<PAGE>   1
                                                                    EXHIBIT 10.6
                                                                  EXECUTION COPY




                           MASTER REPURCHASE AGREEMENT




                                    Between:




                      DLJ MORTGAGE CAPITAL, INC., AS BUYER




                                       and




                        STARNET MORTGAGE, INC., AS SELLER




                            Dated as of May 31, 2000




<PAGE>   2



                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                                                                Page
                                                                                                                ----

<S>      <C>                                                                                                    <C>
1.       APPLICABILITY .........................................................................................  1
2.       DEFINITIONS ...........................................................................................  1
3.       INITIATION; TERMINATION ............................................................................... 12
4.       MARGIN AMOUNT MAINTENANCE ............................................................................. 16
5.       INCOME PAYMENTS ....................................................................................... 16
6.       REQUIREMENTS OF LAW ................................................................................... 17
7.       SECURITY INTEREST ..................................................................................... 18
8.       PAYMENT, TRANSFER AND CUSTODY ......................................................................... 19
9.       HYPOTHECATION OR PLEDGE OF PURCHASED ASSETS ........................................................... 20
10.      REPRESENTATIONS ....................................................................................... 20
11.      COVENANTS OF THE SELLER ............................................................................... 25
12.      EVENTS OF DEFAULT ..................................................................................... 30
13.      REMEDIES .............................................................................................. 33
14.      INDEMNIFICATION AND EXPENSES .......................................................................... 35
15.      RECORDING OF COMMUNICATIONS ........................................................................... 36
16.      SINGLE AGREEMENT ...................................................................................... 36
17.      NOTICES AND OTHER COMMUNICATIONS ...................................................................... 37
18.      ENTIRE AGREEMENT; SEVERABILITY ........................................................................ 37
19.      NON-ASSIGNABILITY ..................................................................................... 37
20.      TERMINABILITY ......................................................................................... 37
21.      GOVERNING LAW ......................................................................................... 38
22.      SUBMISSION TO JURISDICTION; WAIVERS ................................................................... 38
</TABLE>



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<PAGE>   3

<TABLE>
<S>      <C>                                                                                                    <C>
23.      NO WAIVERS, ETC. ...................................................................................... 39
24.      SERVICING ............................................................................................. 39
25.      PERIODIC DUE DILIGENCE REVIEW ......................................................................... 40
26.      BUYER'S APPOINTMENT AS ATTORNEY-IN-FACT ............................................................... 41
27.      MISCELLANEOUS ......................................................................................... 42
28.      CONFIDENTIALITY ....................................................................................... 43
29.      CONFLICTS ............................................................................................. 43
30.      MAXIMUM CHARGES ....................................................................................... 43
</TABLE>



                                      -ii-
<PAGE>   4



                                    EXHIBITS



SCHEDULE 1                    Representations and Warranties Re: Mortgage Loans

EXHIBIT I                     Form of Confirmation Letter

EXHIBIT II                    Underwriting Guidelines

EXHIBIT III                   Form of Opinion Letter

EXHIBIT IV                    UCC Filing Jurisdictions

EXHIBIT V                     Form of Account Agreement

EXHIBIT VI                    Form of True Sale Certification

EXHIBIT VII                   Takeout Investors




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<PAGE>   5


                           MASTER REPURCHASE AGREEMENT

                  This is a MASTER REPURCHASE AGREEMENT, dated as of May 31,
2000, between STARNET MORTGAGE, INC., a Delaware corporation (the "Seller"), and
DLJ MORTGAGE CAPITAL, INC., a New York corporation (the "Buyer").

1.       APPLICABILITY

         From time to time the parties hereto may enter into transactions in
         which Seller agrees to transfer to Buyer Mortgage Loans against the
         transfer of funds by Buyer, with a simultaneous agreement by Buyer to
         transfer to Seller such Mortgage Loans at a date certain not later than
         364 days after the date of transfer, against the transfer of funds by
         Seller. Each such transaction shall be referred to herein as a
         "Transaction" and shall be governed by this Agreement, unless otherwise
         agreed in writing.

2.       DEFINITIONS

         As used herein, the following terms shall have the following meanings
         (all terms defined in this Section 2 or in other provisions of this
         Repurchase Agreement in the singular to have the same meanings when
         used in the plural and vice versa) Terms otherwise not defined herein
         shall have the meanings set forth in the Custodial Agreement.

         "Account Agreement" shall mean a letter agreement between the Seller,
         the Buyer, and the Bank substantially in the form of Exhibit V attached
         hereto.

         "Act of Insolvency" shall mean, with respect to any party and its
         Affiliates, (i) the filing of a petition, commencing, or authorizing
         the commencement of any case or proceeding under any bankruptcy,
         insolvency, reorganization, liquidation, dissolution or similar law
         relating to the protection of creditors, or suffering any such petition
         or proceeding to be commenced by another which is consented to, not
         timely contested or results in entry of an order for relief; (ii) the
         seeking the appointment of a receiver, trustee, custodian or similar
         official for such party or an Affiliate or any substantial part of the
         property of either; (iii) the appointment of a receiver, conservator,
         or manager for such party or an Affiliate by any governmental agency or
         authority having the jurisdiction to do so; (iv) the making or offering
         by such party or an Affiliate of a composition with its creditors or a
         general assignment for the benefit of creditors; (v) the admission by
         such party or an Affiliate of such party of its inability to pay its
         debts or discharge its obligations as they become due or mature; or
         (vi) that any governmental authority or agency or any person, agency or
         entity acting or purporting to act under governmental authority shall
         have taken any action to condemn, seize or appropriate, or to assume
         custody or control of, all or any substantial part of the property of
         such party or of any of its Affiliates, or shall have taken any action
         to displace the management of such party or of any of its Affiliates or
         to curtail its authority in the conduct of the business of such party
         or of any of its Affiliates.

         "Additional Purchased Assets" shall mean Mortgage Loans or cash
         provided by Seller to Buyer or its designee pursuant to Section 4 of
         the Repurchase Agreement.


<PAGE>   6

         "Affiliate" shall mean with respect to any Person, any "affiliate" of
         such Person, as such term is defined in the Bankruptcy Code.

         "ALTA" shall mean the American Land Title Association.

         "Anticipated Settlement Date" shall mean, with respect to each Mortgage
         Loan, that date specified in the related Takeout Commitment as the
         expiration date for such Takeout Commitment.

         "Appraised Value" shall mean the value set forth in an appraisal made
         in connection with the origination of the related Mortgage Loan as the
         value of the Mortgaged Property.

         "Asset Medium" shall mean a computer-readable transmission containing
         information with respect to each Mortgage Loan to be delivered by the
         Seller to the Buyer pursuant to Section 3(c) hereof and shall contain
         the information set forth in Annex 1 attached to the Custodial
         Agreement.

         "Asset Schedule" shall have the meaning assigned thereto in the
         Custodial Agreement.

         "Asset Schedule and Exception Report" shall mean an Asset Schedule and
         Exception Report prepared by the Custodian pursuant to the Custodial
         Agreement.

         "Asset Value" shall mean with respect to each Eligible Asset, the
         lesser of (a) the Applicable Collateral Percentage of the Market Value
         of such Mortgage Loan, and (b) the outstanding principal balance of
         such Eligible Asset; provided, that, the following additional
         limitations on Asset Value shall apply:

                  (i) The Asset Value shall be deemed to be zero with respect to
         each Mortgage Loan (1) in respect of which there is a breach of a
         representation and warranty set forth in Schedule 1 (assuming each
         representation and warranty is made as of the date Asset Value is
         determined), (2) in respect of which there is a delinquency in the
         payment of principal and/or interest which continues for a period in
         excess of twenty nine (29) calendar days (without regard to any
         applicable grace periods), (3) which has not been repurchased by the
         Seller by the 180th day after the date on which it is first purchased
         by Buyer, (4) which has been released from the possession of the
         Custodian under the Custodial Agreement to the Seller for a period in
         excess of ten (10) calendar days, or (5) which exceed the limitation on
         Asset Value set forth below.

                  (ii) The Asset Value of Mortgage Loans that are Second Lien
         Mortgage Loans shall not exceed 15% of the Repurchase Price.

         "Assignment of Mortgage" shall mean, with respect to any Mortgage, an
         assignment of the Mortgage, notice of transfer or equivalent instrument
         in recordable form, sufficient under the laws of the jurisdiction
         wherein the related Mortgaged Property is located to reflect the
         assignment of the Mortgage to the Buyer.

         "Bank" shall mean Bank United, N.A., in its capacity as bank with
         respect to the Account Agreement.



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<PAGE>   7

         "Bankruptcy Code" shall mean the United States Bankruptcy Code of 1978,
         as amended from time to time.

         "Business Day" shall mean a day other than (i) a Saturday or Sunday, or
         (ii) a day in which the New York Stock Exchange, the Federal Reserve
         Bank of New York or Custodian is authorized or obligated by law or
         executive order to be closed.

         "Buyer" shall mean DLJ Mortgage Capital, Inc., its successors in
         interest and assigns.

         "Capital Lease Obligations" shall mean, for any Person, all obligations
         of such Person to pay rent or other amounts under a lease of (or other
         agreement conveying the right to use) Property to the extent such
         obligations are required to be classified and accounted for as a
         capital lease on a balance sheet of such Person under GAAP, and, for
         purposes of this Repurchase Agreement, the amount of such obligations
         shall be the capitalized amount thereof, determined in accordance with
         GAAP.

         "Code" shall mean the Internal Revenue Code of 1986, as amended from
         time to time.

         "Collection Account" shall mean the account established by the Bank
         subject to an Account Agreement, into which all Collections shall be
         deposited.

         "Collections" shall mean all collections and proceeds on or in respect
         of the Mortgage Loans, excluding collections required to be paid to the
         Servicer or a Mortgagor on the Mortgage Loans.

         "Commonly Controlled Entity" shall mean an entity, whether or not
         incorporated, which is under common control with the Seller within the
         meaning of Section 4001 of ERISA or is part of a group which includes
         the Seller and which is treated as a single employer under Section 414
         of the Code.

         "Custodial Agreement" shall mean that custodial agreement, dated as of
         August 19, 1999, by and among Buyer, Seller and the Custodian, as the
         same shall be modified and supplemented and in effect from time to
         time.

         "Custodial Identification Certificate" shall have the meaning specified
         in the Custodial Agreement.

         "Custodian" shall mean Bank One, N.A. as custodian under the Custodial
         Agreement, and its successors and permitted assigns thereunder.

         "Default" shall mean an Event of Default or an event that with notice
         or lapse of time or both would become an Event of Default.

         "DLJ Obligations" shall mean any obligations of the Seller hereunder
         and under any other arrangement between the Seller or an Affiliate of
         the Seller on the one hand and the Buyer or an Affiliate of the Buyer
         on the other hand.

         "Dollars" and "$" shall mean lawful money of the United States of
         America.



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<PAGE>   8

         "Due Diligence Review" shall mean the performance by Buyer of any or
         all of the reviews permitted under Section 27 hereof with respect to
         any or all of the Mortgage Loans, as desired by the Buyer from time to
         time.

         "Effective Date" shall mean the date upon which the conditions
         precedent set forth in Section 3(a) shall have been satisfied.

         "Eligible Asset" shall mean a Mortgage Loan (i) as to which the
         representations and warranties in Schedule 1 hereof are correct (ii)
         which is underwritten substantially in accordance with the Seller's
         Underwriting Guidelines, a copy of which is attached hereto as Exhibit
         II, (iii) which is secured by a Residential Dwelling, and (iv) which is
         in strict compliance with any Investor Requirements for purchase by the
         related Takeout Investor.

         "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
         as amended from time to time.

         "ERISA Affiliate" shall mean any corporation or trade or business that
         is a member of any group of organizations (i) described in Section
         414(b) or (c) of the Code of which the Seller is a member and (ii)
         solely for purposes of potential liability under Section 302(c)(11) of
         ERISA and Section 412(c)(11) of the Code and the lien created under
         Section 302(f) of ERISA and Section 412(n) of the Code, described in
         Section 414(m) or (o) of the Code of which the Seller is a member.

         "Eurodollar Rate" shall mean, with respect to each day a Transaction is
         outstanding, the rate per annum equal to the rate appearing at page
         3750 of the Telerate Screen as one-month LIBOR on such date (and if
         such date is not a Business Day, the Eurodollar Rate in effect on the
         Business Day immediately preceding such date), and if such rate shall
         not be so quoted, the average rate per annum at which three mutually
         acceptable banks are offered Dollar deposits at or about 10:00 a.m.,
         New York City time, on such date by prime banks in the interbank
         eurodollar market where the eurodollar and foreign currency exchange
         operations in respect of its Transactions are then being conducted for
         delivery on such day for a period of thirty (30) days and in an amount
         comparable to the amount of the Transactions to be outstanding on such
         day.

         "Event of Default" has the meaning specified in Section 12 hereof.

         "Fannie Mae" shall mean the Federal National Mortgage Association, or
         any successor thereto.

         "FICO Score" shall mean the statistical credit scores obtained by
         lenders in connection with a loan application to help assess a
         Mortgagor's creditworthiness.

         "Foreclosed Loan" shall mean a loan owned by the Seller, the Property
         securing which has been foreclosed upon by the Seller.

         "Freddie Mac" means the Federal Home Loan Mortgage Corporation, or any
         successor thereto.



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<PAGE>   9

         "GAAP" shall mean generally accepted accounting principles as in effect
         from time to time in the United States.

         "Governmental Authority" shall mean any nation or government, any state
         or other political subdivision thereof, any entity exercising
         executive, legislative, judicial, regulatory or administrative
         functions of or pertaining to government and any court or arbitrator;
         including without limitation, the Appropriate Federal Banking Agency
         having jurisdiction over the Seller, any of its Subsidiaries or any of
         their properties.

         "Guarantee" shall mean, as to any Person, any obligation of such Person
         directly or indirectly guaranteeing any Indebtedness of any other
         Person or in any manner providing for the payment of any Indebtedness
         of any other Person or otherwise protecting the holder of such
         Indebtedness against loss (whether by virtue of partnership
         arrangements, by agreement to keep-well, to purchase assets, goods,
         securities or services, or to take-or-pay or otherwise); provided that
         the term "Guarantee" shall not include (i) endorsements for collection
         or deposit in the ordinary course of business, or (ii) obligations to
         make servicing advances for delinquent taxes and insurance, or other
         obligations in respect of a Mortgaged Property, or other principal and
         interest advances made in the ordinary course of servicing the Mortgage
         Loans. The amount of any Guarantee of a Person shall be deemed to be an
         amount equal to the stated or determinable amount of the primary
         obligation in respect of which such Guarantee is made or, if not stated
         or determinable, the maximum reasonably anticipated liability in
         respect thereof as determined by such Person in good faith. The terms
         "Guarantee" and "Guaranteed" used as verbs shall have correlative
         meanings.

         "Income" shall mean, with respect to any Mortgage Loan at any time, any
         principal thereof then payable and all interest, dividends or other
         distributions payable thereon less any related servicing fee(s) charged
         by the Servicer.

         "Indebtedness" shall mean, for any Person: (a) obligations created,
         issued or incurred by such Person for borrowed money (whether by loan,
         the issuance and sale of debt securities or the sale of Property to
         another Person subject to an understanding or agreement, contingent or
         otherwise, to repurchase such Property from such Person); (b)
         obligations of such Person to pay the deferred purchase or acquisition
         price of Property or services, other than trade accounts payable (other
         than for borrowed money) arising, and accrued expenses incurred, in the
         ordinary course of business so long as such trade accounts payable are
         payable within 90 days of the date the respective goods are delivered
         or the respective services are rendered; (c) Indebtedness of others
         secured by a Lien on the Property of such Person, whether or not the
         respective Indebtedness so secured has been assumed by such Person; (d)
         obligations (contingent or otherwise) of such Person in respect of
         letters of credit or similar instruments issued or accepted by banks
         and other financial institutions for account of such Person; (e)
         obligations of such Person under repurchase agreements, sale/buy-back
         agreements or like arrangements; (f) Indebtedness of others Guaranteed
         by such Person; (g) all obligations of such Person incurred in
         connection with the acquisition or carrying of fixed assets by such
         Person; and (h) Indebtedness of general partnerships of which such
         Person is a general partner; and (i) Capital Lease Obligations of such
         Person.



                                      -5-
<PAGE>   10

         "Investor Requirements" shall mean the underwriting standards or
         guidelines of the Takeout Investor, with respect to the related
         Mortgage Loans and the delivery and servicing thereof.

         "Late Payment Fee" has the meaning specified in Section 5(b) hereof.

         "Lien" shall mean any mortgage, lien, pledge, charge, security interest
         or similar encumbrance.

         "Loan-to-Value Ratio" or "LTV" means with respect to any Mortgage Loan,
         the ratio of the original outstanding principal amount of the Mortgage
         Loan to the lesser of (a) the Appraised Value of the Mortgaged Property
         at origination or (b) if the Mortgaged Property was purchased within
         twelve (12) months of the origination of the Mortgage Loan, the
         purchase price of the Mortgaged Property.

         "Margin Percentage" shall mean such percentage as is acceptable to the
         Buyer in its sole discretion and set forth in the related Confirmation.

         "Margin Deficit" has the meaning specified in Section 4.

         "Market Value" shall mean, as of any date with respect to any Mortgage
         Loans, the price at which such Mortgage Loan could readily be sold as
         determined in good faith by Buyer.

         "Material Adverse Effect" shall mean a material adverse effect on (a)
         the Property, business, operations, financial condition or prospects of
         the Seller, (b) the ability of the Seller to perform its obligations
         under any of the Repurchase Documents to which it is a party, (c) the
         validity or enforceability of any of the Repurchase Documents, (d) the
         rights and remedies of the Buyer under any of the Repurchase Documents,
         (e) the timely payment of any amounts payable under the Repurchase
         Documents, or (f) the Asset Value of the Purchased Assets.

         "Moody's" shall mean Moody's Investors Service, Inc. or any successors
         thereto.

         "Mortgage" shall mean the mortgage, deed of trust or other instrument
         securing a Mortgage Note, which creates a first lien on a fee simple
         Residential Dwelling securing the Mortgage Note.

         "Mortgage File" shall mean the documents specified as the "Mortgage
         File" in Section 2 of the Custodial Agreement.

         "Mortgage Loan" shall mean a mortgage loan which the Custodian has been
         instructed to hold for the Buyer pursuant to the Custodial Agreement,
         and which Mortgage Loan includes, without limitation, (i) a Mortgage
         Note and related Mortgage, and (ii) all right, title and interest of
         the Seller in and to the Mortgaged Property covered by such Mortgage.

         "Mortgage Loan Documents" shall mean, with respect to a Mortgage Loan,
         the documents comprising the Mortgage File for such Mortgage Loan.



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         "Mortgage Note" shall mean the original executed promissory note or
         other evidence of the indebtedness of a Mortgagor with respect to a
         Mortgage Loan.

         "Mortgaged Property" shall mean the real property (including all
         improvements, buildings, fixtures, building equipment and personal
         property thereon and all additions, alterations and replacements made
         at any time with respect to the foregoing) and all other collateral
         securing repayment of the debt evidenced by a Mortgage Note.

         "Mortgagee" shall mean the record holder of a Mortgage Note secured by
         a Mortgage.

         "Mortgagor" shall mean the obligor or obligors on a Mortgage Note,
         including any person who has assumed or guaranteed the obligations of
         the obligor thereunder.

         "Multiemployer Plan" shall mean a multiemployer plan defined as such in
         Section 3(37) of ERISA to which contributions have been or are required
         to be made by the Seller or any ERISA Affiliate and that is covered by
         Title IV of ERISA.

         "Net Income" shall mean, for any period, the net income of the Seller
         for such period as determined in accordance with GAAP.

         "1934 Act" shall mean the Securities and Exchange Act of 1934, as
         amended.

         "Payment Date" shall mean the 10th Business Day of each month.

         "PBGC" shall mean the Pension Benefit Guaranty Corporation or any
         entity succeeding to any or all of its functions under ERISA.

         "Periodic Advance Repurchase Payment" has the meaning specified in
         Section 5(b).

         "Person" shall mean any individual, corporation, company, voluntary
         association, partnership, joint venture, limited liability company,
         trust, unincorporated association or government (or any agency,
         instrumentality or political subdivision thereof).

         "Plan" shall mean an employee benefit or other plan established or
         maintained by any Seller or any ERISA Affiliate and covered by Title IV
         of ERISA, other than a Multiemployer Plan.

         "Post-Default Rate" shall mean, in respect of any Transaction or any
         other amount under this Repurchase Agreement or any other Repurchase
         Document that is not paid when due to the Buyer at the stated
         Repurchase Date or otherwise when due, a rate per annum during the
         period from and including the due date to but excluding the date on
         which such amount is paid in full equal to 3% per annum plus the Prime
         Rate.

         "Price Differential" means, with respect to any Transaction hereunder
         as of any date, the aggregate amount obtained by daily application of
         the Pricing Rate for such Transaction to the Purchase Price for such
         Transaction on a 360 day per year basis for the actual number of days
         during the period commencing on (and including) the Purchase Date for
         such Transaction and ending on (but excluding) the Repurchase Date
         (reduced by any



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<PAGE>   12

         amount of such Price Differential previously paid by Seller to Buyer
         with respect to such Transaction).

         "Pricing Rate" shall mean a rate per annum equal to the lesser of (i)
         the sum of (a) the Eurodollar Rate plus (b) the Pricing Spread, and
         (ii) the maximum non-usurious interest rate that then may be contracted
         for, charged or received by the Purchaser from Seller in connection
         with the Transactions.

         "Pricing Spread" shall mean the weighted average of the applicable
         rates per annum set forth in the applicable Confirmation for each day
         of the Transaction calculated as the sum of the product, for each
         category of Eligible Assets assigned a separate rate per annum, of (i)
         a fraction equal to the Asset Value of Eligible Assets for each
         category of Eligible Assets assigned a separate rate per annum, divided
         by the Asset Value of all Eligible Assets multiplied by (b) the
         applicable rate per annum assigned to the related category of Assets.

         "Prime Rate" shall mean the prime rate announced to be in effect from
         time to time, as published as the average rate in The Wall Street
         Journal.

         "Property" shall mean any right or interest in or to property of any
         kind whatsoever, whether real, personal or mixed and whether tangible
         or intangible.

         "Purchase Agreement" shall mean any purchase agreement by and between
         the Seller and any third party, including without limitation, any
         Affiliate of the Seller, pursuant to which the Seller has purchased
         assets subsequently sold to the Buyer hereunder.

         "Purchase Date" shall mean the date on which Purchased Assets are
         transferred by Seller to the Buyer or its designee (including the
         Custodian).

         "Purchase Price" shall mean on each Purchase Date, the price at which
         Purchased Assets are transferred by Seller to Buyer or its designee
         (including the Custodian) which shall equal the Asset Value for such
         Purchased Assets on the Purchase Date.

         "Purchased Assets" shall mean the Mortgage Loans sold by Seller to
         Buyer in a Transaction, and any Additional Purchased Assets.

         "Purchased Items" has the meaning specified in Section 7.

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

         "Qualified Originator" means an originator of Mortgage Loans reasonably
         acceptable to the Buyer.



                                      -8-
<PAGE>   13

         "Regulations T, U and X" shall mean Regulations T, U and X of the Board
         of Governors of the Federal Reserve System (or any successor), as the
         same may be modified and supplemented and in effect from time to time.

         "REO Property" shall mean real property acquired by the Seller,
         including a Mortgaged Property acquired through foreclosure of a
         Mortgage Loan or by deed in lieu of such foreclosure.

         "Reportable Event" shall mean any of the events set forth in Section
         4043(b) of ERISA, other than those events as to which the thirty day
         notice period is waived under subsections .13, .14, .16, .18, .19 or
         .20 of PBGC Reg. Section 2615.

         "Repurchase Agreement" shall mean this Master Repurchase Agreement
         between Buyer and the Seller, dated as of the date hereof as the same
         may be further amended, supplemented or otherwise modified in
         accordance with the terms hereof.

         "Repurchase Date" shall mean the date on which Seller is to repurchase
         the Purchased Assets from Buyer as specified in the related
         Confirmation, including any date determined by application of the
         provisions of Sections 3 or 13.

         "Repurchase Documents" shall mean this Repurchase Agreement, the
         Custodial Agreement and the Account Agreement.

         "Repurchase Obligations" shall have the meaning provided in Section
         7(b) hereof.

         "Repurchase Price" means the price at which Purchased Assets are to be
         transferred from Buyer or its designee (including the Custodian) to
         Seller upon termination of a Transaction, which will be determined in
         each case (including Transactions terminable upon demand) as the sum of
         the Purchase Price and the Price Differential as of the date of such
         determination decreased by all cash, Income and Periodic Advance
         Repurchase Payments actually received by Buyer pursuant to Sections
         5(a) and 5(b), respectively.

         "Requirement of Law" shall mean as to any Person, the certificate of
         incorporation and by-laws or other organizational or governing
         documents of such Person, and any law, treaty, rule or regulation or
         determination of an arbitrator or a court or other Governmental
         Authority, in each case applicable to or binding upon such Person or
         any of its property or to which such Person or any of its property is
         subject.

         "Residential Dwelling" shall mean any one of the following: (i) a
         detached single family dwelling, (ii) a two-to-four family dwelling,
         (iii) a unit in a condominium project, or (iv) a detached single family
         dwelling in a planned unit development. Mortgaged Properties that
         consist of the following property types are not Residential Dwellings:
         (a) co-operative units, (b) log homes, (c) earthen homes, (d)
         underground homes, (e) mobile homes, (f) any dwelling situated on more
         than ten acres of property and (g) any dwelling situated on a leasehold
         estate.

         "Responsible Officer" shall mean, as to any Person, the chief executive
         officer, the chief financial officer, the treasurer or the chief
         operating officer of such Person.



                                      -9-
<PAGE>   14

         "S&P" shall mean Standard & Poor's Ratings Services, or any successor
         thereto.

         "Second Lien Mortgage Loan" shall mean a Mortgage Loan secured by a
         second lien Mortgage on the related Mortgaged Property.

         "Security Agreement" shall mean with respect to any Mortgage Loan, any
         contract, instrument or other document related to security for
         repayment thereof (other than the related Mortgage and Mortgage Note),
         executed by the Mortgagor and/or others in connection with such
         Mortgage Loan, including without limitation, any security agreement,
         guaranty, title insurance policy, hazard insurance policy, chattel
         mortgage, letter of credit or certificate of deposit or other pledged
         accounts, and any other documents and records relating to any of the
         foregoing.

         "Seller" shall mean StarNet Mortgage, Inc.

         "Servicer" has the meaning specified in Section 24 hereof.

         "Servicer Account" shall mean any account established by the Servicer
         in connection with the servicing of the Mortgage Loans.

         "Servicing Agreement" has the meaning specified in Section 24 hereof.

         "Servicing File" means with respect to each Mortgage Loan, the file
         retained by Seller consisting of originals of all documents in the
         Mortgage File which are not delivered to a Custodian and copies of the
         Mortgage Loan Documents set forth in Section 2 of the Custodial
         Agreement.

         "Servicing Records" has the meaning specified in Section 24 hereof.

         "Subsidiary" shall mean, with respect to any Person, any corporation,
         partnership or other entity of which at least a majority of the
         securities or other ownership interests having by the terms thereof
         ordinary voting power to elect a majority of the board of directors or
         other persons performing similar functions of such corporation,
         partnership or other entity (irrespective of whether or not at the time
         securities or other ownership interests of any other class or classes
         of such corporation, partnership or other entity shall have or might
         have voting power by reason of the happening of any contingency) is at
         the time directly or indirectly owned or controlled by such Person or
         one or more Subsidiaries of such Person or by such Person and one or
         more Subsidiaries of such Person.

         "Takeout Commitment" shall mean a trade confirmation from the Takeout
         Investor to the Seller confirming the details of a forward trade
         between the Takeout Investor (as buyer) and the Seller (as seller)
         constituting a valid, binding and enforceable mandatory delivery
         commitment by a Takeout Investor to purchase on the Anticipated
         Settlement Date and at a given Takeout Price described therein.

         "Takeout Investor" shall mean any buyer, loan program, securities
         broker-dealer or other institution which has made a Takeout Commitment
         and which may be listed on Exhibit VII hereto, from time to time
         following approval by the Buyer. The Buyer shall provide



                                      -10-
<PAGE>   15

         at least ten (10) Business Days' prior notice in the event any Takeout
         Investor is to be removed from Exhibit VII.

         "Takeout Price" shall mean as to each Takeout Commitment the purchase
         price (expressed as a percentage of par) set forth therein.

         "Tangible Net Worth" shall mean shall mean, as of a particular date,

                  (a) all amounts which would be included under capital on a
         balance sheet of the Seller at such date, determined in accordance with
         GAAP, less

                  (b) (i) amounts owing to the Seller from Affiliates, or from
         officers, employees, shareholders or other Persons that are Affiliates
         of the Seller, (ii) intangible assets, and (iii) the value of REO
         Property and Foreclosed Loans.

         "Termination Date" shall mean the date which is 364 days from the date
         hereof which shall be May 30, 2001.

         "Test Period" shall have the meaning provided in Section 11(l) hereof.

         "Total Indebtedness" shall mean, for any period, the aggregate
         Indebtedness of the Seller during such period less the amount of any
         nonspecific balance sheet reserves maintained in accordance with GAAP

         "Transaction" has the meaning specified in Section 1.

         "True Sale Certification" shall mean a true sale certification in the
         form of Exhibit VI attached hereto.

         "Trust Receipt" shall mean a trust receipt issued by Custodian to Buyer
         confirming the Custodian's possession of certain Mortgage Files which
         are held by Custodian for the benefit of the Buyer or the registered
         holder of such trust receipt.

         "Underwriting Guidelines" shall mean the underwriting guidelines
         delivered by the Seller to the Buyer on or prior to the Effective Date
         and as may be supplemented from time to time thereafter.

         "Uniform Commercial Code" shall mean the Uniform Commercial Code as in
         effect on the date hereof in the State of New York; provided that if by
         reason of mandatory provisions of law, the perfection or the effect of
         perfection or non-perfection of the security interest in any Purchased
         Items is governed by the Uniform Commercial Code as in effect in a
         jurisdiction other than New York, "Uniform Commercial Code" shall mean
         the Uniform Commercial Code as in effect in such other jurisdiction for
         purposes of the provisions hereof relating to such perfection or effect
         of perfection or non-perfection.

         "Wire Disbursement Authorization Letter" shall mean a wire disbursement
         authorization letter substantially in the form of Exhibit 17 to the
         Custodial Agreement.



                                      -11-
<PAGE>   16

3.       INITIATION; TERMINATION

         (a) Conditions Precedent to Initial Transaction. Buyer's obligation to
         enter into the initial Transaction hereunder is subject to the
         satisfaction, immediately prior to or concurrently with the making of
         such Transaction, of the condition precedent that Buyer shall have
         received from Seller any fees and expenses payable hereunder, and all
         of the following documents, each of which shall be satisfactory to
         Buyer and its counsel in form and substance:

         (1)   The following Repurchase Documents delivered to the Buyer:

                           (A) Master Repurchase Agreement, duly completed and
                  executed by the parties thereto. In addition, the Seller shall
                  have taken such other action as the Buyer shall have requested
                  in order to perfect the security interests created pursuant to
                  this Repurchase Agreement, including execution of UCC-1 and
                  UCC-3 financing statements in form and substance satisfactory
                  to the Buyer;

                           (B) Custodial Agreement. The Custodial Agreement,
                  duly executed and delivered by the Seller and the Custodian.
                  In addition, the Seller shall have taken such other action as
                  the Buyer shall have requested in order to transfer the
                  Purchased Assets pursuant to this Repurchase Agreement; and

                           (C) Account Agreement. An Account Agreement, duly
                  executed by the parties thereto.

         (2)   Opinions of Counsel. An opinion or opinions of outside counsel to
               the Seller, substantially in the form of Exhibit III;

         (3)   Organizational Documents. Certified copies of the charter and
               by-laws (or equivalent documents) of the Seller and of all
               corporate or other authority for the Seller with respect to the
               execution, delivery and performance of the Repurchase Documents
               and each other document to be delivered by the Seller from time
               to time in connection herewith (and the Buyer may conclusively
               rely on such certificate until it receives notice in writing from
               the Seller to the contrary);

         (4)   Asset Schedule and Exception Report. An Asset Schedule and
               Exception Report, dated the Effective Date, from the Custodian,
               duly completed;

         (5)   Underwriting Guidelines. A copy of Seller's current Underwriting
               Guidelines, and any material changes to the Underwriting
               Guidelines made since the Underwriting Guidelines were last
               delivered to Buyer;

         (6)   Servicing Agreement(s). Any Servicing Agreement, certified as a
               true, correct and complete copy of the original, with a letter
               attached thereto acknowledged by the applicable Servicer
               directing the Servicer to remit all payments on account of



                                      -12-
<PAGE>   17

               the Mortgage Loans directly to the Buyer upon receipt of notice
               from the Buyer of the occurrence of an Event of Default;

         (7)   Other Documents. Such other documents as Buyer may reasonably
               request, in form and substance reasonably acceptable to Buyer.

         (b) Conditions Precedent to all Transactions. Buyer's obligation to
         enter into each Transaction (including the initial Transaction) is
         subject to the satisfaction of the following further conditions
         precedent, both immediately prior to entering into such Transaction and
         also after giving effect thereto to the intended use thereof:

         (1)   Buyer shall have executed and delivered a Confirmation in
               accordance with the procedures set forth in Section 3(c).

         (2)   no Default or Event of Default shall have occurred and be
               continuing under the Repurchase Documents;

         (3)   both immediately prior to the Transaction and also after giving
               effect thereto and to the intended use thereof, the
               representations and warranties made by the Seller in Section 10
               hereof, shall be true, correct and complete on and as of such
               Purchase Date in all material respects with the same force and
               effect as if made on and as of such date (or, if any such
               representation or warranty is expressly stated to have been made
               as of a specific date, as of such specific date).

         (4)   the aggregate outstanding Purchase Price of the Transactions
               outstanding shall not exceed the Asset Value of all the Purchased
               Assets subject to Transactions;

         (5)   subject to the Buyer's right to perform one or more Due Diligence
               Reviews pursuant to Section 27 hereof, the Buyer shall have
               completed its due diligence review of the Mortgage Loan Documents
               for each Purchased Asset, and such other documents, records,
               agreements, instruments, mortgaged properties or information
               relating to such Purchased Asset as the Buyer in its sole
               discretion deems appropriate to review and such review shall be
               satisfactory to the Buyer in its sole discretion;

         (6)   the Buyer shall have received from the Custodian a Trust Receipt
               on the initial Purchase Date and on each Purchase Date an Asset
               Schedule and Exception Report with exceptions acceptable to the
               Buyer in its sole discretion in respect of Eligible Assets to be
               purchased hereunder on such Business Day;

         (7)   the Buyer shall have received from the Seller copies of each
               Servicing Agreement relating to the Assets and the Buyer shall
               have reviewed and approved each such Servicing Agreement in its
               sole discretion;

         (8)   the Buyer shall have received all fees and expenses of counsel to
               the Buyer as contemplated by Section 14(b) which amount, at the
               Buyer's option, may be withheld from any Transaction hereunder.



                                      -13-
<PAGE>   18

         (9)   the Buyer shall have approved, in its sole discretion, all
               exceptions to the Underwriting Guidelines;

         (10)  none of the following shall have occurred and/or be continuing:

                           (A) DLJ's corporate bond rating as calculated by S&P
                  or Moody's has been lowered or downgraded to a rating below
                  BBB as indicated by S&P or below BAA as indicated by Moody's;

                           (B) an event or events shall have occurred in the
                  good faith determination of the Buyer resulting in the
                  effective absence of a "repo market" or comparable "lending
                  market" for financing debt obligations secured by mortgage
                  loans or securities or an event or events shall have occurred
                  resulting in the Buyer not being able to finance Purchased
                  Assets through the "repo market" or "lending market" with
                  traditional counterparties at rates which would have been
                  reasonable prior to the occurrence of such event or events; or

                           (C) an event or events shall have occurred resulting
                  in the effective absence of a "securities market" for
                  securities backed by mortgage loans or an event or events
                  shall have occurred resulting in the Buyer not being able to
                  sell securities backed by mortgage loans at prices which would
                  have been reasonable prior to such event or events; or

                           (D) there shall have occurred a material adverse
                  change in the financial condition of the Buyer which affects
                  (or can reasonably be expected to affect) materially and
                  adversely the ability of the Buyer to fund its obligations
                  under this Repurchase Agreement; or

         (11)  prior to the sale of any Mortgage Loan acquired (by purchase or
               otherwise) by the Seller from any third party, including without
               limitation, any Affiliate of the Seller, the Buyer shall have
               received a True Sale Certification.

         Each Confirmation delivered by the Seller hereunder shall constitute a
         certification by the Seller that all the conditions set forth in this
         Section 3(b) have been satisfied (both as of the date of such notice or
         request and as of the date of such purchase).

         (c) An agreement to enter into a Transaction may be entered into orally
         or in writing at the initiation of either Buyer or Seller. In any
         event, Buyer shall confirm the terms of each Transaction by issuing a
         written confirmation to Seller promptly after the parties enter into
         such Transaction in the form of Exhibit I attached hereto (a
         "Confirmation"). Such Confirmation shall describe the Purchased Assets
         in an Asset Medium and set forth (i) the Purchase Date, (ii) the
         Purchase Price, (iii) the Repurchase Date, unless the Transaction is to
         be terminable on demand, (iv) the Pricing Rate applicable to the
         Transaction, (v) the applicable Margin Percentages and (vi) additional
         terms or conditions not inconsistent with this Agreement. After receipt
         of the Confirmation, Seller shall, subject to the provisions of
         subsection (e) below, sign the Confirmation and promptly return it to
         Buyer.



                                      -14-
<PAGE>   19

         (d) Any Confirmation by Buyer shall be deemed to have been received by
         Seller on the date actually received by Seller.

         (e) Each Confirmation, together with this Agreement, shall be
         conclusive evidence of the terms of the Transaction(s) covered thereby
         unless objected to in writing by Seller no more than two (2) Business
         Days after the date the Confirmation was received by Seller or unless a
         corrected Confirmation is sent by Buyer. An objection sent by Seller
         must state specifically that writing which is an objection, must
         specify the provision(s) being objected to by Seller, must set forth
         such provision(s) in the manner that the Seller believes they should be
         stated, and must be received by Buyer no more than two (2) Business
         Days after the Confirmation was received by Seller.

         (f) In the case of Transactions terminable upon demand, such demand
         shall be made by Buyer or Seller by telephone or otherwise, no later
         than 1:00 p.m. (New York time) on the Business Day prior to the day on
         which such termination will be effective.

         (g) On the Repurchase Date, termination of the Transaction will be
         effected by transfer to Seller or its designee of the Purchased Assets
         (and any Income in respect thereof received by Buyer not previously
         credited or transferred to, or applied to the obligations of, Seller
         pursuant to Section 5) against the simultaneous transfer of the
         Repurchase Price to an account of Buyer. Seller is obligated to obtain
         the Mortgage Files from Buyer or its designee at Seller's expense on
         the Repurchase Date.

         (h) Subject to the terms and conditions of this Repurchase Agreement,
         during such period the Seller may sell, repurchase and resell Eligible
         Assets hereunder.

         (i) In no event shall a Transaction be entered into when any Default or
         Event of Default has occurred and is continuing.

         (j) No later than 3:00 p.m., New York City time, one (1) Business Day
         prior to the requested Purchase Date, the Seller shall deliver to the
         Custodian the Mortgage File, as applicable, pertaining to each Eligible
         Asset to be purchased by the Buyer.

         (k) Pursuant to the Custodial Agreement, the Custodian shall deliver to
         the Buyer and the Seller, by no later than 12:00 noon, New York City
         time on a Purchase Date, an Asset Schedule and Exception Report in
         respect of all Eligible Assets purchased by the Buyer on such Purchase
         Date. Subject to the provisions of this Section 3, the Purchase Price
         will then be made available to the Seller by the Buyer transferring,
         via wire transfer, in the aggregate amount of such borrowing in funds
         immediately available pursuant to Wire Instructions set forth in the
         Confirmation (subject to the purchase limits set forth in Section 3(l)
         hereof).

         (l) The Seller shall, at the request of the Buyer, deliver to the Buyer
         a Takeout Commitment for each Mortgage Loan. In the event that any
         Takeout Commitment should expire, the Seller shall enter into a new
         Takeout Commitment, accompanied by a Takeout Assignment, within three
         (3) Business Days following the date of such expiration.



                                      -15-
<PAGE>   20

         (m) The Seller may repurchase Purchased Assets without penalty or
         premium, on any date. The Repurchase Price payable for the repurchase
         of any such Purchased Asset shall be reduced as provided in Section
         5(c). If the Seller intends to make such a repurchase, the Seller shall
         give one (1) Business Day's prior written notice thereof to the Buyer,
         designating the Purchased Assets to be repurchased. If such notice is
         given, the amount specified in such notice shall be due and payable on
         the date specified therein, and, on receipt, such amount shall be
         applied to the Repurchase Price for the designated Purchased Assets.
         The amount of the original Purchase Price of the Purchased Assets thus
         repurchased shall be available for subsequent Transactions subject to
         the terms of this Repurchase Agreement.

         (n) On the Repurchase Date, termination of the Transaction will be
         effected by transfer to Seller or its designee of the Purchased Assets
         (and any Income in respect thereof received by Buyer not previously
         credited or transferred to, or applied to the obligations of, Seller
         pursuant to Section 5 against the simultaneous transfer of the
         Repurchase Price to an account of Buyer. Seller is obligated to obtain
         the Mortgage Files from Buyer or its designee (including the Custodian)
         at Seller's expense on the Repurchase Date.

4.       MARGIN AMOUNT MAINTENANCE

         If at any time the aggregate Asset Value of the related Purchased
         Assets subject to all Transactions is less than the aggregate Purchase
         Price for all such Transactions (a "Margin Deficit"), then Buyer may by
         notice to Seller (as such notice is more particularly set forth below,
         a "Margin Deficit Notice"), require Seller to either (a) transfer to
         Buyer or its designee (including the Custodian) Eligible Assets
         ("Additional Purchased Assets"), so that the aggregate Asset Value of
         the Purchased Assets, including any such Additional Purchased Assets,
         will thereupon equal or exceed the aggregate Asset Value, or (b) remit
         to Buyer a payment (the "Margin Deficit Payment") (to be applied
         against the Purchase Price) in such amount as may be necessary to
         reduce the outstanding Purchase Price such that it is less than or
         equal to the Asset Value. If Buyer delivers a Margin Deficit Notice to
         Seller on or prior to 5 p.m. (New York City time) on any Business Day,
         then Seller shall transfer Additional Purchased Assets or remit the
         Margin Deficit Payment to Buyer no later than 5 p.m. (New York City
         time) the following Business Day. In the event the Buyer delivers a
         Margin Deficit Notice to Seller after 5 p.m. (New York City time) on
         any Business Day, then such Margin Deficit Notice shall be deemed to
         have been delivered on the following Business Day and Seller shall be
         required to transfer Additional Purchased Assets or remit the Margin
         Deficit Payment no later than 5 p.m. (New York City time) on the
         subsequent Business Day.

5.       INCOME PAYMENTS

         (a) Where a particular Transaction's term extends over an Income
         payment date on the Purchased Assets subject to that Transaction such
         Income shall be the property of Buyer. Notwithstanding the foregoing,
         Buyer agrees that until an Event of Default has occurred and is
         continuing and Buyer otherwise directs, Servicer shall continue to
         remit Income in accordance with the Account Agreement.



                                      -16-
<PAGE>   21

         (b) Notwithstanding that Buyer and Seller intend that the Transactions
         hereunder be sales to Buyer of the Purchased Assets, Seller shall pay
         to Buyer the accreted value of the Price Differential (less any amount
         of such Price Differential previously paid by Seller to Buyer) (each
         such payment, a "Periodic Advance Repurchase Payment") on each Payment
         Date. If Seller fails to make all or part of the Periodic Advance
         Repurchase Payment by 5:00 p.m. (New York time) on the Payment Date,
         Seller shall be obligated to pay to Buyer (in addition to, and together
         with, the Periodic Advance Repurchase Payment) interest on the unpaid
         amount of the Periodic Advance Repurchase Payment at a rate per annum
         equal to the Post-Default Rate (the "Late Payment Fee") until the
         Periodic Advance Repurchase Payment is received in full by Buyer.

         (c) Buyer shall offset against the Repurchase Price of each such
         Transaction all Income and Periodic Advance Repurchase Payments
         actually received by Buyer pursuant to Sections 5(a) and (b),
         respectively, excluding any Late Payment Fees paid pursuant to Section
         5(b).

6.       REQUIREMENTS OF LAW

         (a) If any Requirement of Law (other than with respect to any amendment
         made to the Buyer's certificate of incorporation and by-laws or other
         organizational or governing documents) or any change in the
         interpretation or application thereof or compliance by the Buyer with
         any request or directive (whether or not having the force of law) from
         any central bank or other Governmental Authority made subsequent to the
         date hereof:

         (1)   shall subject the Buyer to any tax of any kind whatsoever with
               respect to this Repurchase Agreement or any Transaction
               (excluding net income taxes) or change the basis of taxation of
               payments to the Buyer in respect thereof;

         (2)   shall impose, modify or hold applicable any reserve, special
               deposit, compulsory loan or similar requirement against assets
               held by, deposits or other liabilities in or for the account of,
               advances, or other extensions of credit by, or any other
               acquisition of funds by, any office of the Buyer which is not
               otherwise included in the determination of the Eurodollar Rate
               hereunder;

         (3)   shall impose on the Buyer any other condition;

and the result of any of the foregoing is to increase the cost to the Buyer, by
an amount which the Buyer deems to be material, of entering, continuing or
maintaining any Transaction or to reduce any amount due or owing hereunder in
respect thereof, then, in any such case, the Seller shall promptly pay the Buyer
such additional amount or amounts as calculated by the Buyer in good faith as
will compensate the Buyer for such increased cost or reduced amount receivable.

         (b) If the Buyer shall have determined that the adoption of or any
         change in any Requirement of Law (other than with respect to any
         amendment made to the Buyer's certificate of incorporation and by-laws
         or other organizational or governing documents) regarding capital
         adequacy or in the interpretation or application thereof or compliance
         by the Buyer or any corporation controlling the Buyer with any request
         or directive regarding capital adequacy (whether or not having the
         force of law) from any



                                      -17-
<PAGE>   22

         Governmental Authority made subsequent to the date hereof shall have
         the effect of reducing the rate of return on the Buyer's or such
         corporation's capital as a consequence of its obligations hereunder to
         a level below that which the Buyer or such corporation could have
         achieved but for such adoption, change or compliance (taking into
         consideration the Buyer's or such corporation's policies with respect
         to capital adequacy) by an amount deemed by the Buyer to be material,
         then from time to time, the Seller shall promptly pay to the Buyer such
         additional amount or amounts as will compensate the Buyer for such
         reduction.

         (c) If the Buyer becomes entitled to claim any additional amounts
         pursuant to this Section, it shall promptly notify the Seller of the
         event by reason of which it has become so entitled. A certificate as to
         any additional amounts payable pursuant to this Section submitted by
         the Buyer to the Seller shall be conclusive in the absence of manifest
         error.

7.       SECURITY INTEREST

         (a) Each of the following items or types of property, whether now owned
         or hereafter acquired, now existing or hereafter created and wherever
         located, is hereinafter referred to as the ("Purchased Items"): all
         Mortgage Loans, all rights under each Purchase Agreement (but not the
         obligations thereunder), all Mortgage Loan Documents, including without
         limitation all promissory notes, all Servicing Records (as defined in
         Section 24(c)), servicing agreements and any other collateral pledged
         or otherwise relating to such Mortgage Loans, together with all files,
         documents, instruments, surveys, certificates, correspondence,
         appraisals, computer programs, computer storage media, accounting
         records and other books and records relating thereto, all mortgage
         guaranties and insurance (issued by governmental agencies or otherwise)
         and any mortgage insurance certificate or other document evidencing
         such mortgage guaranties or insurance relating to any Mortgage Loan,
         all servicing fees to which such Seller is entitled and rights relating
         to the Mortgage Loans, any Servicer accounts established pursuant to
         any Servicing Agreement and all amounts on deposit therein, from time
         to time, all purchase agreements or other agreements or contracts
         relating to, constituting, or otherwise governing, any or all of the
         foregoing to the extent they relate to the Purchased Assets including
         the right to receive principal and interest payments with respect to
         the Purchased Assets and the right to enforce such payments, the
         Collection Account and all monies from time to time on deposit in the
         Collection Account, all Takeout Commitments now existing or hereafter
         arising, covering any part of the foregoing Purchased Items, all rights
         to deliver the Mortgage Loans to Takeout Investors or to permanent
         investors and other purchasers pursuant thereto and all proceeds
         resulting from the disposition of such Purchased Items pursuant
         thereto, including the Seller's right and entitlement to receive the
         entire Takeout Price specified in each Takeout Commitment, all "general
         intangibles", "accounts", "chattel paper" and "investment property" as
         defined in the Uniform Commercial Code relating to or constituting any
         and all of the foregoing, and any and all replacements, substitutions,
         distributions on or proceeds of any and all of the foregoing.

         (b) The Buyer and the Seller intend that the Transactions hereunder be
         sales to the Buyer of the Purchased Assets and not loans from the Buyer
         to the Seller secured by the



                                      -18-
<PAGE>   23

         Purchased Assets. However, in order to preserve the Buyer's rights
         under this Repurchase Agreement in the event that a court or other
         forum recharacterizes the Transactions hereunder as loans and as
         security for the performance by the Seller of all of the Seller's
         obligations to the Buyer hereunder and the Transactions entered into
         hereunder (the "Repurchase Obligations") and DLJ Obligations, the
         Seller hereby assigns, pledges and grants a security interest in all of
         its right, title and interest in, to and under the Purchased Items to
         the Buyer to secure the Repurchase Obligations and DLJ Obligations
         including without limitation the repayment of all amounts owing to the
         Buyer hereunder. The assignment, pledge and grant of security interest
         contained herein shall be, and the Seller hereby represents and
         warrants to the Buyer that it is, a first priority security interest.
         The Seller agrees to mark its computer records and tapes to evidence
         the interests granted to the Buyer hereunder. All Purchased Items shall
         secure the payment of all obligations of the Seller now or hereafter
         existing under this Repurchase Agreement, including, without
         limitation, Seller's obligation to repurchase Purchased Assets, or if
         such obligation is so recharacterized as a loan, to repay such loan,
         for the Repurchase Price and to pay any and all other amounts owing to
         the Buyer hereunder.

         (c) Pursuant to the Custodial Agreement, the Custodian shall hold the
         Mortgage Loan Documents as exclusive bailee and agent for the Buyer
         pursuant to the terms of the Custodial Agreement and shall deliver to
         the Buyer Trust Receipts each to the effect that it has reviewed such
         Mortgage Loan Documents in the manner and to the extent required by the
         Custodial Agreement and identifying any deficiencies in such Mortgage
         Loan Documents as so reviewed.

8.       PAYMENT, TRANSFER AND CUSTODY

         (a) Unless otherwise mutually agreed in writing, all transfers of funds
         to be made by the Seller hereunder shall be made in Dollars, in
         immediately available funds, without deduction, set-off or
         counterclaim, to the Buyer at the following account maintained by the
         Buyer; Account No. 066-214-351, for the account of DLJ Mortgage
         Capital, Inc., The Chase Manhattan Bank, ABA No. 021-000-021, Attn:
         StarNet P&I, not later than 3:00 p.m. New York City time, on the date
         on which such payment shall become due (and each such payment made
         after such time shall be deemed to have been made on the next
         succeeding Business Day). The Seller acknowledges that it has no rights
         of withdrawal from the foregoing account.

         (b) On the Purchase Date for each Transaction, ownership of the
         Purchased Assets shall be transferred to the Buyer or its designee
         (including the Custodian) against the simultaneous transfer of the
         Purchase Price to the following account of Seller; Account No. 5026455,
         for the account of StarNet Mortgage, Inc., Bank United, N.A., ABA No.
         313071904, Attn: Edward P. Dayton, not later than 3:00 p.m. New York
         City time, simultaneously with the delivery to the Custodian of the
         Purchased Assets relating to each Transaction hereby sells, transfers,
         conveys and assigns to Buyer or its designee (including the Custodian)
         without recourse, but subject to the terms of this Repurchase
         Agreement, all the right, title and interest of Seller in and to the
         Purchased Assets together with all right, title and interest in and to
         the proceeds of any related Purchased Items.



                                      -19-
<PAGE>   24

         (c) Notwithstanding anything to the contrary in this Repurchase
         Agreement, including agreements to enter into a Transaction pursuant to
         Section 3, Buyer shall have no obligation to purchase any Mortgage
         Loans on any Purchase Date if, after such purchase:

         (1)   an Event of Default by the Seller will have occurred and be
               continuing, or an Event of Default by the Seller would occur with
               notice or the passing of time; or

         (2)   the Repurchase Date for such Transaction would be later than the
               Termination Date.

         (d) In connection with such sale, transfer, conveyance and assignment,
         on or prior to each Purchase Date, the Seller shall deliver or cause to
         be delivered and released to Buyer or its designee (including the
         Custodian) (i) the Custodial Identification Certificate and (ii) the
         documents identified in the Custodial Agreement.

         (e) Any Mortgage Files not delivered to Buyer or its designee
         (including the Custodian) are and shall be held in trust by the Seller
         or its designee for the benefit of the Buyer as the owner thereof. The
         Seller or its designee shall maintain a copy of the Mortgage File and
         the originals of the Mortgage File not delivered to Buyer or its
         designee (including the Custodian). The possession of the Mortgage File
         by the Seller or its designee is at the will of the Buyer for the sole
         purpose of servicing the related Purchased Mortgage Loan, and such
         retention and possession by the Seller or its designee is in a
         custodial capacity only. Each Mortgage File retained or held by the
         Seller or its designee shall be segregated on the Seller's books and
         records from the other assets of the Seller or its designee and the
         books and records of the Seller or its designee shall be marked
         appropriately to reflect clearly the sale of the related Purchased
         Mortgage Loan to the Buyer. The Seller or its designee shall release
         its custody of the Mortgage File only in accordance with written
         instructions from the Buyer, unless such release is required as
         incidental to the servicing of the Purchased Assets or is in connection
         with a repurchase of any Purchased Asset by Seller.

9.       HYPOTHECATION OR PLEDGE OF PURCHASED ASSETS

         Title to all Purchased Assets shall pass to Buyer and Buyer shall have
         free and unrestricted use of all Purchased Assets. Nothing in this
         Repurchase Agreement shall preclude the Buyer from engaging in
         repurchase transactions with the Purchased Assets or otherwise
         pledging, repledging, transferring, hypothecating, or rehypothecating
         the Purchased Assets. Nothing contained in this Repurchase Agreement
         shall obligate the Buyer to segregate any Purchased Assets delivered to
         the Buyer by the Seller.

10.      REPRESENTATIONS

         The Seller represents and warrants to the Buyer that as of the Purchase
         Date for the purchase of any Purchased Assets by the Buyer from the
         Seller and as of the date of this Repurchase Agreement and any
         Transaction hereunder and at all times while the Repurchase Documents
         and any Transaction hereunder is in full force and effect:



                                      -20-
<PAGE>   25

         (1)   Acting as Principal. The Seller will engage in such Transactions
               as principal (or, if agreed in writing in advance of any
               Transaction by the other party hereto, as agent for a disclosed
               principal);

         (2)   Solvency. Neither the Repurchase Documents nor any Transaction
               thereunder are entered into in contemplation of insolvency or
               with intent to hinder, delay or defraud any of the Seller's
               creditors. The transfer of the Mortgage Loans subject hereto is
               not undertaken with the intent to hinder, delay or defraud any of
               the Seller's creditors. The Seller is not insolvent within the
               meaning of 11 U.S.C. Section 101(32) and the transfer and sale of
               the Mortgage Loans pursuant hereto (i) will not cause the Seller
               to become insolvent, (ii) will not result in any property
               remaining with the Seller to be unreasonably small capital, and
               (iii) will not result in debts that would be beyond the Seller's
               ability to pay as same mature. The Seller received reasonably
               equivalent value in exchange for the transfer and sale of the
               Purchased Assets subject hereto.

         (3)   No Broker. The Seller has not dealt with any broker, investment
               banker, agent, or other person, except for the Buyer, who may be
               entitled to any commission or compensation in connection with the
               sale of Purchased Assets pursuant to this Repurchase Agreement;

         (4)   Ability to Perform. Seller does not believe, nor does it have any
               reason or cause to believe, that it cannot perform each and every
               covenant contained in the Repurchase Documents to which it is a
               party on its part to be performed;

         (5)   No Defaults. No Event of Default has occurred and is continuing
               hereunder;

         (6)   Existence. The Seller (a) is a corporation duly organized,
               validly existing and in good standing under the laws of Delaware,
               (b) has all requisite corporate or other power, and has all
               governmental licenses, authorizations, consents and approvals
               necessary to own its assets and carry on its business as now
               being or as proposed to be conducted, except where the lack of
               such licenses, authorizations, consents and approvals would not
               be reasonably likely to have a Material Adverse Effect; and (c)
               is qualified to do business and is in good standing in all other
               jurisdictions in which the nature of the business conducted by it
               makes such qualification necessary, except where failure so to
               qualify would not be reasonably likely (either individually or in
               the aggregate) to have a Material Adverse Effect.

         (7)   Financial Condition. The Seller has heretofore furnished to the
               Buyer a copy of (a) its balance sheet for the fiscal year ended
               March 31, 1999, and the related consolidated statements of income
               and retained earnings and of cash flows for the Seller for such
               fiscal year, (b) its balance sheet for the quarterly fiscal
               period of the Seller ended December 31, 1999 and the related
               consolidated statements of income and retained earnings and of
               cash flows for the Seller for such quarterly fiscal period,
               setting forth in each case in comparative form the figures for
               the previous year, and (c) Starnet Financial Inc.'s Annual Report
               on Form 10-K which includes audited financial statements at and
               for the fiscal year ended



                                      -21-
<PAGE>   26

               March 31, 1999 with the opinion thereon of Jackson & Rhodes, P.C.
               All such financial statements are complete and correct and fairly
               present, in all material respects, the consolidated financial
               condition of the Seller and Starnet Financial Inc. and the
               results of their operations as at such dates and for such fiscal
               periods, all in accordance with GAAP applied on a consistent
               basis. Since December 31, 1999, there has been no material
               adverse change in the business, operations or financial condition
               of the Seller or Starnet Financial Inc. from that set forth in
               said financial statements.

         (8)   Litigation. There are no actions, suits, arbitrations,
               investigations (including, without limitation, any of the
               foregoing which are pending or threatened) or other legal or
               arbitrable proceedings affecting the Seller or any of its
               Subsidiaries, if any, or affecting any of the Property of any of
               them before any Governmental Authority which (i) questions or
               challenges the validity or enforceability of the Repurchase
               Documents or any action to be taken in connection with the
               transactions contemplated hereby, (ii) makes a claim or claims in
               an aggregate amount greater than $100,000, (iii) individually or
               in the aggregate, if adversely determined, could reasonably be
               likely to have a Material Adverse Effect, or (iv) requires filing
               with the Office of the Comptroller of the Currency in accordance
               with its regulations.

         (9)   No Breach. Neither (a) the execution and delivery of the
               Repurchase Documents nor (b) the consummation of the transactions
               therein contemplated to be entered into by the Seller in
               compliance with the terms and provisions thereof will conflict
               with or result in a breach of the charter or by-laws of the
               Seller, or any applicable law, rule or regulation, or any order,
               writ, injunction or decree of any Governmental Authority, or any
               Servicing Agreement or other material agreement or instrument to
               which the Seller or any of its Subsidiaries, if any, is a party
               or by which any of them or any of their Property is bound or to
               which any of them is subject, or constitute a default under any
               such material agreement or instrument or result in the creation
               or imposition of any Lien (except for the Liens created pursuant
               to the Repurchase Documents) upon any Property of the Seller, or
               any of its Subsidiaries, if any, pursuant to the terms of any
               such agreement or instrument.

         (10)  Action. The Seller has all necessary corporate or other power,
               authority and legal right to execute, deliver and perform its
               obligations under each of the Repurchase Documents, as
               applicable; the execution, delivery and performance by the Seller
               of each of the Repurchase Documents have been duly authorized by
               all necessary corporate or other action on its part; and each
               Repurchase Document has been duly and validly executed and
               delivered by the Seller, as applicable, and constitutes a legal,
               valid and binding obligation of the Seller enforceable against
               the Seller in accordance with its terms.

         (11)  Approvals. No authorizations, approvals or consents of, and no
               filings or registrations with, any Governmental Authority or any
               securities exchange are necessary for the execution, delivery or
               performance by the Seller of the Repurchase Documents or for the
               legality, validity or enforceability thereof,



                                      -22-
<PAGE>   27

               except for filings and recordings in respect of the Liens created
               pursuant to the Repurchase Documents.

         (12)  Margin Regulations. Neither any Transaction hereunder, nor the
               use of the proceeds thereof, will violate or be inconsistent with
               the provisions of Regulation T, U or X.

         (13)  Taxes. The Seller and its Subsidiaries, if any, have filed all
               Federal income tax returns and all other material tax returns
               that are required to be filed by them and have paid all taxes due
               pursuant to such returns or pursuant to any assessment received
               by or any of its Subsidiaries, if any, except for any such taxes
               as are being appropriately contested in good faith by appropriate
               proceedings diligently conducted and with respect to which
               adequate reserves have been provided. The charges, accruals and
               reserves on the books of the Seller and its Subsidiaries, if any,
               in respect of taxes and other governmental charges are, in the
               opinion of the Seller, adequate.

         (14)  Investment Company Act. Neither the Seller nor any of its
               Subsidiaries is an "investment company", or a company
               "controlled" by an "investment company," within the meaning of
               the Investment Company Act of 1940, as amended.

         (15)  Purchased Assets.

                         (A) The Seller has not assigned, pledged, or otherwise
                    conveyed or encumbered any Mortgage Loan to any other
                    Person, and immediately prior to the sale of such Mortgage
                    Loan to the Buyer, the Seller was the sole owner of such
                    Mortgage Loan and had good and marketable title thereto,
                    free and clear of all Liens, in each case except for Liens
                    to be released simultaneously with the sale to the Buyer
                    hereunder. No Mortgage Loan sold to the Buyer hereunder was
                    acquired (by purchase or otherwise) by the Seller from an
                    Affiliate of the Seller unless a True Sale Certification has
                    been delivered to the Buyer.

                         (B) The provisions of this Repurchase Agreement are
                    effective to either constitute a sale of Purchased Items to
                    the Buyer or to create in favor of the Buyer a valid
                    security interest in all right, title and interest of the
                    Seller in, to and under the Purchased Items.

                         (C) Upon receipt by the Custodian of each Mortgage
                    Note, endorsed in blank by a duly authorized officer of the
                    Seller, either a purchase shall have been completed by the
                    Buyer of each Mortgage Note or the Buyer shall have a fully
                    perfected first priority security interest in the applicable
                    Mortgage Note and in such Seller's interest in the related
                    Mortgaged Property.

                         (D) Upon the filing of financing statements on Form
                    UCC-1 naming the Buyer as "Secured Party", the Seller as
                    "Debtor" and describing the Purchased Items, in the
                    jurisdictions and recording offices



                                      -23-
<PAGE>   28

                    listed on Exhibit IV attached hereto, the security interests
                    granted hereunder in the Purchased Items will constitute
                    fully perfected security interests under the Uniform
                    Commercial Code in all right, title and interest of the
                    Seller in, to and under such Purchased Items, which can be
                    perfected by filing under the Uniform Commercial Code.

         (16)  Chief Executive Office/Jurisdiction of Organization. On the
               Effective Date, and during the four months immediately preceding
               the Effective Date, the Seller's chief executive office, is, and
               has been located at 17311 North Dallas Parkway, Suite 350,
               Dallas, Texas 75248. On the Effective Date, the Seller's
               jurisdiction of organization is Delaware.

         (17)  Location of Books and Records. The location where the Seller
               keeps its books and records, including all computer tapes and
               records related to the Purchased Items is its chief executive
               office.

         (18)  True and Complete Disclosure. (a) The information, reports,
               financial statements, exhibits and schedules furnished in writing
               by or on behalf of the Seller to the Buyer in connection with the
               negotiation, preparation or delivery of this Repurchase Agreement
               and the other Repurchase Documents or included herein or therein
               or delivered pursuant hereto or thereto (other than with respect
               to the Mortgage Loans), when taken as a whole, do not contain any
               untrue statement of material fact or omit to state any material
               fact necessary to make the statements herein or therein, in light
               of the circumstances under which they were made, not misleading.
               All written information furnished after the date hereof by or on
               behalf of the Seller to the Buyer in connection with this
               Repurchase Agreement and the other Repurchase Documents and the
               transactions contemplated hereby (other than with respect to the
               Mortgage Loans) and thereby will be true, complete and accurate
               in every material respect, or (in the case of projections) based
               on reasonable estimates, on the date as of which such information
               is stated or certified. There is no fact known to a Responsible
               Officer of the Seller, after due inquiry, that could reasonably
               be expected to have a Material Adverse Effect that has been
               disclosed herein, in the other Repurchase Documents or in a
               report, financial statement, exhibit, schedule, disclosure letter
               or other writing furnished to the Buyer for use in connection
               with the transactions contemplated hereby or thereby.

         (19)  ERISA. Each Plan to which the Seller or any of its Subsidiaries
               make direct contributions, and, to the knowledge of the Seller,
               each other Plan and each Multiemployer Plan, is in compliance in
               all material respects with, and has been administered in all
               material respects in compliance with, the applicable provisions
               of ERISA, the Code and any other Federal or State law. No event
               or condition has occurred and is continuing as to which the
               Seller would be under an obligation to furnish a report to the
               Buyer under Section 11(a)(4) hereof.

         (20)  Takeout Assignments; Takeout Commitments. Each Takeout Commitment
               constitutes a valid, binding and subsisting obligation of a
               Takeout Investor,



                                      -24-
<PAGE>   29

               enforceable against the Seller and the Takeout Investor
               respectively, in accordance with its terms (subject to bankruptcy
               laws and other similar laws of general application affecting
               rights of creditors and subject to the application of the rules
               of equity, including those relating to specific performance).

11.      COVENANTS OF THE SELLER

         On and as of the date of this Repurchase Agreement and each Purchase
         Date and until this Repurchase Agreement is no longer in force with
         respect to any Transaction, the Seller covenants that it will:

         (a)   Financial Statements. The Seller shall deliver to the Buyer:

         (1)   as soon as available and in any event within twenty (20) calendar
               days after the end of each calendar month, the unaudited balance
               sheets of Seller as at the end of such period and the related
               unaudited consolidated statements of income and retained earnings
               and of cash flows for the Seller for such period and the portion
               of the fiscal year through the end of such period, accompanied by
               a certificate of a Responsible Officer of Seller, which
               certificate shall state that said financial statements fairly
               present in all material respects the financial condition and
               results of operations of Seller in accordance with GAAP,
               consistently applied, as at the end of, and for, such period
               (subject to normal year-end adjustments);]

         (2)   as soon as available and in any event within ninety (90) days
               after the end of each fiscal year of Seller, the balance sheets
               of Seller as at the end of such fiscal year and the related
               consolidated statements of income and retained earnings and of
               cash flows for the Seller for such year, setting forth in each
               case in comparative form the figures for the previous year,
               accompanied by an opinion thereon of independent certified public
               accountants of recognized national standing, which opinion shall
               not be qualified as to scope of audit or going concern and shall
               state that said financial statements fairly present the financial
               condition and results of operations of as at the end of, and for,
               such fiscal year in accordance with GAAP, and a certificate of
               such accountants stating that, in making the examination
               necessary for their opinion, they obtained no knowledge, except
               as specifically stated, of any Default or Event of Default;

         (3)   from time to time such other information regarding the financial
               condition, operations, or business of the Seller as the Buyer may
               reasonably request; and

         (4)   as soon as reasonably possible, and in any event within thirty
               (30) days after a Responsible Officer of the Seller knows, or
               with respect to any Plan or Multiemployer Plan to which the
               Seller or any of its Subsidiaries makes direct contributions, has
               reason to believe, that any of the events or conditions specified
               below with respect to any Plan or Multiemployer Plan has occurred
               or exists, a statement signed by a senior financial officer of
               the Seller setting forth details respecting such event or
               condition and the action, if any, that the Seller or its ERISA
               Affiliate proposes to take with respect thereto (and a copy of
               any report or



                                      -25-
<PAGE>   30

               notice required to be filed with or given to PBGC by the Seller
               or an ERISA Affiliate with respect to such event or condition):

                         (A) any reportable event, as defined in Section 4043(c)
                    of ERISA and the regulations issued thereunder, with respect
                    to a Plan, as to which PBGC has not by regulation waived the
                    requirement of Section 4043(a) of ERISA that it be notified
                    within thirty (30) days of the occurrence of such event
                    (provided that a failure to meet the minimum funding
                    standard of Section 412 of the Code or Section 302 of ERISA,
                    including without limitation the failure to make on or
                    before its due date a required installment under Section
                    412(m) of the Code or Section 302(e) of ERISA, shall be a
                    reportable event regardless of the issuance of any waivers
                    in accordance with Section 412(d) of the Code); and any
                    request for a waiver under Section 412(d) of the Code for
                    any Plan;

                         (B) the distribution under Section 4041(c) of ERISA of
                    a notice of intent to terminate any Plan or any action taken
                    by the Seller or an ERISA Affiliate to terminate any Plan;

                         (C) the institution by PBGC of proceedings under
                    Section 4042 of ERISA for the termination of, or the
                    appointment of a trustee to administer, any Plan, or the
                    receipt by the Seller or any ERISA Affiliate of a notice
                    from a Multiemployer Plan that such action has been taken by
                    PBGC with respect to such Multiemployer Plan;

                         (D) the complete or partial withdrawal from a
                    Multiemployer Plan by the Seller or any ERISA Affiliate that
                    results in liability under Section 4201 or 4204 of ERISA
                    (including the obligation to satisfy secondary liability as
                    a result of a purchaser default) that would have a Material
                    Adverse Effect or the receipt by the Seller or any ERISA
                    Affiliate of notice from a Multiemployer Plan that it is in
                    reorganization or insolvency pursuant to Section 4241 or
                    4245 of ERISA or that it intends to terminate or has
                    terminated under Section 4041A of ERISA;

                         (E) the institution of a proceeding by a fiduciary of
                    any Multiemployer Plan against the Seller or any ERISA
                    Affiliate to enforce Section 515 of ERISA, which proceeding
                    is not dismissed within thirty (30) days; and

                         (F) the adoption of an amendment to any Plan that would
                    result in the loss of tax-exempt status of the trust of
                    which such Plan is a part if the Seller or an ERISA
                    Affiliate fails to provide timely security to such Plan in
                    accordance with the provisions of Section 401(a)(29) of the
                    Code or Section 307 of ERISA.

         The Seller will furnish to the Buyer, at the time the Seller furnishes
         each set of financial statements pursuant to paragraphs (a)(1) and
         (a)(2) above, a certificate of a Responsible



                                      -26-
<PAGE>   31

         Officer of the Seller to the effect that, to the best of such
         Responsible Officer's knowledge, the Seller during such fiscal period
         or year has observed or performed in all material respects all of its
         covenants and other agreements, and satisfied every condition,
         contained in this Repurchase Agreement and the other Repurchase
         Documents to be observed, performed or satisfied by it, and that such
         Responsible Officer has obtained no knowledge of any Default or Event
         of Default except as specified in such certificate (and, if any Default
         or Event of Default has occurred and is continuing, describing the same
         in reasonable detail and describing the action the Seller has taken or
         proposes to take with respect thereto).

         (b) Litigation. The Seller will promptly, and in any event within ten
         (10) days after service of process on any of the following, give to the
         Buyer notice of all litigation, actions, suits, arbitrations,
         investigations (including, without limitation, any of the foregoing
         which are threatened or pending) or other legal or arbitrable
         proceedings affecting the Seller or any of its Subsidiaries or
         affecting any of the Property of any of them before any Governmental
         Authority that (i) questions or challenges the validity or
         enforceability of any of the Repurchase Documents or any action to be
         taken in connection with the transactions contemplated hereby, (ii)
         makes a claim or claims in an aggregate amount greater than $100,000,
         (iii) which, individually or in the aggregate, if adversely determined,
         could be reasonably likely to have a Material Adverse Effect, or (iv)
         requires filing with the Securities and Exchange Commission in
         accordance with the 1934 Act and any rules thereunder.

         (c) Existence, etc. The Seller will:

         (1)   preserve and maintain its legal existence and all of its material
               rights, privileges, licenses and franchises necessary for the
               operation of its business (provided that nothing in this Section
               11(c)(i) shall prohibit any transaction expressly permitted under
               Section 11(d) hereof);

         (2)   comply with the requirements of all applicable laws, rules,
               regulations and orders of Governmental Authorities (including,
               without limitation, all environmental laws) if failure to comply
               with such requirements would be reasonably likely (either
               individually or in the aggregate) to have a Material Adverse
               Effect;

         (3)   keep adequate records and books of account, in which complete
               entries will be made in accordance with GAAP consistently
               applied;

         (4)   not move its chief executive office from the address referred to
               in Section 10(xvi) or change its jurisdiction of organization
               unless it shall have provided the Buyer thirty (30) days' prior
               written notice of such change;

         (5)   pay and discharge all taxes, assessments and governmental charges
               or levies imposed on it or on its income or profits or on any of
               its Property prior to the date on which penalties attach thereto,
               except for any such tax, assessment, charge or levy the payment
               of which is being contested in good faith and by proper
               proceedings and against which adequate reserves are being
               maintained; and



                                      -27-
<PAGE>   32

         (6)   permit representatives of the Buyer, upon reasonable notice
               (unless a Default shall have occurred and is continuing, in which
               case, no prior notice shall be required), during normal business
               hours, to examine, copy and make extracts from its books and
               records, to inspect any of its Properties, and to discuss its
               business and affairs with its officers, all to the extent
               reasonably requested by the Buyer.

         (d) Prohibition of Fundamental Changes. The Seller shall not enter into
         any transaction of merger or consolidation or amalgamation, or
         liquidate, wind up or dissolve itself (or suffer any liquidation,
         winding up or dissolution) or sell all or substantially all of its
         assets; provided, that the Seller may merge or consolidate with (a) any
         wholly owned subsidiary of the Seller, or (b) any other Person if the
         Seller is the surviving corporation; and provided further, that if
         after giving effect thereto, no Default would exist hereunder.

         (e) Margin Deficit. If at any time there exists a Margin Deficit the
         Seller shall cure same in accordance with Section 4 hereof.

         (f) Notices. The Seller shall give notice to the Buyer:

         (1)   promptly upon receipt of notice or knowledge of the occurrence of
               any Default or Event of Default;

         (2)   with respect to any Purchased Asset, promptly upon receipt of any
               principal prepayment (in full or partial) of such Purchased
               Asset;

         (3)   with respect to any Purchased Asset hereunder, promptly upon
               receipt of notice or knowledge that the underlying Mortgaged
               Property has been damaged by waste, fire, earthquake or earth
               movement, flood, tornado or other casualty, or otherwise damaged
               so as to affect adversely the Asset Value of such Purchased
               Asset;

         (4)   promptly upon receipt of notice or knowledge of (i) any material
               default related to any Purchased Item, (ii) any Lien or security
               interest on, or claim asserted against, any Purchased Item or
               (iii) any event or change in circumstances which could reasonably
               be expected to have a Material Adverse Effect;

         (5)   promptly upon any material change in the market value of any or
               all of the Seller's assets which could reasonably be expected to
               have a Material Adverse Effect; and

         (6)   promptly upon any expected or actual change in the senior
               management of the Seller.

         Each notice pursuant to this Section shall be accompanied by a
         statement of a Responsible Officer of the Seller setting forth details
         of the occurrence referred to therein and stating what action the
         Seller has taken or proposes to take with respect thereto.

         (g) Reports. The Seller shall provide the Buyer with a quarterly
         report, which report shall include, among other items, a summary of
         such Seller's delinquency and loss experience with respect to Mortgage
         Loans serviced by the Seller, any Servicer or any



                                      -28-
<PAGE>   33

         designee of either operating statements, the occupancy status of such
         Mortgaged Property and other property level information, plus any such
         additional reports as the Buyer may reasonably request with respect to
         the Seller or any Servicer's servicing portfolio or pending
         originations of Mortgage Loans.

         (h) Underwriting Guidelines. In the event the Seller makes any
         amendment or modification to the Underwriting Guidelines, the Seller
         shall promptly deliver to the Buyer a complete copy of the amended or
         modified Underwriting Guidelines.

         (i) Transactions with Affiliates. The Seller shall not enter into any
         transaction, including without limitation any purchase, sale, lease or
         exchange of property or the rendering of any service, with any
         Affiliate (except for (i) the acquisition of equity or stock or
         warrants of an Affiliate and (ii) the payment of dividends, in either
         case, in the ordinary course of business, and (iii) the purchase or
         sale of loans in the ordinary course of business which is a true sale
         and does not constitute a fraudulent conveyance) unless such
         transaction is (a) not otherwise expressly prohibited under this
         Repurchase Agreement, (b) in the ordinary course of the Seller's
         business (c) upon fair and reasonable terms no less favorable to the
         Seller than it would obtain in a comparable arm's length transaction
         with a Person which is not an Affiliate, or make a payment that is not
         otherwise permitted by this Section 11(i) to any Affiliate. In no event
         shall the Seller transfer to the Buyer hereunder any Mortgage Loan
         acquired by the Seller from an Affiliate of the Seller unless a True
         Sale Certification has been delivered to the Buyer prior to such sale.

         (j) Limitation on Liens. Immediately upon notice of a Lien or any
         circumstance which could give rise to a Lien on the Purchased Items,
         the Seller will defend the Purchased Items against, and will take such
         other action as is necessary to remove, any Lien, security interest or
         claim on or to the Purchased Items (other than any security interest
         created under this Repurchase Agreement), and the Seller will defend
         the right, title and interest of the Buyer in and to any of the
         Purchased Items against the claims and demands of all persons
         whomsoever.

         (k) Limitation on Distributions. After the occurrence and during the
         continuation of any Event of Default, the Seller shall not make any
         payment on account of, or set apart assets for, a sinking or other
         analogous fund for the purchase, redemption, defeasance, retirement or
         other acquisition of any equity or partnership interest of the Seller,
         whether now or hereafter outstanding, or make any other distribution in
         respect thereof, either directly or indirectly, whether in cash or
         property or in obligations of the Seller.

         (l) Maintenance of Profitability. The Seller shall not permit, for any
         period of six (6) consecutive calendar months (each such period, a
         "Test Period"), Net Income for such Test Period determined on a monthly
         basis, before income taxes for such Test Period and distributions made
         during such Test Period, to be less than $1.00.

         (m) Maintenance of Tangible Net Worth. The Seller shall not permit
         Tangible Net Worth at any time to be less than the sum of (i)
         $1,000,000 plus (ii) an amount equal to 75% of the aggregate or
         positive Net Income (without deduction for quarterly losses).



                                      -29-
<PAGE>   34

         (n) Maintenance of Ratio of Total Indebtedness to Tangible Net Worth.
         The Seller shall not permit the ratio of Total Indebtedness to Tangible
         Net Worth at any time to be greater than 15:1.

         (o) Servicer; Servicing Tape. The Seller shall provide to the Buyer,
         electronically, in a format mutually acceptable to the Buyer and
         Seller, a remittance report on a monthly basis by no later than the
         20th day of each month (the "Reporting Date") containing servicing
         information, including without limitation those fields reasonably
         requested by the Buyer from time to time, on a loan-by-loan basis and
         in the aggregate, with respect to the Purchased Mortgage Loans serviced
         hereunder by the Seller or any Servicer for the month (or any portion
         thereof) prior to the Reporting Date (such remittance report, an "Asset
         Tape"). The Seller shall not cause the Mortgage Loans to be serviced by
         any servicer other than a servicer expressly approved in writing by the
         Buyer, which approval shall be deemed granted by the Buyer with respect
         to the Seller with the execution of this Repurchase Agreement.

         (p) Remittance of Prepayments. The Seller shall remit, with sufficient
         detail to enable the Buyer to appropriately identify the Mortgage Loan
         to which any amount remitted applies, all principal prepayments
         relating to a Mortgage Loan that the Seller has received after the sale
         of the Mortgage Loan to the Buyer no later than one (1) Business Day
         following the date such prepayment was received.

         (q) Custodial Agreement. The Seller shall maintain the Custodial
         Agreement in full force and effect and shall not amend or modify the
         Custodial Agreement or waive compliance with any provisions thereunder
         without the prior written consent of the Buyer.

         (r) The Seller shall provide the Buyer on a monthly basis, in a letter
         format acceptable to the Buyer in its sole discretion, a compliance
         report demonstrating therein the calculations the Seller utilized to
         determine its compliance with the financial covenants set forth in
         clauses (l) (m) and (n) of this Section 11.

         (s) Takeout Commitments. The Borrower shall at all times have in place
         a Takeout Commitment covering each Mortgage Loan pledged as Collateral
         hereunder; provided that, in the event that any Takeout Commitment
         should expire, the Borrower shall arrange a new Takeout Commitment
         within three (3) Business Days from the date of such expiration.

12.      EVENTS OF DEFAULT

         If any of the following events (each an "Event of Default") occur, the
         Seller and Buyer shall have the rights set forth in Section 13, as
         applicable:

         (a) the Seller shall default in the payment of any Repurchase Price due
         or any amount due under Section 5 hereof when due (whether at stated
         maturity, upon acceleration or at mandatory or optional prepayment); or



                                      -30-
<PAGE>   35

         (b) the Seller shall default in the payment of any other amount payable
         by it hereunder or under any other Repurchase Document after
         notification by the Buyer of such default, and such default shall have
         continued unremedied for one (1) Business Day; or

         (c) any representation, warranty or certification made or deemed made
         herein or in any other Repurchase Document by the Seller or any
         certificate furnished to the Buyer pursuant to the provisions hereof or
         thereof or any information with respect to the Mortgage Loans furnished
         in writing by on behalf of the Seller shall prove to have been false or
         misleading in any material respect as of the time made or furnished
         (other than the representations and warranties set forth in Schedule 1,
         which shall be considered solely for the purpose of determining the
         Asset Value of the Purchased Assets; unless (i) the Seller shall have
         made any such representations and warranties with actual knowledge that
         they were materially false or misleading at the time made; or (ii) any
         such representations and warranties have been determined in good faith
         by the Buyer in its sole discretion to be materially false or
         misleading on a regular basis); or

         (d) the Seller shall fail to comply with the requirements of 11(c)(i),
         Section 11(d), Section 11(e), or Sections 11(h) through 11(t) hereof;
         or

         (e) the Seller shall otherwise fail to comply with the requirements of
         Section 11(c), Section 11(f), or Section 11(p) hereof and such default
         shall continue unremedied for a period of 5 Business Days; or

         (f) the Seller shall fail to observe or perform any other covenant or
         agreement contained in this Repurchase Agreement or any other
         Transaction Document and such failure to observe or perform shall
         continue unremedied for a period of 10 Business Days; or

         (g) a final judgment or judgments for the payment of money in excess of
         $100,000 in the aggregate shall be rendered against the Seller or any
         of its Affiliates by one or more courts, administrative tribunals or
         other bodies having jurisdiction and the same shall not be satisfied,
         discharged (or provision shall not be made for such discharge) or
         bonded, or a stay of execution thereof shall not be procured, within 30
         days from the date of entry thereof, and the Seller or any such
         Affiliate shall not, within said period of 30 days, or such longer
         period during which execution of the same shall have been stayed or
         bonded, appeal therefrom and cause the execution thereof to be stayed
         during such appeal; or

         (h) an Act of Insolvency shall have occurred with respect to the
         Seller; or

         (i) the Custodial Agreement or any Repurchase Document shall for
         whatever reason be terminated or cease to be in full force and effect
         and with respect to the Custodial Agreement, shall not have been
         replaced with a comparable agreement acceptable to the Seller, provided
         that, the comparable agreement is in full force and effect prior to or
         at the time such agreement is terminated or ceases to be in full force
         and effect, or the enforceability of the Custodial Agreement or any
         Repurchase Document shall be contested by the Seller or any party
         thereto; or

         (j) the Seller shall grant, or suffer to exist, any Lien on any
         Purchased Item (except any Lien in favor of the Buyer); or (A) the
         Purchased Items shall not have been sold to the



                                      -31-
<PAGE>   36

         Buyer, or (B) the Liens contemplated hereby shall cease or fail to be
         first priority perfected Liens on any Purchased Items in favor of the
         Buyer or shall be Liens in favor of any Person other than the Buyer; or

         (k) the Seller or any of the Seller's Affiliates shall be in default
         under (i) any Indebtedness of the Seller or of such Affiliate which
         default (1) involves the failure to pay a matured obligation, or (2)
         permits the acceleration of the maturity of obligations by any other
         party to or beneficiary with respect to such Indebtedness, or (ii) any
         other contract to which the Seller or such Affiliate is a party which
         default (1) involves the failure to pay a matured obligation, or (2)
         permits the acceleration of the maturity of obligations by any other
         party to or beneficiary of such contract; or

         (l) any material adverse change in the Property, business or financial
         condition of the Seller or any of its Affiliates shall occur, in each
         case as determined by the Buyer in its sole good faith discretion, or
         any other condition shall exist which, in the Buyer's sole good faith
         discretion, constitutes a material impairment of the Seller's ability
         to perform its obligations under this Repurchase Agreement or any other
         Repurchase Document; or

         (m)(i) any Person shall engage in any "prohibited transaction" (as
         defined in Section 406 of ERISA or Section 4975 of the Code) involving
         any Plan, (ii) any material "accumulated funding deficiency" (as
         defined in Section 302 of ERISA), whether or not waived, shall exist
         with respect to any Plan or any Lien in favor of the PBGC or a Plan
         shall arise on the assets of the Seller or any Commonly Controlled
         Entity, (iii) a Reportable Event shall occur with respect to, or
         proceedings shall commence to have a trustee appointed, or a trustee
         shall be appointed, to administer or to terminate, any Plan, which
         Reportable Event or commencement of proceedings or appointment of a
         trustee is, in the reasonable opinion of the Buyer, likely to result in
         the termination of such Plan for purposes of Title IV of ERISA, (iv)
         any Plan shall terminate for purposes of Title IV of ERISA, (v) the
         Seller or any Commonly Controlled Entity shall, or in the reasonable
         opinion of the Buyer is likely to, incur any liability in connection
         with a withdrawal from, or the insolvency or reorganization of, a
         Multiemployer Plan or (vi) any other event or condition shall occur or
         exist with respect to a Plan; and in each case in clauses (i) through
         (vi) above, such event or condition, together with all other such
         events or conditions, if any, could reasonably be expected to have a
         Material Adverse Effect; or

         (n) The Seller's Tangible Net Worth at any time, has declined by either
         (a) 25% or more from the Seller's Tangible Net Worth as calculated
         based upon the Seller's audited financial statements from the most
         recent fiscal year, or (b) 35% or more from the Seller's highest
         Tangible Net Worth as calculated on any date during the Seller's
         current fiscal quarter.

         (o) DLJ's corporate bond rating as calculated by S&P or Moody's has
         been lowered or downgraded to a rating below BBB as indicated by S&P or
         below BAA as indicated by Moody's and the Seller shall have failed to
         both (i) repurchase all Purchased Assets then subject to Transactions
         and (ii) pay all other Repurchase Obligations, within ninety (90)
         calendar days following demand therefor by the Buyer.



                                      -32-
<PAGE>   37

13.      REMEDIES

         (a) If an Event of Default occurs with respect to the Seller, the
         following rights and remedies are available to the Buyer; provided,
         that an Event of Default shall be deemed to be continuing unless
         expressly waived by the Buyer in writing.

         (1)   At the option of the Buyer, exercised by written notice to the
               Seller (which option shall be deemed to have been exercised, even
               if no notice is given, immediately upon the occurrence of an Act
               of Insolvency of the Seller), the Repurchase Date for each
               Transaction hereunder, if it has not already occurred, shall be
               deemed immediately to occur. The Buyer shall (except upon the
               occurrence of an Act of Insolvency of the Seller) give notice to
               the Seller of the exercise of such option as promptly as
               practicable.

         (2)   If the Buyer exercises or is deemed to have exercised the option
               referred to in subsection (a)(1) of this Section,

                           (A) the Seller's obligations in such Transactions to
                  repurchase all Purchased Assets, at the Repurchase Price
                  therefor on the Repurchase Date determined in accordance with
                  subsection (a)(1) of this Section, (1) shall thereupon become
                  immediately due and payable, (2) all Income paid after such
                  exercise or deemed exercise shall be retained by the Buyer and
                  applied to the aggregate unpaid Repurchase Prices and any
                  other amounts owed by the Seller hereunder, and (3) the Seller
                  shall immediately deliver to the Buyer any Purchased Assets
                  subject to such Transactions then in the Seller's possession
                  or control;

                           (B) to the extent permitted by applicable law, the
                  Repurchase Price with respect to each such Transaction shall
                  be increased by the aggregate amount obtained by daily
                  application of, on a 360 day per year basis for the actual
                  number of days during the period from and including the date
                  of the exercise or deemed exercise of such option to but
                  excluding the date of payment of the Repurchase Price as so
                  increased, (x) the Post-Default Rate to (y) the Repurchase
                  Price for such Transaction as of the Repurchase Date as
                  determined pursuant to subsection (a)(1) of this Section
                  (decreased as of any day by (i) any amounts actually in the
                  possession of Buyer pursuant to clause (C) of this subsection,
                  (ii) any proceeds from the sale of Purchased Assets applied to
                  the Repurchase Price pursuant to subsection (a)(7) of this
                  Section, and (iii) any amounts applied to the Repurchase Price
                  pursuant to subsection (a)(7) of this Section); and

                           (C) all Income actually received by the Buyer
                  pursuant to Section 5 (excluding any Late Payment Fees paid
                  pursuant to Section 5(b)) shall be applied to the aggregate
                  unpaid Repurchase Price owed by the Seller.

         (3)   Upon the occurrence of one or more Events of Default with respect
               to the Seller, the Buyer shall have the right to obtain physical
               possession of the Servicing



                                      -33-
<PAGE>   38

               Records (subject to the provisions of the Custodial Agreement)
               and all other files of the Seller relating to the Purchased
               Assets and all documents relating to the Purchased Assets which
               are then or may thereafter come in to the possession of the
               Seller or any third party acting for the Seller and such Seller
               shall deliver to the Buyer such assignments as the Buyer shall
               request and the Buyer shall have the right to appoint any Person
               to act as Servicer for the Purchased Assets. The Buyer shall be
               entitled to specific performance of all agreements of the Seller
               contained in the Repurchase Documents.

         (4)   At any time on the Business Day following notice to the Seller
               (which notice may be the notice given under subsection (a)(1) of
               this Section), in the event the Seller has not repurchased all
               Purchased Assets, the Buyer may (A) immediately sell, without
               demand or further notice of any kind, at a public or private sale
               and at such price or prices as the Buyer may deem satisfactory
               any or all Purchased Assets subject to such Transactions
               hereunder and apply the proceeds thereof to the aggregate unpaid
               Repurchase Prices and any other amounts owing by the Seller
               hereunder or (B) in its sole discretion elect, in lieu of selling
               all or a portion of such Purchased Assets, to give the Seller
               credit for such Purchased Assets in an amount equal to the Market
               Value of the Purchased Assets against the aggregate unpaid
               Repurchase Price and any other amounts owing by the Seller
               hereunder. The proceeds of any disposition of Purchased Assets
               shall be applied first to the costs and expenses incurred by the
               Buyer in connection with the Seller's default; second to costs of
               cover and/or related hedging transactions; third to the
               Repurchase Price; and fourth to any other outstanding obligation
               of the Seller to the Buyer or its Affiliates.

         (5)   Seller agrees that Buyer may obtain an injunction or an order of
               specific performance to compel Seller to fulfill its obligations
               as set forth in Section 24, if Seller fails or refuses to perform
               its obligations as set forth therein.

         (6)   Seller shall be liable to Buyer, payable as and when incurred by
               Buyer, for (A) the amount of all actual reasonable out-of-pocket
               expenses, including reasonable legal or other expenses incurred
               by Buyer in connection with or as a consequence of an Event of
               Default, and (B) all reasonable costs incurred in connection with
               hedging or covering transactions.

         (7)   The Buyer shall have any rights otherwise available to it under
               any other agreement or applicable law. Subject to the terms and
               conditions of this Agreement, the Seller shall have, in addition
               to its rights hereunder, any rights otherwise available to it
               under applicable law and under any other agreement between the
               parties hereto; provided, however, that in the event of a
               conflict between this Agreement and any other agreement, this
               Agreement shall prevail unless expressly superseded by a separate
               written agreement.

         (b) Buyer may exercise one or more of the remedies available to Buyer
         immediately upon the occurrence of an Event of Default and, except to
         the extent provided in subsections (a)(1) and (4) of this Section, at
         any time thereafter without notice to Seller.



                                      -34-
<PAGE>   39

         All rights and remedies arising under this Repurchase Agreement as
         amended from time to time hereunder are cumulative and not exclusive of
         any other rights or remedies which Buyer may have.

         (c) Buyer may enforce its rights and remedies hereunder without prior
         judicial process or hearing, and Seller hereby expressly waives any
         defenses Seller might otherwise have to require Buyer to enforce its
         rights by judicial process. Seller also waives any defense (other than
         a defense of payment or performance) Seller might otherwise have
         arising from the use of nonjudicial process, enforcement and sale of
         all or any portion of the Purchased Items, or from any other election
         of remedies. Seller recognizes that nonjudicial remedies are consistent
         with the usages of the trade, are responsive to commercial necessity
         and are the result of a bargain at arm's length.

         (d) To the extent permitted by applicable law, the Seller shall be
         liable to the Buyer for interest on any amounts owing by the Seller
         hereunder, from the date the Seller becomes liable for such amounts
         hereunder until such amounts are (i) paid in full by the Seller or (ii)
         satisfied in full by the exercise of the Buyer's rights hereunder.
         Interest on any sum payable by the Seller to the Buyer under this
         paragraph 13(d) shall be at a rate equal to the Post-Default Rate.

14.      INDEMNIFICATION AND EXPENSES

         (a) The Seller agrees to hold the Buyer, and its Affiliates and their
         officers, directors, employees, agents and advisors (each an
         "Indemnified Party") harmless from and indemnify any Indemnified Party
         against all liabilities, losses, damages, judgments, costs and expenses
         of any kind which may be imposed on, incurred by or asserted against
         such Indemnified Party (collectively, "Costs"), relating to or arising
         out of this Repurchase Agreement, any other Repurchase Document or any
         transaction contemplated hereby or thereby, or any amendment,
         supplement or modification of, or any waiver or consent under or in
         respect of, this Repurchase Agreement, any other Repurchase Document or
         any transaction contemplated hereby or thereby, that, in each case,
         results from anything other than the Indemnified Party's gross
         negligence or willful misconduct. Without limiting the generality of
         the foregoing, the Seller agrees to hold any Indemnified Party harmless
         from and indemnify such Indemnified Party against all Costs with
         respect to all Mortgage Loans relating to or arising out of any
         violation or alleged violation of any environmental law, rule or
         regulation or any consumer credit laws, including without limitation
         the Truth in Lending Act and/or the Real Estate Settlement Procedures
         Act, that, in each case, results from anything other than the
         Indemnified Party's gross negligence or willful misconduct. In any
         suit, proceeding or action brought by an Indemnified Party in
         connection with any Mortgage Loan for any sum owing thereunder, or to
         enforce any provisions of any Mortgage Loan, the Seller will save,
         indemnify and hold such Indemnified Party harmless from and against all
         expense, loss or damage suffered by reason of any defense, set-off,
         counterclaim, recoupment or reduction or liability whatsoever of the
         account debtor or obligor thereunder, arising out of a breach by the
         Seller of any obligation thereunder or arising out of any other
         agreement, indebtedness or liability at any time owing to or in favor
         of such account debtor or obligor or its successors from the Seller.
         The Seller also agrees to reimburse an



                                      -35-
<PAGE>   40

         Indemnified Party as and when billed by such Indemnified Party for all
         the Indemnified Party's costs and expenses incurred in connection with
         the enforcement or the preservation of the Buyer's rights under this
         Repurchase Agreement, any other Repurchase Document or any transaction
         contemplated hereby or thereby, including without limitation the
         reasonable fees and disbursements of its counsel.

         (b) The Seller agrees to pay as and when billed by the Buyer all of the
         out-of-pocket costs and expenses incurred by the Buyer in connection
         with the development, preparation and execution of, and any amendment,
         supplement or modification to, this Repurchase Agreement, any other
         Repurchase Document or any other documents prepared in connection
         herewith or therewith. The Seller agrees to pay as and when billed by
         the Buyer all of the reasonable out-of-pocket costs and expenses
         incurred in connection with the consummation and administration of the
         transactions contemplated hereby and thereby including without
         limitation all the reasonable fees, disbursements and expenses of
         counsel to the Buyer which amount shall be deducted from the Purchase
         Price paid for the first Transaction hereunder. Subject to the
         limitations set forth in Section 27 hereof, the Seller agrees to pay
         the Buyer all the reasonable out of pocket due diligence, inspection,
         testing and review costs and expenses incurred by the Buyer with
         respect to Mortgage Loans submitted by Seller for purchase under this
         Repurchase Agreement, including, but not limited to, those out of
         pocket costs and expenses incurred by the Buyer pursuant to Sections
         13(a), 24 and 27 hereof.

15.      RECORDING OF COMMUNICATIONS

         Buyer and Seller shall have the right (but not the obligation) from
         time to time to make or cause to be made tape recordings of
         communications between its employees and those of the other party with
         respect to Transactions upon notice to the other party of such
         recording. Buyer and Seller consent to the admissibility of such tape
         recordings in any court, arbitration, or other proceedings. The parties
         agree that a duly authenticated transcript of such a tape recording
         shall be deemed to be a writing conclusively evidencing the parties'
         agreement.

16.      SINGLE AGREEMENT

         Buyer and Seller acknowledge that, and have entered hereinto and will
         enter into each Transaction hereunder in consideration of and in
         reliance upon the fact that, all Transactions hereunder constitute a
         single business and contractual relationship and that each has been
         entered into in consideration of the other Transactions. Accordingly,
         each of Buyer and Seller agrees (i) to perform all of its obligations
         in respect of each Transaction hereunder, and that a default in the
         performance of any such obligations shall constitute a default by it in
         respect of all Transactions hereunder, (ii) that each of them shall be
         entitled to set off claims and apply property held by them in respect
         of any Transaction against obligations owing to them in respect of any
         other Transaction hereunder; (iii) that payments, deliveries, and other
         transfers made by either of them in respect of any Transaction shall be
         deemed to have been made in consideration of payments, deliveries, and
         other transfers in respect of any other Transactions hereunder, and the
         obligations to make any such payments, deliveries, and other transfers
         may be



                                      -36-
<PAGE>   41

         applied against each other and netted and (iv) to promptly provide
         notice to the other after any such set off or application.

17.      NOTICES AND OTHER COMMUNICATIONS

         Except as otherwise expressly permitted by this Repurchase Agreement,
         all notices, requests and other communications provided for herein and
         under the Custodial Agreement (including without limitation any
         modifications of, or waivers, requests or consents under, this
         Repurchase Agreement) shall be given or made in writing (including
         without limitation by telex or telecopy) delivered to the intended
         recipient at the "Address for Notices" specified below its name on the
         signature pages hereof or thereof); or, as to any party, at such other
         address as shall be designated by such party in a written notice to
         each other party. Except as otherwise provided in this Repurchase
         Agreement and except for notices given under Section 3 (which shall be
         effective only on receipt), all such communications shall be deemed to
         have been duly given when transmitted by telecopy or personally
         delivered or, in the case of a mailed notice, upon receipt, in each
         case given or addressed as aforesaid.

18.      ENTIRE AGREEMENT; SEVERABILITY

         This Repurchase Agreement together with the Custodial Agreement
         constitute the entire understanding between Buyer and Seller with
         respect to the subject matter it covers and shall supersede any
         existing agreements between the parties containing general terms and
         conditions for repurchase transactions involving Purchased Assets. By
         acceptance of this Repurchase Agreement, Buyer and Seller acknowledge
         that they have not made, and are not relying upon, any statements,
         representations, promises or undertakings not contained in this
         Repurchase Agreement. Each provision and agreement herein shall be
         treated as separate and independent from any other provision or
         agreement herein and shall be enforceable notwithstanding the
         unenforceability of any such other provision or agreement.

19.      NON-ASSIGNABILITY

         The rights and obligations of the parties under this Repurchase
         Agreement and under any Transaction shall not be assigned by Seller
         without the prior written consent of Buyer. Subject to the foregoing,
         this Repurchase Agreement and any Transactions shall be binding upon
         and shall inure to the benefit of the parties and their respective
         successors and assigns. Nothing in this Repurchase Agreement express or
         implied, shall give to any person, other than the parties to this
         Repurchase Agreement and their successors hereunder, any benefit of any
         legal or equitable right, power, remedy or claim under this Repurchase
         Agreement.

20.      TERMINABILITY

         This Repurchase Agreement may be canceled by either party upon giving
         written notice to the other except that this Repurchase Agreement
         shall, notwithstanding such notice, remain applicable to any
         Transaction then outstanding. Each representation and warranty made or
         deemed to be made by entering into a Transaction, herein or pursuant
         hereto



                                      -37-
<PAGE>   42

         shall survive the making of such representation and warranty, and the
         Buyer shall not be deemed to have waived any Default that may arise
         because any such representation or warranty shall have proved to be
         false or misleading, notwithstanding that the Buyer may have had notice
         or knowledge or reason to believe that such representation or warranty
         was false or misleading at the time the Transaction was made.
         Notwithstanding any such termination or the occurrence of an Event of
         Default, all of the representations and warranties and covenants
         hereunder shall continue and survive. The obligations of the Seller
         under Section 14 hereof shall survive the termination of this
         Repurchase Agreement.

21.      GOVERNING LAW

         THIS AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
         NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES
         THEREOF.

22.      SUBMISSION TO JURISDICTION; WAIVERS
         BUYER AND SELLER HEREBY IRREVOCABLY AND UNCONDITIONALLY:

         (A) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
         PROCEEDING RELATING TO THIS REPURCHASE AGREEMENT AND THE OTHER
         REPURCHASE DOCUMENTS, OR FOR RECOGNITION AND ENFORCEMENT OF ANY
         JUDGMENT IN RESPECT THEREOF, TO THE EXCLUSIVE GENERAL JURISDICTION OF
         THE COURTS OF THE STATE OF NEW YORK, THE FEDERAL COURTS OF THE UNITED
         STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE
         COURTS FROM ANY THEREOF;

         (B) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH
         COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION THAT
         IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR
         PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS
         BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE
         SAME;

         (C) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY
         BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL
         (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS
         ADDRESS SET FORTH UNDER ITS SIGNATURE BELOW OR AT SUCH OTHER ADDRESS OF
         WHICH THE BUYER SHALL HAVE BEEN NOTIFIED; AND

         (D) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE
         OF PROCESS IN ANY OTHER MANNER



                                      -38-
<PAGE>   43

         PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER
         JURISDICTION.

         (E) THE BUYER AND THE SELLER HEREBY IRREVOCABLY WAIVE, TO THE FULLEST
         EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY
         IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS REPURCHASE
         AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR THE TRANSACTIONS
         CONTEMPLATED HEREBY OR THEREBY.

23.      NO WAIVERS, ETC.

         No failure on the part of the Buyer to exercise and no delay in
         exercising, and no course of dealing with respect to, any right, power
         or privilege under any Repurchase Document shall operate as a waiver
         thereof, nor shall any single or partial exercise of any right, power
         or privilege under any Repurchase Document preclude any other or
         further exercise thereof or the exercise of any other right, power or
         privilege. The remedies provided herein are cumulative and not
         exclusive of any remedies provided by law. An Event of Default shall be
         deemed to be continuing unless expressly waived by the Buyer in
         writing.

24.      SERVICING

         (a) The Seller covenants to maintain or cause the servicing of the
         Mortgage Loans, to be maintained in conformity with accepted and
         prudent servicing practices in the industry for the same type of
         mortgage loans as the Mortgage Loans and in a manner at least equal in
         quality to the servicing the Seller provides for mortgage loans which
         it owns. In the event that the preceding language is interpreted as
         constituting one or more servicing contracts, each such servicing
         contract shall terminate automatically upon the earliest of (i) an
         Event of Default, (ii) the date on which all the Repurchase Obligations
         have been paid in full or (iii) the transfer of servicing approved by
         the Seller.

         (b) All remittances from the Servicer under the Servicing Agreement, so
         long as the Buyer shall not have notified the Servicer and the Seller
         that a Default or an Event of Default has occurred and is continuing
         (in which event the Buyer shall be entitled to apply such amounts as
         the Buyer may determine in its sole discretion), shall be applied by
         the Buyer on each Payment Date in the following order of priority:

         (1)   to the payment of the Servicer's servicing fee;

         (2)   to the payment of any Repurchase Obligations then due and
               payable; and;

         (3)   to the extent any amounts remain, to the Seller.

         (c) If the Purchased Mortgage Loans are serviced by the Seller, (i) the
         Seller agrees that Buyer is the owner of all servicing records,
         including but not limited to any and all servicing agreements, files,
         documents, records, data bases, computer tapes, copies of computer
         tapes, proof of insurance coverage, insurance policies, appraisals,
         other closing



                                      -39-
<PAGE>   44

         documentation, payment history records, and any other records relating
         to or evidencing the servicing of Mortgage Loans (the "Servicing
         Records"). The Seller covenants to safeguard such Servicing Records and
         to deliver them promptly to the Buyer or its designee (including the
         Custodian) at Buyer's request following a Default.

         (d) If the servicer of the Mortgage Loans is the Seller or the Servicer
         is an Affiliate of the Seller, the Seller shall provide to the Buyer a
         letter from the Seller or the Servicer, as the case may be, to the
         effect that upon the occurrence of an Event of Default, the Buyer may
         terminate any Servicing Agreement and transfer servicing to its
         designee, at no cost or expense to the Buyer, it being agreed that the
         Seller will pay any and all fees required to terminate the Servicing
         Agreement and to effectuate the transfer of servicing to the designee
         of the Buyer.

         (e) In the event the Seller or its respective Affiliate is servicing
         the Mortgage Loans, the Seller shall, upon one (1) Business Day's prior
         notice, permit the Buyer to inspect the Seller's or its Affiliate's
         servicing facilities, as the case may be, during normal business hours
         for the purpose of satisfying the Buyer that the Seller or its
         Affiliate, as the case may be, has the ability to service the Mortgage
         Loans as provided in this Repurchase Agreement.

25.      PERIODIC DUE DILIGENCE REVIEW

         The Seller acknowledges that the Buyer has the right to perform
         continuing due diligence reviews with respect to the Mortgage Loans,
         for purposes of verifying compliance with the representations,
         warranties and specifications made hereunder, or otherwise, and the
         Seller agrees that upon reasonable (but no less than one (1) Business
         Day's) prior notice unless an Event of Default shall have occurred, in
         which case no notice is required, to the Seller, the Buyer or its
         authorized representatives will be permitted during normal business
         hours to examine, inspect, and make copies and extracts of, the
         Mortgage Files and any and all documents, records, agreements,
         instruments or information relating to such Mortgage Loans in the
         possession or under the control of the Seller and/or the Custodian. The
         Seller also shall make available to the Buyer a knowledgeable financial
         or accounting officer for the purpose of answering questions respecting
         the Mortgage Files and the Mortgage Loans. Without limiting the
         generality of the foregoing, the Seller acknowledges that the Buyer may
         purchase Mortgage Loans from the Seller based solely upon the
         information provided by the Seller to the Buyer in the Asset Medium and
         the representations, warranties and covenants contained herein, and
         that the Buyer, at its option, has the right at any time to conduct a
         partial or complete due diligence review on some or all of the Mortgage
         Loans purchased in a Transaction, including without limitation ordering
         new credit reports and new appraisals on the related Mortgaged
         Properties and otherwise re-generating the information used to
         originate such Mortgage Loan. The Buyer may underwrite such Mortgage
         Loans itself or engage a mutually agreed upon third party underwriter
         to perform such underwriting. The Seller agrees to cooperate with the
         Buyer and any third party underwriter in connection with such
         underwriting, including, but not limited to, providing the Buyer and
         any third party underwriter with access to any and all documents,
         records, agreements, instruments or information relating to such
         Mortgage Loans in the possession, or under the control, of



                                      -40-
<PAGE>   45

         the Seller. The Seller further agrees that the Buyer shall pay all
         out-of-pocket costs and expenses incurred by the Buyer in connection
         with the Buyer's activities pursuant to this Section 25 (collectively,
         the "Due Diligence Costs"); provided that, in the event that a Default
         or an Event of Default shall have occurred, the Seller shall reimburse
         the Buyer for all Due Diligence Costs.

26.      BUYER'S APPOINTMENT AS ATTORNEY-IN-FACT

         (a) The Seller hereby irrevocably constitutes and appoints the Buyer
         and any officer or agent thereof, with full power of substitution, as
         its true and lawful attorney-in-fact with full irrevocable power and
         authority in the place and stead of the Seller and in the name of the
         Seller or in its own name, from time to time in the Buyer's discretion
         from and after the occurrence of a Default with respect to the Seller,
         for the purpose of carrying out the terms of this Repurchase Agreement,
         to take any and all appropriate action and to execute any and all
         documents and instruments which may be reasonably necessary or
         desirable to accomplish the purposes of this Repurchase Agreement, and,
         without limiting the generality of the foregoing, the Seller hereby
         gives the Buyer the power and right, on behalf of the Seller, without
         assent by, but with notice to, the Seller, if an Event of Default shall
         have occurred and be continuing, to do the following:

         (1)   in the name of the Seller, or in its own name, or otherwise, to
               take possession of and endorse and collect any checks, drafts,
               notes, acceptances or other instruments for the payment of moneys
               due under any mortgage insurance or with respect to any other
               Purchased Items and to file any claim or to take any other action
               or proceeding in any court of law or equity or otherwise deemed
               appropriate by the Buyer for the purpose of collecting any and
               all such moneys due under any such mortgage insurance or with
               respect to any other Purchased Items whenever payable;

         (2)   to pay or discharge taxes and Liens levied or placed on or
               threatened against the Purchased Items;

         (3)   (A) to direct any party liable for any payment under any
               Purchased Items to make payment of any and all moneys due or to
               become due thereunder directly to the Buyer or as the Buyer shall
               direct; (B) to ask or demand for, collect, receive payment of and
               receipt for, any and all moneys, claims and other amounts due or
               to become due at any time in respect of or arising out of any
               Purchased Items; (C) to sign and endorse any invoices,
               assignments, verifications, notices and other documents in
               connection with any Purchased Items; (D) to commence and
               prosecute any suits, actions or proceedings at law or in equity
               in any court of competent jurisdiction to collect the Purchased
               Items or any proceeds thereof and to enforce any other right in
               respect of any Purchased Items; (E) to defend any suit, action or
               proceeding brought against the Seller with respect to any
               Purchased Items; (F) to settle, compromise or adjust any suit,
               action or proceeding described in clause (E) above and, in
               connection therewith, to give such discharges or releases as the
               Buyer may deem appropriate; and (G) generally, to sell, transfer,
               pledge and make any agreement with respect to or otherwise deal
               with any



                                      -41-
<PAGE>   46

               Purchased Items as fully and completely as though the Buyer were
               the absolute owner thereof for all purposes, and to do, at the
               Buyer's option and the Seller's expense, at any time, and from
               time to time, all acts and things which the Buyer deems necessary
               to protect, preserve or realize upon the Purchased Items and the
               Buyer's Liens thereon and to effect the intent of this Repurchase
               Agreement, all as fully and effectively as such Seller might do;
               and

         (4)   to direct the actions of the Custodian with respect to the
               Purchased Items under the Custodial Agreement.

         The Seller hereby ratifies all that said attorneys shall lawfully do or
         cause to be done by virtue hereof. This power of attorney is a power
         coupled with an interest and shall be irrevocable.

         (b) The Seller also authorizes the Buyer, if an Event of Default shall
         have occurred with respect to the Seller, from time to time, to
         execute, in connection with any sale provided for in Section 13 hereof,
         any endorsements, assignments or other instruments of conveyance or
         transfer with respect to the Purchased Items.

         (c) The powers conferred on the Buyer hereunder are solely to protect
         the Buyer's interests in the Purchased Items and shall not impose any
         duty upon it to exercise any such powers. The Buyer shall be
         accountable only for amounts that it actually receives as a result of
         the exercise of such powers, and neither it nor any of its officers,
         directors, employees or agents shall be responsible to the Seller for
         any act or failure to act hereunder, except for its or their own gross
         negligence or willful misconduct.

27.      MISCELLANEOUS

         (a) If there is any conflict between the terms of this Repurchase
         Agreement or any Transaction entered into hereunder and the Custodial
         Agreement, this Repurchase Agreement shall prevail.

         (b) This Repurchase Agreement may be executed in any number of
         counterparts, all of which taken together shall constitute one and the
         same instrument, and any of the parties hereto may execute this
         Repurchase Agreement by signing any such counterpart.

         (c) The captions and headings appearing herein are for included solely
         for convenience of reference and are not intended to affect the
         interpretation of any provision of this Repurchase Agreement.

         (d) The Seller hereby acknowledges that:

         (1)   it has been advised by counsel in the negotiation, execution and
               delivery of this Repurchase Agreement and the other Repurchase
               Documents;

         (2)   the Buyer has no fiduciary relationship to the Seller; and

         (3)   no joint venture exists between the Buyer and the Seller.



                                      -42-
<PAGE>   47

28.      CONFIDENTIALITY

         The Buyer and Seller hereby acknowledge and agree that all written or
         computer-readable information provided by one party to the other
         regarding the terms set forth in any of the Repurchase Documents or the
         Transactions contemplated thereby (the "Confidential Terms") shall be
         kept confidential and shall not be divulged to any party without the
         prior written consent of such other party except to the extent that (i)
         it is necessary to do so in working with legal counsel, auditors,
         taxing authorities or other governmental agencies or regulatory bodies
         or in order to comply with any applicable federal or state laws, (ii)
         any of the Confidential Terms are in the public domain other than due
         to a breach of this covenant, or (iii) in the Event of a Default the
         Buyer determines such information to be necessary or desirable to
         disclose in connection with the marketing and sales of the Purchased
         Assets or otherwise to enforce or exercise the Buyer's rights
         hereunder. The provisions set forth in this Section 30 shall survive
         the termination of this Repurchase Agreement for a period of one year
         following such termination.

29.      CONFLICTS

         In the event of any conflict between the terms of this Repurchase
         Agreement, any other Repurchase Document and any Confirmation, the
         documents shall control in the following order of priority: first, the
         terms of the Confirmation shall prevail, then the terms of this
         Repurchase Agreement shall prevail, and then the terms of the
         Repurchase Documents shall prevail.

30.      MAXIMUM CHARGES

         In no event whatsoever shall interest and other charges charged
         hereunder for the use, forebearance or detention of money exceed the
         highest rate permissible under law which a court of competent
         jurisdiction shall, in a final determination, deem applicable hereto.
         In the event that the Purchaser has received interest and other charges
         hereunder in excess of the highest rate permissible hereto, such excess
         amount shall be first applied to any unpaid principal balance owned by
         the Seller, and if the then remaining excess amount is greater than the
         previously unpaid principal balance, the Purchaser shall promptly
         refund such excess amount to the Seller and the provisions hereof shall
         be deemed amended to provide for such permissible rate.

                      [THIS SPACE INTENTIONALLY LEFT BLANK]



                                      -43-


<PAGE>   48


         IN WITNESS WHEREOF, the parties have entered into this Repurchase
Agreement as of the date set forth above.

                              BUYER:

                              DLJ MORTGAGE CAPITAL, INC.

                              By: /s/ Karey Geddes
                                 ------------------
                                 Title:  Vice President

                              Address for Notices:

                                 DLJ Mortgage Capital, Inc.
                                 277 Park Avenue
                                 New York, New York 10172
                                 Attention: Shannon Smith
                                 Telecopier No.: (212) 892-5434
                                 Telephone No.: (212) 892-3315

                              With a copy to:
                                 DLJ Mortgage Capital, Inc.
                                 277 Park Avenue
                                 New York, New York 10172

                                 Attention: Tim Porter, Esq.
                                 Telecopier No.: (212) 892-3332
                                 Telephone No.: (212) 892-2689


<PAGE>   49

                              SELLER:

                              STARNET MORTGAGE, INC.

                              By: /s/ Kenneth F. Urbanus
                                 -----------------------
                                 Title:  President

                              Address for Notices:

                                 StarNet Mortgage, Inc.
                                 17311 North Dallas Parkway
                                 Suite 350
                                 Dallas, Texas 75248

                                 Attention: Kenneth F. Urbanus
                                 Telecopier No.: (972) 818-3264
                                 Telephone No: (972) 818-1212

                              With a copy (which shall not constitute notice)
                                 to:

                                 Gardere & Wynne, L.L.P.
                                 3000 Thanksgiving Tower
                                 1601 Elm Street
                                 Dallas, Texas  75201-4761

                                 Attention: I. Bobby Majumder, Esq.
                                 Telecopier No.: (214) 999-4667
                                 Telephone No.: (214) 999-3000




<PAGE>   50



                                                                      SCHEDULE 1

                REPRESENTATIONS AND WARRANTIES RE: MORTGAGE LOANS

                       Part I: Residential Mortgage Loans

The Seller represents and warrants to the Buyer, with respect to each Mortgage
Loan, that as of the Purchase Date for the purchase of any Purchased Assets by
the Buyer from the Seller and as of the date of this Repurchase Agreement and
any Transaction hereunder and at all times while the Repurchase Documents and
any Transaction hereunder is in full force and effect. For purposes of this
Schedule 1 and the representations and warranties set forth herein, a breach of
a representation or warranty shall be deemed to have been cured with respect to
a Mortgage Loan if and when the Seller has taken or caused to be taken action
such that the event, circumstance or condition that gave rise to such breach no
longer adversely affects such Mortgage Loan.

         (1)      Mortgage Loans as Described. The information set forth in the
                  Asset Medium is complete, true and correct;

         (2)      Payments Current. All payments required to be made up to the
                  related Purchase Date for the Mortgage Loan under the terms of
                  the Mortgage Note have been made and credited. No payment
                  required under the Mortgage Loan is delinquent nor has any
                  payment under the Mortgage Loan been delinquent for more than
                  30 days more than once in the 12 months preceding the related
                  Purchase Date. The first and second Monthly Payments shall be
                  made with respect to the Mortgage Loan on or within 30 days of
                  its Due Date, all in accordance with the terms of the related
                  Mortgage Note;

         (3)      No Outstanding Charges. There are no defaults in complying
                  with the terms of the Mortgage, and all taxes, governmental
                  assessments, insurance premiums, water, sewer and municipal
                  charges, leasehold payments or ground rents which previously
                  became due and owing have been paid, or an escrow of funds has
                  been established in an amount sufficient to pay for every such
                  item which remains unpaid and which has been assessed but is
                  not yet due and payable. Except for (A) payments in the nature
                  of escrow payments and (B) interest accruing from the date of
                  the Mortgage Note or date of disbursement of the Mortgage
                  proceeds, whichever is greater to the day which precedes by
                  one month the Due Date of the first installment of principal
                  and interest, including, without limitation, taxes and
                  insurance payments, the Seller has not advanced funds, or
                  induced, solicited or knowingly received any advance of funds
                  by a party other than the Mortgagor, directly or indirectly,
                  for the payment of any amount required under the Mortgage
                  Loan, except for interest accruing from the date of the
                  Mortgage Note or date of disbursement of the Mortgage Loan
                  proceeds, whichever is earlier, to the day which precedes by
                  one month the Due Date of the first installment of principal
                  and interest;

         (4)      Original Terms Unmodified. The terms of the Mortgage Note and
                  Mortgage have not been impaired, waived, altered or modified
                  in any respect, except by a written



                                    Sch. 1-1

<PAGE>   51

                  instrument which has been recorded, if necessary to protect
                  the interests of the Buyer and which has been delivered to the
                  Buyer. The substance of any such waiver, alteration or
                  modification has been approved by the title insurer, to the
                  extent required by the policy, and its terms are reflected on
                  the Asset Medium. No Mortgagor has been released, in whole or
                  in part, except in connection with an assumption agreement
                  approved by the title insurer, to the extent required by the
                  policy, and which assumption agreement is part of the Mortgage
                  File delivered to the Buyer and the terms of which are
                  reflected in the Asset Medium;

         (5)      No Defenses. The Mortgage Loan is not subject to any right of
                  rescission, set-off, counterclaim or defense, including
                  without limitation the defense of usury, nor will the
                  operation of any of the terms of the Mortgage Note or the
                  Mortgage, or the exercise of any right thereunder, render
                  either the Mortgage Note or the Mortgage unenforceable, in
                  whole or in part, or subject to any right of rescission,
                  set-off, counterclaim or defense, including without limitation
                  the defense of usury, and no such right of rescission,
                  set-off, counterclaim or defense has been asserted with
                  respect thereto, and no Mortgagor was a debtor in any state or
                  federal bankruptcy or insolvency proceeding at the time the
                  Mortgage Loan was originated;

         (6)      Hazard Insurance. Pursuant to the terms of the Mortgage, all
                  buildings or other improvements upon the Mortgaged Property
                  are insured by a generally acceptable insurer against loss by
                  fire, hazards of extended coverage and such other hazards as
                  are customary in the area where the Mortgaged Property is
                  located pursuant to insurance policies conforming to the
                  requirements of Fannie Mae and Freddie Mac in an amount not
                  less than the greatest of (i) 100% of the replacement cost of
                  all improvements to the Mortgaged Property, (ii) either (A)
                  the outstanding principal balance of the Mortgage Loan with
                  respect to each First Lien Mortgage Loan or (B) with respect
                  to each Second Lien Mortgage Loan, the sum of the outstanding
                  principal balance of the First Lien Mortgage Loan and the
                  outstanding principal balance of the Second Lien Mortgage
                  Loan, or (iii) the amount necessary to avoid the operation of
                  any co-insurance provisions with respect to the Mortgaged
                  Property, and consistent with the amount that would have been
                  required as of the date of origination in accordance with the
                  requirements of Fannie Mae and Freddie Mac. If upon
                  origination of the Mortgage Loan, the Mortgaged Property was
                  in an area identified in the Federal Register by the Federal
                  Emergency Management Agency as having special flood hazards
                  (and such flood insurance has been made available) a flood
                  insurance policy meeting the requirements of the current
                  guidelines of the Federal Flood Insurance Administration is in
                  effect which policy conforms to the requirements of Fannie Mae
                  and Freddie Mac. All individual insurance policies contain a
                  standard mortgagee clause naming the Seller and its successors
                  and assigns as mortgagee, and all premiums thereon have been
                  paid. The Mortgage obligates the Mortgagor thereunder to
                  maintain the hazard insurance policy at the Mortgagor's cost
                  and expense, and on the Mortgagor's failure to do so,
                  authorizes the holder of the Mortgage to obtain and maintain
                  such insurance at such Mortgagor's cost and expense, and to
                  seek reimbursement therefor from the Mortgagor. Where




<PAGE>   52

                  required by state law or regulation, the Mortgagor has been
                  given an opportunity to choose the carrier of the required
                  hazard insurance, provided the policy is not a "master" or
                  "blanket" hazard insurance policy covering the common
                  facilities of a planned unit development. The hazard insurance
                  policy is the valid and binding obligation of the insurer, is
                  in full force and effect, and will be in full force and effect
                  and inure to the benefit of the Buyer upon the consummation of
                  the transactions contemplated by this Agreement. The Seller
                  has not engaged in, and has no knowledge of the Mortgagor's or
                  any subservicer's having engaged in, any act or omission which
                  would impair the coverage of any such policy, the benefits of
                  the endorsement provided for herein, or the validity and
                  binding effect of either, including, without limitation, no
                  unlawful fee, commission, kickback or other unlawful
                  compensation or value of any kind has been or will be
                  received, retained or realized by any attorney, firm or other
                  person or entity, and no such unlawful items have been
                  received, retained or realized by the Seller;

         (7)      Compliance with Applicable Laws. Any and all requirements of
                  any federal, state or local law including, without limitation,
                  usury, truth-in-lending, real estate settlement procedures,
                  consumer credit protection, equal credit opportunity or
                  disclosure laws applicable to the Mortgage Loan have been
                  complied with, and the Seller shall maintain in its
                  possession, available for the Buyer's inspection, evidence of
                  compliance with all such requirements;

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

         (9)      Location and Type of Mortgaged Property. The Mortgaged
                  Property is a fee simple property located in the state
                  identified in the Asset Medium except that with respect to
                  real property located in jurisdictions in which the use of
                  leasehold estates for residential properties is a
                  widely-accepted practice, the mortgaged property may be a
                  leasehold estate and consists of a single parcel of real
                  property with a detached single family residence erected
                  thereon, or a two- to four-family dwelling, or an individual
                  residential condominium unit in a low-rise condominium
                  project, or an individual unit in a planned unit development,
                  and that no residence or dwelling is (i) a mobile home or (ii)
                  a manufactured dwelling unless such manufactured dwelling is
                  (x) permanently affixed to the Mortgaged Property, (y)
                  considered real estate under applicable local law and (z)
                  conforms to all Fannie Mae requirements. No portion of the
                  Mortgaged Property is used for commercial purposes;

         (10)     Valid First or Second Lien. The Mortgage is a valid,
                  subsisting enforceable and perfected first or second lien on
                  the Mortgaged Property, including all buildings



<PAGE>   53

                  on the Mortgaged Property and all installations and
                  mechanical, electrical, plumbing, heating and air conditioning
                  systems located in or annexed to such buildings, and all
                  additions, alterations and replacements made at any time with
                  respect to the foregoing. The lien of the Mortgage is subject
                  only to:

                                    (A) the lien of current real property taxes
                           and assessments not yet due and payable;

                                    (B) covenants, conditions and restrictions,
                           rights of way, easements and other matters of the
                           public record as of the date of recording acceptable
                           to mortgage lending institutions generally and
                           specifically referred to in the lender's title
                           insurance policy delivered to the originator of the
                           Mortgage Loan and (i) referred to or to otherwise
                           considered in the appraisal made for the originator
                           of the Mortgage Loan or (ii) which do not adversely
                           affect the appraised value of the Mortgaged Property
                           set forth in such appraisal;

                                    (C) other matters to which like properties
                           are commonly subject which do not materially
                           interfere with the benefits of the security intended
                           to be provided by the Mortgage or the use, enjoyment,
                           value or marketability of the related Mortgaged
                           Property; and

                                    (D) with respect to each Second Lien
                           Mortgage a prior mortgage lien on the Mortgaged
                           Property.

Any security agreement, chattel mortgage or equivalent document related to and
delivered in connection with the Mortgage Loan establishes and creates a valid,
subsisting and enforceable (A) first lien and first priority security interest
with respect to each First Lien Mortgage Loan, or (B) second lien and second
priority security interest with respect to each Second Lien Mortgage Loan, in
either case, on the property described therein and the Seller has full right to
sell and assign the same to the Buyer;

         (11)     Validity of Mortgage Loan Documents. The Mortgage Note and the
                  Mortgage are genuine, and each is the legal, valid and binding
                  obligation of the maker thereof enforceable in accordance with
                  its terms. All parties to the Mortgage Note and the Mortgage
                  and any other related agreement had legal capacity to enter
                  into the Mortgage Loan and to execute and deliver the Mortgage
                  Note and the Mortgage and any other related agreement, and the
                  Mortgage Note and the Mortgage and any other related agreement
                  have been duly and properly executed by such parties. The
                  documents, instruments and agreements submitted for loan
                  underwriting were not falsified and contain no untrue
                  statement of material fact or omit to state a material fact
                  required to be stated therein or necessary to make the
                  information and statements therein not misleading. No fraud,
                  error, negligence, misrepresentation or omission of fact with
                  respect to a Mortgage Loan has taken place on the part of the
                  Seller or the Mortgagor or any other party involved in the
                  origination or servicing of the Mortgage Loan. The Seller has
                  reviewed all of the documents constituting the Servicing File
                  and has made such inquiries as it deems



<PAGE>   54

                  necessary to make and confirm the accuracy of the
                  representations set forth herein;

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

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

         (14)     Doing Business. All parties which have had any interest in the
                  Mortgage Loan, whether as mortgagee, assignee, pledgee or
                  otherwise, are (or, during the period in which they held and
                  disposed of such interest, were) (1) in compliance with any
                  and all applicable licensing requirements of the laws of the
                  state wherein the Mortgaged Property is located, and (2)
                  organized under the laws of such state, or (3) qualified to do
                  business in such state, or (4) federal savings and loan
                  associations or national banks having principal offices in
                  such state, or (5) not doing business in such state;

         (15)     Title Insurance. The Mortgage Loan is covered by an ALTA
                  lender's title insurance policy or other generally acceptable
                  form of policy of insurance acceptable to Fannie Mae or
                  Freddie Mac, issued by a title insurer acceptable to Fannie
                  Mae or Freddie Mac and qualified to do business in the
                  jurisdiction where the Mortgaged Property is located, insuring
                  the Seller, its successors and assigns, as to the first or
                  second priority lien of the Mortgage in the original principal
                  amount of the Mortgage Loan, and against any loss by reason of
                  the invalidity or unenforceability of the lien resulting from
                  the provisions of the Mortgage providing for adjustment in the
                  Mortgage Interest Rate and Monthly Payment, subject only to
                  the exceptions contained in clauses (A), (B), and (C), and
                  with respect to each Second Lien Mortgage Loan clause (D) of
                  Paragraph (10) of this Schedule I. Where required by state law
                  or regulation, the Mortgagor has been given the opportunity to
                  choose the carrier of the required mortgage title insurance.
                  Additionally, such lender's title insurance policy
                  affirmatively insures ingress and egress, and against
                  encroachments by or upon the Mortgaged Property or any
                  interest therein. The Seller is the sole insured of such
                  lender's title insurance policy, and such lender's title
                  insurance policy is in full force and effect and will be in
                  force and effect upon the consummation of the transactions



<PAGE>   55

                  contemplated by this Agreement. No claims have been made under
                  such lender's title insurance policy, and no prior holder of
                  the Mortgage, including the Seller, has done, by act or
                  omission, anything which would impair the coverage of such
                  lender's title insurance policy including without limitation,
                  no unlawful fee, commission, kickback or other unlawful
                  compensation or value of any kind has been or will be
                  received, retained or realized by any attorney, firm or other
                  person or entity, and no such unlawful items have been
                  received, retained or realized by the Seller;

         (16)     No Defaults. There is no default, breach, violation or event
                  of acceleration existing under the Mortgage or the Mortgage
                  Note and no event which, with the passage of time or with
                  notice and the expiration of any grace or cure period, would
                  constitute a default, breach, violation or event of
                  acceleration, and neither the Seller nor its predecessors have
                  waived any default, breach, violation or event of
                  acceleration. With respect to each Second Lien Mortgage Loan,
                  (i) the prior mortgage is in full force and effect, (ii) there
                  is no default, breach, violation or event of acceleration
                  existing under such prior mortgage or the related mortgage
                  note, (iii) no event which, with the passage of time or with
                  notice and the expiration of any grace or cure period, would
                  constitute a default, breach, violation or event of
                  acceleration thereunder, and either (A) the prior mortgage
                  contains a provision which allows or (B) applicable law
                  requires, the mortgagee under the Second Lien Mortgage Loan to
                  receive notice of, and affords such mortgagee an opportunity
                  to cure any default by payment in full or otherwise under the
                  prior mortgage;

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

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

         (19)     Origination: Payment Terms. At the time the Mortgage Loan was
                  originated, the originator was a mortgagee approved by the
                  Secretary of Housing and Urban Development pursuant to
                  Sections 203 and 211 of the National Housing Act or a savings
                  and loan association, a savings bank, a commercial bank or
                  similar banking institution which is supervised and examined
                  by a Federal or State authority. No Mortgage Loan contains
                  terms or provisions which would result in negative
                  amortization. The Mortgage Note is payable in equal monthly
                  installments of principal and interest, which installments of
                  interest are subject to change due to adjustments to the
                  Mortgage Interest Rate, with interest calculated



<PAGE>   56

                  and payable in arrears, sufficient to amortize the Mortgage
                  Loan fully by the stated maturity date, over an original term
                  of not more than thirty years from commencement of
                  amortization;

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

         (21)     Conformance with Underwriting Guidelines. The Mortgage Loan
                  was underwritten in accordance with the Seller's underwriting
                  guidelines in effect at the time the Mortgage Loan was
                  originated, a copy of which underwriting guidelines are
                  attached as Exhibit II hereto. The Mortgage Note and Mortgage
                  are on forms acceptable to Fannie Mae or Freddie Mac;

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

         (23)     No Additional Collateral. The Mortgage Note is not and has not
                  been secured by any collateral except the lien of the
                  corresponding Mortgage and the security interest of any
                  applicable security agreement or chattel mortgage referred to
                  in Paragraph (10) above;

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

         (25)     Acceptable Investment. The Mortgagor is not in bankruptcy or
                  insolvent and the Seller has no knowledge of any circumstances
                  or conditions with respect to the Mortgage, the Mortgaged
                  Property, the Mortgagor or the Mortgagor's credit standing
                  that can reasonably be expected to cause private institutional
                  investors to regard the Mortgage Loan as an unacceptable
                  investment, cause the Mortgage



<PAGE>   57

                  Loan to become delinquent, or adversely affect the value or
                  marketability of the Mortgage Loan;

         (26)     Delivery of Mortgage Loan Documents. The Mortgage Note, the
                  Mortgage, the Assignment of Mortgage and any other documents
                  required to be delivered by the Seller under this Agreement
                  have been delivered to the Buyer or its Custodian. The Seller
                  is in possession of a complete, true and accurate Mortgage
                  File in compliance with Section 2 of the Custodial Agreement,
                  except for such documents the originals of which have been
                  delivered to the Buyer or its Custodian;

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

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

         (29)     No Buydown Provisions; No Graduated Payments or Contingent
                  Interests. The Mortgage Loan does not contain provisions
                  pursuant to which Monthly Payments are paid or partially paid
                  with funds deposited in any separate account established by
                  the Seller, the Mortgagor or anyone on behalf of the
                  Mortgagor, or paid by any source other than the Mortgagor nor
                  does it contain any other similar provisions currently in
                  effect which may constitute a "buydown" provision. The
                  Mortgage Loan is not a graduated payment mortgage loan and the
                  Mortgage Loan does not have a shared appreciation or other
                  contingent interest feature;

         (30)     Consolidation of Future Advances. Any future advances made
                  prior to the related Purchase Date have been consolidated with
                  the outstanding principal amount secured by the Mortgage, and
                  the secured principal amount, as consolidated, bears a single
                  interest rate and single repayment term. The lien of the
                  Mortgage securing the consolidated principal amount is
                  expressly insured as having first or second lien priority by a
                  title insurance policy, an endorsement to the policy insuring
                  the mortgagee's consolidated interest or by other title
                  evidence acceptable to Fannie Mae and Freddie Mac. The
                  consolidated principal amount does not exceed the original
                  principal amount of the Mortgage Loan;

         (31)     Mortgaged Property Undamaged. There is no proceeding pending
                  or threatened for the total or partial condemnation of the
                  Mortgaged Property. The Mortgaged Property is undamaged by
                  waste, fire, earthquake or earth movement, windstorm, flood,
                  tornado or other casualty so as to affect adversely the value
                  of the Mortgaged Property as security for the Mortgage Loan or
                  the use for which the premises were intended;



<PAGE>   58

         (32)     Collection Practices; Escrow Deposits; Adjustable Rate
                  Mortgage Loan Adjustments. The origination and collection
                  practices used with respect to the Mortgage Loan have been in
                  accordance with Accepted Servicing Practices and in all
                  respects in compliance with all applicable laws and
                  regulations. With respect to escrow deposits and Escrow
                  Payments (other than with respect to Second Lien Mortgage
                  Loans for which the mortgagee under the prior mortgage lien is
                  collecting Escrow Payments), all such payments are in the
                  possession of the Seller and there exist no deficiencies in
                  connection therewith for which customary arrangements for
                  repayment thereof have not been made. All Escrow Payments have
                  been collected in full compliance with state and federal law.
                  An escrow of funds is not prohibited by applicable law and has
                  been established in an amount sufficient to pay for every item
                  which remains unpaid and which has been assessed but is not
                  yet due and payable. No escrow deposits or Escrow Payments or
                  other charges or payments due the Seller have been capitalized
                  under the Mortgage or the Mortgage Note. All Mortgage Interest
                  Rate adjustments have been made in strict compliance with
                  state and federal law and the terms of the related Mortgage
                  Note. Any interest required to be paid pursuant to state and
                  local law has been properly paid and credited;

         (33)     Appraisal. The Seller has delivered to the Buyer an appraisal
                  of the Mortgaged Property signed prior to the approval of the
                  Mortgage application by a appraiser qualified under Fannie Mae
                  and Freddie Mac guidelines who (i) is licensed in the state
                  where the Mortgaged Property is located, (ii) has no interest,
                  direct or indirect, in the Mortgaged Property or in any Loan
                  or the security therefor, and (iii) does not receive
                  compensation that is affected by the approval or disapproval
                  of the Loan. The appraisal shall have been made within one
                  hundred and eighty (180) days of the origination of the Loan,
                  be completed in compliance with the Uniform Standards of
                  Professional Appraisal Practice, any additional requirements
                  set forth for appraisals in Section 10 of the Repurchase
                  Agreement, and all applicable Federal and state laws and
                  regulations. If the appraisal was made more than one hundred
                  and twenty (120) days before the origination of the Loan, the
                  Seller shall have received and deliver to the purchase a
                  recertification of the appraisal.

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

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



<PAGE>   59

         (36)     No Construction Loans No Mortgage Loan was made in connection
                  with (a) facilitating the trade-in or exchange of a Mortgaged
                  Property or (b) the construction or rehabilitation of a
                  Mortgaged Property, unless the Mortgage Loan is a
                  construction-to-permanent mortgage loan listed on the Asset
                  Medium which has been fully disbursed, all construction work
                  is complete and a completion certificate has been issued;

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

         (38)     Regarding the Mortgagor. The Mortgagor is one or more natural
                  persons and/or trustees for an Illinois land trust or a
                  trustee under a "living trust" and such "living trust" is in
                  compliance with Fannie Mae guidelines for such trusts;

         (39)     Mortgagor Acknowledgment. The Mortgagor has executed a
                  statement to the effect that the Mortgagor has received all
                  disclosure materials required by applicable law with respect
                  to the making of Adjustable Rate Mortgage Loans. The Seller
                  shall maintain such statement in the Mortgage File;

         (40)     Riegle Act. None of the Mortgage Loans are classified as "high
                  cost" loans under the Home Ownership and Equity Protection Act
                  of 1994;

         (41)     Texas Home Equity Loans. With respect to any Loan which is a
                  Texas Home Equity Loan, any and all requirements of Section
                  50, Article XVI of the Texas Constitution applicable to Texas
                  Home Equity Loans which were in effect at the time of the
                  origination of the Mortgage Loan have been complied with.
                  Specifically, without limiting the generality of the
                  foregoing,

                           (a) all fees paid by the owner of the Mortgaged
                           Property or such owner's spouse, to any person, that
                           were necessary to originate, evaluate, maintain,
                           record, insure or service the Mortgage Loan are
                           reflected in the closing statement for such Mortgage
                           Loan;

                           (b) the Mortgage Loan was closed only at the office
                           of the mortgage lender, an attorney at law, or a
                           title company;

                           (c) the Mortgagee has not been found by a federal
                           regulatory agency to have engaged in the practice of
                           refusing to make loans because the applicants for the
                           loans reside or the property proposed to secure the
                           loans is located in a certain area;



<PAGE>   60

                           (d) the owner of the Mortgaged Property was not
                           required to apply the proceeds of the Loan to repay
                           another debt except debt secured by the Mortgaged
                           Property or debt to a lender other than the
                           Mortgagee;


                           (e) the owner of the Mortgaged Property did not sign
                           any documents or instruments relating to the Loan in
                           which blanks were left to be filled in; and

                           (f) if discussions between the Mortgagee and the
                           Seller were conducted primarily in a language other
                           than English, the Mortgagee provided to the owner of
                           the Mortgaged Property, prior to closing, a copy of
                           the notice required by Section 50(g), Article XVI of
                           the Texas Constitution translated into the written
                           language in which the discussions were conducted.

All notices, acknowledgments and disclosure statements required by Section 50,
Article XVI of the Texas Constitution applicable to Texas Home Equity Loans are
contained in the Mortgage File for each such Mortgage Loan.

         (42)     Insurance. The Seller has caused or will cause to be performed
                  any and all acts required to preserve the rights and remedies
                  of the Buyer in any insurance policies applicable to the
                  Mortgage Loans including, without limitation, any necessary
                  notifications of insurers, assignments of policies or
                  interests therein, and establishments of coinsured, joint loss
                  payee and mortgagee rights in favor of the Buyer;

         (43)     Simple Interest Mortgage Loans. None of the Mortgage Loans are
                  simple interest Mortgage Loans;

         (44)     Prepayment Fee. With respect to each Mortgage Loan that has a
                  Prepayment Fee feature, each such Prepayment Fee is
                  enforceable and will be enforced by the Seller for the benefit
                  of Buyer, and each Prepayment Fee is permitted pursuant to
                  federal, state and local law. Each such Prepayment Fee is in
                  an amount equal to the maximum amount permitted under
                  applicable law;

         (45)     Flood Certification Contract. The Seller shall have obtained a
                  life of loan, transferable flood certification contract for
                  each Mortgage Loan and shall assign all such contracts to the
                  Buyer;

         (46)     CLTV; Equity LTV. No Second Lien Mortgage Loan has a CLTV in
                  excess of 100%. No Mortgage Loan has an Equity LTV in excess
                  of 125%; and

         (47)     Consent. Either (a) no consent for the Second Lien Mortgage
                  Loan is required by the holder of the related first lien or
                  (b) such consent has been obtained and is contained in the
                  Mortgage File.

         (48)     "Takeout Commitment" Each Takeout Commitment constitutes a
                  legal, valid and binding obligation of Seller and the Takeout
                  Investor (subject to bankruptcy laws



<PAGE>   61

                  and other similar laws of general application affecting rights
                  of creditors and subject to the application of the rules of
                  equity, including those relating to specific performance),
                  respectively, enforceable against Seller and the Takeout
                  Investor, respectively, in accordance with its terms.


<PAGE>   62


                             Part II: Defined Terms

         In addition to terms defined elsewhere in the Repurchase Agreement, the
following terms shall have the following meanings when used in this Schedule 1:

         "Accepted Servicing Practices" shall mean, with respect to any Mortgage
Loan, those mortgage servicing practices of prudent mortgage lending
institutions which service mortgage loans of the same type as such Mortgage
Loans in the jurisdiction where the related Mortgaged Property is located.

         "Adjustable Rate Mortgage Loan" shall mean an Adjustable Rate Mortgage
Loan purchased pursuant to this Agreement.

         "Combined Loan-to-Value Ratio or CLTV" shall mean with respect to any
Second Lien Mortgage Loan, the sum of the original principal balance of such
Mortgage Loan and the outstanding principal balance of any related first lien as
of the date of origination of the Mortgage Loan, divided by the lesser of the
Appraised Value of the Mortgage Property as of the origination date or the
purchase price of the Mortgaged Property.

         "Due Date" shall mean the day on which the Monthly Payment is due on a
Mortgage Loan, exclusive of any days of grace.

         "Equity Loan-to-Value Ratio or Equity LTV" shall mean with respect to
any Second Lien Mortgage Loan, the original principal balance of such Second
Lien Mortgage Loan, divided by the Equity.

         "Escrow Payments" shall mean with respect to any Mortgage Loan, the
amounts constituting ground rents, taxes, assessments, water charges, sewer
rents, municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and other payments as may be required to be
escrowed by the Mortgagor with the Mortgagee pursuant to the terms of any
Mortgage Note, Mortgage or any other document.

         "First Lien Mortgage Loan" shall mean a Mortgage Loan secured by a
first lien Mortgage on the related Mortgaged Property.

         "Fixed Rate Mortgage Loan" shall mean a fixed rate Mortgage Loan
purchased pursuant to this Repurchase Agreement.

         "Interest Rate Adjustment Date" shall mean with respect to each
Adjustable Rate Mortgage Loan, the date set forth in the related Mortgage Note
on which the Mortgage Interest Rate on the Mortgage Loan is adjusted in
accordance with the terms of the Mortgage Note.

         "Maximum Mortgage Interest Rate" shall mean with respect to each
Adjustable Rate Mortgage Loan, a rate that is set forth on the related Asset
Medium and in the related Mortgage Note and is the maximum interest rate to
which the Mortgage Interest Rate on such Mortgage Loan may be increased on any
Adjustment Date.




<PAGE>   63

         "Minimum Mortgage Interest Rate" shall mean with respect to each
Adjustable Rate Mortgage Loan, a rate that is set forth on the related Asset
Medium and in the related Mortgage Note and is the minimum interest rate to
which the Mortgage Interest Rate on such Mortgage Loan may be decreased on any
Adjustment Date.

         "Monthly Payment" shall mean with respect to any Mortgage Loan, the
scheduled combined payment of principal and interest payable by a Mortgagor
under the related Mortgage Note on each Due Date.

         "Mortgage Interest Rate" shall mean with respect to each Mortgage Loan,
the annual rate at which interest accrues on such Mortgage Loan from time to
time in accordance with the provisions of the related Mortgage Note.

         "Primary Mortgage Insurance Policy" shall mean each primary policy of
mortgage insurance represented to be in effect pursuant to Paragraph (35) of
this Schedule I.




<PAGE>   64


                                                                       EXHIBIT I
                           FORM OF CONFIRMATION LETTER
                                           [                 ], 2000


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

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

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

---------------------------
Attention:
         Confirmation No.:
                          ----------------------

Ladies/Gentlemen:

         This letter confirms our oral agreement to purchase from you the
Mortgage Loans listed in Appendix I hereto, pursuant to the Master Repurchase
Agreement governing purchases and sales of Mortgage Loans between us, dated as
of _______ _ , 2000 (the "Agreement"), as follows. All capitalized terms herein
shall have the meaning as provided in the Agreement.

         Purchase Date:

         Mortgage Loans to be Purchased: See Appendix I hereto.
         [Appendix I to Confirmation Letter will list Mortgage Loans]

         Aggregate Principal Amount of Purchased Mortgage Loans:

         Purchase Price:

         Pricing Spread:

         Repurchase Date:

         Repurchase Price:

         Margin Percentage:

         Names and addresses for communications:

         Buyer:
            DLJ Mortgage Capital, Inc.
            DLJ Mortgage Capital, Inc.
            277 Park Avenue
            New York, New York 10172



<PAGE>   65

            Attention: Shannon Smith
            Telecopier No.: (212) 892-5434
            Telephone No.: (212) 892-3315

         With a copy to:

            DLJ Mortgage Capital, Inc.
            277 Park Avenue
            New York, New York 10172

            Attention: Tim Porter, Esq.
            Telecopier No.: (212) 892-3332
            Telephone No.: (212) 892-2689

         Seller:

            StarNet Mortgage, Inc.
            17311 North Dallas Parkway
            Suite 350
            Dallas, Texas 75248

            Attention: Kenneth F. Urbanus
            Telecopier No.: (972) 818-3264
            Telephone No: (972) 818-1212

         With a copy (which shall not constitute notice) to:

            Gardere & Wynne, L.L.P.
            3000 Thanksgiving Tower
            1601 Elm Street
            Dallas, Texas  75201-4761

            Attention: I. Bobby Majumder, Esq.
            Telecopier No.: (214) 999-4667
            Telephone No.: (214) 999-3000

         Seller's wire transfer instructions for this transaction:

                  [BANK]
                  ABA #___________________
                  Account Name:_____________
                  A/C #:____________________
                  Attention:



<PAGE>   66

                              DLJ MORTGAGE CAPITAL, INC.


                              By:
                                 -----------------------------
                                 Name:
                                 Title:

Agreed and Acknowledged:


STARNET MORTGAGE, INC.

By:
   ----------------------------
   Name:
   Title:




<PAGE>   67


                                                                      EXHIBIT II

                             UNDERWRITING GUIDELINES

                              [ON FILE WITH BUYER]







<PAGE>   68


                                                                     EXHIBIT III

                                FORM OF OPINIONS

DLJ Mortgage Capital, Inc.
[Address]

Dear Sirs and Mesdames:

You have requested our opinion as counsel to [____________], a [___________]
organized and existing under the laws of [________] (the "Seller"), with
respect to certain matters in connection with that certain Master Repurchase
Agreement governing purchases and sales of certain Mortgage Loans, dated
_______, 2000 (the "Repurchase Agreement"), by and between the Seller and DLJ
Mortgage Capital, Inc. (the "Buyer"). The Master Repurchase Agreement and the
Supplemental Terms and Conditions are hereinafter collectively referred to as
the "Governing Agreements." Capitalized terms not otherwise defined herein have
the meanings set forth in the Repurchase Agreement.


         [We] [I] have examined the following documents:

         1.       the Repurchase Agreement;
         2.       unfiled copies of the financing statements listed on Schedule
                  1 (collectively, the "Financing Statements") naming the Seller
                  as Debtor and the Buyer as Secured Party and describing the
                  Purchased Items (as defined in the Master Repurchase
                  Agreement) as to which security interests may be perfected by
                  filing under the Uniform Commercial Code of the States listed
                  on Schedule 1 (the "Filing Collateral"), which I understand
                  will be filed in the filing offices listed on Schedule 1 (the
                  "Filing Offices");
         3.       the reports listed on Schedule 2 as to UCC financing
                  statements (collectively, the "UCC Search Report");
         4.       such other documents, records and papers as we have deemed
                  necessary and relevant as a basis for this opinion.

         To the extent [we] [I] have deemed necessary and proper, [we] [I] have
relied upon the representations and warranties of the Seller contained in the
Repurchase Agreement. [We] [I] have assumed the authenticity of all documents
submitted to me [us] as originals, the genuineness of all signatures, the legal
capacity of natural persons and the conformity to the originals of all
documents.

         Based upon the foregoing, it is [our] [my] opinion that:

         1. The Seller is a corporation duly organized, validly existing and in
good standing under the laws of the [State of _________] and is qualified to
transact business in, and is in good standing under, the laws of the [State of
_________].



<PAGE>   69

         2. The execution, delivery and performance by the Seller of the
Governing Agreements to which it is a party, and the sales by the Seller and the
pledge of the Purchased Items under the Repurchase Agreement have been duly
authorized by all necessary corporate action on the part of the Seller. Each of
the Governing Agreements have been executed and delivered by the Seller and are
legal, valid and binding agreements enforceable under Texas and federal law in
accordance with their respective terms against the Seller, subject to bankruptcy
laws and other similar laws of general application affecting rights of creditors
and subject to the application of the rules of equity, including those
respecting the availability of specific performance, none of which will
materially interfere with the realization of the benefits provided thereunder or
with the Buyer's purchase of the Purchased Assets and/or security interest in
the Purchased Assets.

         3. To the best of our knowledge, after due inquiry, no consent,
approval, authorization or order of, and no filing or registration with, any
court or governmental agency or regulatory body is required on the part of the
Seller for the execution, delivery or performance by the Seller of the Governing
Agreements to which it is a party or for the sales by the Seller under the
Repurchase Agreement or the sale of the Purchased Items to the Buyer and/or
granting of a security interest to the Buyer in the Purchased Items, pursuant to
the Repurchase Agreement.

         4. The execution, delivery and performance by the Seller of, and the
consummation of the transactions contemplated by the Governing Agreements to
which it is a party do not and will not (a) violate any provision of the
Seller's charter or by-laws, (b) violate any applicable law, rule or regulation,
(c) violate any order, writ, injunction or decree of any court or governmental
authority or agency or any arbitral award applicable to the Seller of which I
[we] have knowledge (after due inquiry) or (d) result in a breach of, constitute
a default under, require any consent under, or result in the acceleration or
required prepayment of any indebtedness pursuant to the terms of, any agreement
or instrument of which I have knowledge (after due inquiry) to which the Seller
is a party or by which it is bound or to which it is subject, or (except for the
Liens created pursuant to the Repurchase Agreement) result in the creation or
imposition of any Lien upon any Property of the Seller pursuant to the terms of
any such agreement or instrument.

         5. There is no action, suit, proceeding or investigation pending or, to
the best of [our] [my] knowledge, threatened against the Seller which, in [our]
[my] judgment, either in any one instance or in the aggregate, would be
reasonably likely to result in any material adverse change in the properties,
business or financial condition, or prospects of the Seller or in any material
impairment of the right or ability of the Seller to carry on its business
substantially as now conducted or in any material liability on the part of the
Seller or which would draw into question the validity of the Governing
Agreements to which it is a party or the Mortgage Loans or of any action taken
or to be taken in connection with the transactions contemplated thereby, or
which would be reasonably likely to impair materially the ability of the Seller
to perform under the terms of the Governing Agreements to which it is a party or
the Mortgage Loans.

         6. The Repurchase Agreement is effective to create, in favor of the
Buyer, either a valid sale of the Purchased Items to the Buyer under Texas law
or a valid security interest under the Uniform Commercial Code in all of the
right, title and interest of the Seller in,



<PAGE>   70

to and under the Purchased Items as collateral security for the payment of the
Seller's obligations under the Repurchase Agreement, except that (a) such
security interests will continue in Purchased Items after its sale, exchange or
other disposition only to the extent provided in Section 9-306 of the Uniform
Commercial Code, (b) the security interests in Purchased Items in which the
Seller acquires rights after the commencement of a case under the Bankruptcy
Code in respect of the Seller may be limited by Section 552 of the Bankruptcy
Code.

         7. When the Mortgage Notes are delivered to the Custodian, endorsed in
blank by a duly authorized officer of the Seller, the security interest referred
to in Section 6 above in the Mortgage Notes will constitute a fully perfected
first priority security interest in all right, title and interest of the Seller
therein.

         8. (a) Upon the filing of financing statements on Form UCC-1 naming the
Buyer as "Secured Party" and the Seller as "Debtor", and describing the
Purchased Items, in the jurisdictions and recording offices listed on Schedule 1
attached hereto, the security interests referred to in Section 6 above will
constitute fully perfected security interests under [Texas] law in all right,
title and interest of the Seller in, to and under such Purchased Items, which
can be perfected by filing under [Texas] law, or, will demonstrate a completion
of the sale of the Mortgage Loans to the Buyer.

         (b) The UCC Search Report sets forth the proper filing offices and the
proper debtors necessary to identify those Persons who have on file in the
jurisdictions listed on Schedule 1 financing statements covering the Purchased
Items as of the dates and times specified on Schedule 2. The UCC Search Report
identifies no Person who has filed in any Filing Office a financing statement
describing the Purchased Items prior to the effective dates of the UCC Search
Report.

         9. The Seller is not an "investment company", or a company "controlled"
by an "investment company," within the meaning of the Investment Company Act of
1940, as amended.



                                   Very truly yours,




<PAGE>   71



                                                                      EXHIBIT IV

                            UCC FILING JURISDICTIONS

Secretary of State of Delaware
Secretary of State of Texas




                                   Exh. IV-1

<PAGE>   72



                                                                       EXHIBIT V

                                ACCOUNT AGREEMENT

                                                                    May 31, 2000

StarNet Mortgage, Inc., as Seller
17311 North Dallas Parkway
Suite 350
Dallas, Texas 75248
Attn: Kenneth F. Urbanus, President

Bank United, N.A., as Bank
10501 North Central Expressway
Dallas, Texas 75248
Attn: Keith Schmidt, Vice President

Re:      Collection Account Established by StarNet Mortgage, Inc. (the "Seller")
         at Bank United, N.A. (the "Bank") pursuant to that certain Master
         Repurchase Agreement (as amended, supplemented or otherwise modified
         from time to time, the "Repurchase Agreement"), dated May 31, 2000,
         between DLJ Mortgage Capital, Inc. (the "Buyer") and Seller.

Ladies and Gentlemen:

         The Seller has entered into a Repurchase Agreement pursuant to which
the Buyer may from time to time enter into Transactions (as defined therein)
secured by, among other things, the payments made by mortgagors on account of
Purchased Assets sold to the Buyer under the Repurchase Agreement. As a
requirement of such Transactions, all such payments are required to be forwarded
daily to the Buyer at the Collection Account identified below within one (1)
Business Day of receipt.

         The Seller has established a collection account, Account No.
8005171189, for the account of DLJ Mortgage Capital, Inc., with the Bank, ABA#
313071904 (the "Collection Account") which the Bank maintains in the name and in
trust for the Buyer. The Seller has granted to the Buyer a security interest in
all payments deposited in the Collection Account with respect to the Purchased
Items sold to the Buyer under the Repurchase Agreement.

         The Buyer agrees to release such funds no later than one (1) Business
Day following the later to occur of the (i) receipt of the related Asset Tape
from the Seller detailing such deposits made to Collection Account and (ii)
receipt of the accrued and unpaid Periodic Advance Repurchase Payment with
respect to outstanding Transactions. The Buyer shall withdraw and apply or remit
to the Seller (as applicable) such deposits in the following order:

         (a)      any amounts due on account of a Price Differential in
                  accordance with Section 5(b) of the Repurchase Agreement,



<PAGE>   73

         (b)      any amounts due on account of a Margin Deficit in accordance
                  with Section 4 of the Repurchase Agreement,

         (c)      any other fees or amounts due the Buyer under the Repurchase
                  Agreement, and

         (d)      the remainder of funds to the Seller.

         In addition, the Bank acknowledges that (a) the Seller has granted a
security interest in all of the Seller's right, title and interest in and to any
funds from time to time on deposit in the Collection Account with respect to the
Purchased Assets sold to the Buyer under the Repurchase Agreement, (b) that such
funds are received by the Bank in trust for the benefit of Buyer and, except as
provided below, are for application against the Seller's liabilities to Buyer,
and (c) that the Bank shall transfer funds from the Collection Account in
accordance with the Buyer's instructions until the Bank receives notice from the
Buyer that it has released its lien on the Collection Account and all funds
deposited therein.

         In the event the Bank receives notice from the Buyer that an event of
default has occurred and is continuing under the Repurchase Agreement (a "Notice
of Event of Default") from the Buyer, the Bank shall in no event (a) transfer
funds from the Collection Account to the Seller, (b) act on the instruction of
the Seller or (3) cause or permit withdrawals from the Collection Account in any
manner not approved by the Buyer in writing.

         All bank statements in respect to the Collection Account shall be sent
to the Buyer at:

                              DLJ Mortgage Capital, Inc.
                              277 Park Avenue
                              New York, New York 10172

                              Attention: Shannon Smith
                              Telecopier No.: (212) 892-5434
                              Telephone No: (212) 892-3315

         With a copy to:

                              DLJ Mortgage Capital, Inc.
                              277 Park Avenue
                              New York, New York 10172
                              Attention: Tim Porter, Esq.
                              Telecopier No.: (212) 892-3332
                              Telephone No.: (212) 892-3315




<PAGE>   74

         with copies to the Seller at:

                              StarNet Mortgage, Inc.
                              17000 Preston Road
                              Suite 350
                              Dallas, Texas 75248

                              Attention: Kenneth F. Urbanus
                              Telecopier No.: (972) 665-0094
                              Telephone No: (972) 665-0009

         With a copy (which shall not constitute notice) to:

                              Gardere & Wynne, L.L.P.
                              3000 Thanksgiving Tower
                              1601 Elm Street
                              Dallas, Texas  75201-4761
                              Attention: I. Bobby Majumder, Esq.
                              Telecopier No.: (214) 999-4667
                              Telephone No.: (214) 999-3000

         Kindly acknowledge your agreement with the terms of this agreement by
signing the enclosed copy of this letter and returning it to the undersigned.


                                   Very truly yours,


                                   DLJ MORTGAGE CAPITAL, INC.

                                   By:
                                      ---------------------------------
                                      Title:


Agreed and acknowledged:


STARNET MORTGAGE, INC., as Seller


By:
   ------------------------------
Title:



<PAGE>   75

Agreed and acknowledged:


BANK UNITED, N.A., as Bank


By:
   ------------------------------
Title:



<PAGE>   76



                                                                      EXHIBIT VI

                         FORM OF TRUE SALE CERTIFICATION

             CERTIFICATE OF STARNET MORTGAGE, INC. (THE "PURCHASER")

         In connection with the transaction pursuant to the Master Repurchase
Agreement, dated as of [ ], 2000 between DLJ Mortgage Capital, Inc. and StarNet
Mortgage, Inc., the undersigned certifies, on behalf of Purchaser that:

         1. I personally participated as the __________ of the Purchaser in the
transaction (the "Transaction"), pursuant to which [NAME OF SELLER] (the
"Seller") sold [DESCRIBE ASSETS] (the "Assets") to the Purchaser. In such
capacity, I reviewed the purchase and sale agreement relating to the Transaction
dated as of __________ __, 2000 (the "Purchase and Sale Agreement").

         2. Due to my close involvement in the Transaction, I can accurately and
diligently certify the facts listed herein on behalf of the Purchaser.

         3. The Seller has shifted all of the risks and burdens which are
associated with the ownership of the Assets to the Purchaser.

         4. The Seller has shifted all of the benefits and rewards which are
associated with the Assets to the Purchaser. Subsequent to the consummation of
the Transaction, the Seller had no control rights with respect to the Assets,
and all legal rights and title with respect to the Assets vested in the
Purchaser.

         5. There has been no recourse to the Seller with respect to the
performance of the Assets.

         6. As of the date of the consummation of the Transaction, the Seller
received from the Purchaser reasonably equivalent value for the transferred
Assets, in the form of [DESCRIBE CONSIDERATION].

         7. The Purchase and Sale Agreement represented the intention of the
Seller and the Purchaser to accomplish a complete and irrevocable sale of the
Assets.

         8. The Seller neither was obligated to repurchase, nor had any "call"
rights with respect to, the Assets.

         9. The Purchaser neither was obligated to sell the Assets back to the
Seller, nor had any "put" rights with respect to the Assets.

         10. The Purchaser's books and records reflect that the Transaction was
a sale of the Assets, rather than a secured financing or a loan.



<PAGE>   77

         11. The Purchaser treated the Transaction as a sale for accounting and
tax purposes.

         12. The Transaction was duly authorized by the Purchaser's officers and
directors, as required by the Purchaser's organizational documents and
applicable law.

         I have been duly authorized to execute this certificate on behalf of
Purchaser.

                                   STARNET MORTGAGE, INC.


                                   By:
                                      ------------------------------------
                                      Name:
                                      Title:




<PAGE>   78



                         CERTIFICATE OF [NAME OF SELLER]

                  In connection with the transaction pursuant to the Master
Repurchase Agreement, dated as of July 15, 1999 between DLJ Mortgage Capital,
Inc. and [PURCHASER] (the "Purchaser"), the undersigned certifies, on behalf of
[NAME OF SELLER] (the "Seller") that:

         1. I personally participated as the __________ of the Seller in the
transaction (the "Transaction") pursuant to which Seller sold [DESCRIBE ASSETS]
(the "Assets") to the Purchaser. In such capacity, I reviewed the purchase and
sale agreement relating to the Transaction dated as of __________ __, 2000 (the
"Purchase and Sale Agreement").

         2. Due to my close involvement in the Transaction, I can accurately and
diligently certify the facts listed herein on behalf of the Seller.

         3. The Seller has shifted all of the risks and burdens which are
associated with the ownership of the Assets to the Purchaser.

         4. The Seller has shifted all of the benefits and rewards which are
associated with the Assets to the Purchaser. Subsequent to the consummation of
the Transaction, the Seller had no control rights with respect to the Assets,
and all legal rights and title with respect to the Assets vested in the
Purchaser.

         5. There has been no recourse to the Seller with respect to the
performance of the Assets. As of the date of the consummation of the
Transaction, the Seller received from the Purchaser reasonably equivalent value
for the transferred Assets, in the form of [DESCRIBE CONSIDERATION].

         6. The Purchase and Sale Agreement represented the intention of the
Seller and the Purchaser to accomplish a complete and irrevocable sale of the
Assets.

         7. The Seller neither was obligated to repurchase, nor had any "call"
rights with respect to, the Assets.

         8. The Purchaser neither was obligated to sell the Assets back to the
Seller, nor had any "put" rights with respect to the Assets.

         9. The Seller's books and records reflect that the Transaction was a
sale of the Assets, rather than a secured financing or a loan.

         10. The Seller treated the Transaction as a sale for accounting and tax
purposes.

         11. The Transaction was duly authorized by the Seller's officers and
directors, as required by the Seller's organizational documents and applicable
law.



<PAGE>   79

         I have been duly authorized to execute this certificate on behalf of
StarNet Mortgage, Inc.

                                   [SELLER]


                                   By:
                                      --------------------------------
                                      Name:
                                      Title:




<PAGE>   80




                                                                     EXHIBIT VII


                                TAKEOUT INVESTORS