NEW CENTURY MORTGAGE SECURITIES, INC.

                                    Depositor




                        NEW CENTURY MORTGAGE CORPORATION
                             OCWEN FEDERAL BANK FSB

                                    Servicers



                                       and



                      DEUTSCHE BANK NATIONAL TRUST COMPANY

                                     Trustee



                         POOLING AND SERVICING AGREEMENT
                            Dated as of March 1, 2003


                New Century Home Equity Loan Trust, Series 2003-2
                     Asset Backed Pass-Through Certificates

                                  Series 2003-2




<PAGE>

<TABLE>
<CAPTION>


                                                 TABLE OF CONTENTS

                                                     ARTICLE I

                                                    DEFINITIONS

<S>     <C>                <C>

         SECTION 1.01.     Defined Terms........................................................................-1-
         SECTION 1.02.     Allocation of Certain Interest Shortfalls...........................................-52-

                                                    ARTICLE II

                                           CONVEYANCE OF MORTGAGE LOANS;
                                         ORIGINAL ISSUANCE OF CERTIFICATES
         SECTION 2.01.     Conveyance of the Mortgage Loans....................................................-54-
         SECTION 2.02.     Acceptance of REMIC I by Trustee....................................................-56-
         SECTION 2.03.     Repurchase or Substitution of Mortgage Loans by NC
                                    Capital....................................................................-58-
         SECTION 2.04.     Reserved............................................................................-60-
         SECTION 2.05.     Representations, Warranties and Covenants of the Servicer...........................-60-
         SECTION 2.06.     Issuance of the REMIC I Regular Interests and the Class R-I
                           Interest............................................................................-62-
         SECTION 2.07.     Conveyance of the REMIC I Regular Interests; Acceptance of
                           REMIC II by the Trustee.............................................................-62-
         SECTION 2.08.     Conveyance of the REMIC II Regular Interests; Acceptance of
                           REMIC III by the Trustee............................................................-63-
         SECTION 2.09.     Issuance of Class R Certificates....................................................-63-

                                                    ARTICLE III

                                           ADMINISTRATION AND SERVICING
                                               OF THE MORTGAGE LOANS
         SECTION 3.01.     Servicers to Act as Servicer........................................................-64-
         SECTION 3.02.     Sub-Servicing Agreements Between Servicer and Sub-
                                    Servicers..................................................................-66-
         SECTION 3.03.     Successor Sub-Servicers.............................................................-67-
         SECTION 3.04.     Liability of the Servicer...........................................................-67-
         SECTION 3.05.     No Contractual Relationship Between Sub-Servicers, the
                                    Trustee or the Certificateholders..........................................-68-
         SECTION 3.06.     Assumption or Termination of Sub-Servicing Agreements by
                                    the Trustee................................................................-68-
         SECTION 3.07.     Collection of Certain Mortgage Loan Payments........................................-69-
         SECTION 3.08.     Sub-Servicing Accounts..............................................................-69-
         SECTION 3.09.     Collection of Taxes, Assessments and Similar Items; Servicing
                           Accounts............................................................................-69-
         SECTION 3.10.     Collection Account, Distribution Account............................................-70-
         SECTION 3.11.     Withdrawals from the Collection Account and Distribution
                           Account.............................................................................-72-


                                                        -i-

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         SECTION 3.12.     Investment of Funds in the Collection Account and the
                                    Distribution Account.......................................................-74-
         SECTION 3.13.     [Reserved]..........................................................................-75-
         SECTION 3.14.     Maintenance of Hazard Insurance and Errors and Omissions
                                    and Fidelity Coverage......................................................-76-
         SECTION 3.15.     Enforcement of Due-On-Sale Clauses; Assumption
                                    Agreements.................................................................-77-
         SECTION 3.16.     Realization Upon Defaulted Mortgage Loans...........................................-78-
         SECTION 3.17.     Trustee to Cooperate; Release of Mortgage Files.....................................-80-
         SECTION 3.18.     Servicing Compensation..............................................................-81-
         SECTION 3.19.     Reports to the Trustee and Others; Collection Account
                                    Statements.................................................................-81-
         SECTION 3.20.     Statement as to Compliance..........................................................-82-
         SECTION 3.21.     Independent Public Accountants' Servicing Report....................................-82-
         SECTION 3.22.     Access to Certain Documentation.....................................................-83-
         SECTION 3.23.     Title, Management and Disposition of REO Property...................................-83-
         SECTION 3.24.     Obligations of the Servicer in Respect of Prepayment Interest
                           Shortfalls..........................................................................-86-
         SECTION 3.25.     Obligations of the Servicer in Respect of Mortgage Rates and
                           Monthly Payments....................................................................-86-
         SECTION 3.26.     Advance Facility....................................................................-87-
         SECTION 3.28      Net WAC Rate Carryover Reserve Account..............................................-88-


                                                    ARTICLE IV

                                          PAYMENTS TO CERTIFICATEHOLDERS
         SECTION 4.01.     Distributions.......................................................................-90-
         SECTION 4.02.     Statements to Certificateholders....................................................-99-
         SECTION 4.03.     Remittance Reports; P&I Advances...................................................-102-
         SECTION 4.04.     Allocation of Realized Losses......................................................-104-
         SECTION 4.05.     Compliance with Withholding Requirements...........................................-106-

                                                     ARTICLE V

                                                 THE CERTIFICATES
         SECTION 5.01.     The Certificate....................................................................-109-
         SECTION 5.02.     Registration of Transfer and Exchange of Certificates..............................-111-
         SECTION 5.03.     Mutilated, Destroyed, Lost or Stolen Certificates..................................-115-
         SECTION 5.04.     Persons Deemed Owners..............................................................-115-
         SECTION 5.05.     Certain Available Information......................................................-116-

                                                    ARTICLE VI

                                          THE DEPOSITOR AND THE SERVICERS
         SECTION 6.01.     Liability of the Depositor and the Servicer........................................-117-


                                                       -ii-

<PAGE>



         SECTION 6.02.     Merger or Consolidation of the Depositor or the Servicer...........................-117-
         SECTION 6.03.     Limitation on Liability of the Depositor, the Servicers and
                                    Others....................................................................-117-
         SECTION 6.04.     Limitation on Resignation of the Servicers.........................................-118-
         SECTION 6.05.     Rights of the Depositor in Respect of the Servicers................................-119-
         SECTION 6.06.     Collection Advisor.................................................................-120-
         SECTION 6.07.     Duties of the Credit Risk Manager..................................................-121-
         SECTION 6.08.     Limitation Upon Liability of the Credit Risk Manager...............................-121-
         SECTION 6.09.     Removal of the Credit Risk Manager.................................................-121-

                                                    ARTICLE VII

                                                      DEFAULT
         SECTION 7.01.     Servicer Events of Default.........................................................-123-
         SECTION 7.02.     Trustee to Act; Appointment of Successor...........................................-125-
         SECTION 7.03.     Notification to Certificateholders.................................................-126-
         SECTION 7.04.     Waiver of Servicer Events of Default...............................................-126-

                                                   ARTICLE VIII

                                              CONCERNING THE TRUSTEE
         8.01.    Duties of Trustee...........................................................................-127-
         8.02.    Certain Matters Affecting the Trustee.......................................................-128-
         8.03.    Trustee Not Liable for Certificates or Mortgage Loans.......................................-129-
         8.04.    Trustee May Own Certificates................................................................-129-
         8.05.    Trustee's Fees and Expenses.................................................................-129-
         8.06.    Eligibility Requirements for Trustee........................................................-130-
         8.07.    Resignation and Removal of the Trustee......................................................-131-
         8.08.    Successor Trustee...........................................................................-131-
         8.09.    Merger or Consolidation of Trustee..........................................................-132-
         8.10.    Appointment of Co-Trustee or Separate Trustee...............................................-132-
         8.11.    Appointment of the Custodian................................................................-133-
         8.12.    Appointment of Office or Agency.............................................................-134-
         8.13.    Representations and Warranties of the Trustee...............................................-134-

                                                    ARTICLE IX

                                                    TERMINATION
         SECTION 9.01      Termination Upon Repurchase or Liquidation of All Mortgage
                           Loans..............................................................................-135-
         SECTION 9.02      Additional Termination Requirements................................................-136-

                                                     ARTICLE X

                                                 REMIC PROVISIONS
         SECTION 10.01.    REMIC Administration...............................................................-138-


                                                       -iii-

<PAGE>



         SECTION 10.02.    Prohibited Transactions and Activities.............................................-140-
         SECTION 10.03.    Servicers and Trustee Indemnification..............................................-141-

                                           ARTICLE XI

                                    MISCELLANEOUS PROVISIONS
         SECTION 11.01.    Amendment..........................................................................-142-
         SECTION 11.02.    Recordation of Agreement; Counterparts.............................................-143-
         SECTION 11.03.    Limitation on Rights of Certificateholders.........................................-144-
         SECTION 11.04.    Governing Law......................................................................-144-
         SECTION 11.05.    Notices............................................................................-144-
         SECTION 11.06.    Severability of Provisions.........................................................-145-
         SECTION 11.07.    Notice to Rating Agencies..........................................................-145-
         SECTION 11.08.    Article and Section References.....................................................-146-
         SECTION 11.09.    Grant of Security Interest.........................................................-146-
         SECTION 11.10.    Waiver of Jury Trial...............................................................-147-

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                                                       -iv-

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<TABLE>
<CAPTION>


Exhibits

<S>               <C>
Exhibit A-1       Form of Class A-1 Certificate
Exhibit A-2       Form of Class A-2 Certificate
Exhibit A-3       Form of Class M-1 Certificate
Exhibit A-4       Form of Class M-2 Certificate
Exhibit A-5       Form of Class M-3 Certificate
Exhibit A-6       Form of Class M-4 Certificate
Exhibit A-7       Form of Class CE Certificate
Exhibit A-8       Form of Class P Certificate
Exhibit A-9       Form of Class R Certificate
Exhibit A-10      Form of Class A-IO Certificate
Exhibit B         [Reserved]
Exhibit C-1A      Form of Trustee's Initial Certification
Exhibit C-2       Form of Trustee's Final Certification
Exhibit D         Form of Mortgage Loan Purchase Agreement
Exhibit E         Request for Release
Exhibit F-1       Form of Transferor Representation Letter and Form of Transferee Representation
                  Letter in Connection with Transfer of the Class CE Certificates, Class P Certificates
                  or Residual Certificates Pursuant to Rule 144A Under the 1933 Act
Exhibit F-2       Form of Transfer Affidavit and Agreement and Form of Transferor Affidavit in
                  Connection with Transfer of Residual Certificates
Exhibit G         Form of Certification with respect to ERISA and the Code
Exhibit H         Form of Report Pursuant to Section 4.06
Exhibit I         Form of Lost Note Affidavit
Exhibit J-1       Form of Certification to Be Provided by the Depositor with Form 10-K
Exhibit J-2       Form of Certification to Be Provided to the Depositor by the Trustee
Exhibit J-3       Form of Certification to Be Provided to Ocwen by the Trustee
Exhibit K         Form of Collection Advisory Agreement

Schedule 1        Mortgage Loan Schedule
Schedule 2        Prepayment Charge Schedule


</TABLE>


                                       -v-

<PAGE>



                  This Pooling and Servicing Agreement, is dated and effective
as of March 1, 2003, among NEW CENTURY MORTGAGE SECURITIES, INC. as Depositor,
NEW CENTURY MORTGAGE CORPORATION ("New Century") and OCWEN FEDERAL BANK FSB
("Ocwen"), as Servicers and DEUTSCHE BANK NATIONAL TRUST COMPANY as Trustee.

                             PRELIMINARY STATEMENT:

                  The Depositor intends to sell pass-through certificates to be
issued hereunder in multiple classes, which in the aggregate will evidence the
entire beneficial ownership interest in each REMIC (as defined herein) created
hereunder. The Trust Fund will consist of a segregated pool of assets comprised
of the Mortgage Loans and certain other related assets subject to this
Agreement.

                                     REMIC I

                  As provided herein, the Trustee will elect to treat the
segregated pool of assets consisting of the Mortgage Loans and certain other
related assets (other than the Servicer Prepayment Charge Payment Amount and the
Net WAC Rate Carryover Reserve Account) subject to this Agreement as a REMIC for
federal income tax purposes, and such segregated pool of assets will be
designated as "REMIC I." The Class R-I Interest will be the sole class of
"residual interests" in REMIC I for purposes of the REMIC Provisions (as defined
herein). The following table irrevocably sets forth the designation, the REMIC I
Remittance Rate, the initial Uncertificated Balance and, solely for purposes of
satisfying Treasury regulation section 1.860G-1(a)(4)(iii), the "latest possible
maturity date" for each of the REMIC I Regular Interests (as defined herein).
None of the REMIC I Regular Interests will be certificated.

<TABLE>
<CAPTION>

                                         REMIC I                       Initial                   Latest Possible
         Designation                 Remittance Rate           Uncertificated Balance           Maturity Date(1)
         -----------                 ---------------           ----------------------           ----------------

<S>                                    <C>                         <C>                          <C>
            I-LT1                      Variable(2)                 $782,668,939.61              December 25, 2032
            I-LT2                      Variable(2)                 $273,734,269.26              December 25, 2032
          I-LTAIO1                     Variable(2)                 $ 86,963,000.00              December 25, 2032
          I-LTAIO2                     Variable(2)                 $ 30,415,000.00              December 25, 2032
            I-LTP                      Variable(2)                 $        100.00              December 25, 2032
</TABLE>
_______________
(1)  Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
     regulations, the Distribution Date immediately following the maturity date
     for the Mortgage Loan with the latest maturity date has been designated as
     the "latest possible maturity date" for each REMIC I Regular Interest.
(2)  Calculated in accordance with the definition of "REMIC I Remittance Rate"
     herein.

                                      -vi-

<PAGE>



                                    REMIC II

                  As provided herein, the Trustee will elect to treat the
segregated pool of assets consisting of the REMIC I Regular Interests as a REMIC
for federal income tax purposes, and such segregated pool of assets will be
designated as "REMIC II." The Class R-II Interest will be the sole class of
"residual interests" in REMIC II for purposes of the REMIC Provisions (as
defined herein). The following table irrevocably sets forth the designation, the
REMIC II Remittance Rate, the initial Uncertificated Balance and, solely for
purposes of satisfying Treasury regulation Section 1.860G- 1(a)(4)(iii), the
"latest possible maturity date" for each of the REMIC II Regular Interests (as
defined herein). None of the REMIC II Regular Interests will be certificated.


                                      -vii-

<PAGE>

<TABLE>
<CAPTION>


                                        REMIC II                       Initial                   Latest Possible
         Designation                 Remittance Rate           Uncertificated Balance           Maturity Date(1)
         -----------                 ---------------           ----------------------           ----------------
<S>                                    <C>                        <C>                           <C>
           II-LTAA                     Variable(2)                $   575,152,792.35           December 25, 2032
           II-LTA1                     Variable(2)                $     3,522,010.00           December 25, 2032
           II-LTA2                     Variable(2)                $     1,231,800.00           December 25, 2032
           II-LTM1                     Variable(2)                $       352,135.00           December 25, 2032
           II-LTM2                     Variable(2)                $       322,790.00           December 25, 2032
           II-LTM3                     Variable(2)                $       228,885.00           December 25, 2032
           II-LTM4                     Variable(2)                $        88,035.00           December 25, 2032
           II-LTZZ                     Variable(2)                $     5,992,157.09           December 25, 2032
         II-LTAIO1A                    Variable(2)                        N/A(3)               December 25, 2032
         II-LTAIO1B                    Variable(2)                        N/A(3)               December 25, 2032
         II-LTAIO1C                    Variable(2)                        N/A(3)               December 25, 2032
         II-LTAIO2A                    Variable(2)                        N/A(4)               December 25, 2032
         II-LTAIO2B                    Variable(2)                        N/A(4)               December 25, 2032
         II-LTAIO2C                    Variable(2)                        N/A(4)               December 25, 2032
          II-LT1SUB                    Variable(2)                $        16,522.99           December 25, 2032
          II-LT1GRP                    Variable(2)                $        86,963.20           December 25, 2032
          II-LT2SUB                    Variable(2)                $         5,778.93           December 25, 2032
          II-LT2GRP                    Variable(2)                $        30,414.93           December 25, 2032
           II-LTXX                     Variable(2)                $   586,750,924.38           December 25, 2032
           II-LTP                      Variable(2)                $           100.00           December 25, 2032
</TABLE>
_______________
(1)  Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
     regulations, the Distribution Date immediately following the maturity date
     for the Mortgage Loan with the latest maturity date has been designated as
     the "latest possible maturity date" for each REMIC I Regular Interest.
(2)  Calculated in accordance with the definition of "REMIC II Remittance Rate"
     herein.
(3)  REMIC II Regular Interest II-LTAIO1A, REMIC II Regular Interest II-LTAIO1B
     and REMIC II Regular Interest II-LTAIO1C will not have Initial
     Uncertificated Balances, but will accrue interest on their Uncertificated
     Notional Amounts outstanding from time to time which shall equal, in each
     case, the Initial Uncertificated Balance of REMIC I Regular Interest
     I-LTAIO1.
(4)  REMIC II Regular Interest II-LTAIO2A, REMIC II Regular Interest II-LTAIO2B
     and REMIC II Regular Interest II-LTAIO2C will not have Initial
     Uncertificated Balances, but will accrue interest on their Uncertificated
     Notional Amounts outstanding from time to time which shall equal, in each
     case, the Initial Uncertificated Balance of REMIC I Regular Interest
     I-LTAIO2.


                                     -viii-

<PAGE>



                                    REMIC III

                  As provided herein, the Trustee will elect to treat the
segregated pool of assets consisting of the REMIC II Regular Interests as a
REMIC for federal income tax purposes, and such segregated pool of assets will
be designated as "REMIC III." The Class R-III Interests will evidence the sole
class of "residual interests" in REMIC III for purposes of the REMIC Provisions
under federal income tax law. The following table irrevocably sets forth the
designation, the Pass-Through Rate, the initial aggregate Certificate Principal
Balance and, solely for purposes of satisfying Treasury regulation section
1.860G-1(a)(4)(iii), the "latest possible maturity date" for the indicated
Classes of Certificates.

<TABLE>
<CAPTION>

                                                                  Initial Aggregate
                                                                Certificate Principal            Latest Possible
         Designation                Pass-Through Rate                  Balance                  Maturity Date(1)
         -----------                -----------------                  -------                  ----------------
<S>                                    <C>                         <C>                          <C>
          Class A-1                    Variable(2)                 $704,402,000.00              December 25, 2032
          Class A-2                    Variable(2)                 $246,360,000.00              December 25, 2032
          Class M-1                    Variable(2)                 $ 70,427,000.00              December 25, 2032
          Class M-2                    Variable(2)                 $ 64,558,000.00              December 25, 2032
          Class M-3                    Variable(2)                 $ 45,777,000.00              December 25, 2032
          Class M-4                    Variable(2)                 $ 17,607,000.00              December 25, 2032
         Class A-IO                    Variable(2)                     N/A(3)                   December 25, 2032
          Class CE                     Variable(2)                 $ 24,650,208.87(4)           December 25, 2032
           Class P                       N/A(5)                    $        100.00              December 25, 2032
</TABLE>
_______________
(1)  Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
     regulations, the Distribution Date immediately following the maturity date
     for the Mortgage Loans with the latest maturity date has been designated as
     the "latest possible maturity date" for each Class of Certificates.
(2)  Calculated in accordance with the definition of "Pass-Through Rate" herein.
(3)  The Class A-IO Certificates will not have a Certificate Principal Balance,
     but will receive all amounts distributed to REMIC II Regular Interest
     II-LTAIO1A, REMIC II Regular Interest II-LTAIO1B, REMIC II Regular Interest
     II-LTAIO1C, REMIC II Regular Interest II-LTAIO2A, REMIC II Regular Interest
     II-LTAIO2B and REMIC II Regular Interest II-LTAIO2C.
(4)  The Class CE Certificates will accrue interest at their variable
     Pass-Through Rate on the Notional Amount of the Class CE Certificates
     outstanding from time to time which shall equal the Uncertificated Balance
     of the REMIC II Regular Interests. The Class CE Certificates will not
     accrue interest on their Certificate Principal Balance.
(5)  The Class P Certificates will not accrue interest.

                  As of the Cut-off Date, the Group I Mortgage Loans had an
aggregate Scheduled Principal Balance equal to $869,632,039.61 and the Group II
Mortgage Loans had an aggregate Scheduled Principal Balance equal to
$304,149,269.26.

                  In consideration of the mutual agreements herein contained,
the Depositor, the Servicers and the Trustee agree as follows:



                                      -ix-

<PAGE>



                                    ARTICLE I

                                   DEFINITIONS

                  SECTION 1.01. Defined Terms.

                  Whenever used in this Agreement, including, without
limitation, in the Preliminary Statement hereto, the following words and
phrases, unless the context otherwise requires, shall have the meanings
specified in this Article. Unless otherwise specified, all calculations
described herein shall be made on the basis of a 360-day year consisting of
twelve 30-day months.

                  "Accepted Servicing Practices": The servicing standards set
forth in Section 3.01.

                  "Accrued Certificate Interest": With respect to any Class A
Certificate, Class A-IO Certificate, Mezzanine Certificate or Class CE
Certificate and each Distribution Date, interest accrued during the related
Interest Accrual Period at the Pass-Through Rate for such Certificate for such
Distribution Date on the Certificate Principal Balance, in the case of the Class
A Certificates and the Mezzanine Certificates, or on the Notional Amount, in the
case of the Class A-IO Certificates and the Class CE Certificates, of such
Certificate immediately prior to such Distribution Date. The Class P
Certificates are not entitled to distributions in respect of interest and,
accordingly, will not accrue interest. All distributions of interest on the
Class A Certificates and the Mezzanine Certificates will be calculated on the
basis of a 360-day year and the actual number of days in the applicable Interest
Accrual Period. All distributions of interest on the Class A-IO Certificates and
the Class CE Certificates will be based on a 360-day year consisting of twelve
30-day months. Accrued Certificate Interest with respect to each Distribution
Date, as to any Class A Certificate, Class A-IO Certificate, Mezzanine
Certificate or Class CE Certificate, shall be reduced by an amount equal to the
portion allocable to such Certificate pursuant to Section 1.02 hereof of the sum
of (a) the aggregate Prepayment Interest Shortfall, if any, for such
Distribution Date to the extent not covered by payments pursuant to Section 3.24
and (b) the aggregate amount of any Relief Act Interest Shortfall, if any, for
such Distribution Date. In addition, Accrued Certificate Interest with respect
to each Distribution Date, as to any Class CE Certificate, shall be reduced by
an amount equal to the portion allocable to such Class CE Certificate of
Realized Losses, if any, pursuant to Section 4.04 hereof.

                  "Adjustable-Rate Mortgage Loan": Each of the Mortgage Loans
identified in the Mortgage Loan Schedule as having a Mortgage Rate that is
subject to adjustment.

                  "Adjusted Group I Net WAC Rate": With respect to any
Distribution Date, a per annum rate equal to (A) the weighted average of the
Expense Adjusted Mortgage Rates of the Group I Mortgage Loans weighted on the
basis of the outstanding Stated Principal Balances of the Group I Mortgage Loans
as of the first day of the month preceding the month of such Distribution Date
less (B) the REMIC II Remittance Rate for REMIC II Regular Interest II-LTAIO1A,
REMIC II Regular Interest II-LTAIO1B and REMIC II Regular Interest II-LTAIO1C
(with respect to the 1st Interest Accrual Period through the 10th Interest
Accrual Period), REMIC II Regular Interest II-LTAIO1B and REMIC II Regular
Interest II-LTAIO1C (with respect to the 10th Interest Accrual Period through
the 20th Interest Accrual Period) and REMIC II Regular Interest II-LTAIO1C (with
respect to the 21st


                                       -1-

<PAGE>



Interest Accrual Period through the 24th Interest Accrual Period) multiplied by
a fraction, the numerator of which is the Notional Amount of REMIC II Regular
Interest II-LTAIO1C immediately prior to such Distribution Date and the
denominator of which is the aggregate outstanding Stated Principal Balance of
the Group I Mortgage Loans as of the first day of the month preceding the month
of such Distribution Date. For federal income tax purposes, the equivalent of
the foregoing is expressed as, a per annum rate equal to the weighted average of
(x) the REMIC I Remittance Rate with respect to REMIC I Regular Interest I-LT1
and REMIC I Regular Interest I-LTP for such Distribution Date and (y) the
excess, if any, of (i) the REMIC I Remittance Rate with respect to REMIC I
Regular Interest I-LTAIO1 for such Distribution Date over (ii) the Pass-Through
Rate for the Class A-IO-1 Component for such Distribution Date, weighted on the
basis of the Uncertificated Balance of (x) REMIC I Regular Interest I-LT1 and
REMIC I Regular Interest I-LTP and (y) REMIC I Regular Interests I-LTAIO1.

                  "Adjusted Group II Net WAC Rate": With respect to any
Distribution Date, a per annum rate equal to (A) the weighted average of the
Expense Adjusted Mortgage Rates of the Group II Mortgage Loans weighted on the
basis of the outstanding Stated Principal Balances of the Group II Mortgage
Loans as of the first day of the month preceding the month of such Distribution
Date less (B) the REMIC II Remittance Rate for REMIC II Regular Interest
II-LTAIO2A, REMIC II Regular Interest II-LTAIO2B and REMIC II Regular Interest
II-LTAIO2C (with respect to the 1st Interest Accrual Period through the 10th
Interest Accrual Period), REMIC II Regular Interest II-LTAIO2B and REMIC II
Regular Interest II-LTAIO2C (with respect to the 10th Interest Accrual Period
through the 20th Interest Accrual Period) and REMIC II Regular Interest
II-LTAIO2C (with respect to the 21st Interest Accrual Period through the 24th
Interest Accrual Period) multiplied by a fraction, the numerator of which is the
Notional Amount of REMIC II Regular Interest II-LTAIO2C immediately prior to
such Distribution Date and the denominator of which is the aggregate outstanding
Stated Principal Balance of the Group II Mortgage Loans as of the first day of
the month preceding the month of such Distribution Date. For federal income tax
purposes, the equivalent of the foregoing is expressed as, a per annum rate
equal to the weighted average of (x) the REMIC I Remittance Rate with respect to
REMIC I Regular Interest I-LT2 for such Distribution Date and (y) the excess, if
any, of (i) the REMIC I Remittance Rate with respect to REMIC I Regular Interest
I-LTAIO2 for such Distribution Date over (ii) the Pass-Through Rate for the
Class A-IO-2 Component for such Distribution Date, weighted on the basis of the
Uncertificated Balance of (x) REMIC I Regular Interest I-LT2 and (y) REMIC I
Regular Interests I-LTAIO2.

                  "Adjustment Date": With respect to each Adjustable-Rate
Mortgage Loan, the first day of the month in which the Mortgage Rate of such
Mortgage Loan changes pursuant to the related Mortgage Note. The first
Adjustment Date following the Cut-off Date as to each Adjustable-Rate Mortgage
Loan is set forth in the Mortgage Loan Schedule.

                  "Advancing Person": As defined in Section 3.26(a) hereof.

                  "Affiliate": With respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect to
any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have


                                       -2-

<PAGE>



meanings correlative to the foregoing.

                  "Agreement": This Pooling and Servicing Agreement and all
amendments hereof and supplements hereto.

                  "Assignment": An assignment of Mortgage, notice of transfer or
equivalent instrument, in recordable form (excepting therefrom, if applicable,
the mortgage recordation information which has not been required pursuant to
Section 2.01 hereof or returned by the applicable recorder's office), which is
sufficient under the laws of the jurisdiction wherein the related Mortgaged
Property is located to reflect of record the sale of the Mortgage, which
assignment, notice of transfer or equivalent instrument may be in the form of
one or more blanket assignments covering Mortgages secured by Mortgaged
Properties located in the same county, if permitted by law.

                  "Available Distribution Amount": With respect to any
Distribution Date, an amount equal to (1) the sum of (a) the aggregate of the
amounts on deposit in the Collection Accounts and Distribution Account as of the
close of business on the related Determination Date, (b) the aggregate of any
amounts received in respect of an REO Property withdrawn from any REO Account
and deposited in the Distribution Account for such Distribution Date pursuant to
Section 3.23, (c) the aggregate of any amounts deposited in the Distribution
Account by the Servicers in respect of Prepayment Interest Shortfalls for such
Distribution Date pursuant to Section 3.24, (d) the aggregate of any P&I
Advances made by the Servicers for such Distribution Date pursuant to Section
4.03 and (e) the aggregate of any advances made by the Trustee as a successor
Servicer or any other successor Servicer for such Distribution Date pursuant to
Section 7.02(b), reduced (to not less than zero), by (2) the portion of the
amount described in clause (1)(a) above that represents (i) Monthly Payments on
the Mortgage Loans received from a Mortgagor on or prior to the Determination
Date but due during any Due Period subsequent to the related Due Period, (ii)
Principal Prepayments on the Mortgage Loans received after the related
Prepayment Period (together with any interest payments received with such
Principal Prepayments to the extent they represent the payment of interest
accrued on the Mortgage Loans during a period subsequent to the related
Prepayment Period), (iii) Liquidation Proceeds and Insurance Proceeds received
in respect of the Mortgage Loans after the related Prepayment Period, (iv)
amounts reimbursable or payable to the Depositor, the Servicers, the Trustee,
the Seller or any Sub-Servicer pursuant to Section 3.11 or Section 3.12 or
otherwise payable in respect of Extraordinary Trust Fund Expenses and amounts
payable to the Collection Advisor pursuant to Section 6.03, (v) the Trustee Fee
payable from the Distribution Account pursuant to Section 8.05 and the expenses
of the Custodian payable from the Distribution Account pursuant to Section 8.05,
(vi) the Credit Risk Manager Fee and the Custodian Fee payable from the
Distribution Account; (vii) amounts deposited in the Collection Accounts or the
Distribution Account in error and (viii) the amount of any Prepayment Charges
collected by the Servicers in connection with the Principal Prepayment of any of
the Mortgage Loans or any Servicer Prepayment Charge Payment Amount.

                  "Bankruptcy Code": The Bankruptcy Reform Act of 1978 (Title 11
of the United States Code), as amended.

                  "Bankruptcy Loss": With respect to any Mortgage Loan, a
Realized Loss resulting from a Deficient Valuation or Debt Service Reduction.


                                       -3-

<PAGE>


                  "Book-Entry Certificate": The Class A Certificates, the Class
A-IO Certificates and the Mezzanine Certificates for so long as the Certificates
of such Class shall be registered in the name of the Depository or its nominee.

                  "Book-Entry Custodian": The custodian appointed pursuant to
Section 5.01.

                  "Business Day": Any day other than a Saturday, a Sunday or a
day on which banking or savings and loan institutions in the State of
California, the State of Florida, the State of New York or in the city in which
the Corporate Trust Office of the Trustee is located, are authorized or
obligated by law or executive order to be closed.

                  "Cap Contract": The cap contract between the Trustee and the
counterparty thereunder for the benefit of the Holders of the Class A-2
Certificates and the Mezzanine Certificates.

                  "Cash-Out Refinancing": A Refinanced Mortgage Loan the
proceeds of which are more than a nominal amount in excess of the principal
balance of any existing first mortgage or subordinate mortgage on the related
Mortgaged Property and related closing costs.

                  "Certificate": Any one of the Asset Backed Pass-Through
Certificates, Series 2003-2, Class A-1, Class A-2, Class A-IO, Class M-1, Class
M-2, Class M-3, Class M-4, Class CE, Class P, Class R issued under this
Agreement.

                  "Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the Certificate Register, except that a
Disqualified Organization or a Non-United States Person shall not be a Holder of
a Residual Certificate for any purposes hereof and, solely for the purposes of
giving any consent pursuant to this Agreement, any Certificate registered in the
name of the Depositor or either Servicer or any Affiliate thereof shall be
deemed not to be outstanding and the Voting Rights to which it is entitled shall
not be taken into account in determining whether the requisite percentage of
Voting Rights necessary to effect any such consent has been obtained, except as
otherwise provided in Section 11.01. The Trustee may conclusively rely upon a
certificate of the Depositor or either Servicer in determining whether a
Certificate is held by an Affiliate thereof. All references herein to "Holders"
or "Certificateholders" shall reflect the rights of Certificate Owners as they
may indirectly exercise such rights through the Depository and participating
members thereof, except as otherwise specified herein; provided, however, that
the Trustee shall be required to recognize as a "Holder" or "Certificateholder"
only the Person in whose name a Certificate is registered in the Certificate
Register.

                  "Certificate Factor": With respect to any Class of Regular
Certificates as of any Distribution Date, a fraction, expressed as a decimal
carried to six places, the numerator of which is the aggregate Certificate
Principal Balance (or the Notional Amount, in the case of the Class A-IO
Certificates and the Class CE Certificates) of such Class of Certificates on
such Distribution Date (after giving effect to any distributions of principal
and allocations of Realized Losses in reduction of the Certificate Principal
Balance (or the Notional Amount, in the case of the Class A-IO Certificates and
the Class CE Certificates) of such Class of Certificates to be made on such


                                       -4-

<PAGE>



Distribution Date), and the denominator of which is the initial aggregate
Certificate Principal Balance (or the Notional Amount, in the case of the Class
A-IO Certificates and the Class CE Certificates) of such Class of Certificates
as of the Closing Date.

                  "Certificate Margin": With respect to the Class A-1
Certificates and REMIC II Regular Interest II-LTA1, 0.41% in the case of each
Distribution Date through and including the Distribution Date on which the
aggregate principal balance of the Mortgage Loans (and properties acquired in
respect thereof) remaining in the Trust Fund is reduced to less than 10% of the
aggregate principal balance of the Mortgage Loans as of the Cut-off Date and
0.82% in the case of each Distribution Date thereafter.

                  With respect to the Class A-2 Certificates and REMIC II
Regular Interest II-LTA2, 0.434% in the case of each Distribution Date through
and including the Distribution Date on which the aggregate principal balance of
the Mortgage Loans (and properties acquired in respect thereof) remaining in the
Trust Fund is reduced to less than 10% of the aggregate principal balance of the
Mortgage Loans as of the Cut-off Date and 0.86% in the case of each Distribution
Date thereafter.

                  With respect to the Class M-1 Certificates and REMIC II
Regular Interest II-LTM1, 0.90% in the case of each Distribution Date through
and including the Distribution Date on which the aggregate principal balance of
the Mortgage Loans (and properties acquired in respect thereof) remaining in the
Trust Fund is reduced to less than 10% of the aggregate principal balance of the
Mortgage Loans as of the Cut-off Date and 1.35% in the case of each Distribution
Date thereafter.

                  With respect to the Class M-2 Certificates and REMIC II
Regular Interest II-LTM2, 2.00% in the case of each Distribution Date through
and including the Distribution Date on which the aggregate principal balance of
the Mortgage Loans (and properties acquired in respect thereof) remaining in the
Trust Fund is reduced to less than 10% of the sum of the aggregate principal
balance of the Mortgage Loans as of the Cut-off Date and 3.00% in the case of
each Distribution Date thereafter.

                  With respect to the Class M-3 Certificates and REMIC II
Regular Interest II-LTM3, 3.70% in the case of each Distribution Date through
and including the Distribution Date on which the aggregate principal balance of
the Mortgage Loans (and properties acquired in respect thereof) remaining in the
Trust Fund is reduced to less than 10% of the aggregate principal balance of the
Mortgage Loans as of the Cut-off Date and 5.55% in the case of each Distribution
Date thereafter.

                  With respect to the Class M-4 Certificates and REMIC II
Regular Interest II-LTM4, 3.60% in the case of each Distribution Date through
and including the Distribution Date on which the aggregate principal balance of
the Mortgage Loans (and properties acquired in respect thereof) remaining in the
Trust Fund is reduced to less than 10% of the aggregate principal balance of the
Mortgage Loans as of the Cut-off Date and 5.40% in the case of each Distribution
Date thereafter.

                  "Certificate Owner": With respect to a Book-Entry Certificate,
the Person who is the beneficial owner of such Certificate as reflected on the
books of the Depository or on the books of a Depository Participant or on the
books of an indirect participating brokerage firm for which a Depository
Participant acts as agent.


                                       -5-

<PAGE>



                  "Certificate Principal Balance": With respect to each Class A
Certificate, Mezzanine Certificate or Class P Certificate as of any date of
determination, the Certificate Principal Balance of such Certificate on the
Distribution Date immediately prior to such date of determination, minus all
distributions allocable to principal made thereon and in the case of a Mezzanine
Certificate, Realized Losses allocated thereto on such immediately prior
Distribution Date (or, in the case of any date of determination up to and
including the first Distribution Date, the initial Certificate Principal Balance
of such Certificate, as stated on the face thereof). With respect to each Class
CE Certificate as of any date of determination, an amount equal to the
Percentage Interest evidenced by such Certificate times the excess, if any, of
(A) the then aggregate Uncertificated Balances of the REMIC I Regular Interests
over (B) the then aggregate Certificate Principal Balances of the Class A
Certificates, the Mezzanine Certificates and the Class P Certificates then
outstanding.

                  "Certificate Register": The register maintained pursuant to
Section 5.02.

                  "Class": Collectively, all of the Certificates bearing the
same class designation.

                  "Class A Certificate": Any one of the Class A-1 Certificates
or the Class A-2 Certificates.

                  "Class A Principal Distribution Amount": With respect to any
Distribution Date, an amount equal to the sum of (i) the Class A-1 Principal
Distribution Amount and (ii) the Class A-2 Principal Distribution Amount.

                  "Class A-1 Allocation Percentage": With respect to any
Distribution Date, the percentage equivalent of a fraction, the numerator of
which is (x) the Group I Principal Remittance Amount for such Distribution Date
and the denominator of which is (y) the Principal Remittance Amount for such
Distribution Date.

                  "Class A-1 Certificate": Any one of the Class A-1 Certificates
executed, authenticated and delivered by the Trustee, substantially in the form
annexed hereto as Exhibit A-1 and evidencing a Regular Interest in REMIC III for
purposes of the REMIC Provisions.

                  "Class A-1 Principal Distribution Amount": With respect to any
Distribution Date, the excess of (x) the Certificate Principal Balance of the
Class A-1 Certificates immediately prior to such Distribution Date over (y) the
lesser of (A) the product of (i) 62.00% and (ii) the aggregate Stated Principal
Balance of the Group I Mortgage Loans as of the last day of the related Due
Period (after giving effect to scheduled payments of principal due during the
related Due Period, to the extent received or advanced, and unscheduled
collections of principal received during the related Prepayment Period) and (B)
the aggregate Stated Principal Balance of the Group I Mortgage Loans as of the
last day of the related Due Period (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced,
and unscheduled collections of principal received during the related Prepayment
Period) minus $4,348,160.

                  "Class A-2 Allocation Percentage": With respect to any
Distribution Date, the percentage equivalent of a fraction, the numerator of
which is (x) the Group II Principal Remittance Amount for such Distribution Date
and the denominator of which is (y) the Principal Remittance


                                       -6-

<PAGE>



Amount for such Distribution Date.

                  "Class A-2 Certificate": Any one of the Class A-2 Certificates
executed, authenticated and delivered by the Trustee, substantially in the form
annexed hereto as Exhibit A-2 and evidencing a Regular Interest in REMIC III for
purposes of the REMIC Provisions.

                  "Class A-2 Principal Distribution Amount": With respect to any
Distribution Date, the excess of (x) the Certificate Principal Balance of the
Class A-2 Certificates immediately prior to such Distribution Date over (y) the
lesser of (A) the product of (i) 62.00% and (ii) the aggregate Stated Principal
Balance of the Group II Mortgage Loans as of the last day of the related Due
Period (after giving effect to scheduled payments of principal due during the
related Due Period, to the extent received or advanced, and unscheduled
collections of principal received during the related Prepayment Period) and (B)
the aggregate Stated Principal Balance of the Group II Mortgage Loans as of the
last day of the related Due Period (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced,
and unscheduled collections of principal received during the related Prepayment
Period) minus $1,520,746.

                  "Class A-IO Certificate": Any one of the Class A-IO
Certificates executed, authenticated and delivered by the Trustee, substantially
in the form annexed hereto as Exhibit A-10 and evidencing a Regular Interest in
REMIC III for purposes of the REMIC Provisions.

                  "Class A-IO-1 Component": With respect to the 1st Interest
Accrual Period through the 10th Interest Accrual Period, REMIC II Regular
Interest II-LTAIO1A, REMIC II Regular Interest II-LTAIO1B and REMIC II Regular
Interest II-LTAIO1C. With respect to the 11th Interest Accrual Period through
the 20th Interest Accrual Period, REMIC II Regular Interest II-LTAIO1B and REMIC
II Regular Interest II-LTAIO1C. With respect to the 21st Interest Accrual Period
through the 24th Interest Accrual Period, REMIC II Regular Interest II-LTAIO1C.

                  "Class A-IO-2 Component": With respect to the 1st Interest
Accrual Period through the 10th Interest Accrual Period, REMIC II Regular
Interest II-LTAIO2A, REMIC II Regular Interest II-LTAIO2B and REMIC II Regular
Interest II-LTAIO2C. With respect to the 11th Interest Accrual Period through
the 20th Interest Accrual Period, REMIC II Regular Interest II-LTAIO2B and REMIC
II Regular Interest II-LTAIO2C. With respect to the 21st Interest Accrual Period
through the 24th Interest Accrual Period, REMIC II Regular Interest II-LTAIO2C.

                  "Class CE Certificate": Any one of the Class CE Certificates
executed, authenticated and delivered by the Trustee, substantially in the form
annexed hereto as Exhibit A-7 and evidencing a Regular Interest in REMIC III for
purposes of the REMIC Provisions.

                  "Class M-1 Certificate": Any one of the Class M-1 Certificates
executed, authenticated and delivered by the Trustee, substantially in the form
annexed hereto as Exhibit A-3 and evidencing a Regular Interest in REMIC III for
purposes of the REMIC Provisions.

                  "Class M-1 Principal Distribution Amount": With respect to any
Distribution Date, the excess of (x) the sum of (i) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into account the
payment of the Class A Principal Distribution Amount on such


                                       -7-

<PAGE>



Distribution Date) and (ii) the Certificate Principal Balance of the Class M-1
Certificates immediately prior to such Distribution Date over (y) the lesser of
(A) the product of (i) 74.00% and (ii) the aggregate Stated Principal Balance of
the Mortgage Loans as of the last day of the related Due Period (after giving
effect to scheduled payments of principal due during the related Due Period, to
the extent received or advanced, and unscheduled collections of principal
received during the related Prepayment Period) and (B) the aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period (after giving effect to scheduled payments of principal due during the
related Due Period, to the extent received or advanced, and unscheduled
collections of principal received during the related Prepayment Period) minus
$5,868,907.

                  "Class M-2 Certificate": Any one of the Class M-2 Certificates
executed, authenticated and delivered by the Trustee, substantially in the form
annexed hereto as Exhibit A-4 and evidencing a Regular Interest in REMIC III for
purposes of the REMIC Provisions.

                  "Class M-2 Principal Distribution Amount": With respect to any
Distribution Date, the excess of (x) the sum of (i) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the Certificate Principal Balance of the Class M-1 Certificates (after
taking into account the payment of the Class M-1 Principal Distribution Amount
on such Distribution Date) and (iii) the Certificate Principal Balance of the
Class M-2 Certificates immediately prior to such Distribution Date over (y) the
lesser of (A) the product of (i) 85.00% and (ii) the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period
(after giving effect to scheduled payments of principal due during the related
Due Period, to the extent received or advanced, and unscheduled collections of
principal received during the related Prepayment Period) and (B) the aggregate
Stated Principal Balance of the Mortgage Loans as of the last day of the related
Due Period (after giving effect to scheduled payments of principal due during
the related Due Period, to the extent received or advanced, and unscheduled
collections of principal received during the related Prepayment Period) minus
$5,868,907.

                  "Class M-3 Certificate": Any one of the Class M-3 Certificates
executed, authenticated and delivered by the Trustee, substantially in the form
annexed hereto as Exhibit A-5 and evidencing a Regular Interest in REMIC III for
purposes of the REMIC Provisions.

                  "Class M-3 Principal Distribution Amount": With respect to any
Distribution Date, the excess of (x) the sum of (i) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the Certificate Principal Balance of the Class M-1 Certificates (after
taking into account the payment of the Class M-1 Principal Distribution Amount
on such Distribution Date), (iii) the Certificate Principal Balance of the Class
M-2 Certificates (after taking into account the payment of the Class M-2
Principal Distribution Amount on such Distribution Date) and (iv) the
Certificate Principal Balance of the Class M-3 Certificates immediately prior to
such Distribution Date over (y) the lesser of (A) the product of (i) 92.80% and
(ii) the aggregate Stated Principal Balance of the Mortgage Loans as of the last
day of the related Due Period (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced,
and unscheduled collections of principal received during the related Prepayment
Period) and (B) the aggregate Stated Principal Balance of the Mortgage Loans as
of the last day of the related


                                       -8-

<PAGE>



Due Period (after giving effect to scheduled payments of principal due during
the related Due Period, to the extent received or advanced, and unscheduled
collections of principal received during the related Prepayment Period) minus
$5,868,907.

                  "Class M-4 Certificate": Any one of the Class M-4 Certificates
executed, authenticated and delivered by the Trustee, substantially in the form
annexed hereto as Exhibit A-6 and evidencing a Regular Interest in REMIC III for
purposes of the REMIC Provisions.

                  "Class M-4 Principal Distribution Amount": With respect to any
Distribution Date, the excess of (x) the sum of (i) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the Certificate Principal Balance of the Class M-1 Certificates (after
taking into account the payment of the Class M-1 Principal Distribution Amount
on such Distribution Date), (iii) the Certificate Principal Balance of the Class
M-2 Certificates (after taking into account the payment of the Class M-2
Principal Distribution Amount on such Distribution Date), (iv) the Certificate
Principal Balance of the Class M-3 Certificates (after taking into account the
payment of the Class M-3 Principal Distribution Amount on such Distribution
Date) and (v) the Certificate Principal Balance of the Class M-4 Certificates
immediately prior to such Distribution Date over (y) the lesser of (A) the
product of (i) 95.80% and (ii) the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period (after giving effect
to scheduled payments of principal due during the related Due Period, to the
extent received or advanced, and unscheduled collections of principal received
during the related Prepayment Period) and (B) the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period
(after giving effect to scheduled payments of principal due during the related
Due Period, to the extent received or advanced, and unscheduled collections of
principal received during the related Prepayment Period) minus $5,868,907.

                  "Class P Certificate": Any one of the Class P Certificates
executed, authenticated and delivered by the Trustee, substantially in the form
annexed hereto as Exhibit A-8 and evidencing a Regular Interest in REMIC III for
purposes of the REMIC Provisions.

                  "Class R Certificate": Any one of the Class R Certificates
executed, authenticated and delivered by the Trustee, substantially in the form
annexed hereto as Exhibit A-9 and evidencing the ownership of the Class R-I
Interest, the Class R-II Interest and the Class R-III Interest.

                  "Class R-I Interest": The uncertificated Residual Interest in
REMIC I.

                  "Class R-II Interest": The uncertificated Residual Interest in
REMIC II.

                  "Class R-III Interest": The uncertificated Residual Interest
in REMIC III.

                  "Closing Date": March 19, 2003.

                  "Code": The Internal Revenue Code of 1986.

                  "Collection Account": The account or accounts created and
maintained, or caused to


                                       -9-

<PAGE>



be created and maintained, by each Servicer pursuant to Section 3.10(a), which
shall be entitled as appropriate (i) "New Century Mortgage Corporation, as a
Servicer for Deutsche Bank National Trust Company, as Trustee, in trust for the
registered holders of New Century Mortgage Securities, Inc., New Century Home
Equity Loan Trust, Series 2003-2, Asset Backed Pass-Through Certificates" or
(ii) "Ocwen Federal Bank FSB, as a Servicer for Deutsche Bank National Trust
Company, as Trustee, in trust for the registered holders of New Century Mortgage
Securities, Inc., New Century Home Equity Loan Trust, Series 2003-2, Asset
Backed Pass-Through Certificates." Each Collection Account must be an Eligible
Account.

                  "Collection Advisor": The collection advisor designated in the
Collection Advisory Agreement.

                  "Collection Advisor Fee": The monthly fee payable to the
Collection Advisor which shall be an amount equal to $125 per Collection Advisor
Mortgage Loan beginning on the date such Collection Advisor Mortgage Loan is
transferred to the Collection Advisor and $125 each month thereafter.

                  "Collection Advisory Agreement": The agreement between New
Century and the Collection Advisor, regarding the loss mitigation and advisory
services to be provided by the Collection Advisor, substantially in the form
attached hereto as Exhibit K.

                  "Collection Advisor Delinquency Trigger": The Collection
Advisor Delinquency Trigger will be in effect if the Delinquency Percentage with
respect to the New Century Mortgage Loans exceeds the applicable percentages set
forth below with respect to such Distribution Date:



    DISTRIBUTION DATE OCCURRING IN              PERCENTAGE
    ------------------------------              ----------

April 2003 through September 2003                  6.00%
October 2003 through March  2004                  13.00%
April 2004 through September 2004                 15.00%
October 2004 through March 2005                   17.00%

                  "Collection Advisor Mortgage Loans": The New Century Mortgage
Loans for which New Century shall be required to transfer servicing to the
Collection Advisor pursuant to Section 6.06, which shall consist of the sum of
(i) any New Century Mortgage Loans that, as of the last day of the previous
calendar month, are 60 or more days delinquent, are in foreclosure, have been
converted to REO Properties or have been discharged by reason of bankruptcy and
that, when included in the calculation of the Delinquency Percentage (solely
with respect to the New Century Mortgage Loans) for the related Due Period,
cause such Delinquency Percentage to exceed the Collection Advisor Delinquency
Trigger for such Distribution Date, (ii) 10% of all New Century Mortgage Loans
that, as of the last day of the previous calendar month, are 60 or more days
delinquent, are in foreclosure, have been converted to REO Properties or have
been discharged by reason of bankruptcy, as selected by New Century MINUS (iii)
any such New Century Mortgage Loans for which New Century has undergone loss
mitigation efforts with the related Mortgagor for collection of delinquent
payments pursuant to Section 3.07 and any such New Century Mortgage


                                      -10-

<PAGE>



Loan which is the subject of litigation proceedings, is in foreclosure or is the
subject of bankruptcy proceedings; provided, however, to the extent that any New
Century Mortgage Loan would be a Collection Advisor Mortgage Loan but for the
reason set forth in (iii) above, Collection Advisor Mortgage Loans shall also
include (a) any New Century Mortgage Loans that, as of the last day of the
previous calendar month, are 30 or more days delinquent, are in foreclosure,
have been converted to REO Properties or have been discharged by reason of
bankruptcy MINUS (b) any such New Century Mortgage Loans for which New Century
has undergone loss mitigation efforts with the related Mortgagor for collection
of delinquent payments pursuant to Section 3.07 and any such New Century
Mortgage Loan which is the subject of litigation proceedings, is in foreclosure
or is the subject of bankruptcy proceedings.

                  "Commission": The Securities and Exchange Commission.

                  "Corporate Trust Office": The principal corporate trust office
of the Trustee at which at any particular time its corporate trust business in
connection with this Agreement shall be administered, which office at the date
of the execution of this instrument is located at 1761 East St. Andrew Place,
Santa Ana, CA 92705-4934, Attn: NC0302, or at such other address as the Trustee
may designate from time to time by notice to the Certificateholders, the
Depositor and the Servicers.

                  "Corresponding Certificate": With respect to (i) REMIC II
Regular Interest II-LTA1, (ii) REMIC II Regular Interest II-LTA2, (iii) REMIC II
Regular Interest II-LTM1, (iv) REMIC II Regular Interest II-LTM2, (v) REMIC II
Regular Interest II-LTM3, (vi) REMIC II Regular Interest II-LTM4, (vii) REMIC II
Regular Interest II-LTAIO1A, REMIC II Regular Interest II-LTAIO1B, REMIC II
Regular Interest II-LTAIO1C, REMIC II Regular Interest II-LTAIO2A, REMIC II
Regular Interest II-LTAIO2B and REMIC II Regular Interest II-LTAIO2C and (viii)
REMIC II Regular Interest II-LTP, (i) the Class A-1 Certificates, (ii) the Class
A-2 Certificates, (iii) the Class M-1 Certificates, (iv) the Class M-2
Certificates, (v) the Class M-3 Certificates, (vi) the Class M-4 Certificates,
(vii) the Class A-IO Certificates and (viii) the Class P Certificates,
respectively.

                  "Credit Enhancement Percentage": For any Distribution Date,
the percentage equivalent of a fraction, the numerator of which is the sum of
the aggregate Certificate Principal Balances of the Mezzanine Certificates and
the Class CE Certificates calculated after taking into account payments of
principal on the Mortgage Loans and distribution of the Group I Principal
Distribution Amount and the Group II Principal Distribution Amount to the
Certificates then entitled to distributions of principal on such Distribution
Date, and the denominator of which is the aggregate Stated Principal Balance of
the Mortgage Loans (after giving effect to scheduled payments of principal due
during the related Due Period, to the extent received or advanced, and
unscheduled collections of principal received during the related Prepayment
Period).

                  "Credit Risk Management Agreement": The agreement among the
Servicers and the Credit Risk Manager, regarding the loss mitigation and
advisory services to be provided by the Credit Risk Manager.

                  "Credit Risk Manager": The Murrayhill Company, a Colorado
corporation, and its successors and assigns.



                                      -11-

<PAGE>



                  "Credit Risk Manager Fee": The amount payable to the Credit
Risk Manager on each Distribution Date as compensation for all services rendered
by it in the exercise and performance of any of the powers and duties of the
Credit Risk Manager under the Credit Risk Management Agreement, which amount
shall equal one twelfth of the product of (i) the Credit Risk Manager Fee Rate
and (ii) the aggregate Stated Principal Balance of the Mortgage Loans and any
related REO Properties as of the first day of the related Due Period.

                  "Credit Risk Manager Fee Rate": 0.0__% per annum.

                  "Cumulative Loss Percentage": With respect to any Distribution
Date, the percentage equivalent of a fraction, the numerator of which is the
aggregate amount of Realized Losses incurred from the Cut-off Date to the last
day of the preceding calendar month and the denominator of which is the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date.

                  "Custodial Agreement": An agreement among the Trustee, the
Servicers and the Custodian pursuant to which the Custodian holds certain of the
Mortgage Files.

                  "Custodian": A Custodian, which shall initially be Wells Fargo
Bank Minnesota, National Association.

                  "Custodian Fee": The amount payable to the Custodian on each
Distribution Date pursuant to Section 8.05 as compensation for all services
rendered by it under the Custodial Agreement.

                  "Cut-off Date": With respect to each Original Mortgage Loan,
March 1, 2003. With respect to all Qualified Substitute Mortgage Loans, their
respective dates of substitution. References herein to the "Cut-off Date," when
used with respect to more than one Mortgage Loan, shall be to the respective
Cut-off Dates for such Mortgage Loans.

                  "Debt Service Reduction": With respect to any Mortgage Loan, a
reduction in the scheduled Monthly Payment for such Mortgage Loan by a court of
competent jurisdiction in a proceeding under the Bankruptcy Code, except such a
reduction resulting from a Deficient Valuation.

                  "Deficient Valuation": With respect to any Mortgage Loan, a
valuation of the related Mortgaged Property by a court of competent jurisdiction
in an amount less than the then outstanding principal balance of the Mortgage
Loan, which valuation results from a proceeding initiated under the Bankruptcy
Code.

                  "Definitive Certificates": As defined in Section 5.01(b).

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

                  "Delinquency Percentage": As of the last day of the related
Due Period, the percentage equivalent of a fraction, the numerator of which is
the aggregate Stated Principal Balance


                                      -12-

<PAGE>



of all Mortgage Loans that, as of the last day of the previous calendar month,
are 60 or more days delinquent, are in foreclosure, have been converted to REO
Properties or have been discharged by reason of bankruptcy, and the denominator
of which is the aggregate Stated Principal Balance of the Mortgage Loans and REO
Properties as of the last day of the previous calendar month; provided, however,
that any Mortgage Loan purchased by either Servicer pursuant to Section 3.16(c)
shall not be included in either the numerator or the denominator for purposes of
calculating the Delinquency Percentage.

                  "Depositor": New Century Mortgage Securities, Inc., a Delaware
corporation, or its successor in interest.

                  "Depository": The Depository Trust Company, or any successor
Depository hereafter named. The nominee of the initial Depository, for purposes
of registering those Certificates that are to be Book-Entry Certificates, is
CEDE & Co. The Depository shall at all times be a "clearing corporation" as
defined in Section 8-102(3) of the Uniform Commercial Code of the State of New
York and a "clearing agency" registered pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934, as amended.

                  "Depository Institution": Any depository institution or trust
company, including the Trustee that (a) is incorporated under the laws of the
United States of America or any State thereof, (b) is subject to supervision and
examination by federal or state banking authorities and (c) has outstanding
unsecured commercial paper or other short-term unsecured debt obligations (or,
in the case of a depository institution that is the principal subsidiary of a
holding company, such holding company has unsecured commercial paper or other
short-term unsecured debt obligations) that are rated at least P-1 by Moody's,
F-1 by Fitch (if rated by Fitch) and A-1 by S&P.

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

                  "Determination Date": With respect to each Distribution Date,
the 15th day of the calendar month in which such Distribution Date occurs or, if
such 15th day is not a Business Day, the Business Day immediately preceding such
15th day.

                  "Directly Operate": With respect to any REO Property, the
furnishing or rendering of services to the tenants thereof, the management or
operation of such REO Property, the holding of such REO Property primarily for
sale to customers, the performance of any construction work thereon or any use
of such REO Property in a trade or business conducted by REMIC I other than
through an Independent Contractor; provided, however, that the Trustee (or
either Servicer on behalf of the Trustee) shall not be considered to Directly
Operate an REO Property solely because the Trustee (or either Servicer on behalf
of the Trustee) establishes rental terms, chooses tenants, enters into or renews
leases, deals with taxes and insurance, or makes decisions as to repairs or
capital expenditures with respect to such REO Property.

                  "Disqualified Organization": Any of the following: (i) the
United States, any State or political subdivision thereof, any possession of the
United States, or any agency or instrumentality


                                      -13-

<PAGE>



of any of the foregoing (other than an instrumentality which is a corporation if
all of its activities are subject to tax and, except for Freddie Mac, a majority
of its board of directors is not selected by such governmental unit), (ii) any
foreign government, any international organization, or any agency or
instrumentality of any of the foregoing, (iii) any organization (other than
certain farmers' cooperatives described in Section 521 of the Code) which is
exempt from the tax imposed by Chapter 1 of the Code (including the tax imposed
by Section 511 of the Code on unrelated business taxable income), (iv) rural
electric and telephone cooperatives described in Section 1381(a)(2)(C) of the
Code, (v) an "electing large partnership" and (vi) any other Person as set forth
in an Opinion of Counsel delivered to the Trustee and the Depositor to the
effect that the holding of an Ownership Interest in a Residual Certificate by
such Person may cause any of REMIC I or REMIC II or any Person having an
Ownership Interest in any Class of Certificates (other than such Person) to
incur a liability for any federal tax imposed under the Code that would not
otherwise be imposed but for the Transfer of an Ownership Interest in a Residual
Certificate to such Person. The terms "United States," "State" and
"international organization" shall have the meanings set forth in Section 7701
of the Code or successor provisions.

                  "Distribution Account": The trust account or accounts created
and maintained by the Trustee pursuant to Section 3.10(b), which shall be
entitled "Deutsche Bank National Trust Company, as Trustee, in trust for the
registered holders of New Century Mortgage Securities, Inc., New Century Home
Equity Loan Trust, Series 2003-2, Asset Backed Pass-Through Certificates." The
Distribution Account must be an Eligible Account. On the Closing Date, the
Depositor will deposit $175,219.98 into the Distribution Account for
distribution to the Holders of the Certificates as part of the Group I Principal
Distribution Amount on the 1st Distribution Date.

                  "Distribution Date": The 25th day of any month, or if such
25th day is not a Business Day, the Business Day immediately following such 25th
day, commencing in April 2003.

                  "Due Date": With respect to each Distribution Date, the first
day of the calendar month in which such Distribution Date occurs, which is
generally the day of the month on which the Monthly Payment is due on a Mortgage
Loan, exclusive of any days of grace.

                  "Due Period": With respect to any Distribution Date, the
period commencing on the second day of the month immediately preceding the month
in which such Distribution Date occurs and ending on the related Due Date.

                  "Eligible Account": Any of (i) an account or accounts
maintained with a Depository Institution, (ii) an account or accounts the
deposits in which are fully insured by the FDIC or (iii) a segregated,
non-interest bearing trust account or accounts maintained with the corporate
trust department of a federal or state chartered depository institution or trust
company acting in its fiduciary capacity. Eligible Accounts may bear interest.

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

                  "Estate in Real Property": A fee simple estate in a parcel of
land.

                  "Excess Overcollateralized Amount": With respect to the Class
A Certificates and


                                      -14-

<PAGE>



the Mezzanine Certificates and any Distribution Date, the excess, if any, of (i)
the Overcollateralized Amount for such Distribution Date over (ii) the
Overcollateralization Target Amount for such Distribution Date.

                  "Expense Adjusted Mortgage Rate": With respect to any Mortgage
Loan (or the related REO Property), as of any date of determination, a per annum
rate of interest equal to the applicable Mortgage Rate thereon as of the first
day of the month preceding the month in which the Distribution Date occurs minus
the sum of (i) the Trustee Fee Rate, (ii) the Servicing Fee Rate, (iii) the
Credit Risk Manager Fee Rate and (iv) a per annum rate equal to the Custodian
Fee paid to the Custodian on such Distribution Date divided by the aggregate
Stated Principal Balance of the Mortgage Loans immediately preceding such
Distribution Date multiplied by 12.

                  "Expense Adjusted Maximum Mortgage Rate": With respect to any
Mortgage Loan (or the related REO Property), as of any date of determination, a
per annum rate of interest equal to the applicable Maximum Mortgage Rate (in the
case of any Adjustable-Rate Mortgage Loan) or Mortgage Rate (in the case of any
Fixed Rate Mortgage Loan) thereon as of the first day of the month preceding the
month in which the Distribution Date occurs minus the sum of (i) the Trustee Fee
Rate, (ii) the Servicing Fee Rate and (iii) the Credit Risk Manager Fee Rate and
(iv) a per annum rate equal to the Custodian Fee paid to the Custodian on such
Distribution Date divided by the aggregate Stated Principal Balance of the
Mortgage Loans immediately preceding such Distribution Dat multiplied by 12.

                  "Extraordinary Trust Fund Expense": Any amounts reimbursable
to the Trustee or any director, officer, employee or agent of the Trustee from
the Trust Fund pursuant to Section 8.05 or Section 10.01(c), any amounts payable
from the Distribution Account in respect of taxes pursuant to Section
10.01(g)(iii), any costs incurred by the Trustee endorsing any Mortgage Notes
delivered in blank under Section 2.01 or recording the Assignments pursuant to
Section 2.01 (to the extent the Seller is unable to pay such costs) and any
costs incurred by the Trustee under Section 9 or Section 18 of the Custodial
Agreement.

                  "Fannie Mae": Fannie Mae, formally known as the Federal
National Mortgage Association, or any successor thereto.

                  "FDIC": Federal Deposit Insurance Corporation or any successor
thereto.

                  "Final Recovery Determination": With respect to any defaulted
Mortgage Loan or any REO Property (other than a Mortgage Loan or REO Property
purchased by NC Capital, the Depositor, the majority Holder of the Class CE
Certificates or either Servicer pursuant to or as contemplated by Section 2.03,
Section 3.16(c) or Section 9.01), a determination made by the related Servicer
that all Insurance Proceeds, Liquidation Proceeds and other payments or
recoveries which such Servicer, in its reasonable good faith judgment, expects
to be finally recoverable in respect thereof have been so recovered. Each
Servicer shall maintain records, prepared by a Servicing Officer, of each Final
Recovery Determination made thereby.

                  "Fitch": Fitch Ratings, Inc., or its successor in interest.



                                      -15-

<PAGE>



                  "Formula Rate": For any Distribution Date and the Class A
Certificates and the Mezzanine Certificates, the lesser of (i) One-Month LIBOR
plus the related Certificate Margin and (ii) the Maximum Cap Rate.

                  "Freddie Mac": Freddie Mac, formally known as the Federal Home
Loan Mortgage Corporation, or any successor thereto.

                  "Gross Margin": With respect to each Adjustable-Rate Mortgage
Loan, the fixed percentage set forth in the related Mortgage Note that is added
to the Index on each Adjustment Date in accordance with the terms of the related
Mortgage Note used to determine the Mortgage Rate for such Adjustable-Rate
Mortgage Loan.

                  "Group I Interest Remittance Amount": With respect to any
Distribution Date, that portion of the Available Distribution Amount for such
Distribution Date allocable to interest on the Group I Mortgage Loans.

                  "Group I Mortgage Loan": A first lien fixed-rate Mortgage Loan
or Adjustable-Rate Mortgage Loan with a principal balance at origination that
conforms to Fannie Mae and Freddie Mac loan limits. The Group I Mortgage Loans
are identified as such on the Mortgage Loan Schedule.

                  "Group I Principal Distribution Amount": With respect to any
Distribution Date, the sum of (i) the principal portion of each Monthly Payment
on the Group I Mortgage Loans due during the related Due Period, whether or not
received on or prior to the related Determination Date; (ii) the Stated
Principal Balance of any Group I Mortgage Loan that was purchased during the
related Prepayment Period pursuant to or as contemplated by Section 2.03,
Section 3.16(a) or Section 9.01 and the amount of any shortfall deposited in the
Collection Accounts in connection with the substitution of a Deleted Mortgage
Loan in Loan Group I pursuant to Section 2.03 during the related Prepayment
Period; (iii) the principal portion of all other unscheduled collections
(including, without limitation, Principal Prepayments, Insurance Proceeds,
Liquidation Proceeds and REO Principal Amortization) received during the related
Prepayment Period on the Group I Mortgage Loans, net of any portion thereof that
represents a recovery of principal for which an advance was made by the
Servicers pursuant to Section 4.03 in respect of a preceding Distribution Date;
and (iv) the Class A-1 Allocation Percentage of the amount of any
Overcollateralization Increase Amount for such Distribution Date MINUS (v) the
Class A-1 Allocation Percentage of the amount of any Overcollateralization
Reduction Amount for such Distribution Date.

                  "Group I Principal Remittance Amount": With respect to any
Distribution Date, the sum of the amounts set forth in clauses (i) through (iii)
of the definition of Group I Principal Distribution Amount.

                  "Group II Interest Remittance Amount": With respect to any
Distribution Date, that portion of the Available Distribution Amount for such
Distribution Date allocable to interest on the Group II Mortgage Loans.

                  "Group II Mortgage Loan": A first lien or second lien
fixed-rate Mortgage Loan or Adjustable-Rate Mortgage Loan with a principal
balance at origination that may or may not conform


                                      -16-

<PAGE>



to Fannie Mae and Freddie Mac loan limits. The Group II Mortgage Loans are
identified as such on the Mortgage Loan Schedule.

                  "Group II Principal Distribution Amount": With respect to any
Distribution Date, the sum of (i) the principal portion of each Monthly Payment
on the Group II Mortgage Loans due during the related Due Period, whether or not
received on or prior to the related Determination Date; (ii) the Stated
Principal Balance of any Group II Mortgage Loan that was purchased during the
related Prepayment Period pursuant to or as contemplated by Section 2.03,
Section 3.16(a) or Section 9.01 and the amount of any shortfall deposited in the
Collection Account in connection with the substitution of a Deleted Mortgage
Loan in Loan Group II pursuant to Section 2.03 during the related Prepayment
Period; (iii) the principal portion of all other unscheduled collections
(including, without limitation, Principal Prepayments, Insurance Proceeds,
Liquidation Proceeds and REO Principal Amortization) received during the related
Prepayment Period on the Group II Mortgage Loans, net of any portion thereof
that represents a recovery of principal for which an advance was made by the
Servicer pursuant to Section 4.03 in respect of a preceding Distribution Date;
and (iv) the Class A-2 Allocation Percentage of the amount of any
Overcollateralization Increase Amount for such Distribution Date MINUS (v) the
Class A-2 Allocation Percentage of the amount of any Overcollateralization
Reduction Amount for such Distribution Date.

                  "Group II Principal Remittance Amount": With respect to any
Distribution Date, the sum of the amounts set forth in clauses (i) through (iii)
of the definition of Group II Principal Distribution Amount.

                  "Indenture": An indenture relating to the issuance of notes
backed by all or a portion of the Class CE Certificates, the Class P
Certificates and the Residual Certificates.

                  "Independent": When used with respect to any specified Person,
any such Person who (a) is in fact independent of the Depositor, each Servicer
and their respective Affiliates, (b) does not have any direct financial interest
in or any material indirect financial interest in the Depositor, either Servicer
or any Affiliate thereof, and (c) is not connected with the Depositor, either
Servicer or any Affiliate thereof as an officer, employee, promoter,
underwriter, trustee, partner, director or Person performing similar functions;
provided, however, that a Person shall not fail to be Independent of the
Depositor, either Servicer or any Affiliate thereof merely because such Person
is the beneficial owner of 1% or less of any class of securities issued by the
Depositor, either Servicer or any Affiliate thereof, as the case may be.

                  "Independent Contractor": Either (i) any Person (other than
the Servicers) that would be an "independent contractor" with respect to REMIC I
within the meaning of Section 856(d)(3) of the Code if REMIC I were a real
estate investment trust (except that the ownership tests set forth in that
section shall be considered to be met by any Person that owns, directly or
indirectly, 35% or more of any Class of Certificates), so long as REMIC I does
not receive or derive any income from such Person and provided that the
relationship between such Person and REMIC I is at arm's length, all within the
meaning of Treasury Regulation Section 1.856-4(b)(5), or (ii) any other Person
(including the Servicers) if the Trustee has received an Opinion of Counsel to
the effect that the taking of any action in respect of any REO Property by such
Person, subject to any conditions therein specified, that is otherwise herein
contemplated to be taken by an Independent Contractor will not


                                      -17-

<PAGE>



cause such REO Property to cease to qualify as "foreclosure property" within the
meaning of Section 860G(a)(8) of the Code (determined without regard to the
exception applicable for purposes of Section 860D(a) of the Code), or cause any
income realized in respect of such REO Property to fail to qualify as Rents from
Real Property.

                  "Index": With respect to each Adjustable-Rate Mortgage Loan
and each related Adjustment Date, the average of the interbank offered rates for
six-month or one-month United States dollar deposits in the London market as
published in THE WALL STREET JOURNAL and as most recently available either (i)
as of the first business day 45 days prior to such Adjustment Date or (ii) as of
the first business day of the month preceding the month of such Adjustment Date,
as specified in the related Mortgage Note.

                  "Insurance Proceeds": Proceeds of any title policy, hazard
policy or other insurance policy covering a Mortgage Loan 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 the procedures that the
related Servicer would follow in servicing mortgage loans held for its own
account, subject to the terms and conditions of the related Mortgage Note and
Mortgage.

                  "Interest Accrual Period": With respect to any Distribution
Date and the Class A Certificates and the Mezzanine Certificates, the period
commencing on the Distribution Date of the month immediately preceding the month
in which such Distribution Date occurs (or, in the case of the first
Distribution Date, commencing on the Closing Date) and ending on the day
preceding such Distribution Date. With respect to any Distribution Date and the
Class A-IO Certificates, the Class CE Certificates, the REMIC I Regular
Interests and the REMIC II Regular Interests, the one-month period ending on the
last day of the calendar month preceding the month in which such Distribution
Date occurs.

                  "Interest Carry Forward Amount": With respect to any
Distribution Date and the Class A Certificates, the Class A-IO Certificates or
the Mezzanine Certificates, the sum of (i) the amount, if any, by which (a) the
Interest Distribution Amount for such Class of Certificates as of the
immediately preceding Distribution Date exceeded (b) the actual amount
distributed on such Class of Certificates in respect of interest on such
immediately preceding Distribution Date, (ii) the amount of any Interest Carry
Forward Amount for such Class of Certificates remaining unpaid from the previous
Distribution Date and (iii) accrued interest on the sum of (i) and (ii) above
calculated at the related Pass-Through Rate for the most recently ended Interest
Accrual Period.

                  "Interest Determination Date": With respect to the Class A
Certificates, the Mezzanine Certificates, REMIC II Regular Interest II-LTA1,
REMIC II Regular Interest II-LTA2, REMIC II Regular Interest II-LTM1, REMIC II
Regular Interest II-LTM2, REMIC II Regular Interest II-LTM3 and REMIC II Regular
Interest II-LTM4 and any Interest Accrual Period therefor, the second London
Business Day preceding the commencement of such Interest Accrual Period.

                  "Interest Distribution Amount": With respect to any
Distribution Date and any Class A Certificates, any Class A-IO Certificates, any
Mezzanine Certificates and any Class CE Certificates, the aggregate Accrued
Certificate Interest on the Certificates of such Class for such Distribution
Date.


                                      -18-

<PAGE>




                  "Late Collections": With respect to any Mortgage Loan and any
Due Period, all amounts received subsequent to the Determination Date
immediately following such Due Period, whether as late payments of Monthly
Payments or as Insurance Proceeds, Liquidation Proceeds or otherwise, which
represent late payments or collections of principal and/or interest due (without
regard to any acceleration of payments under the related Mortgage and Mortgage
Note) but delinquent for such Due Period and not previously recovered.

                  "Liquidation Event": With respect to any Mortgage Loan, any of
the following events: (i) such Mortgage Loan is paid in full; (ii) a Final
Recovery Determination is made as to such Mortgage Loan; or (iii) such Mortgage
Loan is removed from REMIC I by reason of its being purchased, sold or replaced
pursuant to or as contemplated by Section 2.03, Section 3.16(c) or Section 9.01.
With respect to any REO Property, either of the following events: (i) a Final
Recovery Determination is made as to such REO Property; or (ii) such REO
Property is removed from REMIC I by reason of its being purchased pursuant to
Section 9.01.

                  "Liquidation Proceeds": The amount (other than Insurance
Proceeds or amounts received in respect of the rental of any REO Property prior
to REO Disposition) received by the applicable Servicer in connection with (i)
the taking of all or a part of a Mortgaged Property by exercise of the power of
eminent domain or condemnation, (ii) the liquidation of a defaulted Mortgage
Loan through a trustee's sale, foreclosure sale or otherwise, or (iii) the
repurchase, substitution or sale of a Mortgage Loan or an REO Property pursuant
to or as contemplated by Section 2.03, Section 3.16(c), Section 3.23 or Section
9.01.

                  "Loan Group": Loan Group I or Loan Group II, as the context
requires.

                  "Loan Group I": The group of Mortgage Loans identified in the
Mortgage Loan Schedule as having been assigned to Loan Group I.

                  "Loan Group II": The group of Mortgage Loans identified in the
Mortgage Loan Schedule as having been assigned to Loan Group II.

                  "Loan-to-Value Ratio": As of any date of determination, the
fraction, expressed as a percentage, the numerator of which is the principal
balance of the related Mortgage Loan at such date and the denominator of which
is the Value of the related Mortgaged Property.

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

                  "Marker Rate": With respect to the Class CE Certificates and
any Distribution Date, a per annum rate equal to two (2) times the weighted
average of the REMIC II Remittance Rate for REMIC II Regular Interest II-LTA1,
REMIC II Regular Interest II-LTA2, REMIC II Regular Interest II-LTM1, REMIC II
Regular Interest II-LTM2, REMIC II Regular Interest II-LTM3, REMIC II Regular
Interest II-LTM4 and REMIC II Regular Interest II-LTZZ, with the rate on each
such REMIC II Regular Interest subject to a cap equal to the related Formula
Rate for the purpose of this calculation for such Distribution Date and with the
rate on REMIC II Regular Interest II-LTZZ


                                      -19-

<PAGE>



subject to a cap of zero for the purpose of this calculation; provided, however,
each cap shall be multiplied by a fraction, the numerator of which is the actual
number of days in the related Interest Accrual Period and the denominator of
which is 30.

                  "Maximum Cap Rate": For any Distribution Date with respect to
the Class A-1 Certificates, a per annum rate equal to the product of (x)(A) the
weighted average of the Expense Adjusted Maximum Mortgage Rates of the Group I
Mortgage Loans, weighted based on their Stated Principal Balances as of the
first day of the calendar month preceding the month in which the Distribution
Date occurs (after giving effect to scheduled payments of principal due during
the related Due Period, to the extent received or advanced, and unscheduled
collections of principal received during the related Prepayment Period) less (B)
the Pass-Through Rate for the Class A-IO-1 Component for such Distribution Date
multiplied by a fraction, the numerator of which is the Notional Amount for the
Class A-IO-1 Component immediately prior to such Distribution Date and the
denominator of which is the aggregate outstanding Stated Principal Balance of
the Group I Mortgage Loans as of the first day of the month preceding the month
of such Distribution Date (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced,
and unscheduled collections of principal received during the related Prepayment
Period) and (y) a fraction, the numerator of which is 30 and the denominator of
which is the actual number of days elapsed in the related Interest Accrual
Period.

                  For any Distribution Date with respect to the Class A-2
Certificates, a per annum rate equal to the product of (x)(A) the weighted
average of the Expense Adjusted Maximum Mortgage Rates of the Group II Mortgage
Loans, weighted based on their Stated Principal Balances as of the first day of
the calendar month preceding the month in which the Distribution Date occurs
(after giving effect to scheduled payments of principal due during the related
Due Period, to the extent received or advanced, and unscheduled collections of
principal received during the related Prepayment Period) less (B) the
Pass-Through Rate for the Class A-IO-2 Component for such Distribution Date
multiplied by a fraction, the numerator of which is the Notional Amount for the
Class A-IO-2 Component immediately prior to such Distribution Date and the
denominator of which is the aggregate outstanding Stated Principal Balance of
the Group II Mortgage Loans as of the first day of the month preceding the month
of such Distribution Date (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced,
and unscheduled collections of principal received during the related Prepayment
Period) and (y) a fraction, the numerator of which is 30 and the denominator of
which is the actual number of days elapsed in the related Interest Accrual
Period.

                  For any Distribution Date with respect to the Mezzanine
Certificates, a per annum rate equal to the product of (x)(A) the weighted
average of the Expense Adjusted Maximum Mortgage Rates of the Mortgage Loans,
weighted based on their Stated Principal Balances as of the first day of the
calendar month preceding the month in which the Distribution Date occurs (after
giving effect to scheduled payments of principal due during the related Due
Period, to the extent received or advanced, and unscheduled collections of
principal received during the related Prepayment Period) less (B) the sum of (i)
the Pass-Through Rate for the Class A-IO-1 Component for such Distribution Date
multiplied by a fraction, the numerator of which is the Notional Amount for the
Class A-IO-1 Component immediately prior to such Distribution Date and the
denominator of which is the aggregate outstanding Stated Principal Balance of
the Mortgage Loans as of the first


                                      -20-

<PAGE>



day of the month preceding the month of such Distribution Date (after giving
effect to scheduled payments of principal due during the related Due Period, to
the extent received or advanced, and unscheduled collections of principal
received during the related Prepayment Period) and (ii) the Pass-Through Rate
for the Class A-IO-2 Component for such Distribution Date multiplied by a
fraction, the numerator of which is the Notional Amount for the Class A-IO-2
Component immediately prior to such Distribution Date and the denominator of
which is the aggregate outstanding Stated Principal Balance of the Mortgage
Loans as of the first day of the month preceding the month of such Distribution
Date (after giving effect to scheduled payments of principal due during the
related Due Period, to the extent received or advanced, and unscheduled
collections of principal received during the related Prepayment Period) weighted
in proportion to the results of subtracting from the aggregate Stated Principal
Balance of each Loan Group the Certificate Principal Balance of the related
Class of Class A Certificates, and (y) a fraction, the numerator of which is 30
and the denominator of which is the actual number of days elapsed in the related
Interest Accrual Period.

                  "Maximum II-LTZZ Uncertificated Interest Deferral Amount":
With respect to any Distribution Date, the excess of (i) accrued interest at the
REMIC II Remittance Rate applicable to REMIC II Regular Interest II-LTZZ for
such Distribution Date on a balance equal to the Uncertificated Balance of REMIC
II Regular Interest II-LTZZ minus the REMIC II Overcollateralized Amount, in
each case for such Distribution Date, over (ii) Uncertificated Interest on REMIC
II Regular Interest II-LTA1, REMIC II Regular Interest II-LTA2, REMIC II Regular
Interest II-LTM1, REMIC II Regular Interest II-LTM2, REMIC II Regular Interest
II-LTM3 and REMIC II Regular Interest II-LTM4 for such Distribution Date, with
the rate on each of REMIC II Regular Interest II-LTA1, REMIC II Regular Interest
II-LTA2, REMIC II Regular Interest II-LTM1, REMIC II Regular Interest II-LTM2,
REMIC II Regular Interest II-LTM3 and REMIC II Regular Interest II-LTM4 subject
to a cap equal to the related Formula Rate; provided, however, each cap shall be
multiplied by a fraction, the numerator of which is the actual number of days in
the related Interest Accrual Period and the denominator of which is 30.

                  "Maximum Mortgage Rate": With respect to each Adjustable-Rate
Mortgage Loan, the percentage set forth in the related Mortgage Note as the
maximum Mortgage Rate thereunder.

                  "Mezzanine Certificate": Any Class M-1 Certificate, Class M-2
Certificate, Class M- 3 Certificate or Class M-4 Certificate.

                  "Minimum Mortgage Rate": With respect to each Adjustable-Rate
Mortgage Loan, the percentage set forth in the related Mortgage Note as the
minimum Mortgage Rate thereunder.

                  "Monthly Payment": With respect to any Mortgage Loan, the
scheduled monthly payment of principal and interest on such Mortgage Loan which
is payable by the related Mortgagor from time to time under the related Mortgage
Note, determined: (a) after giving effect to (i) any Deficient Valuation and/or
Debt Service Reduction with respect to such Mortgage Loan and (ii) any reduction
in the amount of interest collectible from the related Mortgagor pursuant to the
Relief Act; (b) without giving effect to any extension granted or agreed to by
the related Servicer pursuant to Section 3.07 and (c) on the assumption that all
other amounts, if any, due under such Mortgage Loan are paid when due.


                                      -21-

<PAGE>


                  "Moody's": Moody's Investors Service, Inc. or its successor in
interest.

                  "Mortgage": The mortgage, deed of trust or other instrument
creating a first or second lien on, or first or second priority security
interest in, a Mortgaged Property securing a Mortgage Note.

                  "Mortgage File": The mortgage documents listed in Section 2.01
pertaining to a particular Mortgage Loan and any additional documents required
to be added to the Mortgage File pursuant to this Agreement.

                  "Mortgage Loan": Each mortgage loan transferred and assigned
to the Trustee and delivered to the Trustee pursuant to Section 2.01 or Section
2.03(b) of this Agreement, as held from time to time as a part of the Trust
Fund, the Mortgage Loans so held being identified in the Mortgage Loan Schedule.

                  "Mortgage Loan Purchase Agreement": The agreement among the
Seller, NC Capital and the Depositor, regarding the sale of the Mortgage Loans
by the Seller to the Depositor, substantially in the form of Exhibit D annexed
hereto.

                  "Mortgage Loan Schedule": As of any date, the list of Mortgage
Loans included in REMIC I on such date, separately identifying the Group I
Mortgage Loans and the Group II Mortgage Loans, attached hereto as Schedule 1.
The Mortgage Loan Schedule shall set forth the following information with
respect to each Mortgage Loan:

                  (i) the Mortgage Loan identifying number;

                  (ii) the Mortgagor's name;

                  (iii) the street address of the Mortgaged Property including
         the state and zip code;

                  (iv) a code indicating whether the Mortgaged Property is
         owner-occupied;

                  (v) the type of Residential Dwelling constituting the
         Mortgaged Property;

                  (vi) the original months to maturity;

                  (vii) the stated remaining months to maturity from the
         Cut-off Date based on the original amortization schedule;

                  (viii) the Loan-to-Value Ratio at origination;

                  (ix) the Mortgage Rate in effect immediately following the
         Cut-off Date;

                  (x) (A) the date on which the first Monthly Payment was due on
         the Mortgage Loan and (B) if such date is not consistent with the Due
         Date currently in effect, such Due


                                      -22-

<PAGE>



         Date;

                  (xi) the stated maturity date;

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

                  (xiii) the amount of the Monthly Payment due on the first Due
         Date after the Cut- off Date;

                  (xiv) the last Due Date on which a Monthly Payment was
         actually applied to the unpaid Stated Principal Balance;

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

                  (xvi) the Scheduled Principal Balance of the Mortgage Loan as
         of the close of business on the Cut-off Date;

                  (xvii) with respect to each Adjustable-Rate Mortgage Loan, the
         Adjustment Dates;

                  (xviii)  with respect to each Adjustable-Rate Mortgage Loan,
         the Gross Margin;

                  (xix) a code indicating the purpose of the Mortgage Loan
         (i.e., purchase financing, Rate/Term Refinancing, Cash-Out
         Refinancing);

                  (xx) with respect to each Adjustable-Rate Mortgage Loan, the
         Maximum Mortgage Rate;

                  (xxi) with respect to each Adjustable-Rate Mortgage Loan, the
         Minimum Mortgage Rate;

                  (xxii) the Mortgage Rate at origination;

                  (xxiii) with respect to each Adjustable-Rate Mortgage Loan,
         the Periodic Rate Cap and the maximum first Adjustment Date Mortgage
         Rate adjustment;

                  (xxiv) a code indicating the documentation program (i.e., Full
         Documentation, Limited Documentation, Stated Income Documentation);

                  (xxv) the first Adjustment Date immediately following the
         origination date;

                  (xxvi) the risk grade;

                  (xxvii) the Value of the Mortgaged Property;

                  (xxviii) the sale price of the Mortgaged Property, if
         applicable;



                                      -23-

<PAGE>



                  (xxix) the actual unpaid principal balance of the Mortgage
         Loan as of the Cut-off Date;

                  (xxx) the type and term of the related Prepayment Charge;

                  (xxxi) the rounding code (i.e., nearest 0.125%, next highest
         0.125%); and

                  (xxxii) the program code.

                  The Mortgage Loan Schedule shall set forth the following
information with respect to the Mortgage Loans in the aggregate as of the
Cut-off Date: (1) the number of Mortgage Loans; (2) the current principal
balance of the Mortgage Loans; (3) the weighted average Mortgage Rate of the
Mortgage Loans and (4) the weighted average maturity of the Mortgage Loans. The
Mortgage Loan Schedule shall be amended from time to time by the Depositor in
accordance with the provisions of this Agreement. With respect to any Qualified
Substitute Mortgage Loan, the Cut-off Date shall refer to the related Cut-off
Date for such Mortgage Loan, determined in accordance with the definition of
Cut-off Date herein.

                  "Mortgage Note": The original executed note or other evidence
of the indebtedness of a Mortgagor under a Mortgage Loan.

                  "Mortgage Pool": The pool of Mortgage Loans, identified on
Schedule 1 and existing from time to time thereafter, and any REO Properties
acquired in respect thereof.

                  "Mortgage Rate": With respect to each Mortgage Loan, the
annual rate at which interest accrues on such Mortgage Loan from time to time in
accordance with the provisions of the related Mortgage Note, which rate (i) with
respect to each fixed-rate Mortgage Loan shall remain constant at the rate set
forth in the Mortgage Loan Schedule as the Mortgage Rate in effect immediately
following the Cut-off Date and (ii) with respect to the Adjustable-Rate Mortgage
Loans, (A) as of any date of determination until the first Adjustment Date
following the Cut-off Date shall be the rate set forth in the Mortgage Loan
Schedule as the Mortgage Rate in effect immediately following the Cut-off Date
and (B) as of any date of determination thereafter shall be the rate as adjusted
on the most recent Adjustment Date equal to the sum, rounded as provided in the
Mortgage Note, of the Index, as most recently available as of a date prior to
the Adjustment Date as set forth in the related Mortgage Note, plus the related
Gross Margin; provided that the Mortgage Rate on such Adjustable-Rate Mortgage
Loan on any Adjustment Date shall never be more than the lesser of (i) the sum
of the Mortgage Rate in effect immediately prior to the Adjustment Date plus the
related Periodic Rate Cap, if any, and (ii) the related Maximum Mortgage Rate,
and shall never be less than the greater of (i) the Mortgage Rate in effect
immediately prior to the Adjustment Date less the Periodic Rate Cap, if any, and
(ii) the related Minimum Mortgage Rate. With respect to each Mortgage Loan that
becomes an REO Property, as of any date of determination, the annual rate
determined in accordance with the immediately preceding sentence as of the date
such Mortgage Loan became an REO Property.

                  "Mortgaged Property": The underlying property securing a
Mortgage Loan, including any REO Property, consisting of an Estate in Real
Property improved by a Residential Dwelling.


                                      -24-

<PAGE>



                  "Mortgagor": The obligor on a Mortgage Note.

                  "NC Capital": NC Capital Corporation, a California
corporation, in its capacity as a party to the Mortgage Loan Purchase Agreement.

                  "Net Monthly Excess Cashflow": With respect to any
Distribution Date, the sum of (i) any Overcollateralization Reduction Amount for
such Distribution Date and (ii) the excess of (x) the Available Distribution
Amount for such Distribution Date over (y) the sum for such Distribution Date of
(A) the Senior Interest Distribution Amount payable to the holders of the Class
A Certificates and the Class A-IO Certificates and the Interest Distribution
Amount payable to the holders of the Mezzanine Certificates and (B) the
Principal Remittance Amount.

                  "Net Mortgage Rate": With respect to any Mortgage Loan (or the
related REO Property) as of any date of determination, a per annum rate of
interest equal to the then applicable Mortgage Rate for such Mortgage Loan minus
the Servicing Fee Rate.

                  "Net WAC Pass-Through Rate": For any Distribution Date with
respect to the Class A-1 Certificates, a per annum rate equal to the product of
(x)(A) the weighted average of the Expense Adjusted Mortgage Rates of the Group
I Mortgage Loans, weighted based on their Stated Principal Balances as of the
first day of the calendar month preceding the month in which the Distribution
Date occurs (after giving effect to scheduled payments of principal due during
the related Due Period, to the extent received or advanced, and unscheduled
collections of principal received during the related Prepayment Period) less (B)
the Pass-Through Rate for the Class A-IO-1 Component for such Distribution Date
multiplied by a fraction, the numerator of which is the Notional Amount for the
Class A-IO-1 Component immediately prior to such Distribution Date and the
denominator of which is the aggregate outstanding Stated Principal Balance of
the Group I Mortgage Loans as of the first day of the month preceding the month
of such Distribution Date (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced,
and unscheduled collections of principal received during the related Prepayment
Period) and (y) a fraction, the numerator of which is 30 and the denominator of
which is the actual number of days elapsed in the related Interest Accrual
Period. For federal income tax purposes, the economic equivalent of such rate
shall be expressed as the weighted average of the REMIC II Remittance Rate on
REMIC II Regular Interest II-LT1SUB, weighted on the basis of the Uncertificated
Balance of such REMIC II Regular Interest.

                  For any Distribution Date with respect to the Class A-2
Certificates, a per annum rate equal to the product of (x)(A) the weighted
average of the Expense Adjusted Mortgage Rates of the Group II Mortgage Loans,
weighted based on their Stated Principal Balances as of the first day of the
calendar month preceding the month in which the Distribution Date occurs (after
giving effect to scheduled payments of principal due during the related Due
Period, to the extent received or advanced, and unscheduled collections of
principal received during the related Prepayment Period) less (B) the
Pass-Through Rate for the Class A-IO-2 Component for such Distribution Date
multiplied by a fraction, the numerator of which is the Notional Amount for the
Class A-IO-2 Component immediately prior to such Distribution Date and the
denominator of which is the aggregate outstanding Stated Principal Balance of
the Group II Mortgage Loans as of the first day of the month preceding the month
of such Distribution Date (after giving effect to scheduled


                                      -25-

<PAGE>



payments of principal due during the related Due Period, to the extent received
or advanced, and unscheduled collections of principal received during the
related Prepayment Period) and (y) a fraction, the numerator of which is 30 and
the denominator of which is the actual number of days elapsed in the related
Interest Accrual Period. For federal income tax purposes, the economic
equivalent of such rate shall be expressed as the weighted average of the REMIC
II Remittance Rate on REMIC II Regular Interest II-LT2SUB, weighted on the basis
of the Uncertificated Balance of such REMIC II Regular Interest.

                  For any Distribution Date with respect to the Mezzanine
Certificates, a per annum rate equal to the product of (x)(A) the weighted
average of the Expense Adjusted Mortgage Rates of the Mortgage Loans, weighted
based on their Stated Principal Balances as of the first day of the calendar
month preceding the month in which the Distribution Date occurs (after giving
effect to scheduled payments of principal due during the related Due Period, to
the extent received or advanced, and unscheduled collections of principal
received during the related Prepayment Period) less (B) the sum of (i) the
Pass-Through Rate for the Class A-IO-1 Component for such Distribution Date
multiplied by a fraction, the numerator of which is the Notional Amount for the
Class A-IO-1 Component immediately prior to such Distribution Date and the
denominator of which is the aggregate outstanding Stated Principal Balance of
the Mortgage Loans as of the first day of the month preceding the month of such
Distribution Date (after giving effect to scheduled payments of principal due
during the related Due Period, to the extent received or advanced, and
unscheduled collections of principal received during the related Prepayment
Period) and (ii) the Pass-Through Rate for the Class A-IO-2 Component for such
Distribution Date multiplied by a fraction, the numerator of which is the
Notional Amount for the Class A-IO-2 Component immediately prior to such
Distribution Date and the denominator of which is the aggregate outstanding
Stated Principal Balance of the Mortgage Loans as of the first day of the month
preceding the month of such Distribution Date (after giving effect to scheduled
payments of principal due during the related Due Period, to the extent received
or advanced, and unscheduled collections of principal received during the
related Prepayment Period), weighted in proportion to the results of subtracting
from the aggregate Stated Principal Balance of each Loan Group the Certificate
Principal Balance of the related Class of Class A Certificates, and (y) a
fraction, the numerator of which is 30 and the denominator of which is the
actual number of days elapsed in the related Interest Accrual Period. For
federal income tax purposes, the economic equivalent of such rate shall be
expressed as the weighted average of the REMIC II Remittance Rates on (a) REMIC
II Regular Interest II-LT1SUB, subject to a cap and a floor equal to the Expense
Adjusted Mortgage Rates of the Group I Mortgage Loans and (b) REMIC II Regular
Interest II-LT2SUB, subject to a cap and a floor equal to the Expense Adjusted
Mortgage Rates of the Group II Mortgage Loans, weighted on the basis of the
Uncertificated Balance of each such REMIC II Regular Interest.

                  For any Distribution Date with respect to the Class A-IO-1
Component, a per annum rate equal to the weighted average of the Expense
Adjusted Mortgage Rates of the Group I Mortgage Loans, weighted based on their
Stated Principal Balances as of the first day of the calendar month preceding
the month in which the Distribution Date occurs (after giving effect to
scheduled payments of principal due during the related Due Period, to the extent
received or advanced, and unscheduled collections of principal received during
the related Prepayment Period).

                  For any Distribution Date with respect to the Class A-IO-2
Component, a per annum


                                      -26-

<PAGE>



rate equal to the weighted average of the Expense Adjusted Mortgage Rates of the
Group II Mortgage Loans, weighted based on their Stated Principal Balances as of
the first day of the calendar month preceding the month in which the
Distribution Date occurs (after giving effect to scheduled payments of principal
due during the related Due Period, to the extent received or advanced, and
unscheduled collections of principal received during the related Prepayment
Period).

                  "Net WAC Rate Carryover Reserve Account": The account
established and maintained pursuant to Section 3.28.

                  "Net WAC Rate Carryover Amount": With respect to any Class of
Class A Certificates, the Class A-IO Certificates and any Class of Mezzanine
Certificates and any Distribution Date, the sum of (A) the positive excess of
(i) the amount of interest accrued on such Class of Certificates for such
Distribution Date at the related Pass-Through Rate for such Distribution Date
over (ii) the amount of interest accrued on such Class of Certificates at the
related Net WAC Pass-Through Rate for such Distribution Date and (B) the related
Net WAC Rate Carryover Amount for the previous Distribution Date not previously
paid, together with interest thereon at a rate equal to the related Pass-Through
Rate for such Class of Certificates for such Distribution Date.

                  "New Century Mortgage Loans": The Mortgage Loans serviced by
New Century pursuant to the terms of this Agreement.

                  "New Lease": Any lease of REO Property entered into on behalf
of REMIC I, including any lease renewed or extended on behalf of REMIC I, if
REMIC I has the right to renegotiate the terms of such lease.

                  "Nonrecoverable P&I Advance": Any P&I Advance previously made
or proposed to be made in respect of a Mortgage Loan or REO Property that, in
the good faith business judgment of the related Servicer, will not or, in the
case of a proposed P&I Advance, would not be ultimately recoverable from related
Late Collections, Insurance Proceeds or Liquidation Proceeds on such Mortgage
Loan or REO Property as provided herein.

                  "Nonrecoverable Servicing Advance": Any Servicing Advance
previously made or proposed to be made in respect of a Mortgage Loan or REO
Property that, in the good faith business judgment of the related Servicer, will
not or, in the case of a proposed Servicing Advance, would not be ultimately
recoverable from related Late Collections, Insurance Proceeds or Liquidation
Proceeds on such Mortgage Loan or REO Property as provided herein.

                  "Non-United States Person": Any Person other than a United
States Person.

                  "Notional Amount": With respect to the Class CE Certificates
and any Distribution Date, the Uncertificated Balance of the REMIC II Regular
Interests for such Distribution Date. With respect to the Class A-IO-1 Component
and any Distribution Date, an amount equal to the lesser of (a) $86,963,000 and
(b) the aggregate Stated Principal Balance of the Group I Mortgage Loans (prior
to giving effect to scheduled payments of principal due during the related Due
Period and unscheduled collections of principal received during the related
Prepayment Period). For federal


                                      -27-

<PAGE>



income tax purposes, the Notional Amount of the Class A-IO-1 Component is equal
to the Uncertificated Balance of REMIC II Regular Interest II-LTAIO1C.

                  With respect to the Class A-IO-2 Component and any
Distribution Date, an amount equal to the lesser of (a) $30,415,000 and (b) the
aggregate Stated Principal Balance of the Group II Mortgage Loans (prior to
giving effect to scheduled payments of principal due during the related Due
Period and unscheduled collections of principal received during the related
Prepayment Period). For federal income tax purposes, the Notional Amount of the
Class A-IO-2 Component is equal to the Uncertificated Balance of REMIC II
Regular Interest II-LTAIO2C.

                  "Ocwen Mortgage Loans": The Mortgage Loans serviced by Ocwen
pursuant to the terms of this Agreement.

                  "Officers' Certificate": A certificate signed by the Chairman
of the Board, the Vice Chairman of the Board, the President or a vice president
(however denominated), and by the Treasurer, the Secretary, or one of the
assistant treasurers or assistant secretaries of the Servicers, the Originator,
the Seller, NC Capital or the Depositor, as applicable.

                  "One-Month LIBOR": With respect to the Class A Certificates,
the Mezzanine Certificates and for purposes of the Formula Rate, REMIC I Regular
Interest I-LTA1, REMIC I Regular Interest I-LTA2, REMIC I Regular Interest
I-LTM1, REMIC I Regular Interest I-LTM2, REMIC I Regular Interest I-LTM3 and
REMIC I Regular Interest I-LTM4 and any Interest Accrual Period therefor, the
rate determined by the Trustee on the related Interest Determination Date on the
basis of the offered rate for one-month U.S. dollar deposits, as such rate
appears on Telerate Page 3750 as of 11:00 a.m. (London time) on such Interest
Determination Date; provided that if such rate does not appear on Telerate Page
3750, the rate for such date will be determined on the basis of the offered
rates of the Reference Banks for one-month U.S. dollar deposits, as of 11:00
a.m. (London time) on such Interest Determination Date. In such event, the
Trustee will request the principal London office of each of the Reference Banks
to provide a quotation of its rate. If on such Interest Determination Date, two
or more Reference Banks provide such offered quotations, One-Month LIBOR for the
related Interest Accrual Period shall be the arithmetic mean of such offered
quotations (rounded upwards if necessary to the nearest whole multiple of
1/16%). If on such Interest Determination Date, fewer than two Reference Banks
provide such offered quotations, One-Month LIBOR for the related Interest
Accrual Period shall be the higher of (i) LIBOR as determined on the previous
Interest Determination Date and (ii) the Reserve Interest Rate. Notwithstanding
the foregoing, if, under the priorities described above, LIBOR for an Interest
Determination Date would be based on LIBOR for the previous Interest
Determination Date for the third consecutive Interest Determination Date, the
Trustee, after consultation with the Depositor, shall select an alternative
comparable index (over which the Trustee has no control), used for determining
one-month Eurodollar lending rates that is calculated and published (or
otherwise made available) by an independent party.

                  "Opinion of Counsel": A written opinion of counsel, who may,
without limitation, be salaried counsel for the Depositor or either Servicer,
acceptable to the Trustee, except that any opinion of counsel relating to (a)
the qualification of any Trust REMIC as a REMIC or (b) compliance with the REMIC
Provisions, must be an opinion of Independent counsel.


                                      -28-

<PAGE>




                  "Original Mortgage Loan": Any of the Mortgage Loans included
in REMIC I as of the Closing Date.

                  "Originator": New Century Mortgage Corporation, or its
successor in interest, in its capacity as originator.

                  "Overcollateralization Deficiency Amount": With respect to any
Distribution Date, the excess, if any, of (a) the Overcollateralization Target
Amount applicable to such Distribution Date over (b) the Overcollateralized
Amount applicable to such Distribution Date (calculated for this purpose only,
after taking into account the distributions to be made of the Principal
Remittance Amount on such Distribution Date).

                  "Overcollateralization Increase Amount": With respect to any
Distribution Date, the lesser of (a) the Overcollateralization Deficiency Amount
as of such Distribution Date (after taking into account the payment of the Group
I Principal Distribution Amount and the Group II Principal Distribution Amount
on such Distribution Date, exclusive of the payment of any Overcollateralization
Increase Amount) and (b) the amount of Accrued Certificate Interest payable on
the Class CE Certificates on such Distribution Date as reduced by Realized
Losses allocated thereto with respect to such Distribution Date pursuant to
Section 4.04.

                  "Overcollateralization Reduction Amount": With respect to any
Distribution Date, an amount equal to the lesser of (a) the Excess
Overcollateralized Amount and (b) the Principal Remittance Amount.

                  "Overcollateralization Target Amount": With respect to any
Distribution Date (i) prior to the Stepdown Date, 2.10% of the aggregate Stated
Principal Balance of the Mortgage Loans as of the Cut-off Date, (ii) on or after
the Stepdown Date provided a Trigger Event is not in effect, the greater of (x)
4.20% of the aggregate Stated Principal Balance of the Mortgage Loans as of the
last day of the related Due Period and (y) $5,868,907, (iii) on or after the
Stepdown Date and if a Trigger Event is in effect, the Overcollateralization
Target Amount for the immediately preceding Distribution Date.

                  "Overcollateralized Amount": With respect to any Distribution
Date, the excess, if any, of (a) the aggregate Stated Principal Balances of the
Mortgage Loans and REO Properties immediately following such Distribution Date
(after giving effect to scheduled payments of principal due during the related
Due Period, to the extent received or advanced, and unscheduled collections of
principal received during the related Prepayment Period) over (b) the sum of the
aggregate Certificate Principal Balances of the Class A Certificates, the
Mezzanine Certificates and the Class P Certificates as of such Distribution Date
(after taking into account the payment of the amounts described in clauses (i)
through (iv) of the definition of Group I Principal Distribution Amount and
Group II Principal Distribution Amount on such Distribution Date).

                  "Ownership Interest": As to any Certificate, any ownership or
security interest in such Certificate, including any interest in such
Certificate as the Holder thereof and any other interest therein, whether direct
or indirect, legal or beneficial, as owner or as pledgee.


                                      -29-

<PAGE>



                  "Pass-Through Rate": With respect to the Class A Certificates
and the Mezzanine Certificates and any Distribution Date, a rate per annum equal
to the lesser of (i) the related Formula Rate for such Distribution Date and
(ii) the related Net WAC Pass-Through Rate for such Distribution Date.

                  With respect to the Class A-IO-1 Component and any
Distribution Date, the lesser of (i) (a) 5.50% per annum (with respect to the
1st Interest Accrual Period through the 10th Interest Accrual Period), (b) 4.50%
per annum (with respect to the 11th Interest Accrual Period through the 20th
Interest Accrual Period) and (c) 3.50% per annum (with respect to the 21st
Interest Accrual Period through the 24th Interest Accrual Period) and (ii) the
related Net WAC Pass-Through Rate for such Distribution Date.

                  With respect to the Class A-IO-2 Component and any
Distribution Date, the lesser of (i) (a) 5.50% per annum (with respect to the
1st Interest Accrual Period through the 10th Interest Accrual Period), (b) 4.50%
per annum (with respect to the 11th Interest Accrual Period through the 20th
Interest Accrual Period) and (c) 3.50% per annum (with respect to the 21st
Interest Accrual Period through the 24th Interest Accrual Period) and (ii) the
related Net WAC Pass-Through Rate for such Distribution Date.

                  With respect to the Class CE Certificates and any Distribution
Date, a rate per annum equal to the percentage equivalent of a fraction, the
numerator of which is the sum of the amounts calculated pursuant to clauses (A)
through (I) below, and the denominator of which is the Uncertificated Balance of
the REMIC II Regular Interests. For purposes of calculating the Pass- Through
Rate for the Class CE Certificates, the numerator is equal to the sum of the
following components:

                  (A) the REMIC II Remittance Rate for REMIC II Regular Interest
         II-LTAA minus the Marker Rate, applied to an amount equal to the
         Uncertificated Balance of REMIC II Regular Interest II-LTAA;

                  (B) the REMIC II Remittance Rate for REMIC II Regular Interest
         II-LTA1 minus the Marker Rate, applied to an amount equal to the
         Uncertificated Balance of REMIC II Regular Interest II-LTA1;

                  (C) the REMIC II Remittance Rate for REMIC II Regular Interest
         II-LTA2 minus the Marker Rate, applied to an amount equal to the
         Uncertificated Balance of REMIC II Regular Interest II-LTA2;

                  (D) the REMIC II Remittance Rate for REMIC II Regular Interest
         II-LTM1 minus the Marker Rate, applied to an amount equal to the
         Uncertificated Balance of REMIC II Regular Interest II-LTM1;

                  (E) the REMIC II Remittance Rate for REMIC II Regular Interest
         II-LTM2 minus the Marker Rate, applied to an amount equal to the
         Uncertificated Balance of REMIC II Regular Interest II-LTM2;


                                      -30-

<PAGE>




                  (F) the REMIC II Remittance Rate for REMIC II Regular Interest
         II-LTM3 minus the Marker Rate, applied to an amount equal to the
         Uncertificated Balance of REMIC II Regular Interest II-LTM3;

                  (G) the REMIC II Remittance Rate for REMIC II Regular Interest
         II-LTM4 minus the Marker Rate, applied to an amount equal to the
         Uncertificated Balance of REMIC II Regular Interest II-LTM4;

                  (H) the REMIC II Remittance Rate for REMIC II Regular Interest
         II-LTZZ minus the Marker Rate, applied to an amount equal to the
         Uncertificated Balance of REMIC II Regular Interest II-LTZZ; and

                  (I) 100% of the interest on REMIC II Regular Interest II-LTP.

                  "Percentage Interest": With respect to any Class of
Certificates (other than the Residual Certificates), the undivided percentage
ownership in such Class evidenced by such Certificate, expressed as a
percentage, the numerator of which is the initial Certificate Principal Balance
or Notional Amount represented by such Certificate and the denominator of which
is the aggregate initial Certificate Principal Balance or Notional Amount of all
of the Certificates of such Class. The Class A Certificates and the Mezzanine
Certificates are issuable only in minimum Percentage Interests corresponding to
minimum initial Certificate Principal Balances of $50,000 and integral multiples
of $1.00 in excess thereof. The Class A-IO Certificates are issuable only in
minimum Percentage Interests corresponding to minimum initial Notional Amounts
of $50,000 and integral multiples of $1.00 in excess thereof. The Class P
Certificates are issuable only in Percentage Interests corresponding to initial
Certificate Principal Balances of $20 and integral multiples thereof. The Class
CE Certificates are issuable only in minimum Percentage Interests corresponding
to minimum initial Certificate Principal Balances of $50,000 and integral
multiples of $1.00 in excess thereof; provided, however, that a single
Certificate of each such Class of Certificates may be issued having a Percentage
Interest corresponding to the remainder of the aggregate initial Certificate
Principal Balance or Notional Amount of such Class or to an otherwise authorized
denomination for such Class plus such remainder. With respect to any Residual
Certificate, the undivided percentage ownership in such Class evidenced by such
Certificate, as set forth on the face of such Certificate. The Residual
Certificates are issuable in Percentage Interests of 20% and multiples thereof.

                  "Periodic Rate Cap": With respect to each Adjustable-Rate
Mortgage Loan and any Adjustment Date therefor, the fixed percentage set forth
in the related Mortgage Note, which is the maximum amount by which the Mortgage
Rate for such Mortgage Loan may increase or decrease (without regard to the
Maximum Mortgage Rate or the Minimum Mortgage Rate) on such Adjustment Date from
the Mortgage Rate in effect immediately prior to such Adjustment Date.

                  "Permitted Investments": Any one or more of the following
obligations or securities acquired at a purchase price of not greater than par,
regardless of whether issued by the Depositor, either Servicer, the Trustee or
any of their respective Affiliates:

                  (i) direct obligations of, or obligations fully guaranteed
         as to timely payment of


                                      -31-

<PAGE>



         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) demand and time deposits in, certificates of deposit of,
         or bankers' acceptances issued by, any Depository Institution;

                  (iii) repurchase obligations with respect to any security
         described in clause (i) above entered into with a Depository
         Institution (acting as principal);

                  (iv) securities bearing interest or sold at a discount that
         are issued by any corporation incorporated under the laws of the United
         States of America or any state thereof and that are rated by each
         Rating Agency that rates such securities in its highest long-term
         unsecured rating categories at the time of such investment or
         contractual commitment providing for such investment;

                  (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 30 days after the date of
         acquisition thereof) that is rated by each Rating Agency that rates
         such securities in its highest short-term unsecured debt rating
         available at the time of such investment;

                  (vi)     units of money market funds that have been rated
         "AAA" by Fitch (if rated by Fitch) and "AAAm" or "AAAm-G" by S&P; and

                  (viii) if previously confirmed in writing to the Trustee, any
         other demand, money market or time deposit, or any other obligation,
         security or investment, as may be acceptable to the Rating Agencies as
         a permitted investment of funds backing securities having ratings
         equivalent to its highest initial rating of the Class A Certificates;

provided, however, that no instrument described hereunder shall evidence either
the right to receive (a) only interest with respect to the obligations
underlying such instrument or (b) both principal and interest payments derived
from obligations underlying such instrument and the interest and principal
payments with respect to such instrument provide a yield to maturity at par
greater than 120% of the yield to maturity at par of the underlying obligations.

                  "Permitted Transferee": Any Transferee of a Residual
Certificate other than a Disqualified Organization or Non-United States Person.

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

                  "P&I Advance": As to any Mortgage Loan or REO Property, any
advance made by the related Servicer in respect of any Distribution Date
pursuant to Section 4.03.

                  "Plan": Any employee benefit plan or certain other retirement
plans and


                                      -32-

<PAGE>



arrangements, including individual retirement accounts and annuities, Keogh
plans and bank collective investment funds and insurance company general or
separate accounts in which such plans, accounts or arrangements are invested,
that are subject to ERISA or Section 4975 of the Code.

                  "Prepayment Assumption": A prepayment rate for the Mortgage
Loans of 28% CPR. The Prepayment Assumption is used solely for determining the
accrual of original issue discount on the Certificates for federal income tax
purposes. A CPR (or Constant Prepayment Rate) represents an annualized constant
assumed rate of prepayment each month of a pool of mortgage loans relative to
its outstanding principal balance for the life of such pool.

                  "Prepayment Charge": With respect to any Prepayment Period,
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 (other than any Servicer Prepayment Charge Payment
Amount).

                  "Prepayment Charge Schedule": As of any date, the list of
Prepayment Charges on the Mortgage Loans included in REMIC I on such date,
attached hereto as Schedule 2 (including the Prepayment Charge Summary attached
thereto). The Prepayment Charge Schedule shall set forth the following
information with respect to each related Mortgage Loan:

                  (i)      the Mortgage Loan identifying number;

                  (ii)     a code indicating the type of Prepayment Charge;

                  (iii)    the state of origination of the related Mortgage
                           Loan;

                  (iv)     the date on which the first monthly payment was due
                           on the related Mortgage Loan;

                  (v)      the term of the related Mortgage Loan; and

                  (vi)     the principal balance of the related Mortgage Loan
                           as of the Cut-off Date.

                  The Prepayment Charge Schedule shall be amended from time to
time by the Depositor in accordance with the provisions of this Agreement.

                  "Prepayment Interest Excess": With respect to any Distribution
Date, for each Ocwen Mortgage Loan that was the subject of a Principal
Prepayment in full or in part during the portion of the related Prepayment
Period occurring between the first day of the calendar month in which such
Distribution Date occurs and the Determination Date of the calendar month in
which such Distribution Date occurs, an amount equal to interest (to the extent
received) at the applicable Net Mortgage 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 Distribution Date occurs and ending on the last date through
which interest is collected from the related Mortgagor. Ocwen may withdraw such
Prepayment Interest Excess from the Collection Account in accordance with
Section 3.11(a)(x).



                                      -33-

<PAGE>



                  "Prepayment Interest Shortfall": With respect to any
Distribution Date and the New Century Mortgage Loans, for each such Mortgage
Loan that was during the related Prepayment Period the subject of a Principal
Prepayment in full or in part that was applied by New Century to reduce the
outstanding principal balance of such loan on a date preceding the Due Date in
the succeeding Prepayment Period, an amount equal to interest at the applicable
Net Mortgage 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 related Prepayment Period. With respect to any Distribution Date
and the Ocwen Mortgage Loans, for each such Mortgage Loan that was the subject
of a Principal Prepayment in full or in part 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
Distribution Date occurs that was applied by Ocwen to reduce the outstanding
principal balance of such loan on a date preceding the Due Date in the
succeeding Prepayment Period, an amount equal to interest at the applicable Net
Mortgage 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 Distribution Date. The obligations of
each Servicer in respect of any Prepayment Interest Shortfall are set forth in
Section 3.24.

                  "Prepayment Period": With respect to any Distribution Date and
the New Century Mortgage Loans, the calendar month preceding the calendar month
in which such Distribution Date occurs. With respect to any Distribution Date
and the Ocwen Mortgage Loans, the period commencing on the day after the
Determination Date in the calendar month preceding the calendar month in which
such Distribution Date occurs (or, in the case of the first Distribution Date,
commencing on March 1, 2003) and ending on the Determination Date of the
calendar month in which such Distribution Date occurs.

                  "Principal Prepayment": Any payment of principal made by the
Mortgagor on a Mortgage Loan which is received in advance of its scheduled Due
Date and which is not accompanied by an amount of interest representing the full
amount of scheduled interest due on any Due Date in any month or months
subsequent to the month of prepayment.

                  "Principal Remittance Amount": With respect to any
Distribution Date, the sum of (i) the Group I Principal Remittance Amount and
(ii) the Group II Principal Remittance Amount.

                  "Purchase Price": With respect to any Mortgage Loan or REO
Property to be purchased pursuant to or as contemplated by Section 2.03, Section
3.16(c), Section 3.16(e) or Section 9.01, and as confirmed by an Officers'
Certificate from the related Servicer to the Trustee, an amount equal to the sum
of (i) 100% of the Stated Principal Balance thereof as of the date of purchase
(or such other price as provided in Section 9.01), (ii) in the case of (x) a
Mortgage Loan, accrued interest on such Stated Principal Balance at the
applicable Mortgage Rate in effect from time to time from the Due Date as to
which interest was last covered by a payment by the Mortgagor or an advance by
the related Servicer, which payment or advance had as of the date of purchase
been distributed pursuant to Section 4.01, through the end of the calendar month
in which the purchase is to be effected and (y) an REO Property, the sum of (1)
accrued interest on such Stated Principal Balance at the applicable Mortgage
Rate in effect from time to time from the Due Date as to which interest was last
covered by a payment by the Mortgagor or an advance by the related Servicer


                                      -34-

<PAGE>



through the end of the calendar month immediately preceding the calendar month
in which such REO Property was acquired, plus (2) REO Imputed Interest for such
REO Property for each calendar month commencing with the calendar month in which
such REO Property was acquired and ending with the calendar month in which such
purchase is to be effected, net of the total of all net rental income, Insurance
Proceeds, Liquidation Proceeds and P&I Advances that as of the date of purchase
had been distributed as or to cover REO Imputed Interest pursuant to Section
4.01, (iii) any unreimbursed Servicing Advances and P&I Advances (including
Nonrecoverable P&I Advances and Nonrecoverable Servicing Advances) and any
unpaid Servicing Fees allocable to such Mortgage Loan or REO Property, (iv) any
amounts previously withdrawn from the Collection Account in respect of such
Mortgage Loan or REO Property pursuant to Section 3.11(a)(ix) and Section
3.16(b), and (v) in the case of a Mortgage Loan required to be purchased
pursuant to Section 2.03, expenses reasonably incurred or to be incurred by the
related Servicer or the Trustee in respect of the breach or defect giving rise
to the purchase obligation.

                  "Qualified Substitute Mortgage Loan": A mortgage loan
substituted for a Deleted Mortgage Loan pursuant to the terms of this Agreement
which must, on the date of such substitution, (i) have an outstanding principal
balance, after application of all scheduled payments of principal and interest
due during or prior to the month of substitution, not in excess of the Scheduled
Principal Balance of the Deleted Mortgage Loan as of the Due Date in the
calendar month during which the substitution occurs, (ii) have a Mortgage Rate
not less than (and not more than one percentage point in excess of) the Mortgage
Rate of the Deleted Mortgage Loan, (iii) with respect to any Adjustable- Rate
Mortgage Loan, have a Maximum Mortgage Rate not less than the Maximum Mortgage
Rate on the Deleted Mortgage Loan, (iv) with respect to any Adjustable-Rate
Mortgage Loan, have a Minimum Mortgage Rate not less than the Minimum Mortgage
Rate of the Deleted Mortgage Loan, (v) with respect to any Adjustable-Rate
Mortgage Loan, have a Gross Margin equal to the Gross Margin of the Deleted
Mortgage Loan, (vi) with respect to any Adjustable-Rate Mortgage Loan, have a
next Adjustment Date not more than two months later than the next Adjustment
Date on the Deleted Mortgage Loan, (vii) have a remaining term to maturity not
greater than (and not more than one year less than) that of the Deleted Mortgage
Loan, (viii) have the same Due Date as the Due Date on the Deleted Mortgage
Loan, (ix) have a Loan-to-Value Ratio as of the date of substitution equal to or
lower than the Loan-to-Value Ratio of the Deleted Mortgage Loan as of such date,
(x) have a risk grading determined by the Originator at least equal to the risk
grading assigned on the Deleted Mortgage Loan, (xi) [reserved] and (xii) conform
to each representation and warranty set forth in Section 6 of the Mortgage Loan
Purchase Agreement applicable to the Deleted Mortgage Loan. In the event that
one or more mortgage loans are substituted for one or more Deleted Mortgage
Loans, the amounts described in clause (i) hereof shall be determined on the
basis of aggregate principal balances, the Mortgage Rates described in clause
(ii) hereof shall be determined on the basis of weighted average Mortgage Rates,
the terms described in clause (vii) hereof shall be determined on the basis of
weighted average remaining term to maturity, the Loan-to-Value Ratios described
in clause (ix) hereof shall be satisfied as to each such mortgage loan, the risk
gradings described in clause (x) hereof shall be satisfied as to each such
mortgage loan and, except to the extent otherwise provided in this sentence, the
representations and warranties described in clause (xii) hereof must be
satisfied as to each Qualified Substitute Mortgage Loan or in the aggregate, as
the case may be.

                  "Rate/Term Refinancing": A Refinanced Mortgage Loan, the
proceeds of which are not more than a nominal amount in excess of the existing
first mortgage loan and any subordinate


                                      -35-

<PAGE>



mortgage loan on the related Mortgaged Property and related closing costs, and
were used exclusively (except for such nominal amount) to satisfy the then
existing first mortgage loan and any subordinate mortgage loan of the Mortgagor
on the related Mortgaged Property and to pay related closing costs.

                  "Rating Agency or Rating Agencies": Fitch, Moody's and S&P or
their successors. If such agencies or their successors are no longer in
existence, "Rating Agencies" shall be such nationally recognized statistical
rating agencies, or other comparable Persons, designated by the Depositor,
notice of which designation shall be given to the Trustee and the Servicers.

                  "Realized Loss": With respect to each Mortgage Loan as to
which a Final Recovery Determination has been made, an amount (not less than
zero) equal to (i) the unpaid principal balance of such Mortgage Loan as of the
commencement of the calendar month in which the Final Recovery Determination was
made, plus (ii) accrued interest from the Due Date as to which interest was last
paid by the Mortgagor through the end of the calendar month in which such Final
Recovery Determination was made, calculated in the case of each calendar month
during such period (A) at an annual rate equal to the annual rate at which
interest was then accruing on such Mortgage Loan and (B) on a principal amount
equal to the Stated Principal Balance of such Mortgage Loan as of the close of
business on the Distribution Date during such calendar month, plus (iii) any
amounts previously withdrawn from the Collection Account in respect of such
Mortgage Loan pursuant to Section 3.11(a)(ix) and Section 3.16(b), minus (iv)
the proceeds, if any, received in respect of such Mortgage Loan during the
calendar month in which such Final Recovery Determination was made, net of
amounts that are payable therefrom to the related Servicer with respect to such
Mortgage Loan pursuant to Section 3.11(a)(iii).

                  With respect to any REO Property as to which a Final Recovery
Determination has been made, an amount (not less than zero) equal to (i) the
unpaid principal balance of the related Mortgage Loan as of the date of
acquisition of such REO Property on behalf of REMIC I, plus (ii) accrued
interest from the Due Date as to which interest was last paid by the Mortgagor
in respect of the related Mortgage Loan through the end of the calendar month
immediately preceding the calendar month in which such REO Property was
acquired, calculated in the case of each calendar month during such period (A)
at an annual rate equal to the annual rate at which interest was then accruing
on the related Mortgage Loan and (B) on a principal amount equal to the Stated
Principal Balance of the related Mortgage Loan as of the close of business on
the Distribution Date during such calendar month, plus (iii) REO Imputed
Interest for such REO Property for each calendar month commencing with the
calendar month in which such REO Property was acquired and ending with the
calendar month in which such Final Recovery Determination was made, plus (iv)
any amounts previously withdrawn from the Collection Account in respect of the
related Mortgage Loan pursuant to Section 3.11(a)(ix) and Section 3.16(b), minus
(v) the aggregate of all P&I Advances and Servicing Advances (in the case of
Servicing Advances, without duplication of amounts netted out of the rental
income, Insurance Proceeds and Liquidation Proceeds described in clause (vi)
below) made by the related Servicer in respect of such REO Property or the
related Mortgage Loan for which such Servicer has been or, in connection with
such Final Recovery Determination, will be reimbursed pursuant to Section 3.23
out of rental income, Insurance Proceeds and Liquidation Proceeds received in
respect of such REO Property, minus (vi) the total of all net rental income,
Insurance Proceeds and Liquidation Proceeds received in respect of such REO
Property that has


                                      -36-

<PAGE>



been, or in connection with such Final Recovery Determination, will be
transferred to the Distribution Account pursuant to Section 3.23.

                  With respect to each Mortgage Loan which has become the
subject of a Deficient Valuation, the difference between the principal balance
of the Mortgage Loan outstanding immediately prior to such Deficient Valuation
and the principal balance of the Mortgage Loan as reduced by the Deficient
Valuation.

                  With respect to each Mortgage Loan which has become the
subject of a Debt Service Reduction, the portion, if any, of the reduction in
each affected Monthly Payment attributable to a reduction in the Mortgage Rate
imposed by a court of competent jurisdiction. Each such Realized Loss shall be
deemed to have been incurred on the Due Date for each affected Monthly Payment.

                  "Record Date": With respect to each Distribution Date and any
Book-Entry Certificate (other than the Class A-IO Certificates), the Business
Day immediately preceding such Distribution Date. With respect to each
Distribution Date and the Class A-IO Certificates and any other Certificates,
including any Definitive Certificates, the last Business Day of the month
immediately preceding the month in which such Distribution Date occurs.

                  "Reference Banks": Deutsche Bank AG, Barclay's Bank PLC, The
Tokyo Mitsubishi Bank and National Westminster Bank PLC and their successors in
interest; provided, however, that if any of the foregoing banks are not suitable
to serve as a Reference Bank, then any leading banks selected by the Trustee,
after consultation with the Depositor, which are engaged in transactions in
Eurodollar deposits in the international Eurocurrency market (i) with an
established place of business in London and (ii) not controlling, under the
control of or under common control with the Depositor or any Affiliate thereof.

                  "Refinanced Mortgage Loan": A Mortgage Loan the proceeds of
which were not used to purchase the related Mortgaged Property.

                  "Regular Certificate": Any Class A Certificate, Class A-IO
Certificate, Mezzanine Certificate, Class CE Certificate or Class P Certificate.

                  "Regular Interest": A "regular interest" in a REMIC within the
meaning of Section 860G(a)(1) of the Code.

                  "Relief Act": The Soldiers' and Sailors' Civil Relief Act of
1940, as amended.

                  "Relief Act Interest Shortfall": With respect to any
Distribution Date and any Mortgage Loan, any reduction in the amount of interest
collectible on such Mortgage Loan for the most recently ended calendar month as
a result of the application of the Relief Act.

                  "REMIC": A "real estate mortgage investment conduit" within
the meaning of Section 860D of the Code.

                  "REMIC I": The segregated pool of assets subject hereto,
constituting the primary


                                      -37-

<PAGE>



trust created hereby and to be administered hereunder, with respect to which a
REMIC election is to be made, consisting of: (i) such Mortgage Loans and
Prepayment Charges as from time to time are subject to this Agreement, together
with the Mortgage Files relating thereto, and together with all collections
thereon and proceeds thereof; (ii) any REO Property, together with all
collections thereon and proceeds thereof; (iii) the Trustee's rights with
respect to the Mortgage Loans under all insurance policies required to be
maintained pursuant to this Agreement and any proceeds thereof; (iv) the
Depositor's rights under the Mortgage Loan Purchase Agreement (including any
security interest created thereby); and (v) the Collection Account (other than
any amounts representing any Servicer Prepayment Charge Payment Amount), the
Distribution Account (other than any amounts representing any Servicer
Prepayment Charge Payment Amount) and any REO Account, and such assets that are
deposited therein from time to time and any investments thereof, together with
any and all income, proceeds and payments with respect thereto. Notwithstanding
the foregoing, however, REMIC I specifically excludes the Net WAC Rate Carryover
Reserve Account, all payments and other collections of principal and interest
due on the Mortgage Loans on or before the Cut-off Date and all Prepayment
Charges payable in connection with Principal Prepayments made before the Cut-off
Date.

                  "REMIC I Regular Interest": Any of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a "regular interest" in REMIC I. Each REMIC I Regular Interest
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto. The
designations for the respective REMIC I Regular Interests are set forth in the
Preliminary Statement hereto.

                  "REMIC I Regular Interest I-LT1": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT1
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                  "REMIC I Regular Interest I-LT2": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT2
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                  "REMIC I Regular Interest I-LTAIO1": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTAIO1
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.



                                      -38-

<PAGE>



                  "REMIC I Regular Interest I-LTAIO2": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTAIO2
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                  "REMIC I Regular Interest I-LTP": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTP
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time and shall be entitled to any Prepayment Charges collected by the
Servicers and to a distribution of principal, subject to the terms and
conditions hereof, in an aggregate amount equal to its initial Uncertificated
Balance as set forth in the Preliminary Statement hereto.

                  "REMIC I Remittance Rate": With respect to REMIC I Regular
Interest I-LT1, REMIC I Regular Interest I-LTAIO1 and REMIC I Regular Interest
I-LTP, the weighted average of the Expense Adjusted Mortgage Rates of the Group
I Mortgage Loans. With respect to REMIC I Regular Interest I-LT2 and REMIC I
Regular Interest I-LTAIO2, the weighted average of the Expense Adjusted Mortgage
Rates of the Group II Mortgage Loans.

                  "REMIC II": The segregated pool of assets consisting of all of
the REMIC I Regular Interests conveyed in trust to the Trustee for the benefit
of the Class R-II Interest pursuant to Section 2.08, and all amounts deposited
therein, with respect to which a separate REMIC election is to be made.

                  "REMIC II Interest Loss Allocation Amount": With respect to
any Distribution Date, an amount (subject to adjustment based on the actual
number of days elapsed in the respective Interest Accrual Periods for the
indicated Regular Interests for such Distribution Date) equal to (a) the product
of (i) the aggregate Stated Principal Balance of the Mortgage Loans and REO
Properties then outstanding and (ii) the REMIC I Remittance Rate for REMIC II
Regular Interest II-LTAA minus the Marker Rate, divided by (b) 12.

                  "REMIC II Marker Allocation Percentage": 50% of any amount
payable or loss attributable from the Mortgage Loans, which shall be allocated
to REMIC II Regular Interest II- LTAA, REMIC II Regular Interest II-LTA1, REMIC
II Regular Interest II-LTA1, REMIC II Regular Interest II-LTM1, REMIC II Regular
Interest II-LTM2, REMIC II Regular Interest II-LTM3, REMIC II Regular Interest
II-LTM4 and REMIC II Regular Interest II-LTZZ.

                  "REMIC II Overcollateralized Amount": With respect to any date
of determination, (i) 0.50% of the aggregate Uncertificated Balances of the
REMIC II Regular Interests minus (ii) the aggregate of the Uncertificated
Balances of REMIC II Regular Interest II-LTA1, REMIC II Regular Interest
II-LTA2, REMIC II Regular Interest II-LTM1, REMIC II Regular Interest II-LTM2,
REMIC II Regular Interest II-LTM3, REMIC II Regular Interest II-LTM4 and REMIC
II Regular Interest II- LTP, in each case as of such date of determination.

                  "REMIC II Principal Loss Allocation Amount": With respect to
any Distribution


                                      -39-

<PAGE>



Date, an amount equal to the product of (i) the aggregate Stated Principal
Balance of the Mortgage Loans and REO Properties then outstanding and (ii) 1
minus a fraction, the numerator of which is two times the aggregate of the
Uncertificated Balances of REMIC II Regular Interest II- LTA1,REMIC II Regular
Interest II-LTA2, REMIC II Regular Interest II-LTM1, REMIC II Regular Interest
II-LTM2, REMIC II Regular Interest II-LTM3 and REMIC II Regular Interest II-LTM4
and the denominator of which is the aggregate of the Uncertificated Balances of
REMIC II Regular Interest II-LTA1, REMIC II Regular Interest II-LTA2, REMIC II
Regular Interest II-LTM1, REMIC II Regular Interest II-LTM2, REMIC II Regular
Interest II-LTM3, REMIC II Regular Interest II- LTM4 and REMIC II Regular
Interest II-LTZZ.

                  "REMIC II Regular Interest": Any of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a "regular interest" in REMIC II. Each REMIC II Regular Interest
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time or shall otherwise be entitled to interest as set forth herein, and
shall be entitled to distributions of principal, subject to the terms and
conditions hereof, in an aggregate amount equal to its initial Uncertificated
Balance as set forth in the Preliminary Statement hereto. The designations for
the respective REMIC I Regular Interests are set forth in the Preliminary
Statement hereto.

                  "REMIC II Regular Interest II-LTAA": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC I. REMIC II Regular Interest II-LTAA
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                  "REMIC II Regular Interest II-LTAIO1A": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest
II-LTAIO1A shall accrue interest at the related REMIC II Remittance Rate in
effect from time to time, on its Uncertificated Notional Amount. REMIC II
Regular Interest II-LTAIO1A has no Uncertificated Balance and is not entitled to
distributions of principal.

                  "REMIC II Regular Interest II-LTAIO1B": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest
II-LTAIO1B shall accrue interest at the related REMIC II Remittance Rate in
effect from time to time, on its Uncertificated Notional Amount. REMIC II
Regular Interest II-LTAIO1A has no Uncertificated Balance and is not entitled to
distributions of principal.

                  "REMIC II Regular Interest II-LTAIO1C": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest
II-LTAIO1C shall accrue interest at the related REMIC II Remittance Rate in
effect from time to time, on its Uncertificated Notional Amount. REMIC II
Regular Interest II-LTAIO1A has no Uncertificated Balance and is not entitled to
distributions of principal.


                                      -40-

<PAGE>



                  "REMIC II Regular Interest II-LTAIO2A": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest
II-LTAIO2A shall accrue interest at the related REMIC II Remittance Rate in
effect from time to time, on its Uncertificated Notional Amount. REMIC II
Regular Interest II-LTAIO1A has no Uncertificated Balance and is not entitled to
distributions of principal.

                  "REMIC II Regular Interest II-LTAIO2B": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest
II-LTAIO2B shall accrue interest at the related REMIC II Remittance Rate in
effect from time to time, on its Uncertificated Notional Amount. REMIC II
Regular Interest II-LTAIO1A has no Uncertificated Balance and is not entitled to
distributions of principal.

                  "REMIC II Regular Interest II-LTAIO2C": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest
II-LTAIO2C shall accrue interest at the related REMIC II Remittance Rate in
effect from time to time, on its Uncertificated Notional Amount. REMIC II
Regular Interest II-LTAIO1A has no Uncertificated Balance and is not entitled to
distributions of principal.

                  "REMIC II Regular Interest II-LTA1": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LTA1
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                  "REMIC II Regular Interest II-LTA2": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LTA2
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                  "REMIC II Regular Interest II-LTM1": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LTM1
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                  "REMIC II Regular Interest II-LTM2": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LTM2
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and


                                      -41-

<PAGE>



conditions hereof, in an aggregate amount equal to its initial Uncertificated
Balance as set forth in the Preliminary Statement hereto.

                  "REMIC II Regular Interest II-LTM3": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LTM3
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                  "REMIC II Regular Interest II-LTM4": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LTM4
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                  "REMIC II Regular Interest II-LTXX": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LTXX
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                  "REMIC II Regular Interest II-LTZZ": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LTZZ
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                  "REMIC II Regular Interest II-LTP": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LTP
shall be entitled to any Prepayment Charges collected by the Servicers and to a
distribution of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Balance as set forth in the
Preliminary Statement hereto.

                  "REMIC II Regular Interest II-LT1SUB": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest
II-LT1SUB shall accrue interest at the related REMIC II Remittance Rate in
effect from time to time, and shall be entitled to distributions of principal,
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Balance as set forth in the Preliminary Statement hereto.

                  "REMIC II Regular Interest II-LT1GRP": One of the separate
non-certificated


                                      -42-

<PAGE>



beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in REMIC II. REMIC II Regular Interest II-LT1GRP shall accrue
interest at the related REMIC II Remittance Rate in effect from time to time,
and shall be entitled to distributions of principal, subject to the terms and
conditions hereof, in an aggregate amount equal to its initial Uncertificated
Balance as set forth in the Preliminary Statement hereto.

                  "REMIC II Regular Interest II-LT2SUB": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest
II-LT2SUB shall accrue interest at the related REMIC II Remittance Rate in
effect from time to time, and shall be entitled to distributions of principal,
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Balance as set forth in the Preliminary Statement hereto.

                  "REMIC II Regular Interest II-LT2GRP": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest
II-LT2GRP shall accrue interest at the related REMIC II Remittance Rate in
effect from time to time, and shall be entitled to distributions of principal,
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Balance as set forth in the Preliminary Statement hereto.

                  "REMIC II Remittance Rate": With respect to REMIC II Regular
Interest II-LTAA, REMIC II Regular Interest II-LTA1, REMIC II Regular Interest
II-LTA2, REMIC II Regular Interest II-LTM1, REMIC II Regular Interest II-LTM2,
REMIC II Regular Interest II-LTM3, REMIC II Regular Interest II-LTM4, REMIC II
Regular Interest II-LTZZ, REMIC II Regular Interest II-LTP, REMIC II Regular
Interest II-LT1SUB, REMIC II Regular Interest II-LT2SUB and REMIC II Regular
Interest II-LTXX, the weighted average of the REMIC I Remittance Rates on each
of the REMIC I Regular Interests. With respect to REMIC II Regular Interest
II-LT1GRP, the weighted average of the REMIC I Remittance Rate on REMIC I
Regular Interest I-LT1, weighted on the basis of the Uncertificated Balance of
such REMIC I Regular Interest. With respect to REMIC II Regular Interest
II-LT2GRP, the weighted average of the REMIC I Remittance Rate on REMIC I
Regular Interest I-LT2, weighted on the basis of the Uncertificated Balance of
such REMIC I Regular Interest.

                  "REMIC II Required Overcollateralized Amount": 0.50% of the
Overcollateralization Target Amount.

                  "REMIC II Sub WAC Allocation Percentage": 50% of any amount
payable or loss attributable from the Mortgage Loans, which shall be allocated
to REMIC II Regular Interest II- LT1SUB, REMIC II Regular Interest II-LT1GRP,
REMIC II Regular Interest II-LT2SUB, REMIC II Regular Interest II-LT2GRP and
REMIC II Regular Interest II-LTXX.

                  "REMIC II Subordinated Balance Ratio": The ratio among the
Uncertificated Balances of each REMIC II Regular Interest ending with the
designation "SUB,", equal to the ratio among, with respect to each such REMIC II
Regular Interest, the excess of (x) the aggregate Stated Principal Balance of
the Mortgage Loans in the related Loan Group over (y) the current Certificate
Principal Balance of the Class A Certificates in the related Loan Group.


                                      -43-

<PAGE>



                  "REMIC III": The segregated pool of assets consisting of all
of the REMIC II Regular Interests conveyed in trust to the Trustee, for the
benefit of the Certificateholders pursuant to Section 2.08, and all amounts
deposited therein, with respect to which a separate REMIC election is to be
made.

                  "REMIC Provisions": Provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Section
860A through 860G of the Code, and related provisions, and proposed, temporary
and final regulations and published rulings, notices and announcements
promulgated thereunder, as the foregoing may be in effect from time to time.

                  "Remittance Report": A report in form and substance acceptable
to the Trustee on a magnetic disk or tape prepared by the related Servicer
pursuant to Section 4.03 with such additions, deletions and modifications as
agreed to by the Trustee and the such Servicer.

                  "Rents from Real Property": With respect to any REO Property,
gross income of the character described in Section 856(d) of the Code as being
included in the term "rents from real property."

                  "REO Account": The account or accounts maintained, or caused
to be maintained, by the related Servicer in respect of an REO Property pursuant
to Section 3.23.

                  "REO Disposition": The sale or other disposition of an REO
Property on behalf of REMIC I.

                  "REO Imputed Interest": As to any REO Property, for any
calendar month during which such REO Property was at any time part of REMIC I,
one month's interest at the applicable Net Mortgage Rate on the Stated Principal
Balance of such REO Property (or, in the case of the first such calendar month,
of the related Mortgage Loan, if appropriate) as of the close of business on the
Distribution Date in such calendar month.

                  "REO Principal Amortization": With respect to any REO
Property, for any calendar month, the excess, if any, of (a) the aggregate of
all amounts received in respect of such REO Property during such calendar month,
whether in the form of rental income, sale proceeds (including, without
limitation, that portion of the Termination Price paid in connection with a
purchase of all of the Mortgage Loans and REO Properties pursuant to Section
9.01 that is allocable to such REO Property) or otherwise, net of any portion of
such amounts (i) payable pursuant to Section 3.23(c) in respect of the proper
operation, management and maintenance of such REO Property or (ii) payable or
reimbursable to the related Servicer pursuant to Section 3.23(d) for unpaid
Servicing Fees in respect of the related Mortgage Loan and unreimbursed
Servicing Advances and P&I Advances in respect of such REO Property or the
related Mortgage Loan, over (b) the REO Imputed Interest in respect of such REO
Property for such calendar month.

                  "REO Property": A Mortgaged Property acquired by the related
Servicer on behalf of REMIC I through foreclosure or deed-in-lieu of
foreclosure, as described in Section 3.23.

                  "Request for Release": A release signed by a Servicing
Officer, in the form of Exhibit


                                      -44-

<PAGE>



E attached hereto.

                  "Reserve Interest Rate": With respect to any Interest
Determination Date, the rate per annum that the Trustee determines to be either
(i) the arithmetic mean (rounded upwards if necessary to the nearest whole
multiple of 1/16%) of the one-month U.S. dollar lending rates which New York
City banks selected by the Trustee, after consultation with the Depositor, are
quoting on the relevant Interest Determination Date to the principal London
offices of leading banks in the London interbank market or (ii) in the event
that the Trustee can determine no such arithmetic mean, the lowest one- month
U.S. dollar lending rate which New York City banks selected by the Trustee,
after consultation with the Depositor, are quoting on such Interest
Determination Date to leading European banks.

                  "Residential Dwelling": Any one of the following: (i) an
attached, detached or semi- detached one-family dwelling, (ii) an attached,
detached or semi-detached two-to four-family dwelling, (iii) a one-family
dwelling unit in a Fannie Mae eligible condominium project, or (iv) an attached,
detached or semi-detached one-family dwelling in a planned unit development,
none of which is a co-operative or mobile home (as defined in 42 United States
Code, Section 5402(6)).

                  "Residual Certificate": The Class R Certificates.

                  "Residual Interest": The sole class of "residual interests" in
a REMIC within the meaning of Section 860G(a)(2) of the Code.

                  "Responsible Officer": When used with respect to the Trustee,
any vice president, managing director, director, any assistant vice president,
the Secretary, any assistant secretary, the Treasurer, any assistant treasurer,
any associate, any trust officer or assistant trust officer or any other officer
of the Trustee having direct responsibility over this Agreement or otherwise
engaged in performing functions similar to those performed by any of the above
designated officers and, with respect to a particular matter, to whom such
matter is referred because of such officer's knowledge of and familiarity with
the particular subject.

                  "S&P": Standard & Poor's Ratings Services, a division of the
McGraw-Hill Companies, Inc., or its successor in interest.

                  "Scheduled Principal Balance": With respect to any Mortgage
Loan: (a) as of the Cut- off Date, the outstanding principal balance of such
Mortgage Loan as of such date, net of the principal portion of all unpaid
Monthly Payments, if any, due on or before such date; (b) as of any Due Date
subsequent to the Cut-off Date up to and including the Due Date in the calendar
month in which a Liquidation Event occurs with respect to such Mortgage Loan,
the Scheduled Principal Balance of such Mortgage Loan as of the Cut-off Date,
minus the sum of (i) the principal portion of each Monthly Payment due on or
before such Due Date but subsequent to the Cut-off Date, whether or not
received, (ii) all Principal Prepayments received before such Due Date but after
the Cut-off Date, (iii) the principal portion of all Liquidation Proceeds and
Insurance Proceeds received before such Due Date but after the Cut-off Date, net
of any portion thereof that represents principal due (without regard to any
acceleration of payments under the related Mortgage and Mortgage Note) on a Due
Date occurring on or before the date on which such proceeds were received and
(iv) any


                                      -45-

<PAGE>



Realized Loss incurred with respect thereto as a result of a Deficient Valuation
occurring before such Due Date, but only to the extent such Realized Loss
represents a reduction in the portion of principal of such Mortgage Loan not yet
due (without regard to any acceleration of payments under the related Mortgage
and Mortgage Note) as of the date of such Deficient Valuation; and (c) as of any
Due Date subsequent to the occurrence of a Liquidation Event with respect to
such Mortgage Loan, zero. With respect to any REO Property: (a) as of any Due
Date subsequent to the date of its acquisition on behalf of the Trust Fund up to
and including the Due Date in the calendar month in which a Liquidation Event
occurs with respect to such REO Property, an amount (not less than zero) equal
to the Scheduled Principal Balance of the related Mortgage Loan as of the Due
Date in the calendar month in which such REO Property was acquired, minus the
aggregate amount of REO Principal Amortization, if any, in respect of such REO
Property for all previously ended calendar months; and (b) as of any Due Date
subsequent to the occurrence of a Liquidation Event with respect to such REO
Property, zero.

                  "Seller": Deutsche Bank AG New York Branch, or its successor
in interest, in its capacity as seller under the Mortgage Loan Purchase
Agreement.

                  "Senior Interest Distribution Amount": With respect to any
Distribution Date, an amount equal to the sum of (i) the Interest Distribution
Amount for such Distribution Date for the Class A Certificates and the Class
A-IO Certificates and (ii) the Interest Carry Forward Amount, if any, for such
Distribution Date for the Class A Certificates and the Class A-IO Certificates.

                  "Servicer": Each of (i) New Century, or any successor Servicer
appointed as herein provided, in its capacity as a Servicer hereunder with
respect to the New Century Mortgage Loans and (ii) Ocwen, or any successor
Servicer appointed as herein provided, in its capacity as a Servicer hereunder
with respect to the Ocwen Mortgage Loans.

                  "Servicer Event of Default": As to either Servicer, one or
more of the events described in Section 7.01 with respect to such Servicer.

                  "Servicer Prepayment Charge Payment Amount": The amounts
payable by either Servicer in respect of any waived Prepayment Charges pursuant
to Section 2.05 or Section 3.01.

                  "Servicer Remittance Date": With respect to any Distribution
Date, by 1:00 p.m. New York time on the Business Day preceding the related
Distribution Date.

                  "Servicer Termination Test": With respect to any Distribution
Date and either Servicer, the Servicer Termination Test will be failed with
respect to such Servicer if the Cumulative Loss Percentage with respect to the
New Century Mortgage Loans (in the case of New Century) or the Ocwen Mortgage
Loans (in the case of Ocwen) exceeds 7.25%.

                  "Servicing Account": The account or accounts created and
maintained pursuant to Section 3.09.

                  "Servicing Advances": The reasonable "out-of-pocket" costs and
expenses incurred by either Servicer in connection with a default, delinquency
or other unanticipated event by a


                                      -46-

<PAGE>



Servicer in the performance of its servicing obligations, including, but not
limited to, the cost of (i) the preservation, restoration and protection of a
Mortgaged Property, (ii) any enforcement or judicial proceedings, including but
not limited to foreclosures, in respect of a particular Mortgage Loan, (iii) the
management (including reasonable fees in connection therewith) and liquidation
of any REO Property, (iv) the performance of its obligations under Section 3.01,
Section 3.09, Section 3.14, Section 3.16 and Section 3.23 and (v) with respect
to Ocwen, executing and recording instruments of satisfaction, deeds of
reconveyance or Assignments of Mortgage. Neither Servicer shall be required to
make any Nonrecoverable Servicing Advances.

                  "Servicing Fee": With respect to each Mortgage Loan and for
any calendar month, an amount equal to the Servicing Fee Rate accrued for one
month (or in the event of any payment of interest which accompanies a Principal
Prepayment in full or in part made by the Mortgagor during such calendar month,
interest for the number of days covered by such payment of interest) on the same
principal amount on which interest on such Mortgage Loan accrues for such
calendar month, calculated on the basis of a 360-day year consisting of twelve
30-day months. A portion of such Servicing Fee may be retained by any
Sub-Servicer as its servicing compensation.

                  "Servicing Fee Rate": 0.50% per annum.

                  "Servicing Officer": Any officer of a Servicer involved in, or
responsible for, the administration and servicing of Mortgage Loans, whose name
and specimen signature appear on a list of Servicing Officers furnished by such
Servicer to the Trustee and the Depositor on the Closing Date, as such list may
from time to time be amended.

                  "Single Certificate": With respect to any Class of
Certificates (other than the Class P Certificates and the Residual
Certificates), a hypothetical Certificate of such Class evidencing a Percentage
Interest for such Class corresponding to an initial Certificate Principal
Balance or Notional Amount of $1,000. With respect to the Class P Certificates
and the Residual Certificates, a hypothetical Certificate of such Class
evidencing a 100% Percentage Interest in such Class.

                  "Startup Day": With respect to each Trust REMIC, the day
designated as such pursuant to Section 10.01(b) hereof.

                  "Stated Principal Balance": With respect to any Mortgage Loan:
(a) as of any date of determination up to but not including the Distribution
Date on which the proceeds, if any, of a Liquidation Event with respect to such
Mortgage Loan would be distributed, the Scheduled Principal Balance of such
Mortgage Loan as of the Cut-off Date, as shown in the Mortgage Loan Schedule,
minus the sum of (i) the principal portion of each Monthly Payment due on a Due
Date subsequent to the Cut-off Date, to the extent received from the Mortgagor
or advanced by the related Servicer and distributed pursuant to Section 4.01 on
or before such date of determination, (ii) all Principal Prepayments received
after the Cut-off Date, to the extent distributed pursuant to Section 4.01 on or
before such date of determination, (iii) all Liquidation Proceeds and Insurance
Proceeds applied by the related Servicer as recoveries of principal in
accordance with the provisions of Section 3.16, to the extent distributed
pursuant to Section 4.01 on or before such date of determination, and (iv) any
Realized Loss incurred with respect thereto as a result of a Deficient Valuation
made during or prior to the Prepayment Period for the most recent Distribution
Date coinciding with or preceding


                                      -47-

<PAGE>



such date of determination; and (b) as of any date of determination coinciding
with or subsequent to the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such Mortgage Loan would be distributed, zero.
With respect to any REO Property: (a) as of any date of determination up to but
not including the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such REO Property would be distributed, an
amount (not less than zero) equal to the Stated Principal Balance of the related
Mortgage Loan as of the date on which such REO Property was acquired on behalf
of REMIC I, minus the sum of (i) if such REO Property was acquired before the
Distribution Date in any calendar month, the principal portion of the Monthly
Payment due on the Due Date in the calendar month of acquisition, to the extent
advanced by the related Servicer and distributed pursuant to Section 4.01 on or
before such date of determination, and (ii) the aggregate amount of REO
Principal Amortization in respect of such REO Property for all previously ended
calendar months, to the extent distributed pursuant to Section 4.01 on or before
such date of determination; and (b) as of any date of determination coinciding
with or subsequent to the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such REO Property would be distributed, zero.

                  "Stepdown Date": The later to occur of (a) the Distribution
Date occurring in April 2006 and (b) the first Distribution Date on which the
Credit Enhancement Percentage (calculated for this purpose only after taking
into account distributions of principal on the Mortgage Loans but prior to any
distribution of the Group I Principal Distribution Amount and the Group II
Principal Distribution Amount on the Certificates then entitled to distributions
of principal on such Distribution Date) is equal to or greater than 38.00%.

                  "Sub-Servicer": Any Person with which either Servicer has
entered into a Sub- Servicing Agreement and which meets the qualifications of a
Sub-Servicer pursuant to Section 3.02.

                  "Sub-Servicing Account": An account established by a
Sub-Servicer which meets the requirements set forth in Section 3.08 and is
otherwise acceptable to the applicable Servicer.

                  "Sub-Servicing Agreement": The written contract between the
Servicer and a Sub- Servicer relating to servicing and administration of certain
Mortgage Loans as provided in Section 3.02.

                  "Substitution Shortfall Amount": As defined in Section
2.03(b).

                  "Tax Returns": The 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 the Trust Fund due to the classification of portions
thereof as REMICs under the REMIC Provisions, together with any and all other
information reports or returns that may be required to be furnished to the
Certificateholders or filed with the Internal Revenue Service or any other
governmental taxing authority under any applicable provisions of federal, state
or local tax laws.

                  "Telerate Page 3750": The display designated as page "3750" on
the Dow Jones Telerate Capital Markets Report (or such other page as may replace
page 3750 on that report for the


                                      -48-

<PAGE>



purpose of displaying London interbank offered rates of major banks).

                  "Termination Price": As defined in Section 9.01.

                  "Terminator": As defined in Section 9.01.

                  "Transfer": Any direct or indirect transfer, sale, pledge,
hypothecation, or other form of assignment of any Ownership Interest in a
Certificate.

                  "Transferee": Any Person who is acquiring by Transfer any
Ownership Interest in a Certificate.

                  "Transferor": Any Person who is disposing by Transfer of any
Ownership Interest in a Certificate.

                  "Trigger Event": A Trigger Event is in effect if:

                  (a) the Delinquency Percentage exceeds 40.00% of the then
current Credit Enhancement Percentage; or

                  (b) the aggregate amount of Realized Losses incurred since the
Cut-off Date through the last day of the related Due Period divided by aggregate
Stated Principal Balance of the Mortgage Loans as of the Cut-off Date exceeds
the applicable percentages set forth below with respect to such Distribution
Date:



       DISTRIBUTION DATE OCCURRING IN              PERCENTAGE
       ------------------------------              ----------

       April 2006 through March 2007                  3.00%
       April 2007 through March 2008                  4.00%
       April 2008 through March 2009                  5.00%
       April 2009 through March 2010                  6.00%
       April 2010 and thereafter                      7.00%

                  "Trust Fund": Collectively, all of the assets of the Trust
REMICs, and the other assets conveyed by the Depositor to the Trustee pursuant
to Section 2.01.

                  "Trust REMIC": Any of REMIC I, REMIC II or REMIC III.

                  "Trustee": Deutsche Bank National Trust Company, a national
banking association, or its successor in interest, or any successor trustee
appointed as herein.

                  "Trustee Fee": The amount payable to the Trustee on each
Distribution Date pursuant to Section 8.05 as compensation for all services
rendered by it in the execution of the trust hereby created and in the exercise
and performance of any of the powers and duties of the Trustee hereunder, which
amount shall equal the Trustee Fee Rate accrued for one month on the aggregate


                                      -49-

<PAGE>



Scheduled Principal Balance of the Mortgage Loans and any REO Properties as of
the first day of the related Due Period (or, in the case of the initial
Distribution Date, as of the Cut-off Date), calculated on the basis of a 360-day
year consisting of twelve 30-day months.

                  "Trustee Fee Rate": 0.002% per annum.

                  "Uncertificated Balance": The amount of any REMIC I Regular
Interest or REMIC II Regular Interest (other than REMIC II Regular Interest
II-LTAIO1A, REMIC II Regular Interest II-LTAIO1B, REMIC II Regular Interest
II-LTAIO1C, REMIC II Regular Interest II-LTAIO2A, REMIC II Regular Interest
II-LTAIO2B and REMIC II Regular Interest II-LTAIO2C) outstanding as of any date
of determination. As of the Closing Date, the Uncertificated Balance of each
REMIC I Regular Interest and each REMIC II Regular Interest (other than REMIC II
Regular Interest II- LTAIO1A, REMIC II Regular Interest II-LTAIO1B, REMIC II
Regular Interest II-LTAIO1C, REMIC II Regular Interest II-LTAIO2A, REMIC II
Regular Interest II-LTAIO2B and REMIC II Regular Interest II-LTAIO2C) shall
equal the amount set forth in the Preliminary Statement hereto as its initial
uncertificated balance. On each Distribution Date, the Uncertificated Balance of
each REMIC I Regular Interest and REMIC II Regular Interest (other than REMIC II
Regular Interest II- LTAIO1A, REMIC II Regular Interest II-LTAIO1B, REMIC II
Regular Interest II-LTAIO1C, REMIC II Regular Interest II-LTAIO2A, REMIC II
Regular Interest II-LTAIO2B and REMIC II Regular Interest II-LTAIO2C) shall be
reduced by all distributions of principal made on such REMIC I Regular Interest
or REMIC II Regular Interest on such Distribution Date pursuant to Section 4.01
and, if and to the extent necessary and appropriate, shall be further reduced on
such Distribution Date by Realized Losses as provided in Section 4.04. The
Uncertificated Balance of REMIC II Regular Interest II-LTZZ shall be increased
by interest deferrals as provided in Section 4.01(a)(1)(i). The Uncertificated
Balance of each REMIC I Regular Interest and REMIC II Regular Interest shall
never be less than zero.

                  "Uncertificated Interest": With respect to any REMIC I Regular
Interest for any Distribution Date, one month's interest at the REMIC I
Remittance Rate applicable to such REMIC I Regular Interest for such
Distribution Date, accrued on the Uncertificated Balance thereof immediately
prior to such Distribution Date. With respect to any REMIC II Regular Interest
for any Distribution Date, one month's interest at the REMIC II Remittance Rate
applicable to such REMIC II Regular Interest for such Distribution Date, accrued
on the Uncertificated Balance or Uncertificated Notional Amount thereof
immediately prior to such Distribution Date. Uncertificated Interest in respect
of any REMIC I Regular Interest and REMIC II Regular Interest shall accrue on
the basis of a 360-day year consisting of twelve 30-day months. Uncertificated
Interest with respect to each Distribution Date, as to any REMIC I Regular
Interest or REMIC II Regular Interest, shall be reduced by an amount equal to
the sum of (a) the aggregate Prepayment Interest Shortfall, if any, for such
Distribution Date to the extent not covered by payments pursuant to Section 3.24
and (b) the aggregate amount of any Relief Act Interest Shortfall, if any
allocated, in each case, to such REMIC I Regular Interest or REMIC II Regular
Interest pursuant to Section 1.02. In addition, Uncertificated Interest with
respect to each Distribution Date, as to any REMIC I Regular Interest or REMIC
II Regular Interest shall be reduced by Realized Losses, if any, allocated to
such REMIC I Regular Interest or REMIC II Regular Interest pursuant to Section
1.02 and Section 4.04.

                  "Uncertificated Notional Amount": With respect to REMIC II
Regular Interest II-

                                      -50-
<PAGE>

LTAIO1A, REMIC II Regular Interest II-LTAIO1B and REMIC II
Regular Interest II-LTAIO1C and any Distribution Date, the Uncertificated
Balance of REMIC I Regular Interest I-LTAIO1.

                  With respect to REMIC II Regular Interest II-LTAIO2A, REMIC II
Regular Interest II-LTAIO2B and REMIC II Regular Interest II-LTAIO2C and any
Distribution Date, the Uncertificated Balance of REMIC I Regular Interest
I-LTAIO2.

                  "Underwriter's Exemption": An individual exemption issued by
the United States Department of Labor, FAN 97-03E, as amended, to Deutsche Bank
Securities Inc., for specific offerings in which Deutsche Bank Securities Inc.
or any person directly or indirectly, through one or more intermediaries,
controlling, controlled by or under common control with Deutsche Bank Securities
Inc. is an underwriter, placement agent or a manager or co-manager of the
underwriting syndicate or selling group where the trust and the offered
certificates meet specified conditions. The Underwriter's Exemption, as amended,
provides a partial exemption for transactions involving certificates
representing a beneficial interest in a trust and entitling the holder to
pass-through payments of principal, interest and/or other payments with respect
to the trust's assets.

                  "Uninsured Cause": Any cause of damage to a Mortgaged Property
such that the complete restoration of such property is not fully reimbursable by
the hazard insurance policies required to be maintained pursuant to Section
3.14.

                  "United States Person": A citizen or resident of the United
States, a corporation, partnership (or other entity treated as a corporation or
partnership for United States federal income tax purposes) created or organized
in, or under the laws of, the United States, any state thereof, or the District
of Columbia (except in the case of a partnership, to the extent provided in
Treasury regulations) provided that, for purposes solely of the restrictions on
the transfer of Class R Certificates, no partnership or other entity treated as
a partnership for United States federal income tax purposes shall be treated as
a United States Person unless all persons that own an interest in such
partnership either directly or through any entity that is not a corporation for
United States federal income tax purposes are required by the applicable
operative agreement to be United States Persons, or an estate the income of
which from sources without the United States is includible in gross income for
United States federal income tax purposes regardless of its connection with the
conduct of a trade or business within the United States, or a trust if a court
within the United States is able to exercise primary supervision over the
administration of the trust and one or more United States persons have authority
to control all substantial decisions of the trust. The term "United States"
shall have the meaning set forth in Section 7701 of the Code or successor
provisions.

                  "Value": With respect to any Mortgaged Property, the lesser of
(i) the lesser of (a) 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 minimum requirements of Fannie Mae and Freddie
Mac and (b) the value thereof as determined by a review appraisal conducted by
the Originator in accordance with the Originator's underwriting guidelines, and
(ii) the purchase price paid for the related Mortgaged Property by the Mortgagor
with the proceeds of the Mortgage Loan; provided, however, (A) in the case of a
Refinanced Mortgage Loan, such value of the Mortgaged Property is based solely
upon the lesser of (1) the value determined by an appraisal made for the
Originator of such Refinanced Mortgage Loan at the time of origination of such


                                      -51-
<PAGE>

Refinanced Mortgage Loan by an appraiser who met the minimum requirements of
Fannie Mae and Freddie Mac and (2) the value thereof as determined by a review
appraisal conducted by the Originator in accordance with the Originator's
underwriting guidelines, and (B) in the case of a Mortgage Loan originated in
connection with a "lease-option purchase," such value of the Mortgaged Property
is based on the lower of the value determined by an appraisal made for the
Originator of such Mortgage Loan at the time of origination or the sale price of
such Mortgaged Property if the "lease option purchase price" was set less than
12 months prior to origination, and is based on the value determined by an
appraisal made for the Originator of such Mortgage Loan at the time of
origination if the "lease option purchase price" was set 12 months or more prior
to origination.

                  "Voting Rights": The portion of the voting rights of all of
the Certificates which is allocated to any Certificate. With respect to any date
of determination, 97% of all Voting Rights will be allocated among the Holders
of the Class A Certificates, the Mezzanine Certificates and the Class CE
Certificates in proportion to the then outstanding Certificate Principal
Balances of their respective Certificates, 1% of all Voting Rights will be
allocated to the Holders of the Class A-IO Certificates in proportion to the
then outstanding Notional Amount of their Certificates, 1% of all Voting Rights
will be allocated to the Holders of the Class P Certificates and 1% of all
Voting Rights will be allocated among the Holders of the Residual Certificates.
The Voting Rights allocated to each Class of Certificates shall be allocated
among Holders of each such Class in accordance with their respective Percentage
Interests as of the most recent Record Date.

                  SECTION 1.02. Allocation of Certain Interest Shortfalls.

                  For purposes of calculating the amount of Accrued Certificate
Interest and the amount of the Interest Distribution Amount for the Class A
Certificates, the Class A-IO Certificates, the Mezzanine Certificates and the
Class CE Certificates for any Distribution Date, (1) the aggregate amount of any
Prepayment Interest Shortfalls (to the extent not covered by payments by the
Servicers pursuant to Section 3.24) and any Relief Act Interest Shortfall
incurred in respect of the Mortgage Loans for any Distribution Date shall be
allocated first, among the Class CE Certificates on a PRO RATA basis based on,
and to the extent of, one month's interest at the then applicable respective
Pass- Through Rate on the respective Notional Amount of each such Certificate
and, thereafter, among the Class A Certificates, the Class A-IO Certificates and
the Mezzanine Certificates on a PRO RATA basis based on, and to the extent of,
one month's interest at the then applicable respective Pass-Through Rate on the
respective Certificate Principal Balance or Notional Amount of each such
Certificate and (2) the aggregate amount of any Realized Losses and Net WAC Rate
Carryover Amounts incurred for any Distribution Date shall be allocated among
the Class CE Certificates on a PRO RATA basis based on, and to the extent of,
one month's interest at the then applicable respective Pass-Through Rate on the
respective Notional Amount of each such Certificate.

                  For purposes of calculating the amount of Uncertificated
Interest for the REMIC I Regular Interests for any Distribution Date, the
aggregate amount of any Prepayment Interest Shortfalls (to the extent not
covered by payments by the Servicers pursuant to Section 3.24) and Relief Act
Interest Shortfalls incurred in respect of the Mortgage Loans for any
Distribution Date shall be allocated first, to REMIC I Regular Interest I-LT1
and REMIC I Regular Interest I-LT2 and then to REMIC I Regular Interest I-LTAIO1
and REMIC I Regular Interest I-LTAIO2, in each case to the extent of one month's
interest at the then applicable respective REMIC I Remittance Rate on


                                      -52-
<PAGE>

the respective Uncertificated Balance of each such REMIC I Regular Interest.

                  For purposes of calculating the amount of Uncertificated
Interest for the REMIC II Regular Interests for any Distribution Date:

                  (A) the REMIC II Marker Allocation Percentage of the aggregate
amount of any Prepayment Interest Shortfalls (to the extent not covered by
payments by the Servicers pursuant to Section 3.24) and the REMIC II Marker
Allocation Percentage of the aggregate amount of any Relief Act Interest
Shortfalls incurred in respect of the Mortgage Loans for any Distribution Date
shall be allocated first, to Uncertificated Interest payable to REMIC II Regular
Interest II-LTAA and REMIC II Regular Interest II-LTZZ up to an aggregate amount
equal to the REMIC II Interest Loss Allocation Amount, 98% and 2%, respectively,
and thereafter among REMIC II Regular Interest II- LTA1, REMIC II Regular
Interest II-LTA2, REMIC II Regular Interest II-LTM1, REMIC II Regular Interest
II-LTM2, REMIC II Regular Interest II-LTM3, REMIC II Regular Interest II-LTM4
and REMIC II Regular Interest II-LTZZ PRO RATA based on, and to the extent of,
one month's interest at the then applicable respective REMIC II Remittance Rate
on the respective Uncertificated Balance of each such REMIC II Regular Interest;
and

                  (B) the REMIC II Sub WAC Allocation Percentage of the
aggregate amount of any Prepayment Interest Shortfalls (to the extent not
covered by payments by the Servicers pursuant to Section 3.24) and the REMIC II
Sub WAC Allocation Percentage of the aggregate amount of any Relief Act Interest
Shortfalls incurred in respect of the Mortgage Loans for any Distribution Date
shall be allocated first, to Uncertificated Interest payable to REMIC II Regular
Interest II-LT1SUB, REMIC II Regular Interest II-LT1GRP, REMIC II Regular
Interest II-LT2SUB, REMIC II Regular Interest II-LT2GRP and REMIC II Regular
Interest II-LTXX, PRO RATA based on, and to the extent of, one month's interest
at the then applicable respective REMIC II Remittance Rate on the respective
Uncertificated Balance of each such REMIC II Regular Interest.


                                      -53-
<PAGE>

                                   ARTICLE II

                          CONVEYANCE OF MORTGAGE LOANS;
                        ORIGINAL ISSUANCE OF CERTIFICATES

                  SECTION 2.01. Conveyance of the Mortgage Loans.

                  The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee without recourse, for the benefit of the Certificateholders, all the
right, title and interest of the Depositor, including any security interest
therein for the benefit of the Depositor, in and to the Mortgage Loans
identified on the Mortgage Loan Schedule, the rights of the Depositor under the
Mortgage Loan Purchase Agreement, and all other assets included or to be
included in REMIC I. Such assignment includes all interest and principal
received by the Depositor or either Servicer on or with respect to the Mortgage
Loans (other than payments of principal and interest due on such Mortgage Loans
on or before the Cut-off Date). The Depositor herewith delivers to the Trustee
an executed copy of the Mortgage Loan Purchase Agreement. The Depositor hereby
authorizes the Trustee to enter into the Cap Contract.

                  In connection with such transfer and assignment, the Depositor
does hereby deliver to, and deposit with, the Trustee (or to the Custodian as
the agent of the Trustee) the following documents or instruments with respect to
each Mortgage Loan so transferred and assigned (a "Mortgage File"):

                  (i) the original Mortgage Note, endorsed in blank or in the
         following form "Pay to the order of Deutsche Bank National Trust
         Company, as Trustee under the applicable agreement, without recourse,"
         with all prior and intervening endorsements showing a complete chain of
         endorsement from the originator to the Person so endorsing to the
         Trustee;

                  (ii) 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;

                  (iii) an original Assignment in blank;

                  (iv) the original recorded Assignment or Assignments showing a
         complete chain of assignment from the originator to the Person
         assigning the Mortgage to the Trustee as contemplated by the
         immediately preceding clause (iii);

                  (v) the original or copies of each assumption, modification or
         substitution agreement, if any; and

                  (vi) the original lender's title insurance policy or, if the
         original title policy has not been issued, the irrevocable commitment
         to issue the same.

                  With respect to a maximum of approximately 2.0% of the
Original Mortgage Loans, by outstanding principal balance of the Original
Mortgage Loans as of the Cut-off Date, if any


                                      -54-
<PAGE>

original Mortgage Note referred to in Section 2.01(i) above cannot be located,
the obligations of the Depositor to deliver such documents shall be deemed to be
satisfied upon delivery to the Trustee (or the Custodian on behalf of the
Trustee) of a photocopy of such Mortgage Note, if available, with a lost note
affidavit substantially in the form of Exhibit I attached hereto. If any of the
original Mortgage Notes for which a lost note affidavit was delivered to the
Trustee (or the Custodian on behalf of the Trustee) is subsequently located,
such original Mortgage Note shall be delivered to the Trustee (or the Custodian
on behalf of the Trustee) within three Business Days.

                  The Trustee (or the Custodian on behalf of the Trustee) shall,
within 45 Business Days following the Closing Date, stamp each Mortgage Note
that was endorsed in blank to "Pay to the order of Deutsche Bank National Trust
Company, as Trustee under the applicable agreement, without recourse."

                  If any of the documents referred to in Sections 2.01(ii),
(iii) or (iv) above has, as of the Closing Date, been submitted for recording
but either (x) has not been returned from the applicable public recording office
or (y) has been lost or such public recording office has retained the original
of such document, the obligations of the Depositor to deliver such documents
shall be deemed to be satisfied upon (1) delivery to the Trustee (or the
Custodian on behalf of the Trustee) of a copy of each such document certified by
the Originator in the case of (x) above or the applicable public recording
office in the case of (y) above to be a true and complete copy of the original
that was submitted for recording and (2) if such copy is certified by the
Originator, delivery to the Trustee (or the Custodian on behalf of the Trustee)
promptly upon receipt thereof of either the original or a copy of such document
certified by the applicable public recording office to be a true and complete
copy of the original. Notice shall be provided to the Trustee and the Rating
Agencies by the Depositor if delivery pursuant to clause (2) above will be made
more than 180 days after the Closing Date. If the original lender's title
insurance policy was not delivered pursuant to Section 2.01(vi) above, the
Depositor shall deliver or cause to be delivered to the Trustee (or the
Custodian on behalf of the Trustee), promptly after receipt thereof, the
original lender's title insurance policy. The Depositor shall deliver or cause
to be delivered to the Trustee (or the Custodian on behalf of the Trustee)
promptly upon receipt thereof any other original documents constituting a part
of a Mortgage File received with respect to any Mortgage Loan, including, but
not limited to, any original documents evidencing an assumption or modification
of any Mortgage Loan.

                  The Trustee (or the Custodian on behalf of the Trustee) shall
enforce the obligation of NC Capital under the Mortgage Loan Purchase Agreement
to promptly (within sixty Business Days following the later of the Closing Date
and the date of receipt by the Trustee (or the Custodian on behalf of the
Trustee) of the recording information for a Mortgage, but in no event later than
ninety days following the Closing Date) submit or cause to be submitted for
recording, at the expense of NC Capital and at no expense to the Trust Fund, the
Trustee, the Custodian or the Depositor, in the appropriate public office for
real property records, each Assignment referred to in Sections 2.01(iii) and
(iv) above and the Depositor shall execute each original Assignment or cause
each original Assignment to be executed in the following form: "Deutsche Bank
National Trust Company, as Trustee under the applicable agreement." In the event
that any such Assignment is lost or returned unrecorded because of a defect
therein, NC Capital shall promptly prepare or cause to be prepared a substitute
Assignment or cure or cause to be cured such defect, as the case may be, and
thereafter cause each such Assignment to be duly recorded. If NC Capital is
unable to pay the cost of recording


                                      -55-
<PAGE>

the Assignments, such expense will be paid by the Trustee and shall be
reimbursable to the Trustee as an Extraordinary Trust Fund Expense.
Notwithstanding the foregoing, neither the Trustee nor the Custodian on behalf
of the Trustee shall be responsible for determining whether any Assignment
delivered by the Depositor hereunder is in recordable form.

                  Notwithstanding the foregoing, however, for administrative
convenience and facilitation of servicing and to reduce closing costs, the
Assignments shall not be required to be submitted for recording (except with
respect to any Mortgage Loan located in Maryland) unless the Trustee or the
Depositor receives notice that such failure to record would result in a
withdrawal or a downgrading by any Rating Agency of the rating on any Class of
Certificates; provided, however, the Trustee (or the Custodian on behalf of the
Trustee) shall enforce the obligation of NC Capital under the Mortgage Loan
Purchase Agreement to submit or cause to be submitted each Assignment for
recording in the manner described above, at the expense of NC Capital and at no
expense to the Trust Fund, the Trustee or the Custodian, upon the earliest to
occur of: (i) reasonable direction by Holders of Certificates entitled to at
least 25% of the Voting Rights, (ii) the occurrence of a Servicer Event of
Termination with respect to the applicable Servicer, (iii) the occurrence of a
bankruptcy, insolvency or foreclosure with respect to the applicable Servicer,
(iv) the occurrence of a servicing transfer as described in Section 7.02 hereof,
(v) with respect to any one Assignment, the occurrence of a bankruptcy,
insolvency or foreclosure relating to the Mortgagor under the related Mortgage
and (vi) any Mortgage Loan that is 90 days or more Delinquent. Upon (a) receipt
of written notice by the Trustee that recording of the Assignments is required
pursuant to one or more of the conditions (excluding condition (vi) above) set
forth in the preceding sentence or (b) upon the occurrence of condition (vi) in
the preceding sentence, the Depositor shall be required to deliver such
Assignments or shall cause such Assignments to be delivered within 30 days
following receipt of such notice.

                  All original documents relating to the Mortgage Loans that are
not delivered to the Trustee (or the Custodian on behalf of the Trustee) are and
shall be held by or on behalf of the Seller, the Depositor or the related
Servicer, as the case may be, in trust for the benefit of the Trustee on behalf
of the Certificateholders. In the event that any such original document is
required pursuant to the terms of this Section to be a part of a Mortgage File,
such document shall be delivered promptly to the Trustee (or the Custodian on
behalf of the Trustee). Any such original document delivered to or held by the
Depositor that is not required pursuant to the terms of this Section to be a
part of a Mortgage File, shall be delivered promptly to the related Servicer.

                  SECTION 2.02. Acceptance of REMIC I by Trustee.

                  The Trustee acknowledges receipt (or, with respect to Mortgage
Loans subject to the Custodial Agreement, receipt by the Custodian as the duly
appointed agent of the Trustee), subject to the provisions of Section 2.01 and
subject to any exceptions noted on the exception report described in the next
paragraph below, of the documents referred to in Section 2.01 (other than such
documents described in Section 2.01(v)) above and all other assets included in
the definition of "REMIC I" under clauses (i), (iii), (iv) and (v) (to the
extent of amounts deposited into the Distribution Account) and declares that it
(or the Custodian on its behalf) holds and will hold such documents and the
other documents delivered to it constituting a Mortgage File, and that it holds
or will hold all such assets and such other assets included in the definition of
"REMIC I" in trust for the exclusive use and benefit of all present and future
Certificateholders.


                                      -56-
<PAGE>

                  The Trustee agrees, for the benefit of the Certificateholders,
to review (or cause the Custodian to review with respect to the Mortgage Loans
subject to the Custodial Agreement) each Mortgage File on or before the Closing
Date and to certify in substantially the form attached hereto as Exhibit C-1A
(or cause the Custodian to certify with respect to the Mortgage Loans subject to
the Custodial Agreement in the form of the Initial Certification attached as an
exhibit to the Custodial Agreement) that, as to each Mortgage Loan listed in the
Mortgage Loan Schedule (other than any Mortgage Loan paid in full or any
Mortgage Loan specifically identified in the exception report annexed thereto as
not being covered by such certification), (i) all documents constituting part of
such Mortgage File (other than such documents described in Section 2.01(v))
required to be delivered to it pursuant to this Agreement or the Custodial
Agreement, as applicable, are in its possession, (ii) such documents have been
reviewed by it or the Custodian, as applicable, and appear regular on their face
and relate to such Mortgage Loan and (iii) based on its or the Custodian's, as
applicable, examination and only as to the foregoing, the information set forth
in the Mortgage Loan Schedule that corresponds to items (i) through (iii), (xi),
(xv) and (xviii) of the definition of "Mortgage Loan Schedule" accurately
reflects information set forth in the Mortgage File. It is herein acknowledged
that, in conducting such review, neither the Trustee nor the Custodian was under
any duty or obligation (i) to inspect, review or examine any such documents,
instruments, certificates or other papers to determine whether they are genuine,
enforceable, or appropriate for the represented purpose or whether they have
actually been recorded or that they are other than what they purport to be on
their face or (ii) to determine whether any Mortgage File should include any of
the documents specified in clause (v) of Section 2.01.

                  Prior to the first anniversary date of this Agreement the
Trustee shall deliver to the Depositor and each Servicer a final certification
in the form annexed hereto as Exhibit C-2 (or shall cause the Custodian to
deliver to the Trustee, the Depositor and each Servicer a final certification
with respect to the Mortgage Loans held by the Custodian in the form attached to
the Custodial Agreement) evidencing the completeness of the Mortgage Files, with
any applicable exceptions noted thereon, and each Servicer shall forward a copy
thereof to any Sub-Servicer.

                  If in the process of reviewing the Mortgage Files and making
or preparing, as the case may be, the certifications referred to above, the
Trustee or the Custodian finds any document or documents constituting a part of
a Mortgage File to be missing or defective in any material respect, at the
conclusion of its review the Trustee (or the Custodian on behalf of the Trustee)
shall so notify the Depositor and the applicable Servicer. In addition, upon the
discovery by the Depositor, either Servicer or the Trustee of a breach of any of
the representations and warranties made by NC Capital in the Mortgage Loan
Purchase Agreement in respect of any Mortgage Loan which materially adversely
affects such Mortgage Loan or the interests of the related Certificateholders in
such Mortgage Loan, the party discovering such breach shall give prompt written
notice to the other parties.

                  The Trustee (or the Custodian on behalf of the Trustee) shall,
at the written request and expense of any Certificateholder, provide a written
report to such Certificateholder of all Mortgage Files released to a Servicer
for servicing purposes.

                  SECTION 2.03. Repurchase or Substitution of Mortgage Loans by
                                NC

                                      -57-
<PAGE>


                                Capital.

                  (a) Upon discovery or receipt of notice of any materially
defective document in, or that a document is missing from, a Mortgage File or of
the breach by NC Capital of any representation, warranty or covenant under the
Mortgage Loan Purchase Agreement in respect of any Mortgage Loan that materially
adversely affects the value of such Mortgage Loan or the interest therein of the
Certificateholders, the Trustee (or the Custodian on behalf of the Trustee)
shall promptly notify NC Capital and the related Servicer of such defect,
missing document or breach and request that NC Capital deliver such missing
document or cure such defect or breach within 60 days from the date NC Capital
was notified of such missing document, defect or breach, and if NC Capital does
not deliver such missing document or cure such defect or breach in all material
respects during such period, the Trustee shall enforce the obligations of NC
Capital under the Mortgage Loan Purchase Agreement to repurchase such Mortgage
Loan from REMIC I at the Purchase Price within 90 days after the date on which
NC Capital was notified (subject to Section 2.03(c)) of such missing document,
defect or breach, if and to the extent that NC Capital is obligated to do so
under the Mortgage Loan Purchase Agreement. The Purchase Price for the
repurchased Mortgage Loan shall be remitted to the related Servicer for deposit
in the related Collection Account and the Trustee, upon receipt of written
certification from the related Servicer of such deposit, shall release (or cause
the Custodian to release) to NC Capital the related Mortgage File and the
Trustee (or the Custodian on behalf of the Trustee) shall execute and deliver
such instruments of transfer or assignment, in each case without recourse, as NC
Capital shall furnish to it and as shall be necessary to vest in NC Capital any
Mortgage Loan released pursuant hereto. Neither the Trustee nor the Custodian
shall have any further responsibility with regard to such Mortgage File. In lieu
of repurchasing any such Mortgage Loan as provided above, if so provided in the
Mortgage Loan Purchase Agreement, NC Capital may cause such Mortgage Loan to be
removed from REMIC I (in which case it shall become a Deleted Mortgage Loan) and
substitute one or more Qualified Substitute Mortgage Loans in the manner and
subject to the limitations set forth in Section 2.03(b). It is understood and
agreed that the obligation of NC Capital to cure or to repurchase (or to
substitute for) any Mortgage Loan as to which a document is missing, a material
defect in a constituent document exists or as to which such a breach has
occurred and is continuing shall constitute the sole remedy respecting such
omission, defect or breach available to the Trustee and the Certificateholders.
The Servicer or the Trustee, as applicable, will be reimbursed for expenses
reasonably incurred in connection with any breach or defect giving rise to the
purchase obligation under this Section 2.03 pursuant to Section 3.11(a)(viii).

                  With respect to the representations and warranties made by NC
Capital in the Mortgage Loan Purchase Agreement, the Trustee shall not be
charged with knowledge of any breach of any such representation or warranty by
NC Capital unless a Responsible Officer of the Trustee at the Corporate Trust
Office obtains actual knowledge of such breach or the Trustee receives written
notice of such breach from the Depositor, either Servicer or the
Certificateholders.

                  (b) Any substitution of Qualified Substitute Mortgage Loans
for Deleted Mortgage Loans made pursuant to Section 2.03(a) must be effected
prior to the date which is two years after the Startup Day for REMIC I.

                  As to any Deleted Mortgage Loan for which NC Capital
substitutes a Qualified


                                      -58-
<PAGE>

Substitute Mortgage Loan or Loans, such substitution shall be effected by NC
Capital delivering to the Trustee (or the Custodian on behalf of the Trustee),
for such Qualified Substitute Mortgage Loan or Loans, the Mortgage Note, the
Mortgage, the Assignment to the Trustee, and such other documents and
agreements, with all necessary endorsements thereon, as are required by Section
2.01, together with an Officers' Certificate providing that each such Qualified
Substitute Mortgage Loan satisfies the definition thereof and specifying the
Substitution Shortfall Amount (as described below), if any, in connection with
such substitution. The Trustee (or the Custodian on behalf of the Trustee) shall
acknowledge receipt for such Qualified Substitute Mortgage Loan or Loans and,
within ten Business Days thereafter, shall review such documents as specified in
Section 2.02 and deliver to the Depositor and the related Servicer, with respect
to such Qualified Substitute Mortgage Loan or Loans, a certification
substantially in the form attached hereto as Exhibit C-1A, with any applicable
exceptions noted thereon. Within one year of the date of substitution, the
Trustee (or the Custodian on behalf of the Trustee) shall deliver to the
Depositor and the related Servicer a certification substantially in the form of
Exhibit C-2 hereto with respect to such Qualified Substitute Mortgage Loan or
Loans, with any applicable exceptions noted thereon. Monthly Payments due with
respect to Qualified Substitute Mortgage Loans in the month of substitution are
not part of REMIC I and will be retained by NC Capital. For the month of
substitution, distributions to Certificateholders will reflect the Monthly
Payment due on such Deleted Mortgage Loan on or before the Due Date in the month
of substitution, and NC Capital shall thereafter be entitled to retain all
amounts subsequently received in respect of such Deleted Mortgage Loan. The
Depositor shall give or cause to be given written notice to the
Certificateholders that such substitution has taken place, shall amend the
Mortgage Loan Schedule to reflect the removal of such Deleted Mortgage Loan from
the terms of this Agreement and the substitution of the Qualified Substitute
Mortgage Loan or Loans and shall deliver a copy of such amended Mortgage Loan
Schedule to the Trustee. Upon such substitution, such Qualified Substitute
Mortgage Loan or Loans shall constitute part of the Mortgage Pool and shall be
subject in all respects to the terms of this Agreement and the Mortgage Loan
Purchase Agreement, including, all applicable representations and warranties
thereof included in the Mortgage Loan Purchase Agreement.

                  For any month in which NC Capital substitutes one or more
Qualified Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the
related Servicer will determine the amount (the "Substitution Shortfall
Amount"), if any, by which the aggregate Purchase Price of all such Deleted
Mortgage Loans exceeds the aggregate of, as to each such Qualified Substitute
Mortgage Loan, the Scheduled Principal Balance thereof as of the date of
substitution, together with one month's interest on such Scheduled Principal
Balance at the applicable Mortgage Rate, plus all outstanding P&I Advances and
Servicing Advances (including Nonrecoverable P&I Advances and Nonrecoverable
Servicing Advances) related thereto. On the date of such substitution, NC
Capital will deliver or cause to be delivered to the related Servicer for
deposit in the related Collection Account an amount equal to the Substitution
Shortfall Amount, if any, and the Trustee, upon receipt of the related Qualified
Substitute Mortgage Loan or Loans and certification by the related Servicer of
such deposit, shall release to NC Capital the related Mortgage File or Files and
the Trustee (or the Custodian on behalf of the Trustee) shall execute and
deliver such instruments of transfer or assignment, in each case without
recourse, NC Capital shall deliver to it and as shall be necessary to vest
therein any Deleted Mortgage Loan released pursuant hereto.

                  In addition, NC Capital shall obtain at its own expense and
deliver to the Trustee an


                                      -59-
<PAGE>

Opinion of Counsel to the effect that such substitution will not cause (a) any
federal tax to be imposed on any Trust REMIC, including without limitation, any
federal tax imposed on "prohibited transactions" under Section 860F(a)(1) of the
Code or on "contributions after the startup date" under Section 860G(d)(1) of
the Code, or (b) any Trust REMIC to fail to qualify as a REMIC at any time that
any Certificate is outstanding.

                  (c) Upon discovery by the Depositor, the Seller, either
Servicer or the Trustee that any Mortgage Loan does not constitute a "qualified
mortgage" within the meaning of Section 860G(a)(3) of the Code, the party
discovering such fact shall within two Business Days give written notice thereof
to the other parties. In connection therewith, NC Capital shall repurchase or,
subject to the limitations set forth in Section 2.03(b), substitute one or more
Qualified Substitute Mortgage Loans for the affected Mortgage Loan within 90
days of the earlier of discovery or receipt of such notice with respect to such
affected Mortgage Loan. Any such repurchase or substitution shall be made in the
same manner as set forth in Section 2.03(a). The Trustee shall reconvey to NC
Capital the Mortgage Loan to be released pursuant hereto in the same manner, and
on the same terms and conditions, as it would a Mortgage Loan repurchased for
breach of a representation or warranty.

                  SECTION 2.04. Reserved

                  SECTION 2.05. Representations, Warranties and Covenants of the
                                Servicers.

                  Each Servicer hereby represents, warrants and covenants as to
itself to the Trustee, for the benefit of the Certificateholders, and to the
Depositor that as of the Closing Date or as of such date specifically provided
herein:

                  (i) It is either (a) a corporation duly organized and validly
         existing under the laws of the State of California or (b) a federal
         savings bank duly organized and validly existing under the laws of the
         United States, and is duly authorized and qualified to transact any and
         all business contemplated by this Agreement to be conducted by such
         Servicer in any state in which a Mortgaged Property is located or is
         otherwise not required under applicable law to effect such
         qualification and, in any event, is in compliance with the doing
         business laws of any such State, to the extent necessary to ensure its
         ability to enforce each Mortgage Loan and to service the Mortgage Loans
         in accordance with the terms of this Agreement;

                  (ii) Such Servicer has the full power and authority to conduct
         its business as presently conducted by it and to execute, deliver and
         perform, and to enter into and consummate, all transactions
         contemplated by this Agreement. Such Servicer has duly authorized the
         execution, delivery and performance of this Agreement, has duly
         executed and delivered this Agreement, and this Agreement, assuming due
         authorization, execution and delivery by the Depositor and the Trustee,
         constitutes a legal, valid and binding obligation of such Servicer,
         enforceable against it in accordance with its terms except as the
         enforceability thereof may be limited by bankruptcy, insolvency,
         reorganization or similar laws affecting the enforcement of creditors'
         rights generally and by general principles of equity;

                  (iii) The execution and delivery of this Agreement by such
         Servicer, the servicing


                                      -60-
<PAGE>

         of the Mortgage Loans by such Servicer hereunder, the consummation by
         such Servicer of any other of the transactions herein contemplated, and
         the fulfillment of or compliance with the terms hereof are in the
         ordinary course of business of such Servicer and will not (A) result in
         a breach of any term or provision of the charter or by-laws of such
         Servicer or (B) conflict with, result in a breach, violation or
         acceleration of, or result in a default under, the terms of any other
         material agreement or instrument to which such Servicer is a party or
         by which it may be bound, or any statute, order or regulation
         applicable to such Servicer of any court, regulatory body,
         administrative agency or governmental body having jurisdiction over
         such Servicer; and such Servicer is not a party to, bound by, or in
         breach or violation of any indenture or other agreement or instrument,
         or subject to or in violation of any statute, order or regulation of
         any court, regulatory body, administrative agency or governmental body
         having jurisdiction over it, which materially and adversely affects or,
         to such Servicer's knowledge, would in the future materially and
         adversely affect, (x) the ability of such Servicer to perform its
         obligations under this Agreement or (y) the business, operations,
         financial condition, properties or assets of such Servicer taken as a
         whole;

                  (iv) Such Servicer is a HUD approved servicer or an approved
         seller/servicer for Fannie Mae or Freddie Mac;

                  (v) Such Servicer does not believe, nor does it have any
         reason or cause to believe, that it cannot perform each and every
         covenant made by it and contained in this Agreement;

                  (vi) [Reserved];

                  (vii) No litigation is pending against such Servicer that
         would materially and adversely affect the execution, delivery or
         enforceability of this Agreement or the ability of such Servicer to
         service the Mortgage Loans or to perform any of its other obligations
         hereunder in accordance with the terms hereof;

                  (viii) There are no actions or proceedings against, or
         investigations known to it of, such Servicer before any court,
         administrative or other tribunal (A) that might prohibit its entering
         into this Agreement, (B) seeking to prevent the consummation of the
         transactions contemplated by this Agreement or (C) that might prohibit
         or materially and adversely affect the performance by such Servicer of
         its obligations under, or validity or enforceability of, this
         Agreement;

                  (ix) No consent, approval, authorization or order of any court
         or governmental agency or body is required for the execution, delivery
         and performance by such Servicer of, or compliance by such Servicer
         with, this Agreement or the consummation by it of the transactions
         contemplated by this Agreement, except for such consents, approvals,
         authorizations or orders, if any, that have been obtained prior to the
         Closing Date;

                  (x) Such Servicer will not waive any Prepayment Charge unless
         it is waived in accordance with the standard set forth in Section 3.01;
         and


                                      -61-
<PAGE>

                  (xi) Each Servicer has fully furnished and will continue to
         fully furnish, in accordance with the Fair Credit Reporting Act and its
         implementing regulations, accurate and complete information (e.g.,
         favorable and unfavorable) on its borrower credit files to Equifax,
         Experian and Trans Union Credit Information Company or their successors
         on a monthly basis.

                  It is understood and agreed that the representations,
warranties and covenants set forth in this Section 2.05 shall survive delivery
of the Mortgage Files to the Trustee or to the Custodian, as the case may be,
and shall inure to the benefit of the Trustee, the Depositor and the
Certificateholders. Upon discovery by any of the Depositor, either Servicer or
the Trustee of a breach of any of the foregoing representations, warranties and
covenants which materially and adversely affects the value of any Mortgage Loan
or the interests therein of the Certificateholders, the party discovering such
breach shall give prompt written notice (but in no event later than two Business
Days following such discovery) to the Trustee. Subject to Section 7.01, unless
such breach shall not be susceptible of cure within 90 days, the obligation of
each Servicer set forth in this Section 2.05 to cure breaches shall constitute
the sole remedy against the related Servicer available to the Depositor and the
Trustee on behalf of the Certificateholders respecting a breach of the
representations, warranties and covenants contained in this Section 2.05.
Notwithstanding the foregoing, within 90 days of the earlier of discovery by the
related Servicer or receipt of notice by the related Servicer of the breach of
the representation or covenant of the related Servicer set forth in Section
2.05(x) above, which breach materially and adversely affects the interests of
the Holders of the Class P Certificates in any Prepayment Charge, the related
Servicer must pay the amount of such waived Prepayment Charge, for the benefit
of the holders of the Class P Certificates, by depositing such amount into the
related Collection Account.

                  SECTION 2.06. Issuance of the REMIC I Regular Interests and
                                the Class R-I Interest.

                  The Trustee acknowledges the assignment to it of the Mortgage
Loans and the delivery to it (or the Custodian on its behalf) of the Mortgage
Files, subject to the provisions of Section 2.01 and Section 2.02, together with
the assignment to it of all other assets included in REMIC I, the receipt of
which is hereby acknowledged. Concurrently with such assignment and delivery and
in exchange therefor, the Trustee, pursuant to the written request of the
Depositor executed by an officer of the Depositor, has executed, authenticated
and delivered to or upon the order of the Depositor, the Class R Certificates
(in respect of the Class R-I Interest) in authorized denominations. The
interests evidenced by the Class R-I Interest, together with the REMIC I Regular
Interests, constitute the entire beneficial ownership interest in REMIC I. The
rights of the Class R-I Interest and REMIC II (as holder of the REMIC I Regular
Interest) to receive distributions from the proceeds of REMIC I in respect of
the Class R-I Interest and the REMIC I Regular Interests, and all ownership
interests evidenced or constituted by the Class R-I Interest and the REMIC I
Regular Interests, shall be as set forth in this Agreement.

                  SECTION 2.07. Conveyance of the REMIC I Regular Interests;
                                Acceptance of REMIC II by the Trustee.

                  The Depositor, concurrently with the execution and delivery
hereof, does hereby


                                      -62-
<PAGE>

transfer, assign, set over and otherwise convey to the Trustee, without recourse
all the right, title and interest of the Depositor in and to the REMIC I Regular
Interests for the benefit of the Class R-II Interest and REMIC II (as holder of
the REMIC I Regular Interests). The Trustee acknowledges receipt of the REMIC I
Regular Interests and declares that it holds and will hold the same in trust for
the exclusive use and benefit of all present and future Class R-II Interest and
REMIC II (as holder of the REMIC I Regular Interests). The rights of the Class
R-II Interest and REMIC II (as holder of the REMIC I Regular Interests) to
receive distributions from the proceeds of REMIC II in respect of the Class R-II
Interest and REMIC II Regular Interests, respectively, and all ownership
interests evidenced or constituted by the Class R-II Interest and the REMIC II
Regular Interests, shall be as set forth in this Agreement.

                  SECTION 2.08. Conveyance of the REMIC II Regular Interests;
                                Acceptance of REMIC III by the Trustee.

                  The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee, without recourse all the right, title and interest of the Depositor in
and to the REMIC II Regular Interests for the benefit of the Class R-
Certificateholders and REMIC III (as holder of the REMIC II Regular Interests).
The Trustee acknowledges receipt of the REMIC II Regular Interests and declares
that it holds and will hold the same in trust for the exclusive use and benefit
of all present and future Class R Certificateholders and REMIC III (as holder of
the REMIC II Regular Interests). The rights of the Class R Certificateholders
and REMIC III (as holder of the REMIC II Regular Interests) to receive
distributions from the proceeds of REMIC III in respect of the Class R
Certificates and REMIC III Certificates, respectively, and all ownership
interests evidenced or constituted by the Class R Certificates and the REMIC III
Certificates, shall be as set forth in this Agreement.

                  SECTION 2.09. Issuance of Class R Certificates.

                  The Trustee acknowledges the assignment to it of the REMIC
Regular Interests and, concurrently therewith and in exchange therefor, pursuant
to the written request of the Depositor executed by an officer of the Depositor,
the Trustee has executed, authenticated and delivered to or upon the order of
the Depositor, the Class R Certificates in authorized denominations.


                                      -63-
<PAGE>

                                   ARTICLE III

                          ADMINISTRATION AND SERVICING
                              OF THE MORTGAGE LOANS

                  SECTION 3.01. Servicers to Act as Servicers.

                  (a) Unless otherwise specified, all references to actions to
be taken or previously taken by "the Servicer" under this Article III or any
other provision of this Agreement with respect to a Mortgage Loan or Mortgage
Loans or with respect to an REO Property or REO Properties shall be to actions
to be taken or previously taken by each Servicer with respect to a Mortgage Loan
or Mortgage Loans serviced thereby or with respect to an REO Property or REO
Properties administered thereby. Furthermore, unless otherwise specified, all
references to actions to be taken or previously taken by "the Servicer" under
this Article III or any other provision of this Agreement with respect to "the
Collection Account," "the Servicing Account" or "the REO Account" shall be to
actions to be taken or previously taken by each Servicer with respect to the
Collection Account, the Servicing Account or the REO Account to be established
and maintained thereby. Consistent with the foregoing, but only insofar as the
context so permits, this Article III is to be read with respect to each Servicer
as if such Servicer alone was servicing and administering its respective
Mortgage Loans hereunder.

                  (b) The Servicer shall service and administer the Mortgage
Loans on behalf of the Trust Fund and in the best interests of and for the
benefit of the Certificateholders (as determined by the Servicer in its
reasonable judgment) in accordance with the terms of this Agreement and the
respective Mortgage Loans and, to the extent consistent with such terms, in the
same manner in which it services and administers similar mortgage loans for its
own portfolio, giving due consideration to customary and usual standards of
practice of mortgage lenders and loan servicers administering similar mortgage
loans but without regard to:

                  (i) any relationship that the Servicer, any Sub-Servicer or
         any Affiliate of the Servicer or any Sub-Servicer may have with the
         related Mortgagor;

                  (ii) the ownership or non-ownership of any Certificate by the
         Servicer or any Affiliate of the Servicer;

                  (iii) the Servicer's obligation to make P&I Advances or
         Servicing Advances; or

                  (iv) the Servicer's or any Sub-Servicer's right to receive
         compensation for its services hereunder or with respect to any
         particular transaction.

                  To the extent consistent with the foregoing, the Servicer (a)
shall seek to maximize the timely and complete recovery of principal and
interest on the Mortgage Notes and (b) shall waive (or permit a Sub-Servicer to
waive) a Prepayment Charge only under the following circumstances: (i) such
waiver is standard and customary in servicing similar Mortgage Loans and (ii)
either (A) such waiver would, in the reasonable judgement of the Servicer,
maximize recovery of total proceeds taking into account the value of such
Prepayment Charge and the related Mortgage Loan and, if such


                                      -64-
<PAGE>

waiver is made in connection with a refinancing of the related Mortgage Loan,
such refinancing is related to a default or a reasonably foreseeable default or
(B) such waiver is made in connection with a refinancing of the related Mortgage
Loan unrelated to a default or a reasonably foreseeable default where (x) the
related mortgagor has stated to the Servicer or an applicable Sub-Servicer an
intention to refinance the related Mortgage Loan and (y) the Servicer has
concluded in its reasonable judgement that the waiver of such Prepayment Charge
would induce such mortgagor to refinance with the Servicer or (iii) collection
of the related Prepayment Charge would violate applicable law. If a Prepayment
Charge is waived as permitted by meeting both of the standards described in
clauses (i) and (ii)(B) above, then the Servicer is required to pay the amount
of such waived Prepayment Charge, for the benefit of the Holders of the Class P
Certificates, by depositing such amount into the Collection Account together
with and at the time that the amount prepaid on the related Mortgage Loan is
required to be deposited into the Collection Account. Notwithstanding any other
provisions of this Agreement, any payments made by the Servicer in respect of
any waived Prepayment Charges pursuant to clauses (i) and (ii)(B) shall be
deemed to be paid outside of the Trust Fund.

                  Subject only to the above-described servicing standards and
the terms of this Agreement and of the respective Mortgage Loans, the Servicer
shall have full power and authority, acting alone or through Sub-Servicers as
provided in Section 3.02, to do or cause to be done any and all things in
connection with such servicing and administration which it may deem necessary or
desirable. Without limiting the generality of the foregoing, the Servicer in its
own name or in the name of a Sub-Servicer is hereby authorized and empowered by
the Trustee when the Servicer believes it appropriate in its best judgment in
accordance with the servicing standards set forth above, to execute and deliver,
on behalf of the Trust Fund, the Certificateholders and the Trustee or any of
them, and upon written notice to the Trustee, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge, and
all other comparable instruments, with respect to the Mortgage Loans and the
Mortgaged Properties and to institute foreclosure proceedings or obtain a
deed-in-lieu of foreclosure so as to convert the ownership of such properties,
and to hold or cause to be held title to such properties, on behalf of the
Trustee and Certificateholders. The Servicer shall service and administer the
Mortgage Loans in accordance with applicable state and federal law and shall
provide to the Mortgagors any reports required to be provided to them thereby.
The Servicer shall also comply in the performance of this Agreement with all
reasonable rules and requirements of each insurer under any standard hazard
insurance policy. Subject to Section 3.17, the Trustee shall execute, at the
written request of the Servicer, and furnish to the Servicer and any
Sub-Servicer any special or limited powers of attorney and other documents
necessary or appropriate to enable the Servicer or any Sub-Servicer to carry out
their servicing and administrative duties hereunder and the Trustee shall not be
liable for the actions of the Servicer or any Sub-Servicers under such powers of
attorney.

                  Subject to Section 3.09 hereof, in accordance with the
standards of the preceding paragraph, the Servicer shall advance or cause to be
advanced funds as necessary for the purpose of effecting the timely payment of
taxes and assessments on the Mortgaged Properties, which advances shall be
Servicing Advances reimbursable in the first instance from related collections
from the Mortgagors pursuant to Section 3.09, and further as provided in Section
3.11. Any cost incurred by the Servicer or by Sub-Servicers in effecting the
timely payment of taxes and assessments on a Mortgaged Property shall not, for
the purpose of calculating distributions to Certificateholders, be added to the
unpaid principal balance of the related Mortgage Loan, notwithstanding that the
terms


                                      -65-
<PAGE>

of such Mortgage Loan so permit.

                  Notwithstanding anything in this Agreement to the contrary,
the Servicer may not make any future advances with respect to a Mortgage Loan
(except as provided in Section 4.03) and the Servicer shall not (i) permit any
modification with respect to any Mortgage Loan that would change the Mortgage
Rate, reduce or increase the principal balance (except for reductions resulting
from actual payments of principal) or change the final maturity date on such
Mortgage Loan (unless, as provided in Section 3.07, the Mortgagor is in default
with respect to the Mortgage Loan or such default is, in the judgment of the
Servicer, reasonably foreseeable) or (ii) permit any modification, waiver or
amendment of any term of any Mortgage Loan that would both (A) effect an
exchange or reissuance of such Mortgage Loan under Section 1001 of the Code (or
Treasury regulations promulgated thereunder) and (B) cause any Trust 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.

                  The Servicer may delegate its responsibilities under this
Agreement; provided, however, that no such delegation shall release the Servicer
from the responsibilities or liabilities arising under this Agreement.

                  SECTION 3.02. Sub-Servicing Agreements Between Servicer and
                                Sub- Servicers.

                  (a) The Servicer may enter into Sub-Servicing Agreements with
Sub-Servicers for the servicing and administration of the Mortgage Loans;
provided, however, that such agreements would not result in a withdrawal or a
downgrading by any Rating Agency of the rating on any Class of Certificates. The
Trustee is hereby authorized to acknowledge, at the request of the Servicer, any
Sub-Servicing Agreement that, based on an Officers' Certificate of the Servicer
delivered to the Trustee (upon which the Trustee can conclusively rely), meets
the requirements applicable to Sub- Servicing Agreements set forth in this
Agreement and that is otherwise permitted under this Agreement.

                  Each Sub-Servicer shall be (i) authorized to transact business
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
Sub-Servicer to perform its obligations hereunder and under the Sub- Servicing
Agreement and (ii) a Freddie Mac or Fannie Mae approved mortgage servicer. Each
Sub- Servicing Agreement must impose on the Sub-Servicer requirements conforming
to the provisions set forth in Section 3.08 and provide for servicing of the
Mortgage Loans consistent with the terms of this Agreement. The Servicer will
examine each Sub-Servicing Agreement and will be familiar with the terms
thereof. The terms of any Sub-Servicing Agreement will not be inconsistent with
any of the provisions of this Agreement. The Servicer and the Sub-Servicers may
enter into and make amendments to the Sub-Servicing Agreements or enter into
different forms of Sub-Servicing Agreements; provided, however, that any such
amendments or different forms shall be consistent with and not violate the
provisions of this Agreement, and that no such amendment or different form shall
be made or entered into which could be reasonably expected to be materially
adverse to the interests of the Certificateholders without the consent of the
Holders of Certificates entitled to at least 66% of the Voting Rights; provided,
further, that the consent of the Holders of Certificates


                                      -66-
<PAGE>

entitled to at least 66% of the Voting Rights shall not be required (i) to cure
any ambiguity or defect in a Sub-Servicing Agreement, (ii) to correct, modify or
supplement any provisions of a Sub- Servicing Agreement, or (iii) to make any
other provisions with respect to matters or questions arising under a
Sub-Servicing Agreement, which, in each case, shall not be inconsistent with the
provisions of this Agreement. Any variation without the consent of the Holders
of Certificates entitled to at least 66% of the Voting Rights from the
provisions set forth in Section 3.08 relating to insurance or priority
requirements of Sub-Servicing Accounts, or credits and charges to the Sub-
Servicing Accounts or the timing and amount of remittances by the Sub-Servicers
to the Servicer, are conclusively deemed to be inconsistent with this Agreement
and therefore prohibited. The Servicer shall deliver to the Trustee copies of
all Sub-Servicing Agreements, and any amendments or modifications thereof,
promptly upon the Servicer's execution and delivery of such instruments.

                  (b) As part of its servicing activities hereunder, the
Servicer, for the benefit of the Trustee and the Certificateholders, shall
enforce the obligations of each Sub-Servicer under the related Sub-Servicing
Agreement, including, without limitation, any obligation of a Sub-Servicer to
make advances in respect of delinquent payments as required by a Sub-Servicing
Agreement. Such enforcement, including, without limitation, the legal
prosecution of claims, termination of Sub- Servicing Agreements, and the pursuit
of other appropriate remedies, shall be in such form and carried out to such an
extent and at such time as the Servicer, in its good faith business judgment,
would require were it the owner of the related Mortgage Loans. The Servicer
shall pay the costs of enforcing the obligations of a Sub-Servicer at its own
expense, and shall be reimbursed therefor only (i) from a general recovery
resulting from such enforcement, to the extent, if any, that such recovery
exceeds all amounts due in respect of the related Mortgage Loans, or (ii) from a
specific recovery of costs, expenses or attorneys' fees against the party
against whom such enforcement is directed.

                  SECTION 3.03. Successor Sub-Servicers.

                  The Servicer shall be entitled to terminate any Sub-Servicing
Agreement and the rights and obligations of any Sub-Servicer pursuant to any
Sub-Servicing Agreement in accordance with the terms and conditions of such
Sub-Servicing Agreement. In the event of termination of any Sub-Servicer, all
servicing obligations of such Sub-Servicer shall be assumed simultaneously by
the Servicer without any act or deed on the part of such Sub-Servicer or the
Servicer, and the Servicer either shall service directly the related Mortgage
Loans or shall enter into a Sub-Servicing Agreement with a successor
Sub-Servicer which qualifies under Section 3.02.

                  Any Sub-Servicing Agreement shall include the provision that
such agreement may be immediately terminated by the Trustee (if the Trustee is
acting as Servicer) without fee, in accordance with the terms of this Agreement,
in the event that the Servicer (or the Trustee, if it is then acting as
Servicer) shall, for any reason, no longer be the Servicer (including
termination due to a Servicer Event of Default).

                  SECTION 3.04. Liability of the Servicer.

                  Notwithstanding any Sub-Servicing Agreement or the provisions
of this Agreement relating to agreements or arrangements between the Servicer
and a Sub-Servicer or reference to actions taken through a Sub-Servicer or
otherwise, the Servicer shall remain obligated and primarily


                                      -67-
<PAGE>

liable to the Trustee and the Certificateholders for the servicing and
administering of the Mortgage Loans in accordance with the provisions of Section
3.01 without diminution of such obligation or liability by virtue of such
Sub-Servicing Agreements or arrangements or by virtue of indemnification from
the Sub-Servicer and to the same extent and under the same terms and conditions
as if the Servicer alone were servicing and administering the Mortgage Loans.
The Servicer shall be entitled to enter into any agreement with a Sub-Servicer
for indemnification of the Servicer by such Sub- Servicer and nothing contained
in this Agreement shall be deemed to limit or modify such indemnification.

                  SECTION 3.05. No Contractual Relationship Between
                                Sub-Servicers, the Trustee or the
                                Certificateholders.

                  Any Sub-Servicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Sub-Servicer
in its capacity as such shall be deemed to be between the Sub-Servicer and the
Servicer alone, and the Trustee and the Certificateholders shall not be deemed
parties thereto and shall have no claims, rights, obligations, duties or
liabilities with respect to the Sub-Servicer except as set forth in Section
3.06. The Servicer shall be solely liable for all fees owed by it to any
Sub-Servicer, irrespective of whether the Servicer's compensation pursuant to
this Agreement is sufficient to pay such fees.

                  SECTION 3.06. Assumption or Termination of Sub-Servicing
                                Agreements by the Trustee.

                  In the event the Servicer shall for any reason no longer be
the Servicer (including by reason of the occurrence of a Servicer Event of
Default), the Trustee, its designee or other successor Servicer shall thereupon
assume all of the rights and obligations of the Servicer under each Sub-
Servicing Agreement that the Servicer may have entered into, unless the Trustee,
such designee or other successor Servicer elects to terminate any Sub-Servicing
Agreement in accordance with its terms as provided in Section 3.03. Upon such
assumption, the Trustee, its designee or the successor Servicer for the Trustee
appointed pursuant to Section 7.02 shall be deemed, subject to Section 3.03, to
have assumed all of the Servicer's interest therein and to have replaced the
Servicer as a party to each Sub-Servicing Agreement to the same extent as if
each Sub-Servicing Agreement had been assigned to the assuming party, except
that (i) the Servicer shall not thereby be relieved of any liability or
obligations under any Sub-Servicing Agreement that arose before it ceased to be
the Servicer and (ii) none of the Trustee, its designee or any successor
Servicer shall be deemed to have assumed any liability or obligation of the
Servicer that arose before it ceased to be the Servicer.

                  The Servicer at its expense shall, upon request of the
Trustee, deliver to the assuming party all documents and records relating to
each Sub-Servicing Agreement and the Mortgage Loans then being serviced and an
accounting of amounts collected and held by or on behalf of it, and otherwise
use its best efforts to effect the orderly and efficient transfer of the
Sub-Servicing Agreements to the assuming party.

                  The Servicing Fee payable to the Trustee or other successor
Servicer shall be payable from payments received on the Mortgage Loans in the
amount and in the manner set forth in this Agreement.


                                      -68-
<PAGE>

                  SECTION 3.07. Collection of Certain Mortgage Loan Payments.

                  The Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans, and
shall, to the extent such procedures shall be consistent with this Agreement and
the terms and provisions of any applicable insurance policies, follow such
collection procedures as it would follow with respect to mortgage loans
comparable to the Mortgage Loans and held for its own account. Consistent with
the foregoing, the Servicer may in its discretion (i) waive any late payment
charge or, if applicable, any penalty interest, or (ii) extend the due dates for
the Monthly Payments due on a Mortgage Note for a period of not greater than 180
days; provided, however, that any extension pursuant to clause (ii) above shall
not affect the amortization schedule of any Mortgage Loan for purposes of any
computation hereunder, except as provided below. In the event of any such
arrangement pursuant to clause (ii) above, the Servicer shall make timely
advances on such Mortgage Loan during such extension pursuant to Section 4.03
and in accordance with the amortization schedule of such Mortgage Loan without
modification thereof by reason of such arrangement. Notwithstanding the
foregoing, in the event that any Mortgage Loan is in default or, in the judgment
of the Servicer, such default is reasonably foreseeable, the Servicer,
consistent with the standards set forth in Section 3.01, may also waive, modify
or vary any term of such Mortgage Loan (including modifications that would
change the Mortgage Rate, forgive the payment of principal or interest or extend
the final maturity date of such Mortgage Loan), accept payment from the related
Mortgagor of an amount less than the Stated Principal Balance in final
satisfaction of such Mortgage Loan (such payment, a "Short Pay-off"), or consent
to the postponement of strict compliance with any such term or otherwise grant
indulgence to any Mortgagor.

                  SECTION 3.08. Sub-Servicing Accounts.

                  In those cases where a Sub-Servicer is servicing a Mortgage
Loan pursuant to a Sub- Servicing Agreement, the Sub-Servicer will be required
to establish and maintain one or more accounts (collectively, the "Sub-Servicing
Account"). The Sub-Servicing Account shall be an Eligible Account and shall
comply with all requirements of this Agreement relating to the Collection
Account. The Sub-Servicer shall deposit in the clearing account in which it
customarily deposits payments and collections on mortgage loans in connection
with its mortgage loan servicing activities on a daily basis, and in no event
more than one Business Day after the Sub-Servicer's receipt thereof, all
proceeds of Mortgage Loans received by the Sub-Servicer less its servicing
compensation to the extent permitted by the Sub-Servicing Agreement, and shall
thereafter deposit such amounts in the Sub-Servicing Account, in no event more
than two Business Days after the receipt of such amounts. The Sub-Servicer shall
thereafter deposit such proceeds in the Collection Account or remit such
proceeds to the Servicer for deposit in the Collection Account not later than
two Business Days after the deposit of such amounts in the Sub-Servicing
Account. For purposes of this Agreement, the Servicer shall be deemed to have
received payments on the Mortgage Loans when the Sub-Servicer receives such
payments.

                  SECTION 3.09. Collection of Taxes, Assessments and Similar
                                Items; Servicing Accounts.

                  The Servicer shall establish and maintain, or cause to be
established and maintained,


                                      -69-
<PAGE>

one or more accounts (the "Servicing Accounts"), into which all collections from
the Mortgagors (or related advances from Sub-Servicers) for the payment of
taxes, assessments, hazard insurance premiums and comparable items for the
account of the Mortgagors ("Escrow Payments") shall be deposited and retained.
Servicing Accounts shall be Eligible Accounts. The Servicer shall deposit in the
clearing account in which it customarily deposits payments and collections on
mortgage loans in connection with its mortgage loan servicing activities on a
daily basis, and in no event more than one Business Day after the Servicer's
receipt thereof, all Escrow Payments collected on account of the Mortgage Loans
and shall thereafter deposit such Escrow Payments in the Servicing Accounts, in
no event more than two Business Days after the receipt of such Escrow Payments,
all Escrow Payments collected on account of the Mortgage Loans for the purpose
of effecting the timely payment of any such items as required under the terms of
this Agreement. Withdrawals of amounts from a Servicing Account may be made only
to (i) effect payment of taxes, assessments, hazard insurance premiums, and
comparable items in a manner and at a time that assures that the lien priority
of the Mortgage is not jeopardized (or, with respect to the payment of taxes, in
a manner and at a time that avoids the loss of the Mortgaged Property due to a
tax sale or the foreclosure as a result of a tax lien); (ii) reimburse the
Servicer (or a Sub-Servicer to the extent provided in the related Sub- Servicing
Agreement) out of related collections for any advances made pursuant to Section
3.01 (with respect to taxes and assessments) and Section 3.14 (with respect to
hazard insurance); (iii) refund to Mortgagors any sums as may be determined to
be overages; (iv) pay interest, if required and as described below, to
Mortgagors on balances in the Servicing Account; or (v) clear and terminate the
Servicing Account at the termination of the Servicer's obligations and
responsibilities in respect of the Mortgage Loans under this Agreement in
accordance with Article IX. As part of its servicing duties, the Servicer or
Sub-Servicers shall pay to the Mortgagors interest on funds in the Servicing
Accounts, to the extent required by law and, to the extent that interest earned
on funds in the Servicing Accounts is insufficient, to pay such interest from
its or their own funds, without any reimbursement therefor.

                  SECTION 3.10. Collection Account, Distribution Account and
                                Initial Deposit Account.

                  (a) On behalf of the Trust Fund, the Servicer shall establish
and maintain, or cause to be established and maintained, one or more accounts
(such account or accounts, the "Collection Account"), held in trust for the
benefit of the Trustee and the Certificateholders. On behalf of the Trust Fund,
the Servicer shall deposit or cause to be deposited in the clearing account in
which it customarily deposits payments and collections on mortgage loans in
connection with its mortgage loan servicing activities on a daily basis, and in
no event more than one Business Day after the Servicer's receipt thereof, and
shall thereafter deposit in the Collection Account, in no event more than two
Business Days after the Servicer's receipt thereof, as and when received or as
otherwise required hereunder, the following payments and collections received or
made by it subsequent to the Cut-off Date (other than in respect of principal or
interest on the related Mortgage Loans due on or before the Cut-off Date), or
payments (other than Principal Prepayments) received by it on or prior to the
Cut-off Date but allocable to a Due Period subsequent thereto:

                  (i) all payments on account of principal, including Principal
         Prepayments, on the Mortgage Loans and, in the case of Ocwen, net of
         any related Prepayment Interest Excess;


                                      -70-
<PAGE>

                  (ii) all payments on account of interest (net of the related
         Servicing Fee) on each Mortgage Loan;

                  (iii) all Insurance Proceeds and Liquidation Proceeds (other
         than proceeds collected in respect of any particular REO Property and
         amounts paid in connection with a purchase of Mortgage Loans and REO
         Properties pursuant to Section 9.01);

                  (iv) any amounts required to be deposited pursuant to Section
         3.12 in connection with any losses realized on Permitted Investments
         with respect to funds held in the Collection Account;

                  (v) any amounts required to be deposited by the Servicer
         pursuant to the second paragraph of Section 3.14(a) in respect of any
         blanket policy deductibles;

                  (vi) all proceeds of any Mortgage Loan repurchased or
         purchased in accordance with Section 2.03, Section 3.16 or Section
         9.01;

                  (vii) all amounts required to be deposited in connection with
         shortfalls in principal amount of Qualified Substitute Mortgage Loans
         pursuant to Section 2.03; and

                  (viii) all Prepayment Charges collected by the Servicer in
         connection with the Principal Prepayment of any of the Mortgage Loans.

                  The foregoing requirements for deposit in the Collection
Accounts shall be exclusive, it being understood and agreed that, without
limiting the generality of the foregoing, payments in the nature of late payment
charges, modification or assumption fees, or insufficient funds charges need not
be deposited by the Servicer in the Collection Account and may be retained by
the Servicer as additional compensation. In the event the Servicer shall deposit
in the Collection Account any amount not required to be deposited therein, it
may at any time withdraw such amount from the Collection Account, any provision
herein to the contrary notwithstanding.

                  (b) On behalf of the Trust Fund, the Trustee shall establish
and maintain one or more accounts (such account or accounts, the "Distribution
Account"), held in trust for the benefit of the Trustee, the Trust Fund and the
Certificateholders. On behalf of the Trust Fund, the Servicer shall deliver to
the Trustee in immediately available funds for deposit in the Distribution
Account by 1:00 p.m. New York time (i) on the Servicer Remittance Date, that
portion of the Available Distribution Amount (calculated without regard to the
references in clause (2) of the definition thereof to amounts that may be
withdrawn from the Distribution Account) for the related Distribution Date then
on deposit in the Collection Account and the amount of all Prepayment Charges
collected by the Servicer in connection with the Principal Prepayment of any of
the Mortgage Loans then on deposit in the Collection Account and the amount of
any funds reimbursable to an Advancing Person pursuant to Section 3.26 and (ii)
on each Business Day as of the commencement of which the balance on deposit in
the Collection Account exceeds $75,000 following any withdrawals pursuant to the
next succeeding sentence, the amount of such excess, but only if the Collection
Account constitutes an Eligible Account solely pursuant to clause (ii) of the
definition of "Eligible Account." If the balance on deposit in the Collection
Account exceeds


                                      -71-
<PAGE>

$75,000 as of the commencement of business on any Business Day and the
Collection Account constitutes an Eligible Account solely pursuant to clause
(ii) of the definition of "Eligible Account," the Servicer shall, by 1:00 p.m.
New York time on such Business Day, withdraw from the Collection Account any and
all amounts payable or reimbursable to the Depositor, the Servicer, the Trustee,
the Originator, the Seller or any Sub-Servicer pursuant to Section 3.11 and
shall pay such amounts to the Persons entitled thereto.

                  (c) Funds in the Collection Account and the Distribution
Account may be invested in Permitted Investments in accordance with the
provisions set forth in Section 3.12. The Servicer shall give notice to the
Trustee of the location of the Collection Account maintained by it when
established and prior to any change thereof. The Trustee shall give notice to
the Servicer and the Depositor of the location of the Distribution Account when
established and prior to any change thereof.

                  (d) Funds held in the Collection Account at any time may be
delivered by the Servicer to the Trustee for deposit in an account (which may be
the Distribution Account and must satisfy the standards for the Distribution
Account as set forth in the definition thereof) and for all purposes of this
Agreement shall be deemed to be a part of the Collection Account; provided,
however, that the Trustee shall have the sole authority to withdraw any funds
held pursuant to this subsection (d). In the event the Servicer shall deliver to
the Trustee for deposit in the Distribution Account any amount not required to
be deposited therein, it may at any time request in writing that the Trustee
withdraw such amount from the Distribution Account and remit to it any such
amount, any provision herein to the contrary notwithstanding. In addition, the
Servicer shall deliver to the Trustee from time to time for deposit, and the
Trustee shall so deposit, in the Distribution Account:

                  (i) any P&I Advances, as required pursuant to Section 4.03;

                  (ii) any amounts required to be deposited pursuant to Section
         3.23(d) or (f) in connection with any REO Property;

                  (iii) any amounts to be paid in connection with a purchase of
         Mortgage Loans and REO Properties pursuant to Section 9.01; and

                  (iv) any amounts required to be deposited pursuant to Section
         3.24 in connection with any Prepayment Interest Shortfall.

                  (e) [Reserved].

                  (f) The Servicer shall deposit in the Collection Account or
Distribution Account, as the case may be, any amounts required to be deposited
pursuant to Section 3.12(b) in connection with losses realized on Permitted
Investments with respect to funds held in the Collection Account or Distribution
Account, respectively.

                  SECTION 3.11. Withdrawals from the Collection Account and
                                Distribution Account.


                                      -72-
<PAGE>

                  (a) The Servicer shall, from time to time, make withdrawals
from the Collection Account for any of the following purposes or as described in
Section 4.03:

                  (i) to remit to the Trustee for deposit in the Distribution
         Account the amounts required to be so remitted pursuant to Section
         3.10(b) or permitted to be so remitted pursuant to the first sentence
         of Section 3.10(d);

                  (ii) subject to Section 3.16(d), to reimburse the Servicer for
         P&I Advances, but only to the extent of amounts received which
         represent Late Collections (net of the related Servicing Fees) of
         Monthly Payments on Mortgage Loans with respect to which such P&I
         Advances were made in accordance with the provisions of Section 4.03;

                  (iii) subject to Section 3.16(d), to pay the Servicer, any
         Sub-Servicer or the Collection Advisor, as applicable, (a) any unpaid
         Servicing Fees or Collection Advisor Fees, if applicable, (b) any
         unreimbursed Servicing Advances with respect to each Mortgage Loan, but
         only to the extent of any Late Collections, Liquidation Proceeds and
         Insurance Proceeds received with respect to such Mortgage Loan and (c)
         any Nonrecoverable Servicing Advances with respect to the final
         liquidation of a Mortgage Loan, but only to the extent that Late
         Collections, Liquidation Proceeds and Insurance Proceeds received with
         respect to such Mortgage Loan are insufficient to reimburse the
         Servicer or any Sub-Servicer for Servicing Advances;

                  (iv) to pay to the Servicer as servicing compensation (in
         addition to the Servicing Fee) on the Servicer Remittance Date any
         interest or investment income earned on funds deposited in the
         Collection Account;

                  (v) to pay to the Servicer, the Depositor, the Originator or
         the Seller, as the case may be, with respect to each Mortgage Loan that
         has previously been purchased or replaced pursuant to Section 2.03 or
         Section 3.16(c) all amounts received thereon subsequent to the date of
         purchase or substitution, as the case may be;

                  (vi) to reimburse the Servicer for any P&I Advance previously
         made which the Servicer has determined to be a Nonrecoverable P&I
         Advance in accordance with the provisions of Section 4.03;

                  (vii) to reimburse the Servicer or the Depositor for expenses
         incurred by or reimbursable to the Servicer or the Depositor, as the
         case may be, pursuant to Section 3.02(b) and Section 6.03;

                  (viii) to reimburse Ocwen or the Trustee for expenses
         reasonably incurred in connection with any breach or defect giving rise
         to the purchase obligation under Section 2.03 of this Agreement,
         including any expenses arising out of the enforcement of the purchase
         obligation;

                  (ix) to pay, or to reimburse the Servicer for Servicing
         Advances in respect of, expenses incurred in connection with any
         Mortgage Loan pursuant to Section 3.16(b);


                                      -73-
<PAGE>

                  (x) with respect to Ocwen, to pay to itself any Prepayment
         Interest Excess on the Ocwen Mortgage Loans (to the extent not retained
         pursuant to Section 3.10(a)(i));

                  (xi) to clear and terminate the Collection Account pursuant to
         Section 9.01.

                  The Servicer shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Collection Account, to the extent held by or on behalf of
it, pursuant to subclauses (ii), (iii), (iv), (v), (vi), (viii), (ix) and (x)
above. The Servicer shall provide written notification to the Trustee, on or
prior to the next succeeding Servicer Remittance Date, upon making any
withdrawals from the Collection Account pursuant to subclauses (vi) and (vii)
above; provided that an Officers' Certificate in the form described under
Section 4.03(d) shall suffice for such written notification to the Trustee in
respect of clause (vi) hereof.

                  (b) The Trustee shall, from time to time, make withdrawals
from the Distribution Account, for any of the following purposes, without
priority:

                  (i) to make distributions to Certificateholders in accordance
         with Section 4.01;

                  (ii) to pay to itself and the Custodian amounts to which it is
         entitled pursuant to Section 8.05 or to pay itself for Extraordinary
         Trust Fund Expenses;

                  (iii) to reimburse itself pursuant to Section 7.02;

                  (iv) to pay any amounts in respect of taxes pursuant to
         Section 10.01(g)(iii);

                  (v) to pay to an Advancing Person reimbursements for P&I
         Advances and/or Servicing Advances pursuant to Section 3.26;

                  (vi) to pay the Credit Risk Manager the Credit Risk Manager
         Fee; and

                  (vi) to clear and terminate the Distribution Account pursuant
         to Section 9.01.

                  SECTION 3.12. Investment of Funds in the Collection Account
                                and the Distribution Account.

                  (a) The Servicer may direct any depository institution
maintaining the Collection Account (for purposes of this Section 3.12, an
"Investment Account") to invest the funds in such Investment Account in one or
more Permitted Investments bearing interest or sold at a discount, and maturing,
unless payable on demand, (i) no later than the Business Day immediately
preceding the date on which such funds are required to be withdrawn from such
account pursuant to this Agreement, if a Person other than the Trustee is the
obligor thereon, and (ii) no later than the date on which such funds are
required to be withdrawn from such account pursuant to this Agreement, if the
Trustee is the obligor thereon. Amounts in the Distribution Account may be held
uninvested. All such Permitted Investments shall be held to maturity, unless
payable on demand. Any investment of funds in an Investment Account shall be
made in the name of the Trustee for the


                                      -74-
<PAGE>

benefit of the Certificateholders. The Trustee shall be entitled to sole
possession (except with respect to investment direction of funds held in the
Collection Account and any income and gain realized thereon) over each such
investment, and any certificate or other instrument evidencing any such
investment shall be delivered directly to the Trustee or its agent, together
with any document of transfer necessary to transfer title to such investment to
the Trustee or its nominee. In the event amounts on deposit in an Investment
Account are at any time invested in a Permitted Investment payable on demand,
the party with investment discretion over such Investment Account shall:

                  (x) consistent with any notice required to be given
         thereunder, demand that payment thereon be made on the last day such
         Permitted Investment may otherwise mature hereunder in an amount equal
         to the lesser of (1) all amounts then payable thereunder and (2) the
         amount required to be withdrawn on such date; and

                  (y) demand payment of all amounts due thereunder promptly upon
         determination by a Responsible Officer of the Trustee that such
         Permitted Investment would not constitute a Permitted Investment in
         respect of funds thereafter on deposit in the Investment Account.

                  (b) All income and gain realized from the investment of funds
deposited in the Collection Account and any REO Account held by or on behalf of
the Servicer, shall be for the benefit of the Servicer and shall be subject to
its withdrawal in accordance with Section 3.11 or Section 3.23, as applicable.
The Servicer shall deposit in the Collection Account or any REO Account, as
applicable, the amount of any loss of principal incurred in respect of any such
Permitted Investment made with funds in such accounts immediately upon
realization of such loss. All income in the nature of interest from the
investment of funds in the Distribution Account shall be for the benefit of the
Trustee. The Trustee shall remit from its own funds for deposit into the
Distribution Account the amount of any loss incurred on Permitted Investments in
the Distribution Account, if amounts on deposit in the Distribution Account are
invested in Permitted Investments by the Trustee in the absence of direction
from another party.

                  (c) Except as otherwise expressly provided in this Agreement,
if any default occurs in the making of a payment due under any Permitted
Investment, or if a default occurs in any other performance required under any
Permitted Investment, the Trustee may and, subject to Section 8.01 and Section
8.02(v), upon the request of the Holders of Certificates representing more than
50% of the Voting Rights allocated to any Class of Certificates, shall take such
action as may be appropriate to enforce such payment or performance, including
the institution and prosecution of appropriate proceedings.

                  (d) The Trustee or its Affiliates are permitted to receive
additional compensation that could be deemed to be in the Trustee's economic
self-interest for (i) serving as investment adviser, administrator, shareholder
servicing agent, custodian or sub-custodian with respect to certain of the
Permitted Investments, (ii) using Affiliates to effect transactions in certain
Permitted Investments and (iii) effecting transactions in certain Permitted
Investments. Such compensation shall not be considered an amount that is
reimbursable or payable to the Trustee pursuant to Section 3.11 or 3.12 or
otherwise payable in respect of Extraordinary Trust Fund Expenses.

                  SECTION 3.13. [Reserved].


                                      -75-
<PAGE>

                  SECTION 3.14. Maintenance of Hazard Insurance and Errors and
                                Omissions and Fidelity Coverage.

                  (a) The Servicer shall cause to be maintained for each
Mortgage Loan fire insurance with extended coverage on the related Mortgaged
Property in an amount which is at least equal to the lesser of the current
principal balance of such Mortgage Loan and the amount necessary to fully
compensate for any damage or loss to the improvements that are a part of such
property on a replacement cost basis, in each case in an amount not less than
such amount as is necessary to avoid the application of any coinsurance clause
contained in the related hazard insurance policy. The Servicer shall also cause
to be maintained fire insurance with extended coverage on each REO Property in
an amount which is at least equal to the lesser of (i) the maximum insurable
value of the improvements which are a part of such property and (ii) the
outstanding principal balance of the related Mortgage Loan at the time it became
an REO Property, plus accrued interest at the Mortgage Rate and related
Servicing Advances. The Servicer will comply in the performance of this
Agreement with all reasonable rules and requirements of each insurer under any
such hazard policies. Any amounts to be collected by the Servicer under any such
policies (other than amounts to be applied to the restoration or repair of the
property subject to the related Mortgage or amounts to be released to the
Mortgagor in accordance with the procedures that the Servicer would follow in
servicing loans held for its own account, subject to the terms and conditions of
the related Mortgage and Mortgage Note) shall be deposited in the Collection
Account, subject to withdrawal pursuant to Section 3.11, if received in respect
of a Mortgage Loan, or in the REO Account, subject to withdrawal pursuant to
Section 3.23, if received in respect of an REO Property. Any cost incurred by
the Servicer in maintaining any such insurance shall not, for the purpose of
calculating distributions to Certificateholders, be added to the unpaid
principal balance of the related Mortgage Loan, notwithstanding that the terms
of such Mortgage Loan so permit. It is understood and agreed that no earthquake
or other additional insurance is to be required of any Mortgagor other than
pursuant to such applicable laws and regulations as shall at any time be in
force and as shall require such additional insurance. If the Mortgaged Property
or REO Property is at any time in an area identified in the Federal Register by
the Federal Emergency Management Agency as having special flood hazards and
flood insurance has been made available, the Servicer will cause to be
maintained a flood insurance policy in respect thereof. Such flood insurance
shall be in an amount equal to the lesser of (i) the unpaid principal balance of
the related Mortgage Loan and (ii) the maximum amount of such insurance
available for the related Mortgaged Property under the national flood insurance
program (assuming that the area in which such Mortgaged Property is located is
participating in such program).

                  In the event that the Servicer shall obtain and maintain a
blanket policy with an insurer having a General Policy Rating of A:X or better
in Best's Key Rating Guide (or such other rating that is comparable to such
rating) insuring against hazard losses on all of the Mortgage Loans, it shall
conclusively be deemed to have satisfied its obligations as set forth in the
first two sentences of this Section 3.14, 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 the first two sentences of this
Section 3.14, and there shall have been one or more losses which would have been
covered by such policy, deposit to the Collection Account from its own funds the
amount not otherwise payable under the blanket policy because of such deductible
clause. In connection with its activities as administrator


                                      -76-
<PAGE>

and servicer of the Mortgage Loans, the Servicer agrees to prepare and present,
on behalf of itself, the Trustee and Certificateholders, claims under any such
blanket policy in a timely fashion in accordance with the terms of such policy.

                  (b) The Servicer shall keep in force during the term of this
Agreement a policy or policies of insurance covering errors and omissions for
failure in the performance of the Servicer's obligations under this Agreement,
which policy or policies shall be in such form and amount that would meet the
requirements of Fannie Mae or Freddie Mac if it were the purchaser of the
Mortgage Loans, unless the Servicer has obtained a waiver of such requirements
from Fannie Mae or Freddie Mac. The Servicer shall also maintain a fidelity bond
in the form and amount that would meet the requirements of Fannie Mae or Freddie
Mac, unless the Servicer has obtained a waiver of such requirements from Fannie
Mae or Freddie Mac. The Servicer shall be deemed to have complied with this
provision if an Affiliate of the Servicer has such errors and omissions and
fidelity bond coverage and, by the terms of such insurance policy or fidelity
bond, the coverage afforded thereunder extends to the Servicer. Any such errors
and omissions policy and fidelity bond shall by its terms not be cancelable
without thirty days prior written notice to the Trustee. The Servicer shall also
cause each Sub-Servicer to maintain a policy of insurance covering errors and
omissions and a fidelity bond which would meet such requirements.

                  SECTION 3.15. Enforcement of Due-On-Sale Clauses; Assumption
                                Agreements.

                  The Servicer will, to the extent it has knowledge of any
conveyance or prospective conveyance of any Mortgaged Property by any Mortgagor
(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 the "due-on-sale" clause, if any, applicable thereto; provided, however,
that the Servicer shall not be required to take such action if in its sole
business judgment the Servicer believes it is not in the best interests of the
Trust Fund and shall not exercise any such rights if prohibited by law from
doing so. If the Servicer reasonably believes it is unable under applicable law
to enforce such "due- on-sale" clause, or if any of the other conditions set
forth in the proviso to the preceding sentence apply, the Servicer will enter
into an assumption and modification agreement from or with the person to whom
such 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. The Servicer is
also authorized to enter into a substitution of liability agreement with such
person, pursuant to which the original Mortgagor is released from liability and
such person is substituted as the Mortgagor and becomes liable under the
Mortgage Note, provided that no such substitution shall be effective unless such
person satisfies the customary underwriting criteria of the Servicer and such
substitution is in the best interest of the Certificateholders. In connection
with any assumption or substitution, the Servicer shall apply such underwriting
standards and follow such practices and procedures as shall be normal and usual
in its general mortgage servicing activities and as it applies to other mortgage
loans serviced solely by it. The Servicer shall not take or enter into any
assumption and modification agreement, however, unless (to the extent
practicable in the circumstances) it shall have received confirmation, in
writing, of the continued effectiveness of any applicable hazard insurance
policy. Any fee collected by the Servicer in respect of an assumption,
modification or substitution of liability agreement shall be


                                      -77-
<PAGE>

retained by the Servicer as additional servicing compensation. In connection
with any such assumption, no material term of the Mortgage Note (including but
not limited to the related Mortgage Rate and the amount of the Monthly Payment)
may be amended or modified, except as otherwise required pursuant to the terms
thereof. The Servicer shall notify the Trustee and the Custodian (if applicable)
that any such substitution, modification or assumption agreement has been
completed by forwarding to the Trustee and the Custodian (if applicable) the
executed original of such substitution, modification 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.

                  Notwithstanding the foregoing paragraph 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 by the terms of the Mortgage Note or any
assumption which the Servicer may be restricted by law from preventing, for any
reason whatever. For purposes of this Section 3.15, 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 3.16. Realization Upon Defaulted Mortgage Loans.

                  (a) The Servicer shall use its best efforts, consistent with
Accepted Servicing Practices, 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 3.07. The Servicer shall
be responsible for all costs and expenses incurred by it in any such
proceedings; provided, however, that such costs and expenses will be recoverable
as Servicing Advances by the Servicer as contemplated in Section 3.11 and
Section 3.23. The foregoing is subject to the provision that, in any case in
which Mortgaged Property shall have suffered damage from an Uninsured Cause, the
Servicer shall not be required to expend its own funds toward the restoration of
such property unless it shall determine in its discretion that such restoration
will increase the proceeds of liquidation of the related Mortgage Loan after
reimbursement to itself for such expenses.

                  (b) Notwithstanding the foregoing provisions of this Section
3.16 or any other provision of this Agreement, 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 not, on behalf of the Trust Fund either (i) obtain
title to such Mortgaged Property as a result of or in lieu of foreclosure or
otherwise, or (ii) otherwise acquire possession of, or take any other action
with respect to, such Mortgaged Property, if, as a result of any such action,
the Trustee, the Trust Fund or the Certificateholders 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 also previously
determined, based on its reasonable judgment and a report prepared by an
Independent Person who regularly conducts environmental audits using customary
industry standards, that:


                                      -78-
<PAGE>

                  (1) such Mortgaged Property is in compliance with applicable
         environmental laws or, if not, that it would be in the best economic
         interest of the Trust Fund to take such actions as are necessary to
         bring the Mortgaged Property into compliance therewith; and

                  (2) 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 Trust Fund to take such actions with respect
         to the affected Mortgaged Property.

                  The cost of the environmental audit report contemplated by
this Section 3.16 shall be advanced by the Servicer, subject to the Servicer's
right to be reimbursed therefor from the Collection Account as provided in
Section 3.11(a)(ix), such right of reimbursement being prior to the rights of
Certificateholders to receive any amount in the Collection Account received in
respect of the affected Mortgage Loan or other Mortgage Loans.

                  If the Servicer determines, as described above, that it is in
the best economic interest of the Trust Fund 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, then
the Servicer shall take such action as it deems to be in the best economic
interest of the Trust Fund; provided that any amounts disbursed by the Servicer
pursuant to this Section 3.16(b) shall constitute Servicing Advances, subject to
Section 4.03(d). The cost of any such compliance, containment, cleanup or
remediation shall be advanced by the Servicer, subject to the Servicer's right
to be reimbursed therefor from the Collection Account as provided in Section
3.11(a)(iii) and (a)(ix), such right of reimbursement being prior to the rights
of Certificateholders to receive any amount in the Collection Account received
in respect of the affected Mortgage Loan or other Mortgage Loans.

                  (c) The Servicer may at its option purchase from REMIC I any
Mortgage Loan or related REO Property that is 90 days or more delinquent, which
the Servicer determines in good faith will otherwise become subject to
foreclosure proceedings (evidence of such determination to be delivered in
writing to the Trustee, in form and substance satisfactory to the Trustee prior
to purchase), at a price equal to the Purchase Price; provided, however, that
the Servicer shall purchase any such Mortgage Loans or related REO Properties on
the basis of delinquency, purchasing the most delinquent Mortgage Loans or
related REO Properties first; provided, further, that such limitation shall not
apply to the purchase of any Collection Advisor Mortgage Loans. The Purchase
Price for any Mortgage Loan or related REO Property purchased hereunder shall be
deposited in the Collection Account, and the Trustee, upon receipt of written
certification from the Servicer of such deposit, shall release or cause to be
released to the Servicer the related Mortgage File and the Trustee shall execute
and deliver such instruments of transfer or assignment, in each case without
recourse, as the Servicer shall furnish and as shall be necessary to vest in the
Servicer title to any Mortgage Loan or related REO Property released pursuant
hereto.


                                      -79-
<PAGE>

                  (d) Proceeds received in connection with any Final Recovery
Determination, as well as any recovery resulting from a partial collection of
Insurance Proceeds or Liquidation Proceeds, in respect of any Mortgage Loan,
will be applied in the following order of priority: first, to reimburse the
Servicer or any Sub-Servicer for any related unreimbursed Servicing Advances and
P&I Advances, pursuant to Section 3.11(a)(ii) or (a)(iii); second, to accrued
and unpaid interest on the Mortgage Loan, to the date of the Final Recovery
Determination, or to the Due Date prior to the Distribution Date on which such
amounts are to be distributed if not in connection with a Final Recovery
Determination; and third, as a recovery of principal of the Mortgage Loan. If
the amount of the recovery so allocated to interest is less than the full amount
of accrued and unpaid interest due on such Mortgage Loan, the amount of such
recovery will be allocated by the Servicer as follows: first, to unpaid
Servicing Fees; and second, to the balance of the interest then due and owing.
The portion of the recovery so allocated to unpaid Servicing Fees shall be
reimbursed to the Servicer or any Sub-Servicer pursuant to Section 3.11(a)(iii).

                  SECTION 3.17. Trustee to Cooperate; Release of Mortgage Files.

                  (a) Upon the payment in full of any Mortgage Loan, or the
receipt by the Servicer of a notification that payment in full shall be escrowed
in a manner customary for such purposes, the Servicer will immediately notify or
cause to be notified the Trustee or the Custodian, as applicable, by a
certification in the form of Exhibit E (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
Collection Account pursuant to Section 3.10 have been or will be so deposited)
of a Servicing Officer and shall request delivery to it of the Mortgage File.
Upon receipt of such certification and request, the Trustee or the Custodian, as
applicable, shall promptly release the related Mortgage File to the Servicer at
no cost to the Trustee or the Trust Fund. Except as otherwise provided herein,
no expenses incurred in connection with any instrument of satisfaction or deed
of reconveyance shall be chargeable to the Collection Account or the
Distribution Account.

                  (b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, including, for this purpose, collection under
any insurance policy relating to the Mortgage Loans, the Trustee shall, upon any
request made by or on behalf of the Servicer and delivery to the Trustee or the
Custodian, as applicable, of a Request for Release in the form of Exhibit E,
release the related Mortgage File to the Servicer, and the Trustee or the
Custodian, as applicable, shall, at the direction of the Servicer, execute such
documents as shall be necessary to the prosecution of any such proceedings. Such
Request for Release shall obligate the Servicer to return each and every
document previously requested from the Mortgage File to the Trustee or the
Custodian, as applicable, 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 Collection
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, or caused to be delivered, to the Trustee or the Custodian, as
applicable, an additional Request for Release certifying as to such liquidation
or action or proceedings. Upon the request of the Trustee, the Servicer shall
provide notice to the Trustee of 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


                                      -80-
<PAGE>

of a Servicing Officer stating that such Mortgage Loan was liquidated and that
all amounts received or to be received in connection with such liquidation that
are required to be deposited into the Collection Account have been so deposited,
or that such Mortgage Loan has become an REO Property, any outstanding Requests
for Release with respect to such Mortgage Loan shall be released by the Trustee
or the Custodian, as applicable, to the Servicer or its designee.

                  (c) Upon written certification of a Servicing Officer, the
Trustee shall execute and deliver to the Servicer or the Sub-Servicer, as the
case may be, any court pleadings, requests for trustee's sale or other documents
necessary to the foreclosure or trustee's sale in respect of a Mortgaged
Property or to any legal action brought to obtain judgment against any Mortgagor
on the Mortgage Note or Mortgage or to obtain a deficiency judgment, or to
enforce any other remedies or rights provided by the Mortgage Note or Mortgage
or otherwise available at law or in equity. Each such certification shall
include a request that such pleadings or documents be executed by the Trustee
and a statement as to the reason such documents or pleadings are required and
that the execution and delivery thereof by the Trustee will not invalidate or
otherwise affect the lien of the Mortgage, except for the termination of such a
lien upon completion of the foreclosure or trustee's sale.

                  SECTION 3.18. Servicing Compensation.

                  As compensation for the activities of the Servicer hereunder,
the Servicer shall be entitled to the Servicing Fee with respect to each
Mortgage Loan payable solely from payments of interest in respect of such
Mortgage Loan, subject to Section 3.24. In addition, the Servicer shall be
entitled to recover unpaid Servicing Fees out of Insurance Proceeds or
Liquidation Proceeds to the extent permitted by Section 3.11(a)(iii) and out of
amounts derived from the operation and sale of an REO Property to the extent
permitted by Section 3.23. Except as provided in Sections 3.26 and 6.04, the
right to receive the Servicing Fee may not be transferred in whole or in part
except in connection with the transfer of all of the Servicer's responsibilities
and obligations under this Agreement; provided, however, that the Servicer may
pay from the Servicing Fee any amounts due to a Sub-Servicer pursuant to a
Sub-Servicing Agreement entered into under Section 3.02.

                  Additional servicing compensation in the form of assumption or
modification fees, late payment charges, insufficient funds charges or otherwise
(subject to Section 3.24 and other than Prepayment Charges) shall be retained by
the Servicer only to the extent such fees or charges are received by the
Servicer. The Servicer shall also be entitled pursuant to Section 3.11(a)(iv) to
withdraw from the Collection Account and pursuant to Section 3.23(b) to withdraw
from any REO Account, as additional servicing compensation, interest or other
income earned on deposits therein, subject to Section 3.12 and Section 3.24. The
Servicer shall be required to pay all expenses incurred by it in connection with
its servicing activities hereunder (including premiums for the insurance
required by Section 3.14, to the extent such premiums are not paid by the
related Mortgagors or by a Sub-Servicer, servicing compensation of each
Sub-Servicer, and to the extent provided herein in Section 8.05, the expenses of
the Trustee) and shall not be entitled to reimbursement therefor except as
specifically provided herein.

                  SECTION 3.19. Reports to the Trustee and Others; Collection
                                Account Statements.


                                      -81-
<PAGE>

                  Not later than twenty days after each Distribution Date, the
Servicer shall forward to the Trustee (upon the Trustee's request) and the
Depositor the most current available bank statement for the Collection Account.
Copies of such statement shall be provided by the Trustee to any
Certificateholder and to any Person identified to the Trustee as a prospective
transferee of a Certificate, upon request at the expense of the requesting
party, provided such statement is delivered by the Servicer to the Trustee.

                  In addition, on each Distribution Date, New Century shall
forward to the Rating Agencies, the Trustee, the Collection Advisor and the
Credit Risk Manager a report setting forth (i) the percentage of the New Century
Mortgage Loans that are 30 or more days delinquent, in foreclosure, have been
converted to REO Properties or have been discharged by reason of bankruptcy,
(ii) the number and aggregate principal balance of New Century Mortgage Loans
that are Collection Advisor Mortgage Loans, (iii) the number and aggregate
principal balance of New Century Mortgage Loans serviced by New Century and the
Collection Advisor and (iv) the Collection Advisor Delinquency Triggers.

                  SECTION 3.20. Statement as to Compliance.

                  Not later than March 15th of each calendar year commencing in
2004, the Servicer will deliver to the Trustee and the Depositor an Officers'
Certificate (upon which the Trustee can conclusively rely in connection with its
obligations under Section 4.06) stating, as to each signatory thereof, that (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. Copies of any such statement shall be provided by the
Trustee to any Certificateholder and to any Person identified to the Trustee as
a prospective transferee of a Certificate, upon request at the expense of the
requesting party, provided such statement is delivered by the Servicer to the
Trustee.

                  SECTION 3.21. Independent Public Accountants' Servicing
                                Report.

                  Not later than March 15th of each calendar year commencing in
2004, the Servicer, at its expense, shall cause a nationally recognized firm of
independent certified public accountants to furnish to the Servicer a report
stating that (i) it has obtained a letter of representation regarding certain
matters from the management of the Servicer which includes an assertion that the
Servicer has complied with certain minimum residential mortgage loan servicing
standards, identified in the Uniform Single Attestation Program for Mortgage
Bankers established by the Mortgage Bankers Association of America, with respect
to the servicing of residential mortgage loans during the most recently
completed fiscal year and (ii) on the basis of an examination conducted by such
firm in accordance with standards established by the American Institute of
Certified Public Accountants, such representation is fairly stated in all
material respects, subject to such exceptions and other qualifications that may
be appropriate. In rendering its report such firm may rely, as to matters
relating to the direct servicing of residential mortgage loans by Sub-Servicers,
upon comparable reports of firms of independent certified public accountants
rendered on the basis of examinations


                                      -82-
<PAGE>

conducted in accordance with the same standards (rendered within one year of
such report) with respect to those Sub-Servicers. Immediately upon receipt of
such report, the Servicer shall, at its own expense, furnish a copy of such
report to the Trustee and each Rating Agency. Copies of such statement shall be
provided by the Trustee to any Certificateholder upon request, provided that
such statement is delivered by the Servicer to the Trustee.

                  SECTION 3.22. Access to Certain Documentation.

                  The Servicer shall provide to the Office of Thrift
Supervision, the FDIC, and any other federal or state banking or insurance
regulatory authority that may exercise authority over any Certificateholder,
access to the documentation in the Servicer's possession regarding the Mortgage
Loans required by applicable laws and regulations. Such access shall be afforded
without charge, but only upon reasonable request and during normal business
hours at the offices of the Servicer designated by it. In addition, access to
the documentation in the Servicer's possession regarding the Mortgage Loans will
be provided to any Certificateholder, the Trustee and to any Person identified
to the Servicer as a prospective transferee of a Certificate; provided, however,
that providing access to such Person will not violate any applicable laws, upon
reasonable request during normal business hours at the offices of the Servicer
designated by it at the expense of the Person requesting such access.

                  SECTION 3.23. Title, Management and Disposition of REO
                                Property.

                  (a) The deed or certificate of sale of any REO Property shall
be taken in the name of the Trustee, or its nominee, in trust for the benefit of
the Certificateholders. The Servicer, on behalf of REMIC I, shall either sell
any REO Property prior to the end of the third taxable year after REMIC I
acquires ownership of such REO Property for purposes of Section 860G(a)(8) of
the Code or request from the Internal Revenue Service, no later than 60 days
before the day on which the three-year grace period would otherwise expire, an
extension of the three-year grace period, unless the Servicer shall have
delivered to the Trustee an Opinion of Counsel, addressed to the Trustee and the
Depositor, to the effect that the holding by REMIC I of such REO Property
subsequent to three years after its acquisition will not result in the
imposition on any Trust REMIC of taxes on "prohibited transactions" thereof, as
defined in Section 860F of the Code, or cause any Trust REMIC to fail to qualify
as a REMIC under Federal law at any time that any Certificates are outstanding.
The Servicer shall manage, conserve, protect and operate each REO Property for
the Certificateholders 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) of the Code or
result in the receipt by any Trust 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 the REMIC
Provisions.

                  (b) The Servicer shall segregate and hold all funds collected
and received in connection with the operation of any REO Property separate and
apart from its own funds and general assets and shall establish and maintain, or
cause to be established and maintained, with respect to REO Properties, an
account held in trust for the Trustee for the benefit of the Certificateholders
(the "REO Account"), which shall be an Eligible Account. The Servicer shall be
permitted to allow the Collection Account to serve as the REO Account, subject
to separate ledgers


                                      -83-
<PAGE>

for each REO Property. The Servicer shall be entitled to retain or withdraw any
interest income paid on funds deposited in the REO Account.

                  (c) The Servicer shall have the sole discretion to determine
whether an immediate sale of an REO Property or continued management of such REO
Property is in the best interests of the Certificateholders. In furtherance of
the foregoing, the Servicer shall have full power and authority, subject only to
the specific requirements and prohibitions of this Agreement, to do any and all
things in connection with any REO Property as are consistent with the manner in
which the Servicer manages and operates similar property owned by the Servicer
or any of its Affiliates, all on such terms and for such period as the Servicer
deems to be in the best interests of Certificateholders. In connection
therewith, the Servicer shall deposit, or cause to be deposited in the clearing
account in which it customarily deposits payments and collections on mortgage
loans in connection with its mortgage loan servicing activities on a daily
basis, and in no event more than one Business Day after the Servicer's receipt
thereof, and shall thereafter deposit in the REO Account, in no event more than
two Business Days after the Servicer's receipt thereof, all revenues received by
it with respect to an REO Property and shall withdraw therefrom funds necessary
for the proper operation, management and maintenance of such REO Property
including, without limitation:

                  (i) all insurance premiums due and payable in respect of such
         REO Property;

                  (ii) all real estate taxes and assessments in respect of such
         REO Property that may result in the imposition of a lien thereon; and

                  (iii) all costs and expenses necessary to maintain such REO
         Property.

                  To the extent that amounts on deposit in the REO Account with
respect to an REO Property are insufficient for the purposes set forth in
clauses (i) through (iii) above with respect to such REO Property, the Servicer
shall advance from its own funds such amount as is necessary for such purposes
if, but only if, the Servicer would make such advances if the Servicer owned the
REO Property and if in the Servicer's judgment, the payment of such amounts will
be recoverable from the rental or sale of the REO Property.

                  Notwithstanding the foregoing, neither the Servicer nor the
Trustee shall:

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

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

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


                                      -84-
<PAGE>

                  (iv) authorize any Person to Directly Operate any REO Property
         on any date more than 90 days after its date of acquisition by the
         Trust Fund;

unless, in any such case, the Servicer has obtained an Opinion of Counsel,
provided to the Trustee, to the effect that such action will not cause such REO
Property to fail to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code at any time that it is held by REMIC I, in which
case the Servicer may take such actions as are specified in such Opinion of
Counsel.

                  The Servicer may contract with any Independent Contractor for
the operation and management of any REO Property, provided that:

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

                  (ii) any such contract shall require, or shall be administered
         to require, that the Independent Contractor pay all costs and expenses
         incurred in connection with the operation and management of such REO
         Property, including those listed above and remit all related revenues
         (net of such costs and expenses) to the Servicer as soon as
         practicable, but in no event later than thirty days following the
         receipt thereof by such Independent Contractor;

                  (iii) none of the provisions of this Section 3.23(c) relating
         to any such contract or to actions taken through any such Independent
         Contractor shall be deemed to relieve the Servicer of any of its duties
         and obligations to the Trustee on behalf of the Certificateholders with
         respect to the operation and management of any such REO Property; and

                  (iv) the Servicer shall be obligated with respect thereto to
         the same extent as if it alone were performing all duties and
         obligations in connection with the operation and management of such REO
         Property.

                  The Servicer shall be entitled to enter into any agreement
with any Independent Contractor performing services for it related to its duties
and obligations hereunder for indemnification of the Servicer by such
Independent Contractor, and nothing in this Agreement shall be deemed to limit
or modify such indemnification. The Servicer shall be solely liable for all fees
owed by it to any such Independent Contractor, irrespective of whether the
Servicer's compensation pursuant to Section 3.18 is sufficient to pay such fees;
provided, however, that to the extent that any payments made by such Independent
Contractor would constitute Servicing Advances if made by the Servicer, such
amounts shall be reimbursable as Servicing Advances made by the Servicer.

                  (d) In addition to the withdrawals permitted under Section
3.23(c), the Servicer may from time to time make withdrawals from the REO
Account for any REO Property: (i) to pay itself or any Sub-Servicer unpaid
Servicing Fees in respect of the related Mortgage Loan; and (ii) to reimburse
itself or any Sub-Servicer for unreimbursed Servicing Advances and P&I Advances
made in respect of such REO Property or the related Mortgage Loan. On the
Servicer Remittance Date, the Servicer shall withdraw from each REO Account
maintained by it and deposit into the Distribution Account in accordance with
Section 3.10(d)(ii), for distribution on the related Distribution Date in
accordance with Section 4.01, the income from the related REO Property


                                      -85-
<PAGE>

received during the prior calendar month, net of any withdrawals made pursuant
to Section 3.23(c) or this Section 3.23(d).

                  (e) Subject to the time constraints set forth in Section
3.23(a), each REO Disposition shall be carried out by the Servicer at such price
and upon such terms and conditions as the Servicer shall deem necessary or
advisable, as shall be normal and usual in its Accepted Servicing Practices.

                  (f) The proceeds from the REO Disposition, net of any amount
required by law to be remitted to the Mortgagor under the related Mortgage Loan
and net of any payment or reimbursement to the Servicer or any Sub-Servicer as
provided above, shall be deposited in the Distribution Account in accordance
with Section 3.10(d)(ii) on the Servicer Remittance Date in the month following
the receipt thereof for distribution on the related Distribution Date in
accordance with Section 4.01. Any REO Disposition shall be for cash only (unless
changes in the REMIC Provisions made subsequent to the Startup Day allow a sale
for other consideration).

                  (g) The Servicer shall file information returns with respect
to the receipt of mortgage interest received in a trade or business, reports of
foreclosures and abandonments of any Mortgaged Property and cancellation of
indebtedness income with respect to any Mortgaged Property as required by
Sections 6050H, 6050J and 6050P of the Code, respectively. Such reports shall be
in form and substance sufficient to meet the reporting requirements imposed by
such Sections 6050H, 6050J and 6050P of the Code.

                  SECTION 3.24. Obligations of the Servicer in Respect of
                                Prepayment Interest Shortfalls.

                  The Servicer shall deliver to the Trustee for deposit into the
Distribution Account by 1:00 p.m. New York time on the Servicer Remittance Date
from its own funds an amount equal to the lesser of (i) the aggregate of the
Prepayment Interest Shortfalls for the related Mortgage Loans for the related
Distribution Date resulting from full or partial Principal Prepayments during
the related Prepayment Period (or the applicable portion thereof in the case of
Ocwen) and (ii) the aggregate Servicing Fee for the related Servicer for the
related Prepayment Period. Any amounts paid by the Servicer pursuant to this
Section 3.24 shall not be reimbursed by any Trust REMIC or the Trust Fund.

                  SECTION 3.25. Obligations of the Servicer in Respect of
                                Mortgage Rates and Monthly Payments.

                  In the event that a shortfall in any collection on or
liability with respect to any Mortgage Loan results from or is attributable to
adjustments to Mortgage Rates, Monthly Payments or Stated Principal Balances
that were made by the Servicer in a manner not consistent with the terms of the
related Mortgage Note and this Agreement, the Servicer, upon discovery or
receipt of notice thereof, immediately shall deliver to the Trustee for deposit
in the Distribution Account from its own funds the amount of any such shortfall
and shall indemnify and hold harmless the Trust Fund, the Trustee, the Depositor
and any successor Servicer in respect of any such liability. Such indemnities
shall survive the termination or discharge of this Agreement. Notwithstanding
the


                                      -86-
<PAGE>

foregoing, this Section 3.25 shall not limit the ability of the Servicer to seek
recovery of any such amounts from the related Mortgagor under the terms of the
related Mortgage Note, as permitted by law.

                  SECTION 3.26. Advance Facility.

                  (a) Either (i) the Servicer or (ii) the Trustee, on behalf of
the Trust Fund, with the consent of the Servicer, is hereby authorized to enter
into a facility with any Person which provides that such Person (an "Advancing
Person") may fund P&I Advances and/or Servicing Advances to the Trust Fund under
this Agreement, although no such facility shall reduce or otherwise affect the
Servicer's obligation to fund such P&I Advances and/or Servicing Advances. If
the Servicer enters into such an Advance Facility pursuant to this Section 3.26,
upon reasonable request of the Advancing Person, the Trustee shall execute a
letter of acknowledgment, confirming its receipt of notice of the existence of
such Advance Facility. If the Trustee enters into such an Advance Facility
pursuant to this Section 3.26, the Servicer shall also be a party to such
Advance Facility. To the extent that an Advancing Person funds any P&I Advance
or any Servicing Advance and the Servicer provides the Trustee with an Officers'
Certificate that such Advancing Person is entitled to reimbursement, such
Advancing Person shall be entitled to receive reimbursement pursuant to this
Agreement for such amount to the extent provided in Section 3.26(b). Such
Officers' Certificate must specify the amount of the reimbursement, the Section
of this Agreement that permits the applicable P&I Advance or Servicing Advance
to be reimbursed and the section(s) of the Advance Facility that entitle the
Advancing Person to request reimbursement from the Trustee, rather than the
Servicer or proof of an Event of Default under the Advance Facility. The Trustee
shall have no duty or liability with respect to any calculation of any
reimbursement to be paid to an Advancing Person and shall be entitled to rely
without independent investigation on the Advancing Person's notice provided
pursuant to this Section 3.26. An Advancing Person whose obligations hereunder
are limited to the funding of P&I Advances and/or Servicing Advances shall not
be required to meet the qualifications of a Servicer or a Sub-Servicer pursuant
to Section 3.02 hereof and will not be deemed to be a Sub-Servicer under this
Agreement.

                  (b) If an advancing facility is entered into, then the
Servicer shall not be permitted to reimburse itself therefor under Section
3.11(a)(ii), Section 3.11(a)(iii) and Section 3.11(a)(vi) prior to the
remittance to the Trust Fund, but instead the Servicer shall remit such amounts
in accordance with the documentation establishing the Advance Facility to such
Advancing Person or to a trustee, agent or custodian (an "Advance Facility
Trustee") designated by such Advancing Person. The Trustee is hereby authorized
to pay to the Advancing Person, reimbursements for P&I Advances and Servicing
Advances from the Distribution Account to the same extent the Servicer would
have been permitted to reimburse itself for such P&I Advances and/or Servicing
Advances in accordance with 3.11(a)(ii), Section 3.11(a)(iii) and Section
3.11(a)(vi), as the case may be, had the Servicer itself funded such P&I Advance
or Servicing Advance. The Trustee is hereby authorized to pay directly to the
Advancing Person such portion of the Servicing Fee as the parties to any
advancing facility agree in writing.

                  (c) All P&I Advances and Servicing Advances made pursuant to
the terms of this Agreement shall be deemed made and shall be reimbursed on a
"first in-first out" (FIFO) basis.


                                      -87-
<PAGE>

                  (d) Any amendment to this Section 3.26 or to any other
provision of this Agreement that may be necessary or appropriate to effect the
terms of an Advance Facility as described generally in this Section 3.26,
including amendments to add provisions relating to a successor Servicer, may be
entered into by the Trustee and the Servicer without the consent of any
Certificateholder, notwithstanding anything to the contrary in this Agreement.

                  SECTION 3.27. [Reserved].

                  SECTION 3.28 Net WAC Rate Carryover Reserve Account.

                  (a) No later than the Closing Date, the Trustee shall
establish and maintain with itself, as agent for the Trustee, a separate,
segregated trust account titled, "Net WAC Rate Carryover Reserve Account,
Deutsche Bank National Trust Company, as Trustee, in trust for the registered
holders of New Century Mortgage Securities, Inc., New Century Home Equity Loan
Trust, Series 2003-2, Asset Backed Pass-Through Certificates." On the Closing
Date, the Depositor will deposit, or cause to be deposited, into the Net WAC
Rate Carryover Reserve Account $1,000. In addition the amount deposited in the
Net WAC Rate Carryover Reserve Account will be increased by any payments
received by the Trustee under the Cap Contract and deposited into the Net WAC
Rate Carryover Reserve Account. All amounts deposited in the Net WAC Rate
Carryover Reserve Account shall be distributed to the Holders of the Class A-2
Certificates and the Mezzanine Certificates in the manner set forth in Section
4.01(a)(4).

                  (b) On each Distribution Date as to which there is a Net WAC
Rate Carryover Amount payable to the Class A Certificates, the Class A-IO
Certificates or the Mezzanine Certificates, the Trustee has been directed by the
Class CE Certificateholders to, and therefore will, deposit into the Net WAC
Rate Carryover Reserve Account the amounts described in Section 4.01(a)(4),
rather than distributing such amounts to the Class CE Certificateholders. On
each such Distribution Date, the Trustee shall hold all such amounts for the
benefit of the Holders of the Class A Certificates, the Class A-IO Certificates
and the Mezzanine Certificates, and will distribute such amounts to the Holders
of the Class A Certificates, the Class A-IO Certificates and the Mezzanine
Certificates in the amounts and priorities set forth in Section 4.01(a). If no
Net WAC Rate Carryover Amounts are payable on a Distribution Date, the Trustee
shall deposit into the Net WAC Rate Carryover Reserve Account on behalf of the
Class CE Certificateholders, from amounts otherwise distributable to the Class
CE Certificateholders, an amount such that when added to other amounts already
on deposit in the Net WAC Rate Carryover Reserve Account, the aggregate amount
on deposit therein is equal to $1,000.

                  (c) For federal and state income tax purposes, the Class CE
Certificateholders will be deemed to be the owners of the Net WAC Rate Carryover
Reserve Account and all amounts deposited into the Net WAC Rate Carryover
Reserve Account (other than the initial deposit therein of $1,000) shall be
treated as amounts distributed by REMIC II to the Holders of the Class CE
Certificates. Upon the termination of the Trust Fund, or the payment in full of
the Class A Certificates, the Class A-IO Certificates and the Mezzanine
Certificates, all amounts remaining on deposit in the Net WAC Rate Carryover
Reserve Account will be released by the Trust Fund and distributed to the Class
CE Certificateholders or their designees. The Net WAC Rate Carryover Reserve
Account will be part of the Trust Fund but not part of any REMIC and any
payments to the


                                      -88-
<PAGE>

Holders of the Class A Certificates, the Class A-IO Certificates or the
Mezzanine Certificates of Net WAC Rate Carryover Amounts will not be payments
with respect to a "regular interest" in a REMIC within the meaning of Code
Section 860(G)(a)(1).

                  (d) By accepting a Class CE Certificate, each Class CE
Certificateholder hereby agrees to direct the Trustee, and the Trustee hereby is
directed, to deposit into the Net WAC Rate Carryover Reserve Account the amounts
described above on each Distribution Date as to which there is any Net WAC Rate
Carryover Amount rather than distributing such amounts to the Class CE
Certificateholders. By accepting a Class CE Certificate, each Class CE
Certificateholder further agrees that such direction is given for good and
valuable consideration, the receipt and sufficiency of which is acknowledged by
such acceptance.

                  (e) At the direction of the Holders of a majority in
Percentage Interest in the Class CE Certificates, the Trustee shall direct any
depository institution maintaining the Net WAC Rate Carryover Reserve Account to
invest the funds in such account in one or more Permitted Investments bearing
interest or sold at a discount, and maturing, unless payable on demand, (i) no
later than the Business Day immediately preceding the date on which such funds
are required to be withdrawn from such account pursuant to this Agreement, if a
Person other than the Trustee or an Affiliate manages or advises such
investment, and (ii) no later than the date on which such funds are required to
be withdrawn from such account pursuant to this Agreement, if the Trustee or an
Affiliate manages or advises such investment. If no investment direction of the
Holders of a majority in Percentage Interest in the Class CE Certificates with
respect to the Net WAC Rate Carryover Reserve Account is received by the
Trustee, the Trustee shall invest the funds in Deutsche Cash Management Fund 541
so long as it is a Permitted Investment or as otherwise directed in writing by
the Depositor on behalf of the Holders of a majority Percentage Interest in the
Class CE Certificates. All income and gain earned upon such investment shall be
deposited into the Net WAC Rate Carryover Reserve Account.

                  (f) For federal tax return and information reporting, the
right of the Class A Certificateholders, the Class A-IO Certificateholders and
the Mezzanine Certificateholders to receive payments from the Net WAC Rate
Carryover Reserve Account in respect of any Net Wac Rate Carryover Amount shall
be assigned a value of zero.



                                      -89-
<PAGE>

                                   ARTICLE IV

                         PAYMENTS TO CERTIFICATEHOLDERS

                  SECTION 4.01. Distributions.

                  (a)(1)(A) On each Distribution Date, the following amounts, in
the following order of priority, shall be distributed by REMIC I to REMIC II on
account of the REMIC I Regular Interests or withdrawn from the Distribution
Account and distributed to the holders of the Class R Certificates (in respect
of the Class R-I Interest), as the case may be:

                  (i) first, to the Holders of REMIC I Regular Interest I-LTAIO1
         and REMIC I Regular Interest I-LTAIO2 in an amount equal to (A) the
         Uncertificated Interest for such Distribution Date, plus (B) any
         amounts in respect thereof remaining unpaid from previous Distribution
         Dates and second, to the Holders of REMIC I Regular Interest I-LT1,
         REMIC I Regular Interest I-LT2 and REMIC I Regular Interest I-LTP, in
         an amount equal to (A) the Uncertificated Interest for such
         Distribution Date, plus (B) any amounts in respect thereof remaining
         unpaid from previous Distribution Dates;

                  (ii) to the Holders of the REMIC I Regular Interest I-LTP, on
         the Distribution Date immediately following the expiration of the
         latest Prepayment Charge term as identified on the Mortgage Loan
         Schedule or any Distribution Date thereafter until $100 has been
         distributed pursuant to this clause;

                  (iii) on each Distribution Date, the remainder of the
         Available Funds for such Distribution Date after the distributions made
         pursuant to clause (i) and clause (ii) above, first, to the Holders of
         REMIC I Regular Interest I-LT1 and REMIC I Regular Interest I-LT2 until
         the Uncertificated Balance of each such REMIC I Regular Interest is
         reduced to zero, and second, to the Holders of REMIC I Regular Interest
         I-LTAIO1 and REMIC I Regular Interest I-LTAIO2 until the Uncertificated
         Balance of each such REMIC I Regular Interest is reduced to zero; and

                  (iv) to the Holders of the Class R Certificates (in respect of
         the Class R-I Interest), any amounts remaining after the distributions
         pursuant to clauses (i) through (iii) above.

                  (2) On each Distribution Date, all amounts representing
Prepayment Charges in respect of the Mortgage Loans received during the related
Prepayment Period will be distributed by REMIC I to the Holders of REMIC I
Regular Interest I-LTP. The payment of the foregoing amounts to the Holders of
REMIC I Regular Interest I-LTP shall not reduce the Uncertificated Balance
thereof.

                  (B) On each Distribution Date, the following amounts, in the
following order of priority, shall be distributed by REMIC II to REMIC III on
account of the REMIC II Regular Interests or withdrawn from the Distribution
Account and distributed to the holders of the Class R-II Interest, as the case
may be:


                                      -90-
<PAGE>

                  (i) to the Holders of REMIC II Regular Interest II-LTAIO1A,
         REMIC II Regular Interest II-LTAIO1B, REMIC II Regular Interest
         II-LTAIO1C, REMIC II Regular Interest II-LTAIO2A, REMIC II Regular
         Interest II-LTAIO2B and REMIC II Regular Interest II-LTAIO2C, on a PRO
         RATA basis, in an amount equal to (A) the Uncertificated Interest for
         each such REMIC II Regular Interest for such Distribution Date, plus
         (B) any amounts in respect thereof remaining unpaid from previous
         Distribution Dates and then to the Holders of REMIC II Regular Interest
         II-LTAA, REMIC II Regular Interest II-LTA1, REMIC II Regular Interest
         II-LTA2, REMIC II Regular Interest II-LTM1, REMIC II Regular Interest
         II-LTM2, REMIC II Regular Interest II-LTM3, REMIC II Regular Interest
         II-LTM4 and REMIC II Regular Interest II-LTZZ, in an amount equal to
         (A) the Uncertificated Interest for such Distribution Date, plus (B)
         any amounts in respect thereof remaining unpaid from previous
         Distribution Dates. Amounts payable as Uncertificated Interest in
         respect of REMIC II Regular Interest II-LTZZ shall be reduced when the
         sum of the REMIC II Overcollateralized Amount is less than the REMIC II
         Required Overcollateralized Amount, by the lesser of (x) the amount of
         such difference and (y) the Maximum II-LTZZ Uncertificated Interest
         Deferral Amount and such amounts will be payable to the Holders of
         REMIC II Regular Interest II-LTA1, REMIC II Regular Interest II-LTA2,
         REMIC II Regular Interest II-LTM1, REMIC II Regular Interest II-LTM2,
         REMIC II Regular Interest II-LTM3 and REMIC II Regular Interest II-LTM4
         in the same proportion as the Overcollateralization Increase Amount is
         allocated to the Corresponding Certificates; and

                  (ii) to the Holders of REMIC II Regular Interest II-LT1SUB,
         REMIC II Regular Interest II-LT1GRP, REMIC II Regular Interest
         II-LT2SUB, REMIC II Regular Interest II- LT2GRP and REMIC II Regular
         Interest II-LTXX,on a PRO RATA basis, in an amount equal to (A) the
         Uncertificated Interest for such Distribution Date, plus (B) any
         amounts in respect thereof remaining unpaid from previous Distribution
         Dates;

                  (iii) to the Holders of REMIC II Regular Interests, in an
         amount equal to the remainder of the Marker Allocation Percentage of
         the Available Distribution Amount for such Distribution Date after the
         distributions made pursuant to clause (i) above, allocated as follows:

                           (a) to the Holders of REMIC II Regular Interest
                  II-LTAA, 98.00% of such remainder (less the amount payable in
                  clause (d) below), until the Uncertificated Balance of such
                  REMIC II Regular Interest is reduced to zero;

                           (b) to the Holders of REMIC II Regular Interest
                  II-LTA1, REMIC II Regular Interest II-LTA2, REMIC II Regular
                  Interest II-LTM1, REMIC II Regular Interest II-LTM2, REMIC II
                  Regular Interest II-LTM3 and REMIC II Regular Interest
                  II-LTM4, 1.00% of such remainder (less the amount payable in
                  clause (d) below), in the same proportion as principal
                  payments are allocated to the Corresponding Certificates,
                  until the Uncertificated Balances of such REMIC II Regular
                  Interests are reduced to zero;


                                      -91-
<PAGE>

                           (c) to the Holders of REMIC II Regular Interest
                  II-LTZZ, 1.00% of such remainder (less the amount payable in
                  clause (d) below), until the Uncertificated Balance of such
                  REMIC II Regular Interest is reduced to zero; then

                           (d) to the Holders of REMIC II Regular Interest
                  II-LTP, on the Distribution Date immediately following the
                  expiration of the latest Prepayment Charge as identified on
                  the Prepayment Charge Schedule or any Distribution Date
                  thereafter until $100 has been distributed pursuant to this
                  clause; and

                           (e) any remaining amount to the Holders of the
                  Class R Certificates (as Holder of the Class R-II Interest);

provided, however, that 98.00% and 2.00% of any principal payments that are
attributable to an Overcollateralization Reduction Amount shall be allocated to
Holders of REMIC II Regular Interest II-LTAA and REMIC II Regular Interest
II-LTZZ, respectively; and

                  (iv) to the Holders of REMIC II Regular Interests, in an
         amount equal to the remainder of the REMIC II Sub WAC Allocation
         Percentage of the Available Distribution Amount for such Distribution
         Date after the distributions made pursuant to clause (i) above, such
         that distributions of principal shall be deemed to be made to the REMIC
         II Regular Interests first, so as to keep the Uncertificated Balance of
         each REMIC II Regular Interest ending with the designation "GRP" equal
         to 0.01% of the aggregate Stated Principal Balance of the Mortgage
         Loans in the related Loan Group; second, to each REMIC II Regular
         Interest ending with the designation "SUB," so that the Uncertificated
         Balance of each such REMIC II Regular Interest is equal to 0.01% of the
         excess of (x) the aggregate Stated Principal Balance of the Mortgage
         Loans in the related Loan Group over (y) the current Certificate
         Principal Balance of the Class A Certificate in the related Loan Group
         (except that if any such excess is a larger number than in the
         preceding distribution period, the least amount of principal shall be
         distributed to such REMIC II Regular Interests such that the REMIC II
         Subordinated Balance Ratio is maintained); and third, any remaining
         principal to REMIC II Regular Interest II-LTXX.

                  (2) On each Distribution Date, the Trustee shall withdraw from
the Distribution Account an amount equal to the Group I Interest Remittance
Amount and distribute to the Certificateholders the following amounts, in the
following order of priority:

                  (i) concurrently to the Holders of the Class A-1 Certificates
         and the Class A-IO Certificates (in respect of the Class A-IO-1
         Component), an amount equal to the Senior Interest Distribution Amount
         allocable to such Certificates, on a PRO RATA basis based on the
         entitlement of each such Class; and

                  (ii) to the Holders of the Class A-2 Certificates and the
         Class A-IO Certificates (in respect of the Class A-IO-2 Component), an
         amount equal to the Senior Interest Distribution Amount allocable to
         such Certificates, on a PRO RATA basis based on the entitlement of each
         such Class, to the extent remaining unpaid after the distribution of
         the Group II Interest Remittance Amount as set forth in Section
         4.01(a)(2)(II)(i) below.


                                      -92-
<PAGE>

                  (II) On each Distribution Date, the Trustee shall withdraw
from the Distribution Account an amount equal to the Group II Interest
Remittance Amount and distribute to the Certificateholders the following
amounts, in the following order of priority:

                  (i) concurrently to the Holders of the Class A-2 Certificates
         and the Class A-IO Certificates (in respect of the Class A-IO-2
         Component), an amount equal to the Senior Interest Distribution Amount
         allocable to such Certificates, on a PRO RATA basis based on the
         entitlement of each such Class; and

                  (ii) to the Holders of the Class A-1 Certificates and the
         Class A-IO Certificates (in respect of the Class A-IO-1 Component), an
         amount equal to the Senior Interest Distribution Amount allocable to
         such Certificates, on a PRO RATA basis based on the entitlement of each
         such Class, to the extent remaining unpaid after the distribution of
         the Group I Interest Remittance Amount set forth in Section
         4.01(a)(2)(I)(i) above.

                  (III) On each Distribution Date, following the distributions
made pursuant to Section 4.01(a)(2)(I) and (II) above, the Trustee shall
withdraw from the Distribution Account an amount equal to any remaining Group I
Interest Remittance Amount and Group II Interest Remittance Amount and
distribute to the Certificateholders the following amounts, in the following
order of priority

                  (i) to the Holders of the Class M-1 Certificates, an amount
         equal to the Interest Distribution Amount allocable to the Class M-1
         Certificates;

                  (ii) to the Holders of the Class M-2 Certificates, an amount
         equal to the Interest Distribution Amount allocable to the Class M-2
         Certificates;

                  (iii) to the Holders of the Class M-3 Certificates, an amount
         equal to the Interest Distribution Amount allocable to the Class M-3
         Certificates; and

                  (iv) to the Holders of the Class M-4 Certificates, an amount
         equal to the Interest Distribution Amount allocable to the Class M-4
         Certificates.

                  (3)(I) On each Distribution Date (a) prior to the Stepdown
Date or (b) on which a Trigger Event is in effect, the Group I Principal
Distribution Amount shall be distributed in the following order of priority:

                  (i) to the Holders of the Class A-1 Certificates, until the
         Certificate Principal Balance thereof has been reduced to zero; and

                  (ii) to the holders of the Class A-2 Certificates, after
         taking into account the distribution of the Group II Principal
         Distribution Amount pursuant to Section 4.01(a)(3)(II) below, until the
         Certificate Principal Balance thereof has been reduced to zero.


                                      -93-
<PAGE>

                  (II) On each Distribution Date (a) prior to the Stepdown Date
or (b) on which a Trigger Event is in effect, the Group II Principal
Distribution Amount shall be distributed in the following order of priority:

                  (i) to the Holders of the Class A-2 Certificates, until the
         Certificate Principal Balance thereof has been reduced to zero;

                  (ii) to the holders of the Class A-1 Certificates, after
         taking into account the distribution of the Group I Principal
         Distribution Amount pursuant to Section 4.01(a)(3)(I) above, until the
         Certificate Principal Balance thereof has been reduced to zero.

                  (III) On each Distribution Date (a) prior to the Stepdown Date
or (b) on which a Trigger Event is in effect, the sum of the Group I Principal
Distribution Amount and the Group II Principal Distribution Amount remaining
undistributed for such Distribution Date shall be distributed in the following
order of priority:

                  (i) to the Holders of the Class M-1 Certificates, until the
         Certificate Principal Balance of such Class has been reduced to zero;

                  (ii) to the Holders of the Class M-2 Certificates, until the
         Certificate Principal Balance of such Class has been reduced to zero;

                  (iii) to the Holders of the Class M-3 Certificates, until the
         Certificate Principal Balance of such Class has been reduced to zero;
         and

                  (iv) to the Holders of the Class M-4 Certificates, until the
         Certificate Principal Balance of such Class has been reduced to zero.

                  (IV) On each Distribution Date (a) on or after the Stepdown
Date and (b) on which a Trigger Event is not in effect, the Group I Principal
Distribution Amount shall be distributed in the following order of priority;

                  (i) to the Holders of the Class A-1 Certificates, the Class
         A-1 Principal Distribution Amount, until the Certificate Principal
         Balance thereof has been reduced to zero;

                  (ii) to the extent of the portion, if any, of the Class A-1
         Principal Distribution Amount remaining undistributed pursuant to
         Section 4.01(a)(3)(IV)(i) above, to the Holders of the Class A-2
         Certificates, after taking into account the distribution of the Group
         II Principal Distribution Amount pursuant to Section 4.01(a)(3)(V)(i)
         below, until the Certificate Principal Balance thereof has been reduced
         to zero; and

                  (iii) to the holders of the Class A-2 Certificates, after
         taking into account the distribution of the Group II Principal
         Distribution Amount pursuant to Section 4.01(a)(3)(V)(i) below, up to
         an amount equal to the Class A-2 Principal Distribution Amount, until
         the Certificate Principal Balance thereof has been reduced to zero.


                                      -94-
<PAGE>

                  (V) On each Distribution Date (a) on or after the Stepdown
Date and (b) on which a Trigger Event is not in effect, the Group II Principal
Distribution Amount shall be distributed in the following order of priority;

                  (i) to the Holders of the Class A-2 Certificates, the Class
         A-2 Principal Distribution Amount, until the Certificate Principal
         Balance thereof has been reduced to zero;

                  (ii) to the extent of the portion, if any, of the Class A-2
         Principal Distribution Amount remaining undistributed pursuant to
         Section 4.01(a)(3)(V)(i) above, to the Holders of the Class A-1
         Certificates, after taking into account the distribution of the Group I
         Principal Distribution Amount pursuant to Section 4.01(a)(3)(IV)(i)
         above, until the Certificate Principal Balance thereof has been reduced
         to zero; and

                  (iii) to the holders of the Class A-1 Certificates, after
         taking into account the distribution of the Group I Principal
         Distribution Amount pursuant to Section 4.01(a)(3)(IV)(i) above, up to
         an amount equal to the Class A-1 Principal Distribution Amount, until
         the Certificate Principal Balance thereof has been reduced to zero.

                  (VI) On each Distribution Date (a) on or after the Stepdown
Date and (b) on which a Trigger Event is not in effect, the sum of the Group I
Principal Distribution Amount and the Group II Principal Distribution Amount
remaining undistributed for such Distribution Date shall be distributed in the
following order of priority:

                  (i) to the holders of the Class M-1 Certificates, the Class
         M-1 Principal Distribution Amount until the Certificate Principal
         Balance thereof has been reduced to zero;

                  (ii) to the holders of the Class M-2 Certificates, the Class
         M-2 Principal Distribution Amount until the Certificate Principal
         Balance thereof has been reduced to zero;

                  (iii) to the holders of the Class M-3 Certificates, the Class
         M-3 Principal Distribution Amount until the Certificate Principal
         Balance thereof has been reduced to zero; and

                  (iv) to the holders of the Class M-4 Certificates, the Class
         M-4 Principal Distribution Amount until the Certificate Principal
         Balance thereof has been reduced to zero.

                  (4) On each Distribution Date, the Net Monthly Excess Cashflow
shall be distributed by the Trustee as follows:

                  (i) to the Holders of the Class or Classes of Certificates
         then entitled to receive distributions in respect of principal, as part
         of the Group I Principal Distribution Amount and the Group II Principal
         Distribution Amount in an amount equal to the Overcollateralization
         Increase Amount for the Certificates, applied to reduce the Certificate
         Principal Balance of such Certificates until the aggregate Certificate
         Principal Balance of such Certificates is reduced to zero;


                                      -95-
<PAGE>

                  (ii) to the Holders of the Class M-1 Certificates, in an
         amount equal to the Interest Carry Forward Amount allocable to such
         Class of Certificates;

                  (iii) to the Holders of the Class M-2 Certificates, in an
         amount equal to the Interest Carry Forward Amount allocable to such
         Class of Certificates;

                  (iv) to the Holders of the Class M-3 Certificates, in an
         amount equal to the Interest Carry Forward Amount allocable to such
         Class of Certificates;

                  (v) to the Holders of the Class M-4 Certificates, in an amount
         equal to the Interest Carry Forward Amount allocable to such Class of
         Certificates;

                  (vi) concurrently, to the Holders of the Class A Certificates
         and the Class A-IO Certificates, in an amount equal to the aggregate of
         any Prepayment Interest Shortfalls and any Relief Act Interest
         Shortfall on the Mortgage Loans allocated to such Certificates, PRO
         RATA based on the entitlement of each such Class;

                  (vii) to the Holders of the Class M-1 Certificates, in an
         amount equal to the aggregate of any Prepayment Interest Shortfalls and
         any Relief Act Interest Shortfall on the Mortgage Loans allocated to
         such Certificates;

                  (viii) to the Holders of the Class M-2 Certificates, in an
         amount equal to the aggregate of any Prepayment Interest Shortfalls and
         any Relief Act Interest Shortfall on the Mortgage Loans allocated to
         such Certificates;

                  (ix) to the Holders of the Class M-3 Certificates, in an
         amount equal to the aggregate of any Prepayment Interest Shortfalls and
         any Relief Act Interest Shortfall on the Mortgage Loans allocated to
         such Certificates;

                  (x) to the Holders of the Class M-4 Certificates, in an amount
         equal to the aggregate of any Prepayment Interest Shortfalls and any
         Relief Act Interest Shortfall on the Mortgage Loans allocated to such
         Certificates;

                  (xi) to the Net WAC Rate Carryover Reserve Account, the amount
         by which the aggregate Net WAC Rate Carryover Amount for such
         Distribution Date exceeds the amounts received by the Trustee under the
         Cap Contract;

                  (xii) to the Holders of the Class CE Certificates the Interest
         Distribution Amount and any remaining Overcollateralization Reduction
         Amount for such Distribution Date; and

                  (xiii) to the Holders of the Class R Certificates, any
         remaining amounts; provided that if such Distribution Date is the
         Distribution Date immediately following the expiration of the latest
         Prepayment Charge term on a Mortgage Loan as identified on the Mortgage
         Loan Schedule or any Distribution Date thereafter, then any such
         remaining amounts will be distributed first, to the Holders of the
         Class P Certificates, until the Certificate Principal


                                      -96-
<PAGE>

         Balance thereof has been reduced to zero; and second, to the Holders of
         the Class R Certificates.

                  (b) On each Distribution Date, after making the distributions
of the Available Distribution Amount as set forth above, the Trustee will FIRST,
withdraw from the Net WAC Rate Carryover Reserve Account all income from the
investment of funds in the Net WAC Rate Carryover Reserve Account and distribute
such amount to the Holders of the Class CE Certificates, and SECOND, withdraw
from the Net WAC Rate Carryover Reserve Account, to the extent of amounts
remaining on deposit therein, the amount of any Net WAC Rate Carryover Amount
with respect to the Class A Certificates, the Class A-IO Certificates and the
Mezzanine Certificates for such Distribution Date and distribute such amount in
the following order of priority:

                  (i) Any amounts received by the Trustee on account of the Cap
Contract will be distributed first, to the Class A-2 Certificates, to the extent
of the Net WAC Rate Carryover Amount for such Distribution Date; second, to the
Class M-1 Certificates, to the extent of the Net WAC Rate Carryover Amount for
such Distribution Date; third, to the Class M-2 Certificates, to the extent of
the Net WAC Rate Carryover Amount for such Distribution Date; fourth, to the
Class M-3 Certificates, to the extent of the Net WAC Rate Carryover Amount for
such Distribution Date; and fifth, to the Class M-4 Certificates, to the extent
of the Net WAC Rate Carryover Amount for such Distribution Date; and

                  (ii) Any amounts deposited in the Net WAC Carryover Reserve
Account from the Net Monthly Excess Cashflow will be distributed:

                  first, concurrently (i) to the Class A-1 Certificates and the
         Class A-IO Certificates (in respect of the Class A-IO-1 Component), to
         the extent of the related Net WAC Rate Carryover Amount for each such
         Class for such Distribution Date and (ii) to the Class A-2 Certificates
         and the Class A-IO Certificates (in respect of the Class A-IO-2
         Component), to the extent of the related Net WAC Rate Carryover Amount
         for such Distribution Date to the extent not paid pursuant to Section
         4.01(b)(i) above, on a PRO RATA basis based on the entitlement of each
         such Class;

                  second, to the Class M-1 Certificates, to the extent of the
         related Net WAC Rate Carryover Amount for such Distribution Date to the
         extent not paid pursuant to Section 4.01(b)(i) above;

                  third, to the Class M-2 Certificates, to the extent of the
         related Net WAC Rate Carryover Amount for such Distribution Date to the
         extent not paid pursuant to Section 4.01(b)(i) above;

                  fourth, to the Class M-3 Certificates, to the extent of the
         related Net WAC Rate Carryover Amount for such Distribution Date to the
         extent not paid pursuant to Section 4.01(b)(i) above; and


                                      -97-
<PAGE>

                  fifth, to the Class M-4 Certificates, to the extent of the
         related Net WAC Rate Carryover Amount for such Distribution Date to the
         extent not paid pursuant to Section 4.01(b)(i) above.

                  On each Distribution Date, the Trustee shall withdraw any
amounts then on deposit in the Distribution Account that represent Prepayment
Charges collected by the Servicers in connection with the Principal Prepayment
of any of the related Mortgage Loans or any Servicer Prepayment Charge Payment
Amount and shall distribute such amounts to the Holders of the Class P
Certificates. Such distributions shall not be applied to reduce the Certificate
Principal Balance of the Class P Certificates.

                  (c) All distributions made with respect to each Class of
Certificates on each Distribution Date shall be allocated PRO RATA among the
outstanding Certificates in such Class based on their respective Percentage
Interests. Payments in respect of each Class of Certificates on each
Distribution Date shall be made to the Holders of the respective Class of record
on the related Record Date (except as otherwise provided in Section 4.01(e) or
Section 9.01 respecting the final distribution on such Class), based on the
aggregate Percentage Interest represented by their respective Certificates, and
shall be made by wire transfer of immediately available funds to the account of
any such Holder at a bank or other entity having appropriate facilities
therefor, if such Holder shall have so notified the Trustee in writing at least
five Business Days prior to the Record Date immediately prior to such
Distribution Date, or otherwise by check mailed by first class mail to the
address of such Holder appearing in the Certificate Register. The final
distribution on each Certificate shall be made in like manner, but only upon
presentment and surrender of such Certificate at the office of the Trustee
maintained for such purpose pursuant to Section 8.12 or such other location
specified in the notice to Certificateholders of such final distribution.

                  Each distribution with respect to a Book-Entry Certificate
shall be paid to the Depository, as Holder thereof, and the Depository shall be
responsible for crediting the amount of such distribution to the accounts of its
Depository Participants in accordance with its normal procedures. Each
Depository Participant shall be responsible for disbursing such distribution to
the Certificate Owners that it represents and to each indirect participating
brokerage firm (a "brokerage firm" or "indirect participating firm") for which
it acts as agent. Each brokerage firm shall be responsible for disbursing funds
to the Certificate Owners that it represents. None of the Trustee, the Depositor
or either Servicer shall have any responsibility therefor except as otherwise
provided by this Agreement or applicable law.

                  (d) The rights of the Certificateholders to receive
distributions in respect of the Certificates, and all interests of the
Certificateholders in such distributions, shall be as set forth in this
Agreement. None of the Holders of any Class of Certificates, the Trustee or
either Servicer shall in any way be responsible or liable to the Holders of any
other Class of Certificates in respect of amounts properly previously
distributed on the Certificates.

                  (e) Except as otherwise provided in Section 9.01, whenever the
Trustee expects that the final distribution with respect to any Class of
Certificates will be made on the next Distribution Date, the Trustee shall, no
later than three (3) days before the related Distribution Date


                                      -98-
<PAGE>

(to the extent that an accurate Remittance Report is received in a timely manner
by the Trustee), mail to each Holder on such date of such Class of Certificates
a notice to the effect that:

                  (i) the Trustee expects that the final distribution with
         respect to such Class of Certificates will be made on such Distribution
         Date but only upon presentation and surrender of such Certificates at
         the office of the Trustee therein specified, and

                  (ii) no interest shall accrue on such Certificates from and
         after the end of the related Interest Accrual Period.

                  Any funds not distributed to any Holder or Holders of
Certificates of such Class on such Distribution Date because of the failure of
such Holder or Holders to tender their Certificates shall, on such date, be set
aside and held in trust by the Trustee and credited to the account of the
appropriate non-tendering Holder or Holders. If any Certificates as to which
notice has been given pursuant to this Section 4.01(e) shall not have been
surrendered for cancellation within six months after the time specified in such
notice, the Trustee shall mail a second notice to the remaining non- tendering
Certificateholders to surrender their Certificates for cancellation in order to
receive the final distribution with respect thereto. If within one year after
the second notice all such Certificates shall not have been surrendered for
cancellation, the Trustee shall, directly or through an agent, mail a final
notice to the remaining non-tendering Certificateholders concerning surrender of
their Certificates but shall continue to hold any remaining funds for the
benefit of non-tendering Certificateholders. The costs and expenses of
maintaining the funds in trust and of contacting such Certificateholders shall
be paid out of the assets remaining in the Trust Fund. If within one year after
the final notice any such Certificates shall not have been surrendered for
cancellation, the Trustee shall pay to Deutsche Bank Securities Inc., in
accordance with its wiring instructions, all such amounts, and all rights of
non-tendering Certificateholders in or to such amounts shall thereupon cease. No
interest shall accrue or be payable to any Certificateholder on any amount held
in trust by the Trustee as a result of such Certificateholder's failure to
surrender its Certificate(s) for final payment thereof in accordance with this
Section 4.01(e). Any such amounts held in trust by the Trustee shall be held in
an Eligible Account and shall be held uninvested.

                  (f) Notwithstanding anything to the contrary herein, (i) in no
event shall the Certificate Principal Balance of a Class A Certificate or a
Mezzanine Certificate be reduced more than once in respect of any particular
amount both (a) allocated to such Certificate in respect of Realized Losses
pursuant to Section 4.04 and (b) distributed to the Holder of such Certificate
in reduction of the Certificate Principal Balance thereof pursuant to this
Section 4.01 from Net Monthly Excess Cashflow and (ii) in no event shall the
Uncertificated Balance of a REMIC I Regular Interest or a REMIC II Regular
Interest be reduced more than once in respect of any particular amount both (a)
allocated to such REMIC I Regular Interest or REMIC II Regular Interest in
respect of Realized Losses pursuant to Section 4.04 and (b) distributed on such
REMIC I Regular Interest or REMIC II Regular Interest in reduction of the
Uncertificated Balance thereof pursuant to this Section 4.01.

                  SECTION 4.02. Statements to Certificateholders.


                                      -99-
<PAGE>

                  On each Distribution Date, the Trustee shall prepare and make
available via its website to each Holder of the Regular Certificates, a
statement as to the distributions made on such Distribution Date setting forth:

                  (i) the amount of the distribution made on such Distribution
         Date to the Holders of the Certificates of each Class allocable to
         principal, and the amount of the distribution made on such Distribution
         Date to the Holders of the Class P Certificates allocable to Prepayment
         Charges;

                  (ii) the amount of the distribution made on such Distribution
         Date to the Holders of the Certificates of each Class allocable to
         interest;

                  (iii) the aggregate Servicing Fee received by each Servicer
         during the related Due Period and such other customary information as
         the Trustee deems necessary or desirable, or which a Certificateholder
         reasonably requests, to enable Certificateholders to prepare their tax
         returns;

                  (iv) the aggregate amount of P&I Advances for such
         Distribution Date;

                  (v) the aggregate Stated Principal Balance of the Mortgage
         Loans and any REO Properties as of the close of business on such
         Distribution Date;

                  (vi) the number, aggregate principal balance, weighted average
         remaining term to maturity and weighted average Mortgage Rate of the
         Mortgage Loans as of the related Due Date;

                  (vii) the number and aggregate unpaid principal balance of
         Mortgage Loans (a) delinquent 30 to 59 days, (b) delinquent 60 to 89
         days, (c) delinquent 90 or more days, in each case, as of the last day
         of the preceding calendar month, (d) as to which foreclosure
         proceedings have been commenced and (e) with respect to which the
         related Mortgagor has filed for protection under applicable bankruptcy
         laws, with respect to whom bankruptcy proceedings are pending or with
         respect to whom bankruptcy protection is in force;

                  (viii) with respect to any Mortgage Loan that became an REO
         Property during the preceding calendar month, the loan number of such
         Mortgage Loan, the unpaid principal balance and the Stated Principal
         Balance of such Mortgage Loan as of the date it became an REO Property;

                  (ix) the book value of any REO Property as of the close of
         business on the last Business Day of the calendar month preceding the
         Distribution Date;

                  (x) the aggregate amount of Principal Prepayments made during
         the related Prepayment Period;

                  (xi) the aggregate amount of Realized Losses incurred during
         the related Prepayment Period (or, in the case of Bankruptcy Losses
         allocable to interest, during the


                                     -100-
<PAGE>

         related Due Period), separately identifying whether such Realized
         Losses constituted Bankruptcy Losses and the aggregate amount of
         Realized Losses incurred since the Closing Date;

                  (xii) the aggregate amount of Extraordinary Trust Fund
         Expenses withdrawn from the Collection Account or the Distribution
         Account for such Distribution Date;

                  (xiii) the aggregate Certificate Principal Balance and
         Notional Amount, as applicable, of each Class of Certificates, after
         giving effect to the distributions, and allocations of Realized Losses,
         made on such Distribution Date, separately identifying any reduction
         thereof due to allocations of Realized Losses;

                  (xiv) the Certificate Factor for each such Class of
         Certificates applicable to such Distribution Date;

                  (xv) the Interest Distribution Amount in respect of the Class
         A Certificates, the Class A-IO Certificates, the Mezzanine Certificates
         and the Class CE Certificates for such Distribution Date and the
         Interest Carry Forward Amount, if any, with respect to the Class A
         Certificates, the Class A-IO Certificates and the Mezzanine
         Certificates on such Distribution Date, and in the case of the Class A
         Certificates, the Class A-IO Certificates, the Mezzanine Certificates
         and the Class CE Certificates, separately identifying any reduction
         thereof due to allocations of Realized Losses, Prepayment Interest
         Shortfalls and Relief Act Interest Shortfalls;

                  (xvi) the aggregate amount of any Prepayment Interest
         Shortfall for such Distribution Date, to the extent not covered by
         payments by the Servicers pursuant to Section 3.24;

                  (xvii) the aggregate amount of Relief Act Interest Shortfalls
         for such Distribution Date;

                  (xviii) the Overcollateralization Target Amount and the Credit
         Enhancement Percentage for such Distribution Date;

                  (xix) the Overcollateralization Increase Amount, if any, for
         such Distribution Date;

                  (xx) the Overcollateralization Reduction Amount, if any, for
         such Distribution Date;

                  (xxi) the respective Pass-Through Rates applicable to the
         Class A Certificates, the Mezzanine Certificates and the Class CE
         Certificates for such Distribution Date and the Pass-Through Rate
         applicable to the Class A Certificates and the Mezzanine Certificates
         for the immediately succeeding Distribution Date; and


                                     -101-
<PAGE>

                  (xxii) the Net WAC Rate Carryover Amount for the Class A
         Certificates, the Class A-IO Certificates and the Mezzanine
         Certificates, if any, for such Distribution Date and the amount
         remaining unpaid after reimbursements therefor on such Distribution
         Date.

                  The Trustee shall make such statement (and, at its option, any
additional files containing the same information in an alternative format)
available each month to Certificateholders, each Servicer and the Rating
Agencies via the Trustee's internet website. The Trustee's internet website
shall initially be located at https://www.corporatetrust.db.com/invr and
assistance in using the website can be obtained by calling the Trustee's
customer service desk at 1-800-735-7777. Parties that are unable to use the
above distribution options are entitled to have a paper copy mailed to them via
first class mail by calling the customer service desk and indicating such. The
Trustee shall have the right to change the way such statements are distributed
in order to make such distribution more convenient and/or more accessible to the
above parties and the Trustee shall provide timely and adequate notification to
all above parties regarding any such changes.

                  In the case of information furnished pursuant to subclauses
(i) through (iii) above, the amounts shall be expressed as a dollar amount per
Single Certificate of the relevant Class.

                  Within a reasonable period of time after the end of each
calendar year, the Trustee shall furnish to each Person who at any time during
the calendar year was a Holder of a Regular Certificate a statement containing
the information set forth in subclauses (i) through (iii) above, aggregated for
such calendar year or applicable portion thereof during which such person was a
Certificateholder. Such obligation of the Trustee shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Trustee pursuant to any requirements of the Code as from time to
time are in force.

                  Within a reasonable period of time after the end of each
calendar year, the Trustee shall furnish to each Person who at any time during
the calendar year was a Holder of a Residual Certificate a statement setting
forth the amount, if any, actually distributed with respect to the Residual
Certificates, as appropriate, aggregated for such calendar year or applicable
portion thereof during which such Person was a Certificateholder.

                  The Trustee shall, upon request, furnish to each
Certificateholder, during the term of this Agreement, such periodic, special, or
other reports or information, whether or not provided for herein, as shall be
reasonable with respect to the Certificateholder, or otherwise with respect to
the purposes of this Agreement, all such reports or information to be provided
at the expense of the Certificateholder in accordance with such reasonable and
explicit instructions and directions as the Certificateholder may provide. For
purposes of this Section 4.02, the Trustee's duties are limited to the extent
that the Trustee receives timely reports as required from each Servicer.

                  On each Distribution Date the Trustee shall provide Bloomberg
Financial Markets, L. P. (" Bloomberg") CUSIP level factors for each class of
Certificates as of such Distribution Date, using a format and media mutually
acceptable to the Trustee and Bloomberg.

                  SECTION 4.03. Remittance Reports; P&I Advances.


                                     -102-
<PAGE>

                  (a) On the Business Day following each Determination Date,
each Servicer shall deliver to the Trustee by telecopy (or by such other means
as the related Servicer or the Trustee, as the case may be, may agree from time
to time) a Remittance Report with respect to the related Distribution Date. On
the same date, each Servicer shall electronically transmit (in a format
acceptable to the Trustee), a data file containing the information set forth in
such Remittance Report with respect to the related Distribution Date or if
electronic transmission is not available, the related Servicer shall forward to
the Trustee by overnight mail a computer readable magnetic tape. Such Remittance
Report will include (i) the amount of P&I Advances to be made by the related
Servicer in respect of the related Distribution Date, the aggregate amount of
P&I Advances outstanding after giving effect to such P&I Advances, and the
aggregate amount of Nonrecoverable P&I Advances in respect of such Distribution
Date and (ii) such other information with respect to the Mortgage Loans as the
Trustee may reasonably require to perform the calculations necessary to make the
distributions contemplated by Section 4.01 and to prepare the statements to
Certificateholders contemplated by Section 4.02. The Trustee shall not be
responsible to recompute, recalculate or verify any information provided to it
by either Servicer.

                  (b) The amount of P&I Advances to be made by each Servicer for
any Distribution Date shall equal, subject to Section 4.03(d), the sum of, with
respect to the Mortgage Loans serviced by such Servicer, (i) the aggregate
amount of Monthly Payments (with each interest portion thereof net of the
related Servicing Fee), due on the related Due Date in respect of the Mortgage
Loans, which Monthly Payments were delinquent as of the close of business on the
related Determination Date and (ii) with respect to each REO Property, which REO
Property was acquired during or prior to the related Prepayment Period and as to
which REO Property an REO Disposition did not occur during the related
Prepayment Period, an amount equal to the excess, if any, of the REO Imputed
Interest on such REO Property for the most recently ended calendar month, over
the net income from such REO Property transferred to the Distribution Account
pursuant to Section 3.23 for distribution on such Distribution Date; provided,
however, that neither Servicer shall be required to make P&I Advances with
respect to Relief Act Interest Shortfalls or Prepayment Interest Shortfalls in
excess of their respective obligations under Section 3.24.

                  By 1:00 p.m. New York time on the Servicer Remittance Date,
each Servicer shall remit in immediately available funds to the Trustee for
deposit in the Distribution Account an amount equal to the aggregate amount of
P&I Advances, if any, to be made by such Servicer in respect of the related
Mortgage Loans and REO Properties for the related Distribution Date either (i)
from its own funds or (ii) from the related Collection Account, to the extent of
funds held therein for future distribution (in which case it will cause to be
made an appropriate entry in the records of such Collection Account that amounts
held for future distribution have been, as permitted by this Section 4.03, used
by the related Servicer in discharge of any such P&I Advance) or (iii) in the
form of any combination of (i) and (ii) aggregating the total amount of P&I
Advances to be made by such Servicer with respect to the related Mortgage Loans
and REO Properties. Any amounts held for future distribution and so used shall
be appropriately reflected in the applicable Servicer's records and replaced by
such Servicer by deposit in the related Collection Account on or before any
future Servicer Remittance Date to the extent that the portion of the Available
Distribution Amount attributable to the related Mortgage Loans for the related
Distribution Date (determined without regard to P&I Advances to be made on the
Servicer Remittance Date) shall be less than the total amount that would be
distributed to the Classes of Certificateholders pursuant to Section 4.01 on


                                     -103-
<PAGE>

such Distribution Date if such amounts held for future distributions had not
been so used to make P&I Advances. The Trustee will provide notice to the
related Servicer by telecopy by the close of business on the Business Day prior
to the Distribution Date (so long as the Trustee receives the required
remittance from the related Servicer) in the event that the amount remitted by
such Servicer to the Trustee on such date is less than the amount required to be
remitted by such Servicer as set forth in the Remittance Report for the related
Distribution Date.

                  (c) The obligation of each Servicer to make such P&I Advances
is mandatory, notwithstanding any other provision of this Agreement but subject
to (d) below, and, with respect to any Mortgage Loan or REO Property, shall
continue until a Final Recovery Determination in connection therewith or the
removal thereof from the Trust Fund pursuant to any applicable provision of this
Agreement, except as otherwise provided in this Section.

                  (d) Notwithstanding anything herein to the contrary, no P&I
Advance or Servicing Advance shall be required to be made hereunder by either
Servicer if such P&I Advance or Servicing Advance would, if made, constitute a
Nonrecoverable P&I Advance or Nonrecoverable Servicing Advance, respectively.
The determination by the related Servicer that it has made a Nonrecoverable P&I
Advance or a Nonrecoverable Servicing Advance or that any proposed P&I Advance
or Servicing Advance, if made, would constitute a Nonrecoverable P&I Advance or
Nonrecoverable Servicing Advance, respectively, shall be evidenced by an
Officers' Certificate of such Servicer delivered to the Depositor and the
Trustee.

                  SECTION 4.04. Allocation of Realized Losses.

                  (a) Prior to each Determination Date, each Servicer shall
determine as to each related Mortgage Loan and REO Property: (i) the total
amount of Realized Losses, if any, incurred in connection with any Final
Recovery Determinations made during the related Prepayment Period; (ii) whether
and the extent to which such Realized Losses constituted Bankruptcy Losses; and
(iii) the respective portions of such Realized Losses allocable to interest and
allocable to principal. Prior to each Determination Date, each Servicer shall
also determine as to each related Mortgage Loan: (i) the total amount of
Realized Losses, if any, incurred in connection with any Deficient Valuations
made during the related Prepayment Period; and (ii) the total amount of Realized
Losses, if any, incurred in connection with Debt Service Reductions in respect
of Monthly Payments due during the related Due Period. The information described
in the two preceding sentences that is to be supplied by a Servicer shall be
evidenced by an Officers' Certificate delivered to the Trustee by the related
Servicer prior to the Determination Date immediately following the end of (i) in
the case of Bankruptcy Losses allocable to interest, the Due Period during which
any such Realized Loss was incurred, and (ii) in the case of all other Realized
Losses, the Prepayment Period during which any such Realized Loss was incurred.

                  (b) All Realized Losses on the Mortgage Loans shall be
allocated by the Trustee on each Distribution Date as follows: first, to the
Accrued Certificate Interest for the Class CE Certificates for the related
Interest Accrual Period; second, to the Class CE Certificates, until the
Certificate Principal Balance thereof has been reduced to zero; third, to the
Class M-4 Certificates until the Certificate Principal Balance thereof has been
reduced to zero; fourth, to the Class M-3 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero; fifth, to the


                                     -104-
<PAGE>

Class M-2 Certificates, until the Certificate Principal Balance thereof has been
reduced to zero; and sixth, to the Class M-1 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero.

                  All Realized Losses to be allocated to the Certificate
Principal Balances of all Classes on any Distribution Date shall be so allocated
after the actual distributions to be made on such date as provided above. All
references above to the Certificate Principal Balance of any Class of
Certificates shall be to the Certificate Principal Balance of such Class
immediately prior to the relevant Distribution Date, before reduction thereof by
any Realized Losses, in each case to be allocated to such Class of Certificates,
on such Distribution Date.

                  Any allocation of Realized Losses to a Mezzanine Certificate
on any Distribution Date shall be made by reducing the Certificate Principal
Balance thereof by the amount so allocated and any allocation of Realized Losses
to a Class CE Certificate shall be made by reducing the amount otherwise payable
in respect thereof pursuant to Section 4.01(a)(4)(xii). No allocations of any
Realized Losses shall be made to the Certificate Principal Balances of the Class
A Certificates or the Class P Certificates.

                  As used herein, an allocation of a Realized Loss on a "PRO
RATA basis" among two or more specified Classes of Certificates means an
allocation on a pro rata basis, among the various Classes so specified, to each
such Class of Certificates on the basis of their then outstanding Certificate
Principal Balances prior to giving effect to distributions to be made on such
Distribution Date. All Realized Losses and all other losses allocated to a Class
of Certificates hereunder will be allocated among the Certificates of such Class
in proportion to the Percentage Interests evidenced thereby.

                  (c) All Realized Losses on the Mortgage Loans shall be
allocated by the Trustee on each Distribution Date, first to REMIC I Regular
Interest I-LT1 and REMIC I Regular Interest I-LT2, until the Uncertificated
Balance of each such REMIC I Regular Interest has been reduced to zero and then
to REMIC I Regular Interest I-LTAIO1 and REMIC I Regular Interest I-LTAIO2,
until the Uncertificated Balance of each such REMIC I Regular Interest has been
reduced to zero.

                  (i) The REMIC II Marker Allocation Percentage of all Realized
Losses on the Mortgage Loans shall be allocated by the Trustee on each
Distribution Date to the following REMIC II Regular Interests in the specified
percentages, as follows: first, to Uncertificated Interest payable to the REMIC
II Regular Interest II-LTAA and REMIC II Regular Interest II-LTZZ up to an
aggregate amount equal to the REMIC II Interest Loss Allocation Amount, 98% and
2%, respectively; second, to the Uncertificated Balances of the REMIC II Regular
Interest II-LTAA and REMIC II Regular Interest II-LTZZ up to an aggregate amount
equal to the REMIC II Principal Loss Allocation Amount, 98% and 2%,
respectively; third, to the Uncertificated Balances of REMIC II Regular Interest
II-LTAA, REMIC II Regular Interest II-LTM4 and REMIC II Regular Interest II-
LTZZ, 98%, 1% and 1%, respectively, until the Uncertificated Balances of REMIC
II Regular Interest II-LTM4 has been reduced to zero; fourth to the
Uncertificated Balances of REMIC II Regular Interest II-LTAA, REMIC II Regular
Interest II-LTM3 and REMIC II Regular Interest II- LTZZ, 98%, 1%, and 1%,
respectively, until the Uncertificated Balance of REMIC II Regular Interest
II-LTM3 has been reduced to zero; fifth to the Uncertificated Balances of REMIC
II Regular


                                     -105-
<PAGE>

Interest II-LTAA, REMIC II Regular Interest II-LTM2 and REMIC II Regular
Interest II-LTZZ, 98%, 1% and 1%, respectively, until the Uncertificated Balance
of REMIC II Regular Interest II-LTM2 has been reduced to zero; and sixth to the
Uncertificated Balances of REMIC II Regular Interest II- LTAA, REMIC II Regular
Interest II-LTM1 and REMIC II Regular Interest II-LTZZ, 98%, 1% and 1%,
respectively, until the Uncertificated Balance of REMIC II Regular Interest
II-LTM1 has been reduced to zero.

                  (ii) The REMIC II Sub WAC Allocation Percentage of all
Realized Losses shall be applied after all distributions have been made on each
Distribution Date first, so as to keep the Uncertificated Balance of each REMIC
II Regular Interest ending with the designation "GRP" equal to 0.01% of the
aggregate Stated Principal Balance of the Mortgage Loans in the related Loan
Group; second, to each REMIC II Regular Interest ending with the designation
"SUB," so that the Uncertificated Balance of each such REMIC II Regular Interest
is equal to 0.01% of the excess of (x) the aggregate Stated Principal Balance of
the Mortgage Loans in the related Loan Group over (y) the current Certificate
Principal Balance of the Class A Certificate in the related Loan Group (except
that if any such excess is a larger number than in the preceding distribution
period, the least amount of Realized Losses shall be applied to such REMIC II
Regular Interests such that the REMIC II Subordinated Balance Ratio is
maintained); and third, any remaining Realized Losses shall be allocated to
REMIC II Regular Interest II-LTXX.

                  SECTION 4.05. Compliance with Withholding Requirements

                  Notwithstanding any other provision of this Agreement, the
Trustee shall comply with all federal withholding requirements respecting
payments to Certificateholders of interest or original issue discount that the
Trustee reasonably believes are applicable under the Code. The consent of
Certificateholders shall not be required for such withholding. In the event the
Trustee does withhold any amount from interest or original issue discount
payments or advances thereof to any Certificateholder pursuant to federal
withholding requirements, the Trustee shall indicate the amount withheld to such
Certificateholders.

                  SECTION 4.06. Exchange Commission; Additional Information.

                  (a) The Trustee and Ocwen shall reasonably cooperate with the
Depositor in connection with the Trust's satisfying the reporting requirements
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The
Trustee shall prepare on behalf of the Trust any Forms 8-K and 10-K customary
for similar securities as required by the Exchange Act and the Rules and
Regulations of the Securities and Exchange Commission thereunder, and the
Depositor shall sign (or shall cause another entity acceptable to the Securities
and Exchange Commission to sign) and the Trustee shall file (via the Securities
and Exchange Commission's Electronic Data Gathering and Retrieval System) such
forms on behalf of the Depositor (or such other entity). The Depositor hereby
grants to the Trustee a limited power of attorney to execute any Form 8-K and
file each such document on behalf of the Depositor. Such power of attorney shall
continue until the earlier of (i) receipt by the Trustee from the Depositor of
written termination of such power of attorney and (ii) the termination of the
Trust. Notwithstanding anything herein to the contrary, the Depositor, and not
the Trustee, shall be responsible for executing each Form 10-K filed on behalf
of the Trust.


                                     -106-
<PAGE>

                  (b) Each Form 8-K shall be filed by the Trustee within 15 days
after each Distribution Date, with a copy of the statement to the
Certificateholders for such Distribution Date as an exhibit thereto. Prior to
March 30th of each year (or such earlier date as may be required by the Exchange
Act and the Rules and Regulations of the Securities and Exchange Commission),
the Trustee shall file a Form 10-K, in substance as required by applicable law
or applicable Securities and Exchange Commission staff's interpretations. Such
Form 10-K shall include as exhibits each Servicer's annual statement of
compliance described under Section 3.20 and the accountant's report with respect
to each Servicer described under Section 3.21, in each case to the extent they
have been timely delivered to the Trustee. If they are not so timely delivered,
the Trustee shall file an amended Form 10-K including such documents as exhibits
reasonably promptly after they are delivered to the Trustee. The Trustee shall
have no liability with respect to any failure to properly prepare or file such
periodic reports resulting from or relating to the Trustee's inability or
failure to obtain any information not resulting from its own negligence or
willful misconduct. The Form 10-K shall also include a certification in the form
attached hereto as Exhibit J-1 (the "Certification"), which shall be signed by
the senior officer of the Depositor in charge of securitization.

                  (c) In addition, (i) the Trustee shall sign a certification
(in the form attached hereto as Exhibit J-2) for the benefit of the Depositor
and its officers, directors and Affiliates regarding certain aspects of the
Certification (provided, however, that the Trustee shall not undertake an
analysis of the accountant's report attached as an exhibit to the Form 10-K) and
(ii) Ocwen shall sign a certification (in the form attached hereto as Exhibit
J-3) for the benefit of the Depositor, the Trustee and their respective
officers, directors and Affiliates regarding certain aspects of the
Certification. Ocwen's certification shall be delivered to the Depositor by no
later than March 18th of each year (or if such day is not a Business Day, the
immediately preceding Business Day), the Trustee's certification shall be
delivered to the Depositor by no later than March 19th of each year and the
Depositor shall deliver the Certification to the Trustee for filing no later
than March 20th of each year (or if such day is not a Business Day, the
immediately preceding Business Day).

                  In addition, (i) the Trustee shall indemnify and hold harmless
the Depositor and its officers, directors and Affiliates from and against any
losses, damages, penalties, fines, forfeitures, reasonable and necessary legal
fees and related costs, judgments and other costs and expenses arising out of or
based upon a breach of the Trustee's obligations under this Section 4.06(c) or
the Trustee's negligence, bad faith or willful misconduct in connection
therewith, (ii) Ocwen shall indemnify and hold harmless the Trustee, the
Depositor and their respective officers, directors and Affiliates from and
against any losses, damages, penalties, fines, forfeitures, reasonable and
necessary legal fees and related costs, judgments and other costs and expenses
arising out of or based upon a breach of Ocwen's obligations under this Section
4.06(c) or Ocwen's negligence, bad faith or willful misconduct in connection
therewith and (iii) the Depositor shall indemnify and hold harmless the Trustee
and Ocwen and its officers, directors and Affiliates from and against any
losses, damages, penalties, fines, forfeitures, reasonable and necessary legal
fees and related costs, judgments and other costs and expenses arising out of or
based upon a breach of the Depositor's obligations under this Section 4.06 or
the Depositor's negligence, bad faith or willful misconduct in connection
therewith. If the indemnification provided for herein is unavailable or
insufficient to hold harmless the Depositor, the Trustee or Ocwen, as
applicable, then the other party, in connection with a breach of its respective
obligations under this Section 4.06 with respect to the Depositor or Section
4.06(c) with respect to the Trustee or Ocwen or its respective negligence, bad
faith or willful misconduct in


                                     -107-
<PAGE>

connection therewith, agrees that it shall contribute to the amount paid or
payable by the other party as a result of the losses, claims, damages or
liabilities of the other party in such proportion as is appropriate to reflect
the relative fault and the relative benefit of the Depositor on the one hand and
the Trustee or Ocwen, as applicable, on the other.

                  (d) Upon any filing with the Securities and Exchange
Commission, the Trustee shall promptly deliver to the Depositor a copy of any
executed report, statement or information.

                  (e) Prior to January 30 of the first year in which the Trustee
is able to do so under applicable law, the Trustee shall file a Form 15
Suspension Notification with respect to the Trust.

                  (f) To the extent that, following the Closing Date, the
Depositor certifies that reports and certifications differing from those
required under this Section 4.06 comply with the reporting requirements under
the Exchange Act, the Trustee hereby agrees that it will reasonably cooperate to
amend the provisions of this Section 4.06 (in accordance with Section 11.01) in
order to comply with such amended reporting requirements and such amendment of
this Section 4.06. Any such amendment may result in the reduction of the reports
filed by the Depositor under the Exchange Act. Notwithstanding the foregoing,
the Trustee shall not be obligated to enter into any amendment pursuant to this
Section that adversely affects its obligations and immunities under this
Agreement.


                                     -108-
<PAGE>

                                    ARTICLE V

                                THE CERTIFICATES

                  SECTION 5.01. The Certificates.

                  (a) The Certificates in the aggregate will represent the
entire beneficial ownership interest in the Mortgage Loans and all other assets
included in the Trust Fund.

                  The Certificates will be substantially in the forms annexed
hereto as Exhibits A-1 through A-10. The Certificates of each Class will be
issuable in registered form only, in denominations of authorized Percentage
Interests as described in the definition thereof. Each Certificate will share
ratably in all rights of the related Class.

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

                  (b) The Class A Certificates, the Class A-IO Certificates and
the Mezzanine Certificates shall initially be issued as one or more Certificates
held by the Book-Entry Custodian or, if appointed to hold such Certificates as
provided below, the Depository and registered in the name of the Depository or
its nominee and, except as provided below, registration of such Certificates may
not be transferred by the Trustee except to another Depository that agrees to
hold such Certificates for the respective Certificate Owners with Ownership
Interests therein. The Certificate Owners shall hold their respective Ownership
Interests in and to such Certificates through the book-entry facilities of the
Depository and, except as provided below, shall not be entitled to definitive,
fully registered Certificates ("Definitive Certificates") in respect of such
Ownership Interests. All transfers by Certificate Owners of their respective
Ownership Interests in the Book- Entry Certificates shall be made in accordance
with the procedures established by the Depository Participant or brokerage firm
representing such Certificate Owner. Each Depository Participant shall only
transfer the Ownership Interests in the Book-Entry Certificates of Certificate
Owners it represents or of brokerage firms for which it acts as agent in
accordance with the Depository's normal procedures. The Trustee is hereby
initially appointed as the Book-Entry Custodian and hereby agrees to act as such
in accordance herewith and in accordance with the agreement that it has with the
Depository authorizing it to act as such. The Book-Entry Custodian may, and, if
it is no longer qualified to act as such, the Book-Entry Custodian shall,
appoint, by a written instrument delivered to the Depositor, each Servicer and,
if the Trustee is not the Book-Entry Custodian, the


                                     -109-
<PAGE>

Trustee, any other transfer agent (including the Depository or any successor
Depository) to act as Book-Entry Custodian under such conditions as the
predecessor Book-Entry Custodian and the Depository or any successor Depository
may prescribe, provided that the predecessor Book-Entry Custodian shall not be
relieved of any of its duties or responsibilities by reason of any such
appointment of other than the Depository. If the Trustee resigns or is removed
in accordance with the terms hereof, the Trustee, the successor Trustee or, if
it so elects, the Depository shall immediately succeed to its predecessor's
duties as Book-Entry Custodian. The Depositor shall have the right to inspect,
and to obtain copies of, any Certificates held as Book-Entry Certificates by the
Book-Entry Custodian.

                  The Trustee, each Servicer and the Depositor may for all
purposes (including the making of payments due on the Book-Entry Certificates)
deal with the Depository as the authorized representative of the Certificate
Owners with respect to the Book-Entry Certificates for the purposes of
exercising the rights of Certificateholders hereunder. The rights of Certificate
Owners with respect to the Book-Entry Certificates shall be limited to those
established by law and agreements between such Certificate Owners and the
Depository Participants and brokerage firms representing such Certificate
Owners. Multiple requests and directions from, and votes of, the Depository as
Holder of the Book-Entry Certificates with respect to any particular matter
shall not be deemed inconsistent if they are made with respect to different
Certificate Owners. The Trustee may establish a reasonable record date in
connection with solicitations of consents from or voting by Certificateholders
and shall give notice to the Depository of such record date.

                  If (i)(A) the Depositor advises the Trustee in writing that
the Depository is no longer willing or able to properly discharge its
responsibilities as Depository, and (B) the Depositor is unable to locate a
qualified successor, (ii) the Depositor at its option, and with the consent of
the Trustee (such consent not to be unreasonably withheld), advises the Trustee
in writing that it elects to terminate the book-entry system through the
Depository or (iii) after the occurrence of a Servicer Event of Default,
Certificate Owners representing in the aggregate not less than 51% of the
Ownership Interests of the Book-Entry Certificates advise the Trustee through
the Depository, in writing, that the continuation of a book-entry system through
the Depository is no longer in the best interests of the Certificate Owners, the
Trustee shall notify all Certificate Owners, through the Depository, of the
occurrence of any such event and of the availability of Definitive Certificates
to Certificate Owners requesting the same. Upon surrender to the Trustee of the
Book-Entry Certificates by the Book-Entry Custodian or the Depository, as
applicable, accompanied by registration instructions from the Depository for
registration of transfer, the Trustee shall cause the Definitive Certificates to
be issued. Such Definitive Certificates will be issued in minimum denominations
of $100,000, except that any beneficial ownership that was represented by a
Book- Entry Certificate in an amount less than $100,000 immediately prior to the
issuance of a Definitive Certificate shall be issued in a minimum denomination
equal to the amount represented by such Book-Entry Certificate. None of the
Depositor, either Servicer or the Trustee shall be liable for any delay in the
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Certificates, all references herein to obligations imposed upon or to be
performed by the Depository shall be deemed to be imposed upon and performed by
the Trustee, to the extent applicable with respect to such Definitive
Certificates, and the Trustee shall recognize the Holders of the Definitive
Certificates as Certificateholders hereunder.


                                     -110-
<PAGE>

                  SECTION 5.02. Registration of Transfer and Exchange of
                                Certificates.

                  (a) The Trustee shall cause to be kept at one of the offices
or agencies to be appointed by the Trustee in accordance with the provisions of
Section 8.11, a Certificate Register for the Certificates in which, subject to
such reasonable regulations as it may prescribe, the Trustee shall provide for
the registration of Certificates and of transfers and exchanges of Certificates
as herein provided.

                  (b) No transfer of any Class CE Certificate, Class P
Certificate or Residual Certificate (the "Private Certificates") shall be made
unless that transfer is made pursuant to an effective registration statement
under the Securities Act of 1933, as amended (the "1933 Act"), and effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that such a transfer of a Class CE Certificate, Class P Certificate or
Residual Certificate is to be made without registration or qualification (other
than in connection with the initial transfer of any such Certificate by the
Depositor to an Affiliate of the Depositor), the Trustee shall require receipt
of: (i) if such transfer is purportedly being made in reliance upon Rule 144A
under the 1933 Act, written certifications from the Certificateholder desiring
to effect the transfer and from such Certificateholder's prospective transferee,
substantially in the forms attached hereto as Exhibit F-1; and (ii) in all other
cases, an Opinion of Counsel satisfactory to it that such transfer may be made
without such registration (which Opinion of Counsel shall not be an expense of
the Trust Fund or of the Depositor, the Trustee, each Servicer in its capacity
as such or any Sub-Servicer), together with copies of the written
certification(s) of the Certificateholder desiring to effect the transfer and/or
such Certificateholder's prospective transferee upon which such Opinion of
Counsel is based, if any. Neither the Depositor nor the Trustee is obligated to
register or qualify any such Certificates under the 1933 Act or any other
securities laws or to take any action not otherwise required under this
Agreement to permit the transfer of such Certificates without registration or
qualification. Any Certificateholder desiring to effect the transfer of any such
Certificate shall, and does hereby agree to, indemnify the Trustee, the
Depositor and each Servicer against any liability that may result if the
transfer is not so exempt or is not made in accordance with such federal and
state laws.

                  (c) No transfer of a Private Certificate or any interest
therein shall be made to any Plan subject to ERISA or Section 4975 of the Code,
any Person acting, directly or indirectly, on behalf of any such Plan or any
Person acquiring such Certificates with "Plan Assets" of a Plan within the
meaning of the Department of Labor regulation promulgated at 29 C. F. R. ss.
2510.3-101 ("Plan Assets"), as certified by such transferee in the form of
Exhibit G, unless the Depositor, the Trustee and each Servicer are provided with
an Opinion of Counsel which establishes to the satisfaction of the Depositor,
the Trustee and each Servicer that the purchase of such Certificates is
permissible under applicable law, will not constitute or result in any
non-exempt prohibited transaction under ERISA or Section 4975 of the Code and
will not subject the Depositor, either Servicer, the Trustee or the Trust Fund
to any obligation or liability (including obligations or liabilities under ERISA
or Section 4975 of the Code) in addition to those undertaken in this Agreement,
which Opinion of Counsel shall not be an expense of the Depositor, either
Servicer, the Trustee or the Trust Fund. Neither an Opinion of Counsel nor any
certification will be required in connection with the initial transfer of any
such Certificate by the Depositor to an Affiliate of the Depositor (in which
case, the Depositor or any Affiliate thereof shall have deemed to have
represented that such Affiliate is not


                                     -111-
<PAGE>

a Plan or a Person investing Plan Assets) and the Trustee shall be entitled to
conclusively rely upon a representation (which, upon the request of the Trustee,
shall be a written representation) from the Depositor of the status of such
transferee as an affiliate of the Depositor.

                  Each beneficial owner of a Mezzanine Certificates or any
interest therein shall be deemed to have represented, by virtue of its
acquisition or holding of that certificate or interest therein, that either (i)
it is not a Plan investor, (ii) it has acquired and is holding such Mezzanine
Certificates in reliance on the Underwriter's Exemption, and that it understands
that there are certain conditions to the availability of the Underwriter's
Exemption, including that the Mezzanine Certificates must be rated, at the time
of purchase, not lower than" BBB-" (or its equivalent) by Fitch, Moody's or S&P
and the Certificates are so rated or (iii) (1) it is an insurance company, (2)
the source of funds used to acquire or hold the certificate or interest therein
is an "insurance company general account," as such term is defined in PTCE
95-60, and (3) the conditions in Sections I and III of PTCE 95-60 have been
satisfied.

                  If any Private Certificate or any interest therein is acquired
or held in violation of the provisions of the preceding paragraph, the next
preceding permitted beneficial owner will be treated as the beneficial owner of
that Certificate retroactive to the date of transfer to the purported beneficial
owner. Any purported beneficial owner whose acquisition or holding of any such
Certificate or interest therein was effected in violation of the provisions of
the preceding paragraph shall indemnify and hold harmless the Depositor, each
Servicer, the Trustee and the Trust Fund from and against any and all
liabilities, claims, costs or expenses incurred by those parties as a result of
that acquisition or holding.

                  (d) (i) Each Person who has or who acquires any Ownership
Interest in a Residual Certificate shall be deemed by the acceptance or
acquisition of such Ownership Interest to have agreed to be bound by the
following provisions and to have irrevocably authorized the Trustee or its
designee under clause (iii)(A) below to deliver payments to a Person other than
such Person and to negotiate the terms of any mandatory sale under clause
(iii)(B) below and to execute all instruments of Transfer and to do all other
things necessary in connection with any such sale. The rights of each Person
acquiring any Ownership Interest in a Residual Certificate are expressly subject
to the following provisions:

                           (A) Each Person holding or acquiring any Ownership
                  Interest in a Residual Certificate shall be a Permitted
                  Transferee and shall promptly notify the Trustee of any change
                  or impending change in its status as a Permitted Transferee.

                           (B) In connection with any proposed Transfer of any
                  Ownership Interest in a Residual Certificate, the Trustee
                  shall require delivery to it, and shall not register the
                  Transfer of any Residual Certificate until its receipt of, an
                  affidavit and agreement (a "Transfer Affidavit and Agreement,"
                  in the form attached hereto as Exhibit F-2) from the proposed
                  Transferee, in form and substance satisfactory to the Trustee,
                  representing and warranting, among other things, that such
                  Transferee is a Permitted Transferee, that it is not acquiring
                  its Ownership Interest in the Residual Certificate that is the
                  subject of the proposed Transfer as a nominee, trustee or
                  agent for any Person that is not a Permitted Transferee, that
                  for so long as it retains its Ownership


                                     -112-
<PAGE>

                  Interest in a Residual Certificate, it will endeavor to remain
                  a Permitted Transferee, and that it has reviewed the
                  provisions of this Section 5.02(d) and agrees to be bound by
                  them.

                           (C) Notwithstanding the delivery of a Transfer
                  Affidavit and Agreement by a proposed Transferee under clause
                  (B) above, if a Responsible Officer of the Trustee who is
                  assigned to this transaction has actual knowledge that the
                  proposed Transferee is not a Permitted Transferee, no Transfer
                  of an Ownership Interest in a Residual Certificate to such
                  proposed Transferee shall be effected.

                           (D) Each Person holding or acquiring any Ownership
                  Interest in a Residual Certificate shall agree (x) to require
                  a Transfer Affidavit and Agreement in the form attached hereto
                  as Exhibit F-2 from any other Person to whom such Person
                  attempts to transfer its Ownership Interest in a Residual
                  Certificate and (y) not to transfer its Ownership Interest
                  unless it provides a Transferor Affidavit (in the form
                  attached hereto as Exhibit F-2) to the Trustee stating that,
                  among other things, it has no actual knowledge that such other
                  Person is not a Permitted Transferee.

                           (E) Each Person holding or acquiring an Ownership
                  Interest in a Residual Certificate, by purchasing an Ownership
                  Interest in such Certificate, agrees to give the Trustee
                  written notice that it is a "pass-through interest holder"
                  within the meaning of temporary Treasury regulation Section
                  1.67-3T(a)(2)(i)(A) immediately upon acquiring an Ownership
                  Interest in a Residual Certificate, if it is, or is holding an
                  Ownership Interest in a Residual Certificate on behalf of, a
                  "pass-through interest holder."

                  (ii) The Trustee will register the Transfer of any Residual
         Certificate only if it shall have received the Transfer Affidavit and
         Agreement and all of such other documents as shall have been reasonably
         required by the Trustee as a condition to such registration. In
         addition, no Transfer of a Residual Certificate shall be made unless
         the Trustee shall have received a representation letter from the
         Transferee of such Certificate to the effect that such Transferee is a
         Permitted Transferee.

                  (iii) (A) If any purported Transferee shall become a Holder of
         a Residual Certificate in violation of the provisions of this Section
         5.02(d), then the last preceding Permitted Transferee shall be
         restored, to the extent permitted by law, to all rights as holder
         thereof retroactive to the date of registration of such Transfer of
         such Residual Certificate. The Trustee shall be under no liability to
         any Person for any registration of Transfer of a Residual Certificate
         that is in fact not permitted by this Section 5.02(d) or for making any
         payments due on such Certificate to the holder thereof or for taking
         any other action with respect to such holder under the provisions of
         this Agreement.

                           (B) If any purported Transferee shall become a holder
                  of a Residual Certificate in violation of the restrictions in
                  this Section 5.02(d) and to the extent that the retroactive
                  restoration of the rights of the holder of such Residual
                  Certificate as described in clause (iii)(A) above shall be
                  invalid, illegal or unenforceable, then the


                                     -113-
<PAGE>

                  Trustee shall have the right, but not the obligation, without
                  notice to the holder or any prior holder of such Residual
                  Certificate, to sell such Residual Certificate to a purchaser
                  selected by the Trustee on such terms as the Trustee may
                  choose. Such purported Transferee shall promptly endorse and
                  deliver each Residual Certificate in accordance with the
                  instructions of the Trustee. Such purchaser may be the Trustee
                  itself or any Affiliate of the Trustee. The proceeds of such
                  sale, net of the commissions (which may include commissions
                  payable to the Trustee or its Affiliates), expenses and taxes
                  due, if any, will be remitted by the Trustee to such purported
                  Transferee. The terms and conditions of any sale under this
                  clause (iii)(B) shall be determined in the sole discretion of
                  the Trustee, and the Trustee shall not be liable to any Person
                  having an Ownership Interest in a Residual Certificate as a
                  result of its exercise of such discretion.

                  (iv) The Trustee shall make available to the Internal Revenue
         Service and those Persons specified by the REMIC Provisions all
         information necessary to compute any tax imposed (A) as a result of the
         Transfer of an Ownership Interest in a Residual Certificate to any
         Person who is a Disqualified Organization, including the information
         described in Treasury regulations sections 1.860D-1(b)(5) and
         1.860E-2(a)(5) with respect to the "excess inclusions" of such Residual
         Certificate and (B) as a result of any regulated investment company,
         real estate investment trust, common trust fund, partnership, trust,
         estate or organization described in Section 1381 of the Code that holds
         an Ownership Interest in a Residual Certificate having as among its
         record holders at any time any Person which is a Disqualified
         Organization. Reasonable compensation for providing such information
         may be accepted by the Trustee.

                  (v) The provisions of this Section 5.02(d) set forth prior to
         this subsection (v) may be modified, added to or eliminated, provided
         that there shall have been delivered to the Trustee at the expense of
         the party seeking to modify, add to or eliminate any such provision the
         following:

                           (A) written notification from each Rating Agency to
                  the effect that the modification, addition to or elimination
                  of such provisions will not cause such Rating Agency to
                  downgrade its then-current ratings of any Class of
                  Certificates; and

                           (B) an Opinion of Counsel, in form and substance
                  satisfactory to the Trustee, to the effect that such
                  modification of, addition to or elimination of such provisions
                  will not cause any Trust REMIC to cease to qualify as a REMIC
                  and will not cause any Trust REMIC to be subject to an
                  entity-level tax caused by the Transfer of any Residual
                  Certificate to a Person that is not a Permitted Transferee or
                  a Person other than the prospective transferee to be subject
                  to a REMIC-tax caused by the Transfer of a Residual
                  Certificate to a Person that is not a Permitted Transferee.

                  (e) Subject to the preceding subsections, upon surrender for
registration of transfer of any Certificate at any office or agency of the
Trustee maintained for such purpose pursuant to Section 8.12, the Trustee shall
execute, authenticate and deliver, in the name of the


                                     -114-
<PAGE>

designated Transferee or Transferees, one or more new Certificates of the same
Class of a like aggregate Percentage Interest.

                  (f) At the option of the Holder thereof, any Certificate may
be exchanged for other Certificates of the same Class with authorized
denominations and a like aggregate Percentage Interest, upon surrender of such
Certificate to be exchanged at any office or agency of the Trustee maintained
for such purpose pursuant to Section 8.12. Whenever any Certificates are so
surrendered for exchange, the Trustee shall execute, authenticate and deliver,
the Certificates which the Certificateholder making the exchange is entitled to
receive. Every Certificate presented or surrendered for transfer or exchange
shall (if so required by the Trustee) be duly endorsed by, or be accompanied by
a written instrument of transfer in the form satisfactory to the Trustee duly
executed by, the Holder thereof or his attorney duly authorized in writing. In
addition, with respect to each Class R Certificate, the Holder thereof may
exchange, in the manner described above, such Class R Certificate for two
separate Certificates, each representing such Holder's respective Percentage
Interest in the Class R-1 Interest, the Class R-2 Interest and the Class R-3
Interest, respectively, in each case that was evidenced by the Class R
Certificate being exchanged.

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

                  (h) All Certificates surrendered for transfer and exchange
shall be canceled and destroyed by the Trustee in accordance with its customary
procedures.

                  SECTION 5.03. Mutilated, Destroyed, Lost or Stolen
                                Certificates.

                  If (i) any mutilated Certificate is surrendered to the
Trustee, or the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Certificate, and (ii) there is delivered to
the Trustee such security or indemnity as may be required by it to save it
harmless, then, in the absence of actual knowledge by the Trustee that such
Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute, authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of the same
Class and of like denomination and Percentage Interest. Upon the issuance of any
new Certificate under this Section, the Trustee may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and expenses of the
Trustee) connected therewith. Any replacement Certificate issued pursuant to
this Section shall constitute complete and indefeasible evidence of ownership in
the applicable REMIC created hereunder, as if originally issued, whether or not
the lost, stolen or destroyed Certificate shall be found at any time.

                  SECTION 5.04. Persons Deemed Owners.

                  The Depositor, each Servicer, the Trustee and any agent of any
of them may treat the Person in whose name any Certificate is registered as the
owner of such Certificate for the purpose of receiving distributions pursuant to
Section 4.01 and for all other purposes whatsoever, and none


                                     -115-
<PAGE>

of the Depositor, either Servicer, the Trustee or any agent of any of them shall
be affected by notice to the contrary.

                  SECTION 5.05. Certain Available Information.

                  On or prior to the date of the first sale of any Private
Certificate to an Independent third party, the Depositor shall provide to the
Trustee ten copies of any private placement memorandum or other disclosure
document used by the Depositor in connection with the offer and sale of such
Certificates. In addition, if any such private placement memorandum or
disclosure document is revised, amended or supplemented at any time following
the delivery thereof to the Trustee, the Depositor promptly shall inform the
Trustee of such event and shall deliver to the Trustee ten copies of the private
placement memorandum or disclosure document, as revised, amended or
supplemented. The Trustee shall maintain at its Corporate Trust Office and shall
make available free of charge during normal business hours for review by any
Holder of a Certificate or any Person identified to the Trustee as a prospective
transferee of a Certificate, originals or copies of the following items: (i) in
the case of a Holder or prospective transferee of a Private Certificate, the
related private placement memorandum or other disclosure document relating to
such Class of Certificates, in the form most recently provided to the Trustee;
and (ii) in all cases, (A) this Agreement and any amendments hereof entered into
pursuant to Section 11.01, (B) all monthly statements required to be delivered
to Certificateholders of the relevant Class pursuant to Section 4.02 since the
Closing Date, and all other notices, reports, statements and written
communications delivered to the Certificateholders of the relevant Class
pursuant to this Agreement since the Closing Date, (C) all certifications
delivered by a Responsible Officer of the Trustee since the Closing Date
pursuant to Section 10.01(h), (D) any and all Officers' Certificates delivered
to the Trustee by the related Servicer since the Closing Date to evidence such
Servicer's determination that any P&I Advance or Servicing Advance was, or if
made, would be, a Nonrecoverable P&I Advance or Nonrecoverable Servicing
Advance, respectively, and (E) any and all Officers' Certificates delivered to
the Trustee by either Servicer since the Closing Date pursuant to Section
4.04(a). Copies and mailing of any and all of the foregoing items will be
available from the Trustee upon request at the expense of the Person requesting
the same.


                                     -116-
<PAGE>

                                   ARTICLE VI

                         THE DEPOSITOR AND THE ServicerS

                  SECTION 6.01. Liability of the Depositor and the Servicers.

                  The Depositor and each Servicer each shall be liable in
accordance herewith only to the extent of the obligations specifically imposed
by this Agreement upon them in their respective capacities as Depositor and a
Servicer and undertaken hereunder by the Depositor and each Servicer herein.

                  SECTION 6.02. Merger or Consolidation of the Depositor or the
                                Servicers.

                  Subject to the following paragraph, the Depositor will keep in
full effect its existence, rights and franchises as a corporation under the laws
of the jurisdiction of its incorporation. Subject to the following paragraph,
each Servicer will keep in full effect its existence, rights and franchises as a
corporation under the laws of the jurisdiction of its incorporation. The
Depositor and each Servicer each 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, the Certificates or any of the Mortgage Loans
and to perform its respective duties under this Agreement.

                  The Depositor or either Servicer may be merged or consolidated
with or into any Person, or transfer all or substantially all of its assets to
any Person, in which case any Person resulting from any merger or consolidation
to which the Depositor or such Servicer shall be a party, or any Person
succeeding to the business of the Depositor or either Servicer, shall be the
successor of the Depositor or such Servicer, as the case may be, hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding;
provided, however, that the successor or surviving Person to either Servicer
shall be qualified to service mortgage loans on behalf of Fannie Mae or Freddie
Mac; and provided further that the Rating Agencies' ratings of the Class A
Certificates, the Class A-IO Certificates and the Mezzanine Certificates in
effect immediately prior to such merger or consolidation will not be qualified,
reduced or withdrawn as a result thereof (as evidenced by a letter to such
effect from the Rating Agencies).

                  SECTION 6.03. Limitation on Liability of the Depositor, the
                                Servicers and Others.

                  None of the Depositor, either Servicer or any of the
directors, officers, employees or agents of the Depositor or either Servicer
shall be under any liability to the Trust Fund or the Certificateholders 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 Depositor, either Servicer or any such
person against any breach of warranties, representations or covenants made
herein, or against any specific liability imposed on such Servicer pursuant
hereto, or against any liability which would otherwise be imposed by reason of
willful misfeasance, bad faith or negligence in the performance of duties or by
reason of reckless disregard


                                     -117-
<PAGE>

of obligations and duties hereunder. The Depositor, each Servicer and any
director, officer, employee or agent of the Depositor or either Servicer may
rely in good faith on any document of any kind which, PRIMA FACIE, is properly
executed and submitted by any Person respecting any matters arising hereunder.
The Depositor, each Servicer and any director, officer, employee or agent of the
Depositor or either Servicer shall be indemnified and held harmless by the Trust
Fund against any loss, liability or expense incurred in connection with (i) any
legal action relating to this Agreement or the Certificates, other than any
loss, liability or expense relating to any specific Mortgage Loan or Mortgage
Loans (except as any such loss, liability or expense shall be otherwise
reimbursable pursuant to this Agreement), any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or negligence in the
performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder and (ii) the breach of any representation or
warranty of NC Capital under the Mortgage Loan Purchase Agreement (but only to
the extent of amounts paid by NC Capital to the Trust Fund pursuant to its
obligations under Section 7 of the Mortgage Loan Purchase Agreement). Neither
the Depositor nor either Servicer shall be under any obligation to appear in,
prosecute or defend any legal action unless such action is related to its
respective duties under this Agreement; provided, however, that each of the
Depositor and each Servicer may in its discretion 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 and the interests of the
Certificateholders hereunder. In such event, the legal expenses and costs of
such action and any liability resulting therefrom (except any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or negligence in
the performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder) shall be expenses, costs and liabilities of
the Trust Fund, and the Depositor and each Servicer shall be entitled to be
reimbursed therefor from the related Collection Account as and to the extent
provided in Section 3.11, any such right of reimbursement being prior to the
rights of the Certificateholders to receive any amount in the Collection
Account.

                  In addition to the foregoing, the Collection Advisor shall be
indemnified and held harmless by the Trust Fund, prior to distributions on the
Certificates, for the failure of New Century to reimburse it pursuant to Section
2.01(f) of the Collection Advisory Agreement or the failure of New Century to
indemnify the Collection Advisor as required under the Collection Advisory
Agreement.

                  SECTION 6.04. Limitation on Resignation of the Servicers.

                  Neither Servicer shall resign from the obligations and duties
hereby imposed on it except upon determination that its duties hereunder are no
longer permissible under applicable law. Any such determination pursuant to the
preceding sentence permitting the resignation of either Servicer shall be
evidenced by an Opinion of Counsel to such effect obtained at the expense of the
related Servicer and delivered to the Trustee. No resignation of either Servicer
shall become effective until the Trustee or a successor servicer shall have
assumed the related Servicer's responsibilities, duties, liabilities (other than
those liabilities arising prior to the appointment of such successor) and
obligations under this Agreement.

                  Except as expressly provided herein, neither Servicer shall
assign or transfer any of its rights, benefits or privileges hereunder to any
other Person, or delegate to or subcontract with, or authorize or appoint any
other Person to perform any of the duties, covenants or obligations to be


                                     -118-
<PAGE>

performed by such Servicer hereunder. The foregoing prohibition on assignment
shall not prohibit either Servicer from designating a Sub-Servicer as payee of
any indemnification amount payable to the related Servicer hereunder; provided,
however, that as provided in Section 3.06 hereof, no Sub- Servicer shall be a
third-party beneficiary hereunder and the parties hereto shall not be required
to recognize any Sub-Servicer as an indemnitee under this Agreement. If,
pursuant to any provision hereof, the duties of either Servicer are transferred
to a successor Servicer, the entire amount of the Servicing Fee and other
compensation payable to the related Servicer pursuant hereto shall thereafter be
payable to such successor Servicer.

                  Notwithstanding anything to the contrary herein, Ocwen may
pledge or assign as collateral all its rights, title and interest under this
Agreement to a lender (the "Lender") financing the purchase price payable by
Ocwen for the servicing rights purchased from the Seller, provided, that:

                  (1) in the event of a default under the loan agreement with
         the Lender, the Lender may effect the termination of Ocwen as a
         Servicer hereunder, and, notwithstanding Section 7.02 which shall not
         apply to a termination of the Servicer pursuant to this Section 6.04,
         designate any replacement Servicer and control the manner of engaging a
         successor following a termination of Ocwen as a Servicer, provided that
         written confirmation is received by the Trustee and the Depositor from
         the Rating Agencies that the appointment of such successor would not
         result in the reduction or withdrawal of the rating of any outstanding
         Class of Certificates and the Seller and the Depositor shall have
         consented to such successor;

                  (2) the Lender's rights are subject to this Agreement; and

                  (3) Ocwen shall be subject to termination as a Servicer under
         this Agreement pursuant to the terms hereof.

                  SECTION 6.05. Rights of the Depositor in Respect of the
                                Servicers.

                  Each Servicer shall afford (and any Sub-Servicing Agreement
shall provide that each Sub-Servicer shall afford) the Depositor and the
Trustee, upon reasonable notice, during normal business hours, access to all
records maintained by the related Servicer (and any such Sub-Servicer) in
respect of the related Servicer's rights and obligations hereunder and access to
officers of the related Servicer (and those of any such Sub-Servicer)
responsible for such obligations. Upon request, each Servicer shall furnish to
the Depositor and the Trustee its (and any such Sub-Servicer's) most recent
financial statements and such other information relating to such Servicer's
capacity to perform its obligations under this Agreement as it possesses (and
that any such Sub-Servicer possesses). To the extent such information is not
otherwise available to the public, the Depositor and the Trustee shall not
disseminate any information obtained pursuant to the preceding two sentences
without such Servicer's written consent, except as required pursuant to this
Agreement or to the extent that it is appropriate to do so (i) in working with
legal counsel, auditors, taxing authorities or other governmental agencies or
(ii) pursuant to any law, rule, regulation, order, judgment, writ, injunction or
decree of any court or governmental authority having jurisdiction over the
Depositor, the Trustee or the Trust Fund, and in any case, the Depositor or the
Trustee as the case may be, (iii) disclosure


                                     -119-
<PAGE>

of any and all information that is or becomes publicly known, or information
obtained by the Trustee from sources other than the Depositor or the related
Servicer, (iv) disclosure as required pursuant to this Agreement or (v)
disclosure of any and all information(A) in any preliminary or final offering
circular, registration statement or contract or other document pertaining to the
transactions contemplated by the Agreement approved in advance by the Depositor
or the related Servicer or (B) to any affiliate, independent or internal
auditor, agent, employee or attorney of the Trustee having a need to know the
same, provided that the Trustee advises such recipient of the confidential
nature of the information being disclosed, shall use its best efforts to assure
the confidentiality of any such disseminated non-public information. The
Depositor may, but is not obligated to, enforce the obligations of each Servicer
under this Agreement and may, but is not obligated to, perform, or cause a
designee to perform, any defaulted obligation of eitherServicer under this
Agreement or exercise the rights of either Servicer under this Agreement;
provided that such Servicer shall not be relieved of any of its obligations
under this Agreement by virtue of such performance by the Depositor or its
designee. The Depositor shall not have any responsibility or liability for any
action or failure to act by either Servicer and is not obligated to supervise
the performance of the Servicers under this Agreement or otherwise.

                  SECTION 6.06. Collection Advisor.

                  On any Determination Date on which the Collection Advisor
Delinquency Trigger is in effect, New Century shall be required to transfer
servicing of the Collection Advisor Mortgage Loans to the Collection Advisor
pursuant to the terms of the Collection Advisory Agreement. The Collection
Advisor Mortgage Loans shall be serviced by the Collection Advisor until (a) the
Collection Advisor Mortgage Loans have been current for a period of not less
than six months, (b) the Distribution Date on which the Delinquency Percentage
falls below the Collection Advisor Delinquency Trigger or (c) the purchase of
any Collection Advisor Mortgage Loans by New Century pursuant to Section
3.16(c); provided, however, notwithstanding the foregoing, the Collection
Advisor will service any Collection Advisor Mortgage Loan for a period of not
less than six months. Upon the occurrence of (a) or (b) above, servicing of the
Collection Advisor Mortgage Loans will be transferred back to New Century. New
Century may, in its sole discretion, terminate the Collection Advisor pursuant
to the terms of the Collection Advisory Agreement at any time after New Century
receives a servicer rating of RPS3 or better by Fitch.

                  Neither New Century nor the Collection Advisor will be
entitled to collect the Servicing Fee on any Collection Advisor Mortgage Loan
and the Collection Advisor shall only be entitled to the Collection Advisor Fee
as compensation for servicing such Mortgage Loan.

                  Upon (i) any termination of the Collection Advisor or
resignation of the Collection Advisor pursuant to the terms of the Collection
Advisory Agreement or (ii) the Collection Advisor becomes rated RPS2- or below
by Fitch, New Century shall (a) immediately appoint a successor collection
advisor who shall be rated at least RPS2 by Fitch and who shall be obligated to
perform the same or substantially similar functions as the predecessor
collection advisor and (b) give notice of such termination and resignation to
the Trustee and Rating Agencies.

                  Neither the Collection Advisor, nor any of its directors,
officers, employees, or agents shall be under any liability to the Trustee, the
Certificateholders, or the Depositor for any action


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taken or for refraining from the taking of any action made in good faith
pursuant to this Agreement, in reliance upon information provided by New Century
under the Collection Advisory Agreement, or for errors in judgment; provided,
however, that this provision shall not protect the Collection Advisor or any
such person against liability that would otherwise be imposed by reason of
willful malfeasance or bad faith in its performance of its duties. The
Collection Advisor and any director, officer, employee, or agent of the
Collection Advisor 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, and may rely in good faith upon the accuracy of information
furnished by New Century pursuant to the Collection Advisory Agreement in the
performance of its duties thereunder and hereunder.

                  SECTION 6.07. Duties of the Credit Risk Manager.

                  For and on behalf of the Depositor, the Credit Risk Manager
will provide reports and recommendations concerning certain delinquent and
defaulted Mortgage Loans, and as to the collection of any Prepayment Charges
with respect to the Mortgage Loans. Such reports and recommendations will be
based upon information provided to the Credit Risk Manager pursuant to the
Credit Risk Management Agreement, and the Credit Risk Manager shall look solely
to each Servicer for all information and data (including loss and delinquency
information and data) relating to the servicing of the related Mortgage Loans.
Upon any termination of the Credit Risk Manager or the appointment of a
successor Credit Risk Manager, the Depositor shall give written notice thereof
to each Servicer, the Trustee, and each Rating Agency. Notwithstanding the
foregoing, the termination of the Credit Risk Manager pursuant to this Section
shall not become effective until the appointment of a successor Credit Risk
Manager.

                  SECTION 6.08. Limitation Upon Liability of the Credit Risk
                                Manager.

                  Neither the Credit Risk Manager, nor any of its directors,
officers, employees, or agents shall be under any liability to the Trustee, the
Certificateholders, or the Depositor for any action taken or for refraining from
the taking of any action made in good faith pursuant to this Agreement, in
reliance upon information provided by either Servicer under the Credit Risk
Management Agreement, or for errors in judgment; provided, however, that this
provision shall not protect the Credit Risk Manager or any such person against
liability that would otherwise be imposed by reason of willful malfeasance or
bad faith in its performance of its duties. The Credit Risk Manager and any
director, officer, employee, or agent of the Credit Risk Manager 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, and may rely
in good faith upon the accuracy of information furnished by either Servicer
pursuant to the applicable Credit Risk Management Agreement in the performance
of its duties thereunder and hereunder.

                  SECTION 6.09. Removal of the Credit Risk Manager.

                  The Credit Risk Manager may be removed as Credit Risk Manager
by Certificateholders holding not less than 66 2/3% of the Voting Rights in the
Trust Fund, in the exercise of its or their sole discretion. The
Certificateholders shall provide written notice of the Credit Risk Manager's
removal to the Trustee. Upon receipt of such notice, the Trustee shall


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provide written notice to the Credit Risk Manager of its removal, which shall be
effective upon receipt of such notice by the Credit Risk Manager.



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<PAGE>

                                   ARTICLE VII

                                     DEFAULT

                  SECTION 7.01. Servicer Events of Default.

         (a) "Servicer Event of Default," wherever used herein, means any one of
the following events, provided, however, that no Servicer shall be obligated or
liable for any default by the other Servicer:

                  (i) any failure by either Servicer to remit to the Trustee for
         distribution to the Certificateholders any payment (other than a P&I
         Advance required to be made from its own funds on any Servicer
         Remittance Date pursuant to Section 4.03) required to be made under the
         terms of the Certificates and this Agreement which continues unremedied
         for a period of one Business Day after the date upon which written
         notice of such failure, requiring the same to be remedied, shall have
         been given to such Servicer by the Depositor or the Trustee (in which
         case notice shall be provided by telecopy), or to such Servicer, the
         Depositor and the Trustee by the Holders of Certificates entitled to at
         least 25% of the Voting Rights; or

                  (ii) any failure on the part of either Servicer duly to
         observe or perform in any material respect any other of the covenants
         or agreements on the part of such Servicer contained in this Agreement,
         or the breach by either Servicer of any representation and warranty
         contained in Section 2.05, which continues unremedied for a period of
         30 days (or if such failure or breach cannot be remedied within 30
         days, then such remedy shall have been commenced within 30 days and
         diligently pursued thereafter; provided, however, that in no event
         shall such failure or breach be allowed to exist for a period of
         greater than 90 days) after the earlier of (i) the date on which
         written notice of such failure, requiring the same to be remedied,
         shall have been given to such Servicer by the Depositor, the Trustee or
         to such Servicer, the Depositor and the Trustee by the Holders of
         Certificates entitled to at least 25% of the Voting Rights and (ii)
         actual knowledge of such failure by a Servicing Officer of the related
         Servicer; or

                  (iii) a decree or order of a court or agency or supervisory
         authority having jurisdiction in the premises in an involuntary case
         under any present or future federal or state bankruptcy, insolvency or
         similar law or the appointment of a conservator or receiver or
         liquidator in any insolvency, readjustment of debt, marshalling of
         assets and liabilities or similar proceeding, or for the winding-up or
         liquidation of its affairs, shall have been entered against either
         Servicer and such decree or order shall have remained in force
         undischarged or unstayed for a period of 90 days; or

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


                                     -123-
<PAGE>

                  (v) either 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) any failure by either Servicer of the Servicer
         Termination Test; or

                  (vii) any failure of either Servicer to make any P&I Advance
         on any Servicer Remittance Date required to be made from its own funds
         pursuant to Section 4.03 which continues unremedied until 3:00 p.m. New
         York time on the Business Day immediately following the Servicer
         Remittance Date; or

                  (viii) with respect to New Century, on or after April 10,
         2003, any failure on the part of New Century to execute the Collection
         Advisory Agreement with the Collection Advisor or any failure on the
         part of New Century duly to observe or perform in any material respect
         any of the covenants or agreements of New Century contained in the
         Collection Advisory Agreement, which continues unremedied for a period
         of 15 days.

                  If a Servicer Event of Default described in clauses (i)
through (vi) of this Section shall occur, then, and in each and every such case,
so long as such Servicer Event of Default shall not have been remedied, the
Depositor or the Trustee may, and at the written direction of the Holders of
Certificates entitled to at least 51% of Voting Rights, the Trustee shall, by
notice in writing to the defaulting Servicer and the Depositor, terminate all of
the rights and obligations of such Servicer in its capacity as a Servicer under
this Agreement, to the extent permitted by law, and in and to the Mortgage Loans
and the proceeds thereof. If a Servicer Event of Default described in clause
(vii) or (viii) hereof shall occur, the Trustee shall, by notice in writing to
the defaulting Servicer and the Depositor, terminate all of the rights and
obligations of such Servicer in its capacity as a Servicer under this Agreement
and in and to the Mortgage Loans and the proceeds thereof. On or after the
receipt by the defaulting Servicer of such written notice, all authority and
power of such Servicer under this Agreement, whether with respect to the
Certificates (other than as a Holder of any Certificate) or the Mortgage Loans
or otherwise, shall pass to and be vested in the Trustee pursuant to and under
this Section, and, without limitation, the Trustee is hereby authorized and
empowered, as attorney-in-fact or otherwise, to execute and deliver, on behalf
of and at the expense of the defaulting Servicer, any and all documents and
other instruments and to 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. The defaulting Servicer agrees promptly (and in
any event no later than ten Business Days subsequent to such notice) to provide
the Trustee with all documents and records requested by it to enable it to
assume such Servicer's functions under this Agreement, and to cooperate with the
Trustee in effecting the termination of such Servicer's responsibilities and
rights under this Agreement, including, without limitation, the transfer within
one Business Day to the Trustee for administration by it of all cash amounts
which at the time shall be or should have been credited by such Servicer to the
related Collection Account held by or on behalf of such Servicer, the
Distribution Account or any REO Account or Servicing Account held by or on
behalf of such Servicer or thereafter be received with respect to the Mortgage
Loans or any REO Property serviced by such Servicer (provided, however, that
such Servicer shall continue to be entitled to receive all


                                     -124-
<PAGE>

amounts accrued or owing to it under this Agreement on or prior to the date of
such termination, whether in respect of P&I Advances, Servicing Advances or
otherwise, and shall continue to be entitled to the benefits of Section 6.03,
notwithstanding any such termination, with respect to events occurring prior to
such termination). For purposes of this Section 7.01, the Trustee shall not be
deemed to have knowledge of a Servicer Event of Default unless a Responsible
Officer of the Trustee assigned to and working in the Trustee's Corporate Trust
Office has actual knowledge thereof or unless written notice of any event which
is in fact such a Servicer Event of Default is received by the Trustee and such
notice references the Certificates, the Trust Fund or this Agreement.

                  SECTION 7.02. Trustee to Act; Appointment of Successor.

                  (a)(1) On and after the time a defaulting Servicer receives a
notice of termination, the Trustee shall be the successor in all respects to
such Servicer in its capacity as a Servicer under this Agreement and the
transactions set forth or provided for herein, and all the responsibilities,
duties and liabilities relating thereto and arising thereafter shall be assumed
by the Trustee (except for any representations or warranties of such Servicer
under this Agreement, the responsibilities, duties and liabilities contained in
Section 2.05 and the obligation to deposit amounts in respect of losses pursuant
to Section 3.12) by the terms and provisions hereof including, without
limitation, such Servicer's obligations to make P&I Advances pursuant to Section
4.03; provided, however, that if the Trustee is prohibited by law or regulation
from obligating itself to make advances regarding delinquent mortgage loans,
then the Trustee shall not be obligated to make P&I Advances pursuant to Section
4.03; and provided further, that any failure to perform such duties or
responsibilities caused by the defaulting Servicer's failure to provide
information required by Section 7.01 shall not be considered a default by the
Trustee as successor to such Servicer hereunder. As compensation therefor, the
Trustee shall be entitled to the Servicing Fee and all funds relating to the
Mortgage Loans to which the defaulting Servicer would have been entitled if it
had continued to act hereunder. Notwithstanding the above and subject to Section
7.02(a)(2) below, the Trustee may, if it shall be unwilling to so act, or shall,
if it is unable to so act or if it is prohibited by law from making advances
regarding delinquent mortgage loans or if the Holders of Certificates entitled
to at least 51% of the Voting Rights so request in writing to the Trustee,
promptly appoint or petition a court of competent jurisdiction to appoint, an
established mortgage loan servicing institution acceptable to each Rating Agency
and having a net worth of not less than $15,000,000, as the successor to the
defaulting Servicer under this Agreement in the assumption of all or any part of
the responsibilities, duties or liabilities of such Servicer under this
Agreement.

                  The Trustee or other successor Servicer shall be entitled to
be reimbursed by the defaulting Servicer (or by the Trust Fund if the defaulting
Servicer is unable to fulfill its obligations hereunder) for all reasonable
out-of-pocket costs (such expenses of the Trustee to be documented by the
Trustee to the extent possible) associated with the transfer of servicing from
the predecessor Servicer, including without limitation, any such costs or
expenses associated with the complete transfer of all servicing data and the
completion, correction or manipulation of such servicing data as may be required
by the Trustee to correct any errors or insufficiencies in the servicing data or
otherwise to enable the Trustee to service the Mortgage Loans properly and
effectively.

                  (2) No appointment of a successor to the defaulting Servicer
under this Agreement shall be effective until the assumption by the successor of
all of such Servicer's


                                     -125-
<PAGE>

responsibilities, duties and liabilities hereunder. In connection with such
appointment and assumption described herein, the Trustee may make such
arrangements for the compensation of such successor out of payments on Mortgage
Loans as it and such successor shall agree; provided, however, that no such
compensation shall be in excess of that permitted the defaulting Servicer as
such hereunder. The Depositor, the Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession. Pending appointment of a successor to the defaulting Servicer
under this Agreement, the Trustee shall act in such capacity as hereinabove
provided.

                  SECTION 7.03. Notification to Certificateholders.

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

                  (b) Not later than the later of 60 days after the occurrence
of any event, which constitutes or which, with notice or lapse of time or both,
would constitute a Servicer Event of Default or five days after a Responsible
Officer of the Trustee becomes aware of the occurrence of such an event, the
Trustee shall transmit by mail to all Holders of Certificates notice of each
such occurrence, unless such default or Servicer Event of Default shall have
been cured or waived.

                  SECTION 7.04. Waiver of Servicer Events of Default.

                  The Holders representing at least 66% of the Voting Rights
evidenced by all Classes of Certificates affected by any default or Servicer
Event of Default hereunder may waive such default or Servicer Event of Default;
provided, however, that a default or Servicer Event of Default under clause (i)
or (vii) of Section 7.01 may be waived only by all of the Holders of the Regular
Certificates. Upon any such waiver of a default or Servicer Event of Default,
such default or Servicer Event of Default shall cease to exist and shall be
deemed to have been remedied for every purpose hereunder. No such waiver shall
extend to any subsequent or other default or Servicer Event of Default or impair
any right consequent thereon except to the extent expressly so waived.


                                     -126-
<PAGE>

                                  ARTICLE VIII

                             CONCERNING THE TRUSTEE

                  SECTION 8.01. Duties of Trustee.

                  The Trustee, prior to the occurrence of a Servicer Event of
Default and after the curing of all Servicer Events of Default which may have
occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. During a Servicer Event of Default,
the Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs. Any permissive right of the Trustee enumerated in
this Agreement shall not be construed as a duty.

                  The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform on their face to the requirements of this Agreement. If any such
instrument is found not to conform on its face to the requirements of this
Agreement in a material manner, the Trustee shall take such action as it deems
appropriate to have the instrument corrected, and if the instrument is not
corrected to its satisfaction, will provide notice thereof to the
Certificateholders.

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

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

                  (ii) The Trustee shall not be personally liable for an error
         of judgment made in good faith by a Responsible Officer or Responsible
         Officers of the Trustee unless it shall be proved that the Trustee was
         negligent in ascertaining the pertinent facts; and

                  (iii) The Trustee shall not be personally liable with respect
         to any action taken, suffered or omitted to be taken by it in good
         faith in accordance with the direction of the Holders of Certificates
         entitled to at least 25% of the Voting Rights relating to the time,
         method and place of conducting any proceeding for any remedy available
         to the Trustee or exercising any trust or power conferred upon it,
         under this Agreement.


                                     -127-
<PAGE>

                  SECTION 8.02. Certain Matters Affecting the Trustee.

                  (a) Except as otherwise provided in Section 8.01:

                  (i) The Trustee may request and conclusively rely upon and
         shall be fully protected in acting or refraining from acting upon any
         resolution, Officers' Certificate, certificate of auditors or any other
         certificate, statement, instrument, opinion, report, notice, request,
         consent, order, appraisal, bond or other paper or document reasonably
         believed by it to be genuine and to have been signed or presented by
         the proper party or parties;

                  (ii) The Trustee may consult with counsel and any Opinion of
         Counsel shall be full and complete authorization and protection in
         respect of any action taken or suffered or omitted by it hereunder in
         good faith and in accordance with such Opinion of Counsel;

                  (iii) The Trustee shall not be under any obligation to
         exercise any of the trusts or powers vested in it by this Agreement or
         to institute, conduct or defend any litigation hereunder or in relation
         hereto at the request, order or direction of any of the
         Certificateholders, pursuant to the provisions of this Agreement,
         unless such Certificateholders shall have offered to the Trustee
         security or indemnity reasonably satisfactory to it against the costs,
         expenses and liabilities which may be incurred therein or thereby;
         nothing contained herein shall, however, relieve the Trustee of the
         obligation, upon the occurrence of a Servicer Event of Default (which
         has not been cured or waived), to exercise such of the rights and
         powers vested in it by this Agreement, and to use the same degree of
         care and skill in their exercise as a prudent person would exercise or
         use under the circumstances in the conduct of such person's own
         affairs;

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

                  (v) Prior to the occurrence of a Servicer Event of Default
         hereunder and after the curing of all Servicer Events of Default which
         may have occurred, the Trustee shall not be bound to make any
         investigation into the facts or matters stated in any resolution,
         certificate, statement, instrument, opinion, report, notice, request,
         consent, order, approval, bond or other paper or document, unless
         requested in writing to do so by the Holders of Certificates entitled
         to at least 25% of the Voting Rights; provided, however, that if the
         payment within a reasonable time to the Trustee of the costs, expenses
         or liabilities likely to be incurred by it in the making of such
         investigation is, in the opinion of the Trustee not reasonably assured
         to the Trustee by such Certificateholders, the Trustee may require
         reasonable indemnity against such expense or liability from such
         Certificateholders as a condition to taking any such action;

                  (vi) The Trustee may execute any of the trusts or powers
         hereunder or perform any duties hereunder either directly or by or
         through agents, accountants or attorneys, and the Trustee shall not be
         responsible for any misconduct or negligence on the part of any agents,
         accountants or attorneys appointed with due care by it hereunder; and


                                     -128-
<PAGE>

                  (vii) The Trustee shall have no obligation to invest and
         reinvest any cash held in the absence of timely and specific written
         investment direction from either Servicer or the Depositor. In no event
         shall the Trustee be liable for the selection of investments or for
         investment losses incurred thereon. The Trustee shall have no liability
         in respect of losses incurred as a result of the liquidation of any
         investment incurred as a result of the liquidation of any investment
         prior to its stated maturity or the failure of either Servicer or the
         Depositor to provide timely written investment direction.

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

                  SECTION 8.03. Trustee Not Liable for Certificates or Mortgage
                                Loans.

                  The recitals contained herein and in the Certificates (other
than the signature of the Trustee, the authentication of the Certificate
Registrar on the Certificates, the acknowledgments of the Trustee contained in
Article II and the representations and warranties of the Trustee in Section
8.13) shall be taken as the statements of the Depositor and the Trustee assumes
no responsibility for their correctness. The Trustee makes no representations or
warranties as to the validity or sufficiency of this Agreement (other than as
specifically set forth with respect to such party in Section 8.13) or of the
Certificates (other than the signature of the Trustee and authentication of the
Certificate Registrar on the Certificates) or of any Mortgage Loan or related
document. The Trustee shall not be accountable for the use or application by the
Depositor of any of the Certificates or of the proceeds of such Certificates, or
for the use or application of any funds paid to the Depositor or either Servicer
in respect of the Mortgage Loans or deposited in or withdrawn from the related
Collection Account by such Servicer, other than any funds held by or on behalf
of the Trustee and any amounts held by or on behalf of the Trustee in accordance
with Section 3.10.

                  SECTION 8.04. Trustee May Own Certificates.

                  The Trustee in its individual capacity or any other capacity
may become the owner or pledgee of Certificates with the same rights it would
have if it were not Trustee.

                  SECTION 8.05. Trustee's Fees and Expenses.

                  (a) The Trustee shall withdraw from the Distribution Account
on each Distribution Date and pay to itself the Trustee Fee. In addition, the
Trustee shall withdraw from the Distribution Account on each Distribution Date
and pay to the Custodian an amount equal to the Custodian Fee for such
Distribution Date and amounts, if any, required to reimburse the Custodian for
expenses, costs and liabilities incurred or reimbursable to it, as such
Custodian Fee and expenses (listed separately) are set forth in writing by the
Custodian to the Trustee by the related Determination Date pursuant to the
Custodial Agreement. The Trustee, or any director, officer, employee or agent of
the Trustee shall be indemnified by REMIC I and held harmless against any loss,
liability or expense (not including expenses, disbursements and advances
incurred or made by


                                     -129-
<PAGE>

the Trustee including the compensation and the expenses and disbursements of its
agents and counsel, in the ordinary course of the Trustee's performance in
accordance with the provisions of this Agreement) incurred by the Trustee in
connection with any Servicer Event of Default (not including expenses,
disbursements and advances incurred or made by the Trustee in its capacity as a
successor Servicer), default, claim or legal action or any pending or threatened
claim or legal action arising out of or in connection with the acceptance or
administration of its obligations and duties under this Agreement, other than
any loss, liability or expense (i) resulting from a breach of either Servicer's
obligations and duties under this Agreement and the Mortgage Loans (for which
such Servicer shall indemnify pursuant to Section 8.05(b)), (ii) for the
expenses of preparing and filing Tax Returns pursuant to Section 10.01(d) or
(iii) any loss, liability or expense incurred by reason of its willful
misfeasance, bad faith or negligence in the performance of its duties hereunder
or by reason of reckless disregard of its respective obligations and duties
hereunder. It is understood by the parties hereto that a "claim" as used in the
preceding sentence includes any claim for indemnification made by the Custodian
under Section 22 of the Custodial Agreement. Any amounts payable to the Trustee,
or any director, officer, employee or agent of the Trustee in respect of the
indemnification provided by this paragraph (a), or pursuant to any other right
of reimbursement from the Trust Fund that the Trustee, or any director, officer,
employee or agent of the Trustee, may have hereunder in its capacity as such,
may be withdrawn by the Trustee from the Distribution Account at any time.

                  (b) The Seller and the Trustee have entered into a fee letter
governing the terms of reimbursement of certain expenses of the Trustee not
otherwise reimbursable to the Trustee from the Trust Fund as set forth above.
Furthermore, each Servicer agrees to indemnify the Trustee from, and hold it
harmless against, any loss, liability or expense resulting from the negligence
or willful misconduct of such Servicer in the performance of its duties
hereunder or a breach of such Servicer's obligations and duties under this
Agreement. Such indemnity shall survive the termination or discharge of this
Agreement and the resignation or removal of the Trustee. Any payment hereunder
made by either Servicer to the Trustee shall be from such Servicer's own funds,
without reimbursement from the Trust Fund therefor.

                  (c) The Seller shall pay any annual rating agency fees of the
Rating Agencies for ongoing surveillance from its own funds without right of
reimbursement.

                  The provisions of this Section 8.05 shall survive the
termination of this Agreement or the earlier resignation or removal of the
Trustee.

                  SECTION 8.06. Eligibility Requirements for Trustee.

                  The Trustee hereunder shall at all times be a corporation or
an association (other than the Depositor, the Seller, each Servicer or any
Affiliate of the foregoing) organized and doing business under the laws of any
state or the United States of America, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by federal or state
authority. If such corporation or association publishes reports of conditions at
least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section the
combined capital and surplus of such corporation or association shall be deemed
to be its combined capital and


                                     -130-
<PAGE>

surplus as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, the Trustee shall resign immediately in the manner
and with the effect specified in Section 8.07.

                  SECTION 8.07. Resignation and Removal of the Trustee.

                  The Trustee may at any time resign and be discharged from the
trust hereby created by giving written notice thereof to the Depositor, each
Servicer and the Certificateholders. Upon receiving such notice of resignation
of the Trustee, the Depositor shall promptly appoint a successor trustee by
written instrument, in duplicate, which instrument shall be delivered to the
resigning Trustee and to the successor trustee. A copy of such instrument shall
be delivered to the Certificateholders, the Trustee and each Servicer by the
Depositor. If no successor trustee shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation or removal, the Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.

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

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

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

                  SECTION 8.08. Successor Trustee.

                  Any successor trustee appointed as provided in Section 8.07
shall execute, acknowledge and deliver to the Depositor and to its predecessor
Trustee an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor trustee shall become effective and
such successor trustee without any further act, deed or conveyance, shall become
fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with the like effect as if originally named as Trustee
herein. The predecessor trustee shall deliver to the successor trustee all
Mortgage Files and related documents and statements, as well as all


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moneys, held by it hereunder (other than any Mortgage Files at the time held by
the Custodian, which Custodian shall become the agent of any successor trustee
hereunder), and the Depositor and the predecessor trustee shall execute and
deliver such instruments and do such other things as may reasonably be required
for more fully and certainly vesting and confirming in the successor trustee all
such rights, powers, duties and obligations.

                  No successor trustee shall accept appointment as provided in
this Section unless at the time of such acceptance such successor trustee shall
be eligible under the provisions of Section 8.06 and the appointment of such
successor trustee shall not result in a downgrading of any Class of Certificates
by either Rating Agency, as evidenced by a letter from each Rating Agency.

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

                  SECTION 8.09. Merger or Consolidation of Trustee.

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

                  SECTION 8.10. Appointment of Co-Trustee or Separate Trustee.

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


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<PAGE>

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

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

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

                  SECTION 8.11. Appointment of the Custodian.

                  The Trustee may, with the consent of the Depositor and each
Servicer, appoint the Custodian to hold all or a portion of the Mortgage Files
as agent for the Trustee, by entering into the Custodial Agreement. The
appointment of the Custodian may at any time be terminated and a substitute
Custodian appointed therefor upon the reasonable request of the Servicers to the
Trustee, the consent to which shall not be unreasonably withheld. The Trustee
shall pay any and all fees and expenses of the Custodian in accordance with
Section 8.05 hereof and the Custodial Agreement. The Trustee initially appoints
Wells Fargo Bank Minnesota, National Association, as Custodian, and the
Depositor and the Servicers consent to such appointment. Subject to Article VIII
hereof, the Trustee agrees to comply with the terms of the Custodial Agreement
and to enforce the terms and provisions thereof against the Custodian for the
benefit of the Certificateholders having an interest in any Mortgage File held
by the Custodian. The Custodian shall be a depository institution or trust
company subject to supervision by federal or state authority, shall have
combined capital and surplus of at least $10,000,000 and shall be qualified to
do business in the jurisdiction in which it holds any Mortgage File. The
Custodial Agreement may be amended only as provided therein. In no event shall
the appointment of the Custodian pursuant to the Custodial Agreement diminish
the obligations of the Trustee hereunder.


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<PAGE>

                  SECTION 8.12. Appointment of Office or Agency.

                  The Trustee will designate an office or agency in the City of
New York where the Certificates may be surrendered for registration of transfer
or exchange, and presented for final distribution, and where notices and demands
to or upon the Trustee in respect of the Certificates and this Agreement may be
delivered. As of the Closing Date, the Trustee designates the office of its
agent located c/o DTC Transfer Agent Services, 55 Water Street, Jeanette Park
Entrance, New York, NY 10041 for such purposes.

                  SECTION 8.13. Representations and Warranties of the Trustee.

                  The Trustee hereby represents and warrants, solely as to
itself, to each Servicer and the Depositor, as of the Closing Date, that:

                  (i) It is a national banking association duly organized,
         validly existing and in good standing under the laws of the United
         States.

                  (ii) The execution and delivery of this Agreement by it, and
         the performance and compliance with the terms of this Agreement by it,
         will not violate its charter or bylaws.

                  (iii) It has the full power and authority to enter into and
         consummate all transactions contemplated by this Agreement, has duly
         authorized the execution, delivery and performance of this Agreement,
         and has duly executed and delivered this Agreement.

                  (iv) This Agreement, assuming due authorization, execution and
         delivery by the other parties hereto, constitutes a valid, legal and
         binding obligation of it, enforceable against it in accordance with the
         terms hereof, subject to (A) applicable bankruptcy, insolvency,
         receivership, reorganization, moratorium and other laws affecting the
         enforcement of creditors' rights generally, and (B) general principles
         of equity, regardless of whether such enforcement is considered in a
         proceeding in equity or at law.


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                                   ARTICLE IX

                                   TERMINATION

                  SECTION 9.01 Termination Upon Repurchase or Liquidation of All
                               Mortgage Loans.

                  (a) Subject to Section 9.02, the respective obligations and
responsibilities under this Agreement of the Depositor, each Servicer and the
Trustee (other than the obligations of each Servicer to the Trustee pursuant to
Section 8.05 and of each Servicer to make remittances to the Trustee and the
Trustee to make payments in respect of the REMIC I Regular Interests, the REMIC
II Regular Interests and the Classes of Certificates as hereinafter set forth)
shall terminate upon payment to the Certificateholders and the deposit of all
amounts held by or on behalf of the Trustee and required hereunder to be so paid
or deposited on the Distribution Date coinciding with or following the earlier
to occur of (i) the purchase by the Terminator (as defined below) of all
Mortgage Loans and each REO Property remaining in REMIC I and (ii) the final
payment or other liquidation (or any advance with respect thereto) of the last
Mortgage Loan or REO Property remaining in REMIC I; provided, however, that in
no event shall the trust created hereby continue beyond the expiration of 21
years from the death of the last survivor of the descendants of Joseph P.
Kennedy, the late ambassador of the United States to the Court of St. James,
living on the date hereof. Subject to Section 3.10 hereof, the purchase by the
Terminator of all Mortgage Loans and each REO Property remaining in REMIC I
shall be at a price (the "Termination Price") equal to the aggregate fair market
value of all of the assets of REMIC I (as determined as of the close of business
on the third Business Day next preceding the date upon which notice of any such
termination is furnished to the Certificateholders pursuant to Section 9.01(c)
by (i) the Terminator and (ii) if the Class A Certificates, the Class A-IO
Certificates or a Class of Mezzanine Certificates will not receive all amounts
owed to it as a result of the termination, an Independent appraiser mutually
agreed upon by the Terminator and the Trustee on behalf of the
Certificateholders; provided, however, such option may only be exercised if (a)
the Termination Price is sufficient to pay all interest accrued on, as well as
amounts necessary to retire the principal balance of, each class of notes issued
pursuant to the Indenture and (b) the fair market value of the assets of REMIC I
described above is at least equal to the Stated Principal Balance of the
Mortgage Loans (after giving effect to scheduled payments of principal due
during the related Due Period, to the extent received or advanced, and
unscheduled collections of principal received during the related Prepayment
Period) and the appraised value of the REO Properties. If the determination of
the fair market value of the Mortgage Loans and REO Properties shall be required
to be made by the Terminator and an Independent appraiser as provided above, (A)
such appraisal shall be obtained at no expense to the Trustee and (B) the
Trustee may conclusively rely on, and shall be protected in relying on, such
appraisal.

                  (b) The majority Holder of the Class CE Certificates (so long
as such Holder is not the Trustee, the Seller or an Affiliate of the Seller)
shall have the right (the party exercising such right, the "Terminator"), to
purchase all of the Mortgage Loans and each REO Property remaining in REMIC I
pursuant to clause (i) of the preceding paragraph no later than the
Determination Date in the month immediately preceding the Distribution Date on
which the Certificates will be retired; provided, however, that the Terminator
may elect to purchase all of the Mortgage Loans and each


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<PAGE>

REO Property remaining in REMIC I pursuant to clause (i) above only if the
aggregate Stated Principal Balance of the Mortgage Loans and each REO Property
remaining in the Trust Fund at the time of such election is reduced to less than
10% of the aggregate Stated Principal Balance of the Mortgage Loans as of the
Cut-off Date. By acceptance of the Residual Certificates, the Holder of the
Residual Certificates agrees, in connection with any termination hereunder, to
assign and transfer any amounts in excess of par, and to the extent received in
respect of such termination, to pay any such amounts to the Holders of the Class
CE Certificates.

                  (c) Notice of the liquidation of the Certificates shall be
given promptly by the Trustee by letter to Certificateholders mailed (a) in the
event such notice is given in connection with the purchase of the Mortgage Loans
and each REO Property by the Terminator, not earlier than the 15th day and not
later than the 25th day of the month next preceding the month of the final
distribution on the Certificates or (b) otherwise during the month of such final
distribution on or before the Determination Date in such month, in each case
specifying (i) the Distribution Date upon which the Trust Fund will terminate
and the final payment in respect of the REMIC I Regular Interests and the
Certificates will be made upon presentation and surrender of the related
Certificates at the office of the Trustee therein designated, (ii) the amount of
any such final payment, (iii) that no interest shall accrue in respect of the
REMIC I Regular Interests or the Certificates from and after the Interest
Accrual Period relating to the final Distribution Date therefor and (iv) that
the Record Date otherwise applicable to such Distribution Date is not
applicable, payments being made only upon presentation and surrender of the
Certificates at the office of the Trustee. In the event such notice is given in
connection with the purchase of all of the Mortgage Loans and each REO Property
remaining in REMIC I by the Terminator, the Terminator shall deliver to the
Trustee for deposit in the Distribution Account not later than the last Business
Day of the month next preceding the month of the final distribution on the
Certificates an amount in immediately available funds equal to the
above-described purchase price. The Trustee shall remit to each Servicer from
such funds deposited in the Distribution Account (i) any amounts which such
Servicer would be permitted to withdraw and retain from the related Collection
Account pursuant to Section 3.11 and (ii) any other amounts otherwise payable by
the Trustee to the Servicers from amounts on deposit in the Distribution Account
pursuant to the terms of this Agreement, in each case prior to making any final
distributions pursuant to Section 10.01(d) below. Upon certification to the
Trustee by the Terminator of the making of such final deposit, the Trustee shall
promptly release to the Terminator the Mortgage Files for the remaining Mortgage
Loans, and the Trustee shall execute all assignments, endorsements and other
instruments necessary to effectuate such transfer.

                  Immediately following the deposit of funds in trust hereunder
in respect of the Certificates, the Trust Fund shall terminate.

                  SECTION 9.02 Additional Termination Requirements.

                  (a) In the event that the Terminator purchases all the
Mortgage Loans and each REO Property or the final payment on or other
liquidation of the last Mortgage Loan or REO Property remaining in REMIC I
pursuant to Section 9.01, the Trust Fund shall be terminated in accordance with
the following additional requirements:


                                     -136-
<PAGE>

                  (i) The Trustee shall specify the first day in the 90-day
         liquidation period in a statement attached to each Trust REMIC's final
         Tax Return pursuant to Treasury regulation Section 1.860F-1 and shall
         satisfy all requirements of a qualified liquidation under Section 860F
         of the Code and any regulations thereunder, as evidenced by an Opinion
         of Counsel obtained at the expense of the Terminator;

                  (ii) During such 90-day liquidation period and, at or prior to
         the time of making of the final payment on the Certificates, the
         Trustee shall sell all of the assets of REMIC I to the Terminator for
         cash; and

                  (iii) At the time of the making of the final payment on the
         Certificates, the Trustee shall distribute or credit, or cause to be
         distributed or credited, to the Holders of the Residual Certificates
         all cash on hand in the Trust Fund (other than cash retained to meet
         claims), and the Trust Fund shall terminate at that time.

                  (b) At the expense of the requesting Terminator (or, if the
Trust Fund is being terminated as a result of the occurrence of the event
described in clause (ii) of the first paragraph of Section 9.01, at the expense
of the Seller without the right of reimbursement from the Trust Fund), the
Trustee shall prepare or cause to be prepared documentation required, if any, in
connection with the adoption of a plan of liquidation of each Trust REMIC
pursuant to this Section 9.02.

                  (c) By their acceptance of Certificates, the Holders thereof
hereby agree to authorize the Trustee to specify the 90-day liquidation period
for each Trust REMIC, which authorization shall be binding upon all successor
Certificateholders.


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<PAGE>

                                    ARTICLE X

                                REMIC PROVISIONS

                  SECTION 10.01. REMIC Administration.

                  (a) The Trustee shall elect to treat each Trust REMIC as a
REMIC under the Code and, if necessary, under applicable state law. Each such
election will be made by the Trustee on Form 1066 or other appropriate federal
tax or information return or any appropriate state return for the taxable year
ending on the last day of the calendar year in which the Certificates are
issued. For the purposes of the REMIC election in respect of REMIC I, the REMIC
I Regular Interests shall be designated as the Regular Interests in REMIC I and
the Class R-I Interest shall be designated as the Residual Interest in REMIC I.
For the purposes of the REMIC election in respect of REMIC II, the REMIC II
Regular Interests shall be designated as the Regular Interests in REMIC II and
the Class R-II Interest shall be designated as the Residual Interest in REMIC
II. The Class A Certificates, the Class A-IO Certificates, each of the Mezzanine
Certificates, the Class CE Certificates and the Class P Certificates (other than
the right to receive amounts from the Net WAC Rate Carryover Reserve Account, if
any) shall be designated as the Regular Interests in REMIC III and the Class
R-III Interest shall be designated as the Residual Interest in REMIC III. The
Trustee shall not permit the creation of any "interests" in any Trust REMIC
(within the meaning of Section 860G of the Code) other than the REMIC I Regular
Interests, the REMIC II Regular Interests and the interests represented by the
Certificates.

                  (b) The Closing Date is hereby designated as the "Startup Day"
of each Trust REMIC within the meaning of Section 860G(a)(9) of the Code.

                  (c) The Trustee shall be reimbursed for any and all expenses
relating to any tax audit of the Trust Fund (including, but not limited to, any
professional fees or any administrative or judicial proceedings with respect to
any Trust REMIC that involve the Internal Revenue Service or state tax
authorities), including the expense of obtaining any tax related Opinion of
Counsel required to be obtained hereunder. The Trustee, as agent for each Trust
REMIC's tax matters person shall (i) act on behalf of the Trust Fund in relation
to any tax matter or controversy involving any Trust REMIC and (ii) represent
the Trust Fund in any administrative or judicial proceeding relating to an
examination or audit by any governmental taxing authority with respect thereto.
The holder of the largest Percentage Interest of each Class of Residual
Certificates shall be designated, in the manner provided under Treasury
regulations section 1.860F-4(d) and Treasury regulations section
301.6231(a)(7)-1, as the tax matters person of the Trust REMICs created
hereunder. By their acceptance thereof, the holder of the largest Percentage
Interest of the Residual Certificates hereby agrees to irrevocably appoint the
Trustee or an Affiliate as its agent to perform all of the duties of the tax
matters person for the Trust Fund.

                  (d) The Trustee shall prepare, sign and file all of the Tax
Returns (including Form 8811, which must be filed within 30 days following the
Closing Date) in respect of each REMIC created hereunder. The expenses of
preparing and filing such returns shall be borne by the Trustee without any
right of reimbursement therefor.


                                     -138-
<PAGE>

                  (e) The Trustee shall perform on behalf of each Trust REMIC
all reporting and other tax compliance duties that are the responsibility of
such REMIC under the Code, the REMIC Provisions or other compliance guidance
issued by the Internal Revenue Service or any state or local taxing authority.
Among its other duties, as required by the Code, the REMIC Provisions or other
such compliance guidance, the Trustee shall provide (i) to any Transferor of a
Residual Certificate such information as is necessary for the application of any
tax relating to the transfer of a Residual Certificate to any Person who is not
a Permitted Transferee, (ii) to the Certificateholders such information or
reports as are required by the Code or the REMIC Provisions including reports
relating to interest, original issue discount and market discount or premium
(using the Prepayment Assumption as required) and (iii) to the Internal Revenue
Service the name, title, address and telephone number of the person who will
serve as the representative of each Trust REMIC. The Depositor shall provide or
cause to be provided to the Trustee, within ten (10) days after the Closing
Date, all information or data that the Trustee reasonably determines to be
relevant for tax purposes as to the valuations and issue prices of the
Certificates, including, without limitation, the price, yield, prepayment
assumption and projected cash flow of the Certificates.

                  (f) The Trustee shall take such action and shall cause each
REMIC created hereunder to take such action as shall be necessary to create or
maintain the status thereof as a REMIC under the REMIC Provisions. The Trustee
shall not take any action or cause the Trust Fund 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 any
Trust REMIC as a REMIC or (ii) result in the imposition of a tax upon the Trust
Fund (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") unless the Trustee has received an Opinion of Counsel, addressed to the
Trustee (at the expense of the party seeking to take such action but in no event
at the expense of the Trustee) to the effect that the contemplated action will
not, with respect to any Trust REMIC, endanger such status or result in the
imposition of such a tax, nor shall either Servicer take or fail to take any
action (whether or not authorized hereunder) as to which the Trustee has advised
it in writing that it has received an Opinion of Counsel to the effect that an
Adverse REMIC Event could occur with respect to such action; provided that each
Servicer may conclusively rely on such Opinion of Counsel and shall incur no
liability for its action or failure to act in accordance with such Opinion of
Counsel. In addition, prior to taking any action with respect to any Trust REMIC
or the respective assets of each, or causing any Trust REMIC to take any action,
which is not contemplated under the terms of this Agreement, each Servicer will
consult with the Trustee or its designee, in writing, with respect to whether
such action could cause an Adverse REMIC Event to occur with respect to any
Trust REMIC and neither Servicer shall take any such action or cause any Trust
REMIC to take any such action as to which the Trustee has advised it in writing
that an Adverse REMIC Event could occur; provided that each Servicer may
conclusively rely on such writing and shall incur no liability for its action or
failure to act in accordance with such writing. The Trustee may consult with
counsel to make such written advice, and the cost of same shall be borne by the
party seeking to take the action not permitted by this Agreement, but in no
event shall such cost be an expense of the Trustee. At all times as may be
required by the Code, the Trustee will ensure that substantially all of the
assets of REMIC I will consist of "qualified mortgages" as defined in Section
860G(a)(3) of the Code and "permitted investments" as defined in Section
860G(a)(5) of the Code, to the extent such


                                     -139-
<PAGE>

obligations are within the Trustee's control and not otherwise inconsistent with
the terms of this Agreement.

                  (g) In the event that any tax is imposed on "prohibited
transactions" of any REMIC created hereunder as defined in Section 860F(a)(2) of
the Code, on the "net income from foreclosure property" of such REMIC as defined
in Section 860G(c) of the Code, on any contributions to any such REMIC after the
Startup Day therefor pursuant to Section 860G(d) of the Code, or any other tax
is imposed by the Code or any applicable provisions of state or local tax laws,
such tax shall be charged (i) to the Trustee pursuant to Section 10.03 hereof,
if such tax arises out of or results from a breach by the Trustee of any of its
obligations under this Article X, (ii) to the applicable Servicer pursuant to
Section 10.03 hereof, if such tax arises out of or results from a breach by such
Servicer of any of its obligations under Article III or this Article X, or (iii)
against amounts on deposit in the Distribution Account and shall be paid by
withdrawal therefrom.

                  (h) On or before April 15th of each calendar year, commencing
April 15, 2004, the Trustee shall deliver to each Rating Agency an Officers'
Certificate of the Trustee stating the Trustee's compliance with this Article X.

                  (i) The Trustee shall, for federal income tax purposes,
maintain books and records with respect to each Trust REMIC on a calendar year
and on an accrual basis.

                  (j) Following the Startup Day, neither Servicer nor the
Trustee shall accept any contributions of assets to any Trust REMIC other than
in connection with any Qualified Substitute Mortgage Loan delivered in
accordance with Section 2.03 unless it shall have received an Opinion of Counsel
to the effect that the inclusion of such assets in the Trust Fund will not cause
the related REMIC to fail to qualify as a REMIC at any time that any
Certificates are outstanding or subject such REMIC to any tax under the REMIC
Provisions or other applicable provisions of federal, state and local law or
ordinances.

                  (k) Neither the Trustee nor any Servicer shall enter into any
arrangement by which any Trust REMIC will receive a fee or other compensation
for services nor knowingly permit either 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.

                  SECTION 10.02. Prohibited Transactions and Activities.

                  None of the Depositor, the Servicers or the Trustee shall
sell, dispose of or substitute for any of the Mortgage Loans (except in
connection with (i) the foreclosure of a Mortgage Loan, including but not
limited to, the acquisition or sale of a Mortgaged Property acquired by deed in
lieu of foreclosure, (ii) the bankruptcy of REMIC I, (iii) the termination of
REMIC I pursuant to Article IX of this Agreement, (iv) a substitution pursuant
to Article II of this Agreement or (v) a purchase of Mortgage Loans pursuant to
Article II or III of this Agreement), acquire any assets for any Trust REMIC
(other than REO Property acquired in respect of a defaulted Mortgage Loan), sell
or dispose of any investments in the Collection Account or the Distribution
Account for gain, or accept any contributions to any Trust REMIC after the
Closing Date (other than a Qualified Substitute Mortgage Loan delivered in
accordance with Section 2.03), unless it has received an Opinion of Counsel,


                                     -140-
<PAGE>

addressed to the Trustee (at the expense of the party seeking to cause such
sale, disposition, substitution, acquisition or contribution but in no event at
the expense of the Trustee) that such sale, disposition, substitution,
acquisition or contribution will not (a) affect adversely the status of any
Trust REMIC as a REMIC or (b) cause any Trust REMIC to be subject to a tax on
"prohibited transactions" or "contributions" pursuant to the REMIC Provisions.

                  SECTION 10.03. Servicers and Trustee Indemnification.

                  (a) The Trustee agrees to indemnify the Trust Fund, the
Depositor and each Servicer for any taxes and costs including, without
limitation, any reasonable attorneys' fees imposed on or incurred by the Trust
Fund, the Depositor or either Servicer, as a result of a breach of the Trustee's
covenants set forth in this Article X.

                  (b) Each Servicer agrees to indemnify the Trust Fund, the
Depositor and the Trustee for any taxes and costs including, without limitation,
any reasonable attorneys' fees imposed on or incurred by the Trust Fund, the
Depositor or the Trustee, as a result of a breach of the applicable Servicer's
covenants set forth in Article III or this Article X.


                                     -141-
<PAGE>

                                   ARTICLE XI

                            MISCELLANEOUS PROVISIONS

                  SECTION 11.01. Amendment.

                  This Agreement may be amended from time to time by the
Depositor, each Servicer and the Trustee without the consent of any of the
Certificateholders, (i) to cure any ambiguity or defect, (ii) to correct, modify
or supplement any provisions herein (including to give effect to the
expectations of Certificateholders), or (iii) to make any other provisions with
respect to matters or questions arising under this Agreement which shall not be
inconsistent with the provisions of this Agreement, provided that such actions
shall not,adversely affect in any material respect the interests of any
Certificateholder, as evidenced by either (i) an Opinion of Counsel delivered to
the Servicers and the Trustee or (ii) confirmation from the Rating Agencies that
such amendment will not result in the reduction or withdrawal of the rating of
any outstanding Class of Certificates. No amendment shall be deemed to adversely
affect in any material respect the interests of any Certificateholder who shall
have consented thereto, and no Opinion of Counsel or confirmation from the
Rating Agencies shall be required to address the effect of any such amendment on
any such consenting Certificateholder.

                  This Agreement may also be amended from time to time by the
Depositor, each Servicer and the Trustee with the consent of the Holders of
Certificates entitled to at least 66% of the Voting Rights for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Holders of Certificates; provided, however, that no such amendment shall (i)
reduce in any manner the amount of, or delay the timing of, payments received on
Mortgage Loans which are required to be distributed on any Certificate without
the consent of the Holder of such Certificate, (ii) adversely affect in any
material respect the interests of the Holders of any Class of Certificates (as
evidenced by either (i) an Opinion of Counsel delivered to the Trustee or (ii)
written notice to the Depositor, each Servicer and the Trustee from the Rating
Agencies that such action will not result in the reduction or withdrawal of the
rating of any outstanding Class of Certificates with respect to which it is a
Rating Agency) in a manner, other than as described in (i), without the consent
of the Holders of Certificates of such Class evidencing at least 66% of the
Voting Rights allocated to such Class, or (iii) modify the consents required by
the immediately preceding clauses (i) and (ii) without the consent of the
Holders of all Certificates then outstanding. Notwithstanding any other
provision of this Agreement, for purposes of the giving or withholding of
consents pursuant to this Section 11.01, Certificates registered in the name of
the Depositor or either Servicer or any Affiliate thereof shall be entitled to
Voting Rights with respect to matters affecting such Certificates.

                  No amendment shall be deemed to adversely affect in any
material respect the interests of any Certificateholder who shall have consented
thereto, and no Opinion of Counsel or Rating Agency confirmation shall be
required to address the effect of any such amendment on any such consenting
Certificateholder.

                  Notwithstanding any contrary provision of this Agreement, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of


                                     -142-
<PAGE>

Counsel to the effect that such amendment (i) will not result in the imposition
of any tax on any Trust REMIC pursuant to the REMIC Provisions or cause any
Trust REMIC to fail to qualify as a REMIC at any time that any Certificates are
outstanding and (ii) is authorized or permitted hereunder.

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

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

                  The cost of any Opinion of Counsel to be delivered pursuant to
this Section 11.01 shall be borne by the Person seeking the related amendment,
but in no event shall such Opinion of Counsel be an expense of the Trustee.

                  Notwithstanding the foregoing, any modification of the
provisions of Section 5.02(d) shall be made in accordance with the provisions
thereof and without the consent of the Certificateholders.

                  The Trustee may, but shall not be obligated to, enter into any
amendment pursuant to this Section that affects its rights, duties and
immunities under this Agreement or otherwise.

                  SECTION 11.02. Recordation of Agreement; Counterparts.

                  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 or
all 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 either Servicer at the expense of the Certificateholders, but only
upon direction of the Certificateholders accompanied by an Opinion of Counsel to
the effect that such recordation materially and beneficially affects the
interests of the Certificateholders.

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


                                     -143-
<PAGE>

                  SECTION 11.03. Limitation on Rights of Certificateholders.

                  The death or incapacity of any Certificateholder shall not
operate to terminate this Agreement or the Trust Fund, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of the
Trust Fund, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.

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

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

                  SECTION 11.04. Governing Law.

                  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, without the
conflicts of laws provisions thereof

                  SECTION 11.05. Notices.

                  All directions, demands and notices hereunder shall be in
writing and shall be deemed to have been duly given when received if personally
delivered at or mailed by first class mail, postage prepaid, or by express
delivery service or delivered in any other manner specified herein, to


                                     -144-
<PAGE>

(a) in the case of the Depositor, 18400 Von Karman, Suite 1000, Irvine,
California 92612, Attention: Kevin Cloyd (telecopy number: (949) 440-7033), or
such other address or telecopy number as may hereafter be furnished to the
Servicers and the Trustee in writing by the Depositor, (b) in the case of New
Century, 18400 Von Karman, Suite 1000, Irvine, California 92612, Attention:
Kevin Cloyd (telecopy number: (949) 440-7033), or such other address or telecopy
number as may hereafter be furnished to the Trustee, the Depositor and Ocwen in
writing by New Century, (c) in the case of Ocwen, 1675 Palm Beach Lakes Blvd.,
Suite 10A, West Palm Beach, Florida 33401, Attention: Secretary (telecopy
number: (561) 682-8177), or such other address or telecopy number as may
hereafter be furnished to the Trustee, the Depositor and New Century in writing
by Ocwen and (d) in the case of the Trustee, Deutsche Bank National Trust
Company, 1761 East St. Andrew Place, Santa Ana, California 92705-4934,
Attention: Trust Administration-NC0302 (telecopy number: (714) 247-6009), or
such other address or telecopy number as may hereafter be furnished to the
Servicers and the Depositor in writing by the Trustee. Any notice required or
permitted to be given to a Certificateholder shall be given by first class mail,
postage prepaid, at the address of such Holder as shown in the Certificate
Register. Any notice so mailed within the time prescribed in this Agreement
shall be conclusively presumed to have been duly given when mailed, whether or
not the Certificateholder receives such notice. A copy of any notice required to
be telecopied hereunder also shall be mailed to the appropriate party in the
manner set forth above.

                  SECTION 11.06. Severability of Provisions.

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

                  SECTION 11.07. Notice to Rating Agencies.

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

                  1. Any material change or amendment to this Agreement;

                  2. The occurrence of any Servicer Event of Default that has
         not been cured or waived;

                  3. The resignation or termination of either Servicer or the
         Trustee;

                  4. The repurchase or substitution of Mortgage Loans pursuant
         to or as contemplated by Section 2.03;

                  5. The final payment to the Holders of any Class of
         Certificates;

                  6. Any change in the location of the Collection Account or the
         Distribution Account; and


                                     -145-
<PAGE>

                  7. Any event that would result in the inability of the
         Trustee, as a successor Servicer, to make advances regarding delinquent
         Mortgage Loans.

                  In addition, the Trustee shall promptly furnish to each Rating
Agency copies of each report to Certificateholders described in Section 4.02 and
each Servicer shall promptly furnish to each Rating Agency copies of the
following:

                  1. Each annual statement as to compliance described in Section
         3.20; and

                  2. Each annual independent public accountants' servicing
         report described in Section 3.21.

                  Any such notice pursuant to this Section 11.07 shall be in
writing and shall be deemed to have been duly given if personally delivered at
or mailed by first class mail, postage prepaid, or by express delivery service
to Fitch Ratings, One State Street, 32nd Floor, New York, New York 10004, to
Moody's Investors Service, 99 Church Street, New York, New York 10007 and to
Standard & Poor's Ratings Services, a division of the McGraw-Hill Companies,
Inc., 55 Water Street, New York, New York 10007 or such other addresses as the
Rating Agencies may designate in writing to the parties hereto.

                  SECTION 11.08. Article and Section References.

                  All article and section references used in this Agreement,
unless otherwise provided, are to articles and sections in this Agreement.

                  SECTION 11.09. Grant of Security Interest.

                  It is the express intent of the parties hereto that the
conveyance of the Mortgage Loans by the Depositor to the Trustee, be, and be
construed as, a sale of the Mortgage Loans by the Depositor and not a pledge of
the Mortgage Loans to secure a debt or other obligation of the Depositor.
However, in the event that, notwithstanding the aforementioned intent of the
parties, the Mortgage Loans are held to be property of the Depositor, then, (a)
it is the express intent of the parties that such conveyance be deemed a pledge
of the Mortgage Loans by the Depositor to the Trustee to secure a debt or other
obligation of the Depositor and (b)(1) this Agreement shall also be deemed to be
a security agreement within the meaning of Articles 8 and 9 of the Uniform
Commercial Code as in effect from time to time in the State of New York; (2) the
conveyance provided for in Section 2.01 hereof shall be deemed to be a grant by
the Depositor to the Trustee of a security interest in all of the Depositor's
right, title and interest in and to the Mortgage Loans and all amounts payable
to the holders of the Mortgage Loans in accordance with the terms thereof and
all proceeds of the conversion, voluntary or involuntary, of the foregoing into
cash, instruments, securities or other property, including without limitation
all amounts, other than investment earnings, from time to time held or invested
in the Collection Account and the Distribution Account, whether in the form of
cash, instruments, securities or other property; (3) the obligations secured by
such security agreement shall be deemed to be all of the Depositor's obligations
under this Agreement, including the obligation to provide to the
Certificateholders the benefits of this Agreement relating to the Mortgage Loans
and the Trust Fund; and (4) notifications to persons holding such property,


                                     -146-
<PAGE>

and acknowledgments, receipts or confirmations from persons holding such
property, shall be deemed notifications to, or acknowledgments, receipts or
confirmations from, financial intermediaries, bailees or agents (as applicable)
of the Trustee for the purpose of perfecting such security interest under
applicable law. Accordingly, the Depositor hereby grants to the Trustee a
security interest in the Mortgage Loans and all other property described in
clause (2) of the preceding sentence, for the purpose of securing to the Trustee
the performance by the Depositor of the obligations described in clause (3) of
the preceding sentence. Notwithstanding the foregoing, the parties hereto intend
the conveyance pursuant to Section 2.01 to be a true, absolute and unconditional
sale of the Mortgage Loans and assets constituting the Trust Fund by the
Depositor to the Trustee.

                  SECTION 11.10. Waiver of Jury Trial.

                  EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY,
WAIVES (TO THE EXTENT PERMITTED BY APPLICABLE LAW) ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY OF ANY DISPUTE ARISING UNDER OR RELATING TO THIS AGREEMENT AND
AGREES THAT ANY SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A
JURY.


                                     -147-
<PAGE>

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


                                        NEW CENTURY MORTGAGE SECURITIES INC.,
                                        as Depositor


                                        By:____________________________________
                                        Name:
                                        Title:


                                        NEW CENTURY MORTGAGE CORPORATION,
                                          as a Servicer


                                        By:____________________________________
                                        Name:
                                        Title:


                                        OCWEN FEDERAL BANK FSB,
                                          as a Servicer


                                        By:____________________________________
                                        Name:
                                        Title:


                                        DEUTSCHE BANK NATIONAL TRUST
                                        COMPANY,
                                          as Trustee


                                        By:____________________________________
                                        Name:
                                        Title:


                                        By:____________________________________
                                        Name:
                                        Title:



<PAGE>



For purposes of Sections 6.07, 6.08 and 6.09:

THE MURRAYHILL COMPANY


By:____________________________________
Name:
Title:





<PAGE>




STATE OF ______________)
                       ) ss.:
COUNTY OF _____________)

                  On the th day of March 2003, before me, a notary public in and
for said State, personally appeared ________________, known to me to be a
___________________ of New Century Mortgage Securities Inc., one of the
corporations 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 and affixed my
official seal the day and year in this certificate first above written.



                                                      _____________________
                                                          Notary Public


[Notarial Seal]




<PAGE>




STATE OF ______________)
                       ) ss.:
COUNTY OF _____________)

                  On the ____ day of March 2003, before me, a notary public in
and for said State, personally appeared _____________________, known to me to be
__________________ of New Century Mortgage Corporation, one of the corporations
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 and affixed my
official seal the day and year in this certificate first above written.



                                                      _____________________
                                                          Notary Public



[Notarial Seal]




<PAGE>




STATE OF ______________)
                       ) ss.:
COUNTY OF _____________)

                  On the ____ day of March 2003, before me, a notary public in
and for said State, personally appeared _____________________, known to me to be
__________________ of Ocwen Federal Bank FSB, one of the corporations 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 and affixed my
official seal the day and year in this certificate first above written.



                                                      _____________________
                                                          Notary Public



[Notarial Seal]




<PAGE>


STATE OF ______________)
                       )ss.:
COUNTY OF _____________)

                  On the ____ day of March 2003, before me, a notary public in
and for said State, personally appeared _______________, known to me to be a
______________ of Deutsche Bank National Trust Company, one of the corporations
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 and affixed my
official seal the day and year in this certificate first above written.



                                                      _____________________
                                                          Notary Public


[Notarial Seal]




<PAGE>


                                   EXHIBIT A-1

                          FORM OF CLASS A-1 CERTIFICATE

         SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
         "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS
         THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
         INTERNAL REVENUE CODE OF 1986 (THE "CODE").

<TABLE>
<CAPTION>

<S>                                                        <C>
Series 2003-2                                              Aggregate Certificate Principal Balance of the
                                                           Class A-1 Certificates as of the Issue Date:
Pass-Through Rate: Variable                                $____________

Cut-off Date and date of Pooling and Servicing             Denomination: $______________
Agreement: March 1, 2003
                                                           Servicerss: New Century Mortgage Corporation
First Distribution Date: April 25, 2003                    and Ocwen Federal Bank FSB

No. __                                                     Trustee: Deutsche Bank National Trust
                                                           Company

                                                           Issue Date: March 19, 2003

                                                           CUSIP: ___________
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
         CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
         OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE
         LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS
         CERTIFICATE.


                                      A-1-1

<PAGE>




                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien and second lien mortgage loans (the
"Mortgage Loans") formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN NEW
         CENTURY MORTGAGE SECURITIES, INC., THE SERVICERS, THE TRUSTEE OR ANY OF
         THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE
         UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
         INSTRUMENTALITY OF THE UNITED STATES.

                  This certifies that ___________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class A-1 Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class A-1 Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among New
Century Mortgage Securities, Inc. (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement), the Servicers and the
Trustee, a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class A-1 Certificates on such Distribution
Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

                                      A-1-2

<PAGE>



                  The Pass-Through Rate applicable to the calculation of
interest payable with respect to this Certificate on any Distribution Date shall
equal a rate per annum equal to the lesser of (i) One- Month LIBOR plus 0.41%,
in the case of each Distribution Date through and including the Distribution
Date on which the aggregate principal balance of the Mortgage Loans (and
properties acquired in respect thereof) remaining in the Trust Fund is reduced
to less than 10% of the aggregate principal balance of the Mortgage Loans as of
the Cut-off Date, or One- Month LIBOR plus 0.82% per annum, in the case of any
Distribution Date thereafter and (ii) the Net WAC Pass-Through Rate for such
Distribution Date.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicers, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be

                                      A-1-3

<PAGE>



made for any such registration of transfer or exchange of Certificates, but the
Trustee may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any transfer or
exchange of Certificates.

                  The Depositor, the Servicers, the Trustee and any agent of the
Depositor, the Servicers or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Servicers, the Trustee nor any such agent shall be affected by
notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC I and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC I of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC I all the Mortgage Loans and all property acquired in respect of any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Stated Principal Balance of the
Mortgage Loans at the time of purchase being less than 10% of the aggregate
principal balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.



                                      A-1-4

<PAGE>



                  IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.

Dated: March __, 2003


                               DEUTSCHE BANK NATIONAL TRUST COMPANY
                               as Trustee

                               By:_____________________________________________
                                                 Authorized Officer



                          CERTIFICATE OF AUTHENTICATION

         This is one of the Class A-1 Certificates referred to in the
within-mentioned Agreement.


                                DEUTSCHE BANK NATIONAL TRUST COMPANY
                                as Trustee

                                By:_____________________________________________
                                                Authorized Signatory



                                      A-1-5

<PAGE>




                                 ABBREVIATIONS

The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:

<TABLE>
<CAPTION>

<S>                                                  <C>
TEN COM - as tenants in common                       UNIF GIFT MIN ACT - Custodian

TEN ENT - as tenants by the entireties                                 (Cust) (Minor) under
                                                                       Uniform Gifts
JT TEN - as joint tenants with right                                   to Minors Act
         if survivorship and not as                                    _______________
          tenants in common                                                (State)

         Additional abbreviations may also be used though not in the above list.
</TABLE>


                                   ASSIGNMENT

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto _________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
 (Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
______________________________________________________________________________
______________________________________________________________________________


Dated:

                                          _____________________________________
                                          Signature by or on behalf of assignor



                                          _____________________________________
                                          Signature Guaranteed





                                      A-1-6

<PAGE>



                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to_________________________________________________
_______________________________________________________________ for the account
of _______________________________, account number ___________________________,
or, if mailed by check, to
_______________________________________________________________________________
_________________________________________________________.Applicable statements
should be mailed to
______________________________________________________________________________
___________________________.This information is provided by
___________________________________________, the assignee named above, or
________________________________________, as its agent.



                                     A-1-7
<PAGE>

                                   EXHIBIT A-2

                          FORM OF CLASS A-2 CERTIFICATE

         SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
         "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS
         THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
         INTERNAL REVENUE CODE OF 1986 (THE "CODE").

<TABLE>
<CAPTION>

<S>                                                        <C>
Series 2003-2                                              Aggregate Certificate Principal Balance of the
                                                           Class A-2 Certificates as of the Issue Date:
Pass-Through Rate: Variable                                $____________

Cut-off Date and date of Pooling and Servicing             Denomination: $______________
Agreement: March 1, 2003
                                                           Servicerss: New Century Mortgage Corporation
First Distribution Date: April 25, 2003                    and Ocwen Federal Bank FSB

No. __                                                     Trustee: Deutsche Bank National Trust
                                                           Company

                                                           Issue Date: March 19, 2003

                                                           CUSIP: ___________

</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
         CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
         OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE
         LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS
         CERTIFICATE.


                                      A-2-1

<PAGE>




                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien and second lien mortgage loans (the
"Mortgage Loans") formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN NEW
         CENTURY MORTGAGE SECURITIES, INC., THE SERVICERS, THE TRUSTEE OR ANY OF
         THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE
         UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
         INSTRUMENTALITY OF THE UNITED STATES.

                  This certifies that ___________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class A-2 Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class A-2 Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among New
Century Mortgage Securities, Inc. (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement), the Servicers and the
Trustee, a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class A-2 Certificates on such Distribution
Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.



                                      A-2-2

<PAGE>



                  The Pass-Through Rate applicable to the calculation of
interest payable with respect to this Certificate on any Distribution Date shall
equal a rate per annum equal to the lesser of (i) One- Month LIBOR plus 0.43%,
in the case of each Distribution Date through and including the Distribution
Date on which the aggregate principal balance of the Mortgage Loans (and
properties acquired in respect thereof) remaining in the Trust Fund is reduced
to less than 10% of the aggregate principal balance of the Mortgage Loans as of
the Cut-off Date, or One- Month LIBOR plus 0.86% per annum, in the case of any
Distribution Date thereafter and (ii) the Net WAC Pass-Through Rate for such
Distribution Date.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicers, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be


                                      A-2-3

<PAGE>



made for any such registration of transfer or exchange of Certificates, but the
Trustee may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any transfer or
exchange of Certificates.

                  The Depositor, the Servicers, the Trustee and any agent of the
Depositor, the Servicers or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Servicers, the Trustee nor any such agent shall be affected by
notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC I and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC I of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC I all the Mortgage Loans and all property acquired in respect of any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Stated Principal Balance of the
Mortgage Loans at the time of purchase being less than 10% of the aggregate
principal balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.




                                      A-2-4

<PAGE>



                  IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.

Dated: March __, 2003


                               DEUTSCHE BANK NATIONAL TRUST COMPANY
                               as Trustee

                               By:_____________________________________________
                                               Authorized Officer



                          CERTIFICATE OF AUTHENTICATION

         This is one of the Class A-2 Certificates referred to in the
within-mentioned Agreement.


                               DEUTSCHE BANK NATIONAL TRUST COMPANY
                               as Trustee

                               By:_____________________________________________
                                               Authorized Signatory





                                      A-2-5

<PAGE>



                                  ABBREVIATIONS

The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:

<TABLE>
<CAPTION>

<S>                                                  <C>
TEN COM - as tenants in common                       UNIF GIFT MIN ACT - Custodian

TEN ENT - as tenants by the entireties                                 (Cust) (Minor) under
                                                                       Uniform Gifts
JT TEN - as joint tenants with right                                   to Minors Act
         if survivorship and not as                                    _______________
          tenants in common                                                 (State)

         Additional abbreviations may also be used though not in the above list.
</TABLE>


                                   ASSIGNMENT

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto _________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
 (Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
______________________________________________________________________________
______________________________________________________________________________


Dated:

                                          _____________________________________
                                          Signature by or on behalf of assignor



                                          _____________________________________
                                          Signature Guaranteed





                                      A-2-6

<PAGE>



                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to_________________________________________________
_______________________________________________________________ for the account
of _______________________________, account number ___________________________,
or, if mailed by check, to
_______________________________________________________________________________
_________________________________________________________.Applicable statements
should be mailed to
______________________________________________________________________________
___________________________.This information is provided by
___________________________________________, the assignee named above, or
________________________________________, as its agent.





                                      A-2-7

<PAGE>



                                   EXHIBIT A-3

                          FORM OF CLASS M-1 CERTIFICATE

         SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
         "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS
         THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
         INTERNAL REVENUE CODE OF 1986 (THE "CODE").

         THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES AND THE
         CLASS A-IO CERTIFICATES TO THE EXTENT DESCRIBED IN THE POOLING AND
         SERVICING AGREEMENT REFERRED TO HEREIN.

<TABLE>
<CAPTION>

<S>                                                        <C>
Series 2003-2                                              Aggregate Certificate Principal Balance of the
                                                           Class M-1 Certificates as of the Issue Date:
Pass-Through Rate: Variable                                $____________

Cut-off Date and date of Pooling and Servicing             Denomination: $______________
Agreement: March 1, 2003
                                                           Servicers: New Century Mortgage Corporation
First Distribution Date: April 25, 2003                    and Ocwen Federal Bank FSB

No. __                                                     Trustee: Deutsche Bank National Trust
                                                           Company

                                                           Issue Date: March 19, 2003

                                                           CUSIP: ___________

</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
         CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
         OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE
         LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS
         CERTIFICATE.





                                      A-3-1

<PAGE>




                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien and second lien mortgage loans (the
"Mortgage Loans") formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN NEW
         CENTURY MORTGAGE SECURITIES, INC., THE SERVICERS, THE TRUSTEE OR ANY OF
         THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE
         UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
         INSTRUMENTALITY OF THE UNITED STATES.

                  This certifies that ___________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class M-1 Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class M-1 Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among New
Century Mortgage Securities, Inc. (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement), the Servicers and the
Trustee, a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class M-1 Certificates on such Distribution
Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.



                                      A-3-2

<PAGE>



                  The Pass-Through Rate applicable to the calculation of
interest payable with respect to this Certificate on any Distribution Date shall
equal a rate per annum equal to the lesser of (i) One- Month LIBOR plus 0.90%,
in the case of each Distribution Date through and including the Distribution
Date on which the aggregate principal balance of the Mortgage Loans (and
properties acquired in respect thereof) remaining in the Trust Fund is reduced
to less than 10% of the aggregate principal balance of the Mortgage Loans as of
the Cut-off Date, or One- Month LIBOR plus 1.35% per annum, in the case of any
Distribution Date thereafter and (ii) the Net WAC Pass-Through Rate for such
Distribution Date.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicers, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be


                                      A-3-3

<PAGE>



made for any such registration of transfer or exchange of Certificates, but the
Trustee may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any transfer or
exchange of Certificates.

                  The Depositor, the Servicers and the Trustee and any agent of
the Depositor, the Servicers or the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and none of
the Depositor, the Servicers, the Trustee nor any such agent shall be affected
by notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC I and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC I of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC I all the Mortgage Loans and all property acquired in respect of any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Stated Principal Balance of the
Mortgage Loans at the time of purchase being less than 10% of the aggregate
principal balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.




                                      A-3-4

<PAGE>



                  IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.

Dated: March __,2003


                               DEUTSCHE BANK NATIONAL TRUST COMPANY
                               as Trustee

                               By:_____________________________________________
                                                 Authorized Officer



                          CERTIFICATE OF AUTHENTICATION

         This is one of the Class M-1 Certificates referred to in the
within-mentioned Agreement.


                                DEUTSCHE BANK NATIONAL TRUST COMPANY
                                as Trustee

                                By:_____________________________________________
                                                Authorized Signatory



                                      A-3-5

<PAGE>



                                  ABBREVIATIONS

The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:

<TABLE>
<CAPTION>

<S>                                                  <C>
TEN COM - as tenants in common                       UNIF GIFT MIN ACT - Custodian

TEN ENT - as tenants by the entireties                                 (Cust) (Minor) under
                                                                       Uniform Gifts
JT TEN - as joint tenants with right                                   to Minors Act
         if survivorship and not as                                    _______________
          tenants in common                                                (State)

         Additional abbreviations may also be used though not in the above list.
</TABLE>


                                   ASSIGNMENT

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto _________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
______________________________________________________________________________
______________________________________________________________________________


Dated:

                                          _____________________________________
                                          Signature by or on behalf of assignor



                                          _____________________________________
                                          Signature Guaranteed





                                      A-3-6

<PAGE>



                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to_________________________________________________
_______________________________________________________________ for the account
of _______________________________, account number ___________________________,
or, if mailed by check, to
_______________________________________________________________________________
_________________________________________________________.Applicable statements
should be mailed to
______________________________________________________________________________
___________________________.This information is provided by
___________________________________________, the assignee named above, or
________________________________________, as its agent.






                                      A-3-7

<PAGE>



                                   EXHIBIT A-4

                          FORM OF CLASS M-2 CERTIFICATE

         SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
         "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS
         THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
         INTERNAL REVENUE CODE OF 1986 (THE "CODE").

         THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES, THE CLASS
         A-IO CERTIFICATES AND THE CLASS M-1 CERTIFICATES TO THE EXTENT
         DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.

<TABLE>
<CAPTION>

<S>                                                        <C>
Series 2003-2                                              Aggregate Certificate Principal Balance of the
                                                           Class M-2 Certificates as of the Issue Date:
Pass-Through Rate: Variable                                $____________

Cut-off Date and date of Pooling and Servicing             Denomination: $______________
Agreement: March 1, 2003
                                                           Servicers: New Century Mortgage Corporation
First Distribution Date: April 25, 2003                    and Ocwen Federal Bank FSB

No. __                                                     Trustee: Deutsche Bank National Trust
                                                           Company

                                                           Issue Date: March 19, 2003

                                                           CUSIP: ___________

</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
         CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
         OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE
         LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS
         CERTIFICATE.





                                      A-4-1

<PAGE>




                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien and second lien mortgage loans (the
"Mortgage Loans") formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN NEW
         CENTURY MORTGAGE SECURITIES, INC., THE SERVICERS, THE TRUSTEE OR ANY OF
         THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE
         UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
         INSTRUMENTALITY OF THE UNITED STATES.

                  This certifies that ___________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class M-2 Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class M-2 Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among New
Century Mortgage Securities, Inc. (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement), the Servicers and the
Trustee, a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class M-2 Certificates on such Distribution
Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.



                                      A-4-2

<PAGE>



                  The Pass-Through Rate applicable to the calculation of
interest payable with respect to this Certificate on any Distribution Date shall
equal a rate per annum equal to the lesser of (i) One- Month LIBOR plus 2.00%,
in the case of each Distribution Date through and including the Distribution
Date on which the aggregate principal balance of the Mortgage Loans (and
properties acquired in respect thereof) remaining in the Trust Fund is reduced
to less than 10% of the aggregate principal balance of the Mortgage Loans as of
the Cut-off Date, or One- Month LIBOR plus 3.00% per annum, in the case of any
Distribution Date thereafter and (ii) the Net WAC Pass-Through Rate for such
Distribution Date.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicers, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be


                                      A-4-3

<PAGE>



made for any such registration of transfer or exchange of Certificates, but the
Trustee may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any transfer or
exchange of Certificates.

                  The Depositor, the Servicers, the Trustee and any agent of the
Depositor, the Servicers or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Servicers, the Trustee nor any such agent shall be affected by
notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC I and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC I of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC I all the Mortgage Loans and all property acquired in respect of any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Stated Principal Balance of the
Mortgage Loans at the time of purchase being less than 10% of the aggregate
principal balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.




                                      A-4-4

<PAGE>



                  IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.

Dated: March __, 2003


                               DEUTSCHE BANK NATIONAL TRUST COMPANY
                               as Trustee

                               By:_____________________________________________
                                                 Authorized Officer



                          CERTIFICATE OF AUTHENTICATION

         This is one of the Class M-2 Certificates referred to in the
within-mentioned Agreement.


                                DEUTSCHE BANK NATIONAL TRUST COMPANY
                                as Trustee

                                By:_____________________________________________
                                                Authorized Signatory





                                      A-4-5

<PAGE>




                                  ABBREVIATIONS

The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:

<TABLE>
<CAPTION>

<S>                                                  <C>
TEN COM - as tenants in common                       UNIF GIFT MIN ACT - Custodian

TEN ENT - as tenants by the entireties                                 (Cust) (Minor) under
                                                                       Uniform Gifts
JT TEN - as joint tenants with right                                   to Minors Act
         if survivorship and not as                                     _______________
          tenants in common                                                 (State)

         Additional abbreviations may also be used though not in the above list.
</TABLE>


                                   ASSIGNMENT

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto _________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
 (Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
______________________________________________________________________________
______________________________________________________________________________


Dated:

                                          _____________________________________
                                          Signature by or on behalf of assignor



                                          _____________________________________
                                          Signature Guaranteed




                                      A-4-6

<PAGE>



                            DISTRIBUTION INSTRUCTIONS

                  The assignee should include the following for purposes of
distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to_________________________________________________
_______________________________________________________________ for the account
of _______________________________, account number ___________________________,
or, if mailed by check, to
_______________________________________________________________________________
_________________________________________________________.Applicable statements
should be mailed to
______________________________________________________________________________
___________________________.This information is provided by
___________________________________________, the assignee named above, or
________________________________________, as its agent.


                                      A-4-7

<PAGE>



                                   EXHIBIT A-5

                          FORM OF CLASS M-3 CERTIFICATE

         SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
         "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS
         THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
         INTERNAL REVENUE CODE OF 1986 (THE "CODE").

         THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES, THE CLASS
         A-IO CERTIFICATES, THE CLASS M-1 CERTIFICATES AND THE CLASS M-2
         CERTIFICATES TO THE EXTENT DESCRIBED IN THE POOLING AND SERVICING
         AGREEMENT REFERRED TO HEREIN.

<TABLE>
<CAPTION>

<S>                                                        <C>
Series 2003-2                                              Aggregate Certificate Principal Balance of the
                                                           Class M-3 Certificates as of the Issue Date:
Pass-Through Rate: Variable                                $____________

Cut-off Date and date of Pooling and Servicing             Denomination: $______________
Agreement: March 1, 2003
                                                           Servicers: New Century Mortgage Corporation
First Distribution Date: April 25, 2003                    and Ocwen Federal Bank FSB

No. __                                                     Trustee: Deutsche Bank National Trust
                                                           Company

                                                           Issue Date: March 19, 2003

                                                           CUSIP: ___________
</TABLE>


         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
         CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
         OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE
         LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS
         CERTIFICATE.





                                      A-5-1

<PAGE>




                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien and second lien mortgage loans (the
"Mortgage Loans") formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN NEW
         CENTURY MORTGAGE SECURITIES, INC., THE SERVICERS, THE TRUSTEE OR ANY OF
         THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE
         UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
         INSTRUMENTALITY OF THE UNITED STATES.

                  This certifies that ___________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class M-3 Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class M-3 Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among New
Century Mortgage Securities, Inc. (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement), the Servicers and the
Trustee, a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class M-3 Certificates on such Distribution
Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.



                                      A-5-2

<PAGE>



                  The Pass-Through Rate applicable to the calculation of
interest payable with respect to this Certificate on any Distribution Date shall
equal a rate per annum equal to the lesser of (i) One- Month LIBOR plus 3.70%,
in the case of each Distribution Date through and including the Distribution
Date on which the aggregate principal balance of the Mortgage Loans (and
properties acquired in respect thereof) remaining in the Trust Fund is reduced
to less than 10% of the aggregate principal balance of the Mortgage Loans as of
the Cut-off Date, or One- Month LIBOR plus 5.55% per annum, in the case of any
Distribution Date thereafter and (ii) the Net WAC Pass-Through Rate for such
Distribution Date.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicers, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be


                                      A-5-3

<PAGE>



made for any such registration of transfer or exchange of Certificates, but the
Trustee may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any transfer or
exchange of Certificates.

                  The Depositor, the Servicers, the Trustee and any agent of the
Depositor, the Servicers or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Servicers, the Trustee nor any such agent shall be affected by
notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC I and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC I of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC I all the Mortgage Loans and all property acquired in respect of any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Stated Principal Balance of the
Mortgage Loans at the time of purchase being less than 10% of the aggregate
principal balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee aasumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.




                                      A-5-4

<PAGE>


                  IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.

Dated: March __, 2003


                               DEUTSCHE BANK NATIONAL TRUST COMPANY
                               as Trustee

                               By:_____________________________________________
                                                 Authorized Officer



                          CERTIFICATE OF AUTHENTICATION

         This is one of the Class M-3 Certificates referred to in the
within-mentioned Agreement.


                                DEUTSCHE BANK NATIONAL TRUST COMPANY
                                as Trustee

                                By:_____________________________________________
                                                Authorized Signatory





                                      A-5-5

<PAGE>



                                  ABBREVIATIONS

The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:

<TABLE>
<CAPTION>

<S>                                                  <C>
TEN COM - as tenants in common                       UNIF GIFT MIN ACT - Custodian

TEN ENT - as tenants by the entireties                                 (Cust) (Minor) under
                                                                       Uniform Gifts
JT TEN - as joint tenants with right                                   to Minors Act
         if survivorship and not as                                     _______________
          tenants in common                                                 (State)

         Additional abbreviations may also be used though not in the above list.
</TABLE>


                                   ASSIGNMENT

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto _________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
 (Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
______________________________________________________________________________
______________________________________________________________________________


Dated:

                                          _____________________________________
                                          Signature by or on behalf of assignor



                                          _____________________________________
                                          Signature Guaranteed





                                      A-5-6

<PAGE>




                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to_________________________________________________
_______________________________________________________________ for the account
of _______________________________, account number ___________________________,
or, if mailed by check, to
_______________________________________________________________________________
_________________________________________________________.Applicable statements
should be mailed to
______________________________________________________________________________
___________________________.This information is provided by
___________________________________________, the assignee named above, or
________________________________________, as its agent.


                                      A-5-7

<PAGE>



                                   EXHIBIT A-6

                          FORM OF CLASS M-4 CERTIFICATE

         SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
         "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS
         THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
         INTERNAL REVENUE CODE OF 1986 (THE "CODE").

         THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES, THE CLASS
         A-IO CERTIFICATES, THE CLASS M-1 CERTIFICATES, THE CLASS M-2
         CERTIFICATES AND THE CLASS M-3 CERTIFICATES TO THE EXTENT DESCRIBED IN
         THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.

<TABLE>
<CAPTION>

<S>                                                        <C>
Series 2003-2                                              Aggregate Certificate Principal Balance of the
                                                           Class M-4 Certificates as of the Issue Date:
Pass-Through Rate: Variable                                $____________

Cut-off Date and date of Pooling and Servicing             Denomination: $______________
Agreement: March 1, 2003
                                                           Servicers: New Century Mortgage Corporation
First Distribution Date: April 25, 2003                    and Ocwen Federal Bank FSB

No. __                                                     Trustee: Deutsche Bank National Trust
                                                           Company

                                                           Issue Date: March 19, 2003

                                                           CUSIP: ___________
</TABLE>


         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
         CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
         OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE
         LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS
         CERTIFICATE.





                                      A-6-1

<PAGE>



                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien and second lien mortgage loans (the
"Mortgage Loans") formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN NEW
         CENTURY MORTGAGE SECURITIES, INC., THE SERVICERS, THE TRUSTEE OR ANY OF
         THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE
         UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
         INSTRUMENTALITY OF THE UNITED STATES.

                  This certifies that ___________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class M-4 Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class M-4 Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among New
Century Mortgage Securities, Inc. (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement), the Servicers and the
Trustee, a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class M-4 Certificates on such Distribution
Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

                  The Pass-Through Rate applicable to the calculation of
interest payable with respect to this Certificate on any Distribution Date shall
equal a rate per annum equal to the lesser of (i) One-


                                     A-6-2
<PAGE>

Month LIBOR plus 3.60%, in the case of each Distribution Date through and
including the Distribution Date on which the aggregate principal balance of the
Mortgage Loans (and properties acquired in respect thereof) remaining in the
Trust Fund is reduced to less than 10% of the aggregate principal balance of the
Mortgage Loans as of the Cut-off Date, or One- Month LIBOR plus 5.40% per annum,
in the case of any Distribution Date thereafter and (ii) the Net WAC
Pass-Through Rate for such Distribution Date.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicers, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trustee may require


                                     A-6-3
<PAGE>

payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.

                  The Depositor, the Servicers, the Trustee and any agent of the
Depositor, the Servicers or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Servicers, the Trustee nor any such agent shall be affected by
notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC I and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC I of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC I all the Mortgage Loans and all property acquired in respect of any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Stated Principal Balance of the
Mortgage Loans at the time of purchase being less than 10% of the aggregate
principal balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.


                                     A-6-4
<PAGE>

                  IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.

Dated: March __, 2003


                               DEUTSCHE BANK NATIONAL TRUST COMPANY
                               as Trustee

                               By:_____________________________________________
                                                 Authorized Officer



                          CERTIFICATE OF AUTHENTICATION

         This is one of the Class M-4 Certificates referred to in the
within-mentioned Agreement.


                                DEUTSCHE BANK NATIONAL TRUST COMPANY
                                as Trustee

                                By:_____________________________________________
                                                Authorized Signatory




                                     A-6-5
<PAGE>

                                  ABBREVIATIONS

The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:

<TABLE>
<CAPTION>

<S>                                                  <C>
TEN COM - as tenants in common                       UNIF GIFT MIN ACT - Custodian

TEN ENT - as tenants by the entireties                                 (Cust) (Minor) under
                                                                       Uniform Gifts
JT TEN - as joint tenants with right                                   to Minors Act
         if survivorship and not as                                    _______________
          tenants in common                                                 (State)

         Additional abbreviations may also be used though not in the above list.
</TABLE>


                                   ASSIGNMENT

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto _________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
 (Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
______________________________________________________________________________
______________________________________________________________________________


Dated:

                                          _____________________________________
                                          Signature by or on behalf of assignor



                                          _____________________________________
                                          Signature Guaranteed



                                     A-6-6
<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to_________________________________________________
_______________________________________________________________ for the account
of _______________________________, account number ___________________________,
or, if mailed by check, to
_______________________________________________________________________________
_________________________________________________________.Applicable statements
should be mailed to
______________________________________________________________________________
___________________________.This information is provided by
___________________________________________, the assignee named above, or
________________________________________, as its agent.


                                     A-6-7
<PAGE>

                                   EXHIBIT A-7

                          FORM OF CLASS CE CERTIFICATE

         SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
         "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS
         THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
         INTERNAL REVENUE CODE OF 1986 (THE "CODE").

         THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES, THE CLASS
         A-IO CERTIFICATES, THE CLASS M-1 CERTIFICATES, THE CLASS M-2
         CERTIFICATES, THE CLASS M-3 CERTIFICATES AND THE CLASS M-4 CERTIFICATES
         TO THE EXTENT DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED
         TO HEREIN.

         THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
         SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE
         AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT
         TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS THAT ARE
         EXEMPT FROM REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW
         AND IS TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF
         THE AGREEMENT.

         NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
         RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
         SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE REGISTERED EXCEPT
         IN COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.


                                     A-7-1
<PAGE>

<TABLE>
<CAPTION>

<S>                                                        <C>
Series 2003-2                                              Aggregate Certificate Principal Balance of the
                                                           Class CE Certificates as of the Issue Date:
Pass-Through Rate: Variable                                $____________

Cut-off Date and date of Pooling and Servicing             Denomination: $______________
Agreement: March 1, 2003
                                                           Servicers: New Century Mortgage Corporation
First Distribution Date: April 25, 2003                    and Ocwen Federal Bank FSB

No. __                                                     Trustee: Deutsche Bank National Trust
                                                           Company
Aggregate Notional Amount of the Class
CE Certificates as of the Issue Date: $_______             Issue Date: March 19, 2003

Notional Amount: $_________________
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
         CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
         OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE
         LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS
         CERTIFICATE.


                                      A-7-2

<PAGE>




                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien and second lien mortgage loans (the
"Mortgage Loans") formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN NEW
         CENTURY MORTGAGE SECURITIES, INC., THE SERVICERS, THE TRUSTEE OR ANY OF
         THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE
         UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
         INSTRUMENTALITY OF THE UNITED STATES.

                  This certifies that ___________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class CE Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class CE Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among New
Century Mortgage Securities, Inc. (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement), the Servicers and the
Trustee, a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class CE Certificates on such Distribution
Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.


                                     A-7-3
<PAGE>

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicers, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  No transfer of this Certificate shall be made unless the
transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and an effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee shall require receipt of (i) if such
transfer is purportedly being made in reliance upon Rule 144A under the 1933
Act, written certifications from the Holder of the Certificate desiring to
effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit F-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee or
the Servicers in their respective capacities as such), together with copies of
the written certification(s) of the Holder of the Certificate desiring to effect
the transfer and/or such Holder's prospective transferee upon which such Opinion
of Counsel is based. Neither the Depositor nor the Trustee is obligated to
register or qualify the Class of


                                     A-7-4
<PAGE>

Certificates specified on the face hereof under the 1933 Act or any other
securities law or to take any action not otherwise required under the Agreement
to permit the transfer of such Certificates without registration or
qualification. Any Holder desiring to effect a transfer of this Certificate
shall be required to indemnify the Trustee, the Depositor and the Servicers
against any liability that may result if the transfer is not so exempt or is not
made in accordance with such federal and state laws.

                  No transfer of this Certificate to a Plan subject to ERISA or
Section 4975 of the Code, any Person acting, directly or indirectly, on behalf
of any such Plan or any Person using "Plan Assets" to acquire this Certificate
shall be made except in accordance with Section 5.02(c) of the Agreement.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

                  The Depositor, the Servicers, the Trustee and any agent of the
Depositor, the Servicers or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Servicers, the Trustee nor any such agent shall be affected by
notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC I and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC I of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC I all the Mortgage Loans and all property acquired in respect of any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Stated Principal Balance of the
Mortgage Loans at the time of purchase being less than 10% of the aggregate
principal balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.



                                      A-7-5

<PAGE>


                  IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.

Dated: March __, 2003


                               DEUTSCHE BANK NATIONAL TRUST COMPANY
                               as Trustee

                               By:_____________________________________________
                                                 Authorized Officer



                          CERTIFICATE OF AUTHENTICATION

         This is one of the Class CE Certificates referred to in the
within-mentioned Agreement.


                                DEUTSCHE BANK NATIONAL TRUST COMPANY
                                as Trustee

                                By:_____________________________________________
                                                Authorized Signatory




                                      A-7-6

<PAGE>

                                  ABBREVIATIONS

The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:

<TABLE>
<CAPTION>

<S>                                                  <C>
TEN COM - as tenants in common                       UNIF GIFT MIN ACT - Custodian

TEN ENT - as tenants by the entireties                                 (Cust) (Minor) under
                                                                       Uniform Gifts
JT TEN - as joint tenants with right                                   to Minors Act
         if survivorship and not as                                    _______________
          tenants in common                                                 (State)

         Additional abbreviations may also be used though not in the above list.
</TABLE>


                                   ASSIGNMENT

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto _________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
 (Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
______________________________________________________________________________
______________________________________________________________________________


Dated:

                                          _____________________________________
                                          Signature by or on behalf of assignor



                                          _____________________________________
                                          Signature Guaranteed




                                      A-7-7

<PAGE>



                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to_________________________________________________
_______________________________________________________________ for the account
of _______________________________, account number ___________________________,
or, if mailed by check, to
_______________________________________________________________________________
_________________________________________________________.Applicable statements
should be mailed to
______________________________________________________________________________
___________________________.This information is provided by
___________________________________________, the assignee named above, or
________________________________________, as its agent.


                                      A-7-8

<PAGE>



                                   EXHIBIT A-8

                           FORM OF CLASS P CERTIFICATE

         SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
         "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS
         THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
         INTERNAL REVENUE CODE OF 1986 (THE "CODE").

         THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
         SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE
         AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT
         TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS THAT ARE
         EXEMPT FROM REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW
         AND IS TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF
         THE AGREEMENT.

         NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
         RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
         SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE REGISTERED EXCEPT
         IN COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.

<TABLE>
<CAPTION>

<S>                                                        <C>
Series 2003-2                                              Aggregate Certificate Principal Balance of the
                                                           Class P Certificates as of the Issue Date:
Pass-Through Rate: Variable                                $____________

Cut-off Date and date of Pooling and Servicing             Denomination: $______________
Agreement: March 1, 2003
                                                           Servicers: New Century Mortgage Corporation
First Distribution Date: April 25, 2003                    and Ocwen Federal Bank FSB

No. __                                                     Trustee: Deutsche Bank National Trust
                                                           Company

                                                           Issue Date: March 19, 2003
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
         CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
         OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE
         LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS
         CERTIFICATE.


                                      A-8-1

<PAGE>




                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien and second lien mortgage loans (the
"Mortgage Loans") formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN NEW
         CENTURY MORTGAGE SECURITIES, INC., THE SERVICERS, THE TRUSTEE OR ANY OF
         THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE
         UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
         INSTRUMENTALITY OF THE UNITED STATES.

                  This certifies that ___________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class P Certificates as of
the Issue Date) in that certain beneficial ownership interest evidenced by all
the Class P Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among New
Century Mortgage Securities, Inc. (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement), the Servicers and the
Trustee, a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class P Certificates on such Distribution
Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.



                                      A-8-2

<PAGE>



                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicers, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  No transfer of this Certificate shall be made unless the
transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and an effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee shall require receipt of (i) if such
transfer is purportedly being made in reliance upon Rule 144A under the 1933
Act, written certifications from the Holder of the Certificate desiring to
effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit F-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee or
the Servicers in their respective capacities as such), together with copies of
the written certification(s) of the Holder of the Certificate desiring to effect
the transfer and/or such Holder's prospective transferee upon which such Opinion
of Counsel is based. Neither the Depositor nor the Trustee is obligated to
register or qualify the Class of


                                      A-8-3

<PAGE>



Certificates specified on the face hereof under the 1933 Act or any other
securities law or to take any action not otherwise required under the Agreement
to permit the transfer of such Certificates without registration or
qualification. Any Holder desiring to effect a transfer of this Certificate
shall be required to indemnify the Trustee, the Depositor and the Servicers
against any liability that may result if the transfer is not so exempt or is not
made in accordance with such federal and state laws.

                  No transfer of this Certificate to a Plan subject to ERISA or
Section 4975 of the Code, any Person acting, directly or indirectly, on behalf
of any such Plan or any Person using "Plan Assets" to acquire this Certificate
shall be made except in accordance with Section 5.02(c) of the Agreement.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

                  The Depositor, the Servicers, the Trustee and any agent of the
Depositor, the Servicers or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Servicers, the Trustee nor any such agent shall be affected by
notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC I and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC I of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC I all the Mortgage Loans and all property acquired in respect of any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Stated Principal Balance of the
Mortgage Loans at the time of purchase being less than 10% of the aggregate
principal balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.



                                      A-8-4

<PAGE>



                  IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.

Dated: March __, 2003


                               DEUTSCHE BANK NATIONAL TRUST COMPANY
                               as Trustee

                               By:_____________________________________________
                                                 Authorized Officer



                          CERTIFICATE OF AUTHENTICATION

         This is one of the Class P Certificates referred to in the
within-mentioned Agreement.


                                DEUTSCHE BANK NATIONAL TRUST COMPANY
                                as Trustee

                                By:_____________________________________________
                                                Authorized Signatory





                                      A-8-5

<PAGE>



                                  ABBREVIATIONS

The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:

<TABLE>
<CAPTION>

<S>                                                  <C>
TEN COM - as tenants in common                       UNIF GIFT MIN ACT - Custodian

TEN ENT - as tenants by the entireties                                 (Cust) (Minor) under
                                                                       Uniform Gifts
JT TEN - as joint tenants with right                                   to Minors Act
         if survivorship and not as                                    _______________
          tenants in common                                                 (State)

         Additional abbreviations may also be used though not in the above list.
</TABLE>


                                   ASSIGNMENT

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto _________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
 (Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
______________________________________________________________________________
______________________________________________________________________________


Dated:

                                          _____________________________________
                                          Signature by or on behalf of assignor



                                          _____________________________________
                                          Signature Guaranteed




                                      A-8-6

<PAGE>



                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to_________________________________________________
_______________________________________________________________ for the account
of _______________________________, account number ___________________________,
or, if mailed by check, to
_______________________________________________________________________________
_________________________________________________________.Applicable statements
should be mailed to
______________________________________________________________________________
___________________________.This information is provided by
___________________________________________, the assignee named above, or
________________________________________, as its agent.


                                      A-8-7

<PAGE>



                                   EXHIBIT A-9

                           FORM OF CLASS R CERTIFICATE

         THIS CERTIFICATE MAY NOT BE TRANSFERRED TO A NON-UNITED
         STATES PERSON.

         SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
         "RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
         ("REMIC"), AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G
         AND 860D OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").

         ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE
         MADE ONLY IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE
         POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.

         THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
         SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE
         AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT
         TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS THAT ARE
         EXEMPT FROM REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW
         AND IS TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF
         THE AGREEMENT.

         NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
         RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
         SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE REGISTERED EXCEPT
         IN COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.

         ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE
         MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES (I) AN AFFIDAVIT TO THE
         TRUSTEE THAT (A) SUCH TRANSFEREE IS NOT (1) THE UNITED STATES OR ANY
         POSSESSION THEREOF, ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY
         FOREIGN GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR
         INSTRUMENTALITY OF ANY OF THE FOREGOING, (2) ANY ORGANIZATION (OTHER
         THAN A COOPERATIVE DESCRIBED IN SECTION 521 OF THE CODE) THAT IS EXEMPT
         FROM THE TAX IMPOSED BY CHAPTER 1 OF THE CODE UNLESS SUCH ORGANIZATION
         IS SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE CODE, (3) ANY
         ORGANIZATION DESCRIBED IN SECTION 1381(A)(2)(C) OF THE CODE (ANY SUCH
         PERSON DESCRIBED IN THE FOREGOING CLAUSES (1), (2) OR


                                      A-9-1

<PAGE>



         (3) SHALL HEREINAFTER BE REFERRED TO AS A "DISQUALIFIED ORGANIZATION")
         OR (4) AN AGENT OF A DISQUALIFIED ORGANIZATION AND (B) NO PURPOSE OF
         SUCH TRANSFER IS TO IMPEDE THE ASSESSMENT OR COLLECTION OF TAX, AND
         (II) SUCH TRANSFEREE SATISFIES CERTAIN ADDITIONAL CONDITIONS RELATING
         TO THE FINANCIAL CONDITION OF THE PROPOSED TRANSFEREE. NOTWITHSTANDING
         THE REGISTRATION IN THE CERTIFICATE REGISTER OF ANY TRANSFER, SALE OR
         OTHER DISPOSITION OF THIS CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR
         AN AGENT OF A DISQUALIFIED ORGANIZATION, SUCH REGISTRATION SHALL BE
         DEEMED TO BE OF NO LEGAL FORCE OR EFFECT WHATSOEVER AND SUCH PERSON
         SHALL NOT BE DEEMED TO BE A CERTIFICATEHOLDER FOR ANY PURPOSE
         HEREUNDER, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS
         ON THIS CERTIFICATE. EACH HOLDER OF THIS CERTIFICATE BY ACCEPTANCE
         HEREOF SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS
         PARAGRAPH AND THE PROVISIONS OF SECTION 5.02(D) OF THE POOLING AND
         SERVICING AGREEMENT REFERRED TO HEREIN. ANY PERSON THAT IS A
         DISQUALIFIED ORGANIZATION IS PROHIBITED FROM ACQUIRING BENEFICIAL
         OWNERSHIP OF THIS CERTIFICATE.

<TABLE>
<CAPTION>

<S>                                                        <C>
Series 2003-2                                              Aggregate Percentage Interest of the Class R
                                                           Certificates as of the Issue Date: 100.00%
Pass-Through Rate: Variable
                                                           Servicers: New Century Mortgage Corporation
Cut-off Date and date of Pooling and Servicing             and Ocwen Federal Bank FSB
Agreement: March 1, 2003
                                                           Trustee: Deutsche Bank National Trust
First Distribution Date: April 25, 2003                    Company

No. __                                                     Issue Date: March 19, 2003

</TABLE>




                                      A-9-2

<PAGE>



                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien and second lien mortgage loans (the
"Mortgage Loans") formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN NEW
         CENTURY MORTGAGE SECURITIES, INC., THE SERVICERS, THE TRUSTEE OR ANY OF
         THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE
         UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
         INSTRUMENTALITY OF THE UNITED STATES.

                  This certifies that ___________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class R Certificates as of
the Issue Date) in that certain beneficial ownership interest evidenced by all
the Class R Certificates in REMIC I created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among New Century
Mortgage Securities, Inc. (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement), the Servicers and the
Trustee, a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class R Certificates on such Distribution
Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the


                                      A-9-3

<PAGE>



"Certificates") and representing a Percentage Interest in the Class of
Certificates specified on the face hereof equal to the denomination specified on
the face hereof divided by the aggregate Certificate Principal Balance of the
Class of Certificates specified on the face hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicers, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  No transfer of this Certificate shall be made unless the
transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and an effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee shall require receipt of (i) if such
transfer is purportedly being made in reliance upon Rule 144A under the 1933
Act, written certifications from the Holder of the Certificate desiring to
effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit F-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee or
the Servicers in their respective capacities as such), together with copies of
the written certification(s) of the Holder of the Certificate desiring to effect
the transfer and/or such Holder's prospective transferee upon which such Opinion
of Counsel is based. Neither the Depositor nor the Trustee is obligated to
register or qualify the Class of Certificates specified on the face hereof under
the 1933 Act or any other securities law or to take any action not otherwise
required under the Agreement to permit the transfer of such Certificates without


                                      A-9-4

<PAGE>



registration or qualification. Any Holder desiring to effect a transfer of this
Certificate shall be required to indemnify the Trustee, the Depositor and the
Servicers against any liability that may result if the transfer is not so exempt
or is not made in accordance with such federal and state laws.

                  No transfer of this Certificate to a Plan subject to ERISA or
Section 4975 of the Code, any Person acting, directly or indirectly, on behalf
of any such Plan or any Person using "Plan Assets" to acquire this Certificate
shall be made except in accordance with Section 5.02(c) of the Agreement.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

                  Prior to registration of any transfer, sale or other
disposition of this Certificate, the proposed transferee shall provide to the
Trustee (i) an affidavit to the effect that such transferee is any Person other
than a Disqualified Organization or the agent (including a broker, nominee or
middleman) of a Disqualified Organization, and (ii) a certificate that
acknowledges that (A) the Class R-I Certificates have been designated as a
residual interest in a REMIC, (B) it will include in its income a PRO RATA share
of the net income of the Trust Fund and that such income may be an "excess
inclusion," as defined in the Code, that, with certain exceptions, cannot be
offset by other losses or benefits from any tax exemption, and (C) it expects to
have the financial means to satisfy all of its tax obligations including those
relating to holding the Class R-I Certificates. Notwithstanding the registration
in the Certificate Register of any transfer, sale or other disposition of this
Certificate to a Disqualified Organization or an agent (including a broker,
nominee or middleman) of a Disqualified Organization, such registration shall be
deemed to be of no legal force or effect whatsoever and such Person shall not be
deemed to be a Certificateholder for any purpose, including, but not limited to,
the receipt of distributions in respect of this Certificate.

                  The Holder of this Certificate, by its acceptance hereof,
shall be deemed to have consented to the provisions of Section 5.02 of the
Agreement and to any amendment of the Agreement deemed necessary by counsel of
the Depositor to ensure that the transfer of this Certificate to any Person
other than a Permitted Transferee or any other Person will not cause the Trust
Fund to cease to qualify as a REMIC or cause the imposition of a tax upon the
REMIC.

                  The Depositor, the Servicers, the Trustee and any agent of the
Depositor, the Servicers or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Servicers, the Trustee nor any such agent shall be affected by
notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required


                                      A-9-5

<PAGE>



to be paid to them pursuant to the Agreement following the earlier of (i) the
final payment or other liquidation (or any advance with respect thereto) of the
last Mortgage Loan remaining in REMIC I and (ii) the purchase by the party
designated in the Agreement at a price determined as provided in the Agreement
from REMIC I of all the Mortgage Loans and all property acquired in respect of
such Mortgage Loans. The Agreement permits, but does not require, the party
designated in the Agreement to purchase from REMIC I all the Mortgage Loans and
all property acquired in respect of any Mortgage Loan at a price determined as
provided in the Agreement. The exercise of such right will effect early
retirement of the Certificates; however, such right to purchase is subject to
the aggregate Stated Principal Balance of the Mortgage Loans at the time of
purchase being less than 10% of the aggregate principal balance of the Mortgage
Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.




                                      A-9-6

<PAGE>


                  IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.

Dated: March __, 2003


                               DEUTSCHE BANK NATIONAL TRUST COMPANY
                               as Trustee

                               By:_____________________________________________
                                                 Authorized Officer



                          CERTIFICATE OF AUTHENTICATION

         This is one of the Class R Certificates referred to in the
within-mentioned Agreement.


                                DEUTSCHE BANK NATIONAL TRUST COMPANY
                                as Trustee

                                By:_____________________________________________
                                                Authorized Signatory




                                      A-9-7

<PAGE>


                                  ABBREVIATIONS

The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:

<TABLE>
<CAPTION>

<S>                                                  <C>
TEN COM - as tenants in common                       UNIF GIFT MIN ACT - Custodian

TEN ENT - as tenants by the entireties                                 (Cust) (Minor) under
                                                                       Uniform Gifts
JT TEN - as joint tenants with right                                   to Minors Act
         if survivorship and not as                                    _______________
          tenants in common                                                 (State)

         Additional abbreviations may also be used though not in the above list.
</TABLE>


                                   ASSIGNMENT

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto _________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
 (Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
______________________________________________________________________________
______________________________________________________________________________


Dated:

                                          _____________________________________
                                          Signature by or on behalf of assignor



                                          _____________________________________
                                          Signature Guaranteed





                                      A-9-8

<PAGE>



                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to_________________________________________________
_______________________________________________________________ for the account
of _______________________________, account number ___________________________,
or, if mailed by check, to
_______________________________________________________________________________
_________________________________________________________.Applicable statements
should be mailed to
______________________________________________________________________________
___________________________.This information is provided by
___________________________________________, the assignee named above, or
________________________________________, as its agent.


                                      A-9-9

<PAGE>



                                  EXHIBIT A-10

                         FORM OF CLASS A-IO CERTIFICATE

         SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
         "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS
         THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
         INTERNAL REVENUE CODE OF 1986 (THE "CODE").


<TABLE>
<CAPTION>

<S>                                                      <C>
Series 2003-2, Class A-IO                                Aggregate Notional Amount of the Class A-IO
                                                         Certificates as of the Issue Date:
Pass-Through Rate:  Variable                             $________________

Date of Pooling and Servicing Agreement                  Denomination:  $___________
and Cut-off Date: March 1, 2003
                                                         Servicers: New Century Mortgage Corporation
First Distribution Date: April 25, 2003                  and Ocwen Federal Bank FSB

No.1                                                     Trustee: Deutsche Bank National Trust Company

                                                         Issue Date: March 19, 2003

                                                         CUSIP: ___________

</TABLE>



                                     A-10-1

<PAGE>




                      ASSET-BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family
adjustable-rate and fixed-rate first lien and second lien mortgage loans (the
"Mortgage Loans") formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN NEW
         CENTURY MORTGAGE SECURITIES, INC., THE SERVICERS, THE TRUSTEE OR ANY OF
         THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE
         UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
         INSTRUMENTALITY OF THE UNITED STATES.

                  This certifies that _____________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Notional Amount of the Class A-IO Certificates as of the Issue
Date) in that certain beneficial ownership interest evidenced by all the Class
A-IO Certificates in REMIC III created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among New Century
Mortgage Securities, Inc. (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement), the Servicers and the
Trustee, a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class A-IO Certificates on such Distribution
Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee in writing at
least five Business Days prior to the Record Date immediately prior to such
Distribution Date or otherwise by check mailed by first class mail to the
address of the Person entitled thereto, as such name and address shall appear on
the Certificate Register. Notwithstanding the above, the final distribution on
this Certificate will be made after due notice by the Trustee of the pendency of
such distribution and only upon presentation and surrender of this Certificate
at the office or agency appointed by the Trustee for that purpose as provided in
the Agreement.



                                     A-10-2

<PAGE>



                  The Pass-Through Rate for the Class A-IO Certificates will be
the lesser of (a) 5.50% per annum for the 1st Interest Accrual Period through
the 10th Interest Accrual Period, 4.50% per annum for the 11th Interest Accrual
Period through the 20th Interest Accrual Period, 3.50% per annum for the 21st
Interest Accrual Period through the 24th Interest Accrual Period and (b) the
related Net WAC Pass-Through Rate. After the 24th Distribution Date, the
Pass-Through Rate for the Class A- IO Certificates will be 0.00% per annum.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset- Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Notional Amount of the Class of Certificates specified on the face hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicers and the Trustee, and the rights of
the Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.



                                     A-10-3

<PAGE>



                  No service charge will be made for any such registration of
transfer or exchange of Certificates, but the Trustee may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any transfer or exchange of Certificates.

                  The Depositor, the Servicers, the Trustee, and the Certificate
Registrar and any agent of the Depositor, the Servicers, the Trustee or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Servicers, the Trustee, the Certificate Registrar nor any such agent shall be
affected by notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC I, and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC I of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC I all the Mortgage Loans and all property acquired in respect of any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Stated Principal Balance of the
Mortgage Loans at the time of purchase being less than 10% of the aggregate
Stated Principal Balance of the Mortgage Loans at the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Certificate Registrar, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.




                                     A-10-4

<PAGE>



                  IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.

Dated: March __, 2003


                               DEUTSCHE BANK NATIONAL TRUST COMPANY
                               as Trustee

                               By:_____________________________________________
                                                 Authorized Officer



                          CERTIFICATE OF AUTHENTICATION

         This is one of the Class A-IO Certificates referred to in the
within-mentioned Agreement.


                                DEUTSCHE BANK NATIONAL TRUST COMPANY
                                as Trustee

                                By:_____________________________________________
                                                Authorized Signatory





                                     A-10-5

<PAGE>


                                  ABBREVIATIONS

The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:

<TABLE>
<CAPTION>

<S>                                                  <C>
TEN COM - as tenants in common                       UNIF GIFT MIN ACT - Custodian

TEN ENT - as tenants by the entireties                                 (Cust) (Minor) under
                                                                       Uniform Gifts
JT TEN - as joint tenants with right                                   to Minors Act
         if survivorship and not as                                    _______________
          tenants in common                                                 (State)

         Additional abbreviations may also be used though not in the above list.
</TABLE>


                                   ASSIGNMENT

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto _________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
______________________________________________________________________________
______________________________________________________________________________


Dated:

                                          _____________________________________
                                          Signature by or on behalf of assignor



                                          _____________________________________
                                          Signature Guaranteed




                                     A-10-6

<PAGE>



                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to_________________________________________________
_______________________________________________________________ for the account
of _______________________________, account number ___________________________,
or, if mailed by check, to
_______________________________________________________________________________
_________________________________________________________.Applicable statements
should be mailed to
______________________________________________________________________________
___________________________.This information is provided by
___________________________________________, the assignee named above, or
________________________________________, as its agent.




                                     A-10-7

<PAGE>



                                    EXHIBIT B

                                   [Reserved]




                                       B-1

<PAGE>



                                  EXHIBIT C-1A

                     FORM OF TRUSTEE'S INITIAL CERTIFICATION

                                              March 19, 2003


New Century Mortgage Securities, Inc.       New Century Mortgage Corporation
18400 Von Karman Avenue, Suite 1000         18400 Von Karman Avenue, Suite 1000
Irvine, California 92612                    Irvine, California 92612
Ocwen Federal Bank FSB
1675 Palm Beach Lakes Blvd., Suite 10A,
West Palm Beach, Florida 33401

                  Re:      Pooling and Servicing Agreement, dated as of
                           March 1, 2003, among New Century Mortgage Securities,
                           Inc., New Century Mortgage Corporation, Ocwen Federal
                           Bank FSB and Deutsche Bank National Trust Company,
                           Asset Backed Pass-Through Certificates, Series 2003-2

Ladies and Gentlemen:

                  Attached is the Trustee's preliminary exceptions in accordance
with Section 2.02 of the referenced Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement"). Capitalized terms used but not otherwise
defined herein shall have the meanings ascribed to them in the Pooling and
Servicing Agreement.

                  As to each Mortgage Loan listed in the Mortgage Loan Schedule
(other than any Mortgage Loan paid in full or any Mortgage Loan specifically
identified in the exception report annexed thereto as not being covered by such
certification), (i) all documents constituting part of such Mortgage File (other
than such documents described in Section 2.01(v)) required to be delivered to it
pursuant to the Pooling and Servicing Agreement are in its possession, (ii) such
documents have been reviewed by it and appear regular on their face and relate
to such Mortgage Loan and (iii) based on its examination and only as to the
foregoing, the information set forth in the Mortgage Loan Schedule that
corresponds to items (i) through (iii), (xi), (xv) and (xviii) of the definition
of "Mortgage Loan Schedule" accurately reflects information set forth in the
Mortgage File.

                  In conducting its review, the Trustee was under no duty or
obligation (i) to inspect, review or examine any such documents, instruments,
certificates or other papers to determine whether they are genuine, enforceable,
or appropriate for the represented purpose or whether they have actually been
recorded or that they are other than what they purport to be on their face or
(ii) to determine whether any Mortgage File should include any of the documents
specified in clause (v) of Section 2.01 of the Pooling and Servicing Agreement.



                                      C-1-1

<PAGE>




                                       DEUTSCHE BANK NATIONAL TRUST COMPANY


                                       By:______________________________
                                       Name:
                                       Title:





                                      C-1-2

<PAGE>



                                   EXHIBIT C-2

                      FORM OF TRUSTEE'S FINAL CERTIFICATION

                                              [Date]


New Century Mortgage Securities, Inc.       New Century Mortgage Corporation
18400 Von Karman Avenue, Sui                18400 Von Karman Avenue, Suite 1000
Irvine, California 92612                    Irvine, California 92612
Ocwen Federal Bank FSB
1675 Palm Beach Lakes Blvd., Suite 10A,
West Palm Beach, Florida 33401

                  Re:      Pooling and Servicing Agreement, dated as of
                           March 1, 2003, among New Century Mortgage Securities,
                           Inc., New Century Mortgage Corporation, Ocwen Federal
                           Bank FSB and Deutsche Bank National Trust Company,
                           Asset Backed Pass-Through Certificates, Series 2003-2

Ladies and Gentlemen:

                  In accordance with Section 2.02 of the above-captioned Pooling
and Servicing Agreement, the undersigned, as Trustee, hereby certifies that as
to each Mortgage Loan listed in the Mortgage Loan Schedule (other than any
Mortgage Loan paid in full or listed on the attachment hereto), it has received:

                  (i) the original recorded Mortgage, and the original recorded
         power of attorney, if the Mortgage was executed pursuant to a power of
         attorney, or a certified copy thereof in those instances where the
         public recording office retains the original or where the original has
         been lost; and

                  (ii) an original Assignment in ______________ or a recorded
         Assignment to the Trustee together with the original recorded
         Assignment or Assignments showing a complete chain of assignment from
         the originator, or a certified copy of such Assignments in those
         instances where the public recording retains the original or where
         original has been lost; and

                  (iii) the original lender's title insurance policy.

                  The Trustee has made no independent examination of any
documents contained in each Mortgage File beyond the review specifically
required in the above-referenced Pooling and Servicing Agreement. The Trustee
makes no representations as to: (i) the validity, legality, sufficiency,
enforceability or genuineness of any of the documents contained in the Mortgage
File of any of the Mortgage Loans identified on the Mortgage Loan Schedule, or
(ii) the collectability, insurability, effectiveness or suitability of any such
Mortgage Loan.



                                      C-2-3

<PAGE>



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

                                          DEUTSCHE BANK NATIONAL TRUST COMPANY


                                          By:________________________________
                                          Name:
                                          Title:




                                      C-2-4

<PAGE>



                                    EXHIBIT D

                    FORM OF MORTGAGE LOAN PURCHASE AGREEMENT
                            [Available Upon Request]



                                       D-1

<PAGE>



                                    EXHIBIT E

                               REQUEST FOR RELEASE
                                  (for Trustee)

LOAN INFORMATION

         Name of Mortgagor:         ______________________________

         Servicer's
         Loan No.:                  ______________________________

TRUSTEE

         Name:                      ______________________________

         Address:                   ______________________________
                                    ______________________________

         Trustee Mortgage
         File No.:                  ______________________________


DEPOSITOR

         Name:                      NEW CENTURY MORTGAGE SECURITIES, INC.

         Address:                   ______________________________

         Certificates:              Asset-Backed Pass-Through
                                    Certificates, Series 2003-2.


                  The undersigned Servicer hereby acknowledges that it has
received from _______________________, as Trustee for the Holders of
Asset-Backed Pass-Through Certificates, Series 2003-2, the documents referred to
below (the "Documents"). All capitalized terms not otherwise defined in this
Request for Release shall have the meanings given them in the Pooling and
Servicing Agreement, dated as of March 1, 2003, among the Trustee, the Depositor
and the Servicers (the "Pooling and Servicing Agreement").

( )      Promissory Note dated _______________, 20__, in the original principal
         sum of $__________, made by _____________________, payable to, or
         endorsed to the order of, the Trustee.

( )      Mortgage recorded on _________________________ as instrument no.
         ____________________ in the County Recorder's Office of the County of


                                       E-1

<PAGE>



         _______________, State of __________________ in
         book/reel/docket_________________ of official records at page/image
         _____________.

( )      Deed of Trust recorded on ___________________ as instrument no.
         ________________ in the County Recorder's Office of the County of
         _________________, State of ____________________ in book/reel/docket
         _________________ of official records at page/image ______________.

( )      Assignment of Mortgage or Deed of Trust to the Trustee, recorded on
         __________________ as instrument no. _________ in the County Recorder's
         Office of the County of _______________, State of
         _______________________ in book/reel/docket ____________ of official
         records at page/image ____________.

( )      Other documents, including any amendments, assignments or other
         assumptions of the Mortgage Note or Mortgage.

( )      ---------------------------------------------

( )      ---------------------------------------------

( )      ---------------------------------------------

( )      ---------------------------------------------



                                       E-2

<PAGE>




                           The undersigned Servicer hereby acknowledges and
agrees as follows:

                           (1) The Servicer shall hold and retain possession of
the Documents in trust for the benefit of the Trustee, solely for the purposes
provided in the Agreement.

                           (2) The Servicer shall not cause or permit the
Documents to become subject to, or encumbered by, any claim, liens, security
interest, charges, writs of attachment or other impositions nor shall the
Servicer assert or seek to assert any claims or rights of setoff to or against
the Documents or any proceeds thereof.

                           (3) The Servicer shall return each and every
Document previously requested from the Mortgage File to the Trustee when the
need therefor no longer exists, unless the Mortgage Loan relating to the
Documents has been liquidated and the proceeds thereof have been remitted to the
Collection Account and except as expressly provided in the Agreement.

                           (4) The Documents and any proceeds thereof,
including any proceeds of proceeds, coming into the possession or control of the
Servicer shall at all times be earmarked for the account of the Trustee, and the
Servicer shall keep the Documents and any proceeds separate and distinct from
all other property in the Servicer's possession, custody or control.

Dated:

                                              [SERVICER]

                                              By:______________________________
                                              Name:
                                              Title:





                                       E-3

<PAGE>



                                   EXHIBIT F-1

                    FORM OF TRANSFEROR REPRESENTATION LETTER

                                               [Date]

Deutsche Bank National Trust Company
1761 East St. Andrews Place
Santa Ana, CA 92705-4935

                  Re:      New Century Home Equity Loan Trust, Series 2003-2,
                           Asset Backed Pass-Through Certificates, Class ___,
                           representing a ___% Class ___ Percentage Interest

Ladies and Gentlemen:

                  In connection with the transfer by ________________ (the
"Transferor") to ________________ (the "Transferee") of the captioned mortgage
pass-through certificates (the "Certificates"), the Transferor hereby certifies
as follows:

                  Neither the Transferor nor anyone acting on its behalf has (a)
offered, pledged, sold, disposed of or otherwise transferred any Certificate,
any interest in any Certificate or any other similar security to any person in
any manner, (b) has solicited any offer to buy or to accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c) has
otherwise approached or negotiated with respect to any Certificate, any interest
in any Certificate or any other similar security with any person in any manner,
(d) has made any general solicitation by means of general advertising or in any
other manner, (e) has taken any other action, that (in the case of each of
subclauses (a) through (e) above) would constitute a distribution of the
Certificates under the Securities Act of 1933, as amended (the "1933 Act"), or
would render the disposition of any Certificate a violation of Section 5 of the
1933 Act or any state securities law or would require registration or
qualification pursuant thereto. The Transferor will not act, nor has it
authorized or will it authorize any person to act, in any manner set forth in
the foregoing sentence with respect to any Certificate. The Transferor will not
sell or otherwise transfer any of the Certificates, except in compliance with
the provisions of that certain Pooling and Servicing Agreement, dated as of
March 1, 2003, among New Century Mortgage Securities, Inc. as depositor, New
Century Mortgage Corporation and Ocwen Federal Bank FSB as Servicers and
Deutsche Bank National Trust Company as trustee (the "Pooling and Servicing
Agreement"), pursuant to which Pooling and Servicing Agreement the Certificates
were issued.




                                      F-1-1

<PAGE>



                  Capitalized terms used but not defined herein shall have the
meanings assigned thereto in the Pooling and Servicing Agreement.

                                                Very truly yours,

                                                [Transferor]

                                                By:___________________________
                                                Name:
                                                Title:





                                      F-1-2

<PAGE>




                    FORM OF TRANSFEREE REPRESENTATION LETTER

                                                   [Date]

Deutsche Bank National Trust Company
1761 East St. Andrews Place
Santa Ana, CA 92705-4935

                  Re:      New Century Home Equity Loan Trust, Series 2003-2,
                           Asset Backed Pass- Through Certificates, Class ___,
                           representing a ___% Percentage Interest

Ladies and Gentlemen:

                  In connection with the purchase from ______________________
(the "Transferor") on the date hereof of the captioned trust certificates (the
"Certificates"), _______________ (the "Transferee") hereby certifies as follows:

                  1. The Transferee is a "qualified institutional buyer" as that
term is defined in Rule 144A ("Rule 144A") under the Securities Act of 1933 (the
"1933 Act") and has completed either of the forms of certification to that
effect attached hereto as Annex 1 or Annex 2. The Transferee is aware that the
sale to it is being made in reliance on Rule 144A. The Transferee is acquiring
the Certificates for its own account or for the account of a qualified
institutional buyer, and understands that such Certificate may be resold,
pledged or transferred only (i) to a person reasonably believed to be a
qualified institutional buyer that purchases for its own account or for the
account of a qualified institutional buyer to whom notice is given that the
resale, pledge or transfer is being made in reliance on Rule 144A, or (ii)
pursuant to another exemption from registration under the 1933 Act.

                  2. The Transferee has been furnished with all information
regarding (a) the Certificates and distributions thereon, (b) the nature,
performance and servicing of the Mortgage Loans, (c) the Pooling and Servicing
Agreement referred to below, and (d) any credit enhancement mechanism associated
with the Certificates, that it has requested.

                  All capitalized terms used but not otherwise defined herein
have the respective meanings assigned thereto in the Pooling and Servicing
Agreement, dated as of March 1, 2003, among New Century Mortgage Securities,
Inc. as depositor, New Century Mortgage Corporation and Ocwen Federal Bank FSB
as Servicers and Deutsche Bank National Trust Company as trustee (the "Pooling
and Servicing Agreement"), pursuant to which the Certificates were issued.



                                      F-1-3

<PAGE>




                                                  [TRANSFEREE]

                                                  By:__________________________
                                                  Name:
                                                  Title:



                                      F-1-4

<PAGE>




                                                          ANNEX 1 TO EXHIBIT F-1

               QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE
                   144A [For Transferees Other Than Registered
                              Investment Companies]

                  The undersigned hereby certifies as follows to [name of
Transferor] (the "Transferor") and Deutsche Bank National Trust Company as
trustee, with respect to the mortgage pass-through certificates (the
"Certificates") described in the Transferee Certificate to which this
certification relates and to which this certification is an Annex:

                  1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
entity purchasing the Certificates (the "Transferee").

                  2. In connection with purchases by the Transferee, the
Transferee is a "qualified institutional buyer" as that term is defined in Rule
144A under the Securities Act of 1933 ("Rule 144A") because (i) the Transferee
owned and/or invested on a discretionary basis $______________________1 in
securities (except for the excluded securities referred to below) as of the end
of the Transferee's most recent fiscal year (such amount being calculated in
accordance with Rule 144A) and (ii) the Transferee satisfies the criteria in the
category marked below.

         ___ CORPORATION, ETC. The Transferee is a corporation (other than a
bank, savings and loan association or similar institution), Massachusetts or
similar business trust, partnership, or any organization described in Section
501(c)(3) of the Internal Revenue Code of 1986.

         ___ BANK. The Transferee (a) is a national bank or banking institution
organized under the laws of any State, territory or the District of Columbia,
the business of which is substantially confined to banking and is supervised by
the State or territorial banking commission or similar official or is a foreign
bank or equivalent institution, and (b) has an audited net worth of at least
$25,000,000 as demonstrated in its latest annual financial statements, a copy of
which is attached hereto.

         ___ SAVINGS AND LOAN. The Transferee (a) is a savings and loan
association, building and loan association, cooperative bank, homestead
association or similar institution, which is supervised and examined by a State
or Federal authority having supervision over any such institutions or is a
foreign savings and loan association or equivalent institution and (b) has an
audited net worth of at least

         ___ BROKER-DEALER. The Transferee is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934.

----------
1        Transferee must own and/or invest on a discretionary basis at least
         $100,000,000 in securities unless Transferee is a dealer, and, in that
         case, Transferee must own and/or invest on a discretionary basis at
         least $10,000,000 in securities. $25,000,000 as demonstrated in its
         latest annual financial statements, A COPY OF WHICH IS ATTACHED HERETO.



                                      F-1-5

<PAGE>



         ___ INSURANCE COMPANY. The Transferee is an insurance company whose
primary and predominant business activity is the writing of insurance or the
reinsuring of risks underwritten by insurance companies and which is subject to
supervision by the insurance commissioner or a similar official or agency of a
State, territory or the District of Columbia.

         ___ STATE OR LOCAL PLAN. The Transferee is a plan established and
maintained by a State, its political subdivisions, or any agency or
instrumentality of the State or its political subdivisions, for the benefit of
its employees.

         ___ ERISA PLAN. The Transferee is an employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security Act of 1974.

         ___ INVESTMENT ADVISOR. The Transferee is an investment advisor
registered under the Investment Advisers Act of 1940.

                  3. The term "SECURITIES" as used herein DOES NOT INCLUDE (i)
securities of issuers that are affiliated with the Transferee, (ii) securities
that are part of an unsold allotment to or subscription by the Transferee, if
the Transferee is a dealer, (iii) securities issued or guaranteed by the U.S. or
any instrumentality thereof, (iv) bank deposit notes and certificates of
deposit, (v) loan participations, (vi) repurchase agreements, (vii) securities
owned but subject to a repurchase agreement and (viii) currency, interest rate
and commodity swaps.

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

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

         ___      ___      Will the Transferee be purchasing the Certificates
         Yes      No       only for the Transferee's own account?

                  6. If the answer to the foregoing question is "no", the
Transferee agrees that, in connection with any purchase of securities sold to
the Transferee for the account of a third party (including any separate account)
in reliance on Rule 144A, the Transferee will only purchase for the account of a
third party that at the time is a "qualified institutional buyer" within the
meaning of Rule 144A. In addition, the Transferee agrees that the Transferee
will not purchase securities for a


                                      F-1-6

<PAGE>



third party unless the Transferee has obtained a current representation letter
from such third party or taken other appropriate steps contemplated by Rule 144A
to conclude that such third party independently meets the definition of
"qualified institutional buyer" set forth in Rule 144A.

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

Dated:

                                       ____________________________________
                                       Print Name of Transferee


                                       By:_________________________________
                                       Name:
                                       Title:


                                      F-1-7

<PAGE>



                                                          ANNEX 2 TO EXHIBIT F-1

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

           [For Transferees That Are Registered Investment Companies]

                  The undersigned hereby certifies as follows to [name of
Transferor] (the "Transferor") and Deutsche Bank National Trust Company as
trustee, with respect to the mortgage pass- through certificates (the
"Certificates") described in the Transferee Certificate to which this
certification relates and to which this certification is an Annex:

                  1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the entity purchasing the
Certificates (the "Transferee") or, if the Transferee is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933 ("Rule 144A") because the Transferee is part of a Family of
Investment Companies (as defined below), is such an officer of the investment
adviser (the "Adviser").

                  2. In connection with purchases by the Transferee, the
Transferee is a "qualified institutional buyer" as defined in Rule 144A because
(i) the Transferee is an investment company registered under the Investment
Company Act of 1940, and (ii) as marked below, the Transferee alone, or the
Transferee's Family of Investment Companies, owned at least $100,000,000 in
securities (other than the excluded securities referred to below) as of the end
of the Transferee's most recent fiscal year. For purposes of determining the
amount of securities owned by the Transferee or the Transferee's Family of
Investment Companies, the cost of such securities was used.

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

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

                  3. The term "FAMILY OF INVESTMENT COMPANIES" as used herein
means two or more registered investment companies (or series thereof) that have
the same investment adviser or investment advisers that are affiliated (by
virtue of being majority owned subsidiaries of the same parent or because one
investment adviser is a majority owned subsidiary of the other).

                  4. The term "SECURITIES" as used herein does not include (i)
securities of issuers that are affiliated with the Transferee or are part of the
Transferee's Family of Investment Companies, (ii) securities issued or
guaranteed by the U.S. or any instrumentality thereof, (iii) bank deposit notes
and certificates of deposit, (iv) loan participations, (v) repurchase
agreements, (vi) securities owned but subject to a repurchase agreement and
(vii) currency, interest rate and commodity swaps.


                                      F-1-8

<PAGE>



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

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

Dated:

                                           ___________________________________
                                           Print Name of Transferee or Advisor


                                           By:________________________________
                                           Name:
                                           Title:

                                           IF AN ADVISER:

                                           ___________________________________
                                           Print Name of Transferee



                                      F-1-9

<PAGE>



                    FORM OF TRANSFEREE REPRESENTATION LETTER

                  The undersigned hereby certifies on behalf of the purchaser
named below (the "Purchaser") as follows:

                  1.  I am an executive officer of the Purchaser.

                  2. The Purchaser is a "qualified institutional buyer", as
defined in Rule 144A, ("Rule 144A") under the Securities Act of 1933, as
amended.

                  3. As of the date specified below (which is not earlier than
the last day of the Purchaser's most recent fiscal year), the amount of
"securities", computed for purposes of Rule 144A, owned and invested on a
discretionary basis by the Purchaser was in excess of $100,000,000.

                                             Name of Purchaser

                                             _______________________________

                                             By:____________________________
                                             Name:
                                             Title:


Date of this certificate:

Date of information provided in paragraph 3



                                     F-1-10

<PAGE>



                                   EXHIBIT F-2

                    FORM OF TRANSFER AFFIDAVIT AND AGREEMENT

STATE OF ______________)
COUNTY ________________)

                  __________________________, being duly sworn, deposes,
represents and warrants as follows:

                  1. I am a ______________________ of
____________________________ (the "Owner") a corporation duly organized and
existing under the laws of ______________, the record owner of New Century Home
Equity Loan Trust, Series 2003-2, Asset Backed Mortgage Pass- Through
Certificates, Series 2003-2, Class R Certificates, (the "Class R Certificates"),
on behalf of whom I make this affidavit and agreement. Capitalized terms used
but not defined herein have the respective meanings assigned thereto in the
Pooling and Servicing Agreement pursuant to which the Class R Certificates were
issued.

                  2. The Owner (i) is and will be a "Permitted Transferee" as of
____________, 20__ and (ii) is acquiring the Class R Certificates for its own
account or for the account of another Owner which is a permitted transferee from
which it has received an affidavit in substantially the same form as this
affidavit. A "Permitted Transferee" is any person other than a "disqualified
organization" or a possession of the United States. For this purpose, a
"disqualified organization" means the United States, any state or political
subdivision thereof, any agency or instrumentality of any of the foregoing
(other than an instrumentality all of the activities of which are subject to tax
and, except for the Federal Home Loan Mortgage Corporation, a majority of whose
board of directors is not selected by any such governmental entity) or any
foreign government, international organization or any agency or instrumentality
of such foreign government or organization, any rural electric or telephone
cooperative, or any organization (other than certain farmers' cooperatives) that
is generally exempt from federal income tax unless such organization is subject
to the tax on unrelated business taxable income. The Owner will endeavor to
remain a Permitted Transferee for so long as it retains its Ownership Interest
in a Residual Certificate

                  3. The Owner is aware (i) of the tax that would be imposed on
transfers of the Class R Certificates to disqualified organizations under the
Internal Revenue Code of 1986 that applies to all transfers of the Class R
Certificates after March 31, 1988; (ii) that such tax would be on the transferor
or, if such transfer is through an agent (which person includes a broker,
nominee or middleman) for a non-Permitted Transferee, on the agent; (iii) that
the person otherwise liable for the tax shall be relieved of liability for the
tax if the transferee furnishes to such person an affidavit that the transferee
is a Permitted Transferee and, at the time of transfer, such person does not
have actual knowledge that the affidavit is false; and (iv) that each of the
Class R Certificates may be a "noneconomic residual interest" within the meaning
of proposed Treasury regulations promulgated under the Code and that the
transferor of a "noneconomic residual interest" will remain liable for any taxes
due with respect to the income on such residual interest, unless no significant
purpose of the transfer is to impede the assessment or collection of tax.



                                      F-2-1

<PAGE>



                  4. The Owner is aware of the tax imposed on a "pass-through
entity" holding the Class R Certificates if, at any time during the taxable year
of the pass-through entity, a non- Permitted Transferee is the record holder of
an interest in such entity. (For this purpose, a "pass- through entity" includes
a regulated investment company, a real estate investment trust or common trust
fund, a partnership, trust or estate, and certain cooperatives.)

                  5. The Owner is aware that the Trustee will not register the
transfer of any Class R Certificate unless the transferee, or the transferee's
agent, delivers to the Trustee, among other things, an affidavit in
substantially the same form as this affidavit. The Owner expressly agrees that
it will not consummate any such transfer if it knows or believes that any of the
representations contained in such affidavit and agreement are false.

                  6. The Owner consents to any additional restrictions or
arrangements that shall be deemed necessary upon advice of counsel to constitute
a reasonable arrangement to ensure that the Class R Certificates will only be
owned, directly or indirectly, by an Owner that is a Permitted Transferee.

                  7. The Owner's taxpayer identification number is
_________________.

                  8. The Owner has reviewed the restrictions set forth on the
face of the Class R Certificates and the provisions of Section 5.02(d) of the
Pooling and Servicing Agreement under which the Class R Certificates were issued
(in particular, clauses (iii)(A) and (iii)(B) of Section 5.02(d) which authorize
the Trustee to deliver payments to a person other than the Owner and negotiate a
mandatory sale by the Trustee in the event that the Owner holds such Certificate
in violation of Section 5.02(d)); and that the Owner expressly agrees to be
bound by and to comply with such restrictions and provisions.

                  9. The Owner is not acquiring and will not transfer the Class
R Certificates in order to impede the assessment or collection of any tax.

                  10. The Owner anticipates that it will, so long as it holds
the Class R Certificates, have sufficient assets to pay any taxes owed by the
holder of such Class R Certificates, and hereby represents to and for the
benefit of the person from whom it acquired the Class R Certificates that the
Owner intends to pay taxes associated with holding such Class R Certificates as
they become due, fully understanding that it may incur tax liabilities in excess
of any cash flows generated by the Class R Certificates.

                  11. The Owner has no present knowledge that it may become
insolvent or subject to a bankruptcy proceeding for so long as it holds the
Class R Certificates.

                  12. The Owner has no present knowledge or expectation that it
will be unable to pay any United States taxes owed by it so long as any of the
Certificates remain outstanding.

                  13. The Owner is not acquiring the Class R Certificates with
the intent to transfer the Class R Certificates to any person or entity that
will not have sufficient assets to pay any taxes


                                      F-2-2

<PAGE>



owed by the holder of such Class R Certificates, or that may become insolvent or
subject to a bankruptcy proceeding, for so long as the Class R Certificates
remain outstanding.

                  14. The Owner will, in connection with any transfer that it
makes of the Class R Certificates, obtain from its transferee the
representations required by Section 5.02(d) of the Pooling and Servicing
Agreement under which the Class R Certificate were issued and will not
consummate any such transfer if it knows, or knows facts that should lead it to
believe, that any such representations are false.

                  15. The Owner will, in connection with any transfer that it
makes of the Class R Certificates, deliver to the Trustee an affidavit, which
represents and warrants that it is not transferring the Class R Certificates to
impede the assessment or collection of any tax and that it has no actual
knowledge that the proposed transferee: (i) has insufficient assets to pay any
taxes owed by such transferee as holder of the Class R Certificates; (ii) may
become insolvent or subject to a bankruptcy proceeding for so long as the Class
R Certificates remains outstanding; and (iii) is not a "Permitted Transferee".

                  16. The Owner is a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, or an estate or
trust whose income from sources without the United States may be included in
gross income for United States federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States.

                  17. The Owner of the Class R Certificate, hereby agrees that
in the event that the Trust Fund created by the Pooling and Servicing Agreement
is terminated pursuant to Section 9.01 thereof, the undersigned shall assign and
transfer to the Holders of the Class CE Certificates any amounts in excess of
par received in connection with such termination. Accordingly, in the event of
such termination, the Trustee is hereby authorized to withhold any such amounts
in excess of par and to pay such amounts directly to the Holders of the Class CE
Certificates. This agreement shall bind and be enforceable against any
successor, transferee or assigned of the undersigned in the Class R Certificate.
In connection with any transfer of the Class R Certificate, the Owner shall
obtain an agreement substantially similar to this clause from any subsequent
owner.



                                      F-2-3

<PAGE>



                  IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors, by
its [Vice] President, attested by its [Assistant] Secretary, this ____ day of
__________, 20__.

                                                  [OWNER]

                                                  By:__________________________
                                                  Name:
                                                  Title:    [Vice] President

ATTEST:

By:_________________________________
Name:
Title:    [Assistant] Secretary



                  Personally appeared before me the above-named , known or
proved to me to be the same person who executed the foregoing instrument and to
be a [Vice] President of the Owner, and acknowledged to me that [he/she]
executed the same as [his/her] free act and deed and the free act and deed of
the Owner.

                  Subscribed and sworn before me this ____ day of __________,
20___.



                                                  ____________________________
                                                           Notary Public

                                                  County of __________________
                                                  State of ___________________

                                                  My Commission expires:




                                      F-2-4

<PAGE>



                          FORM OF TRANSFEROR AFFIDAVIT

STATE OF ______________)

COUNTY OF _____________)

                  __________________________, being duly sworn, deposes,
represents and warrants as follows:

                  1. I am a ____________________ of ____________________________
(the "Owner"), a corporation duly organized and existing under the laws of
______________, on behalf of whom I make this affidavit.

                  2. The Owner is not transferring the Class R Certificates (the
"Residual Certificates") to impede the assessment or collection of any tax.

                  3. The Owner has no actual knowledge that the Person that is
the proposed transferee (the "Purchaser") of the Residual Certificates: (i) has
insufficient assets to pay any taxes owed by such proposed transferee as holder
of the Residual Certificates; (ii) may become insolvent or subject to a
bankruptcy proceeding for so long as the Residual Certificates remain
outstanding and (iii) is not a Permitted Transferee.

                  4. The Owner understands that the Purchaser has delivered to
the Trustee a transfer affidavit and agreement in the form attached to the
Pooling and Servicing Agreement as Exhibit F-2. The Owner does not know or
believe that any representation contained therein is false.

                  5. At the time of transfer, the Owner has conducted a
reasonable investigation of the financial condition of the Purchaser as
contemplated by Treasury Regulations Section 1.860E- 1(c)(4)(i) and, as a result
of that investigation, the Owner has determined that the Purchaser has
historically paid its debts as they became due and has found no significant
evidence to indicate that the Purchaser will not continue to pay its debts as
they become due in the future. The Owner understands that the transfer of a
Residual Certificate may not be respected for United States income tax purposes
(and the Owner may continue to be liable for United States income taxes
associated therewith) unless the Owner has conducted such an investigation.

                  6. Capitalized terms not otherwise defined herein shall have
the meanings ascribed to them in the Pooling and Servicing Agreement.



                                      F-2-5

<PAGE>



                  IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors, by
its [Vice] President, attested by its [Assistant] Secretary, this ____ day of
___________, 20__.

                                             [OWNER]

                                             By:_____________________________
                                             Name:
                                             Title:     [Vice] President

ATTEST:

By:______________________________
Name:
Title:   [Assistant] Secretary



                  Personally appeared before me the above-named , known or
proved to me to be the same person who executed the foregoing instrument and to
be a [Vice] President of the Owner, and acknowledged to me that [he/she]
executed the same as [his/her] free act and deed and the free act and deed of
the Owner.

                  Subscribed and sworn before me this ____ day of __________,
20___.



                                             ____________________________
                                                      Notary Public

                                             County of __________________
                                             State of ___________________

                                             My Commission expires:



                                      F-2-6

<PAGE>



                                    EXHIBIT G

            FORM OF CERTIFICATION WITH RESPECT TO ERISA AND THE CODE

                                           _____________, 20__


New Century Mortgage Securities, Inc.       New Century Mortgage Corporation
18400 Von Karman Avenue, Suite 1000         18400 Von Karman Avenue, Suite 1000
Irvine, California 92612                    Irvine, California 92612
Ocwen Federal Bank FSB                      Deutsche Bank National Trust Company
1675 Palm Beach Lakes Blvd., Suite 10A,     1761 East St. Andrew Place
West Palm Beach, Florida 33401              Santa Ana, CA 92705-4935

                  Re:      New Century Home Equity Loan Trust, Series 2003-2,
                           Asset Backed Pass-Through Certificates, Class ___

Dear Sirs:

                  _______________________ (the "Transferee") intends to acquire
from _____________________ (the "Transferor") $____________ Initial Certificate
Principal Balance of New Century Home Equity Loan Trust, Series 2003-2, Asset
Backed Pass-Through Certificates, Class [CE] [P] [R] (the "Certificates"),
issued pursuant to a Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement") dated as of March 1, 2003 among New Century Mortgage Securities,
Inc. as depositor (the "Depositor"), New Century Mortgage Corporation as
Servicers (the "Servicers") and Deutsche Bank National Trust Company as trustee
(the "Trustee"). Capitalized terms used herein and not otherwise defined shall
have the meanings assigned thereto in the Pooling and Servicing Agreement. The
Transferee hereby certifies, represents and warrants to, and covenants with the
Depositor, the Trustee and the Servicers the following:

                  The Certificates (i) are not being acquired by, and will not
be transferred to, any employee benefit plan within the meaning of section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
other retirement arrangement, including individual retirement accounts and
annuities, Keogh plans and bank collective investment funds and insurance
company general or separate accounts in which such plans, accounts or
arrangements are invested, that is subject to Section 406 of ERISA or Section
4975 of the Internal Revenue Code of 1986 (the "Code") (any of the foregoing, a
"Plan"), (ii) are not being acquired with "plan assets" of a Plan within the
meaning of the Department of Labor ("DOL") regulation, 29 C.F.R. ss. 2510.3-101,
and (iii) will not be transferred to any entity that is deemed to be investing
in plan assets within the meaning of the DOL regulation at 29
C.F.R.ss.2510.3-101.




                                       G-1

<PAGE>



                                                Very truly yours,

                                                [TRANSFEREE]

                                                By:____________________________
                                                Name:
                                                Title:




                                       G-2

<PAGE>



                                    EXHIBIT H

                     FORM OF REPORT PURSUANT TO SECTION 4.06

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


                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    Form 10-K

                                  Annual Report

                     Pursuant to Section 13 or 15(d) of the
                 Securities Exchange Act of 1934 (Fee Required)

                     For fiscal year ended ________________

                       Commission file number: 333-_______


                      NEW CENTURY MORTGAGE SECURITIES, INC.
            (as depositor under the Pooling and Servicing Agreement,
            dated as of March 1, 2003, providing for the issuance of
             Asset Backed Pass-Through Certificates, Series 2003-2)


                      New Century Mortgage Securities, Inc.

             (Exact name of registrant as specified in its charter)
--------------------------------------------------------------------------------




           Delaware                                     33-0852169
(State or Other Jurisdiction                            (I.R.S. Employer
of Incorporation)                                       Identification Number)

18400 Von Karman, Suite 1000
Irvine, California                                      92612
(Address of Principal Executive Offices)                (Zip Code)


Registrant's telephone number, including area code:  (949) 863-7243


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



                                       H-1

<PAGE>



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

None

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

None

Indicate 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.

                                               X  YES       No
                                              ____      ____

Item 1. Business:

Not applicable

Item 2. Properties:

Not applicable

Item 3. Legal Proceedings:

None

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

None

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

To the best knowledge of the registrant there is no established public trading
market for the certificates.

There are approximately _____ holders of record as of the end of the reporting
year.

Item 6. Selected Financial Data.

Not applicable.

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

Not applicable

Item 8. Financial Statements and Supplementary Data.


                                       H-2

<PAGE>



Not applicable.

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

None

Item 10.

Not applicable

Item 11. Executive Compensation

Not applicable

Item 12. Security Ownership of Certain Beneficial Owners and Management

Not applicable

Item 13. Certain Relationships and Related Transactions

Not applicable

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

         a)       The company filed on Form 8-K, separately for each
                  distribution date, the distribution of funds related to the
                  trust for each of the following distribution dates:

                        Distribution Date                  Form 8-K Filing Date
                        _________________                  ________________
                        _________________                  ________________
                        _________________                  ________________

         b) 99.1  Annual Report of Independent Public Accountants' as to
                  master servicing activities or servicing activities, as
                  applicable

                  (a)   New Century Mortgage Corporation and Ocwen Federal
                        Banks, as Servicers

            99.2  Annual Statement of Compliance with obligations under
                  the Pooling and Servicing Agreement or servicing agreement, as
                  applicable, of:

                  (b)   New Century Mortgage Corporation and Ocwen Federal Bank,
                        as Servicers



                                       H-3

<PAGE>



                  Such document (i) is not filed herewith since such document
was not received by the Reporting Person at least three business days prior to
the due date of this report; and (ii) will be included in an amendment to this
report on Form 10-K/A to be filed within 30 days of the Reporting Person's
receipt of such document.




                                       H-4

<PAGE>



                                   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.

Date: ___________

                                      New Century Mortgage Securities, Inc., by
                                      Deutsche Bank National Trust Company as
                                      Trustee for New Century Home Equity Loan
                                      Trust, Series 2003-2, Asset Backed Pass-
                                      Through Certificates.

                                      By:_________________________________
                                      Name:
                                      Title:
                                      Company:





                                       H-5

<PAGE>



                                    EXHIBIT I

                           FORM OF LOST NOTE AFFIDAVIT

Loan #: ____________
Borrower: _____________

                               LOST NOTE AFFIDAVIT

                  I, as ____________________ of ______________________, a
_______________ corporation am authorized to make this Affidavit on behalf of
_____________________ (the "Seller"). In connection with the administration of
the Mortgage Loans held by ____________________, a _________________ corporation
as Seller on behalf of New Century Mortgage Securities, Inc. (the "Purchaser"),
_____________________ (the "Deponent"), being duly sworn, deposes and says that:

         1.       The Seller's address is:  _____________________
                                            _____________________
                                            _____________________

         2.       The Seller previously delivered to the Purchaser a signed
                  Initial Certification with respect to such Mortgage and/or
                  Assignment of Mortgage;

         3.       Such Mortgage Note and/or Assignment of Mortgage was assigned
                  or sold to the Purchaser by ________________________, a
                  ____________ corporation pursuant to the terms and provisions
                  of a Mortgage Loan Purchase Agreement dated as of __________
                  __, _____;

         4.       Such Mortgage Note and/or Assignment of Mortgage is not
                  outstanding pursuant to a request for release of Documents;

         5.       Aforesaid Mortgage Note and/or Assignment of Mortgage (the
                  "Original") has been lost;

         6.       Deponent has made or caused to be made a diligent search for
                  the Original and has been unable to find or recover same;

         7.       The Seller was the Seller of the Original at the time of the
                  loss; and

         8.       Deponent agrees that, if said Original should ever come into
                  Seller's possession, custody or power, Seller will immediately
                  and without consideration surrender the Original to the
                  Purchaser.

         9.       Attached hereto is a true and correct copy of (i) the Note,
                  endorsed in blank by the Mortgagee and (ii) the Mortgage or
                  Deed of Trust (strike one) which secures the


                                       I-1

<PAGE>



                  Note, which Mortgage or Deed of Trust is recorded in the
                  county where the property is located.

         10.      Deponent hereby agrees that the Seller (a) shall indemnify
                  and hold harmless the Purchaser, its successors and assigns,
                  against any loss, liability or damage, including reasonable
                  attorney's fees, resulting from the unavailability of any
                  Notes, including but not limited to any loss, liability or
                  damage arising from (i) any false statement contained in this
                  Affidavit, (ii) any claim of any party that has already
                  purchased a mortgage loan evidenced by the Lost Note or any
                  interest in such mortgage loan, (iii) any claim of any
                  borrower with respect to the existence of terms of a mortgage
                  loan evidenced by the Lost Note on the related property to the
                  fact that the mortgage loan is not evidenced by an original
                  note and (iv) the issuance of a new instrument in lieu thereof
                  (items (i) through (iv) above hereinafter referred to as the
                  "Losses") and (b) if required by any Rating Agency in
                  connection with placing such Lost Note into a Pass-Through
                  Transfer, shall obtain a surety from an insurer acceptable to
                  the applicable Rating Agency to cover any Losses with respect
                  to such Lost Note.

         11.      This Affidavit is intended to be relied upon by the Purchaser,
                  its successors and assigns. _____________________, a
                  ______________ corporation represents and warrants that is has
                  the authority to perform its obligations under this Affidavit
                  of Lost Note.

Executed this ____ day, of ___________ ______.

                                                      SELLER

                                                      By:______________________
                                                      Name:
                                                      Title:

                  On this _____ day of ________, _____, before me appeared
_________________ to me personally known, who being duly sworn did say that he
is the _____________________ of ____________________ a ______________
corporation and that said Affidavit of Lost Note was signed and sealed on behalf
of such corporation and said acknowledged this instrument to be the free act and
deed of said corporation.

                                                      Signature:

                                                      [Seal]



                                       I-2

<PAGE>



                                   EXHIBIT J-1

        FORM CERTIFICATION TO BE PROVIDED BY THE DEPOSITOR WITH FORM 10-K

                  Re:      New Century Mortgage Securities, Inc., Series 2003-2
                           Asset-Backed Certificates, Series 2003-2

                  I, [identify the certifying individual], the senior officer of
New Century Mortgage Securities, Inc. (the "Registrant") in charge of
securitizations, certify that:

                  l. I have reviewed this annual report on Form 10-K, and all
reports on Form 8-K containing distribution and servicing reports filed in
respect of periods included in the year covered by this annual report, of
Registrant;

                  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 this annual report;

                  3. Based on my knowledge, the distribution information, and
the servicing information required to be provided to the Trustee by the
Servicers under the Pooling and Servicing Agreement for inclusion in these
reports, is included in these reports;

                  4. Based on my knowledge and upon the annual compliance
statements included in the report and required to be delivered to the Trustee in
accordance with the terms of the Pooling and Servicing Agreement, and except as
disclosed in the reports, the Servicers have fulfilled their obligations under
the Pooling and Servicing Agreement; and

                  5. The reports disclose all significant deficiencies relating
to each Servicer's compliance with the minimum servicing standards based upon
the report provided by an independent public accountant, after conducting a
review in compliance with the Uniform Single Attestation Program for Mortgage
Bankers or similar procedure, as set forth in the Pooling and Servicing
Agreement, that is included in these reports.

                  In giving the certifications above, I have reasonably relied
on information provided to me by the Trustee and Ocwen Federal Bank FSB.

                  Capitalized terms used but not defined herein have the
meanings ascribed to them in the Pooling and Servicing Agreement, dated March 1,
2003 (the "Pooling and Servicing Agreement"), among the Registrant as depositor,
New Century Mortgage Corporation and Ocwen Federal Bank FSB as Servicers and
Deutsche Bank National Trust Company as trustee.



                                      J-1-1

<PAGE>



                                       NEW CENTURY MORTGAGE SECURITIES, INC.

                                       By:____________________________________
                                       Name:
                                       Title:
                                       Date:


                                       J-2

<PAGE>



                                   EXHIBIT J-2

                            FORM CERTIFICATION TO BE
                      PROVIDED TO DEPOSITOR BY THE TRUSTEE

                  Re:      New Century Mortgage Securities, Inc., Series 2003-2
                           Asset-Backed Certificates, Series 2003-2

                  I, [identify the certifying individual], a [title] of Deutsche
Bank National Trust Company, as Trustee, hereby certify to New Century Mortgage
Securities, Inc. (the "Depositor"), and its officers, directors and affiliates,
and with the knowledge and intent that they will rely upon this certification,
that:

                  1. I have reviewed the annual report on Form 10-K for the
fiscal year [___], and all reports on Form 8-K containing distribution reports
filed in respect of periods included in the year covered by that annual report,
of the Depositor relating to the above-referenced trust;

                  2. Based on my knowledge, the information in these
distribution reports prepared by the Trustee, 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 that annual report; and

                  3. Based on my knowledge, the distribution information
required to be provided by the Trustee under the Pooling and Servicing Agreement
is included in these distribution reports.

                  Capitalized terms used but not defined herein have the
meanings ascribed to them in the Pooling and Servicing Agreement, dated March 1,
2003 (the "Pooling and Servicing Agreement"), among the Depositor as depositor,
New Century Mortgage Corporation and Ocwen Federal Bank FSB as Servicers and
Deutsche Bank National Trust Company as trustee.

                                        DEUTSCHE BANK NATIONAL TRUST
                                        COMPANY, as Trustee

                                        By:__________________________________
                                        Name:
                                        Title:
                                        Date:


                                      J-2-1

<PAGE>



                                   EXHIBIT J-3

                            FORM CERTIFICATION TO BE
                         PROVIDED TO DEPOSITOR BY OCWEN

                  Re:      New Century Mortgage Securities, Inc., Series 2003-2
                           Asset-Backed Certificates, Series 2003-2

                  I, [identify the certifying individual], a [title] of Ocwen
Federal Bank FSB ("Ocwen"), as a Servicer, hereby certify to New Century
Mortgage Securities, Inc. (the "Depositor") and Deutsche Bank National Trust
Company (the "Trustee"), and their respective officers, directors and
affiliates, and with the knowledge and intent that they will rely upon this
certification, that:

                  1. I have reviewed the information required to be delivered to
the Trustee by Ocwen pursuant to the Pooling and Servicing Agreement (the
"Servicing Information");

                  2. Based on my knowledge, the Servicing Information does not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the Servicing Information, in light of the circumstances under
which such information was provided, not misleading as of the last day of the
period covered by the Form 10-K Annual Report;

                  3. Based on my knowledge, the Servicing Information required
to be provided to the Trustee by Ocwen has been provided as required under the
Pooling and Servicing Agreement;

                  4. I am responsible for reviewing the activities performed by
Ocwen under the Pooling and Servicing Agreement and based upon my knowledge and
the annual compliance review required under the Pooling and Servicing Agreement,
and except as disclosed by written notice to the Trustee or in the annual
compliance statement required to be delivered to the Trustee in accordance with
the terms of the Pooling and Servicing Agreement (which has been so delivered to
the Trustee), Ocwen has, for the period covered by the Form 10-K Annual Report,
fulfilled its obligations under the Pooling and Servicing Agreement; and

                  5. Ocwen has disclosed to it's certified public accountants
all significant deficiencies relating to Ocwen's compliance with the minimum
servicing standards in accordance with a review conducted in compliance with the
Uniform Single Attestation Program for Mortgage Bankers or similar procedure, as
set forth in the Pooling and Servicing Agreement.

                  Capitalized terms used but not defined herein have the
meanings ascribed to them in the Pooling and Servicing Agreement, dated March 1,
2003 (the "Pooling and Servicing Agreement"), among the Depositor as depositor,
New Century Mortgage Corporation and Ocwen Federal Bank FSB as Servicers and the
Trustee as trustee.




                                      J-3-1

<PAGE>



                                        OCWEN FEDERAL BANK FSB, as Servicer

                                        By:__________________________________
                                        Name:
                                        Title:
                                        Date:


                                      J-3-2

<PAGE>



                                    EXHIBIT K

                     [FORM OF COLLECTION ADVISORY AGREEMENT]


                                       K-1

<PAGE>



                                   Schedule 1

                             MORTGAGE LOAN SCHEDULE

                                [Filed by Paper]



                                  Schedule 1-1

<PAGE>


                                   Schedule 2

                         SCHEDULE OF PREPAYMENT CHARGES

                            [Available Upon Request]



                                  Schedule 2-1