Exhibit 4.1

<PAGE>

                     NEW CENTURY MORTGAGE SECURITIES, INC.,
                                    Depositor



                        NEW CENTURY MORTGAGE CORPORATION,
                                 Master Servicer




                               FIRSTAR BANK, N.A.,
                                     Trustee


                                       and


                         U.S. BANK NATIONAL ASSOCIATION,
                               Trust Administrator


                         POOLING AND SERVICING AGREEMENT

                            Dated as of June 1, 2000


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

                       NEW CENTURY HOME EQUITY LOAN TRUST,
                                 SERIES 2000-NCA




<PAGE>



<TABLE>
<CAPTION>
                                                 TABLE OF CONTENTS
                                                                                                               Page
                                                                                                               ----

                                                     ARTICLE I

                                                    DEFINITIONS
<S>                        <C>                                                                                 <C>
Section 1.01.              Defined Terms..........................................................................2
Section 1.02.              Accounting............................................................................37
Section 1.03.              Allocation of Certain Interest Shortfalls.............................................37

                                                    ARTICLE II

                                            ESTABLISHMENT OF THE TRUST;
                                       PURCHASE AND SALE OF MORTGAGE LOANS;
                                         ORIGINAL ISSUANCE OF CERTIFICATES

Section 2.01.              Establishment of the Trust............................................................38
Section 2.02.              Purchase and Sale of Mortgage Loans...................................................38
Section 2.03.              Grant of Security Interest............................................................38
Section 2.04.              Document Delivery Requirements........................................................39
Section 2.05.              Acceptance by the Trustee.............................................................43
Section 2.06.              Repurchase or Substitution of Mortgage Loans by the Seller, the
                           Depositor or the Master Servicer......................................................45
Section 2.07.              Representations, Warranties and Covenants of the Master Servicer......................50
Section 2.08.              Representations and Warranties of the Depositor.......................................52
Section 2.09.              Issuance of Certificates..............................................................56

                                                    ARTICLE III

                                           ADMINISTRATION AND SERVICING
                                                   OF THE TRUST

Section 3.01.              Administration of the Trust; Servicing of the Mortgage Loans..........................57
Section 3.02.              Subservicing Agreements Between Master Servicer and Subservicers......................59
Section 3.03.              Successor Subservicers, Termination of Subservicing Agreement.........................61
Section 3.04.              Liability of the Master Servicer......................................................61
Section 3.05.              No Contractual Relationship Between Subservicers and Trust
                           Administrator, Trustee or Certificateholders..........................................62
Section 3.06.              Assumption or Termination of Sub-Servicing Agreements by
                           Trust Administrator...................................................................62
Section 3.07.              Collection of Certain Mortgage Loan Payments..........................................63
Section 3.08.              Subservicing Accounts.................................................................63
Section 3.09.              Collection of Taxes, Assessments and Similar Items; Servicing


                                                         i

<PAGE>



                           Accounts..............................................................................64
Section 3.10.              Collection Account and Certificate Account............................................64
Section 3.11.              Withdrawals from the Collection Account and Certificate Account.......................67
Section 3.12.              Investment of Funds in the Accounts...................................................69
Section 3.13.              Maintenance of Hazard Insurance and Errors and Omissions and
                           Fidelity Coverage.....................................................................70
Section 3.14.              Enforcement of Due-on-Sale Clauses; Assumption Agreements.............................72
Section 3.15.              Realization upon Defaulted Mortgage Loans.............................................73
Section 3.16.              Trustee and Trust Administrator to Cooperate; Release of Mortgage
                           Files.................................................................................75
Section 3.17.              Servicing Compensation................................................................76
Section 3.18.              Reports to the Trust Administrator and the Trustee; Collection
                           Account Statements....................................................................77
Section 3.19.              Statement as to Compliance and Financial Statements...................................78
Section 3.20.              Independent Public Accountants' Servicing Report......................................78
Section 3.21.              Access to Certain Documentation.......................................................79
Section 3.22.              Title, Management and Disposition of REO Property.....................................79
Section 3.23.              Prepayment Interest Shortfalls........................................................82
Section 3.24.              [Reserved]............................................................................83
Section 3.25.              [Reserved]............................................................................83
Section 3.26.              Certain Procedures Relating to Successor Subservicers and Successor
                           Master Servicers......................................................................83
Section 3.27.              Reports to the Securities and Exchange Commission.....................................83
Section 3.28.              Servicing Termination.................................................................83
Section 3.29.              Advance Facility......................................................................84
Section 3.30.              PMI Policy; Claims Under the PMI Policy...............................................85

                                                    ARTICLE IV

                                                   FLOW OF FUNDS

Section 4.01.              Establishment of Accounts.............................................................86
Section 4.02.              The Certificate Insurance Policy......................................................86
Section 4.03.              Deposits into, and Transfers Among, the Accounts......................................88
Section 4.04.              Flow of Funds and Distributions.......................................................89
Section 4.05.              [Reserved]............................................................................93
Section 4.06.              Statements to Certificateholders......................................................93
Section 4.07.              Remittance Reports; Delinquency Advances by the Master Servicer
                           and Insurance Claims..................................................................97
Section 4.08.              Compliance with Withholding Requirements..............................................99

                                                     ARTICLE V

                                                 THE CERTIFICATES


                                                        ii

<PAGE>



Section 5.01.              The Certificates.....................................................................101
Section 5.02.              Registration of Transfer and Exchange of Certificates................................101
Section 5.03.              Mutilated, Destroyed, Lost or Stolen Certificates....................................106
Section 5.04.              Persons Deemed Certificateholders....................................................107
Section 5.05.              Book-Entry Certificates..............................................................107
Section 5.06.              Notices to Depository................................................................108
Section 5.07.              Definitive Certificates..............................................................108

                                                    ARTICLE VI

                                       THE DEPOSITOR AND THE MASTER SERVICER

Section 6.01.              Liability of the Depositor and the Master Servicer...................................110
Section 6.02.              Merger or Consolidation of the Depositor or the Master Servicer......................110
Section 6.03.              Limitation on Liability of the Depositor, the Master Servicer,
                           any Subservicer and Others...........................................................110
Section 6.04.              Limitation on Resignation of the Master Servicer; No Assignment
                           or Delegation of Duties by Master Servicer...........................................111
Section 6.05.              Rights of the Depositor, the Certificateholders and Others in Respect
                           of the Master Servicer...............................................................112
Section 6.06.              Eligibility Requirements for Master Servicer.........................................113

                                                    ARTICLE VII
                                                      DEFAULT

Section 7.01.              Master Servicer Defaults; Certain Matters Affecting the
                           Master Servicer......................................................................114
Section 7.02.              Trust Administrator or Trustee to Act; Appointment of Successor......................117
Section 7.03.              Notification to Mortgagors and Certificateholders....................................118
Section 7.04.              Additional Remedies of Trustee upon Master Servicer Defaults.........................119
Section 7.05.              Waiver of Master Servicer Defaults...................................................119
Section 7.06.              Survivability of Master Servicer Liabilities.........................................119

                                                   ARTICLE VIII

                                CONCERNING THE TRUSTEE AND THE TRUST ADMINISTRATOR

Section 8.01.              Duties of Trustee and the Trust Administrator........................................121
Section 8.02.              Certain Matters Affecting the Trustee and the Trust Administrator....................122
Section 8.03.              Neither Trustee nor Trust Administrator Liable for Certificates
                           or Mortgage Loans....................................................................124
Section 8.04.              Trustee and Trust Administrator May Own Certificates.................................124
Section 8.05.              Expenses of Trustee, Trust Administrator and Master Servicer.........................124
Section 8.06.              Trustee and Trust Administrator Eligibility Requirements.............................125


                                                        iii

<PAGE>



Section 8.07.              Resignation and Removal of the Trustee and the Trust Administrator...................125
Section 8.08.              Successor Trustee and Trust Administrator............................................127
Section 8.09.              Merger or Consolidation of Trustee or Trust Administrator............................128
Section 8.10.              Appointment of Co-Trustee or Separate Trustee........................................128
Section 8.11.              Trust Administrator Records..........................................................129
Section 8.12.              Appointment of Office or Agency......................................................129
Section 8.13.              Exercise of Trustee Powers by Certificateholders.....................................130
Section 8.14.              Representations and Warranties.......................................................130

                                                    ARTICLE IX
                                 CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER

Section 9.01.              Certain Rights of the Certificate Insurer............................................132
Section 9.02.              Trustee To Act Solely with Consent of the Certificate Insurer........................132
Section 9.03.              REMIC I and Accounts Held for Benefit of the Certificate Insurer
                           and the Certificateholders...........................................................133
Section 9.04.              Effect of Payments by the Certificate Insurer; Subrogation...........................133
Section 9.05.              Notices to the Certificate Insurer...................................................134
Section 9.06.              Third-Party Beneficiary..............................................................134
Section 9.07.              Trust Administrator to Hold the Policy...............................................134
Section 9.08.              Certificate Insurer Right to Waive Overcollateralization
                           Requirements.........................................................................134

                                                     ARTICLE X

                                                    TERMINATION

Section 10.01.             Termination..........................................................................136
Section 10.02              Additional Termination Requirements..................................................138

                                                    ARTICLE XI

                                                 REMIC PROVISIONS


11.01.            REMIC Administration..........................................................................139
11.02.            Prohibited Transactions and Activities........................................................142
11.03.            Master Servicer, Trust Administrator and Trustee Indemnification..............................142

                                                    ARTICLE XII

                                             MISCELLANEOUS PROVISIONS

Section 12.01.             Amendment............................................................................143


                                                        iv

<PAGE>



Section 12.02.             Recordation of Agreement; Counterparts...............................................144
Section 12.03.             Limitation on Rights of Certificateholders...........................................144
Section 12.04.             Governing Law; Jurisdiction..........................................................145
Section 12.05.             Notices..............................................................................145
Section 12.06.             Severability of Provisions...........................................................146
Section 12.07.             Article and Section References.......................................................146
Section 12.08.             Notice to the Rating Agencies........................................................147
Section 12.09.             Further Assurances...................................................................148
Section 12.10              Benefits of Agreement................................................................148
Section 12.11.             Acts of Certificateholders...........................................................148

EXHIBITS:
---------
Exhibit A-1       Form of Class A Certificate
Exhibit A-2       Forms of Class R Certificate
Exhibit B         [Reserved]
Exhibit C         Form of Mortgage Loan Purchase Agreement
Exhibit D-1       Request for Release
Exhibit D-2       Request for Release (Mortgage Loans Paid in Full)
Exhibit E-1       Form of Trust Administrator's Initial Certification
Exhibit E-2       Form of Trust Administrator's Final Certification
Exhibit E-3       Form of Trust Administrator's Quarterly Certification
Exhibit F         Form of Liquidation Report
Exhibit G         Forms of Transfer Certification
Exhibit H         Form of Class R Certificate Transferor Affidavit and Transfer Affidavit and
                  Agreement
Exhibit I         Form of Certificate Insurance Policy
Exhibit J         Mortgage Loan Schedule
Exhibit K         Prepayment Charge Schedule
Schedule 1        PMI Mortgage Loans
</TABLE>




                                        v

<PAGE>



                  This Pooling and Servicing Agreement is dated as of June 1,
2000 (the "Agreement"), among NEW CENTURY MORTGAGE SECURITIES, INC. as depositor
(the "Depositor"), NEW CENTURY MORTGAGE CORPORATION as servicer (in such
capacity, the "Master Servicer" or "New Century"), FIRSTAR BANK, N.A. as trustee
(the "Trustee"), and U.S. BANK NATIONAL ASSOCIATION as trust administrator (the
"Trust Administrator").

                             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 REMIC I (as defined herein) created
hereunder. The Trust will consist of a segregated pool of assets comprising 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 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 Certificates 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 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 each of the Regular Certificates (as defined herein).


<TABLE>
<CAPTION>
                                                              Initial Aggregate                Latest Possible
       Designation                Pass-Through Rate      Certificate Principal Balance         Maturity Date(1)
       -----------                -----------------      -----------------------------         ----------------
<S>                               <C>                    <C>                                   <C>
Class A-1                               8.30%                  $ 86,926,000.00                   June 25, 2030
Class A-2                             Variable(2)              $120,008,000.00                   June 25, 2030
</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.







<PAGE>



                                    ARTICLE I

                                   DEFINITIONS

         Section 1.01.              Defined Terms.

                  Whenever used in this Agreement or in the Preliminary
Statement, the following words and phrases, unless the context otherwise
requires, shall have the meanings specified in this Article.

                  Many of the defined terms listed below may apply to both Loan
Groups or Certificate Groups and are sometimes used in this Agreement to refer
to a particular Loan Group or Certificate Group by the adjectival use of the
words "Group I" and "Group II".

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

                  "Accepted Servicing Procedures": The servicing procedures set
forth in Section 3.01.

                  "Account": Either the Collection Account or the Certificate
Account.

                  "Accrual Period": With respect to the Class A-1 Certificates
and any Distribution Date after the first Distribution Date, the calendar month
preceding the month of such Distribution Date (such calendar month assumed for
purposes of this definition to have 30 days). With respect to the Class A-1
Certificates and the first Distribution Date, the period beginning on the
Closing Date and ending on June 30, 2000. With respect to the Class A-2
Certificates and any Distribution Date after the first Distribution Date, the
period commencing on the immediately preceding Distribution Date and ending on
the day immediately preceding such Distribution Date. With respect to the Class
A-2 Certificates and the first Distribution Date, the period commencing on the
Closing Date and ending on the day immediately preceding such Distribution Date.

                  "Accrual Rate": With respect to the Class A-2 Certificates and
any Distribution Date, the per annum rate equal to the lesser of (i) the
Pass-Through Rate for the applicable Accrual Period calculated without regard to
the Net WAC Cap and (ii) the Maximum Pass-Through Rate for such Accrual Period.

                  "Accrued Certificate Interest": With respect to the Class A
Certificates and each Distribution Date, interest accrued during the related
Accrual Period at the Pass-Through Rate for such Certificate for such
Distribution Date on the Certificate Principal Balance of such Certificate
immediately prior to such Distribution Date. All distributions of interest on
the Class A-1 Certificates will be based on a 360-day year consisting of twelve
30-day months. All distributions of interest on the Class A-2 Certificates will
be calculated on the basis of a 360-day year and the actual number of days in
the applicable Accrual Period. Accrued Certificate Interest with respect to each
Distribution Date shall be reduced by an amount equal to the portion allocable
to such Certificate pursuant to Section 1.03 hereof of the sum of (a) the
aggregate Prepayment Interest


                                        2

<PAGE>



Shortfall, if any, for such Distribution Date to the extent not covered by
payments pursuant to Section 3.23 and (b) the aggregate amount of any Relief Act
Interest Shortfall, if any, for such Distribution Date.

                  "Additional Servicing Compensation": As defined in Section
3.17 hereof.

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

                  "Adjustment Date": With respect to each Group II Mortgage Loan
that is an 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 Mortgage
Loan is set forth in the Mortgage Loan Schedule.

                  "Administrative 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 one twelfth of the product of (i) the Administrative Fee
Rate, multiplied by (ii) the Aggregate Loan Balance of the Mortgage Loans and
any REO Properties as of the second preceding Due Date (or, in the case of the
initial Distribution Date, as of the Cut-off Date). The fee payable to the Trust
Administrator for all services rendered by it in the exercise and performance of
any of the powers and duties of the Trust Administrator hereunder will be paid
by the Trustee out of the Administrative Fee.

                  "Administrative Fee Rate":  0.013% per annum.

                  "Advancing Person":  As defined in Section 3.29 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 meanings correlative to the foregoing.

                  "Aggregate Loan Balance": With respect to any date of
determination, the aggregate of the Loan Balances of the Mortgage Loans,
calculated as of such date of determination; provided, however, that the
Aggregate Loan Balance with respect to the Distribution Date on which the
Termination Price is to be paid will be deemed to have been equal to zero as of
the last day of the related Due Period.

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



                                        3

<PAGE>



                  "Annual Loss Percentage": With respect to any Distribution
Date, a fraction, expressed as a percentage, the numerator of which is the
aggregate of all Realized Losses for the twelve months ending on the last day of
the preceding month and the denominator of which is the Aggregate Loan Balance
of the Mortgage Loans and REO Properties as of the first day of the twelfth
preceding calendar month.

                  "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 2.04 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 or transfer of the Mortgage to
the assignee thereof (or, if such sale or transfer is to the Trustee, then to
the Trustee for the benefit of Certificateholders), 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 Funds": With respect to any Distribution Date, the
sum of the Group I Available Funds and Group II Available Funds.

                  "Available Funds Shortfall": With respect to any Distribution
Date, an amount equal to the sum of (a) the amount, if any, by which the
aggregate of the Interest Distribution Amounts for such Distribution Date
exceeds the amount available, pursuant to Section 4.04(a) hereof and before
giving effect to any Insured Payment, to pay the Interest Distribution Amounts
for such Distribution Date and (b) the OC Deficit for such Distribution Date.

                  "Back-Up Servicer": The party appointed by the Master Servicer
pursuant to Section 7.07 hereof.

                  "Back-Up Servicing Agreement": The back-up servicing agreement
between the Master Servicer and the Back-Up Servicer pursuant to Section 7.07
hereof.

                  "Back-Up Servicing Fee": The back-up servicing fee as set
forth in the Back-Up Servicing Agreement.

                  "Bankruptcy Code": The Bankruptcy Code, as amended (Title 11
to the United States Code).

                  "Basis Risk Shortfall": With respect to the Class A-2
Certificates and any Distribution Date on which the Pass-Through Rate thereon
calculated pursuant to the definition thereof is limited to the Net WAC Cap, an
amount equal to interest accrued during the related Accrual Period on the
aggregate Certificate Principal Balance of the Class A-2 Certificates
immediately prior to such Distribution Date at a per annum rate equal to the
excess of (a) the Accrual Rate for such Distribution Date over (b) the Net WAC
Cap for such Distribution Date.


                                        4

<PAGE>



                  "BIF":  The Bank Insurance Fund of the FDIC.

                  "Book-Entry Certificates": Any of the Certificates that shall
be registered in the name of the Depository or its nominee, the ownership of
which is reflected on the books of the Depository or on the books of a Person
maintaining an account with the Depository (directly, as a "Depository
Participant", or indirectly, as an indirect participant in accordance with the
rules of the Depository and as described in Section 5.06 hereof). On the Closing
Date, the Offered Certificates shall be Book-Entry Certificates.

                  "Book-Entry Custodian": The custodian appointed pursuant to
Section 5.05.

                  "Business Day": Any day other than a Saturday, a Sunday or a
day on which banking or savings institutions in The City of New York, California
or in the city in which the corporate trust offices of the Trustee or the Trust
Administrator is located are authorized or obligated by law or executive order
to be closed.

                  "Call Option Date": The first Distribution Date on which the
Aggregate Loan Balance as of the end of the immediately preceding Due Period is
less than or equal to 10% of the Cut-off Date Pool Balance.

                  "Certificate": Any Regular Certificate or Class R Certificate.

                  "Certificate Account": The trust account or accounts created
and maintained by the Trust Administrator pursuant to Section 4.01 hereof which
shall be entitled "Certificate Account, U.S. Bank National Association, as Trust
Administrator for Firstar Bank, N.A., as Trustee, in trust for the registered
Certificateholders of New Century Asset Backed Pass-Through Certificates, Series
2000-NCA", and which must be an Eligible Account.

                  "Certificate Group": Either the Group I Certificates or the
Group II Certificates, as the context may require.

                  "Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the Certificate Register, except that a
Disqualified Organization or non-U.S. Person shall not be a Holder of a Class R
Certificate for any purpose hereof.

                  "Certificate Insurer": Financial Security Assurance Inc., a
stock insurance company organized and created under the laws of the State of New
York, and any successor thereto.

                  "Certificate Insurer Default": The existence and continuance
of a failure by the Certificate Insurer to make a payment required under the
Policy in accordance with its terms.

                  "Certificate Owner": With respect to each Book-Entry
Certificate, any beneficial owner thereof.



                                        5

<PAGE>



                  "Certificate Principal Balance": With respect to any Regular
Certificate, the product of (i) the Percentage Interest represented by the
related Regular Certificate and (ii) the Class Certificate Principal Balance of
the related Class as of such date of determination.

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

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

                  "Class": Collectively, Certificates which have the same
priority of payment and bear the same class designation and the form of which is
identical except for variation in (i) the Initial Certificate Principal Balance
and (ii) the Percentage Interest evidenced thereby.

                  "Class A Certificates": Any one of the Class A-1 Certificates
or Class A-2 Certificates as designated on the face thereof substantially in the
form annexed hereto as Exhibit A-1, executed, authenticated and delivered by the
Trustee or the Trust Administrator, representing the right to distributions as
set forth herein and therein, and evidencing an interest designated as a
"regular interest" in REMIC I for purposes of the REMIC Provisions.

                  "Class A-1 Certificate," "Class A-2 Certificate": Any one of
the related Classes of Certificates as designated on the face thereof
substantially in the form annexed hereto as Exhibit A-1, executed, authenticated
and delivered by the Trustee or the Trust Administrator, representing the right
to distributions as set forth herein and therein, and evidencing an interest
designated as a "regular interest" in REMIC I for purposes of the REMIC
Provisions.

                  "Class Certificate Principal Balance": With respect to either
class of the Class A Certificates and any date of determination, the Original
Class Certificate Principal Balance of such Class reduced by the sum of all
amounts actually distributed in respect of principal of such Class on all prior
Distribution Dates.

                  "Class R Certificate": The Class R Certificates, substantially
in the form annexed hereto as Exhibit A-2, executed, authenticated and delivered
by the Trustee or the Trust Administrator, representing the right to
distributions as set forth herein and therein, and evidencing an interest
designated as a "residual interest" in REMIC I for purposes of the REMIC
Provisions.

                  "Closing Date":  June 29, 2000.

                  "Code": The Internal Revenue Code of 1986 as it may be amended
from time to time.

                  "Collection Account": The account or accounts created and
maintained pursuant to Section 3.10(a) hereof, which shall be entitled
"Collection Account, U.S. Bank National Association, as Trust Administrator for
Firstar Bank, N.A., as Trustee, in trust for the registered Certificateholders
of New Century Home Equity Loan Certificates, Series 2000-NCA", and which must
be an Eligible Account.



                                        6

<PAGE>



                  "Corporate Trust Office": The principal corporate trust office
of the Trust Administrator or the Trustee at which at any particular time its
corporate trust business with respect to the Certificates shall be administered,
which office (a) in the case of the Trust Administrator is located at 180 East
Fifth Street, St. Paul, Minnesota 55101, Attention: Structured Finance/New
Century 2000-NCA, or at such other address as the Trust Administrator may
designate from time to time by notice to the Certificateholders, the Depositor,
the Master Servicer, the Trustee and the Certificate Insurer and (b) in the case
of the Trustee is located at 1555 N. Rivercenter Drive, Milwaukee, Wisconsin
53212, or such other address as the Trustee may designate from time to time by
notice to the Certificateholders, the Depositor, the Master Servicer, the Trust
Administrator and the Certificate Insurer.

                  "Cram Down Loss": With respect to a Mortgage Loan, the amount
of reduction of such Mortgage Loan's Loan Balance resulting from an order issued
by a court of appropriate jurisdiction in an insolvency proceeding. A "Cram Down
Loss" shall be deemed to have occurred on the date of issuance of such order.

                  "Cumulative Loss Percentage": As of any Distribution Date, the
fraction, expressed as a percentage, whose numerator is the aggregate of all
Realized Losses during the period beginning with the Startup Date and ending on
the last day of the calendar month preceding such Distribution Date and whose
denominator is the Cut-off Date Pool Balance.

                  "Cut-off Date": With respect to any Mortgage Loan other than a
Qualified Substitute Mortgage Loan, the later of (i) the date of origination of
such Mortgage Loan or (ii) the close of business on June 1, 2000. With respect
to any Qualified Substitute Mortgage Loan, the date designated as such on the
Mortgage Loan Schedule (as amended).

                  "Cut-off Date Loan Balance": As to any Mortgage Loan, the
outstanding, unpaid principal balance thereof as of the close of business on the
applicable Cut-off Date after giving effect to all scheduled principal payments
due, whether or not received, on or prior to the related Cut-off Date.

                  "Cut-off Date Loan Group Balance": With respect to each Loan
Group, the aggregate of the Cut-off Date Loan Balances of the Mortgage Loans in
such Loan Group.

                  "Cut-off Date Pool Balance": The aggregate of the Cut-off Date
Loan Balances of the Mortgage Loans.

                  "Definitive Certificates": As defined in Section 5.05 hereof.

                  "Deleted Mortgage Loan": A Mortgage Loan replaced or to be
replaced by one or more Qualified Substitute Mortgage Loans.

                  "Delinquency Advance":  As defined in Section 4.06(b) hereof.



                                        7

<PAGE>



                  "Delinquency Percentage": With respect to any Distribution
Date, the fraction, expressed as a percentage, the numerator of which is the
Aggregate Loan Balance of all Mortgage Loans that are 60 or more days
Delinquent, in foreclosure or relating to REO Properties as of the close of
business on the last day of the preceding calendar month, and the denominator of
which is the Aggregate Loan Balance of the Mortgage Loans as of the close of
business on the last day of the preceding calendar month.

                  "Delinquency Statistic Date":  May 31, 2000.

                  "Delinquent": A Mortgage Loan is "Delinquent" if any Monthly
Payment due thereon is not made by the close of business on the day such Monthly
Payment is scheduled to be due. A Mortgage Loan is "30 days Delinquent" if such
Monthly Payment has not been received by the close of business on the
corresponding day of the month immediately succeeding the month in which such
Monthly Payment was due, or, if there is no such corresponding day (E.G., as
when a 30- day month follows a 31-day month in which a payment was due on the
31st day of such month) then on the last day of such immediately succeeding
month, and similarly for "60 days Delinquent," "90 days Delinquent" and so on.

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

                  "Depository": The initial Depository shall be The Depository
Trust Company, whose nominee is Cede & Co., or any other organization registered
as a "clearing agency" pursuant to Section 17A of the Securities Exchange Act of
1934, as amended. The Depository shall initially be the registered Holder of the
Book-Entry Certificates. 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.

                  "Depository Agreement": With respect to any Book-Entry
Certificates, the agreement among the Depositor, the Trust Administrator and the
initial Depository, to be dated on or about June 29, 2000.

                  "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 any Distribution Date,
the close of business on the 15th day of the calendar month in which such
Distribution Date occurs or, if such 15th day is not a Business Day, the close
of business on 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 the Trust other than


                                        8

<PAGE>



through an Independent Contractor; provided, however, that the Trustee (or the
Master Servicer on behalf of the Trustee) shall not be considered to Directly
Operate an REO Property solely because the Trustee (or the Master 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 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 and (v) any other
Person so designated by the Trustee or the Trust Administrator based upon an
Opinion of Counsel that the holding of an ownership interest in a Class R
Certificate by such Person may cause REMIC I 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 Class R 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 Date": The 25th day of any calendar month, or if
such 25th day is not a Business Day, the Business Day immediately following such
25th day, commencing in July 2000.

                  "Due Date": With respect to each Mortgage Loan, the day of the
calendar month on which the Monthly Payment for such Mortgage Loan was due,
exclusive of any days of grace.

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

                  "Eligible Account": Either (A) a segregated account or
accounts maintained with an institution whose deposits are insured by the BIF or
the SAIF of the FDIC, the unsecured and uncollateralized long-term debt
obligations of which shall be rated "A" or better by Fitch, "A" or better by S&P
and "A2" or better by Moody's or the short-term debt obligations of which shall
be rated "F-1+" by Fitch, "P-1" by Moody's and in one of S&P's two highest
short-term rating categories by S&P, and which is any of (i) a federal savings
association duly organized, validly existing and in good standing under the
federal banking laws, (ii) an institution duly organized, validly existing and
in good standing under the applicable banking laws of any state, (iii) a
national banking association duly organized, validly existing and in good
standing under the federal banking laws, (iv) a principal subsidiary of a bank
holding company and (v) approved in writing by the Certificate Insurer or (B) a
segregated trust account maintained with the trust department of a federal


                                        9

<PAGE>



or state chartered depository institution or trust company, having capital and
surplus of not less than $100,000,000, acting in its fiduciary capacity. Any
Eligible Account maintained by the Trustee or the Trust Administrator shall
comply with the provisions of clause (B) hereof.

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

                  "Estate in Real Property": A fee simple estate or a leasehold
estate in a parcel of real property.

                  "Expense Adjusted Maximum Mortgage Rate": With respect to any
Group II Mortgage Loan that is an Adjustable Rate Mortgage Loan or REO Property,
the Maximum Mortgage Rate thereon (or, in the case of a Group II Mortgage Loan
that is a Fixed Rate Mortgage Loan, the Mortgage Rate) minus the sum of (i) the
Servicing Fee Rate, (ii) the Administrative Fee Rate and (iii) the per annum
rate at which the premium to the PMI Insurer is calculated multiplied by a
fraction the numerator of which is the aggregate Loan Balance of the Group II
Mortgage Loans that are covered under the PMI Policy and the denominator of
which is the aggregate Loan Balance of the Group II Mortgage Loans as of the
Cut-off Date.

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

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

                  "Final Recovery Determination": A determination by the Master
Servicer with respect to any defaulted Mortgage Loan or REO Property (other than
a Mortgage Loan purchased or replaced by the Seller or the Master Servicer
pursuant to Section 2.06 or 3.15(c) hereof) that all Net Recovery Proceeds and
other payments or recoveries that the Master Servicer, in its reasonable
judgment, expects to be finally recoverable have been recovered or that the
Master Servicer, in its reasonable judgment as evidenced by an Officers'
Certificate which accompanies the related Liquidation Report, believes the cost
of obtaining any additional recoveries would exceed the amount of such
recoveries. The Master Servicer shall maintain records, prepared by a Servicing
Officer, of each Final Recovery Determination.

                  "Fitch": Fitch, Inc., a corporation organized and existing
under the laws of the State of Delaware, and its successors, and, if such
corporation shall for any reason no longer perform the functions of a securities
rating agency, "Fitch" shall be deemed to refer to any other "nationally
recognized rating organization," as set forth on the most current list of such
organizations released by the Securities and Exchange Commission and designated
by the Certificate Insurer, notice of which designation shall be given to the
Trustee, the Trust Administrator and the Master Servicer by the Certificate
Insurer.

                  "Fixed Rate Mortgage Loan": Each of the Group I Mortgage Loans
and Group II Mortgage Loans identified in the Mortgage Loan Schedule as having a
Mortgage Rate that is fixed.



                                       10

<PAGE>



                  "Freddie Mac": Federal Home Loan Mortgage Corporation or any
successor thereto.

                  "Gross Margin": With respect to each Group II Mortgage Loan
that is an 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 Mortgage Loan.

                  "Group I Available Funds": With respect to any Distribution
Date and the Group I Mortgage Loans, an amount equal to (1) the sum of the
following amounts with respect to such Mortgage Loans (a) the aggregate of the
amounts on deposit in the Collection Account and Certificate 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 Certificate Account for such Distribution Date pursuant to
Section 3.22, (c) the aggregate of any amounts deposited in the Certificate
Account by the Master Servicer in respect of Prepayment Interest Shortfalls for
such Distribution Date pursuant to Section 3.23, (d) the aggregate of any
Delinquency Advances made by the Master Servicer for such Distribution Date
pursuant to Section 4.06 and (e) the aggregate of any advances made by the Trust
Administrator for such Distribution Date pursuant to Section 7.02(b), reduced
(to not less than zero) by (2) the sum of the following amounts with respect to
such Mortgage Loans (x) 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 Master
Servicer, the Trustee, the Seller or any Subservicer pursuant to Section 3.11 or
Section 3.12, (v) Stayed Funds and (vi) amounts deposited in the Collection
Account or the Certificate Account in error and (y) amounts reimbursable to the
Trust Administrator for an advance made pursuant to Section 7.02(b) which
advance the Trust Administrator has determined to be nonrecoverable from the
Stayed Funds in respect of which it was made.

                  "Group I Basic Principal Distribution Amount": With respect to
the Group I Certificates and any Distribution Date, the excess of (i) the
related Principal Remittance Amount for such Distribution Date over (ii) the
related OC Release Amount, if any, for such Distribution Date.

                  "Group I Certificates":  The Class A-1 Certificates.

                  "Group I Extra Principal Distribution Amount": With respect to
the Group I Certificates and any Distribution Date, the lesser of (x) the Group
I General Excess Available Amount for such Distribution Date and (y) the related
OC Deficiency Amount for such Distribution Date.



                                       11

<PAGE>



                  "Group I General Excess Available Amount": With respect to the
Group I Certificates and each Distribution Date, the amount, if any, by which
the related Available Funds for such Distribution Date exceeds the aggregate
amount distributed on such Distribution Date pursuant to subclauses (i) through
(vi) of clause I under Section 4.04(a).

                  "Group I Loan Balance": As of any date, the aggregate of the
Loan Balances of all Mortgage Loans in Loan Group I as of such date.

                  "Group I Mortgage Loan": A Mortgage Loan that is identified as
such on the Mortgage Loan Schedule.

                   "Group I Principal Distribution Amount": With respect to
Group I Certificates, and any Distribution Date (other than the final
Distribution Date), the sum of (i) the Group I Basic Principal Distribution
Amount and (ii) the Group I Extra Principal Distribution Amount.

                  "Group II Available Funds": With respect to any Distribution
Date and the Group I Mortgage Loans, an amount equal to (1) the sum of the
following amounts with respect to such Mortgage Loans (a) the aggregate of the
amounts on deposit in the Collection Account and Certificate 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 Certificate Account for such Distribution Date pursuant to
Section 3.22, (c) the aggregate of any amounts deposited in the Certificate
Account by the Master Servicer in respect of Prepayment Interest Shortfalls for
such Distribution Date pursuant to Section 3.23, (d) the aggregate of any
Delinquency Advances made by the Master Servicer for such Distribution Date
pursuant to Section 4.06 and (e) the aggregate of any advances made by the Trust
Administrator for such Distribution Date pursuant to Section 7.02(b), reduced
(to not less than zero) by (2) the sum of the following amounts with respect to
such Mortgage Loans (x) 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 Master
Servicer, the Trustee, the Seller or any Subservicer pursuant to Section 3.11 or
Section 3.12, (v) Stayed Funds and (vi) amounts deposited in the Collection
Account or the Certificate Account in error and (y) amounts reimbursable to the
Trust Administrator for an advance made pursuant to Section 7.02(b) which
advance the Trust Administrator has determined to be nonrecoverable from the
Stayed Funds in respect of which it was made.

                  "Group II Basic Principal Distribution Amount": With respect
to the Group II Certificates and any Distribution Date, the excess of (i) the
related Principal Remittance Amount for such Distribution Date over (ii) the
related OC Release Amount, if any, for such Distribution Date.


                                       12

<PAGE>



                  "Group II Certificates":  The Class A-2 Certificates.

                  "Group II Extra Principal Distribution Amount": With respect
to the Group II Certificates and any Distribution Date, the lesser of (x) the
Group II General Excess Available Amount for such Distribution Date and (y) the
related OC Deficiency Amount for such Distribution Date.

                  "Group II General Excess Available Amount": With respect to
the Group II Certificates and each Distribution Date, the amount, if any, by
which the related Available Funds for such Distribution Date exceeds the
aggregate amount distributed on such Distribution Date pursuant to subclauses
(i) through (vi) of clause II under Section 4.04(a).

                  "Group II Loan Balance": As of any date, the aggregate of the
Loan Balances of all Mortgage Loans in Loan Group II as of such date.

                  "Group II Mortgage Loan": A Mortgage Loan that is identified
as such on the Mortgage Loan Schedule.

                  "Group II Principal Distribution Amount": With respect to the
Group II Certificates and any Distribution Date (other than the final
Distribution Date), the sum of (i) the Group II Basic Principal Distribution
Amount and (ii) the Group II Extra Principal Distribution Amount.

                  "Independent": When used with respect to any specified Person,
any such Person who (i) is in fact independent of the Depositor, the Master
Servicer, the Subservicer and the Underwriters, (ii) does not have any direct
financial interest or any material indirect financial interest in the Depositor,
the Master Servicer, the Underwriters, the Subservicer or in any affiliate of
any of them, and (iii) is not connected with the Depositor, the Master Servicer,
the Subservicer or the Underwriters as an officer, employee, promoter,
underwriter, trustee, partner, director or Person performing similar functions.

                  "Independent Contractor": Either (i) any Person (other than
the Master Servicer and the Depositor) that would be an "independent contractor"
with respect to the Trust within the meaning of Section 856(d)(3) of the Code if
the Trust were a real estate investment trust (except that the ownership tests
set forth in that section shall be considered to be met by any Person that owns,
directly or indirectly, 35 percent or more of any Class of Certificates), so
long as the Trust does not receive or derive any income from such Person and
provided that the relationship between such Person and the Trust 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 Master Servicer and the Depositor), if the
Trustee, the Trust Administrator and the Certificateholders have each 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 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


                                       13

<PAGE>



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 Group II Mortgage Loan that is
an Adjustable Rate Mortgage Loan and each related Adjustment Date, the average
of the interbank offered rates for six- 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.

                  "Initial Certificate Principal Balance": With respect to any
Regular Certificate, the amount so indicated on the face thereof.

                  "Insurance Agreement": The Insurance and Indemnity Agreement
dated as of June 29, 2000 among the Certificate Insurer, the Depositor, the
Seller and New Century.

                  "Insurance Premium": With respect to any Distribution Date and
each Certificate Group, the product of (x) the aggregate Certificate Principal
Balance of the related Class A Certificates, after taking into account all
distributions to be made on such Distribution Date, and (y) one-twelfth of the
Premium Rate for such Class A Certificates.

                  "Insurance Proceeds": Proceeds of any title policy, hazard
policy or other insurance policy covering a Mortgage Loan, to the extent such
proceeds are received by the Master Servicer and are not to be applied to the
restoration of the related Mortgaged Property or released to the Mortgagor in
accordance with Accepted Servicing Procedures, subject to the terms and
conditions of the related Mortgage Note and Mortgage.

                  "Insured Distribution Amount": With respect to any
Distribution Date, the sum of (i) the aggregate of the Interest Distribution
Amounts and (ii) the OC Deficit, if any for such Distribution Date.

                  "Insured Payment": As of any Distribution Date, any Available
Funds Shortfall.

                  "Interest Determination Date": With respect to the Class A-2
Certificates and each Accrual Period after the initial Accrual Period, the
second LIBOR Business Day preceding the commencement of such Accrual Period.

                  "Interest Distribution Amount": With respect to any
Distribution Date and the Class A Certificates, the interest accrued during the
related Accrual Period on the related Class Certificate Principal Balance at the
related Pass-Through Rate (less the sum of any Prepayment Interest Shortfalls
not covered by the Servicing Fee and any shortfalls in interest resulting from
the application of the Civil Relief Act, in each case that are allocable to such
Class), plus any Interest Distribution Amount for that Class remaining unpaid
from the previous Distribution Date.



                                       14

<PAGE>



                  "Interest Remittance Amount": With respect to a Loan Group and
any Distribution Date and related Master Servicer Remittance Date, the aggregate
amount of all scheduled interest payments due on the Mortgage Loans in the
related Loan Group during the related Due Period, which were either collected or
advanced, net of the related Servicing Fee thereon, plus the aggregate amount of
the Prepayment Interest Shortfalls resulting from Principal Prepayments during
the related Prepayment Period to the extent required to be paid by the Master
Servicer pursuant to Section 3.23.

                  "Late Collection": With respect to any Mortgage Loan and the
Monthly Payment due thereon during any Due Period, all amounts received
subsequent to the Determination Date immediately following such Due Period,
whether as a late payment of such Monthly Payment or as Insurance Proceeds,
Liquidation Proceeds or otherwise, which represent the late payment or
collection of such Monthly Payment.

                  "Late Payment Rate": For any date of determination, the lesser
of (i) the greater of (a) the highest rate of interest on any outstanding Class
of Certificates, and (b) the rate of interest set forth in the Eastern Edition
of THE WALL STREET JOURNAL in its "Money Rates" section as the "prime rate" on
the first Business Day preceding such date of determination that such rate is so
published plus 2% and (ii) the maximum rate permissible under any applicable law
limiting interest rates. The Late Payment Rate shall be computed on the basis of
a year of 360 days calculating the actual number of days elapsed.

                  "LIBOR Business Day": Any day on which banks in London,
England and The City of New York are open and conducting transactions in foreign
currency and exchange.

                  "Liquidation Proceeds": The amount (other than Insurance
Proceeds) received by the Master Servicer or Subservicer 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 or (ii) the liquidation of a defaulted Mortgage
Loan through a trustee's sale, foreclosure sale, REO Disposition or otherwise.

                  "Liquidation Report": The report in the form of Exhibit F
annexed hereto delivered by the Master Servicer pursuant to Section 3.15(e)
hereof.

                  "Loan Balance": With respect to each Mortgage Loan and any
date of determination, the Cut-off Date Loan Balance of such Mortgage Loan minus
all payments of scheduled principal due on or prior to such date of
determination, to the extent received or advanced, and all payments of
unscheduled principal received prior to the month of such date of determination,
minus the aggregate amount of any Cram Down Losses relating to such principal
balance and allocated thereto prior to such date; provided, however, that the
Loan Balance for any Mortgage Loan for which a Final Recovery Determination has
been made shall be zero as of the end of the month in which such Final Recovery
Determination was made, and at all times thereafter.

                  "Loan-to-Value Ratio": With respect to any Mortgage Loan, the
fraction, expressed as a percentage, the numerator of which is the Loan Balance
of the related Mortgage Loan on the date of origination of such Mortgage Loan or
the Loan Balance of such Mortgage Loan at the time


                                       15

<PAGE>



of purchase of such Mortgage Loan by the Depositor, and the denominator of which
is the Value of the related Mortgaged Property.

                  "Loan Group": Either Loan Group I or Loan Group II, as the
context may require.

                  "Loan Group Balance": Either the Group I Loan Balance or the
Group II Loan Balance, as the context may require.

                  "Loan Group I": At any time, the Group I Mortgage Loans in the
aggregate.

                  "Loan Group II": At any time, the Group II Mortgage Loans in
the aggregate.

                  "Majority Certificateholders": The Holders of Certificates
evidencing at least 51% of the Voting Rights.

                  "Master Servicer": New Century Mortgage Corporation, a
corporation organized under the laws of the State of California, or its
successor in interest, in its capacity as servicer of the Mortgage Loans, which
term shall also include any successor servicer appointed hereunder.

                  "Master Servicer Default": One or more of the events described
in Section 7.01 hereof.

                  "Master Servicer Information": Any information contained in a
Liquidation Report.

                  "Master Servicer Loss Test": With respect to any Distribution
Date, a test that is satisfied if the Cumulative Loss Percentage for such
Distribution Date does not exceed the percentage below that corresponds to the
period (including the beginning and ending dates thereof) in which the last day
of the calendar month preceding such Distribution Date falls:


                                                             Cumulative Loss
                      Period                                    Percentage
                      ------                                    ----------
         June 1, 2000    -    May 31, 2001                        1.25%
         June 1, 2001    -    May 31, 2002                        2.25%
         June 1, 2002    -    May 31, 2003                        2.50%
         June 1, 2003    -    May 31, 2004                        2.85%
         June 1, 2004 and thereafter                              3.45%

                  "Master Servicer Remittance Date": With respect to any
Distribution Date, the 18th day of the month of such Distribution Date (or, if
such day is not a Business Day, the next following Business Day).

                  "Master Servicer Termination Test": With respect to any
Distribution Date, a test which is satisfied if (x) the related Rolling
Delinquency Percentage is less than 12.00% on or prior


                                       16

<PAGE>



to the 18th Distribution Date, and 14.00% thereafter, (y) the Master Servicer
Loss Test for such Distribution Date is satisfied and (z) the related Annual
Loss Percentage is not greater than 1.50%.

                  "Maximum Mortgage Rate": With respect to each Group II
Mortgage Loan that is an Adjustable Rate Mortgage Loan, the percentage set forth
in the related Mortgage Note as the maximum Mortgage Rate thereunder.

                  "Minimum Mortgage Rate": With respect to each Group II
Mortgage Loan that is an Adjustable Rate Mortgage Loan, the percentage set forth
in the related Mortgage Note as the minimum Mortgage Rate thereunder.

                  "Maximum Pass-Through Rate": With respect to the Class A-2
Certificates and any Distribution Date, a rate per annum equal to the weighted
average of the Expense Adjusted Maximum Mortgage Rates on the then outstanding
Group II Mortgage Loans, weighted based on their Loan Balances as of the first
day of the calendar month preceding the month in which the Distribution Date
occurs multiplied by a fraction, the numerator of which is 30 and the
denominator of which is the actual number of days elapsed in the related Accrual
Period.

                   "Monthly Payment": With respect to any Mortgage Loan, the
scheduled monthly payment of principal and interest on such Mortgage Loan which
is payable by a Mortgagor from time to time under the related Mortgage Note,
determined after giving effect to any reduction in the amount of interest
collectible from the related Mortgagor as a result of the application of the
Civil Relief Act.

                  "Moody's": Moody's Investors Service, Inc., a corporation
organized and existing under the laws of the State of Delaware, and its
successors, and, if such corporation shall for any reason no longer perform the
functions of a securities rating agency, "Moody's" shall be deemed to refer to
any other "nationally recognized rating organization," as set forth on the most
current list of such organizations released by the Securities and Exchange
Commission and designated by the Certificate Insurer, notice of which
designation shall be given to the Trustee, the Trust Administrator and the
Master Servicer by the Certificate Insurer.

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

                  "Mortgage File": The mortgage documents listed in Section 2.04
hereof 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 sold, transferred and
assigned to the Trustee and delivered to the Trust Administrator pursuant to
Section 2.02 and Section 2.06 hereof as from time to time is held as a part of
REMIC I, the Mortgage Loans so held being identified in the Mortgage Loan
Schedule. Any mortgage loan which, although intended by the parties hereto to
have been, and which purportedly was, sold to the Trustee by the Depositor (as
indicated by the Mortgage


                                       17

<PAGE>



Loan Schedule), that in fact was not transferred and assigned to the Trustee and
delivered to the Trust Administrator for any reason whatsoever, shall
nevertheless be considered a "Mortgage Loan" for all purposes of this Agreement.
As applicable, "Mortgage Loan" shall be deemed to refer to the related REO
Property.

                  "Mortgage Loan Purchase Agreement": The mortgage loan purchase
agreement, dated June 27, 2000, among the Seller, the Originator and the
Depositor, a form of which is attached hereto as Exhibit C.

                  "Mortgage Loan Schedule": As of any date, the list of Mortgage
Loans included in the Trust on such date, separately identifying the Group I
Mortgage Loans and the Group II Mortgage Loans, attached hereto as Exhibit J (as
such list may be amended from time to time), which list shall set forth the
following information with respect to each Mortgage Loan:

                  (i)      the loan number;

                  (ii)     the Mortgagor's name;

                  (iii)    the street address of the Mortgaged Property,
                           including the city, state and five-digit ZIP code;

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

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

                  (vi)     the occupancy status;

                  (vii)    the original term to stated maturity;

                  (viii)   as of the Cut-off Date, the remaining number of
                           months to stated maturity;

                  (ix)     the original principal balance of the Mortgage Loan;

                  (x)      as of the Delinquency Statistic Date, the paid
                           through date;

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

                  (xii)    the Cut-off Date Loan Balance;

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

                  (xiv)    the stated maturity date;



                                       18

<PAGE>



                  (xv)     with respect to each Group II Mortgage Loan that is
                           an Adjustable Rate Mortgage Loan, the Adjustment
                           Date;

                  (xvi)    with respect to each Group II Mortgage Loan that is
                           an Adjustable Rate Mortgage Loan, the Gross Margin

                  (xvii)   with respect to each Group II Mortgage Loan that is
                           an Adjustable Rate Mortgage Loan, the Maximum
                           Mortgage Rate;

                  (xviii)  with respect to each Group II Mortgage Loan that is
                           an Adjustable Rate Mortgage Loan, the Minimum
                           Mortgage Rate;

                  (xix)    with respect to each Group II Mortgage Loan that is
                           an Adjustable Rate Mortgage Loan, the Periodic Rate
                           Cap and the maximum first Adjustment Date Mortgage
                           Rate adjustment;

                  (xx)     with respect to each Group II Mortgage Loan that is
                           an Adjustable Rate Mortgage Loan, the first
                           Adjustment Date immediately following the Cut-off
                           Date;

                  (xxi)    with respect to each Group II Mortgage Loan that is a
                           Fixed Rate Mortgage Loan, the Mortgage Rate

                  (xxii)   the Due Date;

                  (xxiii)  the Value, if available;

                  (xxiv)   the first payment date;

                  (xxv)    the purpose of the Mortgage Loan, if available; and

                  (xxvi)   the Originator's loan grade.

Such schedule shall also set forth the total of the amounts described under
(xii) above for all of the Mortgage Loans as of the specified date. Such
schedule may be in the form of more than one list, which list or lists may have
one or more attachments, collectively setting forth all of the information
required. Such list of information contained in a Mortgage Loan Schedule shall
also be provided to the Trustee and the Trust Administrator in a
computer-readable format on a tape or disk. The Mortgage Loan Schedule shall be
amended from time to time by the Trust Administrator in accordance with Sections
2.06 and 2.12 hereof. With respect to any Qualified Substitute Mortgage Loan,
the amounts described in clauses (viii) and (xii), shall also be set forth as of
the date of substitution.



                                       19

<PAGE>



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

                  "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.

                  "Mortgage Rate": With respect to each Mortgage Loan, the
annual rate at which interest accrues on such Mortgage Loan (subject to any
reduction in such rate resulting from an order issued by a court of appropriate
jurisdiction in an insolvency proceeding), as provided in the related Mortgage
Note and as shown or described on the Mortgage Loan Schedule, which rate in the
case of the Group II Mortgage Loans that are 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 to the nearest 0.125% 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 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.

                  "Mortgagor":  The obligor or obligors on a Mortgage Note.

                  "Net Mortgage Rate": With respect to each Mortgage Loan, a
rate of interest per annum equal to the Mortgage Rate minus the Servicing Fee
Rate and, if the Mortgage Loan is covered by the PMI Policy, the per annum rate
at which the premium with respect to such Mortgage Loan to the PMI Insurer is
calculated.

                  "Net Recovery Proceeds": The amount of any gross Insurance
Proceeds or Liquidation Proceeds received with respect to any Mortgage Loan
minus the sum of (i) all unreimbursed Servicing Advances and Delinquency
Advances, if any, with respect to such Mortgage Loan, (ii) without duplication,
all accrued and unpaid Servicing Fees, if any, and (iii) without duplication,
liquidation expenses.

                  "Net WAC Cap": With respect to any Distribution Date and
Certificate Group, an amount equal to (A) the average of the Mortgage Rates of
the Related Loan Group as of the first day of the month preceding the month of
such Distribution Date (or, in the case of the first Distribution Date, the
Closing Date), weighted on the basis of the related Loan Balances as of the
first day of the related Prepayment Period (after application of scheduled
payments due on such day whether or not received), MINUS (B) the sum of (i) the
Servicing Fee Rate, (ii) the Administrative Fee Rate, (iii) the product of (x)
the Premium Rate and (y) a fraction, the numerator of which is the aggregate
Certificate Principal Balance of the Certificates in such Certificate Group
immediately prior to such


                                       20

<PAGE>



Distribution Date and the denominator of which is the aggregate outstanding Loan
Balance of the Mortgage Loans in the related Loan Group as of the first day of
the month preceding the month of such Distribution Date (after application of
scheduled payments due on such day whether or not received), (iv) the fraction,
expressed as a percentage, the numerator of which is 12 times the amount of the
premium due on the PMI Policy in respect of Mortgage Loans in the related Loan
Group (including any premium tax payable under Section 4.04) and the denominator
of which is the aggregate outstanding Loan Balance of the Mortgage Loans in the
related Loan Group as of the first day of the month preceding the month of such
Distribution Date (after application of scheduled payments due on such day,
whether or not received and (v) in the case of the Group II Certificates, 0.50%.

         Notwithstanding the foregoing, the Net WAC Cap for purposes of
calculating the Pass- Through Rate on the Class A-2 Certificates for any
Distribution Date is an amount equal to (i) the Net WAC Cap for Certificate
Group 2 calculated as provided above, multiplied by (ii) a fraction, the
numerator of which is 30 and the denominator of which is the actual number of
days elapsed in the related Accrual Period.

                  "New Century": New Century Mortgage Corporation, a corporation
organized under the laws of the State of California, or its successor in
interest, in its capacity as the Originator of the Mortgage Loans.

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

                  "Nonrecoverable Delinquency Advance": Any Delinquency Advance
(x) previously made and not previously reimbursed to the Master Servicer or (y)
proposed to be made in respect of a Mortgage Loan or REO Property that the
Master Servicer determines will not, or, in the case of a proposed Delinquency
Advance, would not, be recovered from Late Collections, Insurance Proceeds or
Liquidation Proceeds on such Mortgage Loan or REO Property.

                  "Nonrecoverable Servicing Advance": Any Servicing Advance (x)
previously made and not previously reimbursed to the Master Servicer or (y)
proposed to be made in respect of a Mortgage Loan or REO Property that the
Master Servicer determines will not, or, in the case of a proposed Servicing
Advance, would not, be recovered from Late Collections, Insurance Proceeds or
Liquidation Proceeds on such Mortgage Loan or REO Property.

                  "Notice":  As defined in Section 4.02.

                  "OC Deficiency Amount": With respect to any Distribution Date
and each Certificate Group, the amount, if any, by which the related OC Target
Amount exceeds the related Overcollateralized Amount on such Distribution Date
(after giving effect to distributions in respect of the Group I Basic Principal
Distribution Amount or the Group II Basic Principal Distribution Amount, as
applicable, on such Distribution Date).


                                       21

<PAGE>




                  "OC Deficit": With respect to any Distribution Date, the
amount by which (a) the aggregate Certificate Principal Balance of the Offered
Certificates (after giving effect to all distributions to be made thereon on
such Distribution Date other than any portion thereof consisting of an Insured
Payment in respect of an OC Deficit) exceeds (b) the Aggregate Loan Balance on
the last day of the immediately preceding Due Period.

                  "OC Release Amount": With respect to each Certificate Group
and any Distribution Date, the lesser of (x) the related Principal Remittance
Amount for such Distribution Date and (y) the excess, if any, of (i) the related
Overcollateralized Amount for such Distribution Date, assuming that 100% of the
related Principal Remittance Amount is applied as a principal payment on the
related Certificate Group on such Distribution Date over (ii) the related OC
Target Amount for such Distribution Date.

                  "OC Stepdown Date":  The Distribution Date in December 2002.

                  "OC Target Amount": With respect to any Distribution Date and
either Certificate Group, an amount equal to 3.65% of the related Cut-off Date
Loan Group Balance (3.80% of the related Cut-off Date Loan Group Balance after
the second Distribution Date if a Back-Up Servicing Agreement with a Back-Up
Servicer satisfactory to the Certificate Insurer has not been executed by the
Master Servicer), plus, in the case of Certificate Group II, the Spread Squeeze
Amount, if any, subject to the following:

                  (A) if the Step Up Trigger has occurred, the OC Target Amount
                  with respect to each Certificate Group for such Distribution
                  Date will be the greater of the amount calculated as set forth
                  above and the aggregate of the Loan Balances of all Mortgage
                  Loans 60 days or more Delinquent in the related Loan Group and

                  (B) if the Step Down Trigger has occurred, the OC Target
                  Amount with respect to each Certificate Group for such
                  Distribution Date will be an amount equal to the product of

                           (I) the greater of (1) the greater of (x) 0.50% of
                           the Cut-off Date Pool Balance and (y) the aggregate
                           Loan Balance, as of such Distribution Date, of the
                           three largest outstanding Mortgage Loans and (2) the
                           lesser of (x) the amount calculated pursuant to
                           clause (i) above and (y) the Stepped Down Required
                           Overcollateralized Amount for such Certificate Group
                           for such Distribution Date.

                  "Offered Certificates": The Class A-1 Certificates and the
Class A-2 Certificates.

                  "Officers' Certificate": With respect to the Depositor or the
Master Servicer, a certificate signed by the Chairman of the Board, the
President or a Vice President (however


                                       22

<PAGE>



denominated), and by the Treasurer, the Secretary, an assistant treasurer or an
assistant secretary (however denominated) of the Depositor or the Master
Servicer, as the case may be.

                  "One-Month LIBOR": With respect to any Distribution Date after
the first Distribution Date and the related Accrual Period for the Class A-2
Certificates, will equal the interbank offered rate for one-month United States
dollar deposits in the London market as quoted on Telerate Page 3750 as of 11:00
A.M., London time, on the related Interest Determination Date.
"Telerate Page 3750" means the display designated as page 3750 on the Telerate
Service (or such other page as may replace page 3750 on that service for the
purpose of displaying London interbank offered rates of major banks). If such
rate does not appear on such page (or such other page as may replace that page
on that service, or if such service is no longer offered, such other service for
displaying LIBOR or comparable rates as may be selected by the Trust
Administrator after consultation with the Master Servicer), the rate will be the
Reference Bank Rate. The "Reference Bank Rate" will be determined on the basis
of the rates at which deposits in U.S. dollars are offered by the reference
banks (which shall be three major banks that are engaged in transactions in the
London interbank market, selected by the Trust Administrator after consultation
with the Master Servicer) as of 11:00 A.M., London time, on the applicable
Interest Determination Date to prime banks in the London interbank market for a
period of one month in amounts approximately equal to the aggregate Certificate
Principal Balance of the Class A-2 Certificates. The Trust Administrator will
request the principal London office of each of the reference banks to provide a
quotation of its rate. If at least two such quotations are provided, the rate
will be the arithmetic mean of the quotations. If on such date fewer than two
quotations are provided, the rate will be the arithmetic mean of the rates
quoted by one or more major banks in New York City, selected by the Trust
Administrator after consultation with the Master Servicer, as of 11:00 A.M., New
York City time, on such date for loans in U.S. dollars to leading European banks
for a period of one month in amounts approximately equal to the aggregate
Certificate Principal Balance of the Class A-2 Certificates. If no such
quotations can be obtained, the rate will be equal to One-Month LIBOR for the
prior Distribution Date; provided that if One-Month LIBOR for an Accrual Period
would be based on One-Month LIBOR for the previous Accrual Period for three
consecutive Accrual Periods, then the Trust Administrator shall select a
comparable alternative index (over which the Trust Administrator has no control)
used for determining one-month Eurodollar lending rates that is calculated and
published (or otherwise made available) by an independent third party.

                  With respect to the first Distribution Date and the related
Accrual Period for the Class A-2 Certificates, 6.67375% per annum.

                  "Opinion of Counsel": A written opinion of counsel, who
(unless such Opinion of Counsel is required to be an Independent Opinion of
Counsel) may be counsel for the Depositor, the Trustee, the Trust Administrator,
the Master Servicer or the Certificate Insurer (including, except as otherwise
expressly provided in this Agreement, the in-house general counsel for the
Master Servicer, the Depositor, the Trustee, the Trust Administrator, any
Certificateholder or the Certificate Insurer, as the case may be), and who shall
be reasonably acceptable to the parties to which such opinion is addressed;
except that any opinion of counsel relating to (a) qualification of REMIC I as


                                       23

<PAGE>



a REMIC or compliance with the REMIC Provisions must be an opinion of counsel
who is a tax counsel experienced in REMIC matters, and (b) the qualification of
any account required to be maintained pursuant to this Agreement as an Eligible
Account or the resignation of the Master Servicer pursuant to 6.04 hereof must
be delivered by an Independent counsel who is counsel experienced in federal
income tax matters.

                  "Order":  As defined in Section 4.02(e).

                  "Original Class Certificate Principal Balance": With respect
to the Class A Certificates, the corresponding amounts set forth opposite such
Class:

                           Class A-1:       $  86,926,000.00
                           Class A-2:       $120,008,000.00

                  "Originator": New Century Mortgage Corporation, in its
capacity as Originator under the Mortgage Loan Purchase Agreement.

                  "OTS":  The Office of Thrift Supervision or any successor.

                  "Overcollateralized Amount": For any Distribution Date and
each Certificate Group, the amount (which may be negative) by which (i) the
Related Loan Group Balance on the last day of the immediately preceding Due
Period exceeds (ii) the aggregate of the Class Certificate Principal Balances of
such Certificate Group as of such Distribution Date after giving effect to
distributions of the Group I Basic Principal Distribution Amount or Group II
Basic Principal Distribution Amount, as applicable, to be made thereon 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

                  "Pass-Through Rate": With respect to the Class A-1
Certificates and any Distribution Date on or before the Call Option Date, the
lesser of (a) 8.30% per annum and (b) the related Net WAC Cap. With respect to
the Class A-1 Certificates and any Distribution Date after the Call Option Date,
the lesser of (a) 8.80% per annum and (b) the related Net WAC Cap. With respect
to the Class A-2 Certificates and any Distribution Date on or before the Call
Option Date, the rate per annum equal to the lesser of (a) One-Month LIBOR plus
0.28% and (b) the related Net WAC Cap. With respect to the Class A-2
Certificates and any Distribution Date after the Call Option Date, the lesser of
(a) One-Month LIBOR plus 0.56% and (b) the related Net WAC Cap.

                  "Percentage Interest": With respect to any Certificate (other
than a Class R Certificate), a fraction, expressed as a percentage, the
numerator of which is the Initial Certificate Principal Balance represented by
such Certificate and the denominator of which is the Original Class Certificate
Principal Balance of the related Class. With respect to a Class R Certificate,
the portion


                                       24

<PAGE>



of the Class evidenced thereby, expressed as a percentage, as stated on the face
of such Certificate; provided, however, that the sum of all such percentages for
the Class R Certificates totals 100%.

                  "Periodic Rate Cap": With respect to each Group II Mortgage
Loan that is an 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": As used herein, Permitted Investments
shall include the following:

         (i) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of 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,
Federal Housing Administration debentures, Freddie Mac senior debt obligations,
and Fannie Mae senior debt obligations, but excluding any of such securities
whose terms do not provide for payment of a fixed dollar amount upon maturity or
call for redemption;

         (ii) federal funds, certificates of deposit, time and demand deposits
and banker's acceptances (in each case having original maturities of not more
than 365 days) of any bank or trust company incorporated under the laws of the
United States or any state thereof, provided that the short-term debt
obligations of such bank or trust company at the date of acquisition thereof
have been rated "F-1+" by Fitch, if rated by Fitch, "A-1+" by S&P and "Prime-1"
or better by Moody's;

         (iii) deposits of any bank or savings association which has combined
capital, surplus and undivided profits of at least $100,000,000 which deposits
are held up to the applicable limits insured by the BIF or the SAIF of the FDIC
and a rating, with respect to its long-term, unsecured debt obligations, of "A"
or better by Fitch, if rated by Fitch, "A" or better by S&P and "A2" or better
by Moody's;

         (iv) commercial paper (having original maturities of not more than 180
days) rated "F-1+" by Fitch, if rated by Fitch, "A-1+" by S&P and "Prime-1" or
better by Moody's;

         (v) investments in money market funds rated "AAA" by Fitch, if rated by
Fitch, "AAAm" or "AAAm-G" by S&P and "Aaa" by Moody's;

provided, however, that no instrument described hereunder shall evidence either
the right to receive (a) only interest with respect to 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; and
provided, further, that no instrument


                                       25

<PAGE>



described hereunder may be purchased at a price greater than par if such
instrument may be prepaid or called at a price less than its purchase price
prior to stated maturity. Permitted Investments shall mature not later than the
Business Day prior to the earliest date on which such monies may be needed to
make payments.

                  "Permitted Transferee": Any United States Person other than a
Disqualified Organization or an "electing large partnership" as defined in
Section 775 of the Code.

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

                  "PMI Insurer": Mortgage Guaranty Insurance Corporation, a
monoline private insurance company organized and created under the laws of the
State of Wisconsin, or its successors in interest.

                  "PMI Mortgage Loans": The list of Mortgage Loans insured by
the PMI Insurer attached hereto as Schedule 1.

                  "PMI Policy": The Primary Mortgage Insurance Policy No.
04-307-4-2944 with respect to the PMI Mortgage Loans and all endorsements
thereto dated the Closing Date, issued by the PMI Insurer.

                  "Policy": The Financial Guaranty Insurance Policy No. 50950-N
and all endorsements thereto, dated the Closing Date, issued by the Certificate
Insurer to the Trustee for the benefit of the Holders of the Offered
Certificates, in the form attached hereto as Exhibit I.

                  "Policy Payments Account": As defined in Section 4.02(b)
hereof.

                  "Preference Amount": Any amount previously distributed to the
Offered Certificates that is avoided as a preference pursuant to a final,
non-appealable order of a court of competent jurisdiction under applicable
bankruptcy, insolvency, receivership or similar law and that has been recovered,
or is sought to be recovered from the related Certificateholder by the receiver,
conservator, debtor-in-possession or trustee in bankruptcy, as the case may be.

                  "Premium Letter": The side letter among the Certificate
Insurer, the Depositor and New Century, dated the Closing Date.

                  "Premium Rate": For each class of Class A Certificates, the
rate set forth in the Premium Letter, plus the rate at which any Premium
Supplement (as defined in the Insurance Agreement) is due.

                  "Prepayment Assumption": As defined in the Prospectus
Supplement.


                                       26

<PAGE>



                  "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.

                  "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 Exhibit K (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 Shortfall": With respect to any Master
Servicer Remittance Date, for each Mortgage Loan that was the subject during the
preceding calendar month of a Principal Prepayment, an amount equal to the
excess, if any, of (i) a full month's interest on the amount of such Principal
Prepayment at a rate per annum equal to the Mortgage Rate (or at such lower rate
as may be in effect for such Mortgage Loan pursuant to application of the Civil
Relief Act) minus the Servicing Fee Rate over (ii) the amount of interest
actually remitted by the Mortgagor in connection with such Principal Prepayment
less the Servicing Fee for such Mortgage Loan in such month.

                  "Prepayment Period": With respect to any Distribution Date,
the calendar month preceding 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 subsequent to the prepayment.



                                       27

<PAGE>



                  "Principal Remittance Amount": With respect to each Loan Group
and any Distribution Date, the sum of (i) each scheduled payment of principal
collected or advanced on the related Mortgage Loans by the Master Servicer that
were due during the related Due Period, (ii) the principal portion of all
partial and full principal prepayments of such Mortgage Loans applied by the
Master Servicer during the related Prepayment Period, (iii) the principal
portion of all related Net Recovery Proceeds received during such Prepayment
Period, (iv) that portion of the Purchase Price, representing principal of any
repurchased Mortgage Loan in such Loan Group, deposited to the Collection
Account during such Prepayment Period, (v) the principal portion of any related
Substitution Shortfall Amount deposited in the Collection Account during such
Prepayment Period, and (vi) on the Distribution Date on which the Trust Fund is
to be terminated pursuant to Section 10.01, that portion of the Termination
Price, in respect of principal for such Loan Group.

                  "Prospectus Supplement": That certain Prospectus Supplement
dated June 27, 2000 relating to the public offering of the Class A Certificates.

                  "Purchase Price": With respect to any Mortgage Loan required
to be purchased pursuant to Section 2.06 hereof or Section 3.15(c) hereof and as
confirmed by an Officers' Certificate, an amount equal to the sum, without
duplication, of (i) 100% of the Loan Balance as of the end of the previous Due
Period (or, if such purchase occurs on the first day of any calendar month, as
of the end of such day), (ii) any unreimbursed Servicing Advances or Delinquency
Advances (and any previously reimbursed Non-Recoverable Advances) allocable to
such Mortgage Loan, (iii) interest from the date interest was last paid by the
Mortgagor through the day before the Due Date in the Due Period relating to the
Distribution Date in which the Purchase Price will be remitted at a rate per
annum equal to the applicable Net Mortgage Rate (or, if New Century is not the
Master Servicer at the time of such purchase, at the applicable Mortgage Rate),
to the extent such amounts are not already counted in (ii), (iv) in the event
the Mortgage Loan is required to be purchased pursuant to Section 2.06 hereof,
expenses reasonably incurred or to be incurred by the Master Servicer, the Trust
Administrator or the Trustee in respect of the breach or defect giving rise to
the purchase obligation, including any reasonable expenses arising out of the
enforcement of the purchase obligation and (v) the principal portion of any
scheduled monthly payment which was due during any previous Due Period for which
a Delinquency Advance was not made.

                  "Qualified Substitute Mortgage Loan": A mortgage loan
substituted for a Deleted Mortgage Loan pursuant to the terms of this Agreement
or the Mortgage Loan Purchase Agreement which must, on the date of such
substitution, (i) have an outstanding Loan Balance (when taken together with any
other Qualified Substitute Mortgage Loan substituted for such Deleted Mortgage
Loan), not in excess of and not substantially less than the Loan Balance of the
Deleted Mortgage Loan or Loans as of the date of substitution, (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) in the case of any
Group II Mortgage Loan that is an Adjustable Rate Mortgage Loan, have a Maximum
Mortgage Rate not less than the Maximum Mortgage Rate on the Deleted Mortgage
Loan, (iv) in the case of any Group II Mortgage Loan that is an Adjustable Rate
Mortgage Loan, have a Minimum Mortgage Rate not less than the Minimum Mortgage
Rate of the Deleted Mortgage Loan, (v) in the


                                       28

<PAGE>



case of any Group II Mortgage Loan that is an Adjustable Rate Mortgage Loan,
have a Gross Margin equal to the Gross Margin of the Deleted Mortgage Loan, (vi)
in the case of any Group II Mortgage Loan that is an 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 more than two years greater than nor more than two years less than
that of the Deleted Mortgage Loan (and in any event, not later than May 2030),
(viii) have a Loan-to-Value Ratio equal to or lower than the Loan-to-Value Ratio
of the Deleted Mortgage Loan, (ix) satisfy the criteria set forth from time to
time in the definition of "qualified replacement mortgage" at Section 860G(a)(4)
of the Code, (x) have the same lien priority as the Deleted Mortgage Loan, (xi)
comply as of the date of substitution with each representation and warranty set
forth in Section 3.01(ii) of the Mortgage Loan Purchase Agreement (xii) have the
same or better property type (determined in accordance with the definition of
Residential Dwelling herein) as the Deleted Mortgage Loan, (xiii) have the same
or better occupancy status, (xiv) be of the same or of a better credit quality
(determined in accordance with the New Century's credit underwriting guidelines)
as the Mortgage Loan being replaced,(xv) with respect to any Group I Mortgage
Loan, have a fixed Mortgage Rate and (xvi) be covered by the PMI Policy if the
Deleted Mortgage Loan was covered by the PMI Policy. In the event that one or
more mortgage loans are proposed to be substituted for one or more Deleted
Mortgage Loans, the Certificate Insurer may allow the tests set forth in clauses
(i), (ii), (vii) and (viii) above to be met on a weighted average basis or other
aggregate basis (based on the mortgage loans substituted in any one Due Period)
acceptable to the Certificate Insurer provided that any such substitution shall
not adversely affect the status of REMIC I as a REMIC.

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

                  "Realized Loss": As to any Mortgage Loan on which a Final
Recovery Determination has been made, the amount, if any, by which the Loan
Balance of such Mortgage Loan as of the end of the previous Due Period (or, if
such Final Recovery Determination is made on the first day of any calendar
month, as of the end of such day) exceeds the Net Recovery Proceeds allocable to
such Loan Balance for such Mortgage Loan.

                  "Record Date": With respect to each Distribution Date and the
Class A-1 Certificates, the last Business Day of the month immediately preceding
the month in which such Distribution Date occurs. With respect to each
Distribution Date and the Class A-2 Certificates for so long as they are
Book-Entry Certificates, the Business Day immediately preceding such
Distribution Date.

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

                  "Regular Certificate": Any Class A-1 Certificate or Class A-2
Certificate.

                  "Regular Certificateholder": Any Holder of a Regular
Certificate.



                                       29

<PAGE>



                  "Reimbursement Amount": As of any Distribution Date, the sum
of (x) (i) the aggregate of all Insured Payments previously received by the
Trust Administrator and not previously repaid to the Certificate Insurer
pursuant to pursuant to Section 4.04(a)(I)(v) or (II)(v) hereof plus (ii)
interest accrued on each Insured Payment not previously repaid calculated at a
rate equal to the Late Payment Rate from the date the Trust Administrator
received such Insured Payment, (y) (i) the amount of any Insurance Premium not
paid on the date due and (ii) interest on such amount at the Late Payment Rate
from the date such Insurance Premium was due to be paid and (z) (i) the amount
of any amounts owing and unpaid under the Insurance Agreement plus (ii) interest
on such amount from the date such amount became due at a rate equal to the Late
Payment Rate. The Certificate Insurer shall notify the Trustee, the Trust
Administrator and the Depositor of the amount of any Reimbursement Amount.

                  "Related Loan Group": With respect to the Group I
Certificates, Loan Group I; and with respect to the Group II Certificates, Loan
Group II.

                  "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 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, including the
PMI Policy, 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); (v) the Collection
Account, the Certificate Account 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 (i) 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 and (ii) the
Reserve Fund and any amounts on deposit therein from time to time and any
proceeds thereof.

                  "REMIC Provisions": Provisions of the federal income tax law
relating to real estate mortgage investment conduits which appear at Section
860A through 860G of Subchapter M of Chapter 1 of the Code, and related
provisions, and regulations and rulings promulgated thereunder, as the foregoing
may be in effect from time to time.

                  "Remittance Report": A report prepared by the Master Servicer
pursuant to Section 4.06(a) hereof.



                                       30

<PAGE>



                  "Rents from Real Property": With respect to any REO Property,
gross income of the character described in Section 856(d) of the Code.

                  "REO Disposition": The receipt by the Master Servicer of all
Liquidation Proceeds, Insurance Proceeds and other payments or recoveries
(including proceeds of a final sale) which the Master Servicer expects to be
finally recoverable from the sale or other disposition of the related REO
Property.

                  "REO Property": A Mortgaged Property acquired by the Master
Servicer in the name of the Trustee on behalf of the Certificateholders through
foreclosure or deed in lieu of foreclosure, as described in Section 3.22 hereof.

                  "Request for Release": A release signed by a Servicing
Officer, in the form of Exhibit D-1 or Exhibit D-2 attached hereto.

                  "Required Reserve Fund Balance":  $5,000.

                  "Required Reserve Fund Deposit": With respect to any
Distribution Date, the amount, if any, by which (i) the Required Reserve Fund
Balance exceeds (ii) the amount on deposit in the Reserve Fund immediately prior
to such date.

                  "Reserve Fund": A fund created pursuant to Section 4.10 of
this Agreement which shall be an asset of the Trust but which shall not be an
asset of REMIC I.

                  "Reserve Interest Rate": With respect to any Interest
Determination Date, the rate per annum that the Trust Administrator determines
to be either (i) the arithmetic mean (rounded upwards if necessary to the
nearest whole multiple of 1/16 of 1%) of the one-month United States dollar
lending rates which banks in The City of New York selected by the Trustee 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 Trust Administrator can determine no such arithmetic mean, the lowest
one-month United States dollar lending rate which such New York banks selected
by the Trust Administrator are quoting on such Interest Determination Date to
leading European banks.

                  "Residential Dwelling": Any one of the following: (i) a
detached or semi-detached single-family dwelling, (ii) a two- to four-unit
dwelling, (iii) a townhouse, or (iv) a unit in a condominium or a planned unit
development, none of which is a co-operative unit or a mobile home, but which
may be a pre-fabricated or manufactured unit affixed to a permanent foundation,
all in accordance with the New Century's underwriting guidelines.

                  "Responsible Officer": When used with respect to the Trustee
or the Trust Administrator, the Chairman or Vice Chairman of the Board of
Directors, the President, any vice president, any assistant vice president, the
Secretary, any assistant secretary, the Treasurer, any


                                       31

<PAGE>



assistant treasurer, the Controller and any assistant controller or any other
officer of the Trustee or the Trust Administrator, as the case may be,
customarily performing functions similar to those performed by any of the above
designated officers and also to whom, with respect to a particular matter, such
matter is referred because of such officer's knowledge of and familiarity with
the particular subject.

                  "Rolling Delinquency Percentage": With respect to any
Distribution Date, the average of the Delinquency Percentages as of the last day
of each of the three (or one or two, in the case of the first and second
Distribution Dates, respectively) preceding Due Periods.

                  "S&P": Standard & Poor's, a division of The McGraw-Hill
Companies, Inc., and its successors, and, if such division shall for any reason
no longer perform the functions of a securities rating agency, "S&P" shall be
deemed to refer to any other "nationally recognized rating organization," as set
forth on the most current list of such organizations released by the Securities
and Exchange Commission and designated by the Certificate Insurer, notice of
which designation shall be given to the Trustee, the Trust Administrator and the
Master Servicer by the Certificate Insurer.

                  "SAIF":  The Savings Association Insurance Fund of the FDIC.

                  "Seller": NC Capital Corporation, a corporation organized
under the laws of the State of California, or its successor in interest, in its
capacity as seller of the Mortgage Loans.

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

                  "Servicing Advances": The costs and expenses incurred by or on
behalf of the Master Servicer in connection with (i) the preservation,
restoration and protection of a Mortgaged Property or REO Property, (ii) any
enforcement or judicial proceedings, including foreclosures, (iii) the
management (including reasonable fees in connection therewith) and liquidation
of any REO Property and (iv) the payment of any taxes, assessments or insurance
premiums, and the performance of its obligations under Sections 3.01(b)(ii),
3.09, 3.13, 3.15(a) and 3.22 hereof.

                  "Servicing Fee": With respect to each Mortgage Loan and any
Due Period, an amount equal to one month's interest (or in the event of any
payment of interest which accompanies a Principal Prepayment in full made by the
Mortgagor during such calendar month, interest for the number of days covered by
such payment of interest) at the Servicing Fee Rate on the Loan Balance of such
Mortgage Loan at the beginning of such Due Period. A portion of such Servicing
Fee may be paid to any Subservicer as its servicing compensation.

                  "Servicing Fee Rate": A rate per annum equal to 0.50% minus
the Back-Up Servicing Fee, if any.



                                       32

<PAGE>



                  "Servicing Officer": Any officer of the Master Servicer or any
Subservicer involved in, or responsible for, the administration and servicing of
the Mortgage Loans, whose name and specimen signature appear on a list of
servicing officers furnished to the Trustee and the Trust Administrator by the
Master Servicer or such Subservicer, as such list may from time to time be
amended. There shall at no time be fewer than two Servicing Officers.

                  "Spread Percentage": For any Distribution Date, the product of

         (a)(x) the amount, if any, by which the Group II Available Funds for
         such Distribution Date exceeds the aggregate amount distributed on such
         Distribution Date pursuant to subclauses (i) through (vi) of clause I
         under Section 4.04(a), minus (y) any OC Release Amount for Certificate
         Group I for such Distribution Date and

         (b) twelve, divided by

         (c) the Group II Loan Balance as of the first day of the related
         Prepayment Period (after application of scheduled payments due on such
         day whether or not received).

                  "Spread Squeeze Amount": For any Distribution Date, the
greater of (a) zero and (b) the product of (i) 1.00%, in the case of the 1st
through the 18th Distribution Dates, 2.10%, in the case of the 19th through the
24th Distribution Dates, or 3.00% thereafter minus the Spread Percentage for
such Distribution Date, (ii) three and (iii) the Group II Loan Balance as of the
first day of the related Prepayment Period (after application of scheduled
payments due on such day whether or not received).

                  "Startup Date":  June 29, 2000.

                  "Stayed Funds": If the Master Servicer is the subject of a
proceeding under the federal Bankruptcy Code and the making of a Remittance (as
defined in Section 7.02(b)) is prohibited by Section 362 of the federal
Bankruptcy Code, funds that are in the custody of the Master Servicer, a trustee
in bankruptcy or a federal bankruptcy court and should have been the subject of
such Remittance absent such prohibition.

                  "Step Down Cumulative Loss Test": The Step Down Cumulative
Loss Test will be met with respect to a Distribution Date as follows: (i) for
the 31st through the 41st Distribution Dates, if the Cumulative Loss Percentage
for such Distribution Date is 1.60% or less; (ii) for the 42nd through the 53rd
Distribution Dates, if the Cumulative Loss Percentage for such Distribution Date
is 2.20% or less; (iii) for the 54th through the 65th Distribution Dates, if the
Cumulative Loss Percentage for such Distribution Date is 2.60% or less; and (iv)
for any Distribution Date after the 65th Distribution Date, if the Cumulative
Loss Percentage for such Distribution Date is 3.00% or less.



                                       33

<PAGE>



                  "Step Down Rolling Delinquency Test": The Step Down Rolling
Delinquency Test will be met with respect to a Distribution Date if the Rolling
Delinquency Percentage for such Distribution Date is 10.00% or less.

                  "Step Down Rolling Loss Test": The Step Down Rolling Loss Test
will be met with respect to a Distribution Date if the Annual Loss Percentage is
less than 1.00%.

                  "Step Down Trigger": For any Distribution Date after the OC
Stepdown Date, the Step Down Trigger will have occurred if each of the Step Down
Cumulative Loss Test, the Step Down Rolling Delinquency Test and the Step Down
Rolling Loss Test is met. In no event will the Step Down Trigger be deemed to
have occurred prior to the OC Stepdown Date.

                  "Step Up Claims Denial Test": The Step Up Claims Denial Test
will be met with respect to any Distribution Date if any of the following events
occurs (i) the PMI Insurer's financial strength is rated below "A" or is not
rated by S&P or the PMI Insurer's financial strength is rated below "A2"or is
not rated by Moody's, (ii) the cumulative losses as a result of claims denials
under the PMI Policy for the twelve calendar months preceding the Distribution
Date exceed 0.25% of the aggregate of the Loan Balances of the PMI Mortgage
Loans, as of the beginning of such twelve month period or (iii) the cumulative
losses as a result of claims denials under the PMI Policy exceed $425,000.

                  "Step Up Cumulative Loss Test": The Step Up Cumulative Loss
Test will be met with respect to a Distribution Date as follows: (i) for the 1st
through the 12th Distribution Dates, if the Cumulative Loss Percentage for such
Distribution Date is more than 1.00%; (ii) for the 13th through the 24th
Distribution Dates, if the Cumulative Loss Percentage for such Distribution Date
is more than 1.65%; (iii) for the 25th through the 36th Distribution Dates, if
the Cumulative Loss Percentage for such Distribution Date is more than 2.20%;
(iv) for the 37th through the 48th Distribution Dates, if the Cumulative Loss
Percentage for such Distribution Date is more than 2.75% and (v) for the 49th
Distribution Date and any Distribution Date thereafter, if the Cumulative Loss
Percentage for such Distribution Date is more than 3.50%.

                  "Step Up Rolling Delinquency Test": The Step Up Rolling
Delinquency Test will be met with respect to a Distribution Date if the Rolling
Delinquency Percentage for such Distribution Date is 18% or higher for the 1st
through the 18th Distribution Dates or 13.5% or higher for any subsequent
Distribution Date.

                  "Step Up Rolling Loss Test": The Step Up Rolling Loss Test
will be met with respect to a Distribution Date, if the Annual Loss Percentage
is equal to or more than 1.25%.

                  "Step Up Trigger": For any Distribution Date, the Step Up
Trigger will have occurred if any one of the Step Up Claims Denial Test, the
Step Up Cumulative Loss Test, the Step Up Rolling Delinquency Test or the Step
Up Rolling Loss Test is met.



                                       34

<PAGE>



                  "Stepped Down Required Overcollateralized Amount": For any
Distribution Date for which the Step Down Trigger has occurred in either
Certificate Group, the sum of

         (i) the product of

                  (a) the OC Target Amount for such Certificate Group for such
                  Distribution Date determined as if the Step Down Trigger had
                  not occurred, and

                  (b) a fraction, the numerator of which is six minus the number
                  of consecutive Distribution Dates through and including the
                  Distribution Date for which the Stepped Down Required
                  Overcollateralized Amount is being calculated, up to a maximum
                  of six, for which the Step Down Trigger has occurred, and the
                  denominator of which is six,

         (ii) the product of

                  (a) 7.30% of the related Loan Group Balance (7.60% of the
                  related Loan Group Balance if a Back-Up Servicing Agreement
                  with a Back-Up Servicer satisfactory to the Certificate
                  Insurer has not been executed by the Master Servicer) and

                  (b) one minus the fraction set forth in clause (i)(b) and

         (iii) in the case of Certificate Group II, the Spread Squeeze Amount.

                  "Subservicer": Any Person with which the Master Servicer has
entered into a Subservicing Agreement and which meets the qualifications of a
Subservicer pursuant to Section 3.02 hereof.

                  "Subservicing Account": An account established by a
Subservicer which meets the requirements set forth in Section 3.08 hereof and is
otherwise acceptable to the Master Servicer.

                  "Subservicing Agreement": The written contract between the
Master Servicer and a Subservicer or any successor Subservicer relating to
servicing and administration of certain Mortgage Loans as provided in Section
3.02 hereof.

                  "Substitution Shortfall Amount": As defined in Section 2.06(d)
hereof.

                  "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 due to its classification as a REMIC 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


                                       35

<PAGE>



Service or any other governmental taxing authority under any applicable
provisions of federal, state or local tax laws.

                  "Termination Price":  As defined in Section 10.01(b) hereof.

                  "Trust": New Century Home Equity Loan Trust, Series 2000-NCA,
the trust created hereunder.

                  "Trust Administrator": U.S. Bank, National Association, a
national banking association, or any successor trust administrator appointed as
herein provided.

                  "Trustee": Firstar Bank, N.A., a national banking association,
or any successor trustee appointed as herein provided.

                  "Underwriters": Greenwich Capital Markets, Inc. and Chase
Securities Inc., as underwriters with respect to the Offered Certificates.

                  "Uninsured Cause": Any cause of damage to a Mortgaged Property
such that the complete restoration of such property is not fully reimbursable by
application of the proceeds of the hazard insurance policies required to be
maintained pursuant to Section 3.13 hereof.

                  "United States Person or U.S. Person": A citizen or resident
of the United States, a corporation or partnership (including an entity treated
as a corporation or partnership for federal income tax purposes) created or
organized in, or under the laws of, the United States or any state thereof or
the District of Columbia (except, in the case of a partnership, to the extent
provided in regulations), an estate whose income is subject to United States
federal income tax regardless of its source, 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 such United States Persons have the authority to
control all substantial decisions of the trust. To the extent prescribed in
regulations by the Secretary of the Treasury, which have not yet been issued, a
trust which was in existence on August 20, 1996 (other than a trust treated as
owned by the grantor under subpart E of part I of subchapter J of chapter 1 of
the Code), and which was treated as a United States Person on August 20, 1996
may elect to continue to be treated as a United States Person notwithstanding
the previous sentence.

                  "Unpaid Basis Risk Shortfall": With respect to the Class A-2
Certificates and any Distribution Date, an amount equal to (i) the Basis Risk
Shortfall for the previous Distribution Date, plus (ii) the Unpaid Basis Risk
Shortfall for the previous Distribution Date, to the extent not paid on the
previous Distribution Date, plus (iii) interest accrued on the unpaid amount for
the most recently ended Accrual Period at the applicable Accrual Rate

                  "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, at the time of origination of the Mortgage Loan by an appraiser
who met the minimum requirements of Fannie Mae and


                                       36

<PAGE>



Freddie Mac and (b) the value thereof as determined by a review appraisal
conducted by the Master Servicer (in its capacity as originator of the Mortgage
Loan) in accordance with the Master Servicer'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
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 Master Servicer (in its capacity as originator of the
Mortgage Loan) in accordance with the Master Servicer'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, 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, at the
time of origination if the "lease option purchase price" was set 12 months or
more prior to origination.

                  "Voting Percentage": With respect to a Regular Certificate, a
fraction, expressed as a decimal, the numerator of which is the Certificate
Principal Balance represented by such Regular Certificate and the denominator of
which is the Class Certificate Principal Balance of the related Class. With
respect to a Class R Certificate, the Percentage Interest set forth on such
Certificate.

                  "Voting Rights": The portion of the voting rights of all of
the Certificates which is allocated to any Certificate. Except as otherwise
expressly provided for herein. At all times, the Class A Certificates shall have
99% of the Voting Rights and the Class R Certificates shall have 1% of the
Voting Rights; provided, however, that any Certificate registered in the name of
the Master Servicer, the Depositor, the Trust Administrator or the Trustee or
any of their respective affiliates shall not be included in the calculation of
Voting Rights; when none of the Regular Certificates are outstanding, 100% of
the Voting Rights shall be allocated to the Holders of the Class R Certificates
in accordance with such Holders' respective Percentage Interests in the
Certificates of such Class.

         Section 1.02.              Accounting.

                  Unless otherwise specified herein, for the purpose of any
definition or calculation, whenever amounts are required to be netted,
subtracted or added or any distributions are taken into account such definition
or calculation and any related definitions or calculations shall be determined
without duplication of such functions.

         Section 1.03.              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 for any Distribution Date, (1) with respect to the Class A-1
Certificates, the aggregate amount of any Prepayment Interest Shortfalls (to


                                       37

<PAGE>



the extent not covered by payments by the Master Servicer pursuant to Section
3.23) and any Relief Act Interest Shortfall incurred in respect of the Group I
Mortgage Loans for any Distribution Date shall be allocated to the Class A-1
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 of each such Certificate and (2) with respect to
the Class A-2 Certificates, the aggregate amount of any Prepayment Interest
Shortfalls (to the extent not covered by payments by the Master Servicer
pursuant to Section 3.23) and any Relief Act Interest Shortfall incurred in
respect of the Group II Mortgage Loans for any Distribution Date shall be
allocated to the Class A-2 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 of each such Certificate.

                                   ARTICLE II

                           ESTABLISHMENT OF THE TRUST;
                      PURCHASE AND SALE OF MORTGAGE LOANS;
                        ORIGINAL ISSUANCE OF CERTIFICATES

         Section 2.01.              Establishment of the Trust.

                  The Depositor does hereby establish, pursuant to the further
provisions of this Agreement and the laws of the State of New York, an express
trust to be known, for convenience, as "New Century Home Equity Loan Trust,
Series 2000-NCA" and does hereby appoint Firstar Bank, N.A., as Trustee in
accordance with the provisions of this Agreement and does hereby appoint U.S.
Bank National Association, as Trust Administrator to performance certain duties
in accordance with the provisions of this Agreement, in such capacity on behalf
of and as custodian or agent for the Trustee.

         Section 2.02.              Purchase and Sale of Mortgage Loans.

                  The Depositor, concurrently with the execution and delivery
hereof, does hereby sell, transfer, assign, set over and otherwise convey to the
Trustee without recourse, but subject to the terms of this Agreement, all right,
title and interest of the Depositor, including any security interest therein for
the benefit of the Depositor, in and to (i) the Mortgage Loans identified on the
Mortgage Loan Schedule delivered on the Closing Date, including, without
limitation, all scheduled principal and interest payments due after the
applicable Cut-off Date, (ii) the rights of the Depositor under the Mortgage
Loan Purchase Agreement and (iii) the other assets of REMIC I.

                  In consideration of such sale of the Mortgage Loans, the
Trustee shall issue to or upon the order of the Depositor, the Certificates.

         Section 2.03.              Grant of Security Interest.



                                       38

<PAGE>



                  In the event that any conveyance pursuant to Section 2.02
hereof is deemed by a court of competent jurisdiction to be a loan, the parties
intend that the Depositor shall be deemed to have granted to the Trustee on
behalf of the Certificateholders and the Certificate Insurer a security interest
in the related Mortgage Loans, including, without limitation, all interest
accrued thereon and that this Agreement shall constitute a security agreement
under applicable law. The Depositor, the Trust Administrator and the Trustee
shall, to the extent consistent with this Agreement, take such actions as may be
necessary to ensure that, if this Agreement were deemed to create a security
interest in the Mortgage Loans, such security interest would be deemed to be a
perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of the Agreement.

                  In furtherance of the foregoing, the Depositor hereby delivers
or causes to be delivered to the Trust Administrator, as custodian for the
Trustee, two Uniform Commercial Code Financing Statements covering REMIC I and
executed, in the first case, by the Seller as debtor in favor of the Depositor
as secured party and the Trustee as its assignee and, in the second case, by the
Depositor as debtor in favor of the Trustee. The Trust Administrator shall file,
or cause the Master Servicer to file, such financing statements promptly after
the Closing Date. The Trust Administrator, or the Trustee shall, at the expense
of the Master Servicer, prepare and file or cause the Master Servicer to file,
all filings necessary to maintain the effectiveness of such financing
statements, including (i) continuation statements and (ii) such other statements
as may be occasioned by any change of name of the Depositor, the Seller or the
Trustee or the change of location of the place of business or chief executive
office of the Depositor or the Seller.

                  Except as may otherwise expressly be provided herein, none of
the Depositor, the Master Servicer, the Trust Administrator or the Trustee shall
(and the Master Servicer shall ensure that no Subservicer shall) assign, sell,
dispose of or transfer any interest in REMIC I or any portion thereof, or permit
REMIC I or any portion thereof to be subject to any lien, claim, mortgage,
security interest, pledge or other encumbrance of any other Person.

                  In the event that the parties hereto have failed to transfer
the entire legal ownership in and to each Mortgage Loan to the Trustee on behalf
of the Certificateholders and the Certificate Insurer, the parties hereto intend
that this document operate to transfer the entire equitable ownership interest
in and to each Mortgage Loan to the Trustee on behalf of the Certificateholders.

         Section 2.04.              Document Delivery Requirements.

                  (a) In connection with the conveyance pursuant to Section 2.02
hereof, the Depositor does hereby agree to deliver to, and deposit with, the
Trust Administrator, as custodian for the Trustee (in which capacity the Trust
Administrator will, unless otherwise specified, be acting under this Article
II), no later than two Business Days prior to the Closing Date, the following
documents or instruments (with respect to each Mortgage Loan, a "Mortgage File")
so transferred and assigned:



                                       39

<PAGE>



                           (i) the original Mortgage Note, endorsed in blank or
in the following form: "Pay to the order of Firstar Bank, N.A., as Trustee under
the applicable agreement, without recourse", with all prior and intervening
endorsements showing a complete chain of endorsement from the originator of the
Mortgage Loan to the Trustee;

                           (ii) the original Mortgage with evidence of recording
thereon (or, if the original Mortgage has not been returned from the applicable
public recording office or is not otherwise available, a copy of the Mortgage
certified by a Responsible Officer of the Master Servicer, in its capacity as
originator of the Mortgage Loan, or by the closing attorney or by an officer of
the title insurer or agent of the title insurer which issued the related title
insurance policy or commitment therefor to be a true and complete copy of the
original Mortgage submitted for recording) and, if the Mortgage was executed
pursuant to a power of attorney, the original power of attorney with evidence of
recording thereon (or, if the original power of attorney has not been returned
from the applicable public recording office or is not otherwise available, a
copy of the power of attorney certified by a Responsible Officer of the Master
Servicer, in its capacity as originator of the Mortgage Loan, or by the closing
attorney or by an officer of the title insurer or agent of the title insurer
which issued the related title insurance policy or commitment therefor, to be a
true and complete copy of the original power of attorney submitted for
recording);

                           (iii) the original executed Assignment, acceptable
for recording except with respect to any currently unavailable recording
information, from the Depositor to the Trustee in the following form: "Firstar
Bank, N.A., as Trustee under the applicable agreement" or in blank;

                           (iv) the original Assignment and any intervening
Assignments, with evidence of recording thereon, showing a complete chain of
assignment from origination of the Mortgage Loan to the Depositor (or, if any
such Assignment has not been returned from the applicable public recording
office or is not otherwise available, a copy of such Assignment certified by a
Responsible Officer of the Master Servicer, in its capacity as originator of the
Mortgage Loan, or by the closing attorney or by an officer of the title insurer
or agent of the title insurer which issued the related title insurance policy or
commitment therefor to be a true and complete copy of the original Assignment
submitted for recording);

                           (v) the original, or a copy certified by the
Depositor or the originator of the Mortgage Loan to be a true and complete copy
of the original, of each assumption, modification, written assurance or
substitution agreement, if any; and

                           (vi) an original, or a copy certified by the
Depositor to be a true and complete copy of the original, of a lender's title
insurance policy, together with all endorsements or riders that were issued with
or subsequent to the issuance of such policy, insuring the priority of the
Mortgage as first lien on the Mortgaged Property represented therein as a fee
simple interest vested in the Mortgagor, or in the event such original title
policy is unavailable, a written commitment or uniform binder or preliminary
report of title issued by the title insurance or escrow company.



                                       40

<PAGE>



                  (b) With respect to any Mortgage referred to in Section
2.04(a)(ii) above as to which the original Mortgage is not available as of the
Closing Date, and with respect to any Assignment referred to in Section
2.04(a)(iii) or 2.04(a)(iv) above as to which the original Assignment is not
available as of the Closing Date, the Depositor shall deliver or cause to be
delivered, prior to the Closing Date, a copy of such Mortgage or such
Assignment, as the case may be, certified by the Master Servicer, in its
capacity as Originator, to be a true and complete copy, to the Trust
Administrator and shall also deliver the original Mortgage, or where the
original Mortgage is unavailable a copy thereof certified by the applicable
public recording office, and the original Assignment, or where the original
Assignment is unavailable a copy thereof certified by the applicable public
recording office, to the Trust Administrator within five (5) Business Days after
receipt thereof by or on behalf of the Depositor but in no event later than 360
days (or such longer period, as approved by the Certificate Insurer in writing
with respect to specific Mortgage Loans upon request made by or on behalf of the
Depositor) following the date of origination of the related Mortgage Loan or the
date of such Assignment to the Depositor, as the case may be. The failure of the
Depositor to deliver to the Trust Administrator (x) any original Mortgage under
Section 2.04(a)(ii) above (or where the original is unavailable a copy thereof
certified by the applicable public recording office) or (y) any original
Assignment under Section 2.04(a)(iii) above and (iv) (or where the original is
unavailable a copy thereof certified by the applicable public recording office)
shall not be deemed a breach of this Agreement for any purpose whatsoever until
the expiration of five (5) Business Days after receipt thereof by or on behalf
of the Depositor or such 360-day period (or such longer period, as approved by
the Certificate Insurer in writing with respect to specific Mortgage Loans upon
request made by or on behalf of the Depositor) whichever is shorter.

                  With respect to any lender's title insurance policy referred
to in Section 2.04(a)(vi) above, the Depositor agrees to deliver such documents
with respect to the Mortgage Loans to the Trust Administrator within 15 days
following the Closing Date.

                  The Trust Administrator shall promptly (and in no event later
than five (5) Business Days following the Closing Date) submit or cause to be
submitted for recording, at the Master Servicer's expense, in the appropriate
public office for real property records, each original Assignment referred to in
Section 2.04(a)(iii) above, as well as each original Assignment referred to in
Section 2.04(a)(iv) above that was not previously submitted for recording. With
respect to any original Assignment referred to in Section 2.04(a)(iii) above as
to which the related recording information is unavailable within five (5)
Business Days following the Closing Date, such original Assignment shall be
submitted for recording within five (5) Business Days after receipt of such
information but in no event later than 90 days (or such longer period, up to an
additional 90 days, as approved by the Certificate Insurer in writing with
respect to specific Mortgage Loans upon the request of the Depositor) after the
Closing Date. The Depositor shall deliver each recorded Assignment referred to
in Section 2.04(a)(iii) above or, where the original is unavailable, a copy
thereof certified by the applicable public recording office to be a true and
complete copy of the original, to the Trust Administrator no later than the
earlier of (i) five (5) Business Days after receipt thereof and (ii) within 360
days after the Closing Date (or such longer period, as approved by the
Certificate Insurer in writing with respect to specific Mortgage Loans upon the
request of the


                                       41

<PAGE>



Depositor). Any failure of the Depositor to deliver to the Trust Administrator,
prior to the expiration of five (5) Business Days after receipt thereof by the
Depositor or such 360-day period, whichever is shorter (or any such longer
period as the Certificate Insurer may have approved in accordance with the terms
set forth above), any such recorded Assignment, or such certified copy if such
recorded Assignment has not been received by it, shall not be deemed a breach of
this Agreement for any purpose. In the event that any such Assignment is lost or
returned unrecorded because of a defect therein, the Master Servicer shall
promptly prepare a substitute Assignment or cure such defect, as the case may
be, and thereafter cause each such Assignment to be duly recorded.

                  The Trust Administrator shall promptly upon receipt thereof
(and in any event no longer than 30 days following the Closing Date), with
respect to each Mortgage Note and Assignment delivered in blank in accordance
with Section 2.04(a)(i) and (iii) above, respectively, cause the Trustee to
endorse each such Mortgage Note and assign each such Assignment in the form
described therein.

                  Notwithstanding anything to the contrary in this Section 2.04,
the Trust Administrator need not cause to be recorded any Assignment which
relates to a Mortgage Loan in any jurisdiction under the laws of which, as
evidenced by an Opinion of Counsel delivered by the Depositor to the Trustee,
the Trust Administrator, the Certificate Insurer and the Rating Agencies, the
recordation of such assignment is not necessary to protect the Trustee's
interest in the related Mortgage Loan; provided, however, notwithstanding the
delivery of any Opinion of Counsel, each Assignment shall be submitted for
recording by the Master Servicer in the manner described above, at no expense to
REMIC I, the Trust Administrator or Trustee, upon the earliest to occur of: (i)
reasonable direction by Holders of Certificates entitled to at least 25% of the
Voting Rights or the Certificate Insurer, (ii) the occurrence of a Master
Servicer Default, (iii) the occurrence of a bankruptcy, insolvency or
foreclosure relating to the Master Servicer, (iv) the occurrence of a servicing
transfer as described in Section 7.02 hereof, (v) if New Century is not the
Master Servicer and 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.
Notwithstanding the foregoing (and without prejudice to any claim against the
Master Servicer for any such failure) if the Master Servicer fails to pay the
cost of recording the Assignments, such expense will be paid by the Trust
Administrator and the Trust Administrator shall be reimbursed for such expenses
by the Trust.

                  The Master Servicer shall promptly upon receipt thereof (and
in no event later than the earlier of (i) five (5) Business Days following such
receipt and (ii) 360 days after the Closing Date (or such longer period, as
approved by the Certificate Insurer in writing with respect to specific Mortgage
Loans upon the request of the Depositor)), deliver to the Trust Administrator
(a) the original recorded Mortgage in those instances where a certified copy
thereof was delivered to the Trust Administrator; (b) the original recorded
Assignment or Assignments showing a complete chain of assignment from the
Originator to the Depositor in those instances where certified copies thereof
were delivered to the Trust Administrator; (c) the original policy of title
insurance or a copy certified by the Depositor to be a true and complete copy in
those instances where a commitment (binder)


                                       42

<PAGE>



(including any marked additions thereto or deletions therefrom) to issue such
policy was delivered to the Trust Administrator and (d) 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.

                  In the event that the Certificate Insurer approves in writing
any extension of time for delivery of any document as provided for in this
Section 2.04(b), a copy of such written approval shall be sent to the Trustee,
the Trust Administrator and the Rating Agencies.

                  All original documents relating to the Mortgage Loans that are
not delivered to the Trust Administrator are and shall be held by the Depositor
or the Master 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 2.04 to be a part of
a Mortgage File, such document shall be delivered promptly to the Trust
Administrator. Any original document that is not required pursuant to the terms
of this Section to be a part of a Mortgage File delivered to or held by the
Trust Administrator shall be delivered promptly to the Master Servicer.

                  In connection with the delivery of documentation provided by
this Section 2.04, the Depositor hereby appoints each of the Trustee and the
Trust Administrator its attorney with full power and authority to act in its
stead for the purpose of executing and certifying assignments and endorsing and
certifying promissory notes which make a part of each Mortgage File to cure any
deficiencies in such documentation.

                  In addition to the foregoing, the Depositor shall cause the
Certificate Insurer to deliver on the Closing Date the Policy to the Trust
Administrator for the benefit of the Certificateholders.

                  If the Depositor has not delivered all required documentation
with respect to any Mortgage Loan within the time periods, if any, specified in
this Agreement (including, without limitation, the extension of time approved in
writing by the Certificate Insurer or any Rating Agency), the Depositor shall be
required to take action with respect to such Mortgage Loan as and to the extent
provided in Section 2.06 hereof.

         Section 2.05.              Acceptance by the Trustee.

                  The Trust Administrator, on behalf of the Trustee, agrees to
acknowledge (i) receipt by it on the Closing Date, in good faith without notice
of adverse claims, subject to the provisions of Sections 2.02 and 2.04 hereof
and to any exceptions noted on the Trust Administrator's certification in the
form annexed hereto as Exhibit E-1 to be delivered to the Depositor, the Master
Servicer, the Trustee and the Certificate Insurer on the Closing Date, of (x)
the documents referred to in Section 2.04(a)(i), (ii), (iii) and (iv) above
(except that the documents referred to in Sections 2.04(a)(i) and (iii) may be
endorsed or assigned in blank upon receipt) with respect to the Mortgage Loans
listed on the Mortgage Loan Schedule to be delivered to the Trust Administrator
on the Closing Date and (y) the Certificate Account and the amounts on deposit
therein and (ii) the


                                       43

<PAGE>



assignment to the Trustee of all the other assets included in the definition of
"REMIC I" herein, and the Trust Administrator declares that it will hold such
documents and such other documents constituting the Mortgage Files as are
delivered to it, and all such assets and such other assets included in the
definition of "REMIC I" as are delivered to it, in trust for the exclusive use
and benefit of all present and future Certificateholders and the Certificate
Insurer.

                  Within 10 Business Days after the Closing Date the Trust
Administrator shall deliver to the Depositor, the Master Servicer, the Trustee
and the Certificate Insurer a Final Certification of delivery of all of the
documents referred to in Section 2.04(a) in the form annexed hereto as Exhibit
E-2, with any applicable exceptions noted thereon.

                  After the delivery of the final certification, the Trust
Administrator shall provide to the Master Servicer, the Depositor, the Trustee
and the Certificate Insurer, no less frequently than quarterly, updated
certifications, a form of which is attached hereto as Exhibit E-3, indicating
the then current status of exceptions until all such exceptions have been
eliminated; provided that the delivery of the final certification shall not act
as a waiver of any of the rights the Certificate Insurer may have with respect
to such exceptions, and all rights are reserved with respect thereto.

                  If, in the process of reviewing the Mortgage Files and making
or preparing the certifications referred to above, the Trust Administrator finds
any document or documents constituting a part of a Mortgage File to be missing
or defective in any material respect or, at the end of any 360-day period (or
any later period approved as provided in Section 2.04(b) hereof, notice of which
approval has been provided to the Trust Administrator in writing (if such
approval is made by the Certificate Insurer)) referenced above, finds that all
recorded Assignments and all original Mortgages or certified copies thereof have
not been delivered to it, the Trust Administrator shall promptly so notify the
Depositor, the Certificate Insurer, the Trustee and the Master Servicer. In
performing any such review, the Trust Administrator may conclusively rely on the
Depositor as to the purported genuineness of any such document and any signature
thereon. It is understood that the scope of the Trust Administrator's review of
the items delivered to the Trust Administrator pursuant to this Section 2.05,
unless otherwise expressly stated, shall be limited solely to confirming that
the documents listed in this Section 2.05 have been executed and received,
relate to the Mortgage Loans listed in the Mortgage Loan Schedule and conform as
to the loan number and address and description thereof in the Mortgage Loan
Schedule. In addition, upon the discovery by the Depositor, the Master Servicer,
the Certificate Insurer, the Trust Administrator or the Trustee of a breach of
any of the representations and warranties made by the Master Servicer or the
Depositor pursuant to Sections 2.07 and 2.08 hereof in respect of any Mortgage
Loan which materially adversely affects the value of such Mortgage Loan or the
interests of the Certificateholders in such Mortgage Loan, the Person
discovering such breach shall give prompt written notice to the other Persons
set forth in this sentence.

                  The Trust Administrator shall, upon the written request of the
Certificate Insurer and, at the expense of such requesting party, provide a
written report to the Certificate Insurer of each Mortgage File released to the
Master Servicer for servicing purposes.


                                       44

<PAGE>



                  At such time as any Mortgage Loan becomes 90 days Delinquent,
the Master Servicer shall make, or cause to be made, a reasonable investigation
to determine whether such Mortgage Loan satisfied the representations and
warranties of the Seller set forth in Section 3.01(ii) of the Mortgage Loan
Purchase Agreement as of the Closing Date.

                  If the Depositor has not delivered all required documentation
with respect to any Mortgage Loan within the time periods specified in this
Agreement (as such may have been extended pursuant to Section 2.04(b) hereof),
the Depositor shall be required to take action with respect to such Mortgage
Loan as and to the extent provided in Section 2.06 hereof.

         Section 2.06.              Repurchase or Substitution of Mortgage Loans
                                    by the Seller, the Depositor or the Master
                                    Servicer.

                  (a) Upon discovery or receipt of notice of any materially
defective document in, or that a required document is missing (after expiration
of the applicable time period set forth in Section 2.04 hereof) from, a Mortgage
File, or of the breach by the Master Servicer, in its capacity as Originator, of
any representation, warranty or covenant under the Mortgage Loan Purchase
Agreement in respect of any Mortgage Loan that in either such case materially
adversely affects the value of such Mortgage Loan or the interest therein of the
Certificateholders and the Certificate Insurer, the Trust Administrator shall
promptly notify the Seller, the Depositor, the Certificate Insurer, the Trustee
and the Master Servicer of such defect, missing document or breach and request
that the Depositor or the Master Servicer, in its capacity as Originator, as the
case may be, deliver such missing document or cure such defect within 90 days
after the date on which the Depositor or the Master Servicer, in its capacity as
Originator, as the case may be, was notified of such missing or defective
document or that the Master Servicer, in its capacity as Originator, cure such
breach within 60 days after the date on which the Master Servicer, in its
capacity as Originator, was notified of such breach (which period may be
extended by the Certificate Insurer if in its reasonable judgment it believes
that the Depositor or the Master Servicer, in its capacity as Originator, as the
case may be, is proceeding diligently to cure any such breach or missing
document).

                  In the case of any defect or missing document that is the
responsibility of the Depositor as set forth above, the Depositor shall deliver
such missing document or cure such defect in all material respects during such
period or shall repurchase the related Mortgage Loan from the Trust at the
Purchase Price within 90 days after the date on which the Depositor was first
notified of such missing document or defect. In the case of any defect, missing
document or breach that is the responsibility of the Seller as set forth above,
and the Seller does not deliver such missing document or cure such defect or
breach in all material respects during such period, the Master Servicer (or the
Trust Administrator), in accordance with Section 3.02(b), shall enforce the
obligations of the Seller under the Mortgage Loan Purchase Agreement to
repurchase the related Mortgage Loan from the Trust at the Purchase Price within
90 days after the date on which the Seller was first notified of such missing
document, defect or breach, if and to the extent that the Seller is obligated to
do so under the Mortgage Loan Purchase Agreement. In the case of any breach that
is the responsibility of the Master Servicer, in its capacity as Originator, as
set forth above, the Master


                                       45

<PAGE>



Servicer shall repurchase the related Mortgage Loan from the Trust at the
Purchase Price within 90 days after the date on which the Master Servicer was
first notified of such breach, if and to the extent that the Master Servicer is
obligated to do so under the Mortgage Loan Purchase Agreement. The Purchase
Price for the repurchased Mortgage Loan shall be deposited by the Master
Servicer into the Collection Account and the Trust Administrator, upon (i)
receipt of an Officers' Certificate of the Master Servicer as to the making of
such deposit and (ii) confirmation that such deposit has been made, shall
release or cause to be released to the Master Servicer, the Seller or the
Depositor, as the case may be, the related Mortgage File and the Trustee shall
execute and deliver such instruments of transfer or assignment as are furnished
by the Master Servicer, the Seller or the Depositor (as applicable), in each
case without recourse, as shall be reasonably necessary to vest in the Master
Servicer, the Seller or the Depositor, as applicable, any Mortgage Loan released
pursuant hereto, and neither the Trustee nor the Trust Administrator shall have
any further responsibility or liability (except as to its own negligence or
willful misconduct) with regard to such Mortgage File and such Mortgage Loan.

                  In lieu of repurchasing any such Mortgage Loan as provided
above, if so provided in the Mortgage Loan Purchase Agreement, the Seller and/or
the Master Servicer, in its capacity as Originator, may cause such Mortgage Loan
to be removed from the Trust (in which case it shall become a Deleted Mortgage
Loan) and substitute one or more Qualified Substitute Mortgage Loans in the
manner and subject to the limitations set forth in Section 2.06(d) hereof. It is
understood and agreed that the obligation of the Seller and/or the Master
Servicer, in its capacity as Originator, 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 a breach has occurred and
is continuing shall constitute the sole remedy respecting such omission, defect
or breach available to the Trustee or the Trust Administrator on behalf of the
Certificateholders and the Certificate Insurer.

                  In lieu of repurchasing any such Mortgage Loan as provided
above, the Depositor may cause such Mortgage Loan to be removed from the Trust
(in which case it shall become a Deleted Mortgage Loan) and substitute one or
more Qualified Substitute Mortgage Loans in the manner and subject to the
limitations set forth in Section 2.06(d) hereof. It is understood and agreed
that the obligation of the Depositor to cure or to repurchase (or to substitute
for) any Mortgage Loan as to which a document is missing or a material defect in
a constituent document exists shall constitute the sole remedy respecting such
defect or missing document available to the Trustee or the Trust Administrator
on behalf of the Certificateholders and the Certificate Insurer.

                  (b) Except as otherwise provided in Section 2.06(e) hereof,
within 90 days after the earlier of discovery by the Depositor or receipt of
notice by the Depositor of the breach of the substance of any representation or
warranty of the Depositor set forth in Section 2.08 hereof with respect to any
Mortgage Loan (without giving effect to any qualification contained in such
representation and warranty relating to the Depositor's knowledge) which
materially adversely affects the value of such Mortgage Loan or the interest
therein of the Certificateholders, the Depositor shall (x) cure such breach in
all material respects, (y) subject to the restrictions set forth in Section
2.06(d) hereof repurchase the Mortgage Loan from the Trustee at the Purchase
Price or


                                       46

<PAGE>



(z) remove such Mortgage Loan from the Trust (in which case it shall become a
Deleted Mortgage Loan) and substitute one or more Qualified Substitute Mortgage
Loans in the manner and subject to the limitations set forth in Section 2.06(d)
hereof. If any such breach is a breach of any of the representations and
warranties included in subsections (q) and (t) of Section 2.08 hereof, and the
Depositor is unable to cure such breach, the Depositor shall repurchase or
substitute the smallest number of Mortgage Loans as shall be required to make
such representation or warranty true and correct. The Purchase Price for any
repurchased Mortgage Loan shall be deposited into the Collection Account and the
Trust Administrator, upon (x) receipt of an Officers' Certificate of the Master
Servicer as to the making of such deposit and (y) confirmation that such deposit
has been made, shall release or cause to be released to the Depositor the
related Mortgage File and the Trustee shall execute and deliver such instruments
of transfer or assignment as furnished by the Depositor, in each case without
recourse, as shall be necessary to vest in the Depositor title to any Mortgage
Loan released pursuant hereto, and neither the Trustee nor the Trust
Administrator shall have any further responsibility or liability (except as to
its own negligence or willful misconduct) with regard to such Mortgage File and
such Mortgage Loan.

                  (c) Within 90 days after the earlier of discovery by the
Master Servicer or receipt of notice by the Master Servicer of the breach of any
representation, warranty or covenant of the Master Servicer set forth in Section
2.07 hereof, which breach materially and adversely affects the value of any
Mortgage Loan or the interests of the Certificateholders and the Certificate
Insurer therein, the Master Servicer shall (i) cure such breach in all material
respects or (ii) subject to the restrictions set forth in Section 2.06(d)
hereof, purchase any affected Mortgage Loan from the Trust at the Purchase
Price. The Purchase Price for the purchased Mortgage Loan shall be deposited by
the Master Servicer into the Collection Account, and the Trust Administrator,
upon (i) receipt of an Officers' Certificate of the Master Servicer as to the
making of such deposit and (ii) confirmation that such deposit has been made,
shall release or cause to be released to the Master Servicer the related
Mortgage File and the Trustee shall execute and deliver such instruments of
transfer or assignment as furnished by the Master Servicer, in each case without
recourse, as shall be necessary to vest in the Master Servicer title to any
Mortgage Loan released pursuant hereto, and neither the Trustee nor the Trust
Administrator shall have any further responsibility or liability (except as to
its own negligence or willful misconduct) with regard to such Mortgage File and
such Mortgage Loan.

                  (d) Any substitution of Qualified Substitute Mortgage Loans
for Deleted Mortgage Loans made pursuant to Section 2.06(a) or Section 2.06(b)
hereof must be effected prior to the date that is two years after the Startup
Date or such other period as may be specified therefor in the REMIC Provisions.

                  With respect to any Deleted Mortgage Loan for which the
Seller, the Depositor or the Master Servicer substitutes a Qualified Substitute
Mortgage Loan or Loans, such substitution shall be effected by the Seller, the
Depositor or the Master Servicer, as the case may be, by delivering to the Trust
Administrator for such Qualified Substitute Mortgage Loan or Loans the Mortgage
Note, the Mortgage, the related Assignment, and such other documents and
agreements, with all necessary endorsements thereon, as are required by Section
2.04 hereof (or, in the case of a substitution by the


                                       47

<PAGE>



Seller, as are required under the Mortgage Loan Purchase Agreement), together
with an Officers' Certificate providing that each such Qualified Substitute
Mortgage Loan satisfies the definition thereof herein (or, in the case of a
substitution by the Seller, in the Mortgage Loan Purchase Agreement) and
specifying the Substitution Shortfall Amount as described below (or, in the case
of a substitution by the Seller, as described in the Mortgage Loan Purchase
Agreement), if any, in connection with such substitution. The Trust
Administrator, on behalf of the Trustee, shall acknowledge receipt of such
Qualified Substitute Mortgage Loan or Loans and, within 10 Business Days
thereafter, shall review such documents (or shall cause such documents to be
reviewed) as specified in Section 2.04 hereof and shall deliver to the Seller,
the Depositor, the Master Servicer, the Trustee and the Certificate Insurer,
with respect to such Qualified Substitute Mortgage Loan or Loans, a
certification substantially similar to that made by the Trust Administrator in
the second paragraph of Section 2.05 hereof. Within one year after the date of
substitution, the Trust Administrator shall deliver to the Seller, the
Depositor, the Master Servicer, the Trustee and the Certificate Insurer a
certification in the form of Exhibit E-3 hereto with respect to such Qualified
Substitute Mortgage Loan or Loans pursuant to Section 2.05 hereof. For the
Distribution Date relating to the month in which a substitution occurred,
Monthly Payments due with respect to Qualified Substitute Mortgage Loans during
the related Due Period are not part of REMIC I and will be retained by the
Seller, the Depositor or the Master Servicer, as the case may be. For the
Distribution Date relating to the month in which such of substitution occurred,
distributions to Certificateholders will reflect the Monthly Payment due on such
Deleted Mortgage Loan during the related Due Period and the Seller, the
Depositor or the Master Servicer, as the case may be, shall thereafter be
entitled to retain all amounts subsequently received in respect of such Deleted
Mortgage Loan. The Trust Administrator shall give or cause to be given written
notice to the Certificate Insurer that such substitution has taken place, and
the Trust Administrator shall amend the Mortgage Loan Schedule to reflect the
removal of such Deleted Mortgage Loan from the Trust and the substitution of the
Qualified Substitute Mortgage Loan or Loans. Upon such substitution, such
Qualified Substitute Mortgage Loan or Loans shall be subject in all respects to
the terms of this Agreement, and (i) in the case of a substitution effected by
the Depositor or the Master Servicer, in its capacity as Originator, the
Depositor or the Master Servicer, in its capacity as Originator, as applicable,
shall provide, for the benefit of the Trust and the Certificate Insurer, the
remedies set forth in Section 2.04 of the Mortgage Loan Purchase Agreement, if
any Qualified Substitute Mortgage Loan delivered by such Person fails to comply
with each representation and warranty set forth in Section 3.01(iii) of the
Mortgage Loan Purchase Agreement, as if made as of the date of substitution, to
the same extent as if such person were the Seller of such Qualified Substitute
Mortgage Loan under the Mortgage Loan Purchase Agreement and (ii) in the case of
a substitution effected by the Seller, the Master Servicer or the Trust
Administrator, in accordance with Section 3.02(b), shall enforce the obligations
of the Seller under the Mortgage Loan Purchase Agreement to make the
representations and warranties set forth in Section 3.01 of the Mortgage Loan
Purchase Agreement as of the date of substitution and (iii) in the case of a
substitution effected by the Depositor, the Depositor shall make the
representations and warranties set forth in Section 2.08 hereof as of the date
of substitution.



                                       48

<PAGE>



                  For any month in which the Seller, the Depositor or the Master
Servicer substitutes one or more Qualified Substitute Mortgage Loans for one or
more Deleted Mortgage Loans, the Trust Administrator will determine, based upon
information supplied by the Master Servicer, and inform the Seller, the
Depositor or the Master Servicer, as the case may be, of, the amount (the
"Substitution Shortfall Amount"), if any, by which the aggregate Loan Balance of
all such Qualified Substitute Mortgage Loans as of the date of substitution is
less than the aggregate Loan Balance of all such Deleted Mortgage Loans as of
such date plus the aggregate amount of all unreimbursed Servicing Advances and
Delinquency Advances relating to such Deleted Mortgage Loans as of such date. On
the date of such substitution, the Seller (as required by the Master Servicer in
accordance with the Mortgage Loan Purchase Agreement), the Depositor or the
Master Servicer, in its capacity as Originator, as the case may be, will deliver
or cause to be delivered to the Master Servicer for deposit into the Collection
Account pursuant to Section 3.10(a)(vii) hereof an amount equal to the
Substitution Shortfall Amount, if any, without any right of reimbursement
therefor, and the Trust Administrator, upon (i) receipt of (A) the related
Qualified Substitute Mortgage Loan or Loans and (B) an Officers' Certificate of
the Master Servicer as to the deposit of such Substitution Shortfall Amount into
the Collection Account and (ii) confirmation that such deposit has been made,
shall release or cause to be released to the Seller, the Depositor or the Master
Servicer, as the case may be, the related Mortgage File or Files and the Trustee
shall execute and deliver such instruments of transfer or assignment as are
furnished by the Seller, the Depositor or the Master Servicer in each case
without recourse, as shall be necessary to vest in the Seller, the Depositor or
the Master Servicer, as the case may be, title to any Deleted Mortgage Loan
released pursuant hereto and neither the Trustee nor the Trust Administrator
shall have any further responsibility or liability (except as to its own acts)
with regard to such Mortgage Loan.

                  Notwithstanding any contrary provision of this Agreement, with
respect to any Mortgage Loan, no substitution pursuant to this Section 2.06
shall be made unless the Seller, the Depositor or the Master Servicer, as the
case may be, obtains an Independent Opinion of Counsel, addressed to the
Trustee, the Seller, the Depositor, the Master Servicer, the Trust Administrator
and the Certificate Insurer, to the effect that such substitution would not (i)
result in the imposition of taxes on "prohibited transactions" of the REMIC, as
defined in Section 860F of the Code, (ii) result in the imposition of taxes on
contributions to the Trust under Section 860G(d) of the Code, or (iii) cause the
Trust to fail to qualify as a REMIC at any time that any Certificates are
outstanding.

                  (e) Upon discovery by the Seller, the Depositor the Master
Servicer, the Trustee or the Trust Administrator 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, the Master
Servicer, in its capacity as Originator, or the Depositor shall repurchase or,
subject to the limitations set forth in Section 2.06(d), 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. Such repurchase or substitution shall be made by (i) the
Master Servicer if the affected Mortgage Loan's status as a non-qualified
mortgage is or results from a breach of any representation, warranty or covenant
made by the Master Servicer, in its capacity as


                                       49

<PAGE>



Originator, under the Mortgage Loan Purchase Agreement, or (ii) the Depositor,
if the affected Mortgage Loan's status as a non-qualified mortgage is a breach
of any representation or warranty of the Depositor set forth in Section 2.08
hereof, or if its status as a non-qualified mortgage is a breach of no
representation or warranty. Any such repurchase or substitution shall be made in
the same manner as set forth in Section 2.06(a), if made by the Seller, or
Section 2.06(b), if made by the Depositor. The Trustee and the Trust
Administrator shall reconvey to the Depositor or the Master Servicer, as the
case may be, 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 2.07.              Representations, Warranties and Covenants of
                                    the Master Servicer.

                  The Master Servicer hereby represents and warrants to and
covenants with the Trustee, the Trust Administrator, the Certificateholders, the
Depositor, each Subservicer and the Certificate Insurer that as of the Closing
Date or as of such date specifically provided herein:

                  (i) The Master Servicer is a corporation duly organized,
validly existing and in good standing under the laws of the State of California
and is duly authorized and qualified to transact any and all business
contemplated by this Agreement to be conducted by the Master 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, or to cause a Subservicer, to enforce each
Mortgage Loan and to service the Mortgage Loans in accordance with the terms of
this Agreement;

                  (ii) The Master 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. The Master 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
Trustee, the Trust Administrator and the Depositor, constitutes the legal, valid
and binding obligation of the Master 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 the
Master Servicer, the servicing of the Mortgage Loans by the Master Servicer
hereunder, the consummation by the Master 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 the Master Servicer and
will not (A) result in a breach of any term or provision of the charter or
by-laws of the Master 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 the Master Servicer is a party
or by which it may be bound, or any statute, order or regulation applicable to
the Master Servicer of any court, regulatory body, administrative agency or
governmental body have jurisdiction over the Master


                                       50

<PAGE>



Servicer; and the Master 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 the Master Servicer's knowledge, would
in the future materially and adversely affect, (x) the ability of the Master
Servicer to perform its obligations under this Agreement or (y) the business,
operations, financial condition, properties or assets of the Master Servicer
taken as a whole;

                  (iv) The Master Servicer is a HUD approved mortgagee pursuant
to Section 203 and Section 211 of the National Housing Act. No event has
occurred, including but not limited to a change in insurance coverage, that
would make the Master Servicer unable to comply with HUD eligibility
requirements or that would require notification to HUD;

                  (v) The collection practices used by the Master Servicer with
respect to the Mortgage Loans have been, in all material respects, legal,
proper, prudent and customary in the non- conforming mortgage servicing
business;

                  (vi) The Master 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, it being understood that certain of
such covenants may be performed by a Subservicer pursuant to a Subservicing
Agreement between the Master Servicer and such Subservicer in accordance with
Section 3.02;

                  (vii) With respect to each Mortgage Loan, the Master Servicer,
or Subservicer, is in possession of a complete Mortgage File, except for such
documents as have been delivered to the Trust Administrator;

                  (viii) There are no actions or proceedings against, or
investigations known to it of, the Master 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 the Master Servicer of its obligations
under, or validity or enforceability of, this Agreement;

                  (ix) As of the date of the Prospectus Supplement, the
information under the caption "The Originator and the Master Servicer" in the
Prospectus Supplement will contain no untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading;

                  (x) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery and
performance by the Master Servicer of, or compliance by the Master Servicer
with, this Agreement or the consummation by it of the


                                       51

<PAGE>



transactions contemplated by this Agreement, except for such consents,
approvals, authorizations or orders, if any, that have been obtained prior to
the Closing Date;

                  (xi) The information set forth in the Prepayment Charge
Schedule (including the Prepayment Charge Summary attached thereto) is complete,
true and correct in all material respects on the date or dates when such
information is furnished and each Prepayment Charge is permissible and
enforceable in accordance with its terms (except to the extent that the
enforceability thereof may be limited by bankruptcy, insolvency, moratorium,
receivership and other similar laws relating to creditors' rights generally or
the collectability thereof may be limited due to acceleration in connection with
a foreclosure) under applicable state law; and

                  (xii) The Master Servicer will not waive any Prepayment Charge
unless it is waived in accordance with the standard set forth in Section 3.01.

                  It is understood and agreed that the representations,
warranties and covenants set forth in this Section 2.07 shall survive delivery
of the respective Mortgage Files to the Trust Administrator and shall inure to
the benefit of the Depositor, each Subservicer, the Certificateholders, the
Trustee, the Trust Administrator and the Certificate Insurer. Upon discovery by
any of the Depositor, the Master Servicer, the Trustee, the Trust Administrator
or the Certificate Insurer of a breach of any of the foregoing representations,
warranties and covenants that materially and adversely affects the value of any
Mortgage Loan or the interests of the Certificateholders or the Certificate
Insurer therein, the party discovering such breach shall give prompt written
notice (but in no event later than two Business Days following such discovery)
to the other parties. The obligations of the Master Servicer set forth in (x)
Section 2.06(c) hereof to cure any breach or to purchase or substitute for an
affected Mortgage Loan shall constitute the sole remedies available to the
Certificateholders, the Depositor, the Trustee, the Trust Administrator or the
Certificate Insurer respecting a breach of the representations, warranties and
covenants contained in this Section 2.07. Notwithstanding the foregoing, within
90 days of the earlier of discovery by the Master Servicer or receipt of notice
by the Master Servicer of the breach of the representation or covenant of the
Master Servicer set forth in Sections 2.07(xi) or 2.07(xii) above which
materially and adversely affects the interests of the Holders of the
Certificates or the Certificate Insurer in any Prepayment Charge, the Master
Servicer shall remedy such breach as follows: (a) if the representation made by
the Master Servicer in Section 2.07(xi) above is breached and a Principal
Prepayment has occurred in the applicable Prepayment Period, the Master Servicer
must pay the amount of the scheduled Prepayment Charge, for the benefit of the
Holders of the Certificates and the Certificate Insurer, by depositing such
amount into the Collection Account, net of any amount previously collected by
the Master Servicer or paid by the Master Servicer, for the benefit of the
Holders of Certificates or the Certificate Insurer, in respect of such
Prepayment Charge; and (b) if representation made by the Master Servicer in
Section 2.07(xii) above is breached, the Master Servicer must remedy such breach
by paying the amount of the Prepayment Charge as to which such covenant was
breached, for the benefit of the Holders of the Certificates and the Certificate
Insurer, by depositing such amount into the Collection Account.

         Section 2.08.              Representations and Warranties of the
                                    Depositor.


                                       52

<PAGE>



                  The Depositor hereby represents and warrants to the Master
Servicer, each Subservicer, the Trust Administrator, the Trustee, the
Certificateholders and the Certificate Insurer, as of the Closing Date or as of
such date specifically provided herein, that:

                  (a) The Depositor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has,
and had at all relevant times, full power to own its property, to carry on its
business as currently conducted, to enter into and perform its obligations under
this Agreement and to create the Trust pursuant hereto;

                  (b) The execution and delivery of this Agreement by the
Depositor and its performance of and compliance with the terms of this Agreement
will not violate the Depositor's certificate of incorporation or by-laws or
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in the breach or acceleration of,
any material contract, agreement or other instrument to which the Depositor is a
party or which may be applicable to the Depositor or any of its assets;

                  (c) The Depositor has the full power and authority to enter
into and consummate the transactions contemplated by this Agreement, has duly
authorized the execution, delivery and performance of this Agreement, and has
duly executed and delivered this Agreement. This Agreement, assuming due
authorization, execution and delivery by the Trustee, the Trust Administrator
and the Master Servicer, constitutes a valid, legal and binding obligation of
the Depositor, enforceable against it in accordance with the terms hereof,
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium or other similar laws relating to or
affecting the rights of creditors generally, and by general equity principles
(regardless of whether such enforcement is considered in a proceeding in equity
or at law);

                  (d) The Depositor is not in violation of, and the execution
and delivery of this Agreement by the Depositor and its performance and
compliance with the terms of this Agreement will not constitute a violation with
respect to, any order or decree of any court or any order or regulation of any
federal, state, municipal or other governmental agency having jurisdiction,
which violation would materially and adversely affect the condition (financial
or otherwise) or operations of the Depositor or its properties or materially and
adversely affect the performance of its duties hereunder;

                  (e) There are no actions or proceedings against, or
investigations of, the Depositor pending with regard to which the Depositor has
received service of process, or, to the knowledge of the Depositor, pending or
threatened, before any court, administrative agency or other tribunal (A) that,
if determined adversely, would prohibit its entering into this Agreement or
render the Certificates invalid, (B) seeking to prevent the issuance of the
Certificates or the consummation of any of the transactions contemplated by this
Agreement or (C) that, if determined adversely, would prohibit or materially and
adversely affect the performance by the Depositor of its obligations under, or
the validity or enforceability of, this Agreement or the Certificates;



                                       53

<PAGE>



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

                  (g) The Depositor is solvent, is able to pay its debts as they
become due and has capital sufficient to carry on its business and its
obligations hereunder; it will not be rendered insolvent by the execution and
delivery of this Agreement or its obligations hereunder; no petition of
bankruptcy (or similar insolvency proceeding) has been filed by or against the
Depositor prior to the date hereof;

                  (h) The Depositor did not sell the Mortgage Loans to the Trust
with any intent to hinder, delay or defraud any of its creditors; the Depositor
will not be rendered insolvent as a result of the sale of the Mortgage Loans to
the Trust;

                  (i) As of the Closing Date, the Depositor had good title to,
and was the sole owner of, each Mortgage Loan free and clear of any lien other
than any such lien released simultaneously with the sale contemplated herein,
and, immediately upon each transfer and assignment herein contemplated, the
Depositor will have taken all steps necessary so that the Trust will have good
title to, and will be the sole owner of, each Mortgage Loan free and clear of
any lien;

                  (j) The Depositor acquired title to each of the Mortgage Loans
in good faith, without notice of any adverse claim;

                  (k) No Officers' Certificate, statement, report or other
document prepared by the Depositor and furnished or to be furnished by it
pursuant to this Agreement or in connection with the transactions contemplated
hereby contains any untrue statement of material fact or omits to state a
material fact necessary to make the statements contained herein or therein not
misleading;

                  (l) The Depositor is not required to be registered as an
"investment company" under the Investment Company Act of 1940, as amended;

                  (m) The transfer, assignment and conveyance of the Mortgage
Notes and the Mortgages by the Depositor pursuant to this Agreement are not
subject to the bulk transfer laws or any similar statutory provisions in effect
in any applicable jurisdiction;

                  (n) The information set forth in the Mortgage Loan Schedule
for the Mortgage Loans is complete, true and correct in all material respects at
the date or dates respecting which such information is furnished;

                  (o) Except with respect to approximately 5.97% of the Mortgage
Loans in Loan Group I and approximately 4.82% of the Mortgage Loans in Loan
Group II, in each case, by Cut-off


                                       54

<PAGE>



Date Loan Group Balance, which were 30 days or more but less than 60 days
Delinquent in their Monthly Payment as of May 31, 2000, the Monthly Payment due
under each Mortgage Loan is not, as of May 31, 2000, 30 or more days Delinquent
in payment and has not, as of May 31, 2000, been 30 or more days Delinquent in
payment more than once in the twelve month period prior to May 31, 2000
(assuming that a "rolling" 30 day Delinquency is considered to be Delinquent
only once);

                  (p) Each Mortgage Loan had an original term to maturity of not
greater than 30 years;

                  (q) (A) No more than approximately 21.49%, approximately
6.73%, approximately 4.63%, approximately 3.38% and approximately 27.31% of the
Mortgage Loans in Loan Group I by outstanding principal balance of the Mortgage
Loans in Loan Group I as of the Cut- off Date, will be secured by Mortgaged
Properties located in California, Florida, Illinois, Michigan and Texas,
respectively, and no more than approximately 27.88%, approximately 3.57%,
approximately 6.21%, approximately 7.65%, approximately 3.36%, approximately
4.90%, approximately 3.15%, approximately 12.39% and approximately 3.06% of the
Mortgage Loans in Loan Group II by outstanding principal balance of the Mortgage
Loans in Loan Group II as of the Cut-off Date, will be secured by Mortgaged
Properties located in California, Colorado, Florida, Illinois, Massachusetts,
Michigan, Nevada, Texas and Washington, respectively, and no more than 3.00% of
the Mortgage Loans, by outstanding principal balance of the Mortgage Loans as of
the Cut- off Date, will be secured by Mortgaged Properties located in any other
state; (B) as of the Cut-off Date, no more than approximately 1.01% of the
Mortgage Loans in Loan Group I and no more than approximately 0.95% of the
Mortgage Loans in Loan Group II, in each case, by outstanding principal balance
of the Mortgage Loans as of the Cut-off Date, are secured by Mortgaged
Properties located in any one zip code area, and no more than approximately
13.36% of the Mortgage Loans in Loan Group I and no more than approximately
21.06% of the Mortgage Loans in Loan Group II, in each case, by outstanding
principal balance of the Mortgage Loans as of the Cut-off Date, are secured by
units in two- to four-family dwellings, condominiums, planned unit developments
or manufactured housing and (C) at least approximately 86.64% of the Mortgage
Loans in Loan Group I and at least approximately 78.94% of the Mortgage Loans in
Loan Group II, in each case, by outstanding principal balance of the Mortgage
Loans as of the Cut-off Date, are secured by real property with a single family
residence erected thereon;

                  (r) If the Mortgaged Property securing a Mortgage Loan is
located in an area identified in the Federal Register by the Federal Emergency
Management Agency ("FEMA") as having special flood hazards, as of the Closing
Date, such Mortgaged Property is covered by a flood insurance policy that met
the requirements of FEMA at the time such policy was issued;

                  (s) With respect to each Mortgage Loan in Loan Group I, the
Loan-to-Value Ratio was less than or equal to 100.00% at the origination of such
Mortgage Loan and with respect to each Mortgage Loan in Loan Group II, the
Loan-to-Value Ratio was less than or equal to 90.00% at the origination of such
Mortgage Loan; and



                                       55

<PAGE>



                  (t) With respect to at least approximately 92.63% of the
Mortgage Loans in Loan Group I and approximately 94.49% of the Mortgage Loans in
Loan Group II, in each case, by outstanding principal balance as of the Cut-off
Date, at the time that such Mortgage Loan was made, the Mortgagor represented
that the Mortgagor would occupy the Mortgaged Property as the Mortgagor's
primary residence. With respect to approximately 7.37% of the Mortgage Loans in
Loan Group I and approximately 5.51% of the Mortgage Loans in Loan Group II, in
each case, by outstanding principal balance as of the Cut-off Date, at the time
that such Mortgage Loan was made, the Mortgagor represented that the Mortgagor
would occupy the Mortgaged Property as the Mortgagor's secondary residence or
that the Mortgaged Property would be an investor property.

                  It is understood and agreed that the representations,
warranties and covenants set forth in this Section 2.08 shall survive delivery
of the respective Mortgage Files to the Trust Administrator and shall inure to
the benefit of the Master Servicer, each Subservicer, the Trustee, the
Certificateholders and the Certificate Insurer. Upon discovery by any of the
Depositor, the Master Servicer, each Subservicer, the Certificate Insurer or a
Responsible Officer of the Trustee who must have actual knowledge of a breach of
any of the representations and warranties set forth in this Section 2.08(h), (i)
and (j) with respect to any Mortgage Loan which materially and adversely affects
the value of any Mortgage Loan or the interests of the Certificateholders or the
Certificate Insurer therein, the party discovering such breach shall give prompt
written notice (but in no event later than two Business Days following such
discovery) to the other parties.

         Section 2.09.              Issuance of Certificates.

                  The Trustee acknowledges the assignment to it of the Mortgage
Loans and the delivery to it (or the Trust Administrator on its behalf) of the
Mortgage Files, subject to the provisions of Section 2.04, 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 Trust Administrator, 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
Certificates in authorized denominations. The interests evidenced by the
Certificates constitute the entire beneficial ownership interest in REMIC I. The
rights of the Certificateholders to receive distributions from the proceeds of
REMIC I in respect of the Certificates and all ownership interests evidenced or
constituted by the Certificates shall be as set forth in this Agreement.




                                       56

<PAGE>



                                   ARTICLE III

                          ADMINISTRATION AND SERVICING

                                  OF THE TRUST

         Section 3.01.              Administration of the Trust; Servicing of
                                    the Mortgage Loans.

                  (a) The Master Servicer shall service and administer the
Mortgage Loans in accordance with the terms of this Agreement and the respective
Mortgage Loans and in accordance with the instructions of the Trustee, the Trust
Administrator and the Certificate Insurer and, upon receipt of any such
instructions from the Trust Administrator, the Trustee and the Certificate
Insurer, shall be fully protected against any liability arising from, and shall
be allowed to conclusively rely upon, such instructions. Unless otherwise
specified herein with respect to specific obligations of the Master Servicer,
the Master Servicer shall service and administer the Mortgage Loans in the best
interests of and for the benefit of the Holders and the Certificate Insurer 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:

                  (A) any relationship that the Master Servicer, any Subservicer
                  or any Affiliate of the Master Servicer or any Subservicer may
                  have with the related Mortgagor;

                  (B) the ownership or non-ownership of any Certificate by the
                  Master Servicer or any affiliate of the Master Servicer;

                  (C) the Master Servicer's obligation to make Delinquency
                  Advances or Servicing Advances; or

                  (D) the Master Servicer's or any Subservicer's right to
                  receive compensation for its services hereunder or with
                  respect to any particular transaction.

                  To the extent consistent with the foregoing, the Master
Servicer (i) shall seek to maximize the timely and complete recovery of
principal and interest on the Mortgage Notes and (ii) shall waive (or permit a
subservicer to waive) a Prepayment Charge only under the following
circumstances: (i) such waiver is standard and customary in servicing similar
Mortgage Loans and (ii) such waiver would, in the reasonable judgement of the
Master Servicer, maximize recovery of total proceeds taking into account the
value of such Prepayment Charge and the related Mortgage Loan and, if such
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.
Subject only to the above-described servicing standards and the terms of this
Agreement and the respective Mortgage Loans, the Master Servicer shall have full
power and authority, acting alone and/or through Subservicers as provided in
Section 3.02 hereof, to do or cause to be done any and all things in


                                       57

<PAGE>



connection with such servicing and administration which it may deem necessary or
desirable. The Master Servicer shall promptly notify the Depositor, the Trustee,
the Trust Administrator, the Certificate Insurer and each Rating Agency in
writing of (A) any event, circumstance or occurrence which may materially and
adversely affect the ability of the Master Servicer to service any Mortgage Loan
or otherwise to perform and carry out its duties, responsibilities and
obligations under and in accordance with this Agreement and (B) any attempt by a
court or by a regulatory authority of which it has actual knowledge to assert
jurisdiction over the Trust.

                  Without limiting the generality of the foregoing, the Master
Servicer, in its own name or in the name of a Subservicer, is hereby authorized
and empowered, when the Master Servicer believes it appropriate in its best
judgment and subject to the requirements of Section 3.07 hereof, to execute and
deliver, on behalf of the Certificateholders and the Trust or any of them, and
upon notice to the Trustee and the Trust Administrator, 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 Trust and
Certificateholders. The Master 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 Master 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 3.16 hereof, the Trustee shall execute, at
the written direction of the Master Servicer, and furnish to the Master Servicer
and any Subservicer any limited or special powers of attorney and other
documents reasonably acceptable to the Trustee to enable the Master Servicer or
any Subservicer to carry out their servicing and administrative duties
hereunder, including, without limitation, limited or special powers of attorney
with respect to any REO Property, and the Trustee shall not be accountable, or
have any liability, for the actions of the Master Servicer or any Subservicers
under such powers of attorney.

                  (b) Subject to Section 3.24 hereof and in accordance with the
standards of the preceding paragraph, the Master Servicer shall make, or cause
to be made, Servicing Advances as necessary for the purpose of effecting the
payment of taxes and assessments on the Mortgaged Properties which Servicing
Advances shall be made in a timely fashion so as to not adversely affect the
value of the Mortgaged Property or the interests of the Certificateholders and
which Servicing Advances shall be reimbursable in the first instance from
related collections from the Mortgagors pursuant to Section 3.09 hereof, and
further as provided in Section 3.11 hereof; provided, however, that the Master
Servicer shall not be required to make any Nonrecoverable Servicing Advance, as
determined by the Master Servicer in its reasonable good faith business
judgment. Any cost incurred by the Master Servicer or by Subservicers 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 Loan Balance of the related Mortgage Loan, notwithstanding that
the terms of such Mortgage Loan so permit.



                                       58

<PAGE>



                  (c) Notwithstanding anything in this Agreement to the
contrary, the Master Servicer shall not make any future advances to the
Mortgagor with respect to a Mortgage Loan, and the Master Servicer shall not (a)
permit any modification with respect to any Mortgage Loan that would change the
Mortgage Rate, reduce or increase the principal balance or change the maturity
date on such Mortgage Loan, unless the Mortgagor is in default with respect to
the Mortgage Loan or such default is, in the judgment of the Master Servicer,
reasonably foreseeable or (b) permit any modification, waiver or amendment of
any term of any Mortgage Loan that would both effect an exchange or reissuance
of such Mortgage Loan under Section 1001 of the Code (or Treasury regulations
promulgated thereunder) and cause the Trust 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.

                  (d) All accounting and loan servicing records pertaining to
each Mortgage Loan shall be maintained in such manner as will permit the
Trustee, the Trust Administrator, the Depositor, the Certificateholders, the
Certificate Insurer or their duly authorized representatives and designees to
examine and audit and make legible reproductions of records during reasonable
business hours. All such records shall be maintained until the termination of
this Agreement or such longer period as is required under applicable law,
including, but not limited to, all transaction registers and loan ledger
histories.

                  The Master Servicer may delegate its responsibilities under
this Agreement; provided, however, that no such delegation shall release the
Master Servicer from the responsibilities or liabilities arising under this
Agreement and no delegation that would result in the delegee being a Subservicer
is permitted except pursuant to Section 3.02.

                  (e) The Master Servicer shall not take any action to solicit
the refinancing of any Mortgage Loan included in REMIC I, except under the
circumstances specifically set forth herein.
It is understood and agreed that promotions undertaken by the Master Servicer
which are directed to the general public at large, or designated segments
thereof, including without limitation mass mailings based on commercially
acquired mailing lists, newspaper, radio and television advertisements and
offers to refinance made following receipt by Master Servicer of notice that the
borrower was planning to refinance with another lender shall not constitute
solicitation under this Section 3.01(e).

         Section 3.02.              Subservicing Agreements Between Master
                                    Servicer and Subservicers.

                  (a) The Master Servicer may with the consent of the
Certificate Insurer enter into Subservicing Agreements with Subservicers 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 and the Trust
Administrator are hereby authorized to acknowledge, at the request of the Master
Servicer, any Subservicing Agreement that meets the requirements applicable to
Subservicing Agreements set forth in this Agreement and that is otherwise
permitted under this Agreement.


                                       59

<PAGE>



                  Each Subservicer 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
Subservicer to perform its obligations hereunder and under the Subservicing
Agreement, (ii) a Freddie Mac or Fannie Mae approved mortgage servicer and (iii)
have equity of at least $5,000,000. Each Subservicing Agreement must impose on
the Subservicer 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 and be approved in writing by the Certificate Insurer. The
Master Servicer will examine each Subservicing Agreement and will be familiar
with the terms thereof. The Master Servicer and the Subservicers may enter into
and make amendments to the Subservicing Agreements or enter into different forms
of Subservicing Agreements; provided, however, that any such amendments or
different forms shall be consistent with and not violate the provisions of this
Agreement and be approved in writing by the Certificate Insurer, 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 Certificate
Insurer or 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 entitled to at least 66% of the Voting
Rights shall not be required (i) to cure any ambiguity or defect in a
Subservicing Agreement, (ii) to correct, modify or supplement any provisions of
a Subservicing Agreement, or (iii) to make any other provisions with respect to
matters or questions arising under a Subservicing Agreement, which, in each
case, shall not be inconsistent with the provisions of this Agreement. Any
variation without the consent of the Certificate Insurer from the provisions set
forth in Section 3.08 relating to insurance or priority requirements of
Subservicing Accounts, or credits and charges to the Subservicing Accounts or
the timing and amount of remittances by the Subservicers to the Master Servicer,
are conclusively deemed to be inconsistent with this Agreement and therefore
prohibited. The Master Servicer shall deliver to the Trustee and the Trust
Administrator copies of all Subservicing Agreements, and any amendments or
modifications thereof, promptly upon the Master Servicer's execution and
delivery of such instruments.

                  (b) As part of its servicing activities hereunder, the Master
Servicer, for the benefit of the Trustee, the Depositor, the Trust
Administrator, the Certificateholders and the Certificate Insurer, shall enforce
the obligations of each Subservicer under the related Subservicing Agreement and
of the Originator and the Seller under the Mortgage Loan Purchase Agreement
including, without limitation, any obligation to make advances in respect of
delinquent payments as required by a Subservicing Agreement or to purchase a
Mortgage Loan on account of missing or defective documentation or on account of
a breach of a representation, warranty or covenant, as described in Section
2.06. Such enforcement, including, without limitation, the legal prosecution of
claims, termination of Subservicing Agreements and the pursuit of other
appropriate remedies, shall be in such form and carried out to such extent and
at such time as the Master Servicer, in its good faith business judgment, would
require were it the owner of the related Mortgage Loans. The Master Servicer
shall pay the costs of such enforcement 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 Person against which such


                                       60

<PAGE>



enforcement is directed. Notwithstanding anything to the contrary herein,
however, enforcement of the Mortgage Loan Purchase Agreement against the
Originator and the Seller shall be effected by the Master Servicer to the extent
it is not an affiliate of the Seller, and otherwise by the Trust Administrator
in accordance with the foregoing provisions of this paragraph. If such
enforcement is conducted by the Trust Administrator, the Trust Administrator
shall pay the costs of such enforcement 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 Person against which such
enforcement is directed; provided, however, if the sources of reimbursement
described in clauses (i) and (ii) are insufficient, the Master Servicer shall
reimburse the Trust Administrator for any remaining unreimbursed costs of such
enforcement.

         Section 3.03.              Successor Subservicers, Termination of
                                    Subservicing Agreement.

                  Each Subservicing Agreement shall provide that the Subservicer
will not resign without the consent of the Certificate Insurer. The Master
Servicer shall be entitled to terminate any Subservicing Agreement and the
rights and obligations of any Subservicer pursuant to any Subservicing Agreement
in accordance with the terms and conditions of such Subservicing Agreement with
the written consent of the Certificate Insurer. In the event of resignation or
termination of any Subservicer, all servicing obligations of such Subservicer
shall be assumed simultaneously by the Master Servicer without any act or deed
on the part of such Subservicer or the Master Servicer, and the Master Servicer
shall either service directly the related Mortgage Loans or shall enter, with
the consent of the Certificate Insurer, into a Subservicing Agreement with a
successor Subservicer pursuant to Section 3.02.

                  Any Subservicing Agreement shall include the provision that
such agreement may be immediately terminated by any successor servicer, the
Trustee or the Trust Administrator (if the Trust Administrator is acting as
Master Servicer) at the request of the Certificate Insurer, without cost to the
Trust, in the event that the Master Servicer shall, for any reason, no longer be
the Master Servicer (including termination due to a Master Servicer Default).

         Section 3.04.              Liability of the Master Servicer.

                  Notwithstanding any Subservicing Agreement or any of the
provisions of this Agreement relating to agreements or arrangements between the
Master Servicer and a Subservicer, or reference to actions taken through a
Subservicer or otherwise, the Master Servicer shall remain obligated and
primarily liable to the Trustee, the Trust Administrator, the Certificateholders
and the Certificate Insurer for the servicing and administering of the Mortgage
Loans in accordance with the provisions of this Article III without diminution
of such obligation or liability by virtue of such Subservicing Agreements or
arrangements, or by virtue of indemnification from the Subservicer and to the
same extent and under the same terms and conditions as if the Master Servicer
alone were servicing and administering the Mortgage Loans. The Master Servicer
shall be entitled to enter into


                                       61

<PAGE>



any agreement with a Subservicer for indemnification of the Master Servicer by
such Subservicer and nothing contained in this Agreement shall be deemed to
limit or modify such indemnification.

         Section 3.05.              No Contractual Relationship Between
                                    Subservicers and Trust Administrator,
                                    Trustee or Certificateholders.

                  Any Subservicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Subservicer
in its capacity as such shall be deemed to be between the Subservicer and the
Master Servicer alone, and the Trust Administrator, the Trustee, the
Certificateholders and the Certificate Insurer shall not be deemed parties
thereto and shall have no claims, rights, obligations, duties or liabilities
with respect to the Subservicer except as set forth in Sections 3.03 and 3.06
The Master Servicer shall be solely liable for all fees owed by it to any
Subservicer, irrespective of whether the Master Servicer's compensation pursuant
to this Agreement is sufficient to pay such fees.

         Section 3.06.              Assumption or Termination of Sub-Servicing
                                    Agreements by Trust Administrator.

                  In the event the Master Servicer shall for any reason no
longer be the Master Servicer (including by reason of the occurrence of a Master
Servicer Default), the Back-Up Servicer or the Trust Administrator if there is
no Back-Up Servicer or any designee consented to by the Certificate Insurer, or
if a Certificate Insurer Default has occurred and is continuing, consented to by
the Majority Certificateholders, shall thereupon assume all of the rights and
obligations of the Master Servicer under each Subservicing Agreement that the
Master Servicer may have entered into, unless the Back-Up Servicer or Trust
Administrator, as applicable, (with the consent of the Certificate Insurer)
elects to terminate any Subservicing Agreement in accordance with its terms as
provided in Section 3.03 or unless the Back-Up Servicer or Trust Administrator,
as applicable, is directed by the Certificate Insurer to terminate any
Subservicing Agreement, and each Subservicing Agreement shall so provide. Upon
such assumption, the Back-Up Servicer or Trust Administrator, as applicable, its
designee or the successor servicer for the Trust Administrator appointed
pursuant to Section 7.02 shall be deemed, subject to Section 3.03, to have
assumed all of the Master Servicer's interest therein and to have replaced the
Master Servicer as a party to each Subservicing Agreement to the same extent as
if each Subservicing Agreement had been assigned to the assuming party, except
that (i) the Master Servicer shall not thereby be relieved of any liability or
obligations under any Subservicing Agreement that arose before it ceased to be
the Master Servicer and (ii) none of the Back-Up Servicer, the Trust
Administrator, their designees or any successor Master Servicer shall be deemed
to have assumed any liability or obligation of the Master Servicer that arose
before it ceased to be the Master Servicer.

                  The Master Servicer at its expense shall, upon request of the
Trust Administrator, deliver to the assuming party all documents and records
relating to each Subservicing Agreement and the Mortgage Loans then being
serviced and an accounting of amounts collected and held by or


                                       62

<PAGE>



on behalf of and otherwise use its best efforts to effect the orderly and
efficient transfer of the Subservicing Agreements to the assuming party.

         Section 3.07.              Collection of Certain Mortgage Loan
                                    Payments.

                  The Master 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 held for its own account. Consistent with the
foregoing, the Master 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 Master Servicer shall make timely
advances on such Mortgage Loan during such extension pursuant to Section 4.06
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 Master Servicer, such default is reasonably foreseeable, the Master
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 then outstanding
Loan 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 if in the Master Servicer's
determination such waiver, modification, postponement or indulgence is not
materially adverse to the interests of the Certificateholders or the Certificate
Insurer (taking into account any estimated Realized Loss that might result
absent such action). The Master Servicer shall give the Certificate Insurer
prompt written notice of any such action.

         Section 3.08.              Subservicing Accounts.

                  In those cases where a Subservicer is servicing a Mortgage
Loan pursuant to a Subservicing Agreement, the Sub-Servicer will be required to
establish and maintain one or more accounts (collectively, the "Subservicing
Account"). The Sub-Servicing Account shall be in the name of the Trust
Administrator on behalf of the Trustee for the benefit of the Certificateholders
and the Certificate Insurer, and shall be an Eligible Account and shall comply
with all requirements of this Agreement relating to the Collection Account. The
Subservicer 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 Subservicer's receipt thereof, all proceeds of
Mortgage Loans received by the Subservicer, less its servicing compensation to
the extent permitted by the Subservicing Agreement,


                                       63

<PAGE>



and shall thereafter deposit such amounts in the Subservicing Account, in no
event more than two Business Days after the receipt of such amounts. The
Subservicer shall thereafter deposit such proceeds in the Collection Account or
remit such proceeds to the Master Servicer for deposit in the Collection Account
not later than two Business Days after the deposit of such amount in the
Subservicing Account. For purposes of this Agreement, the Master Servicer shall
be deemed to have received payments on the Mortgage Loans when the Subservicer
receives such payments.

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

                  The Master Servicer shall establish and maintain, or cause to
be established and maintained one or more accounts (the "Servicing Accounts"),
into which all collections from the Mortgagors (or related advances from
Subservicers) 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
Master 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 Master 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
timely payment of taxes, assessments, hazard insurance premiums and comparable
items; (ii) reimburse the Master Servicer (or a Subservicer to the extent
provided in the related Subservicing Agreement) out of related collections for
any advances made pursuant to Section 3.01(b) (with respect to taxes and
assessments) and Section 3.13 hereof (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 Master Servicer's obligations and responsibilities in respect
of the Mortgage Loans under this Agreement in accordance with Section 10.01
hereof. As part of its servicing duties, the Master Servicer or Subservicers
shall pay to the Mortgagors interest on funds in 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 thereof.

         Section 3.10.              Collection Account and Certificate Account.

                  (a) On behalf of the Trust, the Master 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 the name
of the Trustee for the benefit of the Certificateholders. On behalf of the
Trust, the Master 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


                                       64

<PAGE>



mortgage loan servicing activities on a daily basis, and in no event more than
one Business Day after the Master Servicer's receipt thereof, and shall
thereafter deposit in the Collection Account, in no event more than two Business
Days after the Master 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;

                         (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 10.01);

                        (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 Master
                  Servicer pursuant to the second paragraph of Section 3.13(a)
                  in respect of any blanket policy deductibles;

                         (vi) all proceeds of any Mortgage Loan repurchased or
                  purchased in accordance with Section 2.06 or Section 10.01;

                         (vii) all amounts required to be deposited in
                  connection with Substitution Shortfall Amounts pursuant to
                  Section 2.06;

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

                         (ix) all payments of claims under the PMI Policy.

                  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 Master Servicer in the Collection Account and may be
retained by the Master Servicer as additional compensation. In the event the
Master Servicer shall deposit in the Collection


                                       65

<PAGE>



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, the Trust Administrator, as agent
for the Trustee, shall establish and maintain one or more accounts (such account
or accounts, the "Certificate Account"), held in trust for the benefit of the
Trustee and the Certificateholders. On behalf of the Trust, the Master Servicer
shall deliver to the Trust Administrator in immediately available funds for
deposit in the Certificate Account on or before 3:00 p.m. New York time on the
Master Servicer Remittance Date, that portion of the Available Funds for the
related Distribution Date then on deposit in the Collection Account and the
amount of all Prepayment Charges collected by the Master 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 3.29.

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

                  (d) Funds held in the Collection Account at any time may be
delivered by the Master Servicer to the Trust Administrator for deposit in an
account (which may be the Certificate Account and must satisfy the standards for
the Certificate 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 and the Trust Administrator shall
have the sole authority to withdraw any funds held pursuant to this subsection
(d). In the event the Master Servicer shall deliver to the Trust Administrator
for deposit in the Certificate Account any amount not required to be deposited
therein, it may at any time request that the Trust Administrator withdraw such
amount from the Certificate Account and remit to it any such amount, any
provision herein to the contrary notwithstanding. In addition, the Master
Servicer shall deliver to the Trust Administrator from time to time for deposit,
and the Trust Administrator shall so deposit, in the Certificate Account:

                         (i) any Delinquency Advances, as required pursuant to
                  Section 4.06;

                         (ii) any amounts required to be deposited pursuant to
                  Section 3.22(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 10.01; and



                                       66

<PAGE>



                         (iv) any amounts required to be deposited pursuant to
                  Section 3.23 in connection with any Prepayment Interest
                  Shortfall.

                         (v) any Stayed Funds, as soon as permitted by the
                  federal bankruptcy court having jurisdiction in such matters.

                  (e) Promptly upon receipt of any Stayed Funds, whether from
the Master Servicer, a trustee in bankruptcy, federal bankruptcy court or other
source, the Trust Administrator shall deposit such funds in the Certificate
Account, subject to withdrawal thereof pursuant to Section 7.02(b) or as
otherwise permitted hereunder.

                  (f) The Master Servicer shall deposit in the Collection
Account or Certificate 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
Certificate Account, respectively.

         Section 3.11.              Withdrawals from the Collection Account and
                                    Certificate Account.

                  (a) The Master Servicer shall, from time to time, make
withdrawals from the Collection Account for any of the following purposes or as
described in Section 4.06:

                         (i) to remit to the Trust Administrator for deposit in
                  the Certificate 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 3.15(e), to reimburse the Master
                  Servicer for Delinquency 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 Delinquency Advances were made in
                  accordance with the provisions of Section 4.06;

                       (iii) subject to Section 3.15(e), to pay the Master
                  Servicer or any Subservicer (a) any unpaid Servicing Fees, (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 Master Servicer or any Subservicer for Servicing Advances;



                                       67

<PAGE>



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

                         (v) to pay to the Master 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 2.06 or Section 3.15(c) all
                  amounts received thereon subsequent to the date of purchase or
                  substitution, as the case may be;

                        (vi) to reimburse the Master Servicer for any
                  Delinquency Advance previously made which the Master Servicer
                  has determined to be a Nonrecoverable Delinquency Advance in
                  accordance with the provisions of Section 4.06;

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

                      (viii) to reimburse the Master Servicer, the Trustee or
                  the Trust Administrator, as the case may be, for expenses
                  reasonably incurred in connection with any breach or defect
                  giving rise to the purchase obligation under Section 2.06,
                  including any expenses arising out of the enforcement of the
                  purchase obligation;

                        (ix) to pay, or to reimburse the Master Servicer for
                  Servicing Advances in respect of, expenses incurred in
                  connection with any Mortgage Loan pursuant to Section 3.15(b);
                  and

                       (x) to clear and terminate the Collection Account
                  pursuant to Section 10.01.

         The Master 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) and (ix) above.
The Master Servicer shall provide written notification to the Trustee and the
Trust Administrator, on or prior to the next succeeding Master Servicer
Remittance Date, upon making any withdrawals from the Collection Account
pursuant to subclauses (vi) and (vii) above; provided that an Officer's
Certificate in the form described under Section 4.06(d) shall suffice for such
written notification to the Trustee and the Trust Administrator in respect of
clause (vi) hereof.

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



                                       68

<PAGE>



                         (i) to make distributions to Certificateholders in
                  accordance with Section 4.04;

                         (ii) to pay to itself and the Trustee amounts to which
                  each is entitled pursuant to Section 8.05;

                       (iii) to pay to the Master Servicer on each Distribution
                  Date as servicing compensation any interest or investment
                  income earned on funds deposited in the Certificate Account
                  pursuant to Section 3.12(b);

                         (iv) to reimburse itself, the Back-Up Servicer or the
                  Trustee pursuant to Section 7.02(b);

                         (v) to pay any amounts in respect of taxes pursuant to
                  Section 3.01(a);

                         (vi) to pay to an Advancing Person reimbursements for
                  Delinquency Advances and/or Servicing Advances pursuant to
                  Section 3.29; and

                         (vii) to clear and terminate the Certificate Account
                  pursuant to Section 10.01.

         Section 3.12.              Investment of Funds in the Accounts.

                  (a) The Master Servicer may direct in writing any depository
institution maintaining the Collection Account or the Certificate Account to
invest the funds held therein in one or more Permitted Investments bearing
interest or sold at a discount, and maturing, unless payable on demand, (i) if
such Permitted Investments are not obligations of the institution maintaining
the account from which the funds are required to be withdrawn, no later than the
Business Day immediately preceding the earliest date on which such funds may be
required to be withdrawn from such account pursuant to this Agreement but in no
event later than the Business Day immediately preceding the next Master Servicer
Remittance Date or Distribution Date, as applicable and (ii) if such Permitted
Investments are obligations of the institution maintaining the account from
which the funds are required to be withdrawn, no later than the earliest date on
which such funds may be required to be withdrawn from such account pursuant to
this Agreement. All such Permitted Investments shall be held to maturity, unless
payable on demand. Any investment of funds on deposit in any Account shall be
made in the name of the Trust Administrator (in its capacity as such), as agent
for the Trustee, or in the name of a nominee of the Trust Administrator, in each
case in trust for the benefit of the Certificateholders. With respect to any
Account held by the Trust Administrator, the Trust Administrator shall have sole
control (except with respect to investment direction) over each such investment,
and any certificate or other instrument evidencing any such investment shall be
delivered directly to the Trust Administrator or its agent, together with any
document of transfer necessary to transfer title to such investment to the Trust
Administrator or its


                                       69

<PAGE>



nominee. In the event amounts from funds on deposit in any Account are at any
time invested in a Permitted Investment payable on demand, the Trust
Administrator shall:

                  (i)      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

                  (ii)     demand payment of all amounts due thereunder promptly
                           by a Responsible Officer of the Trust Administrator
                           having actual knowledge that such Permitted
                           Investment would not constitute a Permitted
                           Investment.

                  If the Master Servicer, with respect to the Collection Account
or the Certificate Account, does not provide investment directions to the
depository institution with respect to the funds on deposit therein, such funds
shall be invested in the Permitted Investments specified in clause (v) of the
definition thereof, which may be administered by an affiliate of such depository
institution.

                  (b) All net income and net gain realized from investment of
funds deposited in the Collection Account and the Certificate Account shall be
for the benefit of the Master Servicer and shall be subject to its withdrawal in
accordance with Section 3.11 hereof. The Master Servicer shall deposit in the
Collection Account, the Certificate 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.

                  (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 or the Trust Administrator shall take such
action as it is directed in writing by the Master Servicer, as appropriate, to
take in order to enforce such payment or performance, including the initiation
and prosecution of appropriate proceedings; provided, however, that the Trustee
and the Trust Administrator shall be indemnified and reimbursed for any related
costs, expenses, losses or liabilities as provided in Section 8.05 hereof.

         Section 3.13.              Maintenance of Hazard Insurance and Errors
                                    and Omissions and Fidelity Coverage.

                  (a) The Master Servicer shall cause to be maintained for each
Mortgage Loan hazard insurance with extended coverage on the related Mortgaged
Property in an amount which is at least equal to the lesser of the Loan 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


                                       70

<PAGE>



the application of any co-insurance clause contained in the related hazard
insurance policy. The Master Servicer shall also cause to be maintained hazard
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 part of such property and (ii) the Loan 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 Master 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 Master Servicer under any such policies
(other than amounts to be applied to the restoration or repair of the related
Mortgaged Property or amounts to be released to the Mortgagor in accordance with
the procedure that the Master Servicer would follow in servicing loans 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 hereof. Any cost incurred by the Master
Servicer in maintaining any such insurance shall not, for the purpose of
calculating distributions to Certificateholders, be added to the Loan 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
located 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 Master 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 Loan 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 Master Servicer shall obtain and
maintain (at its own expense) 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 3.13, it
being understood and agreed that such policy may contain a deductible clause in
which case the Master 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 3.13, and there shall
have been one or more losses which would have been covered by such policy,
deposit into the Collection Account from its own funds without any right of
reimbursement therefor the amount not otherwise payable under the blanket policy
because of such deductible clause. In connection with its activities as
administrator and servicer of the Mortgage Loans, the Master Servicer agrees to
prepare and present, on behalf of itself, the Trustee and the
Certificateholders, claims under any such blanket policy in a timely fashion in
accordance with the terms of such policy.

                  (b) The Master 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


                                       71

<PAGE>



Master 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 either of them were the purchaser of the Mortgage Loans,
unless the Master Servicer has obtained a waiver of such requirements from
Fannie Mae or Freddie Mac. The Master 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 Master Servicer has obtained a waiver of such
requirements from Fannie Mae or Freddie Mac. The Master Servicer shall be deemed
to have complied with this provision if an affiliate of the Master 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 Master 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 Trust
Administrator and the Certificate Insurer.
The Master Servicer shall also cause each Subservicer to maintain a policy of
insurance covering errors and omissions and a fidelity bond which would meet the
requirements set forth above.

         Section 3.14.              Enforcement of Due-on-Sale Clauses;
                                    Assumption Agreements.

                  The Master 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 Master Servicer shall not be required to take such action if
in its sole business judgment the Master Servicer believes it is not in the best
interests of REMIC I and shall not exercise any such rights if prohibited by law
from doing so. If the Master 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 Master
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 Master 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 underwriting
criteria of the Master Servicer and has a credit risk rating at least equal to
that of the original Mortgagor. In connection with any assumption or
substitution, the Master 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 owned
solely by it. The Master 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 Master Servicer in respect of an assumption, modification or substitution of
liability agreement shall be retained by the Master 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


                                       72

<PAGE>



of the Monthly Payment) may be amended or modified, except as otherwise required
pursuant to the terms thereof. The Master Servicer shall notify the Trustee and
the Trust Administrator that any such substitution, modification or assumption
agreement has been completed by forwarding to the Trust Administrator (with a
copy to the Trustee) the executed original copy of such substitution,
modification or assumption agreement, which 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 Master 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 Master Servicer may be restricted by
law from preventing, for any reason whatever. For purposes of this Section 3.14,
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 3.15.              Realization upon Defaulted Mortgage Loans.

                  (a) The Master Servicer shall use its best efforts, consistent
with Accepted Servicing Procedures, 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 hereof. The
Master 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 Master Servicer as contemplated in
Section 3.11. The foregoing is subject to the provision that, in any case in
which Mortgaged Property shall have suffered damage from an Uninsured Cause, the
Master 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
3.15 or any other provision of this Agreement, with respect to any Mortgage Loan
as to which the Master 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 Master Servicer shall not, on behalf of the Trustee,
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 Administrator, REMIC I 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 Master Servicer has also previously
determined, based on its


                                       73

<PAGE>



reasonable judgment and a report prepared by a Person who regularly conducts
environmental audits using customary industry standards, that:

                  (1) such Mortgaged Property is in compliance with applicable
                  environmental laws or, if not, that it would be in the best
                  economic interest of REMIC I 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 REMIC I to take such actions with respect
                  to the affected Mortgaged Property.

                  The cost of the environmental audit report contemplated by
this Section 3.15 shall be advanced by the Master Servicer, subject to the
Master Servicer's right to be reimbursed therefor from the Collection Account as
provided in Section 3.11, such right of reimbursement being prior to the rights
of Certificateholders to receive any amount in the Collection Account to the
extent provided in Section 3.11.

                  If the Master Servicer determines, as described above, that it
is in the best economic interest of REMIC I 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 Master Servicer shall take such action as it deems to be in the best
economic interest of REMIC I; provided that any amounts disbursed by the Master
Servicer pursuant to this Section 3.15(b) shall constitute Servicing Advances,
(to the extent such amounts do not constitute Nonrecoverable Servicing
Advances). The cost of any such compliance, containment, cleanup or remediation
shall be advanced by the Master Servicer, subject to the Master Servicer's right
to be reimbursed therefor from the Collection Account as provided in Section
3.11, such right of reimbursement being prior to the rights of
Certificateholders to receive any amount in the Collection Account to the extent
provided in Section 3.11.

                  (c) The Master Servicer may at its option purchase from REMIC
I any Mortgage Loan that is 90 days or more delinquent, subject to the
limitations set forth in this paragraph, which the Master Servicer determines in
good faith will otherwise become subject to foreclosure proceedings (evidence of
such determination to be delivered in writing to the Trustee and the Trust
Administrator prior to purchase), at a price equal to the Purchase Price;
provided, however, that if the Master Servicer purchases any such Mortgage Loans
on the basis of delinquency, the Master Servicer must purchase the most
delinquent Mortgage Loans first, unless the Certificate Insurer


                                       74

<PAGE>



otherwise agrees. The Purchase Price for any Mortgage Loan purchased hereunder
shall be deposited in the Collection Account, and the Trust Administrator, upon
receipt of written certification from the Master Servicer of such deposit, shall
release or cause to be released to the Master 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 Master Servicer shall furnish
and as shall be necessary to vest in the Master Servicer title to any Mortgage
Loan released pursuant hereto. The total amount of Mortgage Loans that may be
purchased by the Master Servicer pursuant to this Section 3.15(c) (not including
Mortgage Loans repurchased due to a breach of a representation or warranty) may
not exceed 5% of the Cut-off Date Pool Balance, unless the Certificate Insurer
otherwise agrees in writing. Upon ultimate disposition of any such Mortgage
Loans, the Master Servicer shall provide to the Certificate Insurer a report of
such disposition, which report shall contain the information that would have
been included in the Liquidation Report had the Mortgage Loan remained in REMIC
I.

                  (d) The Master Servicer may also, with the consent of the
Certificate Insurer, sell to a third party any Mortgage Loan that is 90 days or
more delinquent which the Master Servicer determines in good faith will
otherwise become subject to foreclosure proceedings (evidence of such
determination to be delivered in writing to the Trustee and the Trust
Administrator prior to purchase). Each such Mortgage Loan shall be sold at a
market price as determined by the Master Servicer.

                  (e) 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
Master Servicer for any related unreimbursed Servicing Advances and Delinquency
Advances, pursuant to Section 3.11(b); 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 Master 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
Master Servicer or any Subservicer pursuant to Section 3.11(a)(iii).

         Section 3.16.              Trustee and Trust Administrator to
                                    Cooperate; Release of Mortgage Files.

                  Upon the payment in full of any Mortgage Loan or the receipt
by the Master Servicer of a notification that payment in full shall be escrowed
in a manner customary for such purposes, the Master Servicer will immediately
notify or cause to be notified the Trustee, the Trust Administrator and the
Certificate Insurer by a certification in the form of Exhibit D-2 (which
certification shall include a statement to the effect that all amounts received
or to be received in connection with such


                                       75

<PAGE>



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 Trust Administrator shall promptly release the related Mortgage
File to the Master Servicer. No expenses incurred in connection with any
instrument of satisfaction or deed of reconveyance shall be chargeable to any
Account or shall be otherwise chargeable to the Trust, the Trustee, the Trust
Administrator , the Certificateholders or the Certificate Insurer.

                  From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, the Trust Administrator shall, upon request of
the Master Servicer and delivery to the Trust Administrator of a Request for
Release in the form of Exhibit D-1, release the related Mortgage File to the
Master Servicer, and the Trustee shall, at the direction of the Master Servicer,
execute such documents as shall be necessary to the prosecution of any such
proceedings. Such Request for Release shall obligate the Master Servicer to
return each and every document previously requested from the Mortgage File to
the Trust Administrator when the need therefor by the Master Servicer no longer
exists, unless the Mortgage Loan has been liquidated and the Liquidation
Proceeds or Insurance 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 Master Servicer has delivered to the Trustee and the
Trust Administrator a certificate of a Servicing Officer certifying as to the
name and address of the Person to which such Mortgage File or such document was
delivered and the purpose or purposes of such delivery. Upon receipt of a
certificate of a Servicing Officer stating that such Mortgage Loan was
liquidated and that all amounts received or to be received in connection with
such liquidation which are required to be deposited into the Collection Account
have been so deposited, a copy of the Request for Release shall be released by
the Trust Administrator to the Master Servicer.

                  Upon written certification of a Servicing Officer, the Trustee
shall execute and deliver to the Master Servicer 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 3.17.              Servicing Compensation.

                  As compensation for the activities of the Master Servicer
hereunder, the Master Servicer shall be entitled to retain the Servicing Fee
with respect to each Mortgage Loan, payable


                                       76

<PAGE>



solely from payments of interest on the related Mortgage Loan, in respect of
such Mortgage Loan. In addition, the Master 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
3.22. 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 Master Servicer's
responsibilities and obligations under this Agreement, as applicable, although
any portion thereof may be paid to a Subservicer as provided in the related
Subservicing Agreement.

                  Additional servicing compensation in the form of Net Recovery
Proceeds in excess of the Loan Balance of the related Mortgage Loan plus any
accrued and unpaid interest thereon that was not advanced as part of a
Delinquency Advance (if permitted by applicable law), penalty interest,
assumption fees, modification fees, insufficient-funds charges, late payment
charges or otherwise shall be retained by the Master Servicer only to the extent
such fees or charges are received by the Master Servicer (such amounts,
"Additional Servicing Compensation"). The Master Servicer shall also be entitled
pursuant to Section 3.11(a)(ii) hereof to interest or other investment income
earned from the investment of funds on deposit in the Collection Account and the
Certificate Account, respectively, as additional servicing compensation. The
Master Servicer shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder (including, without
limitation, (x) payment of premiums for the insurance required by Section 3.13
hereof, to the extent such premiums are not paid by the related Mortgagors or by
a Subservicer and (y) servicing compensation of each Subservicer) and shall not
be entitled to reimbursement therefor except as specifically provided herein.

                  As compensation for the activities of the Back-Up Servicer
hereunder, the Back-Up Servicer shall be entitled to the Back-Up Servicing Fee.

         Section 3.18.              Reports to the Trust Administrator and the
                                    Trustee; Collection Account Statements.

                  (a) Not later than twenty days after each Distribution Date,
the Master Servicer shall forward to the Trustee, the Trust Administrator, the
Certificate Insurer and the Depositor the most current available bank statement
for the Collection Account. Copies of such statement shall be provided by the
Trust Administrator 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
Master Servicer to the Trust Administrator.

                  (b) If funds in the Collection Account during a Due Period
have been invested in investments other than bank deposits of the depository
institution maintaining the Collection Account or money market funds (as
described in the definition of Permitted Investments), then, on or before the
related Distribution Date, the Master Servicer shall forward to the Trustee, the
Trust Administrator, the Certificate Insurer and the Depositor a statement
setting forth the activity in the Collection Account during the preceding
calendar month.


                                       77

<PAGE>



         Section 3.19.              Statement as to Compliance and Financial
                                    Statements.

                  The Master Servicer will deliver to the Trustee, the Trust
Administrator, the Depositor and the Certificate Insurer not later than 90 days
following the end of each fiscal year (beginning with the 2000 fiscal year) of
the Master Servicer, an Officers' Certificate stating, as to each signatory
thereof, that (i) a review of the activities of the Master 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 Master 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.

                  Contemporaneously with the submission of the Officers'
Certificate required by the preceding paragraph, the Master Servicer shall
deliver to the Trustee, the Trust Administrator and the Certificate Insurer a
copy of its annual audited financial statements prepared in the ordinary course
of business. The Master Servicer shall, upon the request of the Depositor,
deliver to such party any unaudited quarterly financial statements of the Master
Servicer.

                  The Master Servicer shall forward to the Certificate Insurer a
copy of any audited annual financial statements, as well as any unaudited
quarterly financial statements, of any Sub- Servicer received by the Master
Servicer, both at the Master Servicer's expense.

                  Copies of any such Officers' Certificate and financial
statements shall be provided by the Trust Administrator to the Certificate
Insurer, any Certificateholder and to any Person identified to the Trust
Administrator as a prospective transferee of a Certificate, upon request at the
expense of the requesting party, provided such statement is delivered by the
Master Servicer to the Trust Administrator.

         Section 3.20.              Independent Public Accountants' Servicing
                                    Report.

                  Not later than 90 days following the end of each fiscal year
(beginning with the 2000 fiscal year) of the Master Servicer, the Master
Servicer, at its expense, shall cause a nationally recognized firm of
independent certified public accountants to furnish to the Master Servicer a
report stating that (i) it has obtained a letter of representation regarding
certain matters from the management of the Master Servicer which includes an
assertion that the Master 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
Subservicers, upon comparable


                                       78

<PAGE>



reports of firms of independent certified public accountants rendered on the
basis of examinations conducted in accordance with the same standards (rendered
within one year of such report) with respect to those Subservicers. Immediately
upon receipt of such report, the Master Servicer shall furnish a copy of such
report to the Certificate Insurer, the Trustee, the Trust Administrator, the
Depositor and each Rating Agency. Copies of such statement shall be provided by
the Trust Administrator to any Certificateholder upon request at the Master
Servicer's expense, provided that such statement is delivered by the Master
Servicer to the Trust Administrator.

         Section 3.21.              Access to Certain Documentation.

                  The Master Servicer shall provide to the OTS, the FDIC and any
other federal or state banking or insurance regulatory authority that may
exercise authority over any Certificateholder or the Certificate Insurer, access
to the documentation regarding the Mortgage Loans required by applicable state
and federal laws and regulations. The Master Servicer shall similarly provide to
the Trustee, the Trust Administrator, the Depositor and the Certificate Insurer
such access to the documentation regarding the Mortgage Loans as such Persons
may reasonably require. Such access shall in each case be afforded without
charge, but only upon reasonable request and during normal business hours at the
offices of the Master Servicer or of a Subservicer, as applicable, designated by
it. The Master Servicer shall also, upon request of the Trustee, the Trust
Administrator, the Depositor or the Certificate Insurer, provide such Person
with any information concerning the Mortgage Loans or the Prepayment Charges as
is requested by such person and reasonably available to the Master Servicer.

         Section 3.22.              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 Trust on behalf of the Certificateholders. The
Master Servicer, on behalf of the Trust, shall sell any REO Property within
three years after the Trust acquires ownership of such REO Property for purposes
of Section 860G(a)(8) of the Code, unless the Master Servicer has delivered to
the Trust Administrator, the Trustee, the Depositor and the Certificate Insurer
an Independent Opinion of Counsel, addressed to the Trust Administrator, the
Trustee, the Depositor, the Master Servicer and the Certificate Insurer, to the
effect that holding such REO Property for more than three years after its
acquisition will not result in the imposition of taxes on "prohibited
transactions" of the Trust as defined in Section 860F of the Code or cause the
Trust to fail to qualify as a REMIC under federal law at any time that any
Certificates are outstanding. The Master Servicer shall manage, conserve,
protect and operate each REO Property for the Certificateholders and the
Certificate Insurer 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 REMIC I 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.



                                       79

<PAGE>



                  (b) The Master 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 and the Certificate Insurer (the "REO Account"), which shall
be an Eligible Account. The Master Servicer shall be permitted to allow the
Collection Account to serve as the REO Account, subject to separate ledgers for
each REO Property. The Master Servicer shall be entitled to retain or withdraw
any interest income paid on funds deposited in the REO Account.

                  (c) The Master 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 Master Servicer manages and operates similar property
owned by the Master Servicer or any of its affiliates, all on such terms and for
such period as the Master Servicer deems to be in the best interests of
Certificateholders and the Certificate Insurer. In connection therewith, the
Master 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 Master Servicer's receipt thereof,
and shall thereafter deposit in the REO Account, in no event more than two
Business Days after the Master 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 Master Servicer shall advance
from its own funds such amount as is necessary for such purposes if, but only
if, the Master Servicer would make such advances if the Master Servicer owned
the REO Property and if in the Master Servicer's judgment, the payment of such
amounts will be recoverable from the rental or sale of the REO Property.

                  Notwithstanding the foregoing, the Master Servicer shall not:

                           (i) permit the Trust 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;


                                       80

<PAGE>



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

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

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

unless, in any such case, the Master Servicer has obtained an Independent
Opinion of Counsel, addressed to itself, the Trustee, the Trust Administrator
and the Certificate Insurer, 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 the Trust, in
which case the Master Servicer may take such actions as are specified in such
Opinion of Counsel.

                  The Master 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 Master 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 3.22(c)
relating to any such contract or to actions taken through any such Independent
Contractor shall be deemed to relieve the Master 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 Master 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 Master 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 Master Servicer
by such Independent Contractor, and nothing in this Agreement shall be deemed to
limit or modify such indemnification. The Master Servicer shall be


                                       81

<PAGE>



solely liable for all fees owed by it to any such Independent Contractor,
irrespective of whether the Master Servicer's compensation 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 Master
Servicer, such amounts shall be reimbursable as Servicing Advances made by the
Master Servicer.

                  (d) In addition to the withdrawals permitted under Section
3.22(c), the Master Servicer may from time to time make withdrawals from the REO
Account for any REO Property: (i) to pay itself or any Subservicer unpaid
Servicing Fees in respect of the related Mortgage Loan; and (ii) to reimburse
itself or any Subservicer for unreimbursed Servicing Advances and Delinquency
Advances made in respect of such REO Property or the related Mortgage Loan. On
the Master Servicer Remittance Date, the Master Servicer shall withdraw from
each REO Account maintained by it and deposit into the Collection Account, for
distribution on the related Distribution Date in accordance with Section 4.04,
the income from the related REO Property received during the prior calendar
month, net of any withdrawals made pursuant to Section 3.22(c) or this Section
3.22(d).

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

                  (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 Master Servicer or any
Subservicer as provided above, shall be deposited in the Collection Account in
no event more than two Business Days after the Master Servicer's receipt thereof
for distribution on the related Distribution Date in accordance with Section
4.04. 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 Master 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 3.23.              Prepayment Interest Shortfalls.

                  The Master Servicer shall deposit into the Collection Account
on or before 12:00 noon, New York time, on each Master Servicer Remittance Date
an amount equal to the lesser of (i) the aggregate of the Prepayment Interest
Shortfalls resulting from Principal Prepayments during the


                                       82

<PAGE>



related Prepayment Period and (ii) its aggregate Servicing Fee received with
respect to the related Due Period.

         Section 3.24.              [Reserved].

         Section 3.25.              [Reserved].

         Section 3.26.              Certain Procedures Relating to Successor
                                    Subservicers and Successor Master Servicers.

                  (a) In the event that any Subservicer is to be terminated, the
Certificate Insurer and the Master Servicer shall consult among themselves with
respect to the appointment of a successor Sub-Servicer (it being acknowledged
that the Master Servicer is obligated to service the Mortgage Loan directly
pursuant to Section 3.03 hereof if no successor Subservicer is appointed
pursuant to this Section 3.26(a)). In the event that such parties cannot, with
reasonable promptness (but in no event later than 30 days), agree on the
identity of the successor Sub-Servicer (or whether the Master Servicer shall be
required to service directly the Mortgage Loans) the decision of the Certificate
Insurer shall control.

                  (b) In connection with any change in the Master Servicer's
servicing software, the Master Servicer shall promptly deliver to the Trustee,
the Trust Administrator and the Certificate Insurer an Officers' Certificate
detailing the substance of such change and the Master Servicer shall cooperate
fully with the Trustee and the Trust Administrator in any manner that the
Trustee or the Trust Administrator reasonably deems necessary with respect to
such change, to the extent such change affects the ability of the Trustee or the
Trust Administrator to perform its obligations hereunder.

         Section 3.27.              Reports to the Securities and Exchange
                                    Commission.

                  The Trust Administrator shall, on behalf of the Trust, cause
to be filed with the Securities and Exchange Commission any periodic reports
required to be filed under the provisions of the Securities Exchange Act of
1934, as amended, and the rules and regulations of the Securities and Exchange
Commission thereunder. Upon the request of the Trust Administrator, each of the
Master Servicer, the Depositor, the Trustee and the Certificate Insurer shall
cooperate with the Trust Administrator in the preparation of any such report and
shall provide to the Trust Administrator in a timely manner all such information
or documentation as the Trust Administrator may reasonably request in connection
with the performance of its duties and obligations under this Section.

         Section 3.28.              Servicing Termination.

                  The Master Servicer hereby covenants and agrees to act as the
Master Servicer under this Agreement for an initial term, commencing on the
Closing Date and ending on September 30, 2000, which term shall be extendable by
the Certificate Insurer for successive terms of three


                                       83

<PAGE>



calendar months thereafter, until the termination of REMIC I pursuant to Article
X. Each such notice of extension ("a Master Servicer Extension Notice") shall be
delivered by the Certificate Insurer to the Trustee, the Trust Administrator and
the Master Servicer. The Master Servicer hereby agrees that, upon its receipt of
any such Master Servicer Extension Notice, the Master Servicer shall become
bound for the duration of the term covered by such Master Servicer Extension
Notice to continue as the Master Servicer subject to and in accordance with the
other provisions of this Agreement. The Trust Administrator agrees that if as of
the fifteenth (15th) day prior to the last day of any term of the Master
Servicer the Trust Administrator shall not have received any Master Servicer
Extension Notice from the Certificate Insurer, the Trust Administrator will
within five (5) days thereafter, give written notice of such non-receipt to the
Certificate Insurer and the Master Servicer. The failure of the Certificate
Insurer to deliver a Master Servicer Extension Notice by the end of a calendar
term shall result in the termination of the Master Servicer. If the term of the
Master Servicer shall expire without the Certificate Insurer having delivered to
the Master Servicer a Master Servicer Extension Notice, but the Master Servicer
shall continue without objection from the Trustee, the Trust Administrator or
the Certificate Insurer to perform the functions of servicer hereunder (and in
the absence of ground for termination under the Insurance Agreement), the Master
Servicer shall be entitled to receive a prorated portion of the Servicing Fee
specified hereunder for the time during which it shall so act; provided, that it
is understood and agreed that the foregoing provision for payment of the
prorated Servicing Fee is intended solely to avoid unjust enrichment of REMIC I
and does not contemplate or give rise to any implicit renewal of the Master
Servicer's term. The foregoing provisions of this paragraph shall not apply to
the Trustee or Trust Administrator in the event the Trustee or Trust
Administrator succeeds to the rights and obligations of the Master Servicer and
the Trustee or Trust Administrator shall continue in such capacity until the
earlier of the termination of this Agreement pursuant to Article X or the
appointment of a successor servicer.

         Section 3.29.              Advance Facility.

                  (a) The Trustee or the Trust Administrator on behalf of the
Trust, is hereby authorized, with the consent of the Master Servicer and the
Certificate Insurer, to enter into a facility with any Person which provides
that such Person (an "Advancing Person") may fund Delinquency Advances and/or
Servicing Advances under this Agreement, although no such facility shall reduce
or otherwise affect the Master Servicer's obligation to fund such Delinquency
Advances and/or Servicing Advances. To the extent that an Advancing Person funds
any Delinquency Advance or any Servicing Advance and provides the Trust
Administrator and the Certificate Insurer with notice acknowledged by the Master
Servicer 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 3.29(b). Such notice from the
Advancing Person must specify the amount of the reimbursement and must specify
which Section of this Agreement permits the applicable Delinquency Advance or
Servicing Advance to be reimbursed. The Trust Administrator shall have no duty
or liability to the Master Servicer 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 3.29.


                                       84

<PAGE>



An Advancing Person whose obligations hereunder are limited to the funding of
Delinquency Advances and/or Servicing Advances shall not be required to meet the
qualifications of a Subservicer pursuant to Section 3.02 hereof.

                  (b) If an Advancing Person is entitled to reimbursement for
any particular Delinquency Advance or Servicing Advance, then the Master
Servicer shall not be permitted to reimburse itself therefor under Section
3.11(a)(ii), Section 3.11(a)(iii), Section 3.11(a)(vi) or Section 3.11(a)(ix),
but instead the Master Servicer shall deposit such amount in the Collection
Account as collected and include such amounts in the applicable remittance to
the Trust Administrator made pursuant to Section 3.10(b) to the extent of
amounts on deposit in the Collection Account on the related Master Servicer
Remittance Date. The Trust Administrator is hereby authorized to pay to an
Advancing Person, reimbursements for Delinquency Advances and Servicing Advances
from the Certificate Account to the same extent the Master Servicer would have
been permitted to reimburse itself for such Delinquency Advances and/or
Servicing Advances in accordance with Section 3.11(a)(ii), Section 3.11(a)(iii),
Section 3.11(a)(vi) or Section 3.11(a)(ix), as the case may be, had the Master
Servicer made such Delinquency Advance or Servicing Advance.

         Section 3.30.              PMI Policy; Claims Under the PMI Policy.

                  Notwithstanding anything to the contrary elsewhere in this
Article III, the Master Servicer shall not agree to any modification or
assumption of a PMI Mortgage Loan or take any other action with respect to a PMI
Mortgage Loan that could result in denial of coverage under the PMI Policy. The
Master Servicer shall notify the PMI Insurer that the Trustee, on behalf of the
Certificateholders, is the Owner, as that term is defined in the PMI Policy, of
each PMI Mortgage Loan. The Master Servicer shall, on behalf of the Trust
Administrator and the Trustee, prepare and file on a timely basis with the PMI
Insurer, with a copy to the Trust Administrator, the Trustee and the Certificate
Insurer, all claims which may be made under the PMI Policy with respect to the
PMI Mortgage Loans. Consistent with all rights and obligations hereunder, the
Master Servicer shall take all actions required under the PMI Policy as a
condition to the payment of any such claim. Any amount received from the PMI
Insurer with respect to any such PMI Mortgage Loan shall be deposited by the
Master Servicer, no later than two Business Days following receipt thereof, into
the Collection Account.





                                       85

<PAGE>



                                   ARTICLE IV

                                  FLOW OF FUNDS

         Section 4.01.              Establishment of Accounts.

                  The Trust Administrator, on behalf of the Trust and as agent
for the Trustee, shall establish on the Closing Date, and thereafter maintain,
the Certificate Account and the Policy Payments Account, each of which shall
conform to the definition of Eligible Account and shall be held by the Trust
Administrator for the benefit of the Certificateholders and the Certificate
Insurer, as their interests may appear.

         Section 4.02.              The Certificate Insurance Policy.

                  (a) Not later than 3:00 p.m., New York time, on the third
Business Day immediately preceding each Distribution Date, the Trust
Administrator shall determine the Available Funds for such Distribution Date.

                       To the extent any Available Funds Shortfall will exist
for any Distribution Date after giving effect to the distributions specified in
Section 4.04(a) hereof (calculating such distributions without giving effect to
any Insured Payment to be made on such Distribution Date), the Trust
Administrator shall complete a notice in the form attached to the Policy (the
"Notice") and shall submit such Notice to the Certificate Insurer no later than
10:00 a.m., New York time, on the second Business Day preceding such
Distribution Date. Such Notice may be delivered by electronic facsimile (in
which case the original shall be sent by overnight courier). The Notice shall
constitute a claim for an Insured Payment pursuant to the Policy for an amount
equal to the Available Funds Shortfall. Upon receipt of Insured Payments on
behalf of the Certificateholders, the Trust Administrator shall deposit such
Insured Payments in the Policy Payments Account, and shall thereafter transfer
such Insured Payments to the Certificate Account for distribution solely to the
related Certificateholders in accordance with Section 4.04(a).

                  (b) The Trust Administrator, on behalf of the Trust and as
agent for the Trustee, shall establish a separate special purpose trust account
for the benefit of the Holders of the Offered Certificates and the Certificate
Insurer (the "Policy Payments Account") over which the Trust Administrator shall
have exclusive control and sole right of withdrawal. The Trust Administrator
shall deposit any amount paid under the Policy into the Policy Payments Account
and distribute such amount only for purposes of payment to the Holders of
Offered Certificates of the Insured Payment for which a claim was made and such
amount may not be applied to satisfy any costs, expenses or liabilities of the
Master Servicer, the Trustee, the Trust Administrator or the Trust. Amounts paid
under the Policy shall be transferred to the Certificate Account in accordance
with the next succeeding paragraph and thereafter disbursed by the Trust
Administrator to the Holders of the Offered Certificates in accordance with
Section 4.04(a). It shall not be necessary for such payments to be made by
checks or wire transfers separate from the checks or wire transfers used to pay
any


                                       86

<PAGE>



other amounts distributed pursuant to Section 4.04(a). However, the amount of
any payment of principal of or interest on the Offered Certificates to be paid
from funds transferred from the Policy Payments Account shall be noted in the
statement to be furnished to related Holders of the Offered Certificates
pursuant to Section 4.06. Funds held in the Policy Payments Account shall not be
invested by the Trust Administrator.

                       On any Distribution Date with respect to which a claim
has been made under the Policy, the amount of any funds received by the Trust
Administrator as a result of such claim, to the extent required to pay amounts
owed to Certificateholders on such Distribution Date, shall be withdrawn from
the Policy Payments Account and deposited in the Certificate Account and applied
by the Trust Administrator, together with the other funds to be deposited in the
Certificate Account, directly to the amounts owed to Certificateholders on the
related Certificates. Funds received by the Trust Administrator as a result of
any claim under the Policy shall be deposited by the Trust Administrator in the
Policy Payments Account and then transferred to the Certificate Account and used
solely for payment to the related Holders of the related Certificates and may
not be applied to satisfy any costs, expenses or liabilities of the Master
Servicer, the Trustee, the Trust Administrator or the Trust. Any funds remaining
in the Policy Payments Account on the first Business Day following a
Distribution Date shall be remitted to the Certificate Insurer, pursuant to the
instructions of the Certificate Insurer, by the end of such Business Day.

                  (c) The Trust Administrator shall keep a complete and accurate
record of the amount of interest and principal paid in respect of any
Certificate from moneys received under the Policy. The Certificate Insurer shall
have the right to inspect such records at reasonable times during normal
business hours upon one Business Day's prior notice to the Trustee.

                  (d) The Trust Administrator shall receive, as attorney-in-fact
of each Holder of a Class A Certificate, any Insured Payment from the
Certificate Insurer and disburse the same to each Holder of a Class A
Certificate in accordance with the provisions of this Article IV. Insured
Payments disbursed by the Trust Administrator from proceeds of the Policy shall
not be considered payment by the Trust nor shall such payments discharge the
obligation of the Trust with respect to such Offered Certificates, and the
Certificate Insurer shall be subrogated to the rights of the Certificateholders
to the extent of the payment and shall be entitled to receive the Reimbursement
Amount pursuant to Section 4.04(a)(I)(vi) or (II)(vi). By acceptance of a
Certificate, each Holder of a Certificate agrees and recognizes that to the
extent the Certificate Insurer makes Insured Payments, either directly or
indirectly (as by paying through the Trustee), to the Class A
Certificateholders, the Certificate Insurer will be entitled to receive the
Reimbursement Amount pursuant to Section 4.04(a)(I)(vi) and (II)(vi).

                  (e) If the Trust Administrator receives a certified copy of an
order of the appropriate court (an "Order") that any prior distribution made on
the Offered Certificates of principal or current interest has been voided in
whole or in part as a Preference Payment under applicable bankruptcy,
insolvency, receivership or similar law, the Trust Administrator shall so notify
the Certificate Insurer, shall comply with the provisions of the Policy to
obtain payment by the Certificate Insurer


                                       87

<PAGE>



of such voided distribution and shall, at the time it provides notice to the
Certificate Insurer, notify each Holder of the affected Certificates by mail (i)
that, subject to the terms of the Policy, the Certificate Insurer will disburse
the voided distribution directly to the receiver, conservator, debtor-
in-possession or trustee in bankruptcy named in the Order following such
Certificateholder's making timely delivery to the Trust Administrator of (a) a
certificate of such Certificateholder that such Order has been entered and is
not subject to any stay and (b) an assignment duly executed and delivered by
such Certificateholder, in such form as is reasonably required by the
Certificate Insurer and provided to such Certificateholder by the Certificate
Insurer, irrevocably assigning to the Certificate Insurer all rights and claims
of such Certificateholder relating to or arising under the affected Certificates
against the debtor that made such Preference Payment, or otherwise with respect
to such preference payment, and (ii) that, if any such voided distribution
payment is recovered from such Certificateholder pursuant to such Order, such
Certificateholder will be entitled to payment pursuant to the Policy. A copy of
the Policy shall be made available to each affected Certificateholder through
the Trust Administrator, and the Trust Administrator shall furnish to the
Certificate Insurer or its fiscal agent, if any, its records evidencing the
payments that have been made by the Trust Administrator and subsequently
recovered from Certificateholders and the dates on which such payments were
made.

                  (f) The Trust Administrator shall promptly notify the
Certificate Insurer of any proceeding or the institution of any action, of which
a Responsible Officer of the Trust Administrator has actual knowledge, seeking
the avoidance as a preferential transfer under applicable bankruptcy,
insolvency, receivership or similar law (a "Preference Claim") of any
distribution made with respect to the Offered Certificates. Each Holder of a
Class A Certificate, by its purchase of such Certificate, the Master Servicer,
the Trust Administrator and the Trustee agree that the Certificate Insurer (so
long as no Certificate Insurer Default exists) may at any time during the
continuation of any proceeding relating to a Preference Claim direct all matters
relating to such Preference Claim, including, without limitation, (i) the
direction of any appeal of any order relating to such Preference Claim and (ii)
the posting of any surety, supersede as or performance bond pending any such
appeal. In addition and without limitation of the foregoing, the Certificate
Insurer shall be subrogated to, and each Holder, the Master Servicer, the Trust
Administrator and the Trustee hereby delegate and assign to the Certificate
Insurer, to the fullest extent permitted by law, the rights of the Master
Servicer, the Trustee, the Trust Administrator and each Holder in the conduct of
any such Preference Claim, including, without limitation, all rights of any
party to any adversary proceeding or action with respect to any court order
issued in connection with any such Preference Claim.

                  (g) It is understood and agreed that the intention of the
parties is that the Certificate Insurer shall not be entitled to reimbursement
on any Distribution Date for amounts previously paid by it unless on such
Distribution Date the Class A Certificateholders shall also have received the
full amount of the Insured Distribution Amount for such Distribution Date.

         Section 4.03.              Deposits into, and Transfers Among, the
                                    Accounts.



                                       88

<PAGE>



                  (a) The Trust Administrator shall deposit into the Certificate
Account, upon receipt, the amounts referred to in Section 3.10(b) and (d) and
the Termination Price received by the Trust Administrator in connection with a
termination of the Trust pursuant to Article X hereof.

                  (b) Prior to 1:00 p.m. New York time on any Distribution Date,
the Trust Administrator shall make all transfers required in order to make the
payments required pursuant to Section 4.04 hereof.

         Section 4.04.              Flow of Funds and Distributions.

                  (a) I. On each Distribution Date, the Trust Administrator
shall withdraw (a) from the Certificate Account, the Group I Available Funds and
(b) from the Policy Payments Account, the amount of any Insured Payment
allocable to the Group I Certificates and shall distribute the same in the
following order of priority:

                       (i) the portion of the following amounts, attributable to
the Group I Mortgage Loans and the Group I Certificates, in the following order:
first, to pay the PMI Insurer the premium attributable to the eligible Group I
Mortgage Loans, second, to pay the Trust Administrator the Administrative Fee
attributable to the Group I Mortgage Loans and third, to pay the Back-Up
Servicer, if any, the Back-Up Servicing Fee attributable to the Group I Mortgage
Loans;

                       (ii) to the Certificate Insurer, the Premium Amount for
the Group I Certificates for such Distribution Date (to the extent such payment
will not cause an Insured Payment to be required);

                       (iii) to the holders of the Group I Certificates, the
related Interest Distribution Amount for such Distribution Date;

                       (iv) to the holders of the Classes of Group I
Certificates, an amount equal to the Group I Basic Principal Distribution
Amount;

                       (v) to the holders of the Group II Certificates, an
amount equal to the excess, if any, of (x) the Interest Distribution Amount for
the Group II Certificates for such Distribution Date over (y) the amount
actually distributed to the holders of the Group II Certificates on such
Distribution Date pursuant to Section 4.04(a)(II)(iii) below;

                       (vi) to the Certificate Insurer, FIRST, the Reimbursement
Amount for the Group I Certificates for such Distribution Date (to the extent
such payment will not cause an Insured Payment to be required), and SECOND, the
Reimbursement Amount for the Group II Certificates for such Distribution Date
(to the extent not paid under Section 4.04(a)(II)(vi) from the Group II
Available Funds and to the extent such payment will not cause an Insured Payment
to be required);



                                       89

<PAGE>



                       (vii) to holders of the Classes of Group I Certificates,
an amount equal to the Group I Extra Principal Distribution Amount; and

                       (viii) to the holders of the Group II Certificates, an
amount equal to the sum of (A) the excess, if any, of (x) the Group II Principal
Distribution Amount for such Distribution Date over (y) the amount actually
distributed to the holders of the Group II Certificates on such Distribution
Date pursuant to Section 4.04(a)(II)(iv) and (II)(vii) from the Group II
Available Funds and (B) any OC Deficiency Amount for such Distribution Date for
the Group II Certificates, to the extent remaining unpaid after taking into
account the distribution made pursuant to Section 4.04(a)(I)(viii)(A).

                  II. On each Distribution Date, the Trust Administrator shall
withdraw (a) from the Certificate Account all Group II Available Funds and (b)
from the Policy Payments Account, the amount of any Insured Payment allocable to
the Group II Certificates and shall distribute the same in the following order
of priority:

                       (i) the portion of the following amounts, attributable to
the Group II Mortgage Loans and the Group II Certificates, in the following
order: first, to pay the PMI Insurer the premium attributable to the eligible
Group II Mortgage Loans, second, to pay the Trust Administrator the
Administrative Fee attributable to the Group II Mortgage Loans and third, to pay
the Back-Up Servicer, if any, the Back-Up Servicing Fee attributable to the
Group I Mortgage Loans;

                       (ii) to the Certificate Insurer, the Premium Amount for
the Group II Certificates for such Distribution Date (to the extent such payment
will not cause an Insured Payment to be required);

                       (iii) to the holders of the Group II Certificates, the
related Interest Distribution Amount for such Distribution Date;

                       (iv) to the holders of the Group II Certificates, an
amount equal to the Group II Basic Principal Distribution Amount;

                       (v) to the holders of the Group I Certificates, an amount
equal to the excess, if any, of (x) the Interest Distribution Amount for the
Group I Certificates for such Distribution Date over (y) the amount actually
distributed to the holders of the Group I Certificates on such Distribution Date
pursuant to Section 4.04(a)(I)(iii) above;

                       (vi) to the Certificate Insurer, FIRST, the Reimbursement
Amount for the Group II Certificates for such Distribution Date (to the extent
such payment will not cause an Insured Payment to be required), and SECOND, the
Reimbursement Amount for the Group I Certificates for such Distribution Date (to
the extent not paid under Section 4.04(a)(I)(vi) from the Group I Available
Funds and to the extent such payment will not cause an Insured Payment to be
required);



                                       90

<PAGE>



                       (vii) to the holders of the Group II Certificates, an
amount equal to the Group II Extra Principal Distribution Amount;

                       (viii) to the holders of the Group I Certificates, an
amount equal to the sum of (A) the excess, if any, of (x) the Group I Principal
Distribution Amount for such Distribution Date over (y) the amount actually
distributed to the holders of the Group I Certificates on such Distribution Date
pursuant to Section 4.04(a)(I)(iv) and (I)(vii) from the Group I Available Funds
and (B) any OC Deficiency Amount for such Distribution Date for the Group I
Certificates, to the extent remaining unpaid after taking into account the
distribution made pursuant to Section 4.04(a)(II)(viii)(A);

                       (ix) to the Reserve Fund and then from the Reserve Fund,
to the holders of the Group II Certificates, any Basis Risk Shortfall and any
Unpaid Basis Risk Shortfall; and

                       (x) to the Reserve Fund, an amount equal to the Required
Reserve Fund Deposit.

                  On each Distribution Date, any remaining amounts after giving
effect to the distributions specified in clauses I and II above will be paid to
the Back-Up Servicer to the extent provided in the Back-Up Servicing Agreement
as additional compensation and then to the Holders of the Class R Certificates
(net of amounts deposited into the Reserve Fund pursuant to II(x) above).

                  If on a Distribution Date one Certificate Group has an
Overcollateralized Amount less than zero and the other Certificate Group does
not, after giving effect to all payments on that Distribution Date other than
any Insured Payment, then any principal portion of any Insured Payment for that
Distribution Date will be included in the Available Funds of the Certificate
Group having the Overcollateralized Amount less than zero. If on a Distribution
Date both Certificate Groups have an Overcollateralized Amount less than zero,
after giving effect to all payments on that Distribution Date other than any
Insured Payment, then any principal portion of any Insured Payment for that
Distribution Date will be included in the Available Funds of each Certificate
Group to the extent of and in proportion to the amount necessary to eliminate
that Certificate Group's negative Overcollateralized Amount.

                  (b) Whenever in the administration of the Trust the Trust
Administrator comes into possession of money or other property not otherwise
required to be paid to the Holders of the Regular Certificates, the Certificate
Insurer, the Master Servicer or any other Person, or not required to be
otherwise applied at any time pursuant to the provisions of this Agreement, the
Trust Administrator shall promptly distribute such money or other property to
the Class R Certificateholders.

                  (c) Payments to the Certificateholders of each Class on each
Distribution Date will be made to the Certificateholders of the respective Class
of record on the related Record Date (other than as provided in Section 4.04(f)
or Section 10.01 hereof respecting the final distribution on such


                                       91

<PAGE>



Class), and shall be made to each such Certificateholder (x) by wire transfer of
immediately available funds to the account of such Certificateholder at a bank
or other entity having appropriate facilities therefor, if such
Certificateholder is the registered owner of a Class R Certificate or the
registered owner of a Class of Regular Certificates evidencing a Percentage
Interest aggregating at least 10% hereof, and shall have so notified the Trust
Administrator in writing in the case of the first Distribution Date, by the
Closing Date, and, in the case of all subsequent Distribution Dates, at least
five Business Days prior to the Record Date immediately prior to such
Distribution Date; or (y) otherwise by check mailed by first class mail to the
address of such Certificateholder appearing in the Certificate Register.
Payments to the Certificate Insurer on any Distribution Date will be made by
wire transfer of immediately available funds to the account designated by the
Certificate Insurer (initially, in the Premium Letter).

                  (d) The rights of the Certificateholders to receive
distributions from the proceeds of the Trust in respect of the Certificates, and
all interests of the Certificateholders in and to such distributions, shall be
as set forth in this Agreement. In no event shall the Holders of any Class of
Certificates, the Trustee, the Trust Administrator, the Depositor, the Master
Servicer or the Certificate Insurer 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 10.01 hereof,
whenever the Trust Administrator expects that the final distribution with
respect to any Class of Certificates will be made on the next Distribution Date,
the Trust Administrator shall, no later than four days prior to the related
Distribution Date, send, by overnight delivery or by registered mail, to each
Holder on such date of such Class of Certificates and to the Certificate Insurer
a notice to the effect that:

                       (i) the Trust Administrator expects that the final
distribution with respect to such Class of Certificates will be made on such
Distribution Date and requests that such Holder send its Certificates to the
Trust Administrator immediately following such final Distribution Date,

                       (ii) no interest shall accrue on such Certificates from
and after the end of the related Due Period, and upon the Trust Administrator's
making of such final distribution with respect to such Class of Certificates,
such Certificates will be absolutely null and void and of no further effect
thereafter, and

                       (iii) such final distribution will only be made upon
presentment of the Certificates to the Trust Administrator at its Corporate
Trust Office or at such other address set forth in such notice.

                  (f) Within one Business Day of the Trust Administrator's
receipt of any payment disbursed to it by the Certificate Insurer in respect of
any Preference Amount recovered from Class A Certificateholders, the Trust
Administrator shall distribute such payment to such Certificateholders. If any
such distribution is to be made on a Distribution Date, it shall be so made
before giving effect to any distribution to be made on such date pursuant to
Section 4.04(a). The


                                       92

<PAGE>



Trust Administrator shall distribute to the respective Class A Certificateholder
any payment disbursed to it by the Certificate Insurer in respect of any
previous distribution to a Class A Certificateholder that was avoided as a
preference pursuant to a final, non-appealable order of a court of competent
jurisdiction under applicable bankruptcy, insolvency, receivership or similar
law, and that such Certificateholder has repaid to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy, as the case may be.

                  (g) With respect to each Account, the Master Servicer shall
deliver to the Trust Administrator without any right of reimbursement therefor
for deposit into such Account the amount of any losses incurred in connection
with the investment of funds in such Account within one Business Day after
receipt from the Trust Administrator of notice of any such losses. The Trust
Administrator shall not be responsible for and shall be indemnified by the
Master Servicer against any expenses or liability incurred with respect to such
investment losses.

         Section 4.05.              [Reserved].

         Section 4.06.              Statements to Certificateholders.

                  On each Distribution Date the Trust Administrator shall
forward by mail to each Holder of a Regular Certificate and the Certificate
Insurer a statement, parts of which shall be based upon Master Servicer
Information and upon which the Trust Administrator shall conclusively rely,
without independent verification, as to the distributions made on such
Distribution Date, setting forth the following information:

                  (a) the amount of the distributions, separately identified,
with respect to the Regular Certificates;

                  (b) the amount of such distributions allocable to principal,
separately identifying the aggregate amount of any Principal Prepayments and
monthly scheduled payments of principal or other recoveries of principal
included therein;

                  (c) the amount of such distributions allocable to interest and
the calculation thereof;

                  (d) the Aggregate Loan Balance as of the end of the related
Due Period;

                  (e) the Class Certificate Principal Balance of each Class of
Regular Certificates after giving effect to any payment of principal on such
Distribution Date;

                  (f) the amount of any Insured Payment included in the amounts
distributed to the Holders of Offered Certificates on such Distribution Date;

                  (g) the Insured Distribution Amount for such Distribution
Date, separately identifying the portions thereof allocable to principal and
interest;


                                       93

<PAGE>



                  (h) the principal amount of each Class A Certificate (based on
a Certificate in the original principal amount of $1,000) which will be
outstanding and the Class Certificate Principal Balance of each Class of Regular
Certificates, in each case after giving effect to any payment of principal on
such Distribution Date;

                  (i) the amount of any OC Release Amount;

                  (j) the amount of any Available Funds Shortfall;

                  (k) the Net WAC Cap for each Certificate Group;

                  (l) the amount, if any, of Realized Losses for the previous
calendar month;

                  (m) the related Overcollateralized Amount after giving effect
to all distributions on such Distribution Date;

                  (n) the total of any Substitution Shortfall Amounts or
Purchase Price amounts paid or received by the Master Servicer with respect to
the preceding month;

                  (o) the weighted average Mortgage Rate of the Mortgage Loans
as of the last day of the related Due Period;

                  (p) the current weighted average of the remaining terms of the
Mortgage Loans;

                  (q) the amount of Servicing Fee paid to or retained by the
Master Servicer;

                  (r) the amount of Administrative Fee paid to the Trustee and
the Trust Administrator;

                  (s) the amount of any Delinquency Advances and Servicing
Advances for the related Due Period, the aggregate amount of Delinquency
Advances outstanding after giving effect to such Delinquency Advances and the
aggregate amount of Nonrecoverable Delinquency Advances with respect to such
Distribution Date;

                  (t) the number of Mortgage Loans outstanding;

                  (u) the cumulative number and Loan Balances of liquidated
Mortgage Loans;

                  (v) the amount of cumulative Realized Losses and its
percentage of the Cut-off Date Pool Balance;

                  (w) the Cut-off Date Loan Balance of each Mortgage Loan which
was modified or extended pursuant to Section 2.11 or 3.07 hereof;



                                       94

<PAGE>



                  (x) the aggregate amount of payments in respect of Prepayment
Interest Shortfalls deposited in the Collection Account by the Master Servicer
on the related Master Servicer Remittance Date pursuant to Section 3.23 hereof;

                  (y) the Remittance Report (as defined in Section 4.06 hereof);

                  (z) the Interest Distribution Amount and the Principal
Distribution Amount for such Distribution Date;

                  (aa) the Reimbursement Amount, if any and the amount, if any,
allocable to principal, the amount allocable to interest and the amount
allocable to other amounts due under the Insurance Agreement;

                  (bb) whether the Stepdown Requirement has been satisfied and
whether the Master Servicer Termination Test has been violated;

                  (cc) the amount of payments received under the PMI Policy and
the number of Mortgage Loans to which such payments related;

                  (dd) the dollar amount of claims made under the PMI Policy
that were denied during the Due Period and the dollar amount of the cumulative
claims made under the PMI Policy denied since the Closing Date;

                  (ee) the Pass-Through Rate for the Class A-2 Certificates for
such Distribution Date;

                  (ff) the Basis Risk Shortfall, if any, for such Distribution
Date and the Unpaid Basis Risk Shortfalls, if any, outstanding after
reimbursements therefor on such Distribution Date;

                  (gg) the balance of the Reserve Fund prior to the deposit or
withdrawal of any amounts on such Distribution Date, the amount of any
withdrawal from the Reserve Fund pursuant to Section 4.04(a)(II)(ix) and the
balance of the Reserve Fund after all deposits and withdrawals on such
Distribution Date; and

                  (gg) the amount distributed to the Class R Certificateholders.

         Items (a), (b), (c) and (e) above shall also be presented on the basis
of a certificate having a $1,000 denomination.

         In addition, on each Distribution Date the Trust Administrator shall
distribute to each Holder, together with the information described above, the
following information based solely upon Master Servicer Information provided to
the Trust Administrator pursuant to Section 4.06 hereof upon which the Trust
Administrator may conclusively rely without independent verification:


                                       95

<PAGE>



                  (A) the number of, and aggregate Loan Balances (including the
                  percent of the aggregate Loan Balances of such Mortgage Loans
                  to the aggregate Loan Balances of all Mortgage Loans) of,
                  Mortgage Loans (i) 30-59 days Delinquent, (ii) 60-89 days
                  Delinquent and (iii) 90 days or more Delinquent (which
                  statistics shall, in each case, include Mortgage Loans in
                  foreclosure and bankruptcy but which shall exclude REO
                  Properties and shall, in each case, show Mortgage Loans in
                  bankruptcy separately as well as aggregated with other
                  Mortgage Loans in that category), as of the close of business
                  on the last day of the calendar month next preceding such
                  Distribution Date and the aggregate Loan Balances of all
                  Mortgage Loans as of such date;

                  (B) the number of, and aggregate Loan Balances of, all
                  Mortgage Loans in foreclosure proceedings (other than any
                  Mortgage Loans described in clause (C) below) and the percent
                  of the aggregate Loan Balances of such Mortgage Loans to the
                  aggregate Loan Balances of all Mortgage Loans, all as of the
                  close of business on the last day of the calendar month next
                  preceding such Distribution Date;

                  (C) the number of, and the Aggregate Loan Balance of, the
                  Mortgage Loans in bankruptcy proceedings and the percent of
                  the Aggregate Loan Balance of such Mortgage Loans to the
                  Aggregate Loan Balance of all Mortgage Loans, all as of the
                  close of business on the last day of the calendar month next
                  preceding such Distribution Date;

                  (D) the number of REO Properties, the Aggregate Loan Balance
                  of the related Mortgage Loans, and the percent of the
                  Aggregate Loan Balance of such Mortgage Loans to the Aggregate
                  Loan Balance of all Mortgage Loans, all as of the close of
                  business on the last day of the calendar month next preceding
                  such Distribution Date;

                  (E) for each Mortgage Loan which is an REO Property, the Loan
                  Balance of such Mortgage Loan, the loan number of such
                  Mortgage Loan, the Value of the Mortgaged Property, the value
                  established by any new appraisal, the estimated cost of
                  disposing of the Mortgage Loan and the amount of any
                  unreimbursed Delinquency Advances and Servicing Advances;

                  (F) for each Mortgage Loan which is in foreclosure, the Loan
                  Balance of such Mortgage Loan, the Value of the Mortgaged
                  Property, the Loan-to-Value Ratio and the loan-to-value ratio
                  on the original Value as of the close of business on the last
                  day of the calendar month next preceding such Distribution
                  Date and the last paid-to- date, based; and

                  (G) the principal balance of each Mortgage Loan that was
                  modified or extended pursuant to Section 2.10 or 3.01 hereof.



                                       96

<PAGE>



                  Within a reasonable period of time (which shall not be more
than 45 days) after the end of each calendar year, the Trust Administrator 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 (a) through (c) above, aggregated for such calendar year or
applicable portion thereof during which such Person was a Certificateholder.
Such obligation of the Trust Administrator shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Trust Administrator pursuant to any requirements of the Code as
are from time to time in force.

                  On each Distribution Date the Trust Administrator shall
forward to the Certificate Insurer, the Depositor, the Trustee, each Holder of a
Class R Certificate, the Master Servicer and Bloomberg (at 499 Park Avenue, New
York, New York 10022, Attention: Sam Chawla, (212) 940- 1843) a copy of the
reports forwarded to the Regular Certificateholders on such Distribution Date,
and a report of the amounts, if any, actually distributed with respect to the
Class R Certificates on such Distribution Date.

                  Within a reasonable period of time after the end of each
calendar year, the Trust Administrator shall furnish to any Person who at any
time during the calendar year was a Holder of a Class R Certificate a statement
containing the information provided pursuant to the previous paragraph
aggregated for such calendar year or applicable portion thereof during which
such Person was a Certificateholder.

                  The Trust Administrator shall, upon written request, forward
to any Certificateholder within five Business Days after the furnishing or
receipt thereof by the Trustee, as the case may be, copies of any (i)
directions, notices, certificates, opinions or reports furnished hereunder by
the Trust Administrator to the Certificate Insurer, the Master Servicer, the
Trustee, the Depositor or the Rating Agencies, (ii) directions, notices,
certificates, reports, opinions or any other information or document furnished
to the Trust Administrator by the Certificate Insurer, the Trustee, the Master
Servicer, the Depositor or the Rating Agencies and (iii) anything requested in
writing by any Certificateholder which the Trust Administrator otherwise sends
to some other Person pursuant to this Agreement (excluding, however, routine
items sent to Mortgagors, taxing or local property records authorities and
similar items) which, in the case of clause (iii), such Certificateholder is not
otherwise receiving; provided, however, that any such documents or information
requested under clause (iii) shall be at the expense of the requesting
Certificateholder; and provided, further, that the Trust Administrator shall not
be required to provide any document or information which it is otherwise legally
prohibited from providing.

                  The Trustee hereby agrees to disclose the Premium Rate to any
Person upon request.

         Section 4.07.              Remittance Reports; Delinquency Advances by
                                    the Master Servicer and Insurance Claims.



                                       97

<PAGE>



                  (a) On the Business Day following each Determination Date, the
Master Servicer shall deliver to the Trustee, the Trust Administrator and the
Certificate Insurer by telecopy (or by such other means as the Master Servicer,
the Trust Administrator and the Trustee (or the Certificate Insurer) may agree
from time to time) a servicing report (the "Remittance Report") with respect to
the related Distribution Date. In addition, the Master Servicer shall deliver to
Bloomberg, by electronic medium, a copy of the Remittance Report. On the same
date, the Master Servicer shall forward to the Trustee, the Trust Administrator
and the Certificate Insurer by overnight mail a computer readable magnetic tape
containing the information set forth in such report with respect to the related
Distribution Date. Such report will include (i) the amount of Delinquency
Advances to be made by the Master Servicer in respect of the related
Distribution Date, the aggregate amount of Delinquency Advances outstanding
after giving effect to such Delinquency Advances, and the aggregate amount of
Nonrecoverable Delinquency Advances in respect of such Distribution Date and
(ii) such other information with respect to the Mortgage Loans as the Trust
Administrator may reasonably require to perform the calculations necessary to
make the distributions contemplated by Section 4.04 and to prepare the
statements to Certificateholders contemplated by Section 4.06. The Trust
Administrator shall not be responsible to recompute, recalculate or verify any
information provided to it by the Master Servicer.

                  (b) On or before 3:00 p.m. New York time on the Master
Servicer Remittance Date, the Master Servicer shall remit in immediately
available funds to the Trust Administrator for deposit in the Certificate
Account an amount equal to the aggregate amount of Delinquency Advances, if any,
to be made in respect of the Mortgage Loans and REO Properties for the related
Distribution Date either (i) from its own funds or (ii) from the 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 Collection
Account that amounts held for future distribution have been, as permitted by
this Section 4.06, used by the Master Servicer in discharge of any such
Delinquency Advance) or (iii) in the form of any combination of (i) and (ii)
aggregating the total amount of Delinquency Advances to be made by the Master
Servicer with respect to the Mortgage Loans and REO Properties. Any amounts held
for future distribution and so used shall be appropriately reflected in the
Master Servicer's records and replaced by the Master Servicer by deposit in the
Collection Account on or before the next Master Servicer Remittance Date. The
Trust Administrator will provide notice to the Trustee, the Certificate Insurer
and the Master Servicer by telecopy by the close of business on the third
Business Day prior to the Distribution Date in the event that the amount
remitted by the Master Servicer to the Trust Administrator on such date is less
than the Delinquency Advances required to be made by the Master Servicer for the
related Distribution Date..

                  (c) The obligation of the Master Servicer to make Delinquency
Advances (other than Nonrecoverable Delinquency Advances) is mandatory with
respect to any Mortgage Loan or REO Property, and shall continue until a Final
Recovery Determination or an REO Disposition in connection therewith or the
purchase or repurchase thereof from the Trust pursuant to any applicable
provision of this Agreement.



                                       98

<PAGE>



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

         Section 4.08.              Compliance with Withholding Requirements.

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

         Section 4.09.              Securities and Exchange Commission;
                                    Additional Information.

                  Within 15 days after each Distribution Date, the Trust
Administrator shall file with the Securities and Exchange Commission via the
Electronic Data Gathering and Retrieval System, a Form 8-K with a copy of the
statement to Certificateholders for such Distribution Date as an exhibit
thereto. Prior to January 30, 2001, the Trust Administrator shall file a Form 15
Suspension Notification with respect to the Trust, if applicable. Prior to March
30, 2001, the Trust Administrator shall file a Form 10-K with respect to the
Trust. The Depositor hereby grants to the Trust Administrator a limited power of
attorney to execute and file each such document on behalf of the Depositor. Such
power of attorney shall continue until the earlier of (i) receipt by the Trust
Administrator from the Depositor of written termination of such power of
attorney and (ii) the termination of the Trust. Upon request, the Trust
Administrator shall deliver to the Depositor a copy of any Form 8-K or Form 10-K
filed pursuant to this Section 4.08.

         Section 4.10.              Reserve Fund.

                  (a) On the Closing Date, the Trust Administrator shall
establish and maintain in its name, in trust for the benefit of the holders of
the Class A-2 Certificates, the Reserve Fund. The Reserve Fund shall be an
Eligible Account, and funds on deposit therein shall be held separate and apart
from, and shall not be commingled with, any other moneys, including, without
limitation, other moneys of the Trust Administrator held pursuant to this
Agreement.


                                       99

<PAGE>



                  (b) On each Distribution Date, the Trust Administrator shall
transfer the amount of any Basis Risk Shortfall and any Unpaid Basis Risk
Shortfall and the Required Reserve Fund Deposit from the Certificate Account to
the Reserve Fund pursuant to Section 4.04(a)(II)(ix) and (x). The Trust
Administrator shall make withdrawals from the Reserve Fund to make distributions
pursuant to Sections 4.04(a)(II)(ix).

                  (c) Funds in the Reserve Fund may be invested in Permitted
Investments. Any earnings on such amounts shall be distributed to the Master
Servicer. The Holder of the Class R Certificates shall be the owner of the
Reserve Fund for federal income tax purposes and the Holder of the Class R
Certificates shall direct the Trust Administrator, in writing, as to investment
of amounts on deposit therein. In the absence of written direction to the Trust
Administrator from the Holder of the Class R Certificates, all funds in the
Reserve Fund shall remain uninvested.

                  (d) Upon termination of the Trust, any amounts remaining in
the Reserve Fund shall be distributed to the Class R Certificateholder.



                                       100

<PAGE>



                                    ARTICLE V

                                THE CERTIFICATES

         Section 5.01.              The Certificates.

                  The Certificates consist of the Regular Certificates and the
Class R Certificates. The Certificates in the aggregate will represent the
entire beneficial ownership interest in the Mortgage Loans and all other assets
included in REMIC I.

                  The Certificates will be substantially in the forms annexed
hereto as Exhibits A-1 and A-2. The Class A Certificates shall be issued upon
original issuance as Book-Entry Certificates. The Class R Certificates shall be
issued at all times as Definitive Certificates. The Offered Certificates are
issuable only in denominations of $50,000 and integral multiples of $1.00 in
excess thereof. The Class R Certificates are issuable only in denominations
representing Percentage Interests of at least 10%.

                  Upon original issue, the Certificates shall be executed by the
Trustee, or by the Trust Administrator on behalf of the Trustee, and
authenticated and delivered by the Trustee or by the Trust Administrator, upon a
written order to authenticate and upon receipt of the documents specified in
Section 2.04 hereof. The Certificates shall be executed by manual or facsimile
signature on behalf of the Trustee or the Trust Administrator by an authorized
signatory. Certificates bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Trustee or the Trust
Administrator shall bind the Trustee or the Trust Administrator, as applicable,
notwithstanding that such individuals or any of them shall 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 or the Trust
Administrator 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.

                  Interest shall accrue on the Class A-1 Certificates on the
basis of a 360-day year consisting of twelve 30-day months, except as otherwise
provided herein. Interest shall accrue on the Class A-2 Certificates on the
actual number of days in each Accrual Period and a 360-day year, except as
otherwise provided herein.

         Section 5.02.              Registration of Transfer and Exchange of
                                    Certificates.

                  (a) The Trust Administrator shall cause to be kept at the
office or agency appointed by the Trust Administrator in accordance with the
provisions of Section 8.12 hereof a Certificate Register in which, subject to
such reasonable regulations as it may prescribe, the Trust Administrator


                                       101

<PAGE>



shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided. The Depositor, each
Certificateholder, the Trustee and the Certificate Insurer shall have the right
to inspect the Certificate Register or to obtain a copy thereof at all
reasonable times, and to rely conclusively upon a certificate of the Trust
Administrator as to the information set forth in the Certificate Register. The
Trust Administrator shall furnish or cause to be furnished to the Depositor, the
Trustee and the Certificate Insurer and to any Certificateholder a listing of
the names and addresses of the Certificateholders on reasonable request.

                  (b) (i)The Class R Certificates have not been registered or
qualified under the 1933 Act or any state securities laws or "blue sky" laws. No
transfer, sale, pledge or other disposition of any Class R Certificate shall be
made unless such disposition is made pursuant to an effective registration
statement under the 1933 Act and effective registration or qualification under
applicable state securities laws or "blue sky" laws, or is made in a transaction
which does not require such registration or qualification. In the event that a
transfer is to be made in reliance upon an exemption from the 1933 Act, the
Trust Administrator 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 G; 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 or
of the Depositor, the Trust Administrator, the Trustee, the Master 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. None of the Depositor, the Master Servicer, the Trust
Administrator or the Trustee is obligated under this Agreement to register the
Class R Certificates under the 1933 Act or any other securities law or to take
any action not otherwise required under this Agreement to permit the transfer of
Class R Certificates without such registration or qualification. Any Class R
Certificateholder desiring to effect such transfer shall, and does hereby agree
to, promptly indemnify and reimburse the Trustee, the Depositor, the Trust
Administrator and the Master Servicer for costs and expenses incurred in
connection with any liability that results if the transfer is not so exempt or
is not made in accordance with such applicable federal and state laws.

                  (ii) No transfer of a Class R 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") unless the Depositor, the Trust Administrator, the
Trustee and the Master Servicer are provided with an Opinion of Counsel which
establishes to the satisfaction of the Depositor, the Trust Administrator, the
Trustee and the Master Servicer that the purchase of such Certificates is
permissible under applicable law, will not constitute or result in any
prohibited transaction under ERISA or Section 4975 of the Code and will not
subject the Depositor, the Master Servicer, the Trust Administrator, the Trustee
or the Trust to any obligation or liability (including obligations or
liabilities under ERISA or Section 4975 of the Code) in addition to those
undertaken in this


                                       102

<PAGE>



Agreement, which Opinion of Counsel shall not be an expense of the Depositor,
the Master Servicer, the Trust Administrator, the Trustee or the Trust. An
Opinion of Counsel will not 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 a Plan or a Person investing Plan Assets)
and the Trust Administrator shall be entitled to conclusively rely upon a
representation (which, upon the request of the Trust Administrator, shall be a
written representation) from the Depositor of the status of such transferee as
an affiliate of the Depositor.

                  (c) (i) Each Person who has or who acquires any Ownership
Interest in a Class R 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 Trust Administrator
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 Class R Certificate are expressly
subject to the following provisions:

                           (A) Each Person holding or acquiring any Ownership
                       Interest in a Class R Certificate shall be a Permitted
                       Transferee and shall promptly notify the Trust
                       Administrator 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 Class R Certificate, the Trust
                       Administrator shall require delivery to it, and shall not
                       register the transfer of any Class R Certificate until
                       its receipt of, an affidavit and agreement (a "Transfer
                       Affidavit and Agreement," in the form attached hereto as
                       Exhibit H) from the proposed transferee representing and
                       warranting, among other things, that such transferee is a
                       Permitted Transferee, that it is not acquiring its
                       Ownership Interest in the Class R 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 Interest in
                       a Class R Certificate, it will endeavor to remain a
                       Permitted Transferee, and that it has reviewed the
                       provisions of this Section 5.02(c) 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 Trust
                       Administrator 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 Class R Certificate to such proposed
                       transferee shall be effected.



                                       103

<PAGE>



                           (D) Each Person holding or acquiring any Ownership
                       Interest in a Class R Certificate shall agree (x) to
                       require a Transfer Affidavit and Agreement from any other
                       Person to whom such Person attempts to transfer its
                       Ownership Interest in a Class R Certificate and (y) not
                       to transfer its Ownership Interest unless it provides a
                       Transferor Affidavit (in the form attached hereto as
                       Exhibit H) to the Trust Administrator 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 Class R Certificate, by purchasing an
                       Ownership Interest in such Certificate, agrees to give
                       the Trust Administrator 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 Class R Certificate, if it is, or is
                       holding an Ownership Interest in a Class R Certificate on
                       behalf of, a "pass-through interest holder."

                    (ii) The Trust Administrator will register the transfer of a
                  Class R 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 Trust
                  Administrator as a condition to such registration.

                   (iii) (A) If any purported transferee shall become a Holder
                  of a Class R Certificate in violation of the provisions of
                  this Section 5.02(c), 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 Class R Certificate. The
                  Trust Administrator shall be under no liability to any Person
                  for any registration of transfer of a Class R Certificate that
                  is in fact not permitted by this Section 5.02(c) 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 Class R Certificate in violation of the restrictions in
                  this Section 5.02(c) and to the extent that the retroactive
                  restoration of the rights of the holder of such Class R
                  Certificate as described in clause (iii)(A) above shall be
                  invalid, illegal or unenforceable, then the Trust
                  Administrator shall have the right, without notice to the
                  holder or any prior holder of such Class R Certificate, to
                  sell such Class R Certificate to a purchaser selected by the
                  Trust Administrator on such terms as the Trust Administrator
                  may choose. Such purported transferee shall promptly endorse
                  and deliver each Class R Certificate in accordance with the
                  instructions of the Trust Administrator. Such purchaser may be
                  the Trust Administrator itself or any Affiliate of the Trust
                  Administrator. The proceeds of such sale, net of the
                  commissions (which may include commissions payable to the
                  Trust Administrator or its Affiliates), expenses


                                       104

<PAGE>



                  and taxes due, if any, will be remitted by the Trust
                  Administrator 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 Trust Administrator,
                  and the Trust Administrator shall not be liable to any Person
                  having an Ownership Interest in a Class R Certificate as a
                  result of its exercise of such discretion.

                    (iv) The Trust Administrator 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 Class R 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 Class
                  R 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
                  Class R 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 Trust Administrator.

                     (v) The provisions of this Section 5.02(c) set forth prior
                  to this subsection (v) may be modified, added to or
                  eliminated, provided that there shall have been delivered to
                  the Trust Administrator 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 Trust Administrator, to the effect
                       that such modification of, addition to or elimination of
                       such provisions will not cause the Trust to cease to
                       qualify as a REMIC and will not cause the Trust to be
                       subject to an entity-level tax caused by the transfer of
                       any Class R 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 Class R Certificate to a
                       Person that is not a Permitted Transferee.

                  Notwithstanding anything in this Section 5.02 to the contrary,
no certifications or Opinions of Counsel will be required in connection with the
initial transfer of any such Class R Certificate by the Depositor to an
affiliate of the Depositor or by the Depositor or such affiliate to Greenwich
Capital Markets, Inc.



                                       105

<PAGE>



                  (d) Subject to the preceding paragraphs, upon surrender for
registration of transfer of any Certificate (duly endorsed, or accompanied by an
executed assignment, as specified in the Certificate) at any agency or office
appointed by the Trust Administrator for such purpose pursuant to Section 8.12
hereof, the Trustee, or the Trust Administrator on behalf of the Trustee, shall
execute and the Trustee or the Trust Administrator shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Certificates of the same Class of a like aggregate Percentage Interest.

                  (e) At the option of the Certificateholders, each 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 appointed by the Trust
Administrator for such purpose pursuant to Section 8.12 hereof. Whenever any
Certificates are so surrendered for exchange the Trustee, or the Trust
Administrator on behalf of the Trustee, shall execute and the Trustee or the
Trust Administrator shall 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
Trust Administrator) be duly endorsed by, or be accompanied by an assignment in
the form attached to the Certificate or by a written instrument of transfer in a
form reasonably satisfactory to the Trust Administrator duly executed by, the
Holder thereof or his attorney duly authorized in writing.

                  (f) No service charge to the Certificateholders shall be made
for any transfer or exchange of Certificates, but the Trust Administrator 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.

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

         Section 5.03.              Mutilated, Destroyed, Lost or Stolen
                                    Certificates.

                  If (i) any mutilated Certificate is surrendered to the Trust
Administrator or the Trust Administrator receives evidence to its satisfaction
of the destruction, loss or theft of any Certificate, and (ii) there is
delivered to each of the Trustee, the Trust Administrator and the Certificate
Insurer such security or indemnity (provided that an unsecured letter of
indemnity in a form reasonably satisfactory to the Trustee and the Trust
Administrator from a Holder which is an insurance company having long-term
unsecured debt which is rated at least investment grade (or having a comparable
claim-paying ability rating) and having a minimum net worth of $100,000,000
shall satisfy such requirement) as may be required by them to save each of them
harmless, then, in the absence of actual knowledge by a Responsible Officer of
the Trustee or the Trust Administrator that such Certificate has been acquired
by a bona fide purchaser, the Trustee, or the Trust Administrator on behalf of
the Trustee, shall execute and the Trustee or the Trust Administrator shall
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


                                       106

<PAGE>



of any new Certificate under this Section, the Trust Administrator 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 Trust Administrator and the Trustee) connected
therewith. Any replacement Certificate issued pursuant to this Section shall
constitute complete and indefeasible evidence of ownership in the Trust, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.

         Section 5.04.              Persons Deemed Certificateholders.

                  The Depositor, the Master Servicer, the Trust Administrator,
the Trustee and the Certificate Insurer and any agent of any of them may treat
the Person in whose name any Certificate is registered in the Certificate
Register as the Certificateholder for the purpose of receiving distributions
pursuant to Section 4.04 hereof and for all other purposes whatsoever, and none
of the Depositor, the Master Servicer, the Trust Administrator, the Trustee, the
Certificate Insurer or any agent of any of them shall be affected by notice to
the contrary.

         Section 5.05.              Book-Entry Certificates.

                  At such time, if any, as any Class of Regular Certificates
shall be registered on the Certificate Register in the name of the Depository or
its nominee, such Class shall be issued in the form of one or more typewritten
Certificates representing Book-Entry Certificates to be delivered to the
Depository by or on behalf of the Depositor and held by the Book-Entry Custodian
or, if appointed to hold such Certificates as provided below, the Depository.
Any Certificate Owner owning a beneficial interest in the Book-Entry
Certificates shall only be entitled to receive definitive, fully registered
Certificates ("Definitive Certificates") representing such Certificate Owner's
interest in such Certificates pursuant to Section 5.07 hereof. Following the
issuance of Book-Entry Certificates with respect to any Regular Certificates and
until such time, if any, as Definitive Certificates shall have been issued to
the Certificate Owners of such Certificates:

                  (a) the provisions of this Section 5.05 shall be in full force
and effect;

                  (b) the Depositor, the Master Servicer, the Trust
Administrator, the Trustee and the Certificate Insurer may deal with the
Depository and the Depository Participants for all purposes (including the
making of distributions) as the authorized representative of the respective
Certificate Owners of such Certificates;

                  (c) the rights of the respective Certificate Owners of such
Certificates shall be exercised only through the Depository and the Depository
Participants and shall be limited to those established by law and agreements
between the Owners of such Certificates and the Depository and/or the Depository
Participants. Pursuant to the Depository Agreement, with respect to any Book-
Entry Certificates, the Depository will make book-entry transfers among the
Depository Participants and receive and transmit distributions of principal and
interest on such Certificates to such Depository Participants;


                                       107

<PAGE>



                  (d) the Depository may collect its usual and customary fees,
charges and expenses from its Depository Participants;

                  (e) the Trustee and the Trust Administrator may rely, and
shall be fully protected in relying, upon information furnished by the
Depository with respect to its Depository Participants; and

                  (f) to the extent that the provisions of this Section 5.05
conflict with any other provisions of this Agreement, the provisions of this
Section 5.05 shall control.

                  For purposes of any provision of this Agreement requiring or
permitting actions with the consent of, or at the direction of, Holders of
Certificates evidencing a specified percentage of the Voting Rights, such
consent or direction may be given by a combination of Certificate Owners (acting
through the Depository and the Depository Participants) owning Book-Entry
Certificates, and Certificateholders owning Definitive Certificates, evidencing
in the aggregate such specified percentage of the Voting Rights.

         The Trust Administrator 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, the Master Servicer, the Trustee and, if the Trust
Administrator is not the Book-Entry Custodian, the Trust Administrator, 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 Trust Administrator resigns or is removed in accordance with
the terms hereof, the Trustee, the successor trust administrator 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.

         Section 5.06.              Notices to Depository.

                  Whenever any notice or other communication is required to be
given to Holders of any Class of Certificates represented in whole or in part by
Book-Entry Certificates, the Trust Administrator shall, with respect to such
Book-Entry Certificates, give all such notices and communications to the
Depository rather than to the related Certificate Owners.

         Section 5.07.              Definitive Certificates.

                  After any issuance of Regular Certificates as Book-Entry
Certificates, if (a) the Depositor advises the Trustee or the Trust
Administrator that the Depository is no longer willing or


                                       108

<PAGE>



able to discharge properly its responsibilities under the Depository Agreement
with respect to such Certificates and the Trustee, Trust Administrator or the
Depositor is unable to locate a qualified successor, (b) the Depositor, at its
sole option, advises the Trustee or the Trust Administrator that it elects to
terminate the book-entry system with respect to such Certificates through the
Depository or (c) after the occurrence and continuation of a Master Servicer
Default, Certificate Owners of any Class of Certificates evidencing at least 51%
of the Percentage Interests represented by the Book- Entry Certificates of such
Class advise the Trustee, the Trust Administrator and the Depository in writing
through the Depository Participants that the continuation of a book-entry system
with respect to such Certificates through the Depository (or its successor) is
no longer in the best interests of the Certificate Owners with respect to such
Certificates, then the Trust Administrator shall notify all Certificate Owners
of the availability of Definitive Certificates to Certificate Owners requesting
the same.

                  The Depositor shall provide the Trust Administrator with an
adequate inventory of certificates to facilitate the issuance and transfer of
Definitive Certificates. Upon surrender to the Trust Administrator of any
Book-Entry Certificates by the Depository, accompanied by registration
instructions from the Depository for registration, the Trustee, or the Trust
Administrator on behalf of the Trustee, shall execute and the Trustee or the
Trust Administrator shall authenticate and deliver the Definitive Certificates
that are to replace such Book-Entry Certificates. Neither the Depositor, the
Trustee nor the Trust Administrator shall be liable for any delay in delivery of
such instructions and each may conclusively rely on, and shall be protected in
relying on, such instructions. Upon the issuance of such 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 Trust Administrator, to the extent applicable with respect to such
Definitive Certificates, and the Trust Administrator shall recognize the Holders
of such Definitive Certificates as Certificateholders hereunder.



                                       109

<PAGE>



                                   ARTICLE VI

                      THE DEPOSITOR AND THE MASTER SERVICER

         Section 6.01.              Liability of the Depositor and the Master
                                    Servicer.

                  The Depositor and the Master Servicer each shall be severally
liable in accordance herewith only to the extent of the obligations specifically
imposed by this Agreement and undertaken herein by the Depositor and the Master
Servicer, respectively.

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

                  Subject to the following paragraph, the Depositor shall keep
in full effect its existence, rights and franchises as a corporation under the
laws of the jurisdiction of its incorporation. The Master Servicer shall keep in
full effect its existence, rights and franchises as a corporation organized
under the laws of the State of California (or under the laws of such other
jurisdiction as may in the future issue a charter for the Master Servicer). The
Depositor and the Master Servicer each shall (and the Master Servicer shall
require each Subservicer in the related Subservicing Agreement to) 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 the Master Servicer may be merged or
consolidated with or into any Person, or transfer all or substantially all of
its assets, or substantially all of its assets pertaining to the loan
origination or servicing business, respectively, to any Person, in which case
any Person resulting from any merger or consolidation to which the Depositor or
the Master Servicer shall be a party, or any Person succeeding to the business
of the Depositor or the Master Servicer, shall be the successor of the Depositor
or the Master Servicer, as the case may be, hereunder, without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding; provided, however, that the
successor or surviving Person to the Master Servicer shall satisfy the
requirements of Sections 6.06 and 7.02 hereof with respect to the qualifications
of a successor Master Servicer.

         Section 6.03.              Limitation on Liability of the Depositor,
                                    the Master Servicer, any Subservicer and
                                    Others.

                  None of the Depositor or the Master Servicer, or any of the
directors, officers, employees or agents of the Depositor or the Master
Servicer, any Subservicer or members or affiliates of the Depositor shall be
under any liability to the Trust 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, the Master Servicer or any such Person against
the remedies provided herein for the


                                       110

<PAGE>



breach of any warranties, representations or covenants made herein, or against
any specific liability imposed on the Depositor or the Master Servicer herein,
or against any liability which would otherwise be imposed by reason of willful
misfeasance, bad faith or negligence in the performance of duties of the
Depositor or the Master Servicer, as the case may be, or by reason of reckless
disregard of obligations and duties of the Master Servicer or the Depositor, as
the case may be, hereunder. The Depositor, the Master Servicer and any director,
officer, employee or agent of the Depositor or the Master Servicer, or any
member or affiliate of the Depositor 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 Master Servicer, each Subservicer and the Depositor and
any director, officer, employee or agent of the Master Servicer or the Depositor
and any member or affiliate of the Depositor shall be indemnified by the Trust
and held harmless against any loss, liability or expense incurred in connection
with any audit, controversy or judicial proceeding relating to a governmental
taxing authority or any legal action relating to this Agreement or the
Certificates, other than any loss, liability or expense related to any specific
Mortgage Loan or Mortgage Loans (except to the extent any such loss, liability
or expense is otherwise reimbursable pursuant to this Agreement) and 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. Except as otherwise provided
herein, neither the Depositor nor the Master Servicer shall be under any
obligation to appear in, prosecute or defend any legal action that is not
related to its respective duties under this Agreement; provided, however, that,
except as otherwise provided herein, either the Depositor or the Master Servicer
may, with the prior consent of the Trustee, the Trust Administrator and the
Certificate Insurer, 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 and the
Certificate Insurer hereunder. In such event, the legal expenses and costs of
such action, and any liability resulting therefrom, shall be expenses, costs and
liabilities of the Trust, the Depositor and the Master Servicer shall be
entitled to be reimbursed therefor out of the Collection Account.

         Section 6.04.              Limitation on Resignation of the Master
                                    Servicer; No Assignment or Delegation of
                                    Duties by Master Servicer.

                  The Master Servicer shall not resign from the obligations and
duties hereby imposed on it except (a) by the mutual consent of the Certificate
Insurer (except that if a Certificate Insurer Default has occurred and is
continuing, the decision of the Trustee and the Trust Administrator shall
control), the Trustee and the Trust Administrator and written confirmation from
the Rating Agencies that such resignation would not result in the withdrawal,
downgrade or qualification of their ratings of any Class of Certificates (as
they would be determined without regard to the existence of the Policy) or (b)
upon determination that its duties hereunder are no longer permissible under
applicable law. Any such determination pursuant to clause (b) of the preceding
sentence permitting the resignation of the Master Servicer shall be evidenced by
an Independent Opinion of Counsel to such effect delivered (at the expense of
the Master Servicer) to the Trustee, the Trust Administrator and


                                       111

<PAGE>



the Certificate Insurer. No resignation of the Master Servicer shall become
effective until the Trustee, the Trust Administrator or a successor servicer,
appointed pursuant to the provisions of Section 7.02 hereof and satisfying the
requirements of Sections 6.06 with respect to the qualifications of a successor
Master Servicer, shall have assumed the Master 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, the Master Servicer shall
not assign or transfer any of its rights, benefits or privileges hereunder to
any other Person, or (except as permitted by Section 3.02 hereof) delegate to or
subcontract with, or authorize or appoint any other Person to perform any of the
duties, covenants or obligations to be performed by the Master Servicer
hereunder, without the prior written consent of each of the Certificate Insurer,
the Trust Administrator and the Trustee (except that if a Certificate Insurer
Default has occurred and is continuing, the decision of the Trustee and the
Trust Administrator shall control), and, absent such written consent, any
agreement, instrument or act purporting to effect any such assignment, transfer,
delegation or appointment shall be void.

         Section 6.05.              Rights of the Depositor, the
                                    Certificateholders and Others in Respect of
                                    the Master Servicer.

                  The Master Servicer shall (and shall require any Subservicer
in the related Subservicing Agreement to) afford the Depositor, the Trustee, the
Trust Administrator, the Certificate Insurer and any Regular Certificateholder
which has a greater than 10% Percentage Interest in the related Class and any
representative or agent of the foregoing, upon reasonable prior notice, during
normal business hours, access to all records maintained by the Master Servicer
in respect of its rights and obligations hereunder and access to officers of the
Master Servicer and each Subservicer responsible for such obligations. Upon
request and at such requesting party's expense, the Master Servicer shall
furnish to the Depositor, any Certificateholder, the Trustee, the Trust
Administrator and the Certificate Insurer, the Master Servicer's most recent
publicly available financial statements and each Subservicer's most recent
financial statements (annual or quarterly statements, as the case may be) and
such other information reasonably relating to their capacity to perform their
obligations under this Agreement as the Master Servicer or such Subservicer
possesses.

                  To the extent such information is not otherwise available to
the public, the Depositor, the Certificateholders, the Master Servicer (with
respect to information of any Subservicer), the Trust Administrator, the Trustee
and the Certificate Insurer shall not disseminate any information obtained
pursuant to the preceding two sentences without the written consent of the
Master Servicer or the Subservicer (only with respect to information of such
Subservicer) except as required pursuant to this Agreement or to the extent that
it is necessary to do so (i) in working with legal counsel, auditors, taxing
authorities or other governmental agencies for reasons consistent with the
performance of their respective duties or (ii) pursuant to any law, rule,
regulation, order, judgment, writ, injunction or decree of any court or
governmental authority, or as may be required in any report submitted to any
regulatory body, having jurisdiction over the Depositor, the Master Servicer,
the


                                       112

<PAGE>



Trust Administrator, the Trustee, any Certificateholder or REMIC I, as the case
may be, and in any case, the Depositor, the Master Servicer (with respect to
information of any Subservicer), the Trust Administrator or the Trustee, as the
case may be, shall use its best efforts to assure the confidentiality of any
such disseminated non-public information.

         Section 6.06.              Eligibility Requirements for Master
                                    Servicer.

                  The Master Servicer hereunder shall at all times be a
corporation or a state-chartered or national bank acceptable to the Certificate
Insurer except that if a Certificate Insurer Default has occurred and is
continuing, such entity shall be acceptable to the Trustee and the Trust
Administrator. The Master Servicer shall be organized and doing business under
the laws of the United States of America or any state thereof or the District of
Columbia and have, except in the case of the original Master Servicer, equity of
at least $10,000,000 (or such lower level as may be acceptable to the
Certificate Insurer, or, if a Certificate Insurer Default has occurred and is
continuing, to the Trustee and the Trust Administrator, and to the Rating
Agencies, as evidenced by written confirmation that such lower level would not
result in the withdrawal, downgrade or qualification of their ratings of any
Class of Certificates (as they would be determined without regard to the
existence of the Policy). In case at any time the Master Servicer shall cease to
be eligible in accordance with the provisions of this Section 6.06, the Master
Servicer shall resign immediately in the manner and with the effect specified in
Section 7.02(a) hereof.



                                       113

<PAGE>



                                   ARTICLE VII
                                     DEFAULT

         Section 7.01.     Master Servicer Defaults; Certain Matters Affecting
                           the Master Servicer.

                  (a) "Master Servicer Default", wherever used herein, means any
one of the following events:

                       (i) any failure by the Master Servicer to deposit into
the Collection Account and the Certificate Account any amount (other than a
Delinquency Advance required to be made from its own funds) that it is required
to deposit under the terms of this Agreement, which failure continues unremedied
for a period of two Business Days after the date upon which such payment was
required to be remitted or paid; or

                       (ii) any failure on the part of the Master Servicer duly
to observe or perform in any material respect any other of the covenants or
agreements on the part of the Master Servicer contained in the Certificates or
in this Agreement, which failure continues unremedied for a period of 30 days
after the first date on which (x) a Servicing Officer has knowledge of such
failure or (y) written notice of such failure, requiring the same to be
remedied, shall have been given to a Servicing Officer by the Majority
Certificateholders, the Depositor, the Trust Administrator or the Trustee; or

                       (iii) a decree or order for relief 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 the Master Servicer and such decree or order shall
have remained in force undischarged or unstayed for a period of 45 days; or

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

                       (v) the Master Servicer shall admit in writing its
inability to pay its debts generally as they become due, file a petition to take
advantage of any applicable insolvency or reorganization statute, make an
assignment for the benefit of its creditors, or voluntarily suspend payment of
its obligations; or

                       (vi) if the Originator or an affiliate of the Originator
is the Master Servicer, any failure of the Originator to repurchase, or
substitute a Qualified Substitute Mortgage Loan for, any Mortgage Loan as
required by Section 2.06 hereof; or


                                       114

<PAGE>



                       (vii) any failure of the Master Servicer to pay any
Delinquency Advance or any amount in respect of Prepayment Interest Shortfalls
on any Master Servicer Remittance Date required to be made from its own funds
pursuant to Section 3.23 or 4.06 hereof, respectively, which failure continues
unremedied for a period of one Business Day; or

                       (viii) there shall have occurred, and the Certificate
Insurer shall have notified the Master Servicer, the Trust Administrator and the
Trustee of, an event of default by the Master Servicer under the Insurance
Agreement; or

                       (ix) either (a) the Master Servicer fails to make any
payment due with respect to recourse debt or other obligations which such debt
or obligations have an aggregate principal balance of $750,000 or more; or (b)
the occurrence of any event or the existence of any condition, the effect of
which is to cause (or permit one or more Persons to cause) $750,000 or more of
recourse debt or other obligations of the Master Servicer to become due before
their stated maturity or before their regularly scheduled dates of payment, in
each case, so long as such failure, event or condition shall be continuing and
shall not have been waived by the Person or Persons entitled to performance; or

                       (x) the rendering against the Master Servicer of a final
judgment, decree or order for the payment of money in excess of $750,000 which
is uninsured, and the continuance of such judgment, decree or order unsatisfied
and in effect for any period of 60 consecutive days without a stay of execution;
or

                       (xi) a failure of the Master Servicer to meet the Master
Servicer Termination Test with respect to any Distribution Date; or

                       (xii) the merger, consolidation or other combination of
the Master Servicer with or into any other entity, unless (1) the Master
Servicer is the surviving entity of such combination or (2) the surviving entity
is a corporation or a national or state-chartered bank or a national banking
association that is (x) organized and doing business under the laws of any state
or the United States or any state thereof or the District of Columbia and (y)
acceptable to the Majority Certificateholders; or

                       (xiii) the Master Servicer ceases to be an approved
servicer of the PMI Insurer for purposes of the PMI Policy.

                  If a Master Servicer Default shall occur, then, and in each
and every such case, so long as such Master Servicer Default shall not have been
remedied, (x) the Certificate Insurer or (y) if a Certificate Insurer Default
has occurred and is continuing, the Trustee, at the direction of the Majority
Certificateholders, may by notice in writing to the Master Servicer, the
Trustee, the Trust Administrator, the Depositor, each related Certificateholder
and the Certificate Insurer, terminate all of the rights and obligations of the
Master Servicer in its capacity as Master Servicer under this


                                       115

<PAGE>



Agreement, to the extent permitted by law, and in and to the related Mortgage
Loans and the proceeds thereof.

                  On and after the receipt by the Master Servicer of any such
written notice, all authority and power of the Master 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 Trust Administrator or other successor Master Servicer appointed pursuant
to Section 7.02 hereof and, without limitation, the Trust Administrator or such
other successor Master Servicer is hereby authorized and empowered, as
attorney-in-fact or otherwise, to execute and deliver, on behalf of and at the
expense of the Master 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 related Mortgage Loans and related documents,
or otherwise.

                  The Master Servicer agrees promptly (and in any event no later
than ten (10) Business Days subsequent to such notice) to provide the Trust
Administrator or other successor Master Servicer with all documents and records
requested by it to enable it to assume the functions of the Master Servicer
under this Agreement and to cooperate with the Trust Administrator or other
successor Master Servicer in effecting the termination of the Master Servicer's
responsibilities and rights under this Agreement, including, without limitation,
the transfer within one Business Day, to the Trust Administrator or other
successor Master Servicer or its designee for administration, of all cash
amounts which shall at the time be or should have been credited by the Master
Servicer to any Account, or which shall thereafter be received with respect to
the related Mortgage Loans or any related REO Property (provided, however, that
the Master Servicer shall to be entitled to receive at the time of relinquishing
its servicing obligations, a cash payment equal to all amounts accrued or owing
to it under this Agreement on or prior to the date of such termination, whether
in respect of Delinquency Advances or otherwise and shall continue to be
entitled to the benefit of Section 6.03 hereof, notwithstanding such
termination).

                  For purposes of this Section 7.01, the Trustee and the Trust
Administrator shall not be deemed to have knowledge of a Master Servicer Default
unless a Responsible Officer of the Trustee or the Trust Administrator has
actual knowledge thereof or unless written notice of any event which is in fact
such a Master Servicer Default is received at the notice address of the Trustee
or the Trust Administrator provided herein and such notice references the
Certificates, the Depositor, the Trust or this Agreement.

                  For purposes of this Section 7.01, any consent or
determination by the Certificate Insurer shall be replaced by consent or
determination of the Majority Certificateholders if a Certificate Insurer
Default has occurred and is continuing.

                  (b) All rights of action under this Agreement or under any of
the Certificates, enforceable by the Master Servicer on behalf of 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


                                       116

<PAGE>



thereto, and any such suit, action or proceeding instituted by the Master
Servicer on behalf of Trustee shall be brought in its name for the benefit of
all the Holders of such Certificates, subject to the provisions of this
Agreement.

         Section 7.02.              Trust Administrator or Trustee to Act;
                                    Appointment of Successor.

                  (a) (1) On and after the time the Master Servicer receives a
notice of termination, or a servicing term expires pursuant to Section 3.28
hereof, the Back-Up Servicer (and in the event the Back-Up Servicer fails in its
obligation, a successor servicer appointed by the Certificate Insurer, or in the
absence of such appointment, the Trust Administrator and in the event the Trust
Administrator fails in its obligation, the Trustee) shall be the successor in
all respects to the Master Servicer in its capacity as Master 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 Back-Up Servicer, the successor servicer,
Trust Administrator, the Trust Administrator or the Trustee, as applicable,
(except for any representations or warranties of the Master Servicer under this
Agreement, the responsibilities, duties and liabilities contained in Section
2.06(c) and the obligation to deposit amounts in respect of losses pursuant to
Section 3.10) by the terms and provisions hereof including, without limitation,
the Master Servicer's obligations to make Delinquency Advances pursuant to
Section 4.06; provided, however, that if the Back-Up Servicer, the successor
servicer, the Trust Administrator or the Trustee, as applicable, is prohibited
by law or regulation from obligating itself to make advances regarding
delinquent mortgage loans, then the Back-Up Servicer, the successor servicer,
the Trust Administrator or the Trustee, as applicable, shall not be obligated to
make Delinquency Advances pursuant to Section 4.06; and provided further, that
any failure to perform such duties or responsibilities caused by the Master
Servicer's failure to provide information required by Section 7.01 shall not be
considered a default by the Back-Up Servicer, the successor servicer, the Trust
Administrator or the Trustee, as applicable, as successor to the Master Servicer
hereunder. As compensation therefor, the Back-Up Servicer, the successor
servicer, the Trust Administrator or the Trustee, as applicable, shall be
entitled to the Servicing Fee and all funds relating to the Mortgage Loans to
which the Master 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 Trust Administrator or the Trustee, as applicable, 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
Certificate Insurer or if the Holders of Certificates entitled to at least 51%
of the Voting Rights so request in writing to the Trust Administrator or
Trustee, as applicable, promptly appoint or petition a court of competent
jurisdiction to appoint, an established mortgage loan servicing institution
selected by the Certificate Insurer and acceptable to each Rating Agency and
having a net worth of not less than $15,000,000, as the successor to the Master
Servicer under this Agreement in the assumption of all or any part of the
responsibilities, duties or liabilities of the Master Servicer under this
Agreement.

                       (2) No appointment of a successor to the Master Servicer
under this Agreement shall be effective until the assumption by the successor of
all of the Master Servicer's responsibilities, duties and liabilities hereunder.
In connection with such appointment and


                                       117

<PAGE>



assumption described herein, the Back-Up Servicer, the successor servicer, the
Trust Administrator or the Trustee, as applicable, 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 Master Servicer as such hereunder. The
Depositor, the Trustee, the Trust Administrator 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 Master Servicer
under this Agreement, the Trust Administrator or the Trustee, as applicable,
shall act in such capacity as hereinabove provided.

                  (b) If the Master Servicer fails to remit to the Trust
Administrator for distribution to the Certificateholders any payment required to
be made under the terms of this Agreement (for purposes of this Section 7.02(b),
a "Remittance") because the Master Servicer is the subject of a proceeding under
the federal Bankruptcy Code and the making of such Remittance is prohibited by
Section 362 of the federal Bankruptcy Code, the Trust Administrator shall (and
in the event the Trust Administrator fails in its obligation, the Trustee) upon
notice of such prohibition, regardless of whether it has received a notice of
termination under Section 7.01, advance the amount of such Remittance by
depositing such amount in the Certificate Account on the related Distribution
Date. The Trust Administrator or the Trustee, as applicable, shall be obligated
to make such advance only if (i) such advance, in the good faith judgment of the
Trust Administrator or the Trustee, as applicable, can reasonably be expected to
be ultimately recoverable from Stayed Funds and (ii) the Trust Administrator or
the Trustee, as applicable, is not prohibited by law from making such advance or
obligating itself to do so. Upon remittance of the Stayed Funds to the Trust
Administrator for the deposit thereof in the Certificate Account by the Master
Servicer, a trustee in bankruptcy or a federal bankruptcy court, the Trust
Administrator or the Trustee, as applicable, may recover the amount so advanced,
without interest, by withdrawing such amount from the Certificate Account;
however, nothing in this Agreement shall be deemed to affect the Trust
Administrator's or Trustee's, as applicable, rights to recover from the Master
Servicer's own funds interest on the amount of any such advance. If the Trust
Administrator or the Trustee, as the case may be, at any time makes an advance
under this Subsection which it later determines in its good faith judgment will
not be ultimately recoverable from the Stayed Funds with respect to which such
advance was made, the Trust Administrator or the Trustee, as applicable, shall
be entitled to reimburse itself for such advance, without interest, by
withdrawing from the Certificate Account, out of amounts on deposit therein, an
amount equal to the portion of such advance attributable to the Stayed Funds.

                  (c) The successor Master Servicer (other than the Trustee or
the Trust Administrator) shall be solely liable for all costs and expenses
associated with the transfer of servicing to such successor Master Servicer,
other than the costs and expenses of sending to the successor Master Servicer
any Mortgage Loan files and records held by the Master Servicer being replaced,
for which costs and expenses the Master Servicer being replaced shall have sole
responsibility.

         Section 7.03.              Notification to Mortgagors and
                                    Certificateholders.



                                       118

<PAGE>



                  (a) Upon any such termination pursuant to Section 7.02 hereof
or the appointment of a successor to the Master Servicer, the Trust
Administrator shall, at the expense of the Master Servicer, give prompt written
notice thereof to the Certificate Insurer and the related Certificateholders at
their respective addresses appearing in the Certificate Register and to the
related Mortgagors at their respective addresses appearing in the Mortgage Loan
Schedule.

                  (b) Within three Business Days after the occurrence of any
event which constitutes or which, with notice or lapse of time or both, would
constitute a Master Servicer Default, the Trust Administrator shall transmit by
mail, at the expense of the Master Servicer, to all Holders of Certificates and
the Certificate Insurer notice of any Master Servicer Default actually known to
a Responsible Officer of the Trust Administrator.

         Section 7.04.              Additional Remedies of Trustee upon Master
                                    Servicer Defaults.

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

         Section 7.05.              Waiver of Master Servicer Defaults.

                  The Certificate Insurer, for so long as a Certificate Insurer
Default has not occurred and is not continuing, and otherwise Majority
Certificateholders may waive any Master Servicer Default and its consequences,
except that a default in the making of any required deposit into the Collection
Account or the Certificate Account that would result in a failure by the Trust
Administrator to make any required distribution on the Certificates may be
waived only by all of the Certificateholders. Upon any waiver of a past Master
Servicer Default, such Master Servicer Default shall cease to exist, and any
Master Servicer Default arising therefrom shall be deemed to have been remedied
for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other Master Servicer Default or impair any right consequent
thereto except to the extent expressly so waived. Notice of any such waiver
shall be given by the Trust Administrator to each Rating Agency and to all
Certificateholders.

         Section 7.06.              Survivability of Master Servicer
                                    Liabilities.



                                       119

<PAGE>



                  Notwithstanding anything herein to the contrary, upon
termination of the Master Servicer hereunder, any liabilities of the Master
Servicer which accrued prior to such termination shall survive such termination.

         Section 7.07.              Back-Up Servicer and Back-Up Servicing
                                    Agreement.

                  Not later than 60 days after the Closing Date, the Master
Servicer shall enter into a Back-Up Servicing Agreement, in form and substance
satisfactory to the Certificate Insurer, with a Back-Up Servicer satisfactory to
the Certificate Insurer. The Master Servicer shall use best efforts to provide
all information necessary for the Back-Up Servicer to implement the Back-Up
Servicing Agreement. Upon execution of the Back-Up Servicing Agreement, the
Master Servicer shall notify the Trustee and the Trust Administrator in writing
that a Back-Up Servicer has been appointed and shall submit wiring instructions
to them for remittance of the Back-Up Servicing Fee. Furthermore, the Master
Servicer shall deliver a copy of the executed Back-Up Servicing Agreement to the
Trustee and the Trust Administrator as soon as such copy becomes available.



                                       120

<PAGE>



                                  ARTICLE VIII

               CONCERNING THE TRUSTEE AND THE TRUST ADMINISTRATOR

         Section 8.01.              Duties of Trustee and the Trust
                                    Administrator.

                  Each of the Trustee and the Trust Administrator, prior to the
occurrence of a Master Servicer Default and after the curing of all Master
Servicer Defaults which may have occurred, undertakes to perform such duties and
only such duties as are specifically set forth in this Agreement.
During a Master Servicer Default, each of the Trustee and the Trust
Administrator 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 or the Trust
Administrator enumerated in this Agreement shall not be construed as a duty.

                  Each of the Trustee and the Trust Administrator, upon receipt
of all resolutions, certificates, statements, opinions, reports, documents,
orders or other instruments furnished to the it which are specifically required
to be furnished pursuant to any provision of this Agreement, shall examine them
to determine whether they are in the form specified in this Agreement. If any
such instrument is found not to conform to the requirements of this Agreement in
a material manner, it shall take such action as it deems appropriate to have the
instrument corrected, and if the instrument is not corrected to its
satisfaction, it will provide notice thereof to the Certificateholders

                  Each of the Trustee and the Trust Administrator may, in
accordance with its duties hereunder, do all things necessary and proper as may
be required in connection with any secondary mortgage licensing laws and similar
requirements, including, but not limited, to consenting to jurisdiction, and the
appointment of agents for service of process, in jurisdictions in which the
Mortgaged Properties are located.

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

                       (i) Prior to the occurrence of a Master Servicer Default,
and after the curing of all such Master Servicer Defaults which may have
occurred, the duties and obligations of the Trustee and the Trust Administrator
shall be determined solely by the express provisions of this Agreement, the
Trustee and the Trust Administrator 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 or the Trust Administrator and, in the absence of bad faith
on the part of the Trustee and the Trust Administrator, the Trustee and the
Trust Administrator may conclusively rely, as to the truth of the statements and
the correctness of the opinions contained therein (including, but not limited
to, Master Servicer Information), upon


                                       121

<PAGE>



any certificates or opinions furnished to the Trustee and the Trust
Administrator that are in the forms specified in this Agreement;

                       (ii) Neither the Trustee nor the Trust Administrator
shall be personally liable for an error of judgment made in good faith by a
Responsible Officer or Responsible Officers of the Trustee or the Trust
Administrator, unless it shall be proved that the Trustee or the Trust
Administrator was negligent in ascertaining the pertinent facts; and

                       (iii) Neither Trustee nor the Trust Administrator shall
be 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 Majority
Certificateholders issued to the Trustee or the Trust Administrator pursuant to
Section 8.13 hereof.

         Section 8.02.              Certain Matters Affecting the Trustee and
                                    the Trust Administrator.

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

                       (i) Each of the Trustee and the Trust Administrator may
request and rely upon and shall be 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 (including, but not limited
to, Master Servicer Information) reasonably believed by it to be genuine and to
have been signed or presented by the proper party or parties;

                       (ii) Each of the Trustee and the Trust Administrator 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) Neither the Trustee nor the Trust Administrator
shall be under any obligation to exercise any of the trusts or powers vested in
it by this Agreement or to make any investigation of matters arising hereunder
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 or the Trust Administrator, as the case may be,
reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby (provided that an unsecured letter of
indemnity in a form reasonably satisfactory to the Trustee or the Trust
Administrator, as the case may be, from a Holder which is an insurance company
having long-term unsecured debt that is rated at least investment grade (or has
a comparable claim-paying ability rating) and having a minimum net worth of
$100,000,000 shall satisfy such requirement); nothing contained herein shall,
however, relieve the Trustee or the Trust Administrator of the obligation, upon
the occurrence of a Master Servicer Default of which the Trustee or the Trust
Administrator, as the case may be, has actual knowledge (which has not been
cured or waived), to exercise such of the rights and powers vested


                                       122

<PAGE>



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) Neither the Trustee nor the Trust Administrator
shall 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 Master Servicer Default
hereunder and after the curing of all Master Servicer Defaults which may have
occurred, neither the Trustee nor the Trust Administrator shall 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 Certificate Insurer or by the Majority Certificateholders;
provided, however, that if the payment 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 or the Trust Administrator, not reasonably assured to the
Trustee or the Trust Administrator by the security afforded to it by the terms
of this Agreement, the Trustee or the Trust Administrator may require reasonable
indemnity (provided that an unsecured letter of indemnity in a form reasonably
satisfactory to the Trustee or the Trust Administrator from a Holder which is an
insurance company having long-term unsecured debt which is rated at least
investment grade (or having a comparable claim-paying ability rating) and having
a minimum net worth of $100,000,000 shall satisfy such requirement) against such
expense or liability as a condition to taking any such action. The reasonable
expense of every such examination shall be paid by the Master Servicer or, if
paid by the Trustee or the Trust Administrator, shall be repaid by the Master
Servicer upon demand;

                       (vi) The Trustee or the Trust Administrator may execute
any of the trusts or powers hereunder or perform any duties hereunder either
directly or by or through agents or attorneys; and

                       (vii) Neither the Trustee nor the Trust Administrator
shall be personally liable for any loss resulting from the investment of funds
at the direction of the Master Servicer held in any Account or the Reserve Fund;
provided, however, that the Trustee or the Trust Administrator, as applicable,
shall be personally liable on any investment on which the Trustee or the Trust
Administrator or an affiliate thereof, as applicable, is the obligor and has
defaulted.

                  (b) Following the Closing Date, and except as otherwise
provided in this Agreement, neither the Trustee nor the Trust Administrator
shall knowingly accept any contribution of assets to the Trust unless it shall
have been provided with an Opinion of Counsel at the expense of the party
delivering such assets acceptable to it to the effect that the inclusion of such
assets in the Trust will not cause the Trust to fail to qualify as a REMIC at
any time that any Certificates are outstanding or subject the Trust to any tax
under the REMIC Provisions or other applicable provisions of federal, state and
local law or ordinances.



                                       123

<PAGE>



                  (c) All rights of action under this Agreement or under any of
the Certificates, enforceable by the Trustee or the Trust Administrator, 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 or the Trust
Administrator shall be brought in its name for the benefit of all the Holders of
such Certificates, subject to the provisions of this Agreement.

         Section 8.03.              Neither Trustee nor Trust Administrator
                                    Liable for Certificates or Mortgage Loans.

                  The recitals contained herein and in the Certificates (other
than the signature of the Trustee or the Trust Administrator, on behalf of the
Trustee, the authentication of the Trustee or the Trust Administrator on the
Certificates, the acknowledgments of the Trustee and the Trust Administrator
contained in Article II and the representations and warranties of the Trustee
and the Trust Administrator in Section 8.14) shall be taken as the statements of
the Depositor, and the Trustee assumes no responsibility for their correctness.
Neither the Trustee nor the Trust Administrator makes any representations or
warranties as to the validity or sufficiency of this Agreement (other than as
specifically set forth in Section 8.14) or of the Certificates (other than the
signature of the Trustee, or the Trust Administrator, and authentication of the
Trustee or the Trust Administrator on the Certificates) or of any Mortgage Loan
or related document. Neither the Trustee nor the Trust Administrator shall be
accountable for the use or application by the Depositor, the Master Servicer 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 the Master Servicer in
respect of the Mortgage Loans or for the use or application of any funds
deposited into or withdrawn from the Collection Account by the Master Servicer.

         Section 8.04.              Trustee and Trust Administrator May Own
                                    Certificates.

                  The Trustee or Trust Administrator 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 or the Trust Administrator, as
applicable.

         Section 8.05.              Expenses of Trustee, Trust Administrator and
                                    Master Servicer.

                  (a) The Trust Administrator shall withdraw from the
Certificate Account on each Distribution Date the Administrative Fee as
described in Section 4.04 hereof and shall remit to the Trustee the portion
thereof to which it is entitled. Each of the Trustee and the Trust Administrator
and any director, officer, employee or agent of the Trustee or the Trust
Administrator, as applicable, 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 the Trustee or the Trust Administrator, as
applicable, including the compensation and the expenses and disbursements of its
agents and counsel, in the ordinary course of the Trustee's or Trust
Administrator's, as the case may be, performance in accordance with the
provisions of this Agreement) incurred by the Trustee or the


                                       124

<PAGE>



Trust Administrator, as applicable, in connection with any 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 any breach of the Master Servicer's (and in the case of the Trustee, the
Trust Administrator's or in the case of the Trust Administrator, the Trustee's)
obligations in connection with this Agreement, (ii) that constitutes a specific
liability of the Trustee or the Trust Administrator, as applicable, pursuant to
Section 3.01 or (iii) 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
or in the case of the Trust Administrator, as a result of a breach of the Trust
Administrator's obligations under Section 3.01 hereof. The Master Servicer
agrees to indemnify the Trustee and the Trust Administrator, from, and hold each
harmless against, any loss, liability or expense arising in respect of any
breach by the Master Servicer of its obligations in connection with this
Agreement. Such indemnity shall survive the termination or discharge of this
Agreement and the resignation or removal of the Trustee or the Trust
Administrator, as the case may be. Any payment hereunder made by the Master
Servicer to the Trustee or the Trust Administrator shall be from the Master
Servicer's own funds, without reimbursement from REMIC I therefor.

                  (b) The Master Servicer shall pay any annual rating agency
fees of the Rating Agencies for ongoing surveillance from its own funds without
right of reimbursement.

         Section 8.06.              Trustee and Trust Administrator Eligibility
                                    Requirements.

                  Each of the Trustee and the Trust Administrator hereunder
shall at all times be a corporation or a national or state-chartered bank or a
national banking association acceptable to the Certificate Insurer and that is
not an affiliate of the Depositor or the Master Servicer, organized and doing
business under the laws of the United States of America or any state thereof or
the District of Columbia, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least $100,000,000 or a
member of a bank holding company whose capital and surplus is at least
$100,000,000 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 8.06
the combined capital and surplus of such corporation, bank or association shall
be deemed to be its combined capital and surplus as set forth in its most recent
report of conditions so published. In case at any time any Trustee or Trust
Administrator shall cease to be eligible in accordance with the provisions of
this Section 8.06, the Trustee or the Trust Administrator, as the case may be,
shall resign immediately in the manner and with the effect specified in Section
8.07 hereof. The corporation, bank or association serving as Trustee or Trust
Administrator may have normal banking and trust relationships with the Depositor
and the Master Servicer and the respective affiliates.

         Section 8.07.              Resignation and Removal of the Trustee and
                                    the Trust Administrator.



                                       125

<PAGE>



                  Either the Trustee or Trust Administrator may at any time
resign and be discharged from the trusts hereby created by giving written notice
thereof to the Depositor, the Master Servicer, the Certificate Insurer, to all
Certificateholders and if the Trustee is resigning, to the Trust Administrator,
or, if the Trust Administrator is resigning, to the Trustee. Upon receiving such
notice of any such resignation or of any removal as provided in this Section,
the Certificate Insurer may select, or if the Certificate Insurer elects not to,
the Master Servicer shall select a successor Trustee or Trust Administrator
(which may be the same Person, if both are being replaced) and shall present
such party to the Certificate Insurer and upon its approval such party shall
promptly be appointed successor trustee or trust administrator by written
instrument, in duplicate, which instrument shall be delivered to the resigning
Trustee or Trust Administrator and to the successor trustee or trust
administrator, as applicable. A copy of such instrument shall be delivered to
the Certificateholders, the Certificate Insurer and the Depositor by the Master
Servicer. If no successor trustee or trust administrator shall have been so
appointed and accepted appointment within 30 days after the giving of such
notice of resignation, the resigning Trustee or Trust Administrator may petition
any court of competent jurisdiction for the appointment of a successor trustee
or trust administrator.

                  If at any time the Trustee or the Trust Administrator shall
cease to be eligible in accordance with the provisions of Section 8.06 hereof
and shall fail to resign after written request therefor, or if at any time the
Trustee or the Trust Administrator shall become incapable of acting, or shall be
adjudged bankrupt or insolvent, or a receiver of the Trustee or the Trust
Administrator or of its property shall be appointed, or any public officer shall
take charge or control of the Trustee or the Trust Administrator or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Master Servicer shall solicit and present to the
Certificate Insurer a written instrument removing the Trustee or the Trust
Administrator, as applicable, and appointing a successor trustee or trust
administrator, as applicable and, upon its written approval, such instrument
shall be delivered to the Trustee or the Trust Administrator so removed and to
the successor trustee or trust administrator. A copy of such instrument shall be
delivered to the Certificateholders, the Certificate Insurer and the Depositor
by the Master Servicer.

                  The Majority Certificateholders, with the written consent of
the Certificate Insurer (which shall only be required if no Certificate Insurer
Default has occurred and is continuing), or the Certificate Insurer (if no
Certificate Insurer Default has occurred and is continuing) may at any time
remove the Trustee or the Trust Administrator and appoint a successor 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 or the Trust
Administrator so removed and one complete set to the successor so appointed.
A copy of such instrument shall be delivered to the Certificateholders, the
Master Servicer, the Certificate Insurer and the Depositor by the Trustee or the
Trust Administrator, as applicable.

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


                                       126

<PAGE>



contrary contained herein, so long as no Certificate Insurer Default exists and
is continuing, neither the Trustee nor the Trust Administrator may be removed by
the Certificateholders without the prior written consent of the Certificate
Insurer.

                  Notwithstanding the foregoing, in the event the Trust
Administrator advises the Trustee that it is unable to continue to perform its
obligations pursuant to the terms of this Agreement prior to the appointment of
a successor, the Trustee shall be obligated to perform such obligations until a
new trust administrator is appointed. Such performance shall be without
prejudice to any claim by a party hereto or beneficiary hereof resulting from
the Trust Administrator's breach of its obligations hereunder.

         Section 8.08.              Successor Trustee and Trust Administrator.

                  Any successor trustee or successor trust administrator
appointed as provided in Section 8.07 hereof shall execute, acknowledge and
deliver to the Certificateholders, the Certificate Insurer, the Master Servicer,
the Trustee or the Trust Administrator, as applicable, and to its predecessor
trustee or predecessor trust administrator an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee or predecessor trust administrator shall become effective
and such successor trustee or predecessor trust administrator, 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 or
predecessor trust administrator, as applicable, shall deliver to the successor
trustee or predecessor trust administrator, as applicable, all Mortgage Files
and related documents and statements held by it hereunder (other than any
Mortgage Files at the time held by a custodian, which shall become the agent of
any successor trustee hereunder), and the Depositor, the Master Servicer and the
predecessor trustee or the predecessor trust administrator, as applicable, 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 or successor trust administrator shall
accept appointment as provided in this Section 8.08 unless at the time of such
acceptance such successor trustee or successor trust administrator shall be
eligible under the provisions of Section 8.06 hereof.

                  Upon acceptance of appointment by a successor trustee or
successor trust administrator as provided in this Section 8.08, the Depositor
shall mail notice of the succession of such trustee or trust administrator
hereunder to each Holder of Certificates at their respective addresses as shown
in the Certificate Register and to each Rating Agency. If the Depositor fails to
mail such notice within ten (10) days after acceptance of appointment by the
successor trustee or successor trust administrator, the successor trustee or
successor trust administrator, as applicable, shall cause such notice to be
mailed at the expense of the Depositor.



                                       127

<PAGE>



                  Notwithstanding anything to the contrary contained herein, so
long as no Certificate Insurer Default exists, the appointment of any successor
trustee or successor trust administrator pursuant to any provision of this
Agreement will be subject to the prior written consent of the Certificate
Insurer.

                  Neither the Trustee nor the Trust Administrator shall be
liable for the acts or omissions to act of any successor Trustee or successor
Trust Administrator, as applicable, appointed hereunder.

         Section 8.09.              Merger or Consolidation of Trustee or Trust
                                    Administrator.

                  Any corporation, bank or association into which the Trustee or
the Trust Administrator 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 or the Trust Administrator
shall be a party, or any corporation, bank or association succeeding to the
business of the Trustee or the Trust Administrator, shall be the successor of
the Trustee or the Trust Administrator hereunder, provided such corporation,
bank or association shall be eligible under the provisions of Section 8.06
hereof, without the execution or filing of any paper or any further act on the
part of any of the parties hereto.

         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
Trustee with the consent of the Certificate Insurer 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 Depositor and
the Trustee may consider necessary or desirable. If the Trustee shall not have
joined in such appointment within 15 days after the receipt by it of a request
so to do, the Certificate Insurer 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 hereof 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.

                  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 the Master 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


                                       128

<PAGE>



holding of title to the Trust or any portion thereof in any such jurisdiction)
shall be exercised and performed by such separate trustee or co-trustee at the
direction of the Trustee.

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

                  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.              Trust Administrator Records.

                  The Trust Administrator and the Trustee shall afford the
Depositor, the Master Servicer, the Certificate Insurer, the Trustee and each
Certificateholder, upon reasonable notice during normal business hours, access
to all records maintained by the Trust Administrator or the Trustee, as
applicable, in respect of its duties hereunder and access to officers of the
Trust Administrator responsible for performing such duties, such inspection to
take place, in the case of the Trust Administrator, at 180 East Fifth Street,
St. Paul, Minnesota 55101 or such other place as designated by the Trust
Administrator and, in the case of the Trustee, at 1555 North River Center Drive,
Milwaukee, Wisconsin 53212. Upon request, the Trust Administrator and the
Trustee shall each furnish the Master Servicer, the Certificate Insurer, the
Trustee and any requesting Certificateholder with its most recent financial
statements. The Trust Administrator and the Trustee shall cooperate fully with
the Depositor, the Master Servicer and such Certificateholder and shall make
available to the Depositor, the Master Servicer, the Certificate Insurer, the
Trust Administrator or Trustee, as applicable, and such Certificateholder for
review and copying such books, documents or records as may be requested with
respect to the Trustee's or the Trust Administrator's duties hereunder. The
Depositor, the Master Servicer, the Certificate Insurer and the
Certificateholders shall not have any responsibility or liability for any action
or failure to act by the Trustee or by the Trust Administrator and are not
obligated to supervise the performance of the Trustee and the Trust
Administrator under this Agreement or otherwise.

         Section 8.12.              Appointment of Office or Agency.



                                       129

<PAGE>



                  The Trust Administrator designates its office at 180 East
Fifth Street, St. Paul, Minnesota 55101 as its agency where the Certificates may
be surrendered for registration of transfer or exchange and presented for final
distribution. The Trust Administrator designates its offices at 180 East Fifth
Street, St. Paul, Minnesota 55101, as the office at which notices and demands to
or upon the Trust Administrator in respect of the Certificates may be served and
will notify the Certificateholders of any change in the location of such office
or agency.

         Section 8.13.              Exercise of Trustee Powers by
                                    Certificateholders.

                  Subject to the provisions of this Article VIII, the
Certificate Insurer, or the Majority Certificateholders with the consent of the
Certificate Insurer (provided that such consent of the Certificate Insurer shall
not be required if a Certificate Insurer Default has occurred and is
continuing), may direct the time, method and place of conducting any proceeding
relating to the Trust or the Certificates or for any remedy available to the
Trustee in its capacity as Trustee (and not in its individual capacity) or the
Trust Administrator in its capacity as Trust Administrator (and not in its
individual capacity) with respect to the Certificates or exercising any trust or
power conferred on the Trustee or the Trust Administrator with respect to the
Certificates or the Trust (except that if a Certificate Insurer Default has
occurred and is continuing then the direction of the Majority Certificateholders
shall control and the Certificate Insurer shall have no right to act); provided,
however, that:

                       (i) such direction shall not be in conflict with any rule
of law or with this Agreement; and

                       (ii) each of the Trustee and the Trust Administrator
shall have been provided with indemnity satisfactory to it (provided that an
unsecured letter of indemnity in a form reasonably satisfactory to the Trustee
and the Trust Administrator from a Person which is an insurance company having
long-term unsecured debt that is rated at least investment grade (or having a
comparable claim-paying ability rating) and having a minimum net worth of
$100,000,000 shall satisfy such requirement).

         Section 8.14.     Representations and Warranties.

                  Each of the Trustee and the Trust Administrator hereby
represents and warrants to the Master Servicer, the Depositor, the Certificate
Insurer and the Trustee or the Trust Administrator, as applicable, 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 of America.

                  (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 articles of association or bylaws or constitute a
         default (or an event which, with notice or lapse of time, or both,


                                       130

<PAGE>



         would constitute a default) under, or result in the breach of, any
         material agreement or other instrument to which it is a party or which
         is applicable to it or any of its assets.

                  (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.

                  (v) It is not in violation of, and its execution and delivery
         of this Agreement and its performance and compliance with the terms of
         this Agreement will not constitute a violation of, any law, any order
         or decree of any court or arbiter, or any order, regulation or demand
         of any federal, state or local governmental or regulatory authority,
         which violation, in its good faith and reasonable judgment, is likely
         to affect materially and adversely either the ability of it to perform
         its obligations under this Agreement.

                  (vi) No litigation is pending or, to the best of its
         knowledge, threatened against it, which would prohibit it from entering
         into this Agreement or, in its good faith reasonable judgment, is
         likely to materially and adversely affect either the ability of it to
         perform its obligations under this Agreement.






                                       131

<PAGE>



                                   ARTICLE IX
                CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER

         Section 9.01.              Certain Rights of the Certificate Insurer.

                  By accepting its Certificate, each Holder of a Class A
Certificate agrees that unless a Certificate Insurer Default exists, the
Certificate Insurer shall have the right to exercise all rights of the Class A
Certificateholders (except as provided in Section 12.01), including but not
limited to the following rights, without any consent of the Holders of Offered
Certificates:

                  (a) the right to direct foreclosures upon Mortgage Loans upon
failure of the Master Servicer to do so for any reason, except that in the case
of Section 3.15(b) hereof;

                  (b) the right to require the Seller, the Depositor or the
Master Servicer to repurchase or substitute for, Mortgage Loans pursuant to
Section 2.06;

                  (c) the right to give notices of breach or to terminate the
rights and obligations of the Master Servicer pursuant to Section 7.01;

                  (d) the right to direct the actions of the Trustee and the
Trust Administrator during the continuance of a Master Servicer Default pursuant
to Sections 7.01 and 7.02; and

                  (e) the right to direct the Trustee to investigate certain
matters pursuant to Section 8.02(a)(v).

                  In addition, each Holder of a Class A Certificate agrees that,
unless a Certificate Insurer Default exists, the right to remove the Trustee and
the Trust Administrator pursuant to Section 8.07 hereof may be exercised by the
Majority Certificateholders only with the prior written consent of the
Certificate Insurer.

         Section 9.02.              Trustee To Act Solely with Consent of the
                                    Certificate Insurer.

                  (a) Unless a Certificate Insurer Default exists, neither the
Trustee nor the Trust Administrator shall:

                       (i) terminate the rights and obligations of the Master
Servicer as Master Servicer pursuant to Section 7.01 or consent to the
resignation of the Master Servicer pursuant to Section 6.04;

                       (ii) terminate any Sub-Servicing Agreements pursuant to
Section 3.03;

                       (iii) assume any Sub-Servicing Agreements pursuant to
Section 3.06; or



                                       132

<PAGE>



                       (iv) undertake any litigation pursuant to either Section
7.05 or 8.02(a)(iii); without the prior written consent of the Certificate
Insurer.

                  (b) Notwithstanding anything herein to the contrary, after the
occurrence of a Master Servicer Default and until such time as all Master
Servicer Defaults have been cured, no provision of this Agreement shall require
the Trustee or the Trust Administrator to take any action or omit to take any
action at the request of the Certificate Insurer or any Certificateholder to the
extent the Trustee or Trust Administrator believes in good faith such action or
omission would cause the Trustee or the Trust Administrator to violate any law
or regulation applicable to it or to breach their respective obligations owed by
it to the Certificateholders and to the Certificate Insurer, pursuant to this
Agreement or otherwise.

         Section 9.03.              REMIC I and Accounts Held for Benefit of the
                                    Certificate Insurer and the
                                    Certificateholders.

                  The Trustee and the Trust Administrator shall hold REMIC I and
the Mortgage Files, and shall maintain the Accounts, for the benefit of the
Certificateholders and the Certificate Insurer and all references in this
Agreement (including, without limitation, in Sections 2.02, 2.04, 3.10 and 4.04)
and in the Certificates to the benefit of Holders of the Certificates shall be
deemed to include the Certificate Insurer. The Trustee and Trust Administrator
shall cooperate in all reasonable respects with any reasonable request by the
Certificate Insurer or the Class A Certificateholders (when other than the
Depositor, the Master Servicer or any affiliate thereof), for action to preserve
or enforce the respective rights and interests of the Certificate Insurer or the
Class A Certificateholders (when other than the Depositor, the Master Servicer
or any affiliate thereof) under this Agreement and the Certificates.

                  The Master Servicer hereby acknowledges and agrees that it
shall service and administer the Mortgage Loans and any REO Properties for the
benefit of the Certificateholders and for the benefit of the Certificate
Insurer, and all references in this Agreement (including, without limitation, in
Sections 3.01(b) and 3.10) to the benefit of or actions on behalf of the
Certificateholders shall be deemed to include the Certificate Insurer. Unless a
Certificate Insurer Default exists, the Master Servicer shall not terminate any
Sub-Servicing Agreements without cause or undertake any litigation pursuant to
Section 3.12(c), without the prior written consent of the Certificate Insurer.
Unless a Certificate Insurer Default exists, neither the Master Servicer nor the
Depositor shall undertake any litigation pursuant to Section 6.03 (other than
litigation to enforce their respective rights hereunder) without the prior
written consent of the Certificate Insurer.

         Section 9.04.              Effect of Payments by the Certificate
                                    Insurer; Subrogation.

                  Anything herein to the contrary notwithstanding, any payment
with respect to principal of or interest on the Offered Certificates which is
made with moneys received pursuant to the terms of the Policy shall not be
considered payment of the Offered Certificates from REMIC I and shall not result
in the payment of or the provision for the payment of the principal of or
interest


                                       133

<PAGE>



on the Offered Certificates within the meaning of Section 4.04. The Depositor,
the Master Servicer, the Trust Administrator and the Trustee acknowledge, and
each Holder by its acceptance of a Class A Certificate agrees, that without the
need for any further action on the part of the Certificate Insurer, the
Depositor, the Master Servicer, the Trust Administrator or the Trustee, to the
extent the Certificate Insurer makes payments, directly or indirectly, on
account of principal of or interest on the Offered Certificates to the Holders
of such Certificates, the Certificate Insurer will be fully subrogated to the
rights of such Holders to receive such principal and/or interest from REMIC I.

                  The Trustee, the Depositor, the Trust Administrator and the
Master Servicer shall reasonably cooperate in all respects with any reasonable
request by the Certificate Insurer or the Class A Certificateholders (when other
than the Depositor, the Master Servicer or any affiliate thereof) for action to
preserve or enforce the respective rights or interests of the Certificate
Insurer or the Class A Certificateholders under this Agreement without limiting
the rights or affecting the interests of the Holders as otherwise set forth
herein.

         Section 9.05.              Notices to the Certificate Insurer.

                  All notices, statements, reports, certificates or opinions
required by this Agreement to be sent to any other party hereto or to the
Certificateholders if not otherwise required to be sent to the Certificate
Insurer, shall also be sent to the Certificate Insurer.

         Section 9.06.              Third-Party Beneficiary.

                  The Certificate Insurer shall be a third-party beneficiary of
this Agreement, entitled to enforce the provisions hereof as if a party hereto.

         Section 9.07.              Trust Administrator to Hold the Policy.

                  The Trust Administrator will hold the Policy in trust as agent
for the holders of the Offered Certificates for the purpose of making claims
thereon and distributing the proceeds thereof.
Neither the Policy nor amounts paid on the Policy will constitute part of REMIC
I or assets of the Trust. Each holder of Offered Certificates, by accepting its
Offered Certificates, appoints the Trust Administrator as attorney-in-fact for
the purpose of making claims on the Policy.

         Section 9.08.              Certificate Insurer Right to Waive
                                    Overcollateralization Requirements.

                  The Certificate Insurer shall have the right, in its sole
discretion and without the consent of any Certificateholder, to waive any
Step-Up Trigger or Spread Squeeze Amount; provided, however, that the
Certificate Insurer, the Depositor, the Master Servicer, the Trust Administrator
and the Trustee shall be provided with an Opinion of Counsel, (which Opinion of
Counsel shall not be an expense of the Trust Fund or of the Depositor, the Trust
Administrator or the Trustee), stating that such waiver will not cause REMIC I
to fail to qualify as a REMIC at any


                                       134

<PAGE>



time that any Certificates are outstanding and the waiver will not result in the
imposition of any tax on REMIC I, pursuant to the REMIC Provisions.



                                       135

<PAGE>



                                    ARTICLE X

                                   TERMINATION

         Section 10.01.                     Termination.

                  (a) Subject to Section 10.02 hereof, this Agreement shall
terminate upon notice to the Trustee and the Trust Administrator of either: (i)
the later of the distribution to Certificateholders of the final payment or
collection with respect to the last Mortgage Loan (or advances of same by the
Master Servicer), or the disposition of all funds with respect to the last
Mortgage Loan and the remittance of all funds due hereunder and the payment of
all amounts due and payable to the Certificate Insurer, the Trustee and the
Trust Administrator or (ii) mutual consent of the Master Servicer, the
Depositor, the Certificate Insurer and each and every Certificateholder in
writing; provided, however, that in no event shall the Trust established by this
Agreement terminate later than twenty-one years after the death of the last
surviving lineal descendant of John D. Rockefeller, Sr., the late President of
Standard Oil Corporation, alive as of the date hereof.

                  (b) Subject to Section 10.02 hereof, the Master Servicer may,
at its option terminate, this Agreement on any Distribution Date following the
Call Option Date by purchasing, on the Master Servicer Remittance Date preceding
such Distribution Date, all of the outstanding Mortgage Loans and REO Properties
at a price equal to the sum of (x) the greater of (i) 100% of the Loan Balance
of each such outstanding Mortgage Loan and each such REO Property as of the last
day of the preceding Due Period and (ii) the fair market value (disregarding
accrued interest) of such Mortgage Loans and REO Properties, determined as the
average of three written bids (copies of which shall be delivered to the
Trustee, the Trust Administrator, the Certificate Insurer and the Master
Servicer) made by nationally recognized dealers, (y) 30 days' interest thereon
at a rate equal to the Mortgage Rate (or such lesser rate as may be in effect
due to the application of the Civil Relief Act) and (z) the aggregate amount of
(i) all unreimbursed Delinquency Advances, (ii) all unreimbursed Servicing
Advances relating only to such Mortgage Loans and REO Properties then held as
part of REMIC I and (iii) any accrued and unpaid Servicing Fees (such sum, the
"Termination Price"). Any such purchase which results in unpaid Reimbursement
Amounts shall require the consent of the Certificate Insurer.

                  (c) In connection with any such purchase pursuant to paragraph
(b) above, the Master Servicer shall deposit into the Certificate Account all
amounts then on deposit in the Collection Account (less amounts permitted to be
withdrawn by the Master Servicer pursuant to Section 3.11 hereof), which deposit
shall be deemed to have occurred immediately preceding such purchase.

                       Any such purchase shall be accomplished by the deposit of
the Termination Price into the Certificate Account on the applicable Master
Servicer Remittance Date, which amount shall be applied to the distributions to
be made on the Distribution Date immediately following such Master Servicer
Remittance Date. Upon such deposit of the Termination Price, the Trustee shall
pay


                                       136

<PAGE>



the Master Servicer the amount described in clause (z) of the definition of
"Termination Price" from the amounts on deposit in the Certificate Amount.

                  (d) In connection with any such purchase pursuant to paragraph
(b) above, the party or parties effecting such purchase shall (i) at its or
their own expense, provide to the Trustee and the Trust Administrator an Opinion
of Counsel experienced in federal income tax matters, in form and substance
satisfactory to the Trustee and the Trust Administrator, to the effect that such
purchase constitutes a "Qualified Liquidation" of the Trust, as such term is
defined in the REMIC Provisions, and (ii) give the Trustee, the Trust
Administrator, the Certificate Insurer at least 60 days' prior written notice of
its or their intent to exercise such option. The party or parties effecting the
purchase and the Master Servicer shall at the time discuss future servicing
arrangements for the Mortgage Loans.

                  (e) Notice of any termination, specifying the Distribution
Date upon which the Trust will terminate shall, after the Trustee's and the
Trust Administrator's receipt of any such notice, be given promptly by the Trust
Administrator by letter to the Certificateholders by first class mail or
overnight delivery during the month of such final distribution two Business Days
after the Determination Date in such month, specifying (i) the Distribution Date
upon which final payment of the Certificates will be made and (ii) the amount of
any such final payment.

                  (f) Each Holder is required, and hereby agrees, to return to
the Trust Administrator any Certificate with respect to which the Trust
Administrator has made the final distribution due thereon. Any such Certificate
as to which the Trust Administrator has made the final distribution thereon
shall be deemed canceled and shall no longer be outstanding for any purpose of
this Agreement, whether or not such Certificate is ever returned to the Trust
Administrator.

                  (g) In the event that any amount due to any Regular
Certificateholder remains unclaimed, the Trust Administrator shall, at its
expense, use its best efforts to contact each such Regular Certificateholder by
mail or telephone and if such efforts fail shall cause to be published once, in
the eastern edition of THE WALL STREET JOURNAL, notice that such money remains
unclaimed. Such funds shall remain uninvested and shall not accrue any interest.
If, within two years after such publication, such amount remains unclaimed, the
party or parties effecting the purchase pursuant to either clause (b) above
shall be entitled to all unclaimed funds and other assets which remain subject
hereto and the Trust Administrator, upon transfer of such funds, shall be
discharged of any responsibility for such funds, and the Certificateholders
shall look to such party for payment.

                  (h) Following any purchase by the party or parties effecting
the purchase pursuant to clause (b) above, the Trust Administrator shall
promptly release to such party or parties the Mortgage Files for the remaining
Mortgage Loans, and the Trustee shall execute all assignments, endorsements and
other instruments necessary to effect such transfer as are furnished by such
party or parties.



                                       137

<PAGE>



                  (i) The Trust Administrator shall return the Policy to the
Certificate Insurer no later than five Business Days following the termination
of this Agreement.

         Section 10.02              Additional Termination Requirements.

                  (a) In the event that the purchase of the Mortgage Loans as
provided in Section 10.01 hereof occurs, the Trust shall be terminated in
accordance with the following additional requirements, unless the party or
parties effecting such purchase obtains at its or their own expense and delivers
or deliver to the Trustee, the Trust Administrator and the Certificate Insurer
an Opinion of Counsel, addressed to the Depositor, the Master Servicer, the
Trustee, the Trust Administrator and the Certificate Insurer, to the effect that
the failure of the Trust to comply with the requirements of this Section 10.02
will not (x) result in the imposition of taxes on "prohibited transactions" of
the Trust as defined in Section 860F of the Code or (y) cause the Trust to fail
to qualify as a REMIC at any time that any Certificates are outstanding:

                       (i) Within 90 days prior to the time of the making of the
final payment on the Certificates, the Trustee, on behalf the Trust, shall adopt
a plan of complete liquidation of the Trust, meeting the requirements of a
qualified liquidation under Section 860F of the Code and any regulations
thereunder and shall specify the first day of such period in a statement
attached to the Trust's final Tax Returns pursuant to Treasury Regulations ss.
1.860F1;

                       (ii) At or after the time of adoption of such a plan of
complete liquidation and at or prior to the time of making of the final payment
on the Certificates, the Master Servicer, with the cooperation of the Trustee,
shall conduct a sale of the assets of REMIC I to the purchasing party or parties
for cash; and

                       (iii) At the time of the making of the final payment on
the Certificate, the Trust Administrator shall distribute or credit, or cause to
be distributed or credited, to the purchasing party or parties all cash on hand
in any Account not required to be paid to the Master Servicer, the Regular
Certificateholders, or any other Person, and the Trust shall terminate at that
time.

                  (b) By their acceptance of Class R Certificates, the related
Holders thereof hereby agree to authorize the Trustee on behalf of the Trust to
adopt a plan of complete liquidation of the Trust, which authorization shall be
binding upon all successor Class R Certificateholders.


                                       138

<PAGE>



                                   ARTICLE XI

                                REMIC PROVISIONS

         Section 11.01.                     REMIC Administration.

                  (a) The Trustee shall elect to treat REMIC I as a REMIC under
the Code and, if necessary, under applicable state law. Each such election will
be made 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 Class A Certificates shall be
designated as the Regular Interests in REMIC I and the Class R Certificates
shall be designated as the Residual Interests in REMIC I. Neither the Trustee
nor the Trust Administrator shall permit the creation of any "interests" in
REMIC I (within the meaning of Section 860G of the Code) other than the
interests represented by the Certificates.

                  (b) The Closing Date is hereby designated as the "Startup Day"
of REMIC I within the meaning of Section 860G(a)(9) of the Code.

                  (c) The Master Servicer shall pay out of its own funds,
without any right of reimbursement, any and all expenses relating to any tax
audit of the Trust (including, but not limited to, any professional fees or any
administrative or judicial proceedings with respect to REMIC I that involve the
Internal Revenue Service or state tax authorities), other than the expense of
obtaining any tax related Opinion of Counsel except as specified herein. The
Master Servicer, as agent for all of REMIC I's tax matters person, shall (i) act
on behalf of the Trust in relation to any tax matter or controversy involving
REMIC I and (ii) represent the Trust 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
the Class R 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 REMIC created hereunder. By
their acceptance thereof, the holder of the largest Percentage Interest of the
Class R Certificates hereby agrees to irrevocably appoint the Master Servicer or
an Affiliate as its agent to perform all of the duties of the tax matters person
for the Trust.

                  (d) The Master Servicer shall prepare, sign and file all of
the Tax Returns in respect of the REMIC created hereunder. The expenses of
preparing and filing such returns shall be borne by the Master Servicer without
any right of reimbursement therefor.

                  (e) The Master Servicer shall perform on behalf of REMIC I 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 Master Servicer shall provide (i) to any transferor of
a Class R


                                       139

<PAGE>



Certificate such information as is necessary for the application of any tax
relating to the transfer of a Class R 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 REMIC I. The Depositor shall provide or cause to be provided
to the Master Servicer, within ten (10) days after the Closing Date, all
information or data that the Master Servicer 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 Master Servicer, the Trustee and the Trust
Administrator shall take such action and shall cause the 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 Master Servicer, the Trustee
and the Trust Administrator shall not take any action, cause the Trust 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 REMIC I as a REMIC or (ii) result in the imposition of a
tax upon the Trust (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 Master Servicer, the Trustee and the
Trust Administrator have received an Opinion of Counsel, addressed to the Master
Servicer, the Trustee, the Trust Administrator and the Certificate Insurer (at
the expense of the party seeking to take such action but in no event at the
expense of the Trust Administrator or the Trustee) to the effect that the
contemplated action will not, with respect to REMIC I, endanger such status or
result in the imposition of such a tax, nor shall the Master Servicer take or
fail to take any action (whether or not authorized hereunder) as to which the
Trust Administrator or 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 the Master 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 REMIC I or the respective
assets of each, or causing REMIC I to take any action, which is not contemplated
under the terms of this Agreement, the Master Servicer will consult with the
Trustee and the Trust Administrator or their designees, in writing, with respect
to whether such action could cause an Adverse REMIC Event to occur with respect
to REMIC I and the Master Servicer shall not take any such action or cause REMIC
I to take any such action as to which the Trust Administrator or the Trustee has
advised it in writing that an Adverse REMIC Event could occur; provided that the
Master 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
Trust Administrator and 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 or the Trust Administrator. At all times as may be
required by the Code, the Master Servicer, the Trust Administrator and the
Trustee will ensure that


                                       140

<PAGE>



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.

                  (g) In the event that any tax is imposed on "prohibited
transactions" of REMIC I created hereunder as defined in Section 860F(a)(2) of
the Code, on the "net income from foreclosure property" of the REMIC as defined
in Section 860G(c) of the Code, on any contributions to the 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 Trust Administrator pursuant to Section
11.03 hereof, if such tax arises out of or results from a breach by the Trust
Administrator of any of its obligations under this Article XI, (ii) to the
Trustee pursuant to Section 11.03 hereof, if such tax arises out of or results
from a breach by the Trustee of any of its obligations under this Article XI,
(ii) to the Master Servicer pursuant to Section 11.03 hereof, if such tax arises
out of or results from a breach by the Master Servicer of any of its obligations
under Article III or this Article XI, or (iv) against amounts on deposit in the
Certificate Account and shall be paid by withdrawal therefrom.

                  (h) On or before April 15 of each calendar year, commencing
April 15, 2001, the Master Servicer shall deliver to each Rating Agency an
Officer's Certificate of the Master Servicer stating the Master Servicer's
compliance with this Article XI.

                  (i) The Master Servicer shall, for federal income tax
purposes, maintain books and records with respect to REMIC I on a calendar year
and on an accrual basis.

                  (j) Following the Startup Day, the Master Servicer, the Trust
Administrator and the Trustee shall not accept any contributions of assets to
REMIC I other than in connection with any Qualified Substitute Mortgage Loan
delivered in accordance with Section 2.06 unless it shall have received an
Opinion of Counsel to the effect that the inclusion of such assets in the Trust
will not cause REMIC I to fail to qualify as a REMIC at any time that any
Certificates are outstanding or subject REMIC I to any tax under the REMIC
Provisions or other applicable provisions of federal, state and local law or
ordinances.

                  (k) Neither the Trust Administrator, the Trustee nor the
Master Servicer shall enter into any arrangement by which REMIC I will receive a
fee or other compensation for services nor permit REMIC I 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.

                  (l) The Master Servicer shall treat the Reserve Fund as an
outside reserve fund within the meaning of Treasury Regulation Section
1.860G-2(h) that is owned by the Holder of the Class R Certificates and that is
not an asset of any REMIC created hereunder. The Master Servicer shall treat the
rights of the Class A Certificateholders to receive payments from the Reserve
Fund in the event of a Basis Risk Shortfall as rights in an interest rate cap
contract written by the Holder of the Class R Certificates in favor of the Class
A Certificateholders. Thus, each Class A Certificate


                                       141

<PAGE>



shall be treated as representing not only ownership of regular interests in
REMIC I, but also ownership of an interest in an interest rate cap contract. For
purposes of determining the issue prices of the Certificates, the Master
Servicer shall assume that the interest rate cap contract has a value of $5,000.

         Section 11.02.                     Prohibited Transactions and
                                            Activities.

                  None of the Depositor, the Master Servicer, the Trust
Administrator 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 X 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), nor acquire
any assets for REMIC I (other than REO Property acquired in respect of a
defaulted Mortgage Loan), nor sell or dispose of any investments in the
Collection Account or the Certificate Account for gain, nor accept any
contributions to REMIC I after the Closing Date (other than a Qualified
Substitute Mortgage Loan delivered in accordance with Section 2.06), unless it
has received an Opinion of Counsel, addressed to the Trust Administrator, the
Trustee and the Certificate Insurer (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 or the Trust Administrator) that such
sale, disposition, substitution, acquisition or contribution will not (a) affect
adversely the status of REMIC I as a REMIC or (b) cause REMIC I to be subject to
a tax on "prohibited transactions" or "contributions" pursuant to the REMIC
Provisions.

         SECTION 11.03.             Master Servicer, Trust Administrator and
                                    Trustee Indemnification.

                  (a) The Trustee agrees to indemnify the Trust, the Depositor,
the Certificate Insurer and the Master Servicer for any taxes and costs
including, without limitation, any reasonable attorneys fees imposed on or
incurred by the Trust, the Depositor, the Certificate Insurer or the Master
Servicer, as a result of a breach of the Trustee's covenants set forth in this
Article XI.

                  (b) The Trust Administrator agrees to indemnify the Trust, the
Depositor, the Certificate Insurer and the Master Servicer for any taxes and
costs including, without limitation, any reasonable attorneys fees imposed on or
incurred by the Trust, the Depositor, the Certificate Insurer or the Master
Servicer, as a result of a breach of the Trust Administrator's covenants set
forth in this Article XI.

                  (b) The Master Servicer agrees to indemnify the Trust, the
Depositor, the Certificate Insurer, the Trust Administrator and the Trustee for
any taxes and costs including, without limitation, any reasonable attorneys'
fees imposed on or incurred by the Trust, the Depositor, the Certificate
Insurer, the Trust Administrator or the Trustee, as a result of a breach of the
Master Servicer's covenants set forth in Article III or this Article XI.


                                       142

<PAGE>



                                   ARTICLE XII

                            MISCELLANEOUS PROVISIONS

         Section 12.01.                     Amendment.

                  This Agreement may be amended from time to time by the
Depositor, the Master Servicer, the Trust Administrator and the Trustee with the
consent of the Certificate Insurer and without the consent of the
Certificateholders; (i) to cure any ambiguity, (ii) to correct or supplement any
provisions herein which may be defective or inconsistent with any other
provisions herein 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, however, that any such action listed
in clause (i) through (iii) above shall not, as evidenced by (A) an Independent
Opinion of Counsel delivered to the Master Servicer, the Certificate Insurer,
Trust Administrator and the Trustee or (B) written confirmation from the Rating
Agencies that such amendment would not result in the withdrawal, downgrade or
qualification of their ratings of any Class of Certificates (as they would be
determined without regard to the existence of the Policy), adversely affect in
any respect the interests of any Certificateholder.

                  In addition, this Agreement may be amended from time to time
by the Depositor, the Master Servicer, the Trust Administrator and the Trustee
with the consent of the Certificate Insurer with the consent of the majority in
interest of the Holders of any Class of Certificates affected thereby 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 or waiver
shall (x) reduce in any manner the amount of, or delay the timing of, payments
required to be distributed on any Certificate without the consent of the Holder
of such Certificate, (y) adversely affect in any material respect the interests
of the Holders of any Class of Certificates in a manner other than as described
in clause (x) above, without the consent of the Holders of Certificates of such
Class evidencing at least a 66% Percentage Interest in such Class, or (z) reduce
the percentage of Voting Rights required by clause (y) above without the consent
of the Holders of all Certificates of such Class then outstanding.

                  Notwithstanding any provision of this Agreement to the
contrary, the Trustee shall not consent to any amendment to this Agreement
unless it shall have first received an Independent Opinion of Counsel to the
effect that such amendment will not result in the imposition of a tax on the
Trust pursuant to the REMIC Provisions or cause the Trust to fail to qualify as
a REMIC at any time that any Certificates are outstanding.

                  Promptly after the execution of any such amendment the Trust
Administrator shall furnish, at the expense of the Person that requested the
amendment if such Person is the Depositor or the Master Servicer (but in no
event at the expense of the Trust Administrator), otherwise at the expense of
the Trust, a copy of such amendment and the Opinion of Counsel referred to in
the immediately preceding paragraph to the Master Servicer, the Certificate
Insurer and each Rating


                                       143

<PAGE>



Agency, and, if such amendment required the consent of Certificateholders, to
the Certificateholders of the Class or Classes whose consent was required.

                  It shall not be necessary for the consent of
Certificateholders under this Section 11.01 to approve the particular form of
any proposed amendment; instead 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.

                  Each of the Trust Administrator and the Trustee may, but shall
not be obligated to, enter into any amendment pursuant to this 11.01 Section
that affects its rights, duties and immunities under this Agreement or
otherwise.

         Section 12.02.                     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 the Master Servicer at the expense of the Trust, 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
together constitute but one and the same instrument.

         Section 12.03.                     Limitation on Rights of
                                            Certificateholders.

                  The death or incapacity of any Certificateholder shall not (i)
operate to terminate this Agreement or the Trust, (ii) 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, or (iii) otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.

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



                                       144

<PAGE>



                  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 (provided that an unsecured letter of
indemnity in a form reasonably satisfactory to the Trustee from a Holder which
is an insurance company having long- term unsecured debt which is rated at least
investment grade (or having a comparable claim-paying ability rating) and having
a minimum net worth of $100,000,000 shall satisfy such requirement) 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 whatever 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,
which priority or preference is not otherwise provided for herein, 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 11.03 each and every
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.

         Section 12.04.                     Governing Law; Jurisdiction.

                  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. With respect to any
claim arising out of this Agreement each party irrevocably submits to the
exclusive jurisdiction of the courts of the State of New York and the United
States District Court located in the Borough of Manhattan in The City of New
York, and each party irrevocably waives any objection which it may have at any
time to the laying of venue of any suit, action or proceeding arising out of or
relating hereto brought in any such courts, irrevocably waives any claim that
any such suit, action or proceeding brought in any such court has been brought
in any inconvenient forum and further irrevocably waives the right to object,
with respect to such claim, suit, action or proceeding brought in any such
court, that such court does not have jurisdiction over such party, provided that
service of process has been made by any lawful means.

         Section 12.05.                     Notices.

                  All directions, demands and notices hereunder shall be in
writing and shall be deemed to have been duly given (except as otherwise
provided in Section 11.12 hereof) if personally delivered at or mailed by first
class mail, postage prepaid, or by express delivery service, to (a) in the case
of the Master Servicer, 18400 Von Karman, Suite 1000, Irvine, CA 92612 (telecopy
number


                                       145

<PAGE>



(714) 224-5000), or such other address or telecopy number as may hereafter be
furnished to the Depositor, the Certificate Insurer, the Trust Administrator and
the Trustee in writing by the Master Servicer, (b) in the case of the Trust
Administrator, U.S. Bank National Association, 180 East Fifth Street, 2nd Floor,
St. Paul, Minnesota 55101, Attention: Structured Finance/New Century 2000- NCA
(telecopy number (612) 244-0089), or such other address or telecopy number as
may hereafter be furnished to the Depositor, the Certificate Insurer, the Trust
Administrator and the Master Servicer in writing by the Trustee, (c) in the case
of the Depositor, 18400 Von Karman, Suite 1000, Irvine, CA 92612 (telecopy
number (714) 224-5000), or such other address or telecopy number as may be
furnished to the Certificate Insurer, the Master Servicer, Trust Administrator
and the Trustee in writing by the Depositor, (d) in the case of the Trustee,
Firstar Bank, N.A., 1555 North River Center Drive, Suite 301, Milwaukee,
Wisconsin 53212, or such other address or telecopy number as may be furnished to
the Certificate Issuer, the Master Servicer, the Trustee and the Depositor in
writing by the Trustee and (e) in the case of the Certificate Insurer, Financial
Security Assurance, Inc., 350 Park Avenue, New York, New York 10022, Attention:
Surveillance Department, Re: New Century Asset Backed Pass-Through Certificates,
Series 2000-NCA, (212) 826-0100, telecopy number (212) 339-3518 (in each case in
which notice or other communication to the Certificate Insurer refers to a
Master Servicer Default or a claim on the Policy or with respect to which
failure on the part of the Certificate Insurer to respond shall be deemed to
constitute consent or acceptance, then a copy of such notice or other
communication shall also be sent to the attention of each of the General Counsel
and the Head -- Financial Guaranty Group and shall be marked to indicate "URGENT
MATERIAL ENCLOSED"), or such other address or telecopy number as may hereafter
be furnished to the Trustee, the Trust Administrator, the Depositor and the
Master Servicer in writing by the Certificate Insurer. Any notice required or
permitted to be mailed to a Certificateholder shall be given by first class
mail, postage prepaid, at the address of such Holder as shown in the Certificate
Register. Notice of any Master Servicer Default shall be given by telecopy and
by certified mail. Any notice so mailed within the time prescribed in this
Agreement shall be conclusively presumed to have duly been given when mailed,
whether or not the Certificateholder receives such notice. A copy of any notice
required to be telecopied hereunder shall also be mailed to the appropriate
party in the manner set forth above.

         Section 12.06.                     Severability of Provisions.

                  If any one or more of the covenants, agreements, provisions or
terms of this Agreement shall for any reason whatsoever be 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 12.07.                     Article and Section References.

                  All article and section references used in this Agreement,
unless otherwise provided, are to articles and sections in this Agreement.



                                       146

<PAGE>



         Section 12.08.                     Notice to the Rating Agencies.

                  (a) Each of the Trust Administrator and the Master Servicer
shall be obligated to use its best reasonable efforts promptly to provide notice
to the Rating Agencies with respect to each of the following of which a
Responsible Officer of the Trust Administrator or Master Servicer, as the case
may be, has actual knowledge:

                           (i)      any material change or amendment to this
                                    Agreement;

                           (ii)     the occurrence of any Master Servicer
                                    Default that has not been cured or waived;

                           (iii)    the resignation or termination of the Master
                                    Servicer or the Trust Administrator;

                           (iv)     the final payment to Holders of the
                                    Certificates of any Class;

                           (v)      any change in the location of any Account;
                                    and

                           (vi)     if the Trust Administrator or the Trustee is
                                    acting as successor Master Servicer pursuant
                                    to Section 7.02 hereof, any event that would
                                    result in the inability of the Trust
                                    Administrator or the Trustee to make
                                    Delinquency Advances.

                  (b) In addition, (i) the Trust Administrator shall promptly
furnish to each Rating Agency copies of the following:

                  (A) each annual report to Certificateholders described in
Section 4.06 hereof; and

                  (B) each Statement to Certificateholders described in Section
4.06 hereof; and

                  (ii) the Master Servicer shall promptly furnish to each Rating
Agency copies of the following:

                  (A)      each annual statement as to compliance described in
                           Section 3.19 hereof;

                  (B)      each annual independent public accountants' servicing
                           report described in Section 3.20 hereof;

                  (C)      each Collection Account Statement described in
                           Section 3.18(b) hereof; and



                                       147

<PAGE>



                  (D)      each notice delivered pursuant to Section 7.01(a)
                           hereof which relates to the fact that the Master
                           Servicer has not made a Delinquency Advance.

                  Any such notice pursuant to this Section 11.08 shall be in
writing and shall be deemed to have been duly given if personally delivered or
mailed by first class mail, postage prepaid, or by express delivery service to
Fitch, Inc., One State Street Plaza, New York, New York 10004; Standard &
Poor's, a division of the McGraw-Hill Companies, Inc., 55 Water Street, New
York, New York 10041, Attention: Mortgage Surveillance Group; and Moody's
Investors Service, Inc., Pass-Through Monitoring Department, 99 Church Street,
New York, New York 10007, Attention: Structured Finance Group.

         Section 12.09.             Further Assurances.

                  Notwithstanding any other provision of this Agreement, neither
the Regular Certificateholders, the Trust Administrator, nor the Trustee shall
have any obligation to consent to any amendment or modification of this
Agreement unless they have been provided reasonable security or indemnity
against their out-of-pocket expenses (including reasonable attorneys' fees) to
be incurred in connection therewith.

         Section 12.10              Benefits of Agreement.

                  Nothing in this Agreement or in the Certificates, expressed or
implied, shall give to any Person, other than the Certificateholders, the
Certificate Insurer and the parties hereto and their successors hereunder, any
benefit or any legal or equitable right, remedy or claim under this Agreement.

         Section 12.11.             Acts of Certificateholders.

                  (a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Agreement to be given or taken
by the Certificateholders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Certificateholders in
person or by agent duly appointed in writing; and such action shall become
effective when such instrument or instruments are delivered to the Trustee, the
Trust Administrator, the Master Servicer, and the Certificate Insurer. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "act" of the Certificateholders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Agreement and conclusive in favor of the Trustee and the Trust,
if made in the manner provided in this Section 11.11.

                  (b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of a notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the


                                       148

<PAGE>



individual signing such instrument or writing acknowledged to him the execution
thereof. Whenever such execution is by a signer acting in a capacity other than
his or her individual capacity, such certificate or affidavit shall also
constitute sufficient proof of his authority.

                  (c) Any request, demand, authorization, direction, notice,
consent, waiver or other action by any Certificateholder shall bind every future
Holder of such Certificate and the holder of every Certificate issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof, in
respect of anything done, omitted or suffered to be done by the Trustee or the
Trust in reliance thereon, whether or not notation of such action is made upon
such Certificate.




                                       149

<PAGE>



                  IN WITNESS WHEREOF, the Depositor, the Master Servicer, the
Trustee and the Trust Administrator have caused their names to be signed hereto
by their respective officers thereunto duly authorized, all as of the day and
year first above written.

                                          NEW CENTURY MORTGAGE SECURITIES, INC.,
                                            as Depositor

                                          By:      /s/ Patrick Flanagan
                                                   -----------------------------
                                          Name:    Patrick Flanagan
                                          Title:   President



                                          NEW CENTURY MORTGAGE CORPORATION,
                                            as Master Servicer

                                          By:      /s/ Patrick Flanagan
                                                   -----------------------------
                                          Name:    Patrick Flanagan
                                          Title:   EVP/COO



                                          FIRSTAR BANK, N.A.,
                                            as Trustee

                                          By:      /s/ Charles F. Pedersen
                                                   -----------------------------
                                          Name:    Charles F. Pedersen
                                          Title:   Vice President


                                          U.S. BANK NATIONAL ASSOCIATION,
                                            as Trust Administrator

                                          By:      /s/ Eve D. Kaplan
                                                   -----------------------------
                                          Name:    Eve D. Kaplan
                                          Title:   Vice President





                                       150

<PAGE>



STATE OF ___________________   )
                               ) ss.:
COUNTY OF _________________    )

                  On the ___th day of June, 2000 before me, a notary public in
and for said State, personally appeared __________________, known to me to be a
Vice President of New Century Mortgage Securities, Inc., a Delaware corporation
that executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.

                  IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.


                                                   Notary Public



<PAGE>



STATE OF CALIFORNIA    )
                       )ss.:
COUNTY OF ORANGE       )

                  On the ___th day of June, 2000 before me, the undersigned, a
notary public in and for said State, personally appeared ___________________,
known to me (or proved to me on the basis of satisfactory evidence) to be the
person whose name is subscribed to the within instrument, and acknowledged to me
that he executed it in his authorized capacity, and that by his signature on the
instrument, such corporation executed the within instrument.

                  WITNESS my hand and affixed my official seal.


                                                       Notary Public



<PAGE>



STATE OF ____________   )
                        ) ss.:
COUNTY OF __________    )

                  On the ___th day of June, 2000 before me, a notary public in
and for said State, personally appeared _____________, known to me to be a Vice
President of Firstar Bank, N.A., a national banking association that executed
the within instrument, and also known to me to be the person who executed it on
behalf of said association, 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



<PAGE>


STATE OF MINNESOTA    )
                      ) ss.:
COUNTY OF__________   )

                  On the ___th day of June, 2000 before me, a notary public in
and for said State, personally appeared _____________, known to me to be a Vice
President of U.S. Bank National Association, a national banking association that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said association, 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

<PAGE>

                                   EXHIBIT A-1

                      FORM OF CLASS [A-1] [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, AS AMENDED.

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUIRED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OF
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.



New Century Home Equity Loan Trust, Series
2000-NCA, Class A-[1][2] Certificate
Pass-Through Rate: [__]%

Series Original Certificate Principal Balance
of Class A-[1][2] Certificates: $[__]

Initial Certificate Principal Balance:$[__]

Date of Pooling and Servicing Agreement and
Initial Cut-Off Date: June 1, 2000

Issue Date:  June 29, 2000

First Distribution Date: July 25, 2000

No. 1

CUSIP No. 64352V [__]




<PAGE>



                 NEW CENTURY EQUITY LOAN TRUST, SERIES 2000-NCA
                      ASSET BACKED PASS-THROUGH CERTIFICATE
                                 CLASS A-[1][2]

evidencing a beneficial ownership interest in a Trust Estate established by NEW
CENTURY MORTGAGE SECURITIES, INC. consisting primarily of a pool of closed end,
fixed-rate and adjustable-rate, one- to four-family, first mortgage loans
originated by, or purchased from others by,

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         This Certificate is payable solely from the assets of the Trust and
does not represent an obligation of or interest in New Century Mortgage
Corporation, NC Capital Corporation, New Century Mortgage Securities, Inc., the
Trustee, the Trust Administrator or any of their 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 the Percentage
Interest evidenced by this Certificate (obtained by dividing the Initial
Certificate Principal Balance of this Certificate as set forth above by $[__],
such amount being the initial aggregate Class A-[1][2] Certificate Principal
Balance of all of the Class A-[1][2] Certificates) in the Trust created pursuant
to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among New Century Mortgage Corporation as master servicer (the
"Master Servicer," which term includes any successor entity under the
Agreement), New Century Mortgage Securities, Inc. as depositor, U.S. Bank
National Association as trust administrator (the "Trust Administrator") and
Firstar Bank , N.A. as trustee (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 are required to
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 [Class A-1: at the close of business on the last
Business Day of the month immediately preceding the month of such distribution
(the "Record Date"),] [Class A-2: at the close of business on the Business Day
immediately preceding the Distribution Date] in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount to be
distributed to such Class as of such Distribution Date.

         The Holder of this Certificate is entitled to payments on the
applicable Distribution Date which will fully amortize the Initial Certificate
Principal Balance, as set forth on the front page hereof, from the date of the
initial delivery hereof to the final Distribution Date of the Class A-[1][2]
Certificates. Therefore, the actual outstanding principal amount of this Class
A-[1][2] Certificate on any date subsequent to July 25, 2000 (the first
Distribution Date) will be less than the Initial


                                        2

<PAGE>



Certificate Principal Balance set forth on the front page hereof.

         All distributions under the Agreement on the Class A-[1][2]
Certificates will be made or caused to be made by the Trust Administrator by (i)
wire transfer of immediately available funds to the account of the Person
entitled thereto at a bank or other entity having appropriate facilities
therefor, if such Person shall have so notified the Trust Administrator in
writing at least five Business Days prior to the Record Date immediately prior
to such Distribution Date and is the registered owner of Class A-[1][2]
Certificates evidencing a Percentage Interest aggregating at least 10% or (ii)
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.

         [Class A-2 Certificates Only: The Pass-Through Rate applicable to the
calculation of interest payable with respect to this Certificate on any
Distribution Date on or before the Call Option Date, will be a rate per annum
equal to the lesser of (a) One-Month LIBOR plus 0.28% and (b) the related Net
WAC Cap. With respect to this Certificate and any Distribution Date after the
Call Option Date, the lesser of (a) One-Month LIBOR plus 0.56% and (b) the
related Net WAC Cap].

         This Certificate is one of a duly authorized issue of Certificates
designated as New Century Home Equity Loan Trust, Series 2000-NCA, Asset Backed
Pass-Through Certificates of the series specified on the front page hereof
(herein called the "Certificates") and representing the Percentage Interest
specified on the front page hereof in the Class A-[1][2] Certificates.

         The final distribution on this Certificate will be made only upon
presentation and surrender of this Certificate at the office or agency of the
Trust Administrator in St. Paul, Minnesota. The Agreement provides that, in any
event, upon the making of the final distribution due on this Certificate, this
Certificate shall be deemed canceled for all purposes under the Agreement.

         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 Certificate 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 by the Depositor, the Master Servicer, the Trust
Administrator, and the Trustee with the consent of the Majority
Certificateholders; PROVIDED, HOWEVER, that no such amendment or waiver shall
reduce in any manner the amount of, or delay the timing of, distributions on any
Certificate without the consent of the Holder thereof, or adversely affect in
any respect the interests of the Holders of any Class of Certificates without
the consent of the Holders of Certificates evidencing at least a 66% Percentage
Interest in such Class. No amendment shall reduce the percentage of Voting
Rights required in the previous sentence without the consent of the Holders of
all Certificates of such Class then outstanding. 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


                                        3

<PAGE>



transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate.

         As provided in the Agreement and subject to certain limitations therein
set forth and referred to on the face hereof, the transfer of this Certificate
is registrable in the Certificate Register upon surrender of this Certificate
for registration of transfer at the office or agency appointed by the Trust
Administrator as provided in the Agreement, duly endorsed by, or accompanied by
a written instrument of transfer in the form attached hereto 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 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.

         No service charge will be made for any such registration of transfer or
exchange, but the Trust Administrator 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 Master Servicer, the Depositor, the Trust Administrator and the
Trustee and any agent of the Master Servicer, the Depositor, the Trust
Administrator 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 Master
Servicer, the Depositor, the Trust Administrator and the Trustee nor any such
agent shall be affected by notice to the contrary.

         THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.

         The obligations created by the Agreement and the Trust created thereby
shall terminate upon payment to the Certificateholders of all amounts held by or
on behalf of the Trustee and required to be paid to them pursuant to the
Agreement following the final payment or other liquidation (or any advance with
respect thereto) of the last Mortgage Loan remaining in the Trust.

         The Agreement additionally provides that the Master Servicer or the
Certificate Insurer may, at its option, purchase from the Trust all (but not
fewer than all) remaining Mortgage Loans and other property in the Trust Fund
then constituting part of the Trust Estate, and thereby effect early retirement
of the Certificates, on and after the Distribution Date on which the Aggregate
Loan Balance is less than or equal to 10% of the Cut-off Date Pool Balance.

         Unless the certificate of authentication hereon has been executed by
the Trust Administrator, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be


                                        4

<PAGE>



valid for any purpose.



                                        5

<PAGE>



         IN WITNESS WHEREOF, the Trust Administrator has caused this Certificate
to be duly executed.

Dated:  June __, 2000

                                     U.S. BANK NATIONAL ASSOCIATION,
                                     as Trust Administrator


                                     By____________________________________
                                              Authorized Officer



                          CERTIFICATE OF AUTHENTICATION

         This is one of the Class A-[1][2] Certificates referred to in the
within-mentioned Agreement.



                                     U.S. BANK NATIONAL ASSOCIATION,
                                     as Trust Administrator


                                     By____________________________________
                                              Authorized Officer



                                        6

<PAGE>



                                   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
Certificate and hereby authorizes the transfer of registration of such interest
to such assignee on the Certificate Register of the Trust.

         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



                                        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 ____________________________________.
This information is provided by ___________________________________________, the
assignee named above, or ________________________________________________, as
its agent.



                                        8

<PAGE>



                                   EXHIBIT A-2

                          FORM OF CLASS R CERTIFICATES

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 A "PERMITTED TRANSFEREE," WHICH INCLUDE ANY UNITED STATES
PERSON THAT 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 (3) SHALL HEREINAFTER BE REFERRED
TO AS A "DISQUALIFIED ORGANIZATION"), (4) AN AGENT OF A DISQUALIFIED
ORGANIZATION OR (5) AN "ELECTING LARGE PARTNERSHIP" (AS DESCRIBED SECTION 775 OF
THE CODE) 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



<PAGE>



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 PERSON OTHER THAN A PERMITTED TRANSFEREE OR AN AGENT OF A
PERSON OTHER THAN A PERMITTED TRANSFEREE, 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 PERSON
OTHER THAN A PERMITTED TRANSFEREE IS PROHIBITED FROM ACQUIRING BENEFICIAL
OWNERSHIP OF THIS CERTIFICATE.


New Century Home Equity Loan Trust,
Series 2000-NCA, Class R

Certificate Percentage Interest: 100%

First Distribution Date:  July 25, 2000

Certificate No. 1

Date of Pooling and Servicing Agreement
and Cut-Off Date: June 1, 2000

Issue Date:  June 29, 2000


                                        2

<PAGE>



               NEW CENTURY HOME EQUITY LOAN TRUST, SERIES 2000-NCA
                    HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
                                     CLASS R

evidencing a beneficial ownership interest in a Trust Estate established by NEW
CENTURY MORTGAGE SECURITIES, INC. consisting primarily of a pool of closed end,
fixed-rate and adjustable-rate, one- to four-family, first lien mortgage loans
originated by, or purchased from others by,

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         This Certificate is payable solely from the assets of the Trust and
does not represent an obligation of or interest in New Century Mortgage
Corporation, NC Capital Corporation, New Century Mortgage Securities, Inc., the
Trustee, the Trust Administrator or any of their 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 the
Percentage Interest evidenced by this Certificate (obtained by dividing the
Percentage Interest of this Certificate as set forth above by 100%, such amount
being the initial aggregate Class R Percentage Interest of all of the Class R
Certificates) in the Trust created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among New Century
Mortgage Corporation as master servicer (the "Master Servicer," which term
includes any successor entity under the Agreement), New Century Mortgage
Securities, Inc. as depositor, U.S. Bank National Association as trust
administrator (the "Trust Administrator") and Firstar Bank, N.A. as trustee (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 are required to
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 at the close of business on the Business Day
immediately preceding the Distribution Date (the "Record Date"), in an amount
equal to the product of the Percentage Interest evidenced by this Certificate
and the amount to be distributed to such Class as of such Distribution Date.

         All distributions under the Agreement on the Class R Certificates will
be made or caused to be made by the Trust Administrator by (i) wire transfer of
immediately available funds to the account of the Person entitled thereto at a
bank or other entity having appropriate facilities therefor, if such Person
shall have so notified the Trust Administrator in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date and is
the registered owner of Class R


                                        3

<PAGE>



Certificates evidencing a Percentage Interest aggregating at least 10% or (ii)
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.

         This Certificate is one of a duly authorized issue of Certificates
designated as New Century Home Equity Loan Trust, Series 2000-NCA, Asset Backed
Pass-Through Certificates of the series specified on the front page hereof
(herein called the "Certificates") and representing the Percentage Interest
specified on the front page hereof in the Class R Certificates.

         The final distribution on this Certificate will be made only upon
presentation and surrender of this Certificate at the office or agency of the
Trust Administrator in St. Paul, Minnesota. The Agreement provides that, in any
event, upon the making of the final distribution due on this Certificate, this
Certificate shall be deemed canceled for all purposes under the Agreement.

         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 Certificate 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 by the Depositor, the Master Servicer, the Trust Administrator
and the Trustee with the consent of the Majority Certificateholders; PROVIDED,
HOWEVER, that no such amendment or waiver shall reduce in any manner the amount
of, or delay the timing of, distributions on any Certificate without the consent
of the Holder thereof, or adversely affect in any respect the interests of the
Holders of any Class of Certificates without the consent of the Holders of
Certificates evidencing at least a 66% Percentage Interest in such Class. No
amendment shall reduce the percentage of Voting Rights required in the previous
sentence without the consent of the Holders of all Certificates of such Class
then outstanding. 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.

         As provided in the Agreement and subject to certain limitations therein
set forth and referred to on the face hereof, the transfer of this Certificate
is registrable in the Certificate Register upon surrender of this Certificate
for registration of transfer at the office or agency appointed by the Trust
Administrator as provided in the Agreement, duly endorsed by, or accompanied by
a written instrument of transfer in the form attached hereto 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 in Classes
and denominations


                                        4

<PAGE>



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.

         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 Trust Administrator 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 G, 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 or of the Depositor, the Trustee, the Trust
Administrator or the Master Servicer 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. None of the Depositor,
the Trustee or the Trust Administrator 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 registration or
qualification. Any Holder desiring to effect a transfer of this Certificate
shall be required to indemnify the Trustee, the Trust Administrator, the
Depositor and the Master 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.

         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(b)(ii) of the Agreement.

         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 a Permitted Transferee or the
agent (including a broker, nominee or middleman) of a Permitted Transferee, and
(ii) a certificate that acknowledges that (A) the Class R 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 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 Certificates. Notwithstanding
the registration in the Certificate Register of any transfer, sale or other
disposition of this Certificate to a Permitted Transferee or an agent (including
a broker, nominee or middleman) of a Permitted Transferee, 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


                                        5

<PAGE>



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 to cease to
qualify as a REMIC or cause the imposition of a tax upon the REMIC.

         No service charge will be made for any such registration of transfer or
exchange, but the Trust Administrator 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 Master Servicer, the Depositor, the Trust Administrator and the
Trustee and any agent of the Master Servicer, the Depositor, the Trust
Administrator 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 Master
Servicer, the Depositor, the Trust Administrator and the Trustee nor any such
agent shall be affected by notice to the contrary.

         THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.

         The obligations created by the Agreement and the Trust created thereby
shall terminate upon payment to the Certificateholders of all amounts held by or
on behalf of the Trustee and required to be paid to them pursuant to the
Agreement following the final payment or other liquidation (or any advance with
respect thereto) of the last Mortgage Loan remaining in the Trust.

         The Agreement additionally provides that the Master Servicer or the
Certificate Insurer may, at its option, purchase from the Trust all (but not
fewer than all) remaining Mortgage Loans and other property in the Trust Fund
then constituting part of the Trust Estate, and thereby effect early retirement
of the Certificates, on and after the Distribution Date on which the Aggregate
Loan Balance is less than or equal to 10% of the Cut-off Date Pool Balance.

         Unless the certificate of authentication hereon has been executed by
the Trust Administrator, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.


                                        6

<PAGE>



         IN WITNESS WHEREOF, the Trust Administrator has caused this Certificate
to be duly executed.

Dated:  June ____, 2000

                                     U.S. BANK NATIONAL ASSOCIATION,
                                     as Trust Administrator

                                     By:________________________________
                                              Authorized Officer



                          CERTIFICATE OF AUTHENTICATION

         This is one of the Class R Certificates referred to in the
within-mentioned Agreement.

                                     U.S. BANK NATIONAL ASSOCIATION,
                                     as Trust Administrator

                                     By:________________________________
                                              Authorized Officer




                                        7

<PAGE>



                                   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
Certificate and hereby authorizes the transfer of registration of such interest
to such assignee on the Certificate Register of the Trust.

         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



                                        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 ____________________________________.
This information is provided by ___________________________________________, the
assignee named above, or ________________________________________________, as
its agent.



                                        9

<PAGE>



                                    EXHIBIT B

                                   [RESERVED]




<PAGE>



                                    EXHIBIT C

                    FORM OF MORTGAGE LOAN PURCHASE AGREEMENT

<PAGE>

                        MORTGAGE LOAN PURCHASE AGREEMENT


                               Dated June 27, 2000


                        NEW CENTURY MORTGAGE CORPORATION
                                   Originator


                             NC CAPITAL CORPORATION
                                     Seller


                      NEW CENTURY MORTGAGE SECURITIES, INC.
                                    Purchaser











<PAGE>
 >

                                                     CONTENTS
                                                     --------

                                                                          PAGE
                                                                          ----



ARTICLE I         DEFINITIONS..............................................-2-

ARTICLE II        CONVEYANCE OF THE MORTGAGE LOANS.........................-4-

ARTICLE III       REPRESENTATIONS AND WARRANTIES OF THE SELLER

                  AND THE ORIGINATOR.......................................-8-

ARTICLE IV        [RESERVED]..............................................-10-

ARTICLE V         MISCELLANEOUS...........................................-11-



SCHEDULE A        MORTGAGE LOANS
EXHIBIT A         REPRESENTATIONS AND WARRANTIES RELATING TO THE
                  MORTGAGE LOANS




<PAGE>



                          STATEMENT OF THE TRANSACTION

         This is a Mortgage Loan Purchase Agreement (this "Agreement"), dated
June 27, 2000, among NC Capital Corporation, a California corporation (the
"Seller"), New Century Mortgage Securities, Inc., a Delaware corporation (the
"Purchaser") and New Century Mortgage Corporation, a California corporation (the
"Originator").

         Subject to the terms and conditions hereof, the Seller hereby agrees to
sell and transfer to the Purchaser, and the Purchaser hereby agrees to purchase
and accept from the Seller, the mortgage loans (the "Mortgage Loans") identified
in Schedule A of this Agreement (the "Mortgage Loan Schedule") having an
aggregate Cut-off Date Principal Balance of approximately $214,773,566 in
exchange for the purchase price which shall consist of (i) immediately available
funds in an amount equal to the net sale proceeds of the Class A Certificates
and (ii) delivery to NC Residual II Corporation upon the order of the Seller the
Class R Certificates (the "NC Residual Certificates"). The Seller shall deliver
the Mortgage Loan Schedule to the Purchaser on or prior to the Closing Date. The
Mortgage Loan Schedule and purchase price of the Mortgage Loans shall be subject
to the following adjustments: (a) Mortgage Loans identified by the Purchaser
prior to the Closing Date as not conforming to its requirements or which the
Purchaser has not selected for purchase shall be deleted; (b) the Seller shall
delete any and all Mortgage Loans that have been prepaid or as to which the
representations and warranties of the Seller (as described in Section 3.01
(A)(ii) hereof) cannot be made as of the Closing Date and (c) Mortgage Loans
acceptable to the Purchaser to be substituted for Mortgage Loans deleted as
provided above shall be added.

         It is understood that the Mortgage Loans which are the subject of this
Agreement are expected to be sold by the Purchaser on the Closing Date to a
trust (the "Trust") in exchange for New Century Home Equity Loan Trust, Series
2000-NCA, Asset Backed Pass-Through Certificates (the "Certificates"), including
one Class R Certificate (the "Class R Certificate") representing the residual
interest in the Trust relating to the Mortgage Loans. The Seller agrees to
cooperate and use its best efforts to facilitate the execution and delivery of
the Pooling and Servicing Agreement, dated as of June 1, 2000, among the
Purchaser as depositor, the Originator as master servicer (the "Master
Servicer"), U.S. Bank National Association as trust administrator (the "Trust
Administrator") and Firstar Bank, N.A. as trustee (the "Trustee"), pursuant to
which the Certificates will be issued (the "Pooling Agreement").

         Each Mortgage Loan will be serviced by the Master Servicer, in its
capacity as Master Servicer under the Pooling Agreement, for the related
Servicing Fee specified in the Pooling Agreement, and the Mortgage Loans will be
serviced in accordance with the terms of such Pooling Agreement.

         The following sets forth the terms and conditions of the contemplated
transaction, to which the parties have agreed, as evidenced by the execution of
this Agreement.



<PAGE>



                                    ARTICLE I

                                   DEFINITIONS

         Section 1.01. Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the following
meanings (capitalized terms not otherwise defined herein have the meanings
assigned thereto in the Pooling Agreement):

                  AGREEMENT:  This Mortgage Loan Purchase  Agreement,  including
all exhibits, schedules, amendments and supplements to this Agreement.

                  LOAN BALANCE:  As defined in the Pooling Agreement.

                  MORTGAGE FILE:  As to each Mortgage Loan:

                  (i) the original Mortgage Note, endorsed in blank or in the
following form: "Pay to the order of Firstar Bank, N.A., as Trustee under the
applicable agreement, without recourse", with all prior and intervening
endorsements showing a complete chain of endorsement from the originator of the
Mortgage Loan to the Trustee;

                  (ii) the original Mortgage with evidence of recording thereon
(or, if the original Mortgage has not been returned from the applicable public
recording office or is not otherwise available, a copy of the Mortgage certified
by a Responsible Officer of the Master Servicer, in its capacity as originator
of the Mortgage Loan, or by the closing attorney or by an officer of the title
insurer or agent of the title insurer which issued the related title insurance
policy or commitment therefor to be a true and complete copy of the original
Mortgage submitted for recording) and, if the Mortgage was executed pursuant to
a power of attorney, the original power of attorney with evidence of recording
thereon (or, if the original power of attorney has not been returned from the
applicable public recording office or is not otherwise available, a copy of the
power of attorney certified by a Responsible Officer of the Master Servicer, in
its capacity as originator of the Mortgage Loan, or by the closing attorney or
by an officer of the title insurer or agent of the title insurer which issued
the related title insurance policy or commitment therefor, to be a true and
complete copy of the original power of attorney submitted for recording);

                  (iii)  the  original  executed   Assignment,   acceptable  for
recording   except  with  respect  to  any   currently   unavailable   recording
information,  from the Depositor to the Trustee in the following form:  "Firstar
Bank, N.A., as Trustee under the applicable agreement" or in blank;

                  (iv) the original Assignment and any intervening Assignments,
with evidence of recording thereon, showing a complete chain of assignment from
origination of the Mortgage Loan to the Depositor (or, if any such Assignment
has not been returned from the applicable public recording office or is not
otherwise available, a copy of such Assignment certified by a Responsible
Officer of the Master Servicer, in its capacity as originator of the Mortgage
Loan, or by the closing attorney or by an officer of the title insurer or agent
of the title insurer which issued the related title insurance policy or
commitment therefor to be a true and complete copy of the original Assignment
submitted for recording);

                                       -2-

<PAGE>



                  (v) the original, or a copy certified by the Depositor or the
originator of the Mortgage Loan to be a true and complete copy of the original,
of each assumption, modification, written assurance or substitution agreement,
if any; and

                  (vi) an original, or a copy certified by the Depositor to be a
true and complete copy of the original, of a lender's title insurance policy,
together with all endorsements or riders that were issued with or subsequent to
the issuance of such policy, insuring the priority of the Mortgage as first lien
on the Mortgaged Property represented therein as a fee simple interest vested in
the Mortgagor, or in the event such original title policy is unavailable, a
written commitment or uniform binder or preliminary report of title issued by
the title insurance or escrow company.

                  MORTGAGE LOANS: As defined in the Statement of the Transaction
herein.

                  MORTGAGE LOAN SCHEDULE: As defined in the Pooling Agreement.

                  OPINION OF COUNSEL: A written opinion of counsel, who may be
counsel for the Purchaser, the Originator or the Seller, reasonably acceptable
to the Trust Administrator; PROVIDED, HOWEVER, that, any opinion of counsel
relating to (a) qualification of the Trust as a REMIC or compliance with the
REMIC Provisions must be an opinion of counsel who is a tax counsel experienced
in REMIC matters and (b) the qualification of any account required to be
maintained pursuant to this Agreement as an Eligible Account must (i) in fact be
Independent of the Purchaser, the Originator and the Seller, (ii) not have any
direct financial interest in the Purchaser, the Originator or the Seller or in
any affiliate of either, and (iii) not be connected with the Purchaser, the
Originator or the Seller as an officer, employee, promoter, underwriter,
trustee, partner, director or person performing similar functions.

                  PROSPECTUS SUPPLEMENT: The Prospectus Supplement dated June
27, 2000, as amended or supplemented, relating to the proposed public offering
by the Underwriters of New Century Home Equity Loan Trust, Series 2000-NCA,
Asset Backed Pass-Through Certificates, Class A representing interests in the
Mortgage Loans.

                  PURCHASE PRICE: With respect to any Mortgage Loan required to
be repurchased by the Seller pursuant to Section 2.03 or 2.04 of this Agreement,
an amount equal to the sum, without duplication, of (i) 100% of the Loan Balance
as of the date of purchase, (ii) any unreimbursed Servicing Advances or
Delinquency Advances allocable to such Mortgage Loan, (iii) interest from the
date interest was last paid by the Mortgagor through the day before the Due Date
in the Due Period relating to the Distribution Date in which the Purchase Price
will be remitted at a rate per annum equal to the applicable Net Mortgage Rate
(to the extent such amounts are not already counted in (ii)) and (iv) in the
event the Mortgage Loan is required to be purchased pursuant to Section 2.06 of
the Pooling Agreement, expenses reasonably incurred or to be incurred by the
Master Servicer or the Trustee in respect of the breach or defect giving rise to
the purchase obligation, including any reasonable expenses arising out of the
enforcement of the purchase obligation.



                                       -3-

<PAGE>



                                   ARTICLE II

                        CONVEYANCE OF THE MORTGAGE LOANS

         Section 2.01.     CONVEYANCE OF MORTGAGE LOANS.

         The Seller, concurrently with the execution and delivery hereof, hereby
sells, transfers, assigns, sets over and otherwise conveys to the Purchaser,
without recourse, all the right, title and interest of the Seller in and to the
Mortgage Loans, including all interest and principal due on or with respect to
the Mortgage Loans after the Cut-off Date (to the extent not applied in
computing the Cut-off Date Loan Balance thereof).

         On or prior to the Closing Date, the Seller shall authorize the release
to the Purchaser of the Mortgage File for each Mortgage Loan on the Mortgage
Loan Schedule, but the Seller shall remain subject to the substitution,
repurchase and other obligations set forth herein. Such release shall be made to
the Purchaser or, at the Purchaser's direction, to a designee of the Purchaser
against payment by the Purchaser of the purchase price set forth above under
"Statement of the Transaction" (as adjusted) for the Mortgage Loans to be
delivered on the Closing Date, by wire transfer of immediately available funds,
or such other method of payment as to which the parties hereto may agree, and
delivery to NC Residual II Corporation of the NC Residual Certificates.

         In the event that, in connection with any Mortgage Loan, the Seller
cannot deliver to the Purchaser, the original recorded Mortgage or an original
recorded Assignment together with all interim recorded Assignments, the Seller
shall deliver to the Purchaser a true copy of such Mortgage and such Assignment
or Assignments each certified by the Seller, the applicable title company,
escrow agent or attorney, or the originator of such Mortgage, as the case may
be, to be a true and complete copy of the original Mortgage or Assignment
submitted for recording. The Seller shall promptly deliver to the Purchaser such
original Mortgage and such Assignment or Assignments with evidence of recording
indicated thereon upon receipt thereof from the public recording official or a
copy thereof, certified, if appropriate, by the relevant recording office, but
in no event shall any such delivery be made later than 360 days following the
Closing Date; PROVIDED, HOWEVER, that in the event the Seller is unable to
deliver by such date each Mortgage and each Assignment by reason of the fact
that any such documents have not been returned by the appropriate recording
office, or, in the case of each Assignment, because the related Mortgage has not
been returned by the appropriate recording office, the Seller shall deliver such
documents to the Purchaser as promptly as possible upon receipt thereof. If any
document submitted for recording pursuant to this Agreement is lost prior to
recording, the Seller shall immediately prepare a substitute and submit it for
recording, and shall deliver copies and originals thereof in accordance with the
foregoing. The Seller shall promptly forward or cause to be forwarded from time
to time to the Purchaser (a) additional original documents evidencing an
assumption or modification of a Mortgage Loan and (b) any other documents
required to be delivered by the Seller to the Purchaser within the time periods
specified in this Section 2.01.

         In the case of Mortgage Loans that have been prepaid in full as of the
Closing Date, the Seller, in lieu of delivering the above documents to the
Purchaser, will deposit into the Collection

                                       -4-

<PAGE>



Account the amount with respect to such payment that is required to be deposited
into the Collection Account.

         Section 2.02.     CLOSING.

         The closing for the purchase and sale of the Mortgage Loans shall be in
person or by telephone confirmed by letter or wire as the parties shall agree.

         Section 2.03.     CURE BY ORIGINATOR OF DEFECTS.

         The Originator shall promptly correct or cure any defect included in
the Trust Administrator's Final Certification within 60 days after the date on
which the Originator or the Seller was notified of such defect and, if the
Originator does not correct or cure such defect within such period, the
Originator shall either (a) if the time to cure such defect or breach expires
prior to the end of the second anniversary of the Closing Date, substitute for
the related Mortgage Loan a Qualified Substitute Mortgage Loan, which
substitution shall be accomplished, in the manner and subject to the conditions
set forth in Section 2.06 of the Pooling Agreement or (b) purchase such Mortgage
Loan from the Trust Administrator, within 90 days after the date on which the
Originator or the Seller was notified of such defect or breach in writing at the
Purchase Price of such Mortgage Loan; PROVIDED, HOWEVER, that any such
substitution pursuant to clause (a) above or repurchase pursuant to clause (b)
above shall not be effected prior to the delivery to the Trust Administrator of
any Opinion of Counsel required by the Pooling Agreement and any such
substitution pursuant to clause (a) above shall not be effected prior to the
additional delivery of an Officers' Certificate which states that such Qualified
Substitute Mortgage Loan meets with the requirements of the Pooling Agreement.
The Purchase Price for any such Mortgage Loan shall be deposited by the
Originator into the Collection Account. Upon any such substitution and the
deposit of the Purchase Price into the Collection Account, the Purchaser shall,
promptly after the Trust Administrator has released to the Purchaser pursuant to
the Pooling Agreement the Mortgage File relating to such Deleted Mortgage Loan
(as defined below), release such Mortgage File to the Originator.

         Section 2.04.     SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
                           REPURCHASE OBLIGATION OF ORIGINATOR

         It is understood and agreed that within 60 days after the earlier of
the Originator's or the Seller's discovery or its receipt of written notice of
breach of any representation or warranty set forth in Section 3.01 of this
Agreement which materially and adversely affects the interests of the
Certificateholders in any Mortgage Loan, the Originator shall cure such breach
in all material respects and, if such breach is not so cured, shall, subject to
the second following sentence, either (a) if such 60-day period expires prior to
the second anniversary of the Closing Date, remove such Mortgage Loan (a
"Deleted Mortgage Loan") from the trust fund created pursuant to the Pooling
Agreement (the "Trust Fund") and substitute in its place a Qualified Substitute
Mortgage Loan, in the manner and subject to the conditions set forth in Section
2.06 of the Pooling Agreement or (b) repurchase each affected Mortgage Loan from
the Trust Administrator at the Purchase Price in the manner set forth below. The
Originator shall promptly reimburse the Trust Administrator for any expenses
reasonably incurred by the Trust Administrator in respect of enforcing the
remedies for such breach. With respect to the representations and warranties
described in Section 3.01 of this

                                       -5-

<PAGE>



Agreement which are made to the best of the Originator's or the Seller's
knowledge, if it is discovered by any of the Purchaser, the Seller, the
Originator or the Trust Administrator that the substance of such representation
and warranty is inaccurate and such inaccuracy materially and adversely affects
the value of the related Mortgage Loan, notwithstanding the Originator's or the
Seller's lack of knowledge with respect to the substance of such representation
or warranty, such inaccuracy shall be deemed a breach of the applicable
representation or warranty.

         With respect to any Qualified Substitute Mortgage Loan or Loans, the
Originator shall deliver to the Trust Administrator for the benefit of the
Certificateholders, with respect to such Qualified Substitute Mortgage Loan or
Loans, the Mortgage Note, the Mortgage, the related Assignment, and such other
documents and agreements as are required by Section 2.04 of the Pooling
Agreement, with the Mortgage Note endorsed and the Mortgage assigned as required
by Section 2.04 of the Pooling Agreement. No substitution will be made in any
calendar month after the Determination Date for such month. Monthly payments due
with respect to Qualified Substitute Mortgage Loans in the month of substitution
shall not be part of the Trust Fund and will be retained by the Originator. For
the month of substitution, distributions to Certificateholders will include the
monthly payment due on any Deleted Mortgage Loan for such month and thereafter
the Originator shall be entitled to retain all amounts received in respect of
such Deleted Mortgage Loan. The Trust Administrator will be obligated under the
terms of the Pooling Agreement to amend the Mortgage Loan Schedule attached
hereto as Schedule A for the benefit of the Certificateholders to reflect the
removal of such Deleted Mortgage Loan or Loans and the substitution of the
Qualified Substitute Mortgage Loan or Loans. Upon such substitution, the
Qualified Substitute Mortgage Loan or Loans shall be subject to the terms of
this Agreement in all respects, and the Originator shall be deemed to have made
with respect to such Qualified Substitute Mortgage Loan or Loans, as of the date
of substitution, the representations and warranties set forth in Section 3.01 of
this Agreement.

         For any month in which the Originator substitutes one or more Qualified
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Trust
Administrator will determine, based upon information supplied by the Master
Servicer, and inform the Originator of, the amount (the "Substitution Shortfall
Amount"), if any, by which the Aggregate Loan Balance of all such Qualified
Substitute Mortgage Loans as of the date of substitution is less than the
Aggregate Loan Balance of all such Deleted Mortgage Loans as of such date plus
the aggregate amount of all unreimbursed Servicing Advances and Delinquency
Advances relating to such Deleted Mortgage Loans as of such date. On the date of
such substitution, the Originator will deposit or cause to be deposited from the
Originator's own funds into the Collection Account pursuant to Section
3.10(a)(vii) of the Pooling Agreement an amount equal to the Substitution
Shortfall Amount, if any, without reimbursement therefor, and the Trust
Administrator, upon (i) receipt of (A) the related Qualified Substitute Mortgage
Loan or Loans and (B) an Officers' Certificate of the Originator as to the
deposit of such Substitution Shortfall Amount into the Collection Account and
(ii) confirmation that such deposit has been made, shall release or cause to be
released to the Originator the related Mortgage File or Files and shall execute
and deliver such instruments of transfer or assignment as are furnished by the
Originator, in each case without recourse, as shall be necessary to vest in the
Originator title to any Deleted Mortgage Loan released pursuant hereto and the
Trust Administrator shall have no further responsibility or liability (except as
to its own acts) with regard to such Mortgage Loan.


                                       -6-

<PAGE>



                                   ARTICLE III

         REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE ORIGINATOR
         ---------------------------------------------------------------

         Section 3.01.     REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE
                           ORIGINATOR

         (i) The Seller hereby  represents and warrants to the Purchaser  that,
as of the date hereof and as of the Closing Date:

                  (a) The Seller is a corporation licensed as a mortgage banker
         duly organized, validly existing and in good standing under the laws of
         the State of California and has, and had at all relevant times, full
         corporate power to originate or purchase the Mortgage Loans, to own its
         property, to carry on its business as currently conducted and to enter
         into and perform its obligations under this Agreement;

                  (b) The execution and delivery of this Agreement by the Seller
         and its performance of and compliance with the terms of this Agreement
         will not violate the Seller's articles of incorporation or by-laws or
         constitute a default (or an event which, with notice or lapse of time,
         or both, would constitute a default) under, or result in the breach or
         acceleration of, any material contract, agreement or other instrument
         to which the Seller is a party or which may be applicable to the Seller
         or any of its assets;

                  (c) The Seller has the full power and authority to enter into
         and consummate all transactions contemplated by this Agreement to be
         consummated by it, has duly authorized the execution, delivery and
         performance of this Agreement, and has duly executed and delivered this
         Agreement. This Agreement, assuming due authorization, execution and
         delivery by the Purchaser and the Originator, constitutes a valid,
         legal and binding obligation of the Seller, enforceable against it in
         accordance with the terms hereof, except as such enforcement may be
         limited by bankruptcy, insolvency, reorganization, receivership,
         moratorium or other similar laws relating to or affecting the rights of
         creditors generally, and by general equity principles (regardless of
         whether such enforcement is considered in a proceeding in equity or at
         law);

                  (d) The Seller is not in violation of, and the execution and
         delivery of this Agreement by the Seller and its performance and
         compliance with the terms of this Agreement will not constitute a
         violation with respect to, any order or decree of any court or any
         order or regulation of any federal, state, municipal or other
         governmental agency having jurisdiction, which violation would
         materially and adversely affect the condition (financial or otherwise)
         or operations of the Seller or its properties or materially and
         adversely affect the performance of its duties hereunder;

                  (e) There are no actions or proceedings against, or
         investigations of, the Seller pending or, to the knowledge of the
         Seller, threatened, before any court, administrative agency or other
         tribunal (A) that, if determined adversely, would prohibit its entering
         into this Agreement or render the Certificates invalid, (B) seeking to
         prevent the issuance of the Certificates or the consummation of any of
         the transactions contemplated by this Agreement

                                       -7-

<PAGE>



         or (C) that, if determined adversely, would prohibit or materially and
         adversely affect the performance by the Seller of its obligations
         under, or the validity or enforceability of, this Agreement or the
         Certificates;

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

                  (g) The Seller did not sell the Mortgage Loans to the
         Purchaser with any intent to hinder, delay or defraud any of its
         creditors; the Seller will not be rendered insolvent as a result of the
         sale of the Mortgage Loans to the Purchaser;

                  (h) As of the Closing Date, immediately prior to the sale to
         the Purchaser, the Seller had good title to, and was the sole owner of,
         each Mortgage Loan free and clear of any lien other than any such lien
         released simultaneously with the sale contemplated herein, and,
         immediately upon each transfer and assignment herein contemplated, the
         Seller will have taken all steps necessary so that the Purchaser will
         have good title to, and will be the sole owner of, each Mortgage Loan
         free and clear of any lien (except for such liens as may exist
         consistent with the representations and warranties made in clauses (c)
         and (h) of Exhibit A hereto);

                  (i) The Seller  acquired  title to the Mortgage  Loans in good
         faith, without notice of any adverse claim;

                  (j) The collection practices used by the Seller with respect
         to the Mortgage Loans have been, in all material respects, legal,
         proper, prudent and customary in the non-conforming mortgage servicing
         business;

                  (k) No Officers' Certificate, statement, report or other
         document prepared by the Seller and furnished or to be furnished by it
         pursuant to this Agreement or in connection with the transactions
         contemplated hereby contains any untrue statement of material fact or
         omits to state a material fact necessary to make the statements
         contained herein or therein not misleading;

                  (l) The transfer, assignment and conveyance of the Mortgage
         Notes and the Mortgages by the Seller pursuant to this Agreement are
         not subject to the bulk transfer laws or any similar statutory
         provisions in effect in any applicable jurisdiction;

                  (m) The Seller is duly licensed where required as a "Licensee"
         or is otherwise qualified in each state in which it transacts business
         and is not in default of such state's applicable laws, rules and
         regulations, except where the failure to so qualify or such default
         would not have a material adverse effect on the ability of the Seller
         to conduct its business or perform its obligations hereunder;


                                       -8-

<PAGE>



                  (n) The Seller is solvent, is able to pay its debts as they
         become due and has capital sufficient to carry on its business and its
         obligations hereunder; it will not be rendered insolvent by the
         execution and delivery of this Agreement or by the performance of its
         obligations hereunder; no petition of bankruptcy (or similar insolvency
         proceeding) has been filed by or against the Seller prior to the date
         hereof;

                  (o)  The  Seller  is  not  required  to  be  registered  as an
         "investment  company"  under the  Investment  Company  Act of 1940,  as
         amended;

                  (p) Upon execution of this Agreement, the Seller shall have
         sold, transferred, assigned, set over and otherwise conveyed to the
         Purchaser all of its right, title and interest in and to each Mortgage
         Loan; and

                  (q) As to the Mortgage Loans, each of the  representations and
         warranties as set forth on Exhibit A hereto is true and correct.

         (ii) The  Originator  hereby  represents and warrants to the Purchaser
that, as of the date hereof and as of the Closing Date:

                  (a) The Originator is a corporation licensed as a mortgage
         banker duly organized, validly existing and in good standing under the
         laws of the State of California and has, and had at all relevant times,
         full corporate power to originate or purchase the Mortgage Loans, to
         own its property, to carry on its business as currently conducted and
         to enter into and perform its obligations under this Agreement;

                  (b) The execution and delivery of this Agreement by the
         Originator and its performance of and compliance with the terms of this
         Agreement will not violate the Originator's articles of incorporation
         or by-laws or constitute a default (or an event which, with notice or
         lapse of time, or both, would constitute a default) under, or result in
         the breach or acceleration of, any material contract, agreement or
         other instrument to which the Originator is a party or which may be
         applicable to the Originator or any of its assets;

                  (c) The Originator has the full power and authority to enter
         into and consummate all transactions contemplated by this Agreement to
         be consummated by it, has duly authorized the execution, delivery and
         performance of this Agreement, and has duly executed and delivered this
         Agreement. This Agreement, assuming due authorization, execution and
         delivery by the Purchaser and the Seller, constitutes a valid, legal
         and binding obligation of the Originator, enforceable against it in
         accordance with the terms hereof, except as such enforcement may be
         limited by bankruptcy, insolvency, reorganization, receivership,
         moratorium or other similar laws relating to or affecting the rights of
         creditors generally, and by general equity principles (regardless of
         whether such enforcement is considered in a proceeding in equity or at
         law);

                  (d) The Originator is not in violation of, and the execution
         and delivery of this Agreement by the Originator and its performance
         and compliance with the terms of this Agreement will not constitute a
         violation with respect to, any order or decree of any court or

                                       -9-

<PAGE>



         any order or regulation of any federal, state, municipal or other
         governmental agency having jurisdiction, which violation would
         materially and adversely affect the condition (financial or otherwise)
         or operations of the Originator or its properties or materially and
         adversely affect the performance of its duties hereunder;

                  (e) There are no actions or proceedings against, or
         investigations of, the Originator pending or, to the knowledge of the
         Originator, threatened, before any court, administrative agency or
         other tribunal (A) that, if determined adversely, would prohibit its
         entering into this Agreement or render the Certificates invalid, (B)
         seeking to prevent the issuance of the Certificates or the consummation
         of any of the transactions contemplated by this Agreement or (C) that,
         if determined adversely, would prohibit or materially and adversely
         affect the performance by the Originator of its obligations under, or
         the validity or enforceability of, this Agreement or the Certificates;

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

                  (g) The collection practices used by the Originator with
         respect to the Mortgage Loans have been, in all material respects,
         legal, proper, prudent and customary in the non-conforming mortgage
         servicing business;

                  (h) No Officers' Certificate, statement, report or other
         document prepared by the Originator and furnished or to be furnished by
         it pursuant to this Agreement or in connection with the transactions
         contemplated hereby contains any untrue statement of material fact or
         omits to state a material fact necessary to make the statements
         contained herein or therein not misleading;

                  (i) The Originator is duly licensed where required as a
         "Licensee" or is otherwise qualified in each state in which it
         transacts business and is not in default of such state's applicable
         laws, rules and regulations, except where the failure to so qualify or
         such default would not have a material adverse effect on the ability of
         the Originator to conduct its business or perform its obligations
         hereunder;

                  (j) The Originator is solvent, is able to pay its debts as
         they become due and has capital sufficient to carry on its business and
         its obligations hereunder; it will not be rendered insolvent by the
         execution and delivery of this Agreement or by the performance of its
         obligations hereunder; no petition of bankruptcy (or similar insolvency
         proceeding) has been filed by or against the Originator prior to the
         date hereof;

                  (k) The  Originator  is not  required to be  registered  as an
         "investment  company"  under the  Investment  Company  Act of 1940,  as
         amended; and


                                      -10-

<PAGE>




                  (l) As to the Mortgage Loans, each of the  representations and
warranties set forth on Exhibit A hereto is true and correct.

         Section 3.02.     ADDITIONAL DOCUMENTS.

         The Seller agrees to use its best efforts to furnish (or cause to be
furnished) such information and to execute such documents or instruments as the
Purchaser may reasonably request in connection with the transactions herein
contemplated and the issuance of the New Century Home Equity Loan Trust, Series
2000-NCA, Asset Backed Pass-Through Certificates, including, but not limited to,
officers' certificates, opinions of counsel and letters of accountants.

         Section 3.03.     COSTS AND EXPENSES.

         The Seller will pay all costs and expenses in connection with the
transfer and delivery of the Mortgage Loans in the manner contemplated herein,
including, but not limited to, the costs and expenses in connection with the
preparation and recordation of any Assignments referred to herein.

                                   ARTICLE IV

                                   [RESERVED]


                                      -11-

<PAGE>



                                    ARTICLE V

                                  MISCELLANEOUS

         Section 5.01.     RECORDATION OF AGREEMENT.

         This Agreement or a memorandum hereof is subject to recordation in all
appropriate public offices for real property records in each state and county or
other comparable jurisdiction in which any of the Mortgaged Property is
situated, and in any other appropriate public recording office or elsewhere,
such recordation to be effected by the Seller and at its expense, on direction
by the Purchaser, but only upon direction preceded or accompanied by an advice
of counsel to the Purchaser to the effect that failure to record would adversely
affect the interests of the Purchaser, the Trustee, the Trust Administrator or
any Certificateholder.

         Section 5.02.     NOTICES.

         All demands, notices and communications hereunder shall be in writing
and shall be deemed to have been duly given if mailed by registered or certified
mail, return receipt requested, or, if by other means, when received by the
other party or at the address, in the case of the Originator, the Seller or the
Purchaser: New Century Mortgage Corporation, NC Capital Corporation or New
Century Mortgage Securities, Inc., as applicable: 18400 Von Karman, Suite 1000,
Irvine, California 92612, Attn: Patrick J. Flanagan, or such other address as
may hereafter be furnished to the other party by like notice. Any such demand,
notice or communication hereunder shall be deemed to have been given on the date
delivered to the premises of the addressee (as evidenced, in the case of
registered or certified mail, by the date noted on the return receipt).

         Section 5.03.     SEVERABILITY CLAUSE.

         Any part, provision, representation or warranty of this Agreement which
is prohibited or which is held to be void or unenforceable shall be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof. Any part, provision, representation or warranty of
this Agreement which is prohibited or unenforceable or is held to be void or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof. If the invalidity of any
part, provision, representation or warranty of this Agreement shall deprive any
party of the economic benefit intended to be conferred by this Agreement, the
parties shall negotiate in good faith to develop a structure the economic effect
of which is as nearly as possible the same as the economic effect of this
Agreement without regard to such invalidity.


                                      -12-

<PAGE>



         Section 5.04.     COUNTERPARTS.

         For the purpose of facilitating the proving 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.

         Section 5.05.     PLACE OF DELIVERY AND GOVERNING LAW.

         The Agreement shall be deemed in effect when a fully executed
counterpart hereof is received by the Purchaser in New York. The Agreement shall
be construed in accordance with the laws of the State of New York and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.

         Section 5.06.     REMEDIES CUMULATIVE; NO WAIVER.

         All rights and remedies of the Purchaser or any assignee of the
Purchaser under this Agreement shall, to the extent permitted by law, be deemed
cumulative and not exclusive of any thereof or of any other rights and remedies
available to the Purchaser or such assignee; and no failure to exercise any
right or power accruing upon any default occurring and continuing as aforesaid
shall impair any such right or power, or shall be construed to be a waiver of
any such default or an acquiescence therein; and every right and remedy arising
under this Agreement or by law to the Purchaser or such assignee may be
exercised from time to time, and as often as shall be deemed expedient, by the
Purchaser or such assignee.

         Section 5.07.     MISCELLANEOUS.

         This Agreement may be amended or supplemented from time to time only
with the written consent of the Seller and the Purchaser and any assignee of the
Purchaser. This Agreement contains the entire understanding and agreement of the
parties and supersedes and incorporates all prior negotiations, understandings
and agreements which are fully merged herein.

         Section 5.08.     AGREEMENT OF PARTIES.

         The Seller and the Purchaser agree to execute and deliver such
instruments and take such actions as the other may, from time to time,
reasonably request in order to effect the purpose and to carry out the terms of
this Agreement.

         Section 5.09.     SUCCESSORS AND ASSIGNS.

         This Agreement shall bind and inure to the benefit of and be
enforceable by and against the Seller, the Purchaser, and the respective
successors and assigns of the Seller and the Purchaser. The parties hereto
acknowledge that the Purchaser is acquiring the Mortgage Loans for the purpose
of contributing them to the Trust which will issue the Certificates representing
undivided interests in the Mortgage Loans. As an inducement to the Purchaser to
purchase the Mortgage Loans, the Seller acknowledges and consents to the
assignment to the Trustee by the Purchaser of all of the

                                      -13-

<PAGE>



Purchaser's rights against the Seller hereunder in respect of the Mortgage Loans
and affirms that the enforcement or exercise of any right or remedy against the
Seller hereunder by the Trustee or any holder of a Certificate to the extent
permitted under the Pooling Agreement shall have the same force and effect as if
enforced or exercised by the Purchaser directly.

         Section 5.10.     THIRD PARTY BENEFICIARY.

         The Certificate Insurer shall be a third-party beneficiary of this
Agreement, entitled to enforce the provisions hereof as if a party hereto.

         Section 5.11.     MANDATORY DELIVERY.

         The sale and delivery on the Closing Date of the Mortgage Loans
described on the Mortgage Loan Schedule is mandatory, it being specifically
understood and agreed that each Mortgage Loan is unique and identifiable on the
date hereof and that an award of money damages would be insufficient to
compensate the Purchaser for the losses and damages incurred by the Purchaser in
the event of the Seller's failure to deliver the Mortgage Loans on or before the
Closing Date.

                                 *   *   *   *


                                      -14-

<PAGE>



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

                                   NC CAPITAL CORPORATION,
                                   Seller


                                   By:
                                      ----------------------------------------
                                   Name:
                                   Title:



                                   NEW CENTURY MORTGAGE SECURITIES,
INC.,
                                   Purchaser

                                   By:
                                      ----------------------------------------
                                   Name:
                                   Title:



                                   NEW CENTURY MORTGAGE CORPORATION,
                                   Originator

                                   By:
                                      ----------------------------------------
                                   Name:
                                   Title:



                                      -15-

<PAGE>



                                   SCHEDULE A

                                 Mortgage Loans

                             Available Upon Request



<PAGE>



                                    EXHIBIT A

          Representations and Warranties Relating to the Mortgage Loans

         The Originator and the Seller hereby represent and warrant to the
Purchaser, the Trustee, the Trust Administrator, the Certificateholders and the
Certificate Insurer, with respect to each Mortgage Loan as of the Closing Date
(or in the case of certain specified representations and warranties, as of the
applicable Cut-off Date) or as of such other date specifically provided herein
(except that with respect to any Qualified Substitute Mortgage Loan such
representations and warranties shall be as of the date of substitution and made
by the Originator), that:

                  (a) The information set forth in the Mortgage Loan Schedule
         relating to the Mortgage Loans is complete, true and correct in all
         material respects as of the applicable Cut-off Date;

                  (b) The Mortgage Note and the Mortgage are not assigned or
         pledged by the Seller to a Person other than the Purchaser, and
         immediately prior to the transfer of the Mortgage Loans from the Seller
         to the Purchaser, the Seller had good and marketable title thereto, and
         was the sole owner and holder of the Mortgage Loan free and clear of
         any and all liens, claims, encumbrances, participation interests,
         equities, pledges, charges or security interests of any nature
         (collectively, a "Lien"), other than any such Lien released
         simultaneously with the sale contemplated herein, and had full right
         and authority, subject to no interest or participation of, or agreement
         with, any other party, to sell and assign the same pursuant to this
         Agreement, and immediately upon the transfer and assignment of each
         Mortgage Loan as herein contemplated, the Purchaser shall have good
         title to, and will be the sole legal owner of, each Mortgage Loan free
         and clear of any Lien;

                  (c) The Mortgage is a valid and existing lien on the property
         therein described, and the Mortgaged Property is free and clear of all
         encumbrances and liens having priority over the lien of the Mortgage,
         except (i) liens for real estate taxes and special assessments not yet
         due and payable and (ii) in the case of a Mortgaged Property that is a
         condominium or an individual unit in a planned unit development, liens
         for common charges permitted by statute. Any security agreement,
         chattel mortgage or equivalent document related to the Mortgage and
         delivered to the Purchaser establishes in the Originator a valid and
         subsisting lien on the property described therein, and the Seller has
         full right to sell and assign the same to the Purchaser;

                  (d) The terms of the Mortgage Note and the Mortgage have not
         been impaired, altered or modified in any respect which would have any
         adverse effect on the Certificateholders or the Certificate Insurer,
         except by a written instrument which has been recorded, if necessary to
         protect the interests of the Certificateholders, and which has been
         delivered to the Purchaser. The substance of any such alteration or
         modification is reflected in the Mortgage Loan Schedule;

                  (e) No  instrument  of release or waiver has been  executed in
         connection  with the Mortgage Loan, and no Mortgagor has been released,
         in whole or in part, except in


<PAGE>



         connection with an assumption agreement which has been approved by the
         primary mortgage guaranty insurer, if any, and which has been delivered
         to the Purchaser;

                  (f) As of the Delinquency Statistic Date, except with respect
         to delinquencies described in clause (m) hereof, no Mortgagor is in
         default in complying with the terms of the Mortgage Note or the
         Mortgage and there exists no event which, with the passage of time or
         notice or both, would constitute a default thereunder, and neither the
         Originator nor the Seller has waived any default, breach, violation or
         event of acceleration except that the Originator or the Seller may have
         accepted late payments. At origination all taxes, governmental
         assessments, insurance premiums, or water, sewer and municipal charges
         and rents under all ground leases which previously became due and owing
         have been paid, and each Mortgage Note and/or the related Mortgage
         obligate the related Mortgagor to pay all similar amounts as they
         become due. Neither the Originator nor the Seller has advanced funds,
         or induced, solicited or knowingly received any advance of funds by a
         party other than the Mortgagor, directly or indirectly, for the payment
         of any amount required by the Mortgage, except for interest accruing
         from the date of the Mortgage Note or date of disbursement of the
         Mortgage proceeds, whichever is more recent, to the day which precedes
         by one day the Due Date of the first installment of principal and
         interest;

                  (g) There is no proceeding pending or, to the best of the
         Originator's or the Seller's knowledge, threatened for the total or
         partial condemnation of the Mortgaged Property, nor is such a
         proceeding currently occurring, and such property is undamaged by
         waste, fire, water, earthquake or earth movement, windstorm, flood,
         tornado, or otherwise, so as to affect adversely the value of the
         Mortgaged Property as security for the Mortgage Loan or the use for
         which the premises were intended;

                  (h) There are no mechanics' or similar liens or claims which
         have been filed for work, labor or material (and no rights are
         outstanding that under law could give rise to such lien) affecting the
         Mortgaged Property which are, or may be, liens prior or equal to, or
         coordinate with, the lien of the Mortgage except those that are stated
         in the title insurance policy and for which related losses are
         affirmatively insured against by such policy;

                  (i) All of the improvements that were included for the purpose
         of determining the Value of the Mortgaged Property lie wholly within
         the boundaries and building restriction lines of such property, and no
         improvements on adjoining properties encroach upon the Mortgaged
         Property except those that are stated in the title insurance policy and
         for which related losses are affirmatively insured against by such
         policy;

                  (j)      [Reserved.]

                  (k) To the Originator's or the Seller's knowledge, no
         improvement located on or being part of the Mortgaged Property is in
         violation of any applicable zoning law or regulation. To the
         Originator's or the Seller's knowledge, all inspections, licenses and
         certificates required to be made or issued with respect to all occupied
         portions of the Mortgaged Property and, with respect to the use and
         occupancy of the same, including, but not limited to, certificates of
         occupancy and fire underwriting certificates, have been made


                                       -2-

<PAGE>



         or  obtained  from  the  appropriate  authorities  and  the  Mortgaged
         Property is lawfully occupied under applicable law;

                  (l) All parties that have had any interest in the Mortgage
         Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or,
         during the period in which they held and disposed of such interest,
         were) (1) in compliance with any and all licensing requirements of the
         United States and of the laws of the state wherein the Mortgaged
         Property is located that are applicable to such parties, and (2)(A)
         organized under the laws of such state, or (B) qualified to do business
         in such state or exempt from such qualification in a manner so as not
         to affect adversely the enforceability of such Mortgage Loan, or (C)
         federal savings associations or national banks having principal offices
         in such state, or (D) not doing business in such state;

                  (m) As of the Delinquency Statistic Date, approximately 5.97%
         of the Mortgage Loans in Loan Group I and approximately 4.82% of the
         Mortgage Loans in Loan Group II, in each case, by aggregate Cut-off
         Date Loan Balance, failed to make their monthly payment that was due on
         the Cut-off Date;

                  (n) The Mortgage File contains each of the documents and
         instruments specified to be included therein duly executed and in due
         and proper form and each such document or instrument is in a form
         generally acceptable to prudent institutional mortgage lenders that
         regularly originate or purchase mortgage loans comparable to the
         Mortgage Loans for sale to prudent investors in the secondary market
         that invest in mortgage loans such as the Mortgage Loans;

                  (o) The Mortgage Note and the related Mortgage are genuine,
         and each is the legal, valid and binding obligation of the maker
         thereof, enforceable in accordance with its terms, except as such
         enforcement may be limited by bankruptcy, insolvency, reorganization,
         receivership, moratorium or other similar laws relating to or affecting
         the rights of creditors generally, and by general equity principles
         (regardless of whether such enforcement is considered in a proceeding
         in equity or at law). All parties to the Mortgage Note and the Mortgage
         had legal capacity to execute the Mortgage Note and the Mortgage, and
         each Mortgage Note and Mortgage has been duly and properly executed by
         such parties. The Mortgagor is a natural person who is a party to the
         Mortgage Note and the Mortgage in an individual capacity, and not in
         the capacity of a trustee or otherwise;

                  (p) Any and all requirements of any federal, state or local
         law, including, without limitation, usury, truth-in-lending, real
         estate settlement procedures, consumer credit protection, equal credit
         opportunity or disclosure laws, applicable to the Mortgage Loan have
         been complied with, and the Originator has and shall maintain in its
         possession, available for the Purchaser's inspection, and shall deliver
         to the Purchaser upon demand, evidence of compliance with all such
         requirements;

                  (q) The proceeds of the Mortgage Loan have been fully
         disbursed, there is no requirement for future advances thereunder and
         any and all requirements as to completion of any on-site or off-site
         improvements and as to disbursements of any escrow funds therefor


                                       -3-

<PAGE>



         have been  complied  with.  All costs,  fees and expenses  incurred in
         making, closing or recording the Mortgage Loan were paid;

                  (r) Any future  advances made after the date of origination of
         each Mortgage Loan but prior to the Cut-off Date have been consolidated
         with the outstanding  principal amount secured by the related Mortgage,
         and the  secured  principal  amount,  as  consolidated,  bears a single
         interest rate and single  repayment term reflected on the Mortgage Loan
         Schedule.  The lien of the Mortgage securing the consolidated principal
         amount is expressly  insured as having first lien priority,  by a title
         insurance   policy  or  an  endorsement  to  the  policy  insuring  the
         mortgagee's  consolidated  interest.  The consolidated principal amount
         does not exceed the original principal amount of the Mortgage Loan. The
         Originator  shall not be  obligated to make future  advances  after the
         Cut-off Date;

                  (s) Each Mortgage Loan is covered by an ALTA mortgage title
         insurance policy or such other form of policy acceptable to Fannie Mae
         or Freddie Mac, issued by and constituting the valid and binding
         obligation of a title insurer generally acceptable to prudent mortgage
         lenders, which regularly originate or purchase mortgage loans
         comparable to the Mortgage Loans for sale to prudent investors in the
         secondary market that invest in mortgage loans such as the Mortgage
         Loans, and qualified to do business in the jurisdiction wherein the
         Mortgaged Property is located, insuring the Originator, its successors
         and assigns, as to the first priority lien of the Mortgage in the case
         of a First Mortgage Loan, in the original principal amount of the
         Mortgage Loan. The Originator is the sole payee of such mortgage title
         insurance policy, the assignment to the Purchaser of the Originator's
         or the Seller's interest in such mortgage title insurance policy does
         not require the consent of or notification to the insurer or the same
         has been obtained, and such mortgage title insurance policy is in full
         force and effect and will be in full force and effect and inure to the
         benefit of the Purchaser upon the consummation of the transactions
         contemplated by this Agreement. No claims have been made under such
         mortgage title insurance policy and no prior holder of the related
         Mortgage, including the Originator and the Seller, has done, by act or
         omission, anything that would impair the coverage of such mortgage
         title insurance policy;

                  (t) All improvements  upon the Mortgaged  Property are insured
         by an  insurer  who meets  Fannie  Mae and/or  Freddie  Mac  guidelines
         against  loss by fire,  hazards  of  extended  coverage  and such other
         hazards as are  customary in the area where the  Mortgaged  Property is
         located pursuant to insurance  policies  conforming to the requirements
         of  Section  3.13  of  the  Pooling  and  Servicing  Agreement.  If the
         Mortgaged  Property  was,  at the time of  origination  of the  related
         Mortgage Loan, in an area  identified on a Flood Hazard Boundary Map or
         Flood Hazard Rate Map issued by the Federal Emergency Management Agency
         as having  special  flood  hazards (and if the flood  insurance  policy
         referenced herein has been made available), a flood insurance policy is
         in effect  with  respect to such  Mortgaged  Property  with a generally
         acceptable  carrier in an amount  representing  coverage  described  in
         Section 3.13 of the Pooling and  Servicing  Agreement.  All  individual
         insurance  policies  (collectively,  the "hazard insurance policy") are
         the valid and binding  obligation of the insurer and contain a standard
         mortgagee clause naming the Originator,  its successors and assigns, as
         mortgagee.  All premiums thereon have been paid. The Mortgage obligates
         the  Mortgagor  thereunder  to  maintain  all  such  insurance  at  the
         Mortgagor's cost and expense, and upon the Mortgagor's

                                       -4-

<PAGE>



         failure to do so, authorizes the holder of the Mortgage to obtain and
         maintain such insurance at the Mortgagor's cost and expense and to seek
         reimbursement therefor from the Mortgagor;

                  (u) The Mortgage Loan is not subject to any right of
         rescission, set-off, counterclaim or defense, including the defense of
         usury, nor will the operation of any of the terms of the Mortgage Note
         or the Mortgage, or the exercise of any right thereunder, render either
         the Mortgage Note or the Mortgage unenforceable, in whole or in part,
         or subject to any right of rescission, set-off, counterclaim or
         defense, including the defense of usury, and no such right of
         rescission, set-off, counterclaim or defense has been asserted with
         respect thereto;

                  (v) The Mortgage Loans were originated or purchased and
         re-underwritten by the Originator in accordance with the Originator's
         underwriting guidelines, including provisions in such guidelines for
         making exceptions. No Mortgage Loan has been modified except as such
         modification may be reflected in the related Mortgage File;

                  (w) The Mortgage Loan is a closed-end first lien Mortgage Loan
         having an original term of not more than 30 years to maturity. Each
         Mortgage Loan is payable in equal monthly installments of principal and
         interest which would be sufficient, in the absence of late payments, to
         fully amortize such loan within the term thereof, beginning no later
         than 60 days after disbursement of the proceeds of the Mortgage Loan
         and bears a fixed interest rate for the term of the Mortgage Loan;

                  (x) The Mortgage contains a customary provision for the
         acceleration of the payment of the unpaid principal balance of the
         Mortgage Loan in the event the related Mortgaged Property is sold
         without the prior consent of the holder of the Mortgage;

                  (y) With respect to approximately 92.63% of the Mortgage Loans
         in Loan Group I and approximately 94.49% of the Mortgage Loans in Loan
         Group II, in each case, measured by Cut-off Date Loan Balances, at the
         time that each such Mortgage Loan was originated the related Mortgagor
         represented that such Mortgagor would occupy the related Mortgaged
         Property as such Mortgagor's primary residence, and neither the
         Originator nor the Seller has received notice that such representation
         of the Mortgagor is no longer true. No Mortgage Loan is a construction
         loan. Each Mortgaged Property is lawfully occupied under applicable
         law;

                  (z) The Mortgage Note is not and has not been secured by any
         collateral, pledged account or other security except the lien of the
         corresponding Mortgage and the security interest of any applicable
         security agreement or chattel mortgage;

                  (aa) The Mortgage contains customary and enforceable
         provisions which render the rights and remedies of the holder thereof
         adequate for the realization against the Mortgaged Property of the
         benefits of the security, including, (i) in the case of a Mortgage
         designated as a deed of trust, by trustee's sale, and (ii) otherwise by
         judicial or non-judicial foreclosure. Other than applicable homestead
         provisions which may delay the realization against the Mortgaged
         Property, or exemptions that may arise in the event a petition under


                                       -5-

<PAGE>



         the Bankruptcy Code is filed with respect to the Mortgagor, there is no
         homestead or other exemption available to the Mortgagor that would
         interfere with the right to sell the Mortgaged Property at a trustee's
         sale or the right to foreclose the Mortgage;

                  (bb) With respect to each Mortgage constituting a deed of
         trust, a trustee, duly qualified under applicable law to serve as such,
         has been properly designated and currently so serves and is named in
         such Mortgage, and no fees or expenses are or will become payable by
         the Trust Administrator or the Certificateholders to the trustee under
         the deed of trust, except in connection with a trustee's sale after
         default by the Mortgagor, which fees and expenses shall constitute
         Servicing Advances;

                  (cc) The Mortgaged Property is located in the state identified
         in the Mortgage Loan Schedule and consists of at least one parcel of
         real property with a one-family residence erected thereon, a two- to
         four-family dwelling, an individual condominium unit, a unit in a
         planned unit development; PROVIDED, HOWEVER, that no residence or unit
         or a mobile home which is not permanently affixed, but which may be a
         pre-fabricated or manufactured unit affixed to a permanent foundation.
         As of the Cut-off Date with respect to the aggregate Cut-off Date Loan
         Balance of the related Mortgage Loans, (i) not more than 3.94% of the
         Mortgage Loans in Loan Group I and 6.79% of the Mortgage Loans in Loan
         Group II, in each case by Cut-off Date Loan Balance, are secured by
         real property improved by two- to four-family dwellings; (ii) not more
         than 2.06% of the Mortgage Loans in Loan Group I and 2.86% of the
         Mortgage Loans in Loan Group II, in each case by Cut-off Date Loan
         Balance, are secured by real property improved by individual
         condominium units; (iii) at least 86.64% of the Mortgage Loans in Loan
         Group I and 78.94% of the Mortgage Loans, in each case by Cut-off Date
         Loan Balance, in Loan Group II are secured by real property with a
         detached or attached single-family residence erected thereon; and (iv)
         not more than 23.81% of the Mortgage Loans in Loan Group I and 34.11%
         of the Mortgage Loans in Loan Group II, in each case by Cut-off Date
         Loan Balance, have been originated under a Stated Income Program; and
         with respect to each Mortgaged Property subject to a ground lease: (i)
         the current ground lessor has been identified and all ground rents
         which have previously become due and owing have been paid, (ii) the
         ground lease term extends, or is automatically renewable, for at least
         five years beyond the maturity date of the related Mortgage Loan, (iii)
         the ground lease has been duly executed and recorded, (iv) the amount
         of the ground rent and any increases therein are clearly identified in
         the lease and are for predetermined amounts at predetermined times, (v)
         the ground rent payment is included in the Mortgagor's monthly payment
         as an expense item, (vi) the Trust has the right to cure defaults on
         the ground lease and (vii) the terms and conditions of the leasehold do
         not prevent the free and absolute marketability of such Mortgaged
         Property.

                  (dd) The Loan-to-Value Ratio of each Mortgage Loan in Loan
         Group I was not more than 100.00% and the Loan-to-Value Ratio of each
         Mortgage Loan in Loan Group II was not more than 90.00%; the weighted
         average Loan-to-Value Ratio of the Mortgage Loans in Loan Group I was
         approximately 75.78% and the weighted average Loan-to-Value Ratio of
         the Mortgage Loans in Loan Group II was approximately 77.83%;

                  (ee)     [Reserved.]


                                       -6-

<PAGE>



                  (ff) There exist no deficiencies with respect to escrow
         deposits and payments, if such are required, for which customary
         arrangements for repayment thereof have not been made, and no escrow
         deposits or payments of other charges or payments due the Originator
         have been capitalized under the Mortgage or the related Mortgage Note;

                  (gg)  No Mortgage Loan was originated under a buydown plan;

                  (hh) Other than as provided by this Agreement, there is no
         obligation with respect to the Mortgage Loan on the part of the
         Originator or any other party to make payments in addition to those
         made by the Mortgagor;

                  (ii) Subject to the provisions of Section 2.04 of the Pooling
         and Servicing Agreement, the Mortgage Note, the Mortgage, the
         Assignment and any other documents required to be delivered have been
         delivered to the Purchaser. The Originator is in possession of a
         complete Mortgage File, except those documents delivered to the
         Purchaser, and there are no custodial agreements in effect adversely
         affecting the right or ability of the Originator to make the document
         deliveries required hereby. Each original Mortgage was recorded, and
         all subsequent Assignments of the original Mortgage have been recorded
         in the appropriate jurisdictions wherein such recordation is necessary
         to perfect the lien thereof as against creditors of the Originator
         (subject to the provisions of Section 2.04 of the Pooling and Servicing
         Agreement with respect to Mortgages and Assignments which are in the
         process of being recorded);

                  (jj) No Mortgage Loan was selected for inclusion under this
         Agreement on any basis which was intended to have a material adverse
         effect on the Certificateholders;

                  (kk) No  Mortgage  Loan  has a  shared  appreciation  or other
         contingent interest feature;

                  (ll) No more than 1.01% of the Mortgage Loans in Loan Group I
         and 0.95% of the Mortgage Loans in Loan Group II, in each case, by
         Cut-off Date Loan Balance, are secured by Mortgaged Properties located
         within any single five-digit ZIP code area;

                  (mm) The weighted average Mortgage Rate of the Mortgage Loans
         in Loan Group I as of the Cut-off Date was approximately 10.833% and no
         Mortgage Rate for any Mortgage Loan in Loan Group I was greater than
         15.750% or less than 7.950% and the weighted average Mortgage Rate of
         the Mortgage Loans in Loan Group II as of the Cut-off Date was
         approximately 10.567% and no Mortgage Rate for any Mortgage Loan in
         Loan Group II was greater than 15.800% or less than 7.440%. With
         respect to the Mortgage Loans in Loan Group II that are Adjustable Rate
         Mortgage Loans, as of the Cut-off Date, (i) the weighted average
         Maximum Mortgage Rate was 17.553%, and no Maximum Mortgage Rate for any
         Mortgage Loan in Loan Group II was greater than 22.800% or less than
         14.700%, (ii) the weighted average Minimum Mortgage Rate was 10.560%,
         and no Minimum Mortgage Rate for any Mortgage Loan in Loan Group II was
         greater than 15.800% or less than 7.700%, (iii) the weighted average
         Gross Margin was 6.165%, and no Gross Margin for any Mortgage Loan in
         Loan Group II was greater than 11.090% or less than 1.000%, (iv) the
         weighted

                                       -7-

<PAGE>



         average next Adjustment Date was April 2002 and the latest next
         Adjustment Date of any Mortgage Loan in Loan Group II was May 2003;

                  (nn)     [Reserved].

                  (oo) The Originator has caused or will cause to be performed
         any and all acts required to be performed to preserve the rights and
         remedies of the Trustee in any insurance policies applicable to the
         Mortgage Loans, including, without limitation, any necessary
         notifications of insurers, assignments of policies or interests
         therein, and establishments of co-insured, joint loss payee and
         mortgagee rights in favor of the Trustee;

                  (pp) All amounts due and received after the Cut-off Date (and
         all amounts received on or before the Cut-off Date that are due after
         the Cut-off Date) with respect to the Mortgage Loans to which the
         Originator is not entitled are, as of the Closing Date, in the
         Collection Account;

                  (qq) Each Mortgage Loan conforms and all Mortgage Loans in the
         aggregate conform, to the descriptions thereof to be set forth in the
         Prospectus Supplement (subject to the variances specified therein);

                  (rr) A full appraisal on forms approved by Fannie Mae or
         Freddie Mac was performed in connection with the origination of the
         related Mortgage Loan;

                  (ss) There is no indication in the Mortgage File that the
         Mortgaged Property was, as of the Cut-off Date, located within a
         one-mile radius of any site listed in the National Priorities List as
         defined under the Comprehensive Environmental Response, Compensation
         and Liability Act of 1980, as amended, or on any similar state list of
         hazardous waste sites which are known to contain any hazardous
         substance or hazardous waste;

                  (tt) None of the  Mortgage  Loans is subject  to a  bankruptcy
         plan;

                  (uu) No less than 76.19% and 65.89% of the of the Mortgage
         Loans in Loan Group I and Loan Group II, respectively, in each case,
         measured by Cut-off Date Loan Balances, relate to Mortgage Loans
         originated or purchased under the Originator's Full Documentation
         Program;

                  (vv) To the best of the Originator's knowledge, no statement,
         report or other document constituting a part of the Mortgage File
         contains any material untrue statement of fact or omits to state a fact
         necessary to make the statements contained therein not misleading which
         would, either individually or in the aggregate, have a material adverse
         effect on the Certificateholders; no error or omission,
         misrepresentations, negligence, fraud or similar occurrence with
         respect to a Mortgage Loan has taken place on the part of any person,
         including, without limitation, the Mortgagor, any appraiser, any
         builder or developer, or any other party involved in the origination of
         the Mortgage Loan or in the application for any insurance in relation
         to the Mortgage Loan;


                                       -8-

<PAGE>



                  (ww)     [reserved];

                  (xx) Each  Mortgage Loan  constitutes  a "qualified  mortgage"
         within the meaning of Section 860G(a)(3) of the Code;

                  (yy) The Originator has the full authority to sell and
         transfer each Mortgage Note and Mortgage and such transfer and sale
         will not impair the enforceability of any Mortgage;

                  (zz)     [reserved];

                  (aaa) With respect to each Mortgaged Property subject to a
         land trust (a "Land Trust Mortgage"), (i) a trustee, duly qualified
         under applicable law to serve as such, has been properly designated and
         currently so serves and is named as such in the land trust agreement
         and such trustee is named in the Land Trust Mortgage as Mortgagor; (ii)
         all fees and expenses of the land trustee which have previously become
         due and owing have been paid and no fees or expenses are or will become
         payable by the Certificateholders or the Trust to the land trustee
         under the land trust agreement; (iii) the beneficiary is solely
         obligated to pay any fees and expenses of the land trustee and the
         priority of the lien of the Land Trust Mortgage is not and will not be
         primed by the land trustee; (iv) the beneficiary is obligated to make
         payments under the related promissory note and will have personal
         liability for deficiency judgments; (v) the related Land Trust Mortgage
         together with each assignment of beneficial interest relating thereto
         was made in compliance with the related land trust agreement, was
         validly entered into by the related land trustee or beneficiary and did
         not, does not currently, and will not in the future, violate any
         provision of such land trust agreement or any agreement between or
         among the beneficiaries of such land trust; (vi) the assignment of the
         beneficial interest relating to such Land Trust Mortgage was accepted
         by, and noted in the records of the respective land trust trustee,
         subsequent assignments of such beneficial interest in whole or in part
         have not been made, and such subsequent assignments of such beneficial
         interest or any part thereof are not permitted pursuant to a written
         agreement between the respective beneficiary and the related mortgagee,
         until the expiration of the promissory note in such land trust; (vii)
         the Land Trust Mortgage is the first lien on the related Mortgaged
         Property; no liens are in place against the beneficial interests, or
         any part thereof, of such Land Trust Mortgage or collateral assignment
         of beneficial interest, which liens are superior to the interest held
         by the Originator or the Seller, and the beneficial interest, or any
         part thereof, of any Land Trust Mortgage; (viii) the terms and
         conditions of the land trust agreement do not prevent the free and
         absolute marketability of the Mortgaged Property; and (ix) each Land
         Trust Mortgage contains, and will contain, a "due-on-sale" provision
         permitting the mortgagee under the Mortgage Note and Land Trust
         Mortgage to foreclose or otherwise exercise remedies thereunder upon a
         transfer of the beneficial interest in the related Mortgaged Property;

                  (bbb) Each of the Mortgage Loans provides for the calculation
         of interest on the basis of a 360-day year consisting of twelve 30-day
         months;

                  (ccc) No Mortgage Note provides for negative amortization;


                                       -9-

<PAGE>



                  (ddd) None of the Mortgage Loans in Loan Group I and 6.47% of
         the Mortgage Loans in Loan Group II, in each case by in each case by
         Cut-off Date Loan Balance, are "high cost mortgages" pursuant to
         Section 226.32 of the Truth-in-Lending Act, as amended;

                  (eee) There are no delinquent taxes, ground rents, water
         charges, sewer rents, assessments, insurance premiums, leasehold
         payments, including assessments payable in future installments or other
         outstanding charges affecting the related Mortgaged Property;

                  (fff) The origination and collection practices used by the
         Originator or the Seller with respect to each Mortgage Note and
         Mortgage have been in all respects legal, proper prudent and customary
         in the mortgage origination and servicing industry. The Mortgage Loan
         has been serviced by the Master Servicer (directly or through a
         subservicer) and any predecessor servicer in accordance with the terms
         of the Mortgage Note. With respect to escrow deposits and Escrow
         Payments, if any, all such payments are in the possession of, or under
         the control of, the Originator and there exist no deficiencies in
         connection therewith for which customary arrangements for repayment
         thereof have not been made. No escrow deposits or Escrow Payments or
         other charges or payments due the Originator or the Seller have been
         capitalized under any Mortgage or the related Mortgage Note. With
         respect to each Adjustable Rate Mortgage Loan on each Adjustment Date,
         the Mortgage Rate will be adjusted to equal the Index plus the Gross
         Margin, rounded to the nearest 0.125%, subject to the Periodic Rate
         Cap, the Maximum Rate and the Minimum Rate and each such adjustment has
         been and will be made in accordance with the terms of the related
         Mortgage Note.

                  (ggg) The Mortgaged Property is free of damage and waste and
         there is no proceeding pending for the total or partial condemnation
         thereof;

                  (hhh) Any  Mortgage  Loan  subject  to the  provisions  of the
         Homeownership and Equity Protection Act of 1994, P.L. 103-325, 108 Stat
         2160 was originated in compliance therewith;

                  (iii) The Originator has not dealt with any broker or agent or
         other Person who might be entitled to a fee, commission or compensation
         in connection with the transaction contemplated by this Agreement other
         than the Purchaser; and

                  (jjj) Approximately 21.86% of the Mortgage Loans in Loan Group
         I and approximately 37.83% of the Mortgage Loans in Loan Group II, in
         each case, by Cut-off Date Loan Balance, are covered by the PMI Policy;

                  (kkk)  Each  of the  Mortgage  Loans  that  is  identified  on
         Schedule 1 hereto is covered by the PMI Policy; and

                  (lll) As of the Closing Date, with respect to each Mortgage
         Loan that is subject to the PMI Policy, to the best knowledge of the
         Originator, there are no existing circumstances which would cause the
         PMI Insurer to deny a claim with respect to such Mortgage Loan


                                      -10-

<PAGE>


         It is understood and agreed that the representations and warranties set
forth in this Agreement shall survive delivery of the respective Mortgage Files
to the Trust Administrator and shall inure to the benefit of the Purchaser, the
Servicer, each Subservicer, the Certificateholders, the Trustee and the
Certificate Insurer, notwithstanding any restrictive or qualified endorsement or
assignment. Upon discovery by any of the Seller, the Purchaser, the Servicer,
the Trust Administrator or the Trustee of a breach of any of the foregoing
representations and warranties that materially and adversely affects the value
of any Mortgage Loan or the interests of the Certificateholders and the
Certificate Insurer therein (without giving effect to any qualification
contained in such representation or warranty relating to the Seller's or the
Originator's knowledge), the party discovering such breach shall give prompt
written notice to the other parties, and in no event later than two Business
Days after the date of such discovery. It is understood and agreed that the
obligations of the Seller and the Originator set forth in Section 2.06(a) of the
Pooling and Servicing Agreement to cure any breach or to substitute for or
repurchase a defective Mortgage Loan constitute the sole remedies available to
the Certificateholders, the Servicer, the Trustee and the Certificate Insurer
respecting a breach of the representations and warranties contained in this
Agreement. Notwithstanding the foregoing, with respect to representation (p)
above, to the extent that such representation (as it relates to Section 129 of
the federal Truth-in-Lending Act, 15 U.S.C. ss. 1639, as implemented by ss.ss.
226.31 and 226.32 of Regulation Z) is breached and such breach can not, in the
determination of the Certificate Insurer, be cured through substitution or
repurchase of the affected Mortgage Loans, the Originator hereby agrees to
indemnify the Purchaser and any assignee or designee of the Purchaser for the
damages resulting from such breach.


                                      -11-

<PAGE>

                                   EXHIBIT D-1

                               REQUEST FOR RELEASE
                    (Mortgage Loan Servicing or Foreclosure)

Loan Information
----------------

         Name of Mortgagor:             ______________________________


         Servicer Loan No.:             ______________________________


Trustee
-------

         Name:                          ______________________________


         Address:                       ______________________________


         Trustee Mortgage File No.:     ______________________________


Seller
------

         Name:                          ______________________________


         Address:                       ______________________________


         Certificates:                  New Century Home Equity Loan Trust
                                        2000-NCA, Asset Backed Pass-Through
                                        Certificates.

Reason for Request  (check one)
------------------

___ 1.  Mortgage Loan liquidated.
___ 2.  Mortgage Loan in foreclosure.
___ 3.  Mortgage Loan repurchased.
___ 4.  Mortgage Loan substituted.
___ 5.  Other (explain) _______________________

         The undersigned Master Servicer hereby requests delivery to it from the
Trustee of the documents referred to below (the "Documents"). Upon the Master
Servicer's receipt of the



<PAGE>



Documents, the Master Servicer will provide the Trust Administrator with a
written acknowledgement of such receipt. 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 June 1, 2000, among the Trustee, the
Trust Administrator, the Master Servicer and the Depositor.

( )      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
         ______________________, State of __________________ in book/reel/docket
         _________________ of official records at page/image __________.

( )      Deed of Trust recorded on ________________________ as instrument no.
         _______________________ in the County ___________________, 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.

         ( ) ___________________
         ( ) ___________________
         ( ) ___________________
         ( ) ___________________

         The Master Servicer hereby acknowledges and agrees as follows:

         (1) The Master 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 Master 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 Master Servicer
assert or seek to assert any claims or rights of setoff to or against the
Documents or any proceeds thereof.

         (3) The Master 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


                                        2

<PAGE>



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, shall at all times be earmarked for the account of the Trustee except
as expressly provided in the Agreement, and the Master Servicer shall keep the
Documents and any proceeds separate and distinct from all other property in the
Master Servicer's possession, custody or control.

                                            NEW CENTURY MORTGAGE CORPORATION,
                                            as Master Servicer


                                            By:______________________________
                                               Its:



Date: _________________, 20__



                                        3

<PAGE>



                                   EXHIBIT D-2

                               REQUEST FOR RELEASE
                          (Mortgage Loans Paid in Full)

                     OFFICER'S CERTIFICATE AND TRUST RECEIPT
               NEW CENTURY HOME EQUITY LOAN TRUST, SERIES 2000-NCA
                     ASSET BACKED PASS-THROUGH CERTIFICATES

_____________________  HEREBY CERTIFIES THAT HE/SHE IS AN OFFICER OF THE MASTER
SERVICER, HOLDING THE OFFICE SET FORTH BENEATH HIS/HER SIGNATURE, AND HEREBY
FURTHER CERTIFIES AS FOLLOWS:___________________________________________________
WITH RESPECT TO THE MORTGAGE LOANS, AS THE TERM IS DEFINED IN THE POOLING AND
SERVICING AGREEMENT DESCRIBED IN THE ATTACHED SCHEDULE:

ALL PAYMENTS OF PRINCIPAL, PREMIUM (IF ANY), AND INTEREST HAVE BEEN
MADE.

LOAN NUMBER: __________                     BORROWER'S NAME _________________

COUNTY: _______________

WE HEREBY CERTIFY THAT ALL AMOUNTS RECEIVED IN CONNECTION WITH SUCH PAYMENTS,
WHICH ARE REQUIRED TO BE DEPOSITED IN THE COLLECTION ACCOUNT PURSUANT TO SECTION
3.10 OF THE POOLING AND SERVICING AGREEMENT HAVE BEEN OR WILL BE CREDITED.

DATED: _____________________

/ /       VICE PRESIDENT
/ /   ASSISTANT VICE PRESIDENT




<PAGE>



                                   EXHIBIT E-1

                FORM OF TRUST ADMINISTRATOR INITIAL CERTIFICATION

                                                       June __, 2000

New Century Mortgage Securities, Inc.
18400 Von Karman
Irvine, California 92612

New Century Mortgage Corporation
18400 Von Karman, Suite 1000
Irvine, California  92612

                  Re:      Pooling and Servicing Agreement, dated as of June 1,
                           2000, among New Century Mortgage Securities, Inc.,
                           New Century Mortgage Corporation and Firstar Bank,
                           N.A., U.S. Bank National Association, Asset Backed
                           Pass-Through Certificates, Series 2000-NCA
                           ----------------------------------------------------

Ladies and Gentlemen:

                  Attached is the Trust Administrator's preliminary exception
report delivered in accordance with the referenced Pooling and Servicing
Agreement (the "Pooling and Servicing Agreement"). Capitalized terms used but
not otherwise defined herein shall have the meanings set forth in the Pooling
and Servicing Agreement.

                  The Trust Administrator has made no independent examination of
any documents contained in each Mortgage File beyond the review specifically
required in the Pooling and Servicing Agreement. The Trust Administrator makes
no representations as to (i) the validity, legality, sufficiency, enforceability
or genuineness of any of the documents contained in the Mortgage File pertaining
to the Mortgage Loans identified on the Mortgage Loan Schedule, (ii) the
collectability, insurability, effectiveness or suitability of any such Mortgage
Loan or (iii) whether any Mortgage File included any of the documents specified
in clause (v) of Section 2.04 of the Pooling and Servicing Agreement.


                                                 U.S. BANK NATIONAL ASSOCIATION


                                                 By:___________________________
                                                 Name:
                                                 Title:



<PAGE>



                                   EXHIBIT E-2

                FORM OF TRUST ADMINISTRATOR'S FINAL CERTIFICATION

                                               [Date]

New Century Mortgage Securities, Inc.
18400 Von Karman
Irvine, California 92612

New Century Mortgage Corporation
18400 Von Karman, Suite 1000
Irvine, California  92612

                  Re:      Pooling and Servicing Agreement, dated as of June 1,
                           2000, among New Century Mortgage Securities, Inc.,
                           New Century Mortgage Corporation and Firstar Bank,
                           N.A., U.S. Bank National Association, Asset Backed
                           Pass-Through Certificates, Series 2000-NCA
                           ----------------------------------------------------

Ladies and Gentlemen:

         In accordance with Section 2.04 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trust Administrator, 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 or a
Custodian on its behalf 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;

               (ii) an original executed Assignment 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.




<PAGE>



         The Trust Administrator 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 Trust
Administrator 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.

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

                                          U.S. BANK NATIONAL ASSOCIATION


                                          By:____________________________
                                          Name:
                                          Title:


                                        2

<PAGE>



                                   EXHIBIT E-3

               FORM OF TRUST ADMINISTRATOR QUARTERLY CERTIFICATION


                                                     ___________________

New Century Mortgage Securities, Inc.
18400 Von Karman
Irvine, California 92612

New Century Mortgage Corporation
18400 Von Karman, Suite 1000
Irvine, California  92612

                  Re:      Pooling and Servicing Agreement, dated as of June 1,
                           2000, among New Century Mortgage Securities, Inc.,
                           New Century Mortgage Corporation and Firstar Bank,
                           N.A., U.S. Bank National Association, Asset Backed
                           Pass-Through Certificates, Series 2000-NCA
                           ----------------------------------------------------

Ladies and Gentlemen:

         In accordance with Section 2.05 of the above-referenced Pooling and
Servicing Agreement, the undersigned, as Trust Administrator, hereby sets forth
an updated exception report from the previous Trust Administrator's
Certification issued [INSERT DATE].

         The Trust Administrator 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 Trust
Administrator makes no representations as to: (i) the validity, legality,
sufficiency, enforceability, execution by a Responsible Officer, or genuineness
of any of the documents contained in each Mortgage File of any of the Mortgage
Loans identified on the Mortgage Loan Schedule, or (ii) the collectibility,
insurability, effectiveness or suitability of any such Mortgage Loan or (iii)
the existence of any document specified in clause (v) of Section 2.04(a).

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

                                     U.S. BANK NATIONAL ASSOCIATION,
                                     as Trust Administrator

                                     By: ______________________________________
                                     Name:
                                     Title:




<PAGE>



                                    EXHIBIT F

                           FORM OF LIQUIDATION REPORT

Customer Name:
Account Number:
Original Principal Balance:

1.       Type of Liquidation (REO disposition/charge-off/short pay-off)
         -  Date last paid
         -  Date of foreclosure
         -  Date of REO
         -  Date of REO Disposition
         -  Property Sale Price/Estimated Market Value at disposition

2.       Liquidation Proceeds
         Principal Prepayment               $___________
         Property Sale Proceeds             ___________
         Insurance Proceeds                 ___________
         Other (itemize)                    ___________

         Total Proceeds                     $___________

3.       Liquidation Expenses
         Servicing Advances                 $___________
         Monthly Advances                   ___________
         Contingency Fees                   ___________
         Excess Servicing Fees              ___________
         Servicing Fees                     ___________
         Annual Expense
              Escrow Amount                 ___________
         Supplemental Fee (if any)          ___________
         Additional Interest (if any)       ___________

         Total Advances                     $___________

4.  Net Liquidation Proceeds                         $___________
    (Item 2 minus Item 3)

5.  Principal Balance of Mortgage Loan               $___________

6.  Loss, if any (Item 5 minus Item 4)               $___________




<PAGE>



                                    EXHIBIT G

                         FORM OF TRANSFER CERTIFICATION

                                     [Date]

U.S. Bank National Association
First Trust Center
180 East Fifth Street
St. Paul, Minnesota 55101

          Re:      Pooling and Servicing Agreement, dated as of June 1, 2000,
                   among New Century Mortgage Securities, Inc., New Century
                   Mortgage Corporation and Firstar Bank, N.A., U.S. Bank
                   National Association, Asset Backed Pass-Through Certificates,
                   Series 2000-NCA
                   ---------------

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 June
1, 2000, among New Century Mortgage Securities, Inc. as Depositor, New Century
Mortgage Corporation as Master Servicer, Firstar Bank, N.A. as Trustee and U.S.
Bank National Association as Trust Administrator (the "Pooling and Servicing
Agreement"), pursuant to which Pooling and Servicing Agreement the Certificates
were issued.





<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:



<PAGE>



                    FORM OF TRANSFEREE REPRESENTATION LETTER


                                                    [Date]

U.S. Bank National Association
First Trust Center
180 East Fifth Street
St. Paul, Minnesota 55101

         Re:      Pooling and Servicing Agreement, dated as of June 1, 2000,
                  among New Century Mortgage Securities, Inc., New Century
                  Mortgage Corporation and Firstar Bank, N.A., U.S. Bank
                  National Association, Asset Backed Pass-Through Certificates,
                  Series 2000-NCA
                  ---------------

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 June 1, 2000, among New Century Mortgage Securities, Inc.
as Depositor, New Century Mortgage Corporation as Master Servicer, Firstar Bank,
N.A. as Trustee and U.S. Bank National Association as Trust Administrator,
pursuant to which the Certificates were issued.


                                                     [TRANSFEREE]

                                                     By:________________________
                                                     Name:
                                                     Title:




<PAGE>



                                                            ANNEX 1 TO EXHIBIT G
                                                            --------------------

            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 U.S. Bank National Association, as Trust
Administrator, 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 $25,000,000 as demonstrated in
                  its latest annual financial statements, A COPY OF WHICH IS
                  ATTACHED HERETO.

         ___      BROKER-DEALER. The Transferee is a dealer registered pursuant
                  to Section 15 of the Securities Exchange Act of 1934.

         ___      INSURANCE COMPANY. The Transferee is an insurance company
                  whose primary and

--------

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.



                                        2

<PAGE>



                  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 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



<PAGE>



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:





<PAGE>



                                                            ANNEX 2 TO EXHIBIT G
                                                            --------------------


            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 U.S. Bank National Association, as Trust
Administrator, 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.

                  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,



<PAGE>



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






<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:      (Signature)____________________________________________________________

Name of Signatory_______________________________________________________________

Title___________________________________________________________________________

Date of this certificate________________________________________________________

Date of information provided in paragraph 3_____________________________________



<PAGE>



                                    EXHIBIT H

                    FORM OF TRANSFER AFFIDAVIT AND AGREEMENT

STATE OF NEW YORK      )
                       : ss.:
COUNTY OF NEW YORK     )


                  ___________________________________, 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
                  2000-NCA, Asset Backed Pass-Through Certificates, Class R (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 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.

         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.



<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(c) 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(c) 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(c)); 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


                                        2

<PAGE>



                  pay any taxes 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(c) 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.



                                        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:





<PAGE>





                          FORM OF TRANSFEROR AFFIDAVIT

STATE OF NEW YORK                           )
                                            : ss. :
COUNTY OF NEW YORK                          )


                  ___________________________________, 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 Trust Administrator a transfer affidavit and agreement in the form attached
to the Pooling and Servicing Agreement as Exhibit H. 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.


                                        1

<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:



<PAGE>



                                    EXHIBIT I
                      FORM OF CERTIFICATE INSURANCE POLICY

                                                              FINANCIAL GUARANTY
                                                              INSURANCE POLICY

Trust: As described in Endorsement No. 1                    Policy No.:  50950-N
Certificates: $206,934,000 New Century Home Equity Loan     Date of Issuance:
              Trust 2000-NCA, Asset-Backed Pass-Through     06/29/2000
              Certificates, Class A-1 and Class A-2

         FINANCIAL SECURITY ASSURANCE INC. ("Financial Security"), for
consideration received, hereby UNCONDITIONALLY AND IRREVOCABLY GUARANTEES to the
Trustee for the benefit of each Holder, subject only to the terms of this Policy
(which includes each endorsement hereto), the full and complete payment of
Guaranteed Distributions with respect to the Certificates of the Trust referred
to above.

         For the further protection of each Holder, Financial Security
irrevocably and unconditionally guarantees payment of the amount of any
distribution of principal or interest with respect to the Certificates made
during the Term of this Policy to such Holder that is subsequently avoided in
whole or in part as a preference payment under applicable law.

         Payment of any amount required to be paid under this Policy will be
made following receipt by Financial Security of notice as described in
Endorsement No. 1 hereto.

         Financial Security shall be subrogated to the rights of each Holder to
receive distributions with respect to each Certificate held by such Holder to
the extent of any payment by Financial Security hereunder.

         Except to the extent expressly modified by Endorsement No. 1 hereto,
the following terms shall have the meanings specified for all purposes of this
Policy. "Holder" means the registered owner of any Certificate as indicated on
the registration books maintained by or on behalf of the Trustee for such
purpose or, if the Certificate is in bearer form, the holder of the Certificate.
"Trustee", "Guaranteed Distributions" and "Term of this Policy" shall have the
meanings set forth in Endorsement No. 1 hereto.

         This Policy sets forth in full the undertaking of Financial Security,
and shall not be modified, altered or affected by any other agreement or
instrument, including any modification or amendment thereto. Except to the
extent expressly modified by an endorsement hereto, the premiums paid in respect
of this Policy are nonrefundable for any reason whatsoever. This Policy may not
be canceled or revoked during the Term of this Policy. An acceleration payment
shall not be due under this Policy unless such acceleration is at the sole
option of Financial Security. THIS POLICY IS NOT COVERED BY THE
PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76 OF THE NEW
YORK INSURANCE LAW.

         In witness whereof, FINANCIAL SECURITY ASSURANCE INC. has caused this
Policy to be executed on its behalf by its Authorized Officer.

                                             FINANCIAL SECURITY ASSURANCE INC.


                                             By________________________________
                                                      AUTHORIZED OFFICER

A subsidiary of Financial Security Assurance Holdings Ltd.
350 Park Avenue, New York, NY  10022-6022




                                        1

<PAGE>


                              ENDORSEMENT NO. 1 TO
                       FINANCIAL GUARANTY INSURANCE POLICY

FINANCIAL SECURITY ASSURANCE INC.

TRUST:                     Established pursuant to the Pooling and Servicing
                           Agreement dated as of June 1, 2000 among New Century
                           Mortgage Securities, Inc., as Depositor, New Century
                           Mortgage Corporation, as Servicer, NC Capital
                           Corporation, as Seller, Firstar Bank, National
                           Association, as Trustee and U.S. Bank National
                           Association, as Trust Administrator.

CERTIFICATES:              $206,934,000 New Century Home Equity Loan Trust,
                           Series 2000-NCA, Asset Backed Pass-Through
                           Certificates, Class A-1 and Class A-2


POLICY NO.:                50950-N

DATE OF ISSUANCE:          June 29, 2000

         1. DEFINITIONS. For all purposes of this Policy, the terms specified
below shall have the meanings or constructions provided below. Capitalized terms
used herein and not otherwise defined herein shall have the meanings provided in
the Pooling and Servicing Agreement unless the context shall otherwise require.

         "BUSINESS DAY" means any day other than (i) a Saturday or Sunday, or
(ii) a day on which banking institutions in the State of California, the State
of New York or in the cities in which the Corporate Trust Office of the Trustee
and the Trust Administrator are located, are authorized or obligated by law or
executive order to be closed.

         "FINAL DISTRIBUTION DATE" means the Distribution Date coinciding with
or following a purchase by the Servicer in accordance with the terms of Section
10.01(b) of the Pooling and Servicing Agreement.

         "GUARANTEED DISTRIBUTIONS" means, with respect to any Distribution
Date, the distribution to be made to the Certificates on such Distribution Date,
in an aggregate amount equal to the sum of (i) the Interest Distribution Amount
and (ii) the OC Deficit, in each case in accordance with the original terms of
the Certificates when issued and without regard to any amendment or modification
of the Certificates or the Pooling and Servicing Agreement which has not been
consented to by Financial Security. Guaranteed Distributions shall not include,
nor shall coverage be provided under this Policy in respect of any taxes,
withholding or other charge imposed by any governmental authority.

         "MATURITY DATE" means the Distribution Date coinciding with or
following the final payment or other liquidation of the last Mortgage Loan or
REO Property as described in Section 10.01(a) of the Pooling and Servicing
Agreement, subject to the proviso set forth therein.

         "POLICY" means this Financial Guaranty Insurance Policy and includes
each endorsement thereto.

         "POOLING AND SERVICING AGREEMENT" means the Pooling and Servicing
Agreement dated as of June 1, 2000 among New Century Mortgage Securities, Inc.,
New Century Mortgage Corporation, NC Capital Corporation, Firstar Bank, N.A. and
U.S. Bank National Association with respect to the New Century Home Equity Loan
Trust, Series 2000-NCA, as amended from time to time with the consent of
Financial Security.




                                        2

<PAGE>


Policy No.: 50950-N                             Date of Issuance:  June 29, 2000

         "RECEIPT" and "RECEIVED" mean actual delivery to Financial Security and
to the Fiscal Agent (as defined below), if any, at or prior to 12:00 noon, New
York City time, on a Business Day; delivery either on a day that is not a
Business Day, or after 12:00 noon, New York City time, shall be deemed to be
Received on the next succeeding Business Day. If any notice or certificate given
hereunder by the Trust Administrator is not in proper form or is not properly
completed, executed or delivered, it shall be deemed not to have been Received,
and Financial Security or its Fiscal Agent shall promptly so advise the Trust
Administrator and the Trust Administrator may submit an amended notice.

         "TERM OF THIS POLICY" means the period from and including the Date of
Issuance to and including the date on which (i) the Certificate Principal
Balance of all of the Certificates is zero, (ii) any period during which any
payment on the Certificates could have been avoided in whole or in part as a
preference payment under applicable bankruptcy, insolvency, receivership or
similar law has expired, and (iii) if any proceedings requisite to avoidance as
a preference payment have been commenced prior to the occurrence of (i) and
(ii), a final and nonappealable order in resolution of each such proceeding has
been entered.

         "TRUST ADMINISTRATOR" means U.S. Bank National Association, in its
capacity as Trust Administrator under the Pooling and Servicing Agreement and
any successor in such capacity.

         "TRUSTEE" means Firstar Bank, N.A., in its capacity as Trustee under
the Pooling and Servicing Agreement and any successor in such capacity.

         2. NOTICES AND CONDITIONS TO PAYMENT IN RESPECT OF GUARANTEED
DISTRIBUTIONS. Following Receipt by Financial Security of a notice and
certificate from the Trust Administrator in the form attached as Exhibit A to
this Endorsement, Financial Security will pay any amount payable hereunder in
respect of Guaranteed Distributions out of the funds of Financial Security on
the later to occur of (a) 12:00 noon, New York City time, on the second Business
Day following such Receipt and (b) 12:00 noon, New York City time, on the
Distribution Date to which such claim relates. Payments due hereunder in respect
of Guaranteed Distributions will be disbursed by wire transfer of immediately
available funds to the Policy Payments Account established pursuant to the
Pooling and Servicing Agreement or, if no such Policy Payments Account has been
established, to the Trust Administrator.

         Financial Security shall be entitled to pay any amount hereunder in
respect of Guaranteed Distributions whether or not any notice and certificate
shall have been Received by Financial Security as provided above, provided,
however, that by acceptance of this Policy the Trustee, and the Trust
Administrator on behalf of the Trustee, agree to provide upon request to
Financial Security a notice and certificate in respect of any such payments made
by Financial Security. Financial Security's obligations hereunder in respect of
Guaranteed Distributions shall be discharged to the extent funds are disbursed
by Financial Security as provided herein whether or not such funds are properly
applied by the Trust Administrator.

         3. NOTICES AND CONDITIONS TO PAYMENT IN RESPECT OF GUARANTEED
DISTRIBUTIONS AVOIDED AS PREFERENCE PAYMENTS. If any Guaranteed Distribution is
avoided as a preference payment under applicable bankruptcy, insolvency,
receivership or similar law, Financial Security will pay such amount out of the
funds of Financial Security on the later of (a) the date when due to be paid
pursuant to the Order referred to below or (b) the first to occur of (i) the
fourth Business Day following Receipt by Financial Security from the Trustee of
(A) a certified copy of the order of the court or other governmental body which
exercised jurisdiction to the effect that the Holder is required to return
principal or interest distributed with respect to the Certificates during the
Term of this Policy because such distributions were avoidable as preference
payments under applicable bankruptcy law (the "Order"), (B) a certificate of the
Holder that the Order has been entered and is not subject to any stay and (C) an
assignment duly executed and delivered by the Holder, in such form as



                                        3

<PAGE>


Policy No.: 50950-N                             Date of Issuance:  June 29, 2000

is reasonably required by Financial Security and provided to the Holder by
Financial Security, irrevocably assigning to Financial Security all rights and
claims of the Holder relating to or arising under the Certificates against the
debtor which made such preference payment or otherwise with respect to such
preference payment or (ii) the date of Receipt by Financial Security from the
Trust Administrator of the items referred to in clauses (A), (B) and (C) above
if, at least four Business Days prior to such date of Receipt, Financial
Security shall have Received written notice from the Trust Administrator that
such items were to be delivered on such date and such date was specified in such
notice. Such payment shall be disbursed to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Order and not to the
Trustee, the Trust Administrator or any Holder directly (unless a Holder has
previously paid such amount to the receiver, conservator, debtor-in-possession
or trustee in bankruptcy named in the Order, in which case such payment shall be
disbursed to the Trust Administrator for distribution to such Holder upon proof
of such payment reasonably satisfactory to Financial Security). In connection
with the foregoing, Financial Security shall have the rights provided pursuant
to Sections 4.02(d), 4.02(f) and 9.04 of the Pooling and Servicing Agreement.

         4. GOVERNING LAW. This Policy shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to the
conflict of laws principles thereof.

         5. FISCAL AGENT. At any time during the Term of this Policy, Financial
Security may appoint a fiscal agent (the "Fiscal Agent") for purposes of this
Policy by written notice to the Trust Administrator at the notice address
specified in the Pooling and Servicing Agreement specifying the name and notice
address of the Fiscal Agent. From and after the date of receipt of such notice
by the Trust Administrator, (i) copies of all notices and documents required to
be delivered to Financial Security pursuant to this Policy shall be
simultaneously delivered to the Fiscal Agent and to Financial Security and shall
not be deemed Received until Received by both and (ii) all payments required to
be made by Financial Security under this Policy may be made directly by
Financial Security or by the Fiscal Agent on behalf of Financial Security. The
Fiscal Agent is the agent of Financial Security only and the Fiscal Agent shall
in no event be liable to any Holder for any acts of the Fiscal Agent or any
failure of Financial Security to deposit, or cause to be deposited, sufficient
funds to make payments due under this Policy.

         6. WAIVER OF DEFENSES. To the fullest extent permitted by applicable
law, Financial Security agrees not to assert, and hereby waives, for the benefit
of each Holder, all rights (whether by counterclaim, setoff or otherwise) and
defenses (including, without limitation, the defense of fraud), whether acquired
by subrogation, assignment or otherwise, to the extent that such rights and
defenses may be available to Financial Security to avoid payment of its
obligations under this Policy in accordance with the express provisions of this
Policy.

         7. NOTICES. Alt notices to be given hereunder shall be in writing
(except as otherwise specifically provided herein) and shall be mailed by
registered mail or personally delivered or telecopied to Financial Security as
follows:

                        Financial Security Assurance Inc.
                        350 Park Avenue
                        New York, NY  10022
                        Attention:  Senior Vice President - Surveillance
                        Re: New Century Home Equity Loan Trust, Series 2000-NCA
                        Telecopy No.: (212) 339-3518
                        Confirmation: (212) 826-0100

Financial Security may specify a different address or addresses by writing,
mailed or delivered to the Trust



                                        4

<PAGE>


Policy No.: 50950-N                             Date of Issuance:  June 29, 2000

Administrator.

         8. PRIORITIES. In the event any term or provision on the face of this
Policy is inconsistent with the provisions of this Endorsement, the provisions
of this Endorsement shall take precedence and shall be binding.

         9. EXCLUSIONS FROM INSURANCE GUARANTY FUNDS. This Policy is not covered
by the Property/Casualty Insurance Security Fund specified in Article 76 of the
New York Insurance Law. This Policy is not covered by the Florida Insurance
Guaranty Association created under Part II of Chapter 631 of the Florida
Insurance Code. In the event Financial Security were to become insolvent, any
claims arising under this Policy are excluded from coverage by the California
Insurance Guaranty Association, established pursuant to Article 14.2 of Chapter
1 of Part 2 of Division 1 of the California Insurance Code.

         10. SURRENDER OF POLICY. The Trustee shall surrender this Policy to
Financial Security for cancellation upon expiration of the Term of this Policy.

         IN WITNESS WHEREOF, FINANCIAL SECURITY ASSURANCE INC. has caused this
Endorsement No. 1 to be executed by its Authorized Officer.

                                          FINANCIAL SECURITY ASSURANCE INC.



                                          By:  ________________________________
                                                   Authorized Officer



                                        5

<PAGE>


Policy No.: 50950-N                             Date of Issuance:  June 29, 2000

                                                                       Exhibit A
                                                                To Endorsement 1

                         NOTICE OF CLAIM AND CERTIFICATE
                         -------------------------------

Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022

         The undersigned, a duly authorized officer of U.S. Bank National
Association (the "Trust Administrator"), hereby certifies to Financial Security
Assurance Inc. ("Financial Security") with reference to Financial Guaranty
Insurance Policy No. 50950-N dated June 29, 2000 (the "Policy") issued by
Financial Security in respect of the New Century Home Equity Loan Trust, Series
2000-NCA, Asset Backed Pass- Through Certificates, Class A (the "Certificates"),
that:

                  (i) The Trust Administrator is the Trust Administrator under
         the Pooling and Servicing Agreement for the Holders.

                  (ii) The sum of all amounts on deposit (or scheduled to be on
         deposit) in the Distribution Account and available for distribution to
         the Holders of the Guaranteed Distributions pursuant to the Pooling and
         Servicing Agreement will be $________ (the "Shortfall") less than the
         Guaranteed Distributions with respect to the Distribution Date
         occurring on _______________.

                  (iii) The Trust Administrator is making a claim under the
         Policy for the Shortfall to be applied to distributions of principal or
         interest or both with respect to the Certificates.

                  (iv) The Trust Administrator agrees that, following receipt of
         funds from Financial Security, it shall (a) hold such amounts in trust
         and apply the same directly to the payment of Guaranteed Distributions
         on the Certificates when due; (b) not apply such funds for any other
         purpose; (c) not commingle such funds with other funds held by the
         Trust Administrator and (d) maintain an accurate record of such
         payments with respect to each Certificate and the corresponding claim
         on the Policy and proceeds thereof and, if the Certificate is required
         to be surrendered for such payment, shall stamp on each such
         Certificate the legend "$[INSERT APPLICABLE AMOUNT] paid by Financial
         Security and the balance hereof has been canceled and reissued" and
         then shall deliver such Certificate to Financial Security.

                  (v) The Trust Administrator, on behalf of the Trustee and the
         Holders, hereby assigns to Financial Security the rights of the Holders
         with respect to the Certificates to the extent of any payments under
         the Policy, including, without limitation, any amounts due to the
         Holders in respect of securities law violations arising from the offer
         and sale of the Certificates. The foregoing assignment is in addition
         to, and not in limitation of, rights of subrogation otherwise available
         to Financial Security in respect of such payments. The Trust
         Administrator shall take such action and deliver such instruments as
         may be reasonably requested or required by Financial Security to
         effectuate the purpose or provisions of this clause (v).

                  (vi) The Trust Administrator, on its behalf and on behalf of
         the Trustee and the Holders, hereby appoints Financial Security as
         agent and attorney-in-fact for the Trust Administrator, the Trustee and
         each such Holder in any legal proceeding with respect to the
         Certificates. The Trust Administrator hereby agrees, for itself and on
         behalf of the Trustee, that, so long as a Certificate



                                       A-1

<PAGE>


Policy No.: 50950-N                             Date of Issuance:  June 29, 2000

         Insurer Default (as defined in the Pooling and Servicing Agreement)
         shall not exist, Financial Security may at any time during the
         continuation of any proceeding by or against the Seller, the Servicer
         or the Depositor under the United States Bankruptcy Code or any other
         applicable bankruptcy, insolvency, receivership, rehabilitation or
         similar law (an "Insolvency Proceeding") direct all matters relating to
         such Insolvency Proceeding. In addition, the Trust Administrator, for
         itself and on behalf of the Trustee, hereby agrees that Financial
         Security shall be subrogated to, and the Trustee on its behalf and on
         behalf of the Trustee and each Holder, hereby delegates and assigns, to
         the fullest extent permitted by law, the rights of the Trustee, Trust
         Administrator and each Holder in the conduct of any Insolvency
         Proceeding, including, without limitation, all rights of any party to
         an adversary proceeding or action with respect to any court order
         issued in connection with any such Insolvency Proceeding.

                  (vii) Payment should be made by wire transfer directed to
Policy Payments Account.

         Unless the context otherwise requires, capitalized terms used in this
Notice of Claim and Certificate and not defined herein shall have the meanings
provided in the Policy.




                                       A-2

<PAGE>


         IN WITNESS WHEREOF, the Trust Administrator has executed and delivered
this Notice of Claim and Certificate as of the _______ day of _________________,
____.

                                              FIRSTAR BANK, N.A.

                                              By:  ________________________
                                              Title: _______________________

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

For Financial Security or Fiscal Agent Use Only

Wire transfer sent on _______________ by ____________________
Confirmation Number ________________________






<PAGE>


                                    EXHIBIT J

                             MORTGAGE LOAN SCHEDULE

                                 FILED BY PAPER





<PAGE>


                                    EXHIBIT K

                           PREPAYMENT CHARGE SCHEDULE

                             AVAILABLE UPON REQUEST