-off Date:                             [_______________________]

      Servicing Fee Rate:                       [_______________________]

      3.    This Confirmation Agreement may be executed in one or more
counterparts and by the different parties hereto on separate counterparts,
each of which, when so executed, shall be deemed to be an original; such
counterparts, together, shall constitute one and the same agreement.  This
Confirmation Agreement shall inure to the benefit of and be binding upon the
Servicer, the Owner and their respective successors and assigns.

      4.    This Confirmation Agreement shall be governed by and construed in
accordance with the laws of the State of New York (including Section 5-1401
of the New York General Obligations Law) and the obligations, rights and
remedies of the parties hereunder shall be determined in accordance with such
laws without giving effect to conflict of laws principles other than
Section 5-1401 of the New York General Obligations Law.


                                      F-1
<PAGE>

      TO WITNESS THIS, the parties have caused their names to be signed by
their respective duly authorized officers as of the date first written above.



                                    WASHINGTON MUTUAL BANK
                                    a federally chartered savings bank

                                    By:     _________________________________

                                    Name:   _________________________________

                                    Title:  _________________________________


                                    EMC MORTGAGE CORPORATION
                                    a Delaware corporation


                                    By:     _________________________________

                                    Name:   _________________________________

                                    Title:  _________________________________


                                     F-2
<PAGE>

                                  SCHEDULE 1

                                MORTGAGE LOANS
                               [to be attached]









                           Schedule 1 to Exhibit F
<PAGE>

                                  SCHEDULE I

                                MORTGAGE LOANS
                               [to be attached]










                            Mortgage Loan Schedule
                                  Schedule I