<PAGE>

                                                                EXECUTION COPY





===============================================================================


                      GREENPOINT MORTGAGE SECURITIES INC.,
                                    Sponsor,

                       GREENPOINT MORTGAGE FUNDING, INC.,
                                    Servicer,

                    GREENPOINT HOME EQUITY LOAN TRUST 2000-1,
                                     Issuer,

                                       and

                             BANKERS TRUST COMPANY,
                                     Trustee

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

                          SALE AND SERVICING AGREEMENT

                            Dated as of June 1, 2000

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


                    Home Equity Loan Asset-Backed Securities

                                  Series 2000-1


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<PAGE>


                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                Page
<S>                                                                                                             <C>
ARTICLE I DEFINITIONS.............................................................................................1
Section 1.01.     Definitions.....................................................................................1
Section 1.02.     Other Definitional Provisions...................................................................1
Section 1.03.     Interest Calculations...........................................................................2


ARTICLE II CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF SECURITIES; TAX TREATMENT...........................2
Section 2.01.     Conveyance of Mortgage Loans; Retention of Obligation to Fund Advances Under Credit
                  Line Agreements.................................................................................2
Section 2.02.     Further Encumbrance of Trust Property...........................................................6
Section 2.03.     Acceptance by Trustee;  Certain Substitution of Mortgage Loans..................................6
Section 2.04      Representations and Warranties Regarding the Servicer and the Sponsor...........................8
Section 2.05.     Representations and Warranties of the Sponsor Regarding the Mortgage Loans;
                  Removal of Certain Mortgage Loans..............................................................10
Section 2.06.     Covenants of the Sponsor.......................................................................22
Section 2.07.     Removal of Mortgage Loans at Election of Issuer................................................23
Section 2.08.     Execution and Authentication of Securities.....................................................24
Section 2.09.     Tax Treatment..................................................................................24


ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS.......................................................24
Section 3.01.     The Servicer...................................................................................24
Section 3.02.     Collection of Certain Mortgage Loan Payments...................................................26
Section 3.03.     Withdrawals from the Collection Account........................................................28
Section 3.04.     Maintenance of Hazard Insurance; Property Protection Expenses..................................28
Section 3.05.     Assumption and Modification Agreements.........................................................29
Section 3.06.     Realization Upon Defaulted Mortgage Loans; Repurchase of Certain Mortgage Loans................29
Section 3.07.     Trustee to Cooperate...........................................................................30
Section 3.08.     Servicing Compensation; Payment of Certain Expenses by Servicer................................31
Section 3.09.     Annual Statement as to Compliance..............................................................31
Section 3.10.     Annual Servicing Report........................................................................32
Section 3.11.     Annual Opinion of Counsel......................................................................32
Section 3.12.     Access to Certain Documentation and Information Regarding the Mortgage Loans...................32
Section 3.13.     Maintenance of Certain Servicing Insurance Policies............................................33
Section 3.14.     Reports to the Securities and Exchange Commission..............................................33
Section 3.15.     Tax Returns....................................................................................33
Section 3.16.     Information Required by the Internal Revenue Service Generally and Reports of
                  Foreclosures and Abandonments of Mortgaged Property............................................34
Section 3.17.     Inspection Rights; Miscellaneous...............................................................34
</TABLE>


                                       i
<PAGE>


<TABLE>
<S>                                                                                                             <C>
ARTICLE IV SERVICING CERTIFICATE.................................................................................35
Section 4.01.     Servicing Certificate..........................................................................35
Section 4.02.     Freddie Mac Certificate........................................................................37
Section 4.03.     The Trustee Remittance Report..................................................................37
Section 4.04.     Loan Remittance Report.........................................................................38
Section 4.05.     Reserve Fund...................................................................................39


ARTICLE V THE SERVICER AND THE SPONSOR...........................................................................39
Section 5.01.     Liability of the Servicer and the Sponsor......................................................39
Section 5.02.     Merger or Consolidation of, or Assumption of the Obligations of, the Servicer or
                  the Sponsor....................................................................................39
Section 5.03.     on Liability of the Servicer and Others........................................................39
Section 5.04.     Servicer Not to Resign.........................................................................40
Section 5.05.     Delegation of Duties...........................................................................41
Section 5.06.     Indemnification of the Trust by the Servicer...................................................41
Section 5.07.     Indemnification of the Trust by the Sponsor....................................................41
Section 5.08.     Limitation on Liability of the Sponsor.........................................................41


ARTICLE VI SERVICING TERMINATION.................................................................................42
Section 6.01.     Events of Servicing Termination................................................................42
Section 6.02.     Trustee to Act; Appointment of Successor.......................................................44
Section 6.03.     Notification to Securityholders and Residual Certificateholders................................45


ARTICLE VII TERMINATION..........................................................................................45
Section 7.01.     Termination....................................................................................45


ARTICLE VIII ADMINISTRATIVE DUTIES OF THE SERVICER...............................................................47
Section 8.01.     Administrative Duties..........................................................................47
Section 8.02.     Records........................................................................................49
Section 8.03.     Additional Information to be Furnished to the Issuer...........................................49


ARTICLE IX MISCELLANEOUS PROVISIONS..............................................................................49
Section 9.01.     Amendment......................................................................................49
Section 9.02.     Recordation of Agreement.......................................................................50
Section 9.03.     Limitation on Rights of Securityholders........................................................51
Section 9.04.     Governing Law..................................................................................51
Section 9.05.     Notices........................................................................................51
Section 9.06.     Severability of Provisions.....................................................................52
Section 9.07.     Assignment.....................................................................................52
Section 9.08.     Third-Party Beneficiaries......................................................................52
Section 9.09.     Counterparts...................................................................................52
Section 9.10.     Effect of Headings and Table of Contents.......................................................52
Section 9.11.     Insurance Agreement............................................................................52
Section 9.12.     Nonpetition Covenant...........................................................................52
</TABLE>


                                       ii
<PAGE>


                                    EXHIBITS


EXHIBIT A:  MORTGAGE LOAN SCHEDULE........................................A-1

EXHIBIT B:  FORM OF OPINION OF COUNSEL....................................B-1

EXHIBIT C:  OFFICER'S CERTIFICATES........................................C-1

EXHIBIT D:  FORM OF CREDIT LINE AGREEMENT.................................D-1

EXHIBIT E:  FORM OF MORTGAGE NOTE (SECOND LIEN)...........................E-1

EXHIBIT F:  FORMS OF FREDDIE MAC CERTIFICATES.............................F-1






                                      iii
<PAGE>


         SALE AND SERVICING AGREEMENT, dated as of June 1, 2000, (the
"Agreement") among GREENPOINT HOME EQUITY LOAN TRUST 2000-1, a Delaware business
trust (the "Issuer" or "Trust"), GREENPOINT MORTGAGE SECURITIES INC., a Delaware
corporation (the "Sponsor"), GREENPOINT MORTGAGE FUNDING, INC., a New York
corporation (the "Servicer"), and BANKERS TRUST COMPANY, a national banking
association (the "Trustee")

         WHEREAS, the Issuer desires to purchase a portfolio of Mortgage Loans
arising in connection with Loan Agreements acquired by GreenPoint Mortgage
Funding, Inc.;

         WHEREAS, the Sponsor has purchased such Mortgage Loans from GreenPoint
Mortgage Funding, Inc. and is willing to sell such Mortgage Loans to the Issuer;

         WHEREAS, such Mortgage Loans consist of certain home equity revolving
lines of credit (the "HELOC Mortgage Loans") and certain second lien, closed-end
mortgage loans (the "Closed End Mortgage Loans");

         WHEREAS, the Servicer is willing to service all such Mortgage Loans;

         NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, the parties hereto agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

         Section 1.01. Definitions. All capitalized terms used in this Agreement
and not otherwise defined herein, shall have the meanings assigned thereto in
Annex A to the Pooling Agreement dated as of June 1, 2000, between the Issuer
and the Trustee, as the same may be amended and supplemented from time to time.

         Section 1.02. Other Definitional Provisions.


         (a) All terms defined in this Agreement shall have the defined meanings
when used in any instrument governed hereby and in any certificate or other
document made or delivered pursuant hereto unless otherwise defined therein.

          (b) As used in this Agreement, in any instrument governed hereby and
 in any certificate or other document made or delivered pursuant hereto or
 thereto, accounting terms not defined in this Agreement or in any such
 instrument, certificate or other document, and accounting terms partly defined
 in this Agreement or in any such instrument, certificate or other document to
 the extent not defined, shall have the respective meanings given to them under
 generally accepted accounting principles as in effect on the date of this
 Agreement or any such instrument, certificate or other document, as applicable.
 To the extent that the definitions of accounting terms in this Agreement or in
 any such instrument, certificate or other document are inconsistent with the
 meanings of such terms under generally accepted accounting principles, the

<PAGE>


definitions contained in this Agreement or in any such instrument, certificate
or other document shall control.

         (c)    Any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein;
references to a Person are also to its permitted successors and assigns.

         Section 1.03.    Interest Calculations. All calculations of interest
hereunder that are made in respect of the Principal Balance of a Mortgage Loan
shall be made on a daily basis using a 365-day year. All calculations of
interest on the Securities shall be made on the basis of the actual number of
days in an Interest Period and a year assumed to consist of 360 days. The
calculation of the Servicing Fee shall be made on the basis of a 360-day year
consisting of twelve 30-day months. All dollar amounts calculated hereunder
shall be rounded to the nearest penny with one-half of one penny being rounded
down.


                                   ARTICLE II

                          CONVEYANCE OF MORTGAGE LOANS;
                        ORIGINAL ISSUANCE OF SECURITIES;
                                  TAX TREATMENT

         Section 2.01.    Conveyance of Mortgage Loans; Retention of Obligation
to Fund Advances Under Credit Line Agreements. (a) In consideration of the
Issuer's delivery to or upon the order of the Sponsor on the Closing Date of the
net proceeds from the sale of the Securities and Residual Certificates and the
other amounts to be distributed from time to time to the Sponsor in accordance
with the terms of this Agreement, the Sponsor, concurrently with the execution
and delivery of this Agreement, hereby sells, transfers, assigns, sets over and
otherwise conveys to the Issuer, without recourse (subject to Sections 2.03 and
2.05), all of its right, title and interest in and to (i) each Mortgage Loan,
including its Principal Balance (including any Additional Balances related
thereto) and all collections in respect thereof received after the Cut-Off Date
(excluding Interest Collection due on or prior to the Cut-Off Date); (ii)
property that secured a Mortgage Loan that is acquired by foreclosure or deed in
lieu of foreclosure; (iii) all of the Sponsor's rights under the Purchase
Agreement (including all representations and warranties of the Company contained
therein); (iv) the Sponsor's rights under the hazard insurance policies; (v) the
Reserve Fund; (vi) the Policy; (vii) the Demand Note; and (viii) any proceeds of
the foregoing and all other assets included or to be included in the Trust for
the benefit of Securityholders and the Residual Certificateholders, the Insurer
and Freddie Mac; provided, however, neither the Trustee nor the Trust assumes
the obligation under any Credit Line Agreement that provides for the funding of
future advances to the Mortgagor thereunder, and neither the Trust nor the
Trustee shall be obligated or permitted to fund any such future advances. With
respect to the HELOC Mortgage Loans, Additional Balances shall be part of the
related Principal Balance and are hereby transferred to the Trust on the Closing
Date pursuant to this Section 2.01, and therefore part of the Trust Property. On
or prior to the Closing Date, the Sponsor shall cause the Insurer to deliver the
Policy to the Trustee for the benefit of the Securityholders. It is the
intention of the Sponsor that the transfer and assignment contemplated


                                       2
<PAGE>


by this Agreement shall constitute a sale of the Mortgage Loans and other Trust
Property from the Sponsor to the Issuer and that such sale should constitute a
valid transfer and assignment of the Mortgage Loans and other Trust Property to
the Issuer and the beneficial interest in and title to the Mortgage Loans and
the other Trust Property shall not be part of the Sponsor's estate in the event
of the filing of a bankruptcy petition by or against the Sponsor under any
bankruptcy law. In the event that, notwithstanding the intent of the Sponsor,
the transfer and assignment contemplated hereby is held not to be a sale, this
Agreement shall constitute a grant of a security interest in the property
referred to in this Section 2.01 for the benefit of the Securityholders, the
Residual Certificateholders, the Insurer and Freddie Mac. To the extent that the
fair market value of any Additional Balance is greater than the cash
consideration paid by the Issuer for such Additional Balance, the difference
between such fair market value and the amount of such cash consideration shall
be deemed to be a capital contribution made to the Issuer by the Sponsor.

         (b)    Each of the Company and the Sponsor agrees to take or cause to
be taken such actions and execute such documents (including, without limitation,
the filing of all necessary continuation statements for the UCC-1 financing
statements filed in the States of California and Delaware, respectively, (which
shall have been filed on or as of the Closing Date) describing the Cut-Off Date
Principal Balances and Additional Balances and naming (i) the Company as debtor
and the Sponsor as secured party, and (ii) the Sponsor as debtor and the Issuer
as secured party and any amendments to UCC-1 financing statements required to
reflect a change in the name or corporate structure of the Company or the
Sponsor or the filing of any additional UCC-1 financing statements due to the
change in the principal office of the Company or the Sponsor (within 10 days of
any event necessitating such filing) as are necessary to perfect and protect the
Securityholders', Insurer's and Freddie Mac's interests in each Cut-Off Date
Principal Balance and Additional Balance and the proceeds thereof (other than
maintaining possession by the Trustee of the Mortgage Loans and the Mortgage
Files).

         (c)    In connection with such transfer and assignment, the Servicer
shall deliver to the Trustee the following documents or instruments (each a
"Related Document" and together for each Mortgage Loan, the "Mortgage File")
with respect to each Mortgage Loan on the Closing Date:

                (i)     with respect to any Closed-End Mortgage Loan, the
         original Mortgage Note endorsed in blank, and with respect to any HELOC
         Mortgage Loan, the original Credit Line Agreement;

                (ii)    an original Assignment of Mortgage in blank in
         recordable form;

                (iii)   the original recorded Mortgage or, if, in connection
         with any Mortgage Loan, the original recorded Mortgage with evidence of
         recording thereon cannot be delivered on or prior to the Closing Date
         because of a delay caused by the public recording office where such
         original Mortgage has been delivered for recordation or because such
         original Mortgage has been lost, the Sponsor shall deliver or cause to
         be delivered to the Trustee, a true and correct copy of such Mortgage,
         together with (i) in the case of a delay caused by the public recording
         office, an Officer's Certificate of the Sponsor stating that such
         original Mortgage has been dispatched to the appropriate public


                                       3
<PAGE>


         recording official or (ii) in the case of an original Mortgage that has
         been lost, a certificate by the appropriate county recording office
         where such Mortgage is recorded;

                (iv)    if applicable, the original intervening assignments, if
         any ("Intervening Assignments"), with evidence of recording thereon,
         showing a complete chain of title to the Mortgage from the originator
         to the Trustee or, if any such original Intervening Assignment has not
         been returned from the applicable recording office or has been lost, a
         true and correct copy thereof, together with (i) in the case of a delay
         caused by the public recording office, an Officer's Certificate of the
         Sponsor stating that such original Intervening Assignment has been
         dispatched to the appropriate public recording official for recordation
         or (ii) in the case of an original Intervening Assignment that has been
         lost, a certificate by the appropriate county recording office where
         such Mortgage is recorded;

                (v)     either a title policy, a title search or guaranty title
         with respect to the related Mortgaged Property;

                (vi)    the original of any guaranty executed in connection with
         the Mortgage Note;

                (vii)   the original of each assumption, modification,
         consolidation or substitution agreement, if any, relating to the
         Mortgage Loans; and

                (viii)  any security agreement, chattel mortgage or equivalent
         instrument executed in connection with the Mortgage.

         The Sponsor hereby confirms to the Trustee that it has caused the
portions of the Electronic Ledgers relating to the Mortgage Loans as of the
Closing Date to be clearly and unambiguously marked, and has made, or will make,
the appropriate entries in its general accounting records to indicate that such
Mortgage Loans have been transferred to the Trust. The Servicer hereby confirms
to the Trustee that it has clearly and unambiguously made appropriate entries in
its general accounting records indicating that such Mortgage Loans constitute
part of the Trust and are serviced by it on behalf of the Trust in accordance
with the terms hereof.

         (d)    Notwithstanding the characterization of the Securities as debt
for Federal, state and local income and franchise tax purposes, the parties
hereto intend to treat the transfer of the Mortgage Loans to the Trust as
provided herein as a sale, for certain non-tax purposes, of all the Sponsor's
right, title and interest in and to the Mortgage Loans, whether now existing or
hereafter created, and the other property described above and all proceeds
thereof. In the event such transfer is deemed not to be a sale for such
purposes, the Sponsor grants to the Trust, a security interest in all of such
party's right, title and interest in, to and under the Mortgage Loans, whether
now existing or hereafter created, and the other property described above and
all proceeds thereof; and this Agreement shall constitute a security agreement
under applicable law.

         (e)    Within 90 days following delivery of the Mortgage Files to the
Trustee pursuant to this Section, the Trustee shall review each such Mortgage
File to ascertain that all required documents set forth in this Section 2.01
have been executed and received, and that such documents relate to the Mortgage
Loans identified on the Mortgage Loan Schedule and in so doing the Trustee may
rely on the purported due execution and genuineness of any signature


                                       4
<PAGE>


thereon. If within such 90-day period the Trustee finds any document
constituting a part of a Mortgage File not to have been executed or received or
to be unrelated to the Mortgage Loans identified in said Mortgage Loan Schedule
or, if in the course of its review, the Trustee determines that such Mortgage
File is otherwise defective in any material respect, the Trustee shall promptly
upon the conclusion of its review notify the Sponsor, the Insurer and Freddie
Mac, and the Sponsor shall have a period of 90 days after such notice within
which to correct or cure any such defect.

         The Trustee shall have no responsibility for reviewing any Mortgage
File except as expressly provided in this Section 2.01. In reviewing any
Mortgage File pursuant to this Section, the Trustee shall have no responsibility
for determining whether any document is valid and binding, whether the text of
any assignment or endorsement is in proper or recordable form (except, if
applicable, to determine if the Trustee is the assignee or endorsee), whether
any document has been recorded in accordance with the requirements of any
applicable jurisdiction, or whether a blanket assignment is permitted in any
applicable jurisdiction, whether any Person executing any document is authorized
to do so or whether any signature thereon is genuine, but shall only be required
to determine whether a document has been executed, that it appears to be what it
purports to be, and, where applicable, that it purports to be recorded.

         (f)    The Sponsor shall take all necessary steps to prepare and submit
for recordation an Assignment or Mortgage in the name of the Trustee for each
Mortgage Loan within 30 days after the Closing Date.

         (g)    The Sponsor shall sell, assign, transfer, set over and otherwise
convey without recourse to the Trustee all right, title and interest of the
Sponsor in and to any Eligible Substitute Mortgage Loan delivered to the Trustee
on behalf of the Trust by the Sponsor pursuant to Section 2.03 or Section 2.05
hereof and all its right, title and interest to principal collected and interest
accruing on such Eligible Substitute Mortgage Loan on and after the applicable
Substitute Cut-Off Date; provided, however, that the Sponsor shall reserve and
retain all right, title and interest in and to payments of interest due on such
Eligible Substitute Mortgage Loan prior to the applicable Substitute Cut-Off
Date; provided, further, that neither the Trust nor the Trustee shall be
obligated to fund any future advances to the related Mortgagor under such
Eligible Substitute Mortgage Loan.

         In connection with any transfer and assignment of an Eligible
Substitute Mortgage Loan to the Trustee on behalf of the Trust, the Sponsor
agrees to cause to be delivered to the Trustee the items described in Section
2.01(c) on the date of such transfer and assignment or, if a later delivery time
is permitted by Section 2.01(c), then no later than such later delivery time.

         (h)    Each Defective Mortgage Loan that is required to be repurchased
or substituted pursuant to the provisions this Agreement or the Purchase
Agreement shall, upon such repurchase or substitution in accordance with the
provisions hereof, be released from the Trust and from the lien created by the
Pooling Agreement. As to each Mortgage Loan released from the Trust in
connection with the repurchase thereof or the conveyance of an Eligible
Substitute Mortgage Loan therefor, the Trustee will transfer, assign, set over
and otherwise convey without recourse, to or upon the order of the Sponsor, all
of its right, title and interest in and to such released Mortgage Loan and all
the Trust's right title and interest to principal collected and


                                       5
<PAGE>


interest accruing on such released Mortgage Loan on and after the first day of
the calendar month in which such Mortgage Loan is released; provided, however,
that the Trust shall reserve and retain all right, title and interest in and to
payments of principal and interest collected on such released Mortgage Loan
prior to such date.

         Section 2.02.    Further Encumbrance of Trust Property.

         (a)    Immediately upon the conveyance to the Trust by the Sponsor of
any item of the Trust Property pursuant to Section 2.01, all right, title and
interest of the Sponsor in and to such item of Trust Property shall terminate,
and all such right, title and interest shall vest in the Trust, in accordance
with the Trust Agreement and Sections 3802 and 3805 of the Delaware Business
Trust Act (12 Del. Code, ss. 3801 et seq.).

         (b)    Immediately upon the vesting of the Trust Property in the Trust,
the Trust shall have the sole right to pledge or otherwise encumber, such Trust
Property. Pursuant to the Pooling Agreement and contemporaneously with such
property vesting in the Trust pursuant to (a) above, the Trust shall grant a
security interest in the Trust Property to secure the repayment of the
Securities. The Residual Certificates shall represent the beneficial ownership
interest in the Trust Property, and the Residual Certificateholders shall be
entitled to receive distributions with respect thereto as set forth herein.

         (c)    Prior to the payment in full on the Securities, the payment of
all amounts due to the Insurer under the Insurance Agreement, the payment of all
amounts due Freddie Mac under the Pooling Agreement, the termination of the
Policy (as defined therein) and the surrender of the Policy by the Trustee to
the Insurer, the Trustee shall hold the Trust Property on behalf of the
Securityholders, the Insurer and Freddie Mac. Following the payment in full of
the Securities and the release and discharge of the Pooling Agreement, all
covenants of the Issuer under Article III of the Pooling Agreement shall, until
payment in full of the Residual Certificates, remain as covenants of the Issuer
for the benefit of the Residual Certificateholders, enforceable by the Residual
Certificateholders to the same extent as such covenants were enforceable by the
Securityholders prior to the discharge of the Pooling Agreement. Any rights of
the Trustee under Article III of the Pooling Agreement, following the discharge
of the Pooling Agreement, shall vest in the Residual Certificateholders.

         Section 2.03.    Acceptance by Trustee; Certain Substitution of
Mortgage Loans.

         (a)    The Trustee shall, at such time as there are no Securities
outstanding and all sums due to (i) the Trustee or any agent or counsel thereof
pursuant to the Pooling Agreement, (ii) the Trustee pursuant to this Agreement
and (iii) the Insurer pursuant to the Insurance Agreement and Freddie Mac
pursuant to the Pooling Agreement have been paid, release any remaining portion
of the Trust Property to the Sponsor; provided, that the release of the Reserve
fund is subject to Section 2.05 of the Insurance Agreement.

         (b)    The Trust hereby acknowledges its receipt of the Policy and the
Mortgage Loans, and declares that the Trustee holds and will hold such
instrument, and to the extent that any documents are delivered to it pursuant to
Section 2.01, will hold such documents, and all amounts received by it
thereunder and hereunder, in trust, upon the terms herein set forth, for the


                                       6
<PAGE>


use and benefit of all present and future Securityholders, the Insurer and
Freddie Mac. If the time to cure any defect in respect of any Mortgage Loan of
which the Trustee has notified the Sponsor following the review pursuant to
Section 2.01 has expired or if at any time any loss is suffered by the Trustee
on behalf of the Securityholders, the Insurer or Freddie Mac, in respect of any
Mortgage Loan as a result of (i) a defect in any document constituting a part of
its Mortgage File or (ii) an Assignment of Mortgage to the Trustee not having
been recorded as required by Section 2.01, then on the next succeeding Business
Day, the Trustee shall (i) substitute in lieu of such Mortgage Loan all Eligible
Substitute Mortgage Loans and, deliver the Substitution Amount applicable
thereto to the Servicer for deposit in the Collection Account or (ii) purchase
such Mortgage Loan at a purchase price equal to the Loan Purchase Price thereof,
which purchase price shall be delivered to the Servicer for deposit in the
Collection Account. Upon receipt of any Mortgage Loan or of written notification
signed by a Servicing Officer to the effect that the Loan Purchase Price in
respect of a Defective Mortgage Loan has been deposited into the Collection
Account, then as promptly as practicable, the Trustee shall execute such
documents and instruments of transfer presented by the Sponsor, in each case
without recourse, representation or warranty, and take such other actions as
shall reasonably be requested by the Sponsor to effect such transfer by the
Trust of such Defective Mortgage Loan pursuant to this Section. It is understood
and agreed that the obligation of the Sponsor to accept a transfer of a
Defective Mortgage Loan and to either convey an Eligible Substitute Mortgage
Loan or to make a deposit of any related Loan Purchase Price into the Collection
Account shall constitute the sole remedy respecting such defect available to
Securityholders and the Trustee against the Sponsor.

         (c)    As to any Eligible Substitute Mortgage Loan, the Sponsor shall,
if required to deliver any such Eligible Substitute Mortgage Loan, deliver to
the Trustee with respect to such Eligible Substitute Mortgage Loan such
documents and agreements as are required to be held by the Trustee in accordance
with Section 2.01. For any Collection Period during which the Sponsor
substitutes one or more Eligible Substitute Mortgage Loan, the Servicer shall
determine the Substitution Amount which amount shall be deposited by the Sponsor
in the Collection Account at the time of substitution. All amounts received in
respect of the Eligible Substitute Mortgage Loan during the Collection Period in
which the circumstances giving rise to such substitution occur shall not be a
part of the Trust and shall not be deposited by the Servicer in the Collection
Account. All amounts received by the Servicer during the Collection Period in
which the circumstances giving rise to such substitution occur in respect of any
Defective Mortgage Loan so removed by the Trust shall be deposited by the
Servicer in the Collection Account. Upon such substitution, the Eligible
Substitute Mortgage Loan shall be subject to the terms of this Agreement in all
respects, and the Sponsor shall be deemed (i) to have made with respect to such
Eligible Substitute Mortgage Loan as of the date of substitution, the covenants,
representations and warranties set forth in Section 2.05 and (ii) to have
certified that such Mortgage Loan is an Eligible Substitute Mortgage Loan. The
procedures applied by the Sponsor in selecting each Eligible Substitute Mortgage
Loan shall not be materially adverse to the interests of the Trustee, the
Securityholders, the Insurer or Freddie Mac.

         The Servicer, promptly following the transfer of a Defective Mortgage
Loan from or to the Trust pursuant to this Section, shall amend the Mortgage
Loan Schedule and make appropriate entries in its general account records to
reflect such transfer. The Servicer shall, following such removal, appropriately
mark its records to indicate that it is no longer servicing such Mortgage Loan
on behalf of the Trust. The Sponsor, promptly following such transfer,


                                       7
<PAGE>


shall appropriately mark its Electronic Ledger and make appropriate entries in
its general account records to reflect such transfer.

         Section 2.04.    Representations and Warranties Regarding the Servicer
and the Sponsor. (a) The Servicer represents and warrants to the Trustee, the
Insurer and Freddie Mac that as of the Closing Date:

                (i)     The Servicer is a New York corporation, validly existing
         and in good standing under the laws of the State of New York, and has
         the corporate power to own its assets and to transact the business in
         which it is currently engaged. The Servicer is duly qualified to do
         business as a foreign corporation and is in good standing in each
         jurisdiction in which the character of the business transacted by it or
         any properties owned or leased by it requires such qualification and in
         which the failure so to qualify would have a material adverse effect on
         the business, properties, assets, or condition (financial or other) of
         the Servicer;

                (ii)    The Servicer has the power and authority to make,
         execute, deliver and perform this Agreement and all of the transactions
         contemplated under this Agreement, and has taken all necessary
         corporate action to authorize the execution, delivery and performance
         of this Agreement. When executed and delivered, this Agreement will
         constitute the legal, valid and binding obligation of the Servicer
         enforceable in accordance with its terms, except as enforcement of such
         terms may be limited by bankruptcy, insolvency, reorganization,
         moratorium or other similar laws affecting the enforcement of
         creditors' rights generally and by the availability of equitable
         remedies;

                (iii)   The Servicer is not required to obtain the consent of
         any other party or any consent, license, approval or authorization
         from, or registration or declaration with, any governmental authority,
         bureau or agency in connection with the execution, delivery,
         performance, validity or enforceability of this Agreement, except for
         such consent, license, approval or authorization, or registration or
         declaration, as shall have been obtained or filed, as the case may be,
         prior to the Closing Date;

                (iv)    The execution, delivery and performance of this
         Agreement by the Servicer will not violate any provision of any
         existing law or regulation or any order or decree of any court
         applicable to the Servicer or any provision of the Certificate of
         Incorporation or Bylaws of the Servicer, or constitute a material
         breach of any mortgage, Pooling Agreement, contract or other agreement
         to which the Servicer is a party or by which the Servicer may be bound;
         and

                (v)     No litigation or administrative proceeding of or before
         any court, tribunal or governmental body is currently pending, or to
         the knowledge of the Servicer threatened, against the Servicer or any
         of its properties or with respect to this Agreement or the Securities.

The representations and warranties set forth in this Section 2.04(a) shall
survive the sale and assignment of the Mortgage Loans to the Trust. Upon
discovery of a breach of any representations and warranties which materially and
adversely affects the interests of the


                                       8
<PAGE>


Securityholders, the Insurer or Freddie Mac, the person discovering such breach
shall give written notice within five (5) days of discovery to the other
parties, the Insurer and Freddie Mac. Within 90 days of its discovery or its
receipt of notice of breach, or, with the prior written consent of a Responsible
Officer of the Trustee and the Controlling Party, such longer period specified
in such consent, the Servicer shall cure such breach in all material respects.

         (b)    The Sponsor represents and warrants to the Trustee, the Insurer
and Freddie Mac that as of the Closing Date:

                (i)     The Sponsor is a Delaware corporation, validly existing
         and in good standing under the laws of the State of Delaware, and has
         the statutory power to own its assets and to transact the business in
         which it is currently engaged. The Sponsor is duly qualified to do
         business as a foreign limited liability company and is in good standing
         in each jurisdiction in which the character of the business transacted
         by it or any properties owned or leased by it requires such
         qualification and in which the failure so to qualify would have a
         material adverse effect on the business, properties, assets, or
         condition (financial or other) of the Sponsor;

                (ii)    The Sponsor has the power and authority to make,
         execute, deliver and perform this Agreement and all of the transactions
         contemplated under this Agreement, and has taken all necessary
         corporate action to authorize the execution, delivery and performance
         of this Agreement. When executed and delivered, this Agreement will
         constitute the legal, valid and binding obligation of the Sponsor
         enforceable in accordance with its terms, except as enforcement of such
         terms may be limited by bankruptcy, insolvency, reorganization,
         moratorium or other similar laws affecting the enforcement of
         creditors' rights generally and by the availability of equitable
         remedies;

                (iii)   The Sponsor is not required to obtain the consent of any
         other party or any consent, license, approval or authorization from, or
         registration or declaration with, any governmental authority, bureau or
         agency in connection with the execution, delivery, performance,
         validity or enforceability of this Agreement;

                (iv)    The execution, delivery and performance of this
         Agreement by the Sponsor will not violate any provision of any existing
         law or regulation or any order or decree of any court applicable to the
         Sponsor or any provision of the Certificate of Incorporation or bylaws
         of the Sponsor, or constitute a material breach of any mortgage,
         Pooling Agreement, contract or other agreement to which the Sponsor is
         a party or by which the Sponsor may be bound; and

                (v)     No litigation or administrative proceeding of or before
         any court, tribunal or governmental body is currently pending, or to
         the knowledge of the Sponsor threatened, against the Sponsor or any of
         its properties or with respect to this Agreement or the Securities.

The representations and warranties set forth in this Section 2.04(b) shall
survive the sale and assignment of the Mortgage Loans to the Trust. Upon
discovery of a breach of any representations and warranties which materially and
adversely affects the interests of the


                                       9
<PAGE>


Securityholders, the Insurer or Freddie Mac, the person discovering such breach
shall give prompt written notice to the other parties, the Insurer, and Freddie
Mac. Within 90 days of its discovery or its receipt of notice of breach, or,
with the prior written consent of a Responsible Officer of the Trustee and the
Controlling Party, such longer period specified in such consent, the Sponsor
shall cure such breach in all material respects.

         Section 2.05.    Representations and Warranties of the Sponsor
Regarding the Mortgage Loans; Removal of Certain Mortgage Loans.

         (a)    The Sponsor hereby makes the following representations and
warranties on which the Issuer is deemed to have relied in acquiring the
Mortgage Loans and upon which the Insurer is deemed to rely in issuing the
Policy, and upon which Freddie Mac is deemed to have relied as well. Such
representations and warranties speak as of the execution and delivery of this
Agreement and as of the Closing Date with respect to the Mortgage Loans, but
shall survive the sale, transfer, and assignment of the Mortgage Loans to the
Issuer and the pledge thereof to the Trustee pursuant to the Pooling Agreement,

                (i)     As of the Closing Date with respect to the Mortgage
         Loans and as of the related Transfer Date with respect to any Eligible
         Substitute Mortgage Loans and with respect to any HELOC Mortgage Loan,
         as of the date any Additional Balance is created, the information set
         forth in the Mortgage Loan Schedule for such Mortgage Loans is true and
         correct in all material respects;

                (ii)    Each Mortgage Loan is being serviced by the Servicer;

                (iii)   The applicable Cut-Off Date Principal Balance has not
         been assigned or pledged, and the Sponsor is the sole owner and holder
         of such Cut-Off Date Principal Balance free and clear of any and all
         liens, claims, encumbrances, participation interests, equities,
         pledges, charges or security interests of any nature, and has full
         right and authority, under all governmental and regulatory bodies
         having jurisdiction over the ownership of the applicable Mortgage
         Loans, to sell, assign or transfer the same pursuant to this Agreement;

                (iv)    Except with respect to liens released immediately prior
         to the transfer herein contemplated, each Mortgage Note and related
         Mortgage has not been assigned or pledged and immediately prior to the
         transfer and assignment herein contemplated, the Sponsor held good,
         marketable and indefeasible title to, and was the sole owner and holder
         of, each Mortgage Loan subject to no liens, charges, mortgages, claims,
         participation interests, equities, pledges or security interests of any
         nature, encumbrances or rights of others (collectively, a "Lien"); the
         Sponsor has full right and authority under all governmental and
         regulatory bodies having jurisdiction over the Sponsor, subject to no
         interest or participation of, or agreement with, any party, to sell and
         assign the same pursuant to this Agreement; and immediately upon the
         transfers and assignments herein contemplated, the Sponsor shall have
         transferred all of its right, title and interest in and to each
         Mortgage Loan and the Trustee will hold good, marketable and
         indefeasible title, to, and be the sole owner of, each Mortgage Loan
         subject to no Liens;


                                       10
<PAGE>


                (v)     As of the Closing Date with respect to the Mortgage
         Loans and the applicable Transfer Date with respect to any Eligible
         Substitute Mortgage Loans, the related Mortgage is a valid and
         subsisting first or second lien, as set forth on the Mortgage Loan
         Schedule with respect to each related Mortgaged Property, and as of the
         applicable Cut-Off Date the related Mortgaged Property is free and
         clear of all encumbrances and liens having priority over the first or
         second lien, as applicable, of such Mortgage except for liens for (i)
         real estate taxes and special assessments not yet delinquent; (ii) any
         first mortgage loan secured by such Mortgaged Property and specified on
         the Mortgage Loan Schedule; (iii) covenants, conditions and
         restrictions, rights of way, easements and other matters of public
         record as of the date of recording that are acceptable to mortgage
         lending institutions generally; and (iv) 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 such Mortgage;

                (vi)    As of the Closing Date with respect to the Mortgage
         Loans and the applicable Transfer Date with respect to any Eligible
         Substitute Mortgage Loans, there is no valid offset, defense or
         counterclaim of any obligor under any Loan Agreement or Mortgage;

                (vii)   As of the Closing Date with respect to the Mortgage
         Loans and the applicable Transfer Date with respect to any Eligible
         Substitute Mortgage Loans, there is no delinquent recording or other
         tax or fee or assessment lien against any related Mortgaged Property;

                (viii)  As of the Closing Date with respect to the Mortgage
         Loans and the applicable Transfer Date with respect to any Eligible
         Substitute Mortgage Loans, there is no proceeding pending or threatened
         for the total or partial condemnation of any Mortgaged Property, nor is
         such a proceeding currently occurring, and such 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;

                (ix)    As of the Closing Date with respect to the Mortgage
         Loans and the applicable Transfer Date with respect to any Eligible
         Substitute Mortgage Loans, there are no mechanics' or similar liens or
         claims which have been filed for work, labor or material affecting the
         related Mortgaged Property which are, or may be, liens prior or equal
         to the lien of the related Mortgage, except liens which are fully
         insured against by the title insurance policy referred to in clause
         (xiv);

                (x)     No Minimum Monthly Payment is more than 59 days
         delinquent (measured on a contractual basis);

                (xi)    As of the Closing Date with respect to the Mortgage
         Loans and the applicable Transfer Date with respect to any Eligible
         Substitute Mortgage Loans, for each Mortgage Loan, the related Mortgage
         File contains each of the documents and instruments specified to be
         included therein;


                                       11
<PAGE>


                (xii)   The related Loan Agreement and the related Mortgage at
         origination complied in all material respects with applicable state and
         federal laws, including, without limitation, usury, truth-in-lending,
         real estate settlement procedures, consumer credit protection, equal
         credit opportunity or disclosure laws applicable to the Mortgage Loans
         and consummation of the transactions contemplated hereby, including
         without limitation the receipt of interest, will not involve the
         violation or such laws;

                (xiii)  On the Closing Date with respect to the Mortgage Loans
         and to the extent not already included in such filing, on the
         applicable Transfer Date with respect to any Eligible Substitute
         Mortgage Loans, the Sponsor has filed UCC-1 financing statements with
         respect to such Mortgage Loans.

                (xiv)   A lender's policy of title insurance, expressClose.com
         lender master protection program (standard mortgage guaranty) or a
         commitment (binder) to issue the same or an attorney's certificate or
         opinion of title was effective on the date of the origination of each
         mortgage loan and each such policy or certificate or opinion of title
         is valid and remains in full force and effect;

                (xv)    As of the Closing Date with respect to the Mortgage
         Loans and the applicable Transfer Date with respect to any Eligible
         Substitute Mortgage Loans, none of the Mortgaged Properties is a mobile
         home or a manufactured housing unit;

                (xvi)   As of the Cut-Off Date for the Mortgage Loans no more
         than (a) 0.63% of the Pool I Mortgage Loans (by Pool I Balance), or (b)
         1.73% of the Pool II Mortgage Loans (by Pool II Balance) are secured by
         Mortgaged Properties located in one United States postal zip code;

                (xvii)  The Combined Loan-to-Value Ratio for each Pool I
         Mortgage Loan was not in excess of 100% and the Combined Loan-to-Value
         Ratio for each Pool II Mortgage Loan was not in excess of 100%;

                (xviii) Each Pool I Mortgage Loan conforms to all applicable
         loan origination standards with respect to loan balances as of the date
         of origination set forth by Freddie Mac.

                (xix)   No selection procedure reasonably believed by the
         Sponsor to be adverse to the interests of the Securityholders, the
         Insurer or Freddie Mac was utilized in selecting the Mortgage Loans;

                (xx)    The Sponsor has not transferred the Mortgage Loans to
         the Trust with any intent to hinder, delay or defraud any of its
         creditors;

                (xxi)   The Minimum Monthly Payment with respect to any Mortgage
         Loan is not less than the interest accrued at the applicable Loan Rate
         on the average daily Principal Balance during the interest period
         relating to the date on which such Minimum Monthly Payment is due;


                                       12
<PAGE>


                (xxii)  As of the Closing Date with respect to the Mortgage
         Loans and the applicable Transfer Date with respect to any Eligible
         Substitute Mortgage Loans, each Loan Agreement and each Mortgage Loan
         is a legal, valid and binding obligation and is an enforceable
         obligation of the related Mortgagor, except as the enforceability
         thereof may be limited by the bankruptcy, insolvency or similar laws
         affecting creditors' rights generally;

                (xxiii)  As of the Closing Date with respect to the Mortgage
         Loans and the applicable Transfer Date with respect to any Eligible
         Substitute Mortgage Loans, there has been no default of any senior
         mortgage loan related to a Mortgaged Property that has not been cured
         by a party other than the Servicer;

                (xxiv)  The terms of each Mortgage Note and each Mortgage have
         not been impaired, altered or modified in any respect, except by a
         written instrument which (if such instrument is secured by real
         property) has been recorded, if necessary, to protect the interest of
         the Securityholders and which has been delivered to the Trustee. The
         substance of any such alteration or modification is reflected on the
         related Mortgage Loan Schedule and has been approved by the primary
         mortgage guaranty insurer, if any;

                (xxv)   The definition of "prime rate" in each Credit Line
         Agreement relating to a HELOC Mortgage Loan does not differ materially
         from the definition in the form of Credit Line Agreement in Exhibit D;

                (xxvi)  The weighted average remaining term to maturity of the
         Pool I Mortgage Loans on a contractual basis as of the related Cut-Off
         Date is approximately 205 months and for the Pool II Mortgage Loans is
         approximately 203 months. On each date that the Loan Rates relating to
         HELOC Mortgage Loans have been adjusted, interest rate adjustments on
         the HELOC Mortgage Loans were made in compliance with the related
         Mortgages and Credit Line Agreement and applicable law. Over the term
         of each HELOC Mortgage Loan, the Loan Rate may not exceed the related
         Loan Rate Cap, if any. With respect to the Pool I HELOC Mortgage Loans,
         the weighted average Loan Rate Cap is approximately 18.000%. With
         respect to the Pool II HELOC Mortgage Loans, the weighted average Loan
         Rate Cap is approximately 18.000%. With respect to the Pool I HELOC
         Mortgage Loans, the margins range between 0.000% and 7.500% and the
         weighted average margin is approximately 2.903% as of the related
         Cut-Off Date. With respect to the Pool II HELOC Mortgage Loans, the
         margins range between 0.000% and 6.500% and the weighted average margin
         is approximately 2.698% as of the related Cut-Off Date. The Loan Rates
         on the Pool I Mortgage Loans range between 5.875% and 18.000%, the Loan
         Rates on the Pool II Mortgage Loans range between 5.875% and 18% and
         the weighted average Loan Rate is approximately 8.749% for Pool I and
         8.977% for Pool II;

                (xxvii)  As of the Closing Date with respect to the Mortgage
         Loans and the applicable Transfer Date with respect to any Eligible
         Substitute Mortgage Loans, each Mortgaged Property consists of a single
         parcel of real property with a one-to-four unit single family residence
         erected thereon, or an individual condominium unit, planned unit
         development unit or townhouse;


                                       13
<PAGE>


                (xxviii) No more than 29.08% (by Pool I Balance) of the Pool I
         Mortgage Loans are secured by real property improved by individual
         condominium units, planned development units or two-to-four family
         residences erected thereon, and approximately 70.92% (by Pool I
         Balance) of the Pool I Mortgage Loans are secured by real property with
         a one-family residence erected thereon;

                         No more than 27.89% (by Pool II Balance) of the Pool II
         Mortgage Loans are secured by real property improved by individual
         condominium units, planned development units or two-to-four family
         residences erected thereon, and approximately 72.11% (by Pool II
         Balance) of the Pool II Mortgage Loans are secured by real property
         with a one-family residence erected thereon;

                (xxix)   Each Mortgage Note evidencing a Closed End Mortgage
         Loan is comprised of one original promissory note and each such
         promissory note constitutes an "instrument" for purposes of Section
         9-105(1)(i) of the UCC. There is no obligation on the part of the
         Sponsor or any other party to make payments in addition to those made
         by the Mortgagor with respect to the Closed End Mortgage Loans;

                (xxx)    The Credit Limits on the Pool I HELOC Mortgage Loans
         range between $10,000 and $241,000 with an average of approximately
         $51,858. The Credit Limits on the Pool II HELOC Mortgage Loans range
         between $4,800 and $750,000 with an average of approximately $128,173.
         The Principal Balances on the Pool I HELOC Mortgage Loans range between
         $0 and $240,318 with an average of approximately $40,287. The Principal
         Balances on the Pool II HELOC Mortgage Loans range between $0 and
         $750,000 with an average of approximately $91,494. The Principal
         Balances on the Pool I Closed End Mortgage Loans range between $7,087
         and $175,000 with an average of approximately $41,340. The average
         Credit Limit Utilization Rate (weighted by credit line) of the Pool I
         HELOC Mortgage Loans is approximately 77.69% and of the Pool II HELOC
         Mortgage Loans is approximately 71.38%;

                (xxxi)   Substantially all of the Mortgage Loans are second
         liens, and either (A) no consent for each Mortgage Loan was required by
         the holder of the related senior lien, if any, prior to the making of
         such Mortgage Loan or (B) such consent has been obtained and is
         contained in the related Mortgage File;

                (xxxii)  This Agreement constitutes a valid transfer and
         assignment to the Trust of all right, title and interest of the Sponsor
         in and to the Cut-Off Date Principal Balances with respect to the
         applicable Mortgage Loans, all monies due or to become due with respect
         thereto and all proceeds of such Cut-Off Date Principal Balances with
         respect to the Mortgage Loans and such funds as are from time to time
         deposited in the Collection Account (excluding any investment earnings
         thereon) and all other property specified in the definition of "Trust"
         as being part of the corpus of the Trust conveyed to the Trust, and
         upon payment for the Additional Balances, will constitute a valid
         transfer and assignment to the Trustee of all right, title and interest
         of the Sponsor in and to the Additional Balances, all monies due or to
         become due with respect thereto, and all proceeds of such Additional
         Balances and all other property specified in the definition of "Trust"
         relating to the Additional Balances;


                                       14
<PAGE>


                (xxxiii) As of the Closing Date, no Mortgage Loan is the subject
         of foreclosure proceedings and, to the best of the Sponsor's knowledge,
         no obligor of any of the Mortgage Loans has filed for bankruptcy
         protection;

                (xxxiv)  The proceeds of each Closed End Mortgage Loan have been
         fully disbursed, and there is no obligation on the part of the
         mortgagee to make future advances thereunder. Any and all requirements
         as to completion of any on-site or off-site improvements and as to
         disbursements of any escrow funds therefor have been complied with. All
         costs, fees and expenses incurred in making or closing or recording
         such Closed End Mortgage Loans were paid;

                (xxxv)   Each Mortgage contains customary and enforceable
         provisions which render the rights and remedies of the holder thereof
         adequate for the realization against the related Mortgaged Property of
         the benefits of the security, including (A) in the case of a Mortgage
         designated as a deed of trust, by trustee's sale and (B) otherwise by
         judicial foreclosure;

                (xxxvi)  As of the Closing Date with respect to the Mortgage
         Loans and the applicable Transfer Date with respect to any Eligible
         Substitute Mortgage Loan, there is no default, breach, violation or
         event of acceleration existing under any Mortgage or the related
         Mortgage Note and no event which, with the passage of time or with
         notice and the expiration of any grace or cure period, would constitute
         a default, breach, violation or event of acceleration; and the Sponsor
         has not waived any default, breach, violation or event of acceleration;

                (xxxvii) To the best knowledge of the Sponsor, all parties to
         the Mortgage Note and the Mortgage had legal capacity to execute the
         Mortgage Note and the Mortgage and each Mortgage Note and Mortgage have
         been duly and properly executed by such parties; Each Mortgage and
         Mortgage Note is the legal, valid and binding obligation of the related
         Mortgagor and is enforceable by the Issuer against the Mortgagor in
         accordance with its terms, except only as such enforcement may be
         limited by bankruptcy, insolvency, reorganization, moratorium or other
         similar laws affecting the enforcement of creditors' rights generally
         and by law;

                (xxxviii) As of the Cut-Off Date no more than 0.16% of the
         Principal Balance of the Pool I Mortgage Loans nor more than 0.19% of
         the Principal Balance of the Pool II Mortgage Loans represents Mortgage
         Loans with respect to which the related Mortgagor had a Credit Score of
         600 or less at the time of origination or whose Credit Score was
         unavailable.

                (xxxix)  As of the Closing Date with respect to the Mortgage
         Loans and the applicable Transfer Date with respect to any Eligible
         Substitute Mortgage Loan, no Mortgagor has been released, in whole or
         in part, except in connection with an assumption agreement which has
         been approved by the applicable title insurer (to the extent required
         by such title insurer) and which is part of the Mortgage File delivered
         to the Trustee;


                                       15
<PAGE>


                (xl)     At the time of origination of each Mortgage Loan, the
         related prior lien was not more than 30 days delinquent. Additionally,
         as of the Closing Date, no senior mortgage loan on the related
         Mortgaged Property was more than 59 days delinquent;

                (xli)    All required inspections, licenses and certificates
         with respect to the use and occupancy of all occupied portions of all
         property securing the Mortgages have been made, obtained or issued, as
         applicable;

                (xlii)   With respect to the Pool I Mortgage Loans, if the
         improvements securing a Mortgage Loan were in a federally designated
         special flood hazard area as of the date of origination, flood
         insurance to the extent required in Section 3.04 hereof covers the
         related Mortgaged Property (either by coverage under the federal flood
         insurance program or by coverage by private insurers);

                (xliii)  With respect to each Mortgage Loan, the related prior
         lien does not provide for negative amortization;

                (xliv)   With respect to each Mortgage Loan, the maturity date
         of the Mortgage Loan is prior to the maturity date of the related prior
         lien if such prior lien provides for a balloon payment;

                (xlv)    With respect to the Pool I Mortgage Loans, all amounts
         received after the Cut-Off Date with respect to the Mortgage Loans to
         which the Sponsor is not entitled will be deposited into the Collection
         Account within one Business Day after the Closing Date;

                (xlvi)   Each Pool I Mortgage Loan is secured by a property
         having an appraised value as of origination of $334,539 or less and
         each Pool II Mortgage Loan is secured by a property having an appraised
         value as of origination of $562,260 or less;

                (xlvii)  With respect to the Pool I Mortgage Loans, there are no
         defaults in complying with the terms of the Mortgage, and either (1)
         any taxes, governmental assessments, insurance premiums, water, sewer
         and municipal changes or ground rents which previously became due and
         owing have been paid, or (2) 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. There are
         no defaults in complying with the terms of any senior mortgage on the
         related Mortgaged Property that have not been cured by anyone other
         than the Servicer. Except for payments in the nature of escrow
         payments, including without limitation, taxes and insurance payments,
         the Sponsor 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 by the
         Mortgage Note, except for 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;

                (xlviii) With respect to each Mortgage Loan, the improvements
         upon each Mortgaged Property are covered by a valid and existing hazard
         insurance policy with a


                                       16
<PAGE>


         carrier generally acceptable to the Servicer that provides for fire and
         extended coverage representing coverage not less than (a) the Credit
         Limit of such HELOC Mortgage Loan or (b) the Cut-Off Date Principal
         Balance of such Closed End Mortgage Loan or (c) the maximum insurable
         value of the Mortgaged Property;

                (xlix)   With respect to the Pool I Mortgage Loans, no
         misrepresentation of a material fact or fraud in respect of the
         origination, modification or amendment of any Mortgage Loan has taken
         place on the part of any person, including, without limitation, the
         related Mortgagor, any appraiser, any builder or developer or any party
         involved in the origination of such Mortgage Loan;

                (l)      With respect to the Pool I Mortgage Loans, the terms of
         the Mortgage Note and the Mortgage have not been impaired, altered or
         modified in any material respect, except by a written instrument which
         has been recorded or is in the process of being recorded, if necessary,
         to protect the interests of the Securityholders and which has been or
         will be delivered to the Document Custodian on behalf of the Trustee;

                (li)     With respect to the Pool I Mortgage Loans, as of the
         Cut-Off Date, no Mortgage Loan is 30 or more days delinquent in payment
         of principal and interest. In addition, none of the Mortgage Loans have
         been 30 or more days delinquent in the last 12 months and none of the
         Mortgage Loans have been 30 or more days delinquent for two payment
         periods in the last 12 months;

                (lii)    With respect to the Pool I Mortgage Loans, 12.84% of
         the Mortgage Loans, as of the Closing Date, are fixed rate Mortgage
         Loans having an original term to maturity from the date on which the
         first monthly payment is due of not more than 30 years. Each Mortgage
         Note with respect to a fixed rate and balloon Mortgage Note will
         provide for a schedule of substantially level and equal Monthly
         Payments which are sufficient to amortize fully the principal balance
         of such Mortgage Loan over a period of time equal to the amortization
         period of such Mortgage Note; provided, however, that certain Mortgage
         Loans constituting approximately 5.03% of the Cut-Off Date Aggregate
         Loan Balance are balloon loans that provide for final monthly payment
         substantially greater than the preceding monthly payments. All such
         balloon loans provide for monthly payment based upon a 30 year
         amortization schedule with a final balloon payment no later than the
         15th year.

                (liii)   With respect to the Pool I Mortgage Loans, except for
         Mortgage Loans that are delinquent for a time period less than that set
         forth in (li) above, there is no default, breach, violation or event of
         acceleration existing under any Mortgage or the related Mortgage Note
         and no event which, with the passage of time or with notice and the
         expiration of any grace or cure period, would constitute a default,
         breach, violation or event of acceleration; and neither the Sponsor,
         nor any other entity involved in originating or servicing a Mortgage
         Loan, has waived any default, breach, violation or event of
         acceleration;

                (liv)    With respect to the Pool I Mortgage Loans, none of the
         Mortgage Loans are cooperative share mortgages;


                                       17
<PAGE>


                (lv)     With respect to the Pool I Mortgage Loans, each
         appraisal of a Mortgage Loan that was used to determine the appraised
         value of the related Mortgaged Property was conducted generally in
         accordance with customary industry standards and included an assessment
         of the fair market value of the related mortgaged property at the time
         of the appraisal. The Mortgage File contains an appraisal of the
         applicable Mortgaged Property;

                (lvi)    With respect to the Pool I Mortgage Loans, all
         individual insurance policies contain a standard mortgagee clause
         naming the Sponsor, its successors and assigns, as mortgagee. All
         premiums thereon have been paid. Each Mortgage obligates the Mortgagor
         thereunder to maintain all such insurance at the Mortgagor's cost and
         expense, and upon the Mortgagor's failure to do so, authorizes the
         holder of the Mortgage to obtain and maintain such insurance at the
         Mortgagor's cost and expense and to seek reimbursement therefor from
         the Mortgagor;

                (lvii)   With respect to the Pool I Mortgage Loans, any advances
         made after the date of origination of a Mortgage Loan but prior to the
         Cut-Off Date have been consolidated with the outstanding principal
         amount secured by the related Mortgage, and the secured principal
         amount, as consolidated, bears a single interest rate and single
         repayment term reflected on the Mortgage Loan Schedule. The
         consolidated principal amount does not exceed the original principal
         amount of the related Mortgage Loan;

                (lviii)  With respect to the Pool I Mortgage Loans, there are no
         defaults in complying with the terms of the Mortgage, and either (1)
         any taxes, governmental assessments, insurance premiums, water, sewer
         and municipal changes or ground rents which previously became due and
         owing have been paid, or (2) 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. There are
         no defaults in complying with the terms of any senior mortgage on the
         related Mortgaged Property that have not been cured by anyone other
         than the Servicer. Except for payments in the nature of escrow
         payments, including without limitation, taxes and insurance payments,
         the Sponsor 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 by the
         Mortgage Note, except for 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;

                (lix)    With respect to the Pool I Mortgage Loans, no
         improvement located on or being part of any Mortgaged Property is in
         violation of any applicable zoning law or regulation. All inspections,
         licenses and certificates required to be made or issued with respect to
         all occupied portions of each 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 and such Mortgaged
         Property is lawfully occupied under the applicable law;


                                       18
<PAGE>


                (lx)     With respect to the Pool I Mortgage Loans, the proceeds
         of each fixed rate and balloon Mortgage Loan have been fully disbursed
         and there is no obligation on the part of the mortgagee to make future
         advances thereunder and any and all requirements as to completion of
         any on-site or off-site improvements and as to disbursement of any
         escrow funds therefor have been complied with. All costs , fees and
         expenses incurred in making, closing or recording the Mortgage Loans
         were paid and the Mortgagor is not entitled to any refund of amounts
         paid or due under the Mortgage Note;

                (lxi)    With respect to the Pool I Mortgage Loans, no Mortgage
         Loan has a shared appreciation feature, or other contingent interest
         feature;

                (lxii)   With respect to the Pool I Mortgage Loans, all parties
         which have had any interest in the Mortgage Loan, whether as
         originator, mortgagee, assignee, pledgee or otherwise, are (or, during
         the period in which they held and disposed of such interest, were): (A)
         organized under the laws of such state, or (B) qualified to do business
         in such state, or (C) federal savings and loan associations or national
         banks having principal offices in such state, or (D) not doing business
         in such state so as to require qualification or licensing, or (E) not
         otherwise required or licensed in such state. To the best of Sponsor's
         knowledge, all parties which have had any interest in the Mortgage Loan
         were in compliance with any and all applicable licensing requirements
         of the laws of the state wherein the Mortgaged Property is located or
         were not required to be licensed in such state;

                (lxiii)  With respect to the Pool I Mortgage Loans, each
         document or instrument in the related Mortgage File is in a form
         generally acceptable to prudent mortgage lenders that regularly
         originate or purchase mortgage loans comparable to the Mortgage Loans
         for sale to prudent investors in the secondary market that invest in
         mortgage loans such as the Mortgage Loans;

                (lxiv)   With respect to the Pool I Mortgage Loans, each
         original Mortgage was recorded and all subsequent assignments of the
         original Mortgage (other than the assignment to the Trustee) have been
         recorded in the appropriate jurisdictions wherein such recordation is
         necessary to perfect the lien thereof as against creditors of the
         Sponsor, or is in the process of being recorded;

                (lxv)    With respect to the Pool I Mortgage Loans, no Mortgage
         Loan was originated under a buydown plan;

                (lxvi)   With respect to the Pool I Mortgage Loans, no Mortgage
         Loan is subject to the requirements of the Home Ownership and Equity
         Protection Act of 1994 or any comparable state law;

                (lxvii)  With respect to the Pool I Mortgage Loans, the Servicer
         for each Mortgage Loan has accurately and fully reported its borrower
         credit files to each of the credit repositories in a timely manner;

                (lxviii) With respect to the Pool I Mortgage Loans, no proceeds
         from any Mortgage Loan were used to purchase single-premium credit
         insurance policies;


                                       19
<PAGE>


                (lxix)   With respect to the Pool I Mortgage Loans, no Mortgage
         Loan has a prepayment penalty term longer than three years after its
         origination;

                (lxx)    With respect to the Pool I Mortgage Loans, each
         Mortgage Loan conforms, and all Mortgage Loans in the aggregate
         conform, in all material respects, to the descriptions thereof set
         forth in the Information Circular and the Prospectus Supplement;

                (lxxi)   With respect to the Pool I Mortgage Loans, each
         Mortgage Loan was originated on or after November 9, 1996;

                (lxxii) With respect to the Pool I Mortgage Loans, the Sponsor
         represents and warrants that the Servicer currently operates or
         actively participates in an on-going business (A) to originate single
         family mortgage loans ("Loans"), and/or (B) to make periodic purchases
         of Loans from originators or sellers, and/or (C) to issue and/or
         purchase securities or bonds supported by the Loans, a portion of which
         Loans are made to borrowers who are:

                         (a) low-income families (families with incomes of 80%
                         or less of area median income) living in low-income
                         areas (a census tract or block numbering area in which
                         the median income does not exceed 80 percent of the
                         area median income); or

                         (b) very low-income families (families with incomes of
                         60% or less of area median income).

                (lxxiii) With respect to the Pool I Mortgage Loans, each
         Mortgage contains a provision for the acceleration of the payment of
         the unpaid principal balance of the related Mortgage Loan in the event
         the related Mortgaged Property is sold without the prior consent of the
         mortgagee thereunder;

                (lxxiv)  With respect to the Pool I Mortgage Loans, to the best
         of Sponsor's knowledge, no Mortgage Loan that is a second-lien Mortgage
         Loan has a principal balance as of the applicable Cut-Off Date in
         excess of half of Freddie Mac's loan limits for such type of residence;

                (lxxv)   To the best of Sponsor's knowledge, the pool of
         Mortgages backing the Class A-1 Certificates does not contain the first
         and second lien mortgage loans relating to a single Mortgaged property
         if the aggregate original principal balance of such mortgage loans
         exceeds Freddie Mac's loan limits. To the best of Sponsor's knowledge,
         the pool of Mortgages backing the Securities will not result in a
         violation of Freddie Mac's loan limitations;

                (lxxvi) With respect to the Pool I Mortgage Loans, each
         Mortgage Loan was originated substantially in accordance with
         Servicer's underwriting criteria, which conform to the underwriting
         criteria set forth in the Information Circular.


                                       20
<PAGE>


With respect to the representations and warranties set forth in this Section
2.05 that are made to the best of the Sponsor's knowledge or as to which the
Sponsor has no knowledge, if it is discovered by the Sponsor, the Servicer, the
Insurer, Freddie Mac or a Responsible Officer of the Trustee that the substance
of such representation and warranty is inaccurate and such inaccuracy materially
and adversely affects the value of the related Mortgage Loan then,
notwithstanding the Sponsor's lack of knowledge with respect to the substance of
such representation and warranty being inaccurate at the time the representation
or warranty was made, such inaccuracy shall be deemed a breach of the applicable
representation or warranty.

         (b)    It is understood and agreed that the representations and
warranties set forth in this Section 2.05 shall survive delivery of the
respective Mortgage Files to the Trustee pursuant to Section 2.01 and the
termination of the rights and obligations of the Servicer pursuant to Section
5.04 or 6.02. Upon discovery by the Sponsor, the Servicer, the Insurer, Freddie
Mac or a Responsible Officer of the Trustee of a breach of any of the foregoing
representations and warranties, without regard to any limitation set forth
therein concerning the knowledge of the Sponsor as to the facts stated therein,
which materially and adversely affects the interests of the Trust or the
Securityholders or the Insurer or Freddie Mac in the related Mortgage Loans, the
party discovering such breach shall give prompt written notice to the other
parties and to the Insurer and Freddie Mac. Within 90 days of its discovery or
its receipt of notice of such breach, the Sponsor shall use all reasonable
efforts to cure such breach in all material respects or shall, not later than
the Business Day next preceding the Payment Date in the month following the
Collection Period in which any such cure period expired (or such later date that
is acceptable to the Trustee or the Controlling Party as evidenced by their
written consents), either (a) accept a transfer of such Mortgage Loan from the
Trust or (b) substitute an Eligible Substitute Mortgage Loan, each in the same
manner and subject to the same conditions as set forth in Section 2.03;
provided, however, that the cure for any breach of a representation and warranty
relating to the characteristics of the Mortgage Loans in the aggregate shall be
a repurchase of or substitution for only the Mortgage Loans necessary to cause
such characteristics to be in compliance with the related representation and
warranty. Upon accepting such transfer and making any required deposit into the
Collection Account or substitution of an Eligible Substitute Mortgage Loans, as
the case may be, the Sponsor shall be entitled to receive an instrument of
assignment or transfer from the Trustee to the same extent as set forth in
Section 2.03 with respect to the transfer of Mortgage Loans under that Section.
Freddie Mac shall be notified of any substitution of an Eligible Substitute
Mortgage Loan.

         It is understood and agreed that the obligation of the Sponsor to
accept a removal of a Mortgage Loan as to which a breach has occurred and is
continuing and to make any required deposit in the Collection Account or to
substitute an Eligible Substitute Mortgage Loan, as the case may be, shall
constitute the sole remedy against the Sponsor respecting such breach available
to Securityholders, the Trustee on behalf of Securityholders, the Insurer and
Freddie Mac; provided, however, that the Sponsor shall defend and indemnify the
Trustee, the Insurer, Freddie Mac and the Securityholders against all reasonable
costs and expenses, and all losses, damages, claims and liabilities, including
reasonable fees and expenses of counsel and the amount of any settlement entered
into with the consent of the Sponsor (such consent not to be unreasonably
withheld), which may be asserted against or incurred by any of them as a result
of any third-party action arising out of any breach of any such representation
and warranty. Notwithstanding the foregoing, with regard to any breach of the
representation and warranty set


                                       21
<PAGE>


forth in Section 2.05(a)(xxix), the Sponsor shall pay to the Trust the sum of
(i) the amount of the related Principal Balances, plus unpaid accrued interest
on each such Principal Balance at the applicable Loan Rate to the date of
payment, (ii) the amount of any loss suffered by the Securityholders, the
Insurer or Freddie Mac with respect to the affected Mortgage Loans and (iii) all
amounts owing to the Insurer pursuant to the Insurance Agreement.

         The Sponsor does hereby assign to the Trust the benefits of the
representations and warranties made to it with respect to the Mortgage Loans
under the Mortgage Loan Purchase Agreement and the Trust may exercise the rights
with respect thereto relating to a Mortgage Loan, including the right to require
repurchase in the event such Mortgage Loan is not repurchased by the Sponsor

         Section 2.06.    Covenants of the Sponsor. The Sponsor hereby covenants
that:

         (a)    Security Interests. The Sponsor will not sell, pledge, assign or
transfer to any other Person, or grant, create, incur, assume or suffer to exist
any Lien on any Mortgage Loans, whether now existing or hereafter created, or
any interest therein; the Sponsor will notify the Trustee, the Insurer and
Freddie Mac of the existence of any Lien on any Mortgage Loans immediately upon
discovery thereof; and the Sponsor will defend the Trust's right, title and
interest (including the Trust's security interest) in, to and under the Mortgage
Loans, whether now existing or hereafter created, against all claims of third
parties claiming through or under the Sponsor; provided, however, that nothing
in this Section 2.06(a) shall prevent or be deemed to prohibit the Sponsor from
suffering to exist upon any of the Mortgage Loans any Liens for municipal or
other local taxes and other governmental charges if such taxes or governmental
charges shall not at the time be due and payable or if the Sponsor shall
currently be contesting the validity thereof in good faith by appropriate
proceedings and shall have set aside on its books adequate reserves with respect
thereto.

         (b)    UCC-1 Financing Statements. On the Closing Date with respect to
the Mortgage Loans and, to the extent not already included in such filing, on
the applicable Transfer Date with respect to any Eligible Substitute Mortgage
Loans, the Sponsor will file UCC-1 financing statements with respect to such
Mortgage Loans.

         (c)    Negative Pledge. The Sponsor hereby agrees not to transfer,
assign, exchange, pledge, finance, hypothecate, grant a security interest in or
otherwise convey the Residual Certificates except in accordance with Sections
5.05 and 6.02 hereof and in accordance with the Insurance Agreement and the
Trust Agreement.

         (d)    Downgrading. The Sponsor will not engage in any activity which
would result in a downgrading or withdrawal of the ratings on the Securities
without regard to the effect of the Policy.

         (e)    Amendment to Certificate of Incorporation. The Sponsor will not
amend its Certificate of Incorporation without prior written notice to the
Trustee and the Rating Agencies and the prior written consent of the Insurer
which consent shall not be unreasonably withheld.


                                       22
<PAGE>


         (f)    Principal Place of Business. The Sponsor's principal place of
business is in California, and the Sponsor will not change its principal place
of business without prior written notice to the Trustee, the Rating Agencies,
Freddie Mac and to the Insurer.

         Section 2.07.    Removal of Mortgage Loans at Election of Issuer.
Subject to the conditions set forth below and Section 8.2 of the Pooling
Agreement, the Issuer may, but shall not be obligated to, require the removal of
Mortgage Loans from Pool I and/or Pool II, from time to time, as of the close of
business on a Payment Date (each, a "Removal Date"). On the tenth Business Day
(the "Removal Notice Date") prior to the Removal Date designated in such notice,
the Issuer shall give the Trustee, the Insurer, Freddie Mac (with respect to
Pool I only) and the Servicer a notice of the proposed removal that contains a
list of the Mortgage Loans to be removed. Such removal of Mortgage Loans in Pool
I or Pool II shall be permitted upon satisfaction of the following conditions:

                (i)      The applicable Rapid Amortization Period shall not have
         commenced;

                (ii)     On the Removal Date, the related Overcollateralization
         Amount (after giving effect to the removal from the applicable Pool of
         the Mortgage Loans proposed to be removed) exceeds the related
         Specified Overcollateralization Amount;

                (iii)    The transfer of such Mortgage Loans on any Removal Date
         during the related Managed Amortization Period shall not, in the
         reasonable belief of the Sponsor, cause a Rapid Amortization Event with
         respect to the related Class of Securities to occur or an event which
         with notice or lapse of time or both would constitute such a Rapid
         Amortization Event and a Rapid Amortization Event has not occurred;

                (iv)     On or before the Removal Date, the Issuer shall have
         delivered to the Trustee a revised Mortgage Loan Schedule, reflecting
         the proposed transfer and the Removal Date, and the Servicer shall have
         marked the Electronic Ledger to show that the Mortgage Loans removed to
         the Issuer are no longer included in the applicable Pool;

                (v)      The Issuer shall represent and warrant that no
         selection procedures reasonably believed by the Issuer to be adverse to
         the interests of the Securityholders or the Insurer or Freddie Mac
         (with respect to Pool I only) were utilized in selecting the Mortgage
         Loans to be removed from the Applicable Pool;

                (vi)     In connection with each such removal of Mortgage Loans
         pursuant to this Section, each Rating Agency shall have received on or
         prior to the related Removal Notice Date notice of such proposed
         removal of Mortgage Loans and, prior to the Removal Date, shall have
         notified the Trustee, the Insurer and Freddie Mac (with respect to Pool
         I only) in writing that such removal of Mortgage Loans would not result
         in a reduction or withdrawal of its then current ratings of the Class
         A-1 Certificates or of the Class A-2 Notes, in either case without
         regard to the Policy or Guarantee, as applicable; and

                (vii)    The Issuer shall have delivered to the Trustee, the
         Insurer and Freddie Mac an Officer's Certificate certifying that the
         items set forth in subparagraphs (i) through (vi), inclusive, have been
         performed or are true and correct, as the case may be.


                                       23
<PAGE>


         The Trustee may conclusively rely on such Officer's Certificate, shall
         have no duty to make inquiries with regard to the matters set forth
         therein and shall incur no liability in so relying.

         Upon receiving the requisite information from the Issuer, the Servicer
shall perform in a timely manner those acts required of it, as specified above.
Upon satisfaction of the above conditions, on the Removal Date the Trustee shall
deliver, or cause to be delivered, to the Issuer the Mortgage File for each
Mortgage Loan being so transferred, and the Trustee shall execute and deliver to
the Issuer such other documents prepared by the Issuer as shall be reasonably
necessary to remove such Mortgage Loans from the applicable Pool. Any such
removal of Mortgage Loans shall be without recourse, representation or warranty
by or of the Trustee or the Trust to the Issuer. Freddie Mac and the Insurer
shall have the right to review any Mortgage Loans proposed to be removed
pursuant to this Section 2.07. Such review must be completed prior to the
Removal Date.

         Section 2.08.    Execution and Authentication of Securities. The
Trustee, on behalf of the Trust, has caused to be executed, authenticated and
delivered to or upon the order of the Sponsor, in exchange for the Trust,
concurrently with the sale, assignment and conveyance to the Trustee of the
Trust, Securities representing indebtedness of the Trust in authorized
denominations and the Residual Certificates, evidencing the ownership of the
Trust.

         Section 2.09.    Tax Treatment. It is the intention of the Sponsor and
the Residual Certificateholders that the Securities will be indebtedness of the
Sponsor for federal, state and local income and franchise tax purposes and for
purposes of any other tax imposed on or measured by income. The Sponsor, the
Trustee and each Securityholder (or Security Owner) by acceptance of its
Security (or, in the case of a Security Owner, by virtue of such Security
Owner's acquisition of a beneficial interest therein) agrees to treat the
Securities (or beneficial interest therein), for purposes of federal, state and
local income or franchise taxes and any other tax imposed on or measured by
income, as indebtedness of the Sponsor secured by the assets of the Trust and to
report the transactions contemplated by this Agreement on all applicable tax
returns in a manner consistent with such treatment. Each Securityholder agrees
that it will cause any Security Owner acquiring an interest in a Security
through it to comply with this Agreement as to treatment of the Securities as
indebtedness for federal, state and local income and franchise tax purposes and
for purposes of any other tax imposed on or measured by income. The Trustee will
prepare and file all tax reports required hereunder consistent with this
Agreement except as may be required by or provided in Section 3.15.


                                  ARTICLE III

                          ADMINISTRATION AND SERVICING
                                OF MORTGAGE LOANS

         Section 3.01.    The Servicer.

         (a)    The Servicer is hereby authorized to act as agent for the Trust
and in such capacity shall manage, service, administer and make collections on
the Mortgage Loans and perform the other actions under this Agreement. The
Servicer shall service and administer the


                                       24
<PAGE>


Mortgage Loans in a manner consistent with the terms of this Agreement and with
general industry practice and shall have full power and authority, acting alone
or through a subservicer, to do any and all things in connection with such
servicing and administration which it may deem necessary or desirable, it being
understood, however, that the Servicer shall at all times remain responsible to
the Trustee, the Securityholders, the Residual Certificateholders, the Insurer
and Freddie Mac for the performance of its duties and obligations hereunder in
accordance with the terms hereof. Any amounts received by any subservicer in
respect of a Mortgage Loan shall be deemed to have been received by the Servicer
whether or not actually received by it. Without limiting the generality of the
foregoing, the Servicer shall continue, and is hereby authorized and empowered
by the Trust, to execute and deliver, on behalf of the Trust, any and all
instruments of satisfaction or cancellation, or of partial or full release or
discharge and all other comparable instruments, with respect to the Mortgage
Loans and with respect to the Mortgaged Properties and to make deposits to and
withdrawals from the Collection Account. The Trustee and the Owner Trustee
shall, upon the written request of a Servicing Officer, furnish the Servicer
with any powers of attorney and other documents necessary or appropriate to
enable the Servicer to carry out its servicing and administrative duties
hereunder. The Servicer in such capacity may also consent to the placing of a
lien senior to that of any Mortgage on the related Mortgaged Property, provided
that

                (i)      such Mortgage succeeded to a first lien position after
         the related Mortgage Loan was conveyed to the Trust and, immediately
         following the placement of such senior lien, such Mortgage is in a
         second lien position and the outstanding principal amount of the
         mortgage loan secured by such subsequent senior lien is no greater than
         the outstanding principal amount of the senior mortgage loan secured by
         the Mortgaged Property as of the date the related Mortgage Loan was
         originated; or

                (ii)     the Mortgage relating to such Mortgage Loan was in a
         second lien position as of the Cut-Off Date and the new senior lien
         secures a mortgage loan that refinances an existing first mortgage loan
         and the outstanding principal amount of the replacement first mortgage
         loan immediately following such refinancing is not greater than the
         outstanding principal amount of such existing first mortgage loan at
         the date of origination of such Mortgage Loan;

provided, further, that such senior lien does not secure a note that provides
for negative amortization.

         The Servicer may also, without prior approval from the Rating Agencies,
Freddie Mac or the Insurer, increase the Credit Limits on HELOC Mortgage Loans
included in Pool II provided that (i) new appraisals are obtained and the
Combined Loan-to-Value Ratios of the HELOC Mortgage Loans after giving effect to
such increase are less than or equal to the Combined Loan-to-Value Ratios of the
Mortgage Loans as of the Cut-Off Date and (ii) such increases are consistent
with the Servicer's credit and collection policies. No material change or
departure from the Servicer's credit and collection policies with respect to any
Mortgage Loans as in effect as of the Closing Date shall be permitted without
the prior written consent of the Insurer and of Freddie Mac.


                                       25
<PAGE>


         In addition, the Servicer may agree to changes in the terms of a
Mortgage Loan at the request of the Mortgagor; provided that (i) such changes do
not materially and adversely affect the interests of Securityholders, Residual
Certificateholders, Freddie Mac or the Insurer, (ii) such changes are consistent
with prudent and customary business practice as evidenced by a certificate
signed by a Servicing Officer delivered to the Trustee, the Insurer and Freddie
Mac and (iii) the Rating Agencies and Freddie Mac are promptly notified of the
changes.

         In addition to the foregoing, the Servicer may solicit Mortgagors to
change any other terms of the related Mortgage Loans; provided that such changes
(i) do not materially and adversely affect the interest of Securityholders, the
Insurer or Freddie Mac and (ii) are consistent with prudent and customary
business practice as evidenced by a certificate signed by a Servicing Officer
delivered to the Trustee, the Insurer and Freddie Mac. Nothing herein shall
limit the right of the Servicer to solicit Mortgagors with respect to new loans
(including mortgage loans) that are not Mortgage Loans.

         The relationship of the Servicer (and of any successor to the Servicer
as servicer under this Agreement) to the Trustee under this Agreement is
intended by the parties to be that of an independent contractor and not that of
a joint venturer, partner or agent.

         (b)    In the event that the rights, duties and obligations of the
Servicer are terminated hereunder, any successor to the Servicer in its sole
discretion may, to the extent permitted by applicable law, terminate the
existing subservicer arrangements with any subservicer, without charge, or
assume the terminated Servicer's rights under such subservicing arrangements
which termination or assumption will not violate the terms of such arrangements.

         Section 3.02.    Collection of Certain Mortgage Loan Payments.

         (a)    Collection of Certain Mortgage Loan Payments. Servicer shall
make reasonable efforts to collect all payments called for under the terms and
provisions of the Mortgage Loans, and shall, to the extent such procedures shall
be consistent with this Agreement, follow such collection procedures as it
follows with respect to home equity loans in its servicing portfolio comparable
to the Mortgage Loans. Consistent with the foregoing, and without limiting the
generality of the foregoing, the Servicer may in its discretion (i) waive any
late payment charge or any assumption fees or other fees which may be collected
in the ordinary course of servicing such Mortgage Loans and (ii) arrange with a
Mortgagor a schedule for the payment of interest due and unpaid; provided that
such arrangement is consistent with the Servicer's policies with respect to the
Mortgage Loans it owns or services; provided, further, that notwithstanding such
arrangement such Mortgage Loans will be included in the information regarding
delinquent Mortgage Loans set forth in the Servicing Certificate and monthly
statement to Securityholders pursuant to Section 4.01.

         (b)    The Servicer shall on the Closing Date deposit into the
Collection Account any amounts representing payments on, and any collections in
respect of, the Mortgage Loans received after the related Cut-Off Date and prior
to the Closing Date (exclusive of payments in respect of accrued interest due on
or prior to such Cut-Off Date) and thereafter the Servicer, or the Sponsor, as
the case may be, shall deposit into the Collection Account within one Business


                                       26
<PAGE>


Day following receipt thereof the following payments and collections received or
made by it (without duplication):

                (i)      all collections on and in respect of the Mortgage
         Loans;

                (ii)     the amounts, if any, deposited to the Collection
         Account pursuant to Section 3.04;

                (iii)    Net Liquidation Proceeds;

                (iv)     Insurance Proceeds (including, for this purpose, any
         amount required to be credited by the Servicer pursuant to the last
         sentence of Section 3.04 and excluding the portion thereof, if any,
         that has been applied to the restoration or repair of the related
         Mortgaged Property or released to the related Mortgagor in accordance
         with the normal servicing procedures of the Servicer);

                (v)      any amounts required to be deposited therein pursuant
         to Section 7.01;

                (vi)     any amounts drawn under the Policy pursuant to Section
         8.4 of the Pooling Agreement; and

                (vii)    any amounts drawn pursuant to the Demand Note;

provided, however, that with respect to each Collection Period, the Servicer
shall be permitted to retain from payments in respect of interest on the
Mortgage Loans, the Servicing Fee for such Collection Period. The foregoing
requirements respecting deposits to the Collection Account are exclusive, it
being understood that, without limiting the generality of the foregoing, the
Servicer need not deposit in the Collection Account amounts representing
Foreclosure Profits, fees (including annual fees) or late charge penalties
payable by Mortgagors, or amounts received by the Servicer for the accounts of
Mortgagors for application towards the payment of taxes, insurance premiums,
assessments, excess pay off amounts and similar items. The Servicer shall remit
all Foreclosure Profits to the Sponsor.

         The Trustee shall hold amounts deposited in the Collection Account as
trustee for the Securityholders, the Insurer and Freddie Mac. The Servicer shall
notify the Trustee, the Insurer, and Freddie Mac in writing on each
Determination Date of the amount of payments and collections in the Collection
Account allocable to Interest Collections and Principal Collections for the
related Payment Date. Following such notification, the Servicer shall be
entitled to withdraw from the Collection Account and retain any amounts that
constitute income and gain realized from the investment of such payments and
collections.

         At the direction of the Servicer, the Trustee shall invest funds in the
Collection Account in Eligible Investments. All income and gain realized from
any investment in Eligible Investments of funds in the Collection Account shall
be for the benefit of the Servicer and shall be subject to its withdrawal from
time to time. The amount of any losses incurred in respect of the principal
amount of any such investments shall be deposited in the Collection Account by
the Servicer out of its own funds immediately as realized.


                                       27
<PAGE>


         Section 3.03.    Withdrawals from the Collection Account. From time to
time, withdrawals may be made from the Collection Account by the Servicer for
the following purposes:

                (i)      If not received by the Servicer pursuant to Section
         3.02(b), to the Servicer as payment for its Servicing Fee pursuant to
         Section 3.08;

                (ii)     To pay to the Servicer amounts on deposit in the
         Collection Account that are not to be included in the distributions and
         payments pursuant to Section 8.7 of the Pooling Agreement to the extent
         provided by the second to the last and the last paragraph of Section
         3.02(b);

                (iii)    To make or to permit the Paying Agent to make
         distributions and payments pursuant to Section 8.7 of the Pooling
         Agreement;

                (iv)     Prior to the Collection Period preceding the Rapid
         Amortization Commencement Date, to pay to the Sponsor the amount of any
         Additional Balances as and when created during the related Collection
         Period; provided, that the aggregate amount so paid to the Sponsor in
         respect of Additional Balances at any time during any Collection Period
         shall not exceed the amount of Principal Collections theretofore
         received for such Collection Period;

                (v)      To pay to the Servicer any Liquidation Expenses not
         reimbursed prior to the deposit of Net Liquidation Proceeds to the
         Collection Account;

                (vi)     Upon termination of the Trust, to make any payments
         required by Section 7.01.

         If the Servicer deposits in the Collection Account any amount not
required to be deposited therein or any amount in respect of payments by
Mortgagors made by checks subsequently returned for insufficient funds or other
reason for non-payment it may at any time withdraw such amount from the
Collection Account, and any such amounts shall not be included in the amounts to
be deposited in the Collection Account pursuant to Section 3.02(b), any
provision herein to the contrary notwithstanding.

         Section 3.04.    Maintenance of Hazard Insurance; Property Protection
Expenses. The Servicer shall cause to be maintained for each Mortgage Loan
hazard insurance naming the Servicer or the related subservicer as loss payee
thereunder providing extended coverage in an amount which is at least equal to
the lesser of (i) the maximum insurable value of the improvements securing such
Mortgage Loan from time to time or (ii) the combined principal balance owing on
such Mortgage Loan and any mortgage loan senior to such Mortgage Loan from time
to time. The Servicer shall also maintain on property acquired upon foreclosure,
or by deed in lieu of foreclosure, hazard insurance with extended coverage in an
amount which is at least equal to the lesser of (i) the maximum insurable value
from time to time of the improvements which are a part of such property or (ii)
the combined principal balance owing on such Mortgage Loan and any mortgage loan
senior to such Mortgage Loan at the time of such foreclosure or deed in lieu of
foreclosure plus accrued interest and the good-faith estimate of the Servicer of
related Liquidation Expenses to be incurred in connection therewith. Amounts


                                       28
<PAGE>


collected by the Servicer under any such policies shall be deposited in the
Collection Account to the extent called for by Section 3.02. In cases in which
any Mortgaged Property is located in a federally designated flood area, the
hazard insurance to be maintained for the related Mortgage Loan shall include
flood insurance. All such flood insurance shall be in such amounts as are
required under applicable guidelines of the Federal Flood Emergency Act. The
Servicer shall be under no obligation to require that any Mortgagor maintain
earthquake or other additional insurance and shall be under no obligation itself
to maintain any such additional insurance on property acquired in respect of a
Mortgage Loan, other than pursuant to such applicable laws and regulations as
shall at any time be in force and as shall require such additional insurance. If
the Servicer shall obtain and maintain a blanket policy consistent with prudent
industry standards insuring against hazard losses on all of the Mortgage Loans
in an aggregate amount prudent under industry standards, it shall conclusively
be deemed to have satisfied its obligations as set forth in the first sentence
of this Section 3.04 and if there shall have been a loss which would have been
covered by such policy, deposit in the Collection Account without right of
reimbursement, as the case may be, the amount not otherwise payable under the
blanket policy because of any deductible clause.

         Section 3.05.    Assumption and Modification Agreements. In any case in
which a Mortgaged Property has been or is about to be conveyed by the Mortgagor,
the Servicer shall exercise its right to accelerate the maturity of such
Mortgage Loan consistent with the then current practice of the Servicer and
without regard to the inclusion of such Mortgage Loan in the Trust. If it elects
not to enforce its right to accelerate or if it is prevented from doing so by
applicable law, the Servicer (so long as such action conforms with the
underwriting standards generally acceptable in the industry at the time for new
origination) is authorized to take or enter into an assumption and modification
agreement from or with the Person to whom such Mortgaged Property has been or is
about to be conveyed, pursuant to which such Person becomes liable under the
Loan Agreement and, to the extent permitted by applicable law, the Mortgagor
remains liable thereon. The Servicer shall notify the Trustee that any
assumption and modification agreement has been completed by delivering to the
Trustee an Officer's Certificate signed by a Servicing Officer certifying that
such agreement is in compliance with this Section 3.05 and by forwarding to the
Trustee the original copy of such assumption and modification agreement. Any
such assumption and modification agreement shall, for all purposes, be
considered a part of the related Mortgage File to the same extent as all other
documents and instruments constituting a part thereof. No change in the terms of
the related Loan Agreement may be made by the Servicer in connection with any
such assumption to the extent that such change would not be permitted to be made
in respect of the original Loan Agreement pursuant to the fourth paragraph of
Section 3.01(a). Any fee collected by the Servicer for entering into any such
agreement will be retained by the Servicer as additional servicing compensation.

         Section 3.06.    Realization Upon Defaulted Mortgage Loans; Repurchase
of Certain Mortgage Loans. The Servicer shall foreclose upon or otherwise
comparably convert to ownership Mortgaged Properties securing such of the
Mortgage Loans as come into and continue in default when, in the opinion of the
Servicer based upon the practices and procedures referred to in the following
sentence, no satisfactory arrangements can be made for collection of delinquent
payments pursuant to Section 3.02; provided, that if the Servicer has knowledge
or reasonably believes that any Mortgaged Property is affected by hazardous or
toxic wastes or substances and that the acquisition of such Mortgaged Property
would not be commercially


                                       29
<PAGE>


reasonable, then the Servicer will not cause the Trust to acquire title to such
Mortgaged Property in a foreclosure or similar proceeding. In connection with
such foreclosure or other conversion, the Servicer shall follow such practices
(including, in the case of any default on a related senior mortgage loan, the
advancing of funds to correct such default) and procedures as it shall deem
necessary or advisable and as shall be normal and usual in its general mortgage
servicing activities. The foregoing is subject to the proviso that the Servicer
shall not be required to incur any Liquidation Expenses or to otherwise expend
its own funds in connection with any foreclosure or towards the correction of
any default on a related senior mortgage loan or restoration of any property
unless it shall determine that such expenditure will increase Net Liquidation
Proceeds.

         In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be issued to the Trustee, or to its nominee on behalf of the Trust.

         The Servicer, in its sole discretion, shall have the right but not the
obligation to purchase for its own account from the Trust any Mortgage Loan
which is 91 days or more delinquent. The Servicer shall notify Freddie Mac and
the Insurer in writing of any such purchase. The price for any Mortgage Loan
purchased hereunder (which shall be at a purchase price equal to the Loan
Purchase Price thereof), shall be deposited in the Collection Account and the
Trustee, upon receipt of a certificate from the Servicer in the form of Exhibit
C-1 hereto, shall release or cause to be released to the Servicer the related
Mortgage File and shall execute and deliver such instruments of transfer or
assignment prepared by the Servicer, in each case without recourse,
representation or warranty, as shall be necessary to vest in the purchaser of
such Mortgage Loans any Mortgage Loans released pursuant hereto and the Servicer
shall succeed to all the Trustee's right, title and interest in and to such
Mortgage Loans and all security and documents related thereto. Such assignment
shall be an assignment outright and not for security. The Servicer shall
thereupon own such Mortgage Loans, and all security and documents, free of any
further obligation to the Trustee, the Insurer, Freddie Mac, the Securityholders
or the Residual Certificateholders with respect thereto.

         Section 3.07.    Trustee to Cooperate. On or before each Payment Date,
the Servicer will notify the Trustee of the payment in full of the Principal
Balance of any Mortgage Loan during the preceding Collection Period, which
notification shall be by a certification (which certification shall include a
statement to the effect that all amounts received in connection with such
payment which are required to be deposited in the Collection Account pursuant to
Section 3.02 have been so deposited or credited) of a Servicing Officer. Upon
any such payment in full, the Servicer is authorized to execute, pursuant to the
authorization contained in Section 3.01, if the assignments of Mortgage have
been recorded as required hereunder, an instrument of satisfaction regarding the
related Mortgage, which instrument of satisfaction shall be recorded by the
Servicer if required by applicable law and be delivered to the Person entitled
thereto. It is understood and agreed that no expenses incurred in connection
with such instrument of satisfaction or transfer shall be reimbursed from
amounts deposited in the Collection Account. If the Trustee is holding the
Mortgage Files, from time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, or in connection with the payment in full of
the Principal Balance of any Mortgage Loan shall, upon request of the Servicer
and delivery to the Trustee of a Request for Release substantially in the form
attached hereto as Exhibit C signed by a


                                       30
<PAGE>


Servicing Officer, release the related Mortgage File to the Servicer and the
Trustee shall execute such documents, in the forms provided by the Servicer, as
shall be necessary to the prosecution of any such proceedings or the taking of
other servicing actions. Such trust receipt shall obligate the Servicer to
return the Mortgage File to the Trustee when the need therefor by the Servicer
no longer exists unless the Mortgage Loan shall be liquidated, in which case,
upon receipt of a certificate of a Servicing Officer similar to that hereinabove
specified, the trust receipt shall be released by the Trustee.

         In order to facilitate the foreclosure of the Mortgage securing any
Mortgage Loan that is in default following recordation of the Assignments of
Mortgage in accordance with the provisions hereof, the Trustee shall, if so
requested in writing by the Servicer, execute an appropriate assignment in the
form provided to the Trustee by the Servicer to assign such Mortgage Loan for
the purpose of collection to the Servicer or to the related subservicer (any
such assignment shall unambiguously indicate that the assignment is for the
purpose of collection only), and, upon such assignment, the Servicer will
thereupon bring all required actions in its own name and otherwise enforce the
terms of the Mortgage Loan and deposit the Net Liquidation Proceeds, exclusive
of Foreclosure Profits, received with respect thereto in the Collection Account.
In the event that all delinquent payments due under any such Mortgage Loan are
paid by the Mortgagor and any other defaults are cured, then the Servicer shall,
within two Business Days, reassign such Mortgage Loan to the Trustee and return
the related Mortgage File to the place where it was being maintained. The
Residual Certificateholders shall be deemed to have repurchased the ownership
interest in any Liquidated Mortgage Loan in Pool I beneficially held by Holders
of the Class A-1 Certificates. After such repurchase, the Servicer, if requested
by such Residual Certificateholders and if offered suitable indemnification and
reimbursement for expenses, is authorized to seek a deficiency judgment if
permitted by law against the Mortgagor under such Liquidated Mortgage Loan on
behalf of the Residual Certificateholders to the extent of any Liquidation Loss
Amount.

         Section 3.08.    Servicing Compensation; Payment of Certain Expenses by
Servicer. The Servicer shall be entitled to receive the Servicing Fee pursuant
to Section 3.03 as compensation for its services in connection with servicing
the Mortgage Loans. Moreover, additional servicing compensation in the form of
late payment charges or other receipts not required to be deposited in the
Collection Account (other than Foreclosure Profits) shall be retained by the
Servicer. The Servicer shall be required to pay all expenses incurred by it in
connection with its activities hereunder (including payment of all other fees
and expenses not expressly stated hereunder to be for the account of the
Securityholders and the Residual Certificateholders) and shall not be entitled
to reimbursement therefor except as specifically provided herein. Liquidation
Expenses are reimbursable to the Servicer solely from related Liquidation
Proceeds.

         Section 3.09.    Annual Statement as to Compliance.

         (a)    The Servicer will deliver to the Trustee, the Insurer, Freddie
Mac and the Rating Agencies, on or before March 31 of each year, beginning March
31, 2001, an Officer's Certificate stating that (i) a review of the activities
of the Servicer during the preceding fiscal year (or such shorter period as is
applicable in the case of the first report) and of its performance under this
Agreement has been made under such officer's supervision and (ii) to the best of
such


                                       31
<PAGE>


officer's knowledge, based on such review, the Servicer has fulfilled all of its
material obligations under this Agreement throughout such fiscal year, or, if
there has been a default in the fulfillment of any such obligation, specifying
each such default known to such officer and the nature and status thereof.

         (b)    The Servicer shall deliver to the Trustee, the Insurer, Freddie
Mac and each of the Rating Agencies, promptly after having obtained knowledge
thereof, but in no event later than five Business Days thereafter, written
notice by means of an Officer's Certificate of any event which with the giving
of notice or the lapse of time or both, would become an Event of Servicing
Termination.

         Section 3.10.    Annual Servicing Report. On or before March 31 of each
year, beginning March 31, 2001, the Servicer, at its expense, shall cause a firm
of nationally recognized independent public accountants (who may also render
other services to the Servicer) to furnish a report to the Trustee, the Insurer,
Freddie Mac and each Rating Agency to the effect that such firm has examined
certain documents and records relating to the servicing of mortgage loans during
the most recent fiscal year then ended under pooling and servicing agreements
(substantially similar to this Agreement, including this Agreement), that such
examination was conducted substantially in compliance with the audit guide for
audits of non-supervised mortgagees approved by the Department of Housing and
Urban Development for use by independent public accountants (to the extent that
the procedures in such audit guide are applicable to the servicing obligations
set forth in such agreements) and that such examination has disclosed no items
of noncompliance with the provisions of this Agreement which, in the opinion of
such firm, are material, except for such items of noncompliance as shall be set
forth in such report.

         Section 3.11.    Annual Opinion of Counsel. On or before March 31 of
each year, beginning March 31, 2001, the Sponsor, at its expense, shall deliver
to the Trustee, the Insurer and Freddie Mac the applicable Opinion of Counsel
specified in Exhibit B hereto.

         Section 3.12.    Access to Certain Documentation and Information
Regarding the Mortgage Loans.

         (a)    Servicer shall provide to the Trustee, the Insurer, Freddie Mac,
any Securityholders that are federally insured savings and loan associations,
the Office of Thrift Supervision, successor to the Federal Home Loan Bank Board,
the FDIC and the supervisory agents and examiners of the Office of Thrift
Supervision access to the documentation regarding the Mortgage Loans required by
applicable regulations of the Office of Thrift Supervision and the FDIC (acting
as operator of the SAIF or the BIF), such access being afforded without charge
but only upon reasonable request and during normal business hours at the offices
of the Servicer. Nothing in this Section 3.12 shall derogate from the obligation
of the Servicer to observe any applicable law prohibiting disclosure of
information regarding the Mortgagors and the failure of the Servicer to provide
access as provided in this Section 3.12 as a result of such obligation shall not
constitute a breach of this Section 3.12.

         (b)    The Servicer shall supply information in such form as the
Trustee shall reasonably request to the Trustee and the Paying Agent, on or
before the start of the Determination Date


                                       32
<PAGE>


preceding the related Payment Date, as is required in the Trustee's reasonable
judgment to enable the Paying Agent or the Trustee, as the case may be, to make
required distributions and to furnish the required reports to Securityholders
and to make any claim under the Policy.

         Section 3.13.    Maintenance of Certain Servicing Insurance Policies.
The Servicer shall maintain, at its own expense, a blanket fidelity bond (the
"Fidelity Bond") and an errors and omissions insurance policy, with broad
coverage with financially responsible companies on all officers, employees, or
other persons acting in any capacity with regard to the Mortgage Loans to handle
funds, money, documents and papers relating to the Mortgage Loans. The Fidelity
Bond and errors and omissions insurance policy shall be in the form of the
Mortgage Banker's Blanket Bond and shall protect and insure the Servicer against
losses, including forgery, theft, embezzlement, fraud, errors and omissions and
negligent acts of such persons. Such Fidelity Bond shall also protect and insure
the Servicer against losses in connection with the failure to maintain any
insurance policies required pursuant to this Agreement and the release or
satisfaction of a Mortgage Loan without having obtained payment in full of the
indebtedness secured thereby. No provision of this Section 3.13 requiring the
Fidelity Bond and errors and omissions insurance policy shall diminish or
relieve the Servicer from its duties and obligations as set forth in this
Agreement. The minimum coverage under any such bond and insurance policy shall
be at least equal to the corresponding amounts required by Freddie Mac in
Freddie Mac's Seller/Servicer's Guide. Upon request of the Trustee, the Servicer
shall cause to be delivered to the Trustee a certified true copy of the Fidelity
Bond and errors and omissions insurance policy and a statement from the surety
and the insurer that such Fidelity Bond and errors and omissions insurance
policy shall in no event be terminated or materially modified without thirty
days' prior written notice to the Trustee.

         Section 3.14.    Reports to the Securities and Exchange Commission. The
Trustee shall, on behalf of the Trust, cause to be filed with the Securities and
Exchange Commission any periodic reports required to be filed under the
provisions of the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Securities and Exchange Commission thereunder. Upon the
request of the Trustee, each of the Servicer and the Sponsor shall cooperate
with the Trustee in the preparation of any such report and shall provide to the
Trustee in a timely manner all such information or documentation as the Trustee
may reasonably request in connection with the performance of its duties and
obligations under this Section.

         Section 3.15.    Tax Returns. In accordance with Section 2.09 hereof,
the Servicer shall prepare and file any Federal, State or local income and
franchise tax return for the Trust as well as any other applicable return and
apply for a taxpayer identification number on behalf of the Trust as provided in
Article V of the Trust Agreement, including, without limitation, forms 1099 and
1065. The Sponsor shall treat the Mortgage Loans as its property for all
Federal, State or local tax purposes and shall report all income earned thereon
(including amounts payable as fees to the Servicer) as its income for income tax
purposes. In the event the Trust shall be required pursuant to an audit or
administrative proceeding or change in applicable regulations to file Federal,
State or local tax returns, the Servicer shall prepare and file or shall cause
to be prepared and filed any tax returns required to be filed by the Trust; the
Trustee shall promptly sign such returns and deliver such returns after
signature to the Servicer and such returns shall be filed by the Servicer. The
Trustee shall also prepare or shall cause to be prepared all tax information
required by law to be distributed to Securityholders. In no event shall the
Trustee or the


                                       33
<PAGE>


Servicer be liable for any liabilities, costs or expenses of the Trust, the
Securityholders, the Residual Certificateholders or the Security Owners arising
under any tax law, including, without limitation, Federal, state or local income
and franchise or excise taxes or any other tax imposed on or measured by income
(or any interest or penalty with respect thereto or arising from a failure to
comply therewith). The Trustee shall represent the Trust in any administrative
or judicial proceedings relating to an examination or audit by any governmental
taxing authority or otherwise act on behalf of the Trust in relation to any tax
matter involving the Trust, provided, that to the extent that such
representation affects Freddie Mac's obligations under the Guarantee, the
Trustee agrees to consult with Freddie Mac and accommodate Freddie Mac's
reasonable requests.

         Section 3.16.    Information Required by the Internal Revenue Service
Generally and Reports of Foreclosures and Abandonments of Mortgaged Property.
The Servicer shall prepare and deliver all federal and state information reports
when and as required by all applicable state and federal income tax laws. In
particular, with respect to the requirement under Section 6050J of the Code to
the effect that the Servicer shall make reports of foreclosures and abandonments
of any mortgaged property for each year beginning in 2000, the Servicer shall
file reports relating to each instance occurring during the previous calendar
year in which the Servicer (i) on behalf of the Trustee acquires an interest in
any Mortgaged Property through foreclosure or other comparable conversion in
full or partial satisfaction of a Mortgage Loan, or (ii) knows or has reason to
know that any Mortgaged Property has been abandoned. The reports from the
Servicer shall be in form and substance sufficient to meet the reporting
requirements imposed by Section 6050J.

         Section 3.17.    Inspection Rights; Miscellaneous. (a) Within 90
days of the Closing Date, Freddie Mac will have the right to review up to 500 of
the Mortgage Files and the related underwriting documentation in order to
ascertain whether each Mortgage Loan was originated generally in accordance with
the Servicer's underwriting criteria.If Freddie Mac determines that more than
20% (by number) of the 500 Mortgage Loans in such sample were not so originated
in accordance with such the Servicer's underwriting criteria, Freddie Mac will
have the right to review additional Mortgage Loans until Freddie Mac has
reviewed a sample of Mortgage Loans less than 20% (by number) of which were not
so originated.

         With respect to any Mortgage Loan for which the value of the related
Mortgaged Property at the time of origination did not adequately support the
original loan amount of the Mortgage Loan due to the value, condition,
marketability or adverse environmental conditions of such Mortgaged Property,
the Sponsor shall repurchase such Mortgage Loan or replace such Mortgage Loan
with a substitute Mortgage Loan acceptable to Freddie Mac. In addition, Freddie
Mac shall have the right to collect data on an additional 1,200 Mortgage Loans
over and above the Mortgage Loans reviewed as described in the first paragraph
of this Section 3.17(a).

         Freddie Mac has the right to review any Mortgage Loan at any time. With
respect to any Mortgage Loan that goes into foreclosure, Freddie Mac will have
the right to request that the Servicer deliver a copy of the related Mortgage
File to Freddie Mac.

         (b)    Freddie Mac, for a period of two years from the Closing Date,
may contact the Servicer to confirm that the Servicer continues actively to
engage in a business to originate


                                       34
<PAGE>

mortgage loans to low-income families and to obtain other non-proprietary
information about the Sponsor's activities that may assist Freddie Mac in
completing its own regulatory requirements. The Servicer will use its best
efforts to provide such information to Freddie Mac.

         (c)    For each Mortgage Loan, the Servicer will accurately and fully
report its borrower credit files to each of Equifax Credit Information Services,
Inc., TransUnion, LLC and Experion Information Solution, Inc. in a timely manner
on a monthly basis.

         (d)    Freddie Mac, from time to time, shall have the right to audit
the Servicer's servicing practices and to review the Mortgage Files. The
Servicer shall forward to Freddie Mac all of its financial statements.

         (e)    The Servicer will not increase the applicable Credit Limit on
any HELOC Mortgage Loan included in Pool I.

         (f)    The Servicer will not allow any further draws on any HELOC
Mortgage Loan if the related borrower is (i) 90 days delinquent in payment of
principal and interest on such HELOC Mortgage Loan or (ii) 60 days delinquent in
payment of principal and interest on such HELOC Mortgage Loan, unless a payment
has been made by the borrower in the last 30 days on that HELOC Mortgage Loan.


                                   ARTICLE IV

                              SERVICING CERTIFICATE

         Section 4.01.    Servicing Certificate. Not later than seven (7)
Business Days prior to the Payment Date, the Servicer shall deliver (a) to the
Trustee, the Statement to each Class of Securityholders required to be prepared
pursuant to Section 8.8 of the Pooling Agreement and (b) to the Trustee, the
Sponsor, the Paying Agent, the Insurer, Freddie Mac and each Rating Agency a
Servicing Certificate (in written form or the form of computer readable media or
such other form as may be agreed to by the Trustee and the Servicer), together
with an Officer's Certificate to the effect that such Servicing Certificate is
true and correct in all material respects, stating the related Collection
Period, Payment Date, the series number of the Securities, the date of this
Agreement, and:

                (i)      the aggregate amount of collections received on the
         Mortgage Loans on or prior to the Determination Date in respect of such
         Collection Period;

                (ii)     the aggregate amount of (a) Interest Collections and
         (b) Principal Collections for such Collection Period;

                (iii)    the Class A-1 Certificate Rate and the Class A-2 Note
         Rate;

                (iv)     the amount, if any, of such Class A-1 Interest Payment
         Amount or Class A-2 Interest Payment Amount that is not payable on
         account of insufficient Securityholders' Interest Collections;


                                       35
<PAGE>


                (v)      the Accelerated Principal Payments to be distributed
         pursuant to Section 8.7(d)(viii) of the Pooling Agreement;

                (vi)     the Principal Collections for such Payment Date,
         separately stating the components thereof;

                (vii)    any accrued and unpaid Servicing Fees for previous
         Collection Periods and the Servicing Fee for such Collection Period;

                (viii)   the related Pool Balance for each Pool as of the end of
         the preceding Collection Period and as of the end of the second
         preceding Collection Period;

                (ix)     the Class A-1 Certificate Principal Balance and the
         Class A-2 Note Principal Balance and related Pool Factor after giving
         effect to the distribution on such Payment Date;

                (x)      the aggregate amount of Additional Balances created
         during the previous Collection Period;

                (xi)     by Pool and in the aggregate, the number and aggregate
         Principal Balances of Mortgage Loans (A) as to which the Minimum
         Monthly Payment is delinquent for 30-59 days, 60-89 days, 90-119 days,
         120-149 days, 150-179 days and 180 or more days respectively and (B)
         that have become REO, in each case as of the end of the preceding
         Collection Period; (C) as to which foreclosure proceedings have been
         commenced, and (D) in bankruptcy and delinquent as of the close of
         business on the last day of the calendar month preceding such
         Distribution Date;

                (xii)    whether a Rapid Amortization Event has occurred since
         the prior Determination Date, specifying each such Rapid Amortization
         Event if one has occurred;

                (xiii)   whether an Event of Servicing Termination has occurred
         since the prior Determination Date, specifying each such Event of
         Servicing Termination if one has occurred;

                (xiv)    the amount to be distributed to the Insurer or Freddie
         Mac pursuant to Section 8.7(d)(ii) and Section 8.7(d)(vii) of the
         Pooling Agreement, stated separately;

                (xv)     the amount to be distributed to the Reserve Fund
         pursuant to Section 8.7(d)(x) of the Pooling Agreement;

                (xvi)    Insured Payments, if any, for such Payment Date
         including any related Deficiency Amount and any related Preference
         Amount;

                (xvii)   the amount to be distributed to the related Residual
         Certificateholders pursuant to Section 8.7(d)(xiv) of the Pooling
         Agreement;

                (xviii)  the amount to be paid to the Servicer pursuant to
         Section 8.7(d)(xi) of the Pooling Agreement;


                                       36
<PAGE>


                (xix)    the total amount of funds on deposit in the Reserve
         Fund;

                (xx)     the related Overcollateralization Amount after giving
         effect to the distribution to be made on such Payment Date; and

                (xxi)    the number and Principal Balances of any Mortgage Loans
         removed to the Sponsor pursuant to Section 2.07;

                (xxii)   the amount to be drawn under the Demand Note;

                (xxiii)  the Six Month Rolling Pool Delinquency Rate for each
         Pool; and

                (xxiv)   the cumulative Liquidation Loss Amounts with respect to
         Pool I as a percentage of both the Initial Pool I Balance and the
         current Pool Balance with respect to Pool I and the cumulative
         Liquidation Loss Amounts with respect to Pool II as a percentage of
         both the Initial Pool II Balance and the current Pool Balance with
         respect to Pool II.

         The Trustee shall conclusively rely upon the information contained in a
Servicing Certificate for purposes of making distributions pursuant to Section
8.7 of the Pooling Agreement, shall have no duty to inquire into such
information and shall have no liability in so relying. The format and content of
the Servicing Certificate may be modified by the mutual agreement of the
Servicer, the Trustee, the Insurer and Freddie Mac. The Servicer shall give
notice of any such change to the Rating Agencies.

         Section 4.02.    Freddie Mac Certificate. On the Determination Date
prior to each Payment Date, the Trustee shall complete and deliver to Freddie
Mac, in an electronic format reasonably acceptable to Freddie Mac, certificates
as to each Payment Date in the form of the Freddie Mac Certificates attached
hereto as Exhibit F-1 hereto.

         Section 4.03.    The Trustee Remittance Report.

         (a)    On each Determination Date by noon Pacific coast time, the
Trustee shall furnish a report (the "Trustee Remittance Report") in the form
attached as Exhibit F-1 to this Agreement (together with a statement containing
the information that is required to be included in the statement to be prepared
by the Trustee pursuant to Section 4.03) to the Guarantor by electronic medium
as agreed to by the Trustee and the Guarantor.

         (b)    Subject to paragraph (d) below, if in any month the Trustee
fails to deliver the Trustee Remittance Report by 5:00 p.m. Pacific coast time
on the related Determination Date, the Guarantor shall use its best efforts to
determine the amount of any required Guarantor Payment. If on any Distribution
Date the Guarantor makes any Guarantor Payment as a result of the failure of the
Trustee to distribute any remittance, the Trustee shall pay the Guarantor from
its own funds (not from the proceeds of the Trust Fund), not later than the
fourth Business Day following such Distribution Date, a $100 fee plus an amount
equal to the product of (i) the principal portion of such Guarantor Payment,
(ii) a percentage equal to (A) the Prime Rate plus 2.00% divided by (B) 365 and
(iii) the number of days between the Determination Date and the date on which
the Guarantor received the Trustee Remittance Report.


                                       37
<PAGE>


         (c)    Subject to paragraph (d) below, if in any month the Trustee
fails to provide the Guarantor the Trustee Remittance Report on or prior to the
Determination Date, the Trustee shall pay to the Guarantor the following
amounts: (i) upon the first such failure, $500; (ii) upon the second such
failure, $750; and (iii) upon the third such failure, $1,000; provided, however,
that the Trustee shall not be required to make any such payment upon the first
such failure during each successive two year period following the Closing Date.
The fourth consecutive such failure to provide a Trustee Remittance Report to
the Guarantor pursuant to Section 4.05 (a) shall constitute an event of default
and permit the Guarantor to remove the Trustee for cause.

         (d)    The Trustee shall have no responsibility or liability (including
removal as Trustee) under paragraphs (b) and (c) of this Section 4.03 if the
Trustee's failure to timely deliver the Trustee Remittance Report is due to the
failure of the Servicer to furnish the Trustee with a report in accordance with
Section 4.03(a). If the Trustee's failure to timely deliver the Trustee
Remittance Report is due to the failure of the Servicer to furnish the Trustee
with a report in accordance with Section 4.03(a), the Servicer shall pay to the
Guarantor the amount set forth in Section 4.03(b) above (i.e., the product of
the amounts described in clauses (i), (ii) and (iii) of Section 4.03(b) above)
and the following additional amounts: (i) upon the first such failure, $500;
(ii) upon the second such failure, $750; and (iii) upon the third such failure,
$1,000; provided, however, that the Servicer shall not be required to make any
such payment upon the first such failure during each successive two year period
following the Closing Date. The fourth consecutive such failure to provide the
Trustee with a report to accordance with Section 4.04(a) and thereby causing the
Trustee's failure to timely deliver a Trustee Remittance Report to the Guarantor
pursuant to Section 4.03(a) shall constitute an Event of Servicing Termination
and permit the Guarantor to remove the Servicer for cause.

         (e)    On each Determination Date by 5:00 p.m. Pacific coast time, the
Trustee shall forward to the Guarantor by electronic medium as agreed to by the
Trustee and the Guarantor a report describing each Mortgage Loan that became a
Liquidated Mortgage Loan during the related Collection Period, any Liquidation
Proceeds received or Liquidation Loss Amounts incurred with respect to each such
Liquidated Mortgage Loan and Liquidation Expenses incurred in the liquidation of
any such Liquidated Mortgage Loan, in each case to the extent that the Trustee
has received from the Servicer a report providing such information.

         Section 4.04.    Loan Data Remittance Report.

         (a)    On the seventh Business Day before each Payment Date (the "Loan
Data Remittance Date") by 5:00 p.m. Pacific coast time, the Servicer shall
furnish a report (the "Loan Data Remittance Report") in the form attached as
Exhibit F-2 to this Agreement to the Guarantor by electronic medium as agreed to
by the Servicer and the Guarantor.

         (b)    If in any month the Servicer fails to provide the Guarantor the
Loan Data Remittance Report on or prior to the Loan Data Remittance Date, the
Servicer shall pay to the Guarantor the following amounts: (i) upon the first
such failure, $500; (ii) upon the second such failure, $750; and (iii) upon the
third such failure, $1,000; provided, however, that the Servicer shall not be
required to make any such payment upon the first such failure during each
successive two year period following the Closing Date. The fourth consecutive
such failure to


                                       38
<PAGE>


provide a Loan Data Remittance Report to the Guarantor pursuant to Section
4.04(a) shall constitute an event of default and permit the Guarantor to remove
the Servicer for cause.

         Section 4.05.    Reserve Fund.

         (a)    Amounts on deposit in the Reserve Fund will, at the direction of
the Servicer, be invested in Eligible Investments maturing no later than the day
before the next Payment Date.

         All income and gain realized from any investment of funds in the
Reserve Fund shall be considered part of the Reserve Fund until released
pursuant to the Pooling Agreement. Following that point all earnings shall go to
the Sponsor. The Sponsor will report for Federal, state and local income tax
purposes the income, if any, represented by the Reserve Fund.

         (b)    Following the termination of the Trust pursuant to Section 7.01
hereof, the Trustee shall withdraw all amounts then on deposit in the Reserve
Fund pursuant to the Pooling Agreement.


                                   ARTICLE V

                          THE SERVICER AND THE SPONSOR

         Section 5.01.    Liability of the Servicer and the Sponsor. The
Servicer shall be liable in accordance herewith only to the extent of the
obligations specifically imposed upon and undertaken by the Servicer herein. The
Sponsor shall be liable in accordance herewith only to the extent of the
obligations specifically imposed upon and undertaken by the Sponsor.

         Section 5.02.    Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer or the Sponsor. Any corporation into which the
Servicer or the Sponsor may be merged or consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Servicer or
the Sponsor shall be a party, or any corporation succeeding to the business of
the Servicer or the Sponsor, shall be the successor of the Servicer or the
Sponsor, as the case may be, hereunder, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.

         Section 5.03.    Limitation on Liability of the Servicer and Others.
Neither the Servicer nor any of the directors or officers or employees or agents
of the Servicer shall be under any liability to the Trust or the Securityholders
or Residual Certificateholders for any action taken or for refraining from the
taking of any action by the Servicer in good faith pursuant to this Agreement,
or for errors in judgment; provided, however, that this provision shall not
protect the Servicer or any such Person against any breach of representations
and warranties made herein, or against any specific liability imposed on the
Servicer for a breach of its servicing under this Agreement or against liability
which would otherwise be imposed by reason of willful misfeasance, bad faith or
negligence in the performance of duties of the Servicer or by reason of reckless
disregard of obligations and duties of the Servicer hereunder. The Servicer and
any director or officer or employee or agent of the Servicer may rely in good
faith on any document of any kind prima facie properly executed and submitted by
any Person respecting any matters arising hereunder. The Servicer and any
director or officer or employee or agent of the Servicer


                                       39
<PAGE>


shall be indemnified by the Trust and held harmless against any loss, liability
or expense incurred in connection with any legal action relating to this
Agreement or the Securities, other than any loss, liability or expense related
to any specific Mortgage Loan (except as any such loss, liability or expense
shall be otherwise reimbursable pursuant to this Agreement) and any loss,
liability or expense incurred by reason of its willful misfeasance, bad faith or
negligence, breach of representations and warranties made herein, or against any
specific liability imposed on the Servicer for a breach of its servicing under
this Agreement or against in the performance of duties hereunder or by reason of
its reckless disregard of obligations and duties hereunder. The Servicer shall
not be under any obligation to appear in, prosecute or defend any legal action
which is not incidental to duties to service the Mortgage Loans in accordance
with this Agreement, and which in its opinion may involve it in any expense or
liability; provided, however, that the Servicer may in its sole discretion
undertake any such action which it may deem necessary or desirable in respect of
this Agreement, and the rights and duties of the parties hereto and the
interests of the Securityholders and Residual Certificateholders hereunder. In
such event, the reasonable legal expenses and costs of such action and any
liability resulting therefrom shall be expenses, costs and liabilities of the
Trust and the Servicer shall only be entitled to be reimbursed therefor pursuant
to Section 8.7(d)(xi) of the Pooling Agreement. The Servicer's right to
indemnity or reimbursement pursuant to this Section 5.03 shall survive any
resignation or termination of the Servicer pursuant to Section 5.04 or 6.01 with
respect to any losses, expenses, costs or liabilities arising prior to such
resignation or termination (or arising from events that occurred prior to such
resignation or termination).

         Section 5.04.    Servicer Not to Resign. Subject to the provisions of
Section 5.02, the Servicer shall not resign from the obligations and duties
hereby imposed on it except (i) upon determination that the performance of its
obligations or duties hereunder are no longer permissible under applicable law
or are in material conflict by reason of applicable law with any other
activities carried on by it or its subsidiaries or Affiliates, the other
activities of the Servicer so causing such a conflict being of a type and nature
carried on by the Servicer or its subsidiaries or Affiliates at the date of this
Agreement or (ii) upon satisfaction of the following conditions: (a) the
Servicer has proposed a successor servicer to the Trustee, the Insurer and
Freddie Mac in writing and such proposed successor servicer is reasonably
acceptable to the Trustee; (b) each Rating Agency shall have delivered a letter
to the Trustee and the Controlling Party prior to the appointment of the
successor servicer stating that the proposed appointment of such successor
servicer as Servicer hereunder will not result in the qualification, reduction
or withdrawal of the then current rating of the Securities without regard to the
Policy; and (c) such proposed successor servicer is reasonably acceptable to the
Insurer and Freddie Mac, as evidenced by a letter from each to the Trustee;
provided, however, that no such resignation by the Servicer shall become
effective until the Trustee or successor servicer designated by the Servicer as
provided above shall have assumed the Servicer's responsibilities and
obligations hereunder or the Trustee shall have designated a successor servicer
in accordance with Section 6.02. Any such resignation shall not relieve the
Servicer of responsibility for any of the obligations specified in Sections 6.01
and 6.02 as obligations that survive the resignation or termination of the
Servicer. Any such determination permitting the resignation of the Servicer
pursuant to clause (i) above shall be evidenced by an Opinion of Counsel to such
effect delivered to the Trustee, the Insurer and Freddie Mac. The Servicer shall
have no claim (whether by subrogation or otherwise) or other action against any
Securityholder or Residual


                                       40
<PAGE>


Certificateholder for any amounts paid by the Servicer pursuant to any provision
of this Agreement.

         Section 5.05.    Delegation of Duties. In the ordinary course of
business, the Servicer at any time may delegate any of its duties hereunder to
any Person, including any of its Affiliates, or any subservicer referred to in
Section 3.01, who agrees to conduct such duties in accordance with standards
comparable to those with which the Servicer complies pursuant to Section 3.01.
Such delegation shall not relieve the Servicer of its liabilities and
responsibilities with respect to such duties and shall not constitute a
resignation within the meaning of Section 5.04. The Servicer's delegation of any
of its duties hereunder to any subservicer shall be subject to the prior
approval of the Controlling Party.

         Section 5.06.    Indemnification of the Trust by the Servicer. The
Servicer shall indemnify and hold harmless the Trust, the Owner Trustee and the
Trustee from and against any loss, liability, expense, damage or injury suffered
or sustained by reason of the Servicer's activities or omissions in servicing or
administering the Mortgage Loans that are not in accordance with this Agreement,
including, but not limited to, any judgment, award, settlement, reasonable
attorneys' fees and other costs or expenses incurred in connection with the
defense of any actual or threatened action, proceeding or claim. Any such
indemnification shall not be payable from the assets of the Trust. The
provisions of this indemnity shall run directly to and be enforceable by an
injured party subject to the limitations hereof. The provisions of this Section
5.06 shall survive termination of this Agreement.

         Section 5.07.    Indemnification of the Trust by the Sponsor.
Notwithstanding anything to the contrary contained herein, the Sponsor (i)
agrees to be liable directly to the injured party for the entire amount of any
losses, claims, damages, liabilities and expenses of the Trust (other than those
attributable to a Securityholder as a result of defaults on the Mortgage Loans)
to the extent that the Sponsor would be liable if the Trust were a partnership
under the Delaware Revised Uniform Limited Partnership Act in which the Sponsor
was a general partner and (ii) shall indemnify and hold harmless the Trust, the
Owner Trustee and the Trustee from and against any loss, liability, expense,
damage, claim or injury (other than those attributable to a Securityholder as a
result of defaults on the Mortgage Loans) arising out of or based on this
Agreement by reason of any acts, omissions, or alleged acts or omissions arising
out of activities of the Trust, the Owner Trustee or the Trustee, or the actions
of the Servicer, including, but not limited to, amounts payable to the Servicer
pursuant to Section 5.03, any judgment, award, settlement, reasonable attorneys'
fees and other costs or expenses incurred in connection with the defense of any
actual or threatened action, proceeding or claim; provided that the Sponsor
shall not indemnify the Owner Trustee or the Trustee (but shall indemnify any
other injured party) if such loss, liability, expense, damage or injury is due
to the Owner Trustee's or the Trustee's willful malfeasance, bad faith or
negligence, breach of representations and warranties made herein, or against any
specific liability imposed on the Owner Trustee or Trustee for a breach of its
obligations hereunder. The provisions of this indemnity shall run directly to
and be enforceable by an injured party subject to the limitations hereof.

         Section 5.08.    Limitation on Liability of the Sponsor. None of the
directors or officers or employees or agents of the Sponsor shall be under any
liability to the Trust, the Owner Trustee or the Trustee, the Securityholders or
the Residual Certificateholders, it being


                                       41
<PAGE>


expressly understood that all such liability is expressly waived and released as
a condition of, and as consideration for, the execution of this Agreement and
the issuance of the Securities; provided, however, that this provision shall not
protect any such Person against any liability which would otherwise be imposed
by reason of willful misfeasance, bad faith, negligence or breach of
representations and warranties made herein, or against any specific liability
imposed on such Person in the performance of the duties hereunder. Except as
provided in Section 5.07, the Sponsor shall not be under any liability to the
Trust, the Owner Trustee or the Trustee or the Securityholders or Residual
Certificateholders for any action taken or for refraining from the taking of any
action in its capacity as Sponsor pursuant to this Agreement whether arising
from express or implied duties under this Agreement; provided, however, that
this provision shall not protect the Sponsor against any liability which would
otherwise be imposed by reason of willful misfeasance, bad faith or negligence
in the performance of its duties or by reason of reckless disregard of its
obligations and duties hereunder. The Sponsor and any director or officer or
employee or agent of the Sponsor may rely in good faith on any document of any
kind prima facie properly executed and submitted by any Person respecting any
matters arising hereunder.


                                   ARTICLE VI

                              SERVICING TERMINATION

         Section 6.01.    Events of Servicing Termination. If any one of the
following events ("Events of Servicing Termination") shall occur and be
continuing:

                (i)      Any failure by the Servicer to deposit in the
         Collection Account any deposit required to be made under the terms of
         this Agreement which continues unremedied for a period of one Business
         Day after the date upon which written notice of such failure shall have
         been given to the Servicer by the Trustee or to the Servicer and the
         Trustee by the Insurer or Freddie Mac or Holders of Securities
         evidencing more than 25% of the Principal Balance of the Securities
         instruct otherwise; or

                (ii)     Failure on the part of the Servicer duly to observe or
         perform in any material respect any other covenants or agreements of
         the Servicer set forth in the Securities or in this Agreement, which
         failure continues unremedied for a period of 15 days after the date on
         which written notice of such failure, requiring the same to be
         remedied, and stating that such notice is a "Notice of Default"
         hereunder, shall have been given to the Servicer by the Trustee or to
         the Servicer and the Trustee by the Insurer or Freddie Mac or the
         Holders of Securities evidencing Percentage Interests aggregating not
         less than 25%; or

                (iii)    The entry against the Servicer of a decree or order by
         a court or agency or supervisory authority having jurisdiction in the
         premises for the appointment of a trustee, conservator, receiver or
         liquidator in any insolvency, conservatorship, receivership,
         readjustment of debt, marshalling of assets and liabilities or similar
         proceedings, or for the winding up or liquidation of its affairs, and
         the continuance of any such decree or order unstayed and in effect for
         a period of 60 consecutive days; or


                                       42
<PAGE>

                (iv)     The consent by the Servicer to the appointment of a
         trustee, conservator, receiver or liquidator in any insolvency,
         conservatorship, receivership, readjustment of debt, marshalling of
         assets and liabilities or similar proceedings of or relating to the
         Servicer or of or relating to substantially all of its property; or the
         Servicer shall admit in writing its inability to pay its debts
         generally as they become due, file a petition to take advantage of any
         applicable insolvency or reorganization statute, make an assignment for
         the benefit of its creditors, or voluntarily suspend payment of its
         obligations;

                (v)      the occurrence of an Event of Servicer Termination
         under the Insurance Agreement;

                (vi)     the Servicer is no longer an "approved servicer" of
         Freddie Mac

then, and in each and every such case, so long as an Event of Servicing
Termination shall not have been remedied by the Servicer, either the Trustee,
the Controlling Party or the Holders of Securities evidencing more than 50% of
the Outstanding Amount of the Securities instruct otherwise, in each case with
the consent of the Controlling Party, by notice then given in writing to the
Servicer (and to the Trustee if given by the Insurer or the Holders of
Securities) may terminate all of the rights and obligations of the Servicer as
servicer under this Agreement. Upon the occurrence of a Servicer Termination
Delinquency Rate Trigger or Servicer Termination Loss Trigger as those terms are
defined in the Insurance Agreement, the Insurer may, in its reasonable
discretion, terminate all of the rights and obligations of the Servicer pursuant
to the terms hereof. Any such notice to the Servicer shall also be given to each
Rating Agency, Freddie Mac and the Insurer. On or after the receipt by the
Servicer of such written notice, all authority and power of the Servicer under
this Agreement, whether with respect to the Securities or the Mortgage Loans or
otherwise, shall pass to and be vested in the Trustee pursuant to and under this
Section 6.01; and, without limitation, the Trustee is hereby authorized and
empowered to execute and deliver, on behalf of the Servicer, as attorney-in-fact
or otherwise, any and all documents and other instruments, and to do or
accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the transfer and
endorsement of each Mortgage Loan and related documents, or otherwise. The
Servicer agrees to cooperate with the Trustee in effecting the termination of
the responsibilities and rights of the Servicer hereunder, including, without
limitation, the transfer to the Trustee for the administration by it of all cash
amounts that shall at the time be held by the Servicer and to be deposited by it
in the Collection Account, or that have been deposited by the Servicer in the
Collection Account or thereafter received by the Servicer with respect to the
Mortgage Loans. All reasonable costs and expenses (including attorneys' fees)
incurred in connection with amending this Agreement to reflect such succession
as Servicer pursuant to this Section 6.01 shall be paid by the predecessor
Servicer (or if the predecessor Servicer is the Trustee, the initial Servicer)
upon presentation of reasonable documentation of such costs and expenses.

         Notwithstanding the foregoing, a delay in or failure of performance
under Section 6.01(i) for a period of one Business Day or under Section 6.01(ii)
for a period of 15 days, shall not constitute an Event of Servicing Termination
if such delay or failure could not be prevented by the exercise of reasonable
diligence by the Servicer and such delay or failure was caused by an


                                       43
<PAGE>


act of God or the public enemy, acts of declared or undeclared war, public
disorder, rebellion or sabotage, epidemics, landslides, lightning, fire,
hurricanes, earthquakes or floods. The preceding sentence shall not relieve the
Servicer from using its best efforts to perform its respective obligations in a
timely manner in accordance with the terms of this Agreement and the Servicer
shall provide the Trustee, the Sponsor, Freddie Mac, the Insurer and the
Securityholders and Residual Certificateholders with an Officer's Certificate
giving prompt notice of such failure or delay by it, together with a description
of its efforts to so perform its obligations. The Servicer shall immediately
notify the Trustee, the Insurer and Freddie Mac in writing of any Events of
Servicing Termination.

         Section 6.02.    Trustee to Act; Appointment of Successor.

         (a)    On and after the time the Servicer receives a notice of
termination pursuant to Section 6.01 or resigns pursuant to Section 5.04, the
Trustee shall be the successor in all respects to the Servicer in its capacity
as servicer under this Agreement and the transactions set forth or provided for
herein and shall be subject to all the responsibilities, duties and liabilities
relating thereto placed on the Servicer by the terms and provisions hereof.
Notwithstanding the above, if the Trustee becomes the Servicer hereunder, it
shall have no responsibility or obligation (i) of repurchase or substitution
with respect to any Mortgage Loan, (ii) with respect to any representation or
warranty of the Servicer, and (iii) for any act or omission of either a
predecessor or successor Servicer other than the Trustee. As compensation
therefor, the Trustee shall be entitled to such compensation as the Servicer
would have been entitled to hereunder if no such notice of termination had been
given. In addition, the Trustee will be entitled to compensation with respect to
its expenses in connection with conversion of certain information, documents and
record keeping, as provided in Section 6.7 and 6.8 of the Pooling Agreement.
Notwithstanding the above, (i) if the Trustee is unwilling to act as successor
Servicer, or (ii) if the Trustee is legally unable so to act, the Trustee may
with the consent of the Controlling Party (in the situation described in clause
(i)) or shall (in the situation described in clause (ii)) appoint or petition a
court of competent jurisdiction to appoint, any established housing and home
finance institution, bank or other mortgage loan or home equity loan servicer
with all licenses and permits required to perform its obligations under this
Agreement and having a net worth of not less than $15,000,000 as the successor
to the Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Servicer hereunder; provided that
any such successor Servicer shall be acceptable to the Controlling Party, as
evidenced by the prior written consent of each of them, which consent shall not
be unreasonably withheld; and provided, further, that the appointment of any
such successor Servicer will not result in the qualification, reduction or
withdrawal of the ratings assigned to the Securities by the Rating Agencies
without regard to the Policy. Pending appointment of a successor to the Servicer
hereunder, unless the Trustee is prohibited by law from so acting, the Trustee
shall act in such capacity as hereinabove provided. In connection with such
appointment and assumption, the successor shall be entitled to receive
compensation out of payments on Mortgage Loans in an amount equal to the
compensation which the Servicer would otherwise have received pursuant to
Section 3.08 (or such lesser compensation as the Trustee and such successor
shall agree). The Trustee and such successor shall take such action, consistent
with this Agreement, as shall be necessary to effectuate any such succession.


                                       44
<PAGE>


         (b)    Any successor, including the Trustee, to the Servicer as
servicer shall during the term of its service as servicer (i) continue to
service and administer the Mortgage Loans for the benefit of the Securityholders
and Residual Certificateholders, the Insurer and Freddie Mac and (ii) maintain
in force a policy or policies of insurance covering errors and omissions in the
performance of its obligations as Servicer hereunder and a fidelity bond in
respect of its officers, employees and agents to the same extent as the Servicer
is so required pursuant to Section 3.13. The appointment of a successor Servicer
shall not affect any liability of the predecessor Servicer which may have arisen
under this Agreement prior to its termination as Servicer (including, without
limitation, any deductible under an Insurance Policy pursuant to Section 3.04),
nor shall any successor Servicer be liable for any acts or omissions of the
predecessor Servicer or for any breach by such Servicer of any of its
representations or warranties contained herein.

         Section 6.03.    Notification to Securityholders and Residual
Certificateholders. Upon any termination or appointment of a successor to the
Servicer pursuant to this Article VI or Section 5.04, the Trustee shall give
prompt written notice thereof to the Securityholders and Residual
Certificateholders (at their respective addresses appearing in the Security
Register and in the Residual Certificate Register), the Insurer, Freddie Mac and
each Rating Agency.


                                   ARTICLE VII

                                   TERMINATION

         Section 7.01.    Termination.

         (a)    The respective obligations and responsibilities of the Servicer,
the Sponsor and the Trustee created hereby (other than the obligation of the
Trustee to make certain payments to Securityholders after the final Payment Date
and the obligation of the Servicer to send certain notices as hereinafter set
forth) shall terminate upon the last action required to be taken by the Trustee
on the final Payment Date pursuant to this Article VII following the later of
(A) the Payment Date following payment in full of all amounts owing to the
Insurer and Guarantor and (B) the earliest of (i) the transfer, under the
conditions specified in Section 7.01(b), to the Sponsor of the Securityholders'
interest in each Mortgage Loan and all property acquired in respect of any
Mortgage Loans remaining in the Trust for an amount equal to the sum of (v) the
sum of the Class A-1 Certificate Principal Balance and the Class A-2 Note
Principal Balance, (w) the sum of accrued and unpaid Class A-1 Interest Payment
Amount and Class A-2 Interest Payment Amount through the day preceding the final
Payment Date, and (x) Class A-1 Deferred Interest and Class A-2 Deferred
Interest and any interest accrued on any Class A-1 Deferred Interest or Class
A-2 Deferred Interest to the extent legally permissible, and (y) all amounts due
and owing the Insurer pursuant to the Insurance Agreement and Section 8.7 of the
Pooling Agreement and (z) all amounts due and owing Freddie Mac under the
Pooling Agreement, (ii) the day following the Payment Date on which the
distribution made to Securityholders has reduced the Class A-1 Certificate
Principal Balance and the Class A-2 Note Principal Balance to zero and no other
amounts are owed to the Securityholders hereunder pursuant to the Insurance
Agreement and Section 8.7 of the Pooling Agreement, (iii) the final payment or
other liquidation of the last Mortgage Loan remaining in the Trust (including,
without limitation, the disposition of the Mortgage Loans pursuant to Section
5.4 of the Pooling Agreement) or the disposition of all property acquired upon
foreclosure or deed in lieu of foreclosure of any Mortgage Loan and


                                       45
<PAGE>


(iv) the Payment Date in January, 2027; provided, however, that in no event
shall the trust created hereby continue beyond the expiration of 21 years from
the date of death of the last surviving descendants of Joseph P. Kennedy, the
late ambassador of the United States to the Court of St. James, living on the
date hereof. Upon termination in accordance with clause (a)(B)(i) of this
Section 7.01, the Trustee shall execute such documents and instruments of
transfer presented by the Sponsor, in each case without recourse, representation
or warranty, and take such other actions as the Sponsor may reasonably request
to effect the transfer of the Mortgage Loans to the Sponsor.

         (b)    (i)      The Sponsor shall have the right to exercise the
         option to effect the transfer to the Sponsor of each Pool I Mortgage
         Loan pursuant to Section 7.01(a)(B) above on any Payment Date on or
         after the Payment Date immediately prior to which the Class A-1
         Certificate Principal Balance is less than or equal to ten percent
         (10%) of the Original Class A-1 Certificate Principal Balance and all
         amounts due and owing to the Insurer for unpaid premiums and
         unreimbursed draws on the Policy (in each case, related to the Class
         A-1 Certificates) and all other amounts due and owing to the Insurer
         pursuant to the Insurance Agreement, together with interest thereon as
         provided under the Insurance Agreement, and all amounts due and owing
         to Freddie Mac under the Pooling Agreement, have been paid.

                (ii)     The Sponsor shall have the right to exercise the option
         to effect the transfer to the Sponsor of each Pool II Mortgage Loan
         pursuant to Section 7.01(a)(B) above on any Payment Date on or after
         the Payment Date immediately prior to which the Class A-2 Note
         Principal Balance is less than or equal to ten percent (10%) of the
         Original Class A-2 Note Principal Balance and all amounts due and owing
         to the Insurer for unpaid premiums and unreimbursed draws on the Policy
         (in each case, related to the Class A-2 Notes) and all other amounts
         due and owing to the Insurer for unpaid premiums and unreimbursed draws
         on the Policy and all other amounts due and owing to the Insurer
         pursuant to the Insurance Agreement, together with interest thereon as
         provided under the Insurance Agreement, have been paid.

         (c)    The Sponsor, at its expense, shall prepare and deliver to the
Trustee for execution, at the time the related Mortgage Loans are to be released
to the Sponsor, appropriate documents assigning each such Mortgage Loan from the
Trustee to the Sponsor and shall promptly record such assignments.

         (d)    The Sponsor shall not exercise its right to repurchase the
Mortgage Loans pursuant to Section 7.01(b) hereof if such repurchase would
result in a draw on the Policy, without the consent of the Insurer, which
consent shall not be unreasonably withheld.


                                       46
<PAGE>

                                  ARTICLE VIII

                      ADMINISTRATIVE DUTIES OF THE SERVICER

         Section 8.01.    Administrative Duties.

         (a)    Duties with Respect to the Pooling Agreement. The Servicer shall
perform all its duties and the duties of the Issuer under the Pooling Agreement.
In addition, the Servicer shall consult with the Owner Trustee as the Servicer
deems appropriate regarding the duties of the Issuer under the Pooling
Agreement. The Servicer shall monitor the performance of the Issuer and shall
advise the Owner Trustee when action is necessary to comply with the Issuer's
duties under the Pooling Agreement. The Servicer shall prepare for execution by
the Issuer or shall cause the preparation by other appropriate Persons of all
such documents, reports, filings, instruments, certificates and opinions as it
shall be the duty of the Issuer to prepare, file or deliver pursuant to the
Pooling Agreement. In furtherance of the foregoing, the Servicer shall take all
necessary action that is the duty of the Issuer to take pursuant to the Pooling
Agreement.

         (b)    Duties with Respect to the Issuer.

                (i)      In addition to the duties of the Servicer set forth in
         this Agreement or any of the Basic Documents, the Servicer shall
         perform such calculations and shall prepare for execution by the Issuer
         or the Owner Trustee or shall cause the preparation by other
         appropriate Persons of all such documents, reports, filings,
         instruments, certificates and opinions as it shall be the duty of the
         Issuer or the Owner Trustee to prepare, file or deliver pursuant to
         this Agreement or any of the Basic Documents or under state and federal
         tax and securities laws, and at the request of the Owner Trustee shall
         take all appropriate action that it is the duty of the Issuer to take
         pursuant to this Agreement or any of the Basic Documents, including,
         without limitation, pursuant to Sections 2.6 and 2.11 of the Trust
         Agreement. In accordance with the directions of the Issuer or the Owner
         Trustee, the Servicer shall administer, perform or supervise the
         performance of such other activities in connection with the Mortgage
         Loans (including the Basic Documents) as are not covered by any of the
         foregoing provisions and as are expressly requested by the Issuer or
         the Owner Trustee and are reasonably within the capability of the
         Servicer.

                (ii)     Notwithstanding anything in this Agreement or any of
         the Basic Documents to the contrary, the Servicer shall be responsible
         for promptly notifying the Owner Trustee and the Trustee, the Insurer
         and Freddie Mac in the event that any withholding tax is imposed on the
         Issuer's payments (or allocations of income) to a Residual
         Certificateholder (as defined in the Trust Agreement) as contemplated
         by this Agreement. Any such notice shall be in writing and specify the
         amount of any withholding tax required to be withheld by the Owner
         Trustee or the Trustee pursuant to such provision.

                (iii)    Notwithstanding anything in this Agreement or the Basic
         Documents to the contrary, the Servicer shall be responsible for
         performance of the duties of the Issuer or the Sponsor set forth in
         Section 5.1(a), (b), (c) and (d) of the Trust Agreement


                                       47
<PAGE>


         with respect to, among other things, accounting and reports to Residual
         Certificateholders (as defined in the Trust Agreement).

                (iv)     The Servicer shall perform the duties of the Sponsor
         specified in Section 10.2 of the Trust Agreement required to be
         performed in connection with the resignation or removal of the Owner
         Trustee, and any other duties expressly required to be performed by the
         Servicer under this Agreement or any of the Basic Documents.

                (v)      In carrying out the foregoing duties or any of its
         other obligations under this Agreement, the Servicer may enter into
         transactions with or otherwise deal with any of its Affiliates;
         provided, however, that the terms of any such transactions or dealings
         shall be in accordance with any directions received from the Issuer and
         shall be, in the Servicer's opinion, no less favorable to the Issuer in
         any material respect.

         (c)    Non-Ministerial Matters. With respect to matters that in the
reasonable judgment of the Servicer are non-ministerial, the Servicer shall not
take any action pursuant to this Article VIII unless within a reasonable time
before the taking of such action, the Servicer shall have notified the Owner
Trustee, the Insurer and Freddie Mac of the proposed action and the Owner
Trustee, the Insurer and Freddie Mac shall not have withheld consent or provided
an alternative direction. For the purpose of the preceding sentence,
"non-ministerial matters" shall include:

                (A)      the amendment of or any supplement to the Pooling
         Agreement;

                (B)      the initiation of any claim or lawsuit by the Issuer
         and the compromise of any action, claim or lawsuit brought by or
         against the Issuer (other than in connection with the collection of the
         Mortgage Loans);

                (C)      the amendment, change or modification of this Agreement
         or any of the Basic Documents;

                (D)      the appointment of successor Security Registrars,
         successor Paying Agents and successor Trustees pursuant to the Pooling
         Agreement or the appointment of Successor Servicers or the consent to
         the assignment by the Security Registrar, Paying Agent or Trustee of
         its obligations under the Pooling Agreement; and

                (E)      the removal of the Trustee.

         (d)    Exceptions. Notwithstanding anything to the contrary in this
Agreement, except as expressly provided herein or in the other Basic Documents,
the Servicer, in its capacity hereunder, shall not be obligated to, and shall
not, (1) make any payments to the Securityholders or Residual Certificateholders
under the Basic Documents, (2) sell the Trust Property pursuant to Section 5.4
of the Pooling Agreement, (3) take any other action that the Issuer directs the
Servicer not to take on its behalf or (4) in connection with its duties
hereunder assume any indemnification obligation of any other Person.

         (e)    The Trustee or any successor Servicer shall not be responsible
for any obligations or duties of the Servicer under Section 8.01.


                                       48
<PAGE>


         Section 8.02.    Records. The Servicer shall maintain appropriate books
of account and records relating to services performed under this Agreement,
which books of account and records shall be accessible for inspection by the
Issuer and the Trustee at any time during normal business hours.

         Section 8.03.    Additional Information to be Furnished to the Issuer.
The Servicer shall furnish to the Issuer and the Trustee from time to time such
additional information regarding the Mortgage Loans as the Issuer and the
Trustee shall reasonably request.


                                   ARTICLE IX

                            MISCELLANEOUS PROVISIONS

         Section 9.01.    Amendment. This Agreement may be amended from time to
time by agreement among the Sponsor, the Servicer, and the Trustee, in each case
without notice to or the consent of any of the Securityholders or Residual
Certificateholders, but only with the consent of the Insurer and of Freddie Mac
(which consent shall not be unreasonably withheld), (i) to cure any ambiguity,
(ii) to correct any defective provisions or to correct or supplement any
provisions herein that may be inconsistent with any other provisions herein,
(iii) to add to the duties of the Sponsor or the Servicer, (iv) to add any other
provisions with respect to matters or questions arising under this Agreement or
the Policy, as the case may be, which shall not be inconsistent with the
provisions of this Agreement, (v) to add or amend any provisions of this
Agreement as required by any Rating Agency or any other nationally recognized
statistical rating organization in order to maintain or improve any rating of
the Securities (it being understood that, after obtaining the ratings in effect
on the Closing Date, neither the Trustee, the Sponsor nor the Servicer is
obligated to obtain, maintain or improve any such rating) or (vi) to comply with
any requirement imposed by the Code; provided, however, that such action shall
not, as evidenced by an Opinion of Counsel, materially and adversely affect the
interests of any Securityholder or any Residual Certificateholder, the Insurer
or Freddie Mac; and provided, further, that the amendment shall be deemed not to
adversely affect in any material respect the interests of the Securityholders
and the Residual Certificateholders and no opinion referred to in the preceding
proviso shall be required to be delivered if the Person requesting the amendment
obtains a letter from each Rating Agency stating that the amendment would not
result in the downgrading or withdrawal of the respective ratings then assigned
to the Securities without regard to the Policy.

         This Agreement also may be amended from time to time by agreement among
the Servicer, the Sponsor and the Trustee, with the consent of the Insurer,
Freddie Mac and the Holders of the Securities evidencing more than 50% of the
Outstanding Amount of the Securities instruct otherwise and the Holders of the
Residual Certificates evidencing more than 50% of the percentage interest in the
Residual Certificates (which consent of such Holders of Securities and Residual
Certificates given pursuant to this Section 9.01 or pursuant to any other
provision of this Agreement shall be conclusive and binding on such Holder and
all future Holders of such securities and of any security issued upon the
transfer thereof or in exchange thereof or in lieu thereof whether or not
notation of such consent is made upon the security) for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
of this Agreement or of modifying in any manner the rights of the
Securityholders or the Residual


                                       49
<PAGE>


Certificateholders; provided, however, that no such amendment shall (i) reduce
in any manner the amount of, or delay the timing of, payments on the Securities
or distributions or payments under the Policy which are required to be made on
any Security without the consent of the Holder of such Security or (ii) reduce
the aforesaid percentage required to consent to any such amendment, without the
consent of the Holders of all then outstanding Securities and Residual
Certificates or (iii) adversely effect in any material respect the interests of
the Insurer or the interests of Freddie Mac.

         Following the execution and delivery of any such amendment hereto or to
the Policy, either the Sponsor, if the Sponsor requested the amendment, or the
Servicer, if the Servicer requested the amendment, shall reimburse the Insurer
and Freddie Mac for the reasonable out-of-pocket costs and expenses incurred by
each in connection with such amendment.

         Prior to the execution of any such amendment, the party hereto
requesting any such amendment shall furnish written notification of the
substance of such amendment to each Rating Agency. In addition, promptly after
the execution of any such amendment made with the consent of the
Securityholders, the Trustee shall furnish written notification of the substance
of such amendment to each Securityholder and fully executed original
counterparts of the instruments effecting such amendment to the Insurer and
Freddie Mac.

         It shall not be necessary for the consent of Securityholders under this
Section 9.01 to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Securityholders and Residual
Certificateholders shall be subject to such reasonable requirements as the
Trustee may prescribe.

         In executing any amendment permitted by this Section 9.01, the Trustee
shall be entitled to receive, and shall be fully protected in relying upon, an
Opinion of Counsel stating that such amendment is authorized or permitted hereby
and that all conditions precedent to the execution and delivery of such
amendment have been satisfied. The Trustee may, but shall not be obligated to,
enter into any such amendment which affects the Trustee's own rights, duties or
immunities under this Agreement or otherwise.

         Section 9.02.    Recordation of Agreement. This Agreement is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Trustee, but only upon direction of Securityholders accompanied by an Opinion of
Counsel to the effect that such recordation materially and beneficially affects
the interests of Securityholders. The Securityholders requesting such
recordation shall bear all costs and expenses of such recordation. The Trustee
shall have no obligation to ascertain whether such recordation so affects the
interests of the Securityholders.

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


                                       50
<PAGE>


         Section 9.03.    Limitation on Rights of Securityholders. No
Securityholder shall have any right to vote (except as provided in Sections
6.01, 7.01, and 9.01 herein and Section 5.4 of the Pooling Agreement) or in any
manner otherwise control the operation and management of the Trust, or the
obligations of the parties hereto, nor shall anything herein set forth, or
contained in the terms of the Securities, be construed so as to constitute the
Securityholders from time to time as partners or members of an association; nor
shall any Securityholder be under any liability to any third person by reason of
any action taken by the parties to this Agreement pursuant to any provision
hereof.

         No Securityholder shall have any right by virtue or by availing itself
of any provisions of this Agreement to institute any suit, action or proceeding
in equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of default
and of the continuance thereof, as hereinbefore provided, and unless also the
Holders of Securities evidencing more than 50% of the Outstanding Amount of the
Securities shall have made written request upon the Trustee to institute such
action, suit or proceeding in its own name as Trustee hereunder and shall have
offered to the Trustee such reasonable indemnity as it may require against the
costs, expenses and liabilities to be incurred therein or thereby, and the
Trustee, for 60 days after its receipt of such notice, request and offer of
indemnity, shall have neglected or refused to institute any such action, suit or
proceeding; it being understood and intended, and being expressly covenanted by
each Securityholder with every other Securityholder and the Trustee, that no one
or more Holders of Securities shall have any right in any manner whatever by
virtue or by availing itself or themselves of any provisions of this Agreement
to affect, disturb or prejudice the rights of the Holders of any other of the
Securities, or to obtain or seek to obtain priority over or preference to any
other such Holder, or to enforce any right under this Agreement, except in the
manner herein provided and for the equal, ratable and common benefit of all
Securityholders. For the protection and enforcement of the provisions of this
Section 9.03, each and every Securityholder and the Trustee shall be entitled to
such relief as can be given either at law or in equity.

         By accepting its Certificate, each Securityholder agrees that unless a
Insurer Default exists, the Insurer shall have the right to exercise all rights
of the Securityholder under this Agreement without any further consent of the
Securityholder.

         Section 9.04.    Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.

         Section 9.05.    Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at or mailed by certified mail, return receipt requested,
to (a) in the case of the Sponsor, GreenPoint Mortgage Securities Inc., 700
Larkspur Landing Circle, Suite 250, Larkspur, California 94939, Attention: Peter
T. Paul, (b) in the case of the Servicer, GreenPoint Mortgage Funding, Inc.,
1100 Larkspur Landing Circle, Suite 101, Larkspur, California 94939, Attention:
Gilbert MacQuarrie, (c) in the case of the Trustee, at the Corporate Trust
Office, (d) in the case of the Insurer, Ambac Assurance Structured Finance, One
State Street Plaza, New York, NY 10022-4834, Attention: Managing Director
(telecopy number (212) 891-1456 or (212) 755-5477), (e) in the case of


                                       51
<PAGE>


Freddie Mac, Federal Home Loan Mortgage Corporation, 8200 Jones Branch Drive,
McLean, Virginia 22102, Attention Vice-President, Structured Finance (telecopy
number (703) 903-3029), (f) Moody's, Residential Loan Monitoring Group, 4th
Floor, 99 Church Street, New York, New York 10007, and (g) in the case of
Standard & Poor's, 55 Water Street, New York, New York 10041, or, as to each
party, at such other address as shall be designated by such party in a written
notice to each other party. Any notice required or permitted to be mailed to a
Securityholder shall be given by first class mail, postage prepaid, at the
address of such Holder as shown in the Security Register. Any notice so mailed
within the time prescribed in this Agreement shall be conclusively presumed to
have been duly given, whether or not the Securityholder or Residual
Certificateholder receives such notice. Any notice or other document required to
be delivered or mailed by the Trustee to any Rating Agency shall be given on a
best efforts basis and only as a matter of courtesy and accommodation and the
Trustee shall have no liability for failure to deliver such notice or document
to any Rating Agency.

         Section 9.06.    Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Securities or
the rights of the Holders thereof.

         Section 9.07.    Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 5.02 and 5.04, this Agreement
may not be assigned by the Sponsor or the Servicer without the prior written
consent of the Controlling Party and Holders of the Securities evidencing
Percentage Interests aggregating not less than 66%.

         Section 9.08.    Third-Party Beneficiaries. This Agreement will inure
to the benefit of and be binding upon the parties hereto, the Residual
Certificateholders, the Security Owners, the Insurer, Freddie Mac and their
respective successors and permitted assigns. Except as otherwise provided in
this Agreement, no other Person will have any right or obligation hereunder.

         Section 9.09.    Counterparts. This instrument may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.

         Section 9.10.    Effect of Headings and Table of Contents. The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.

         Section 9.11.    Insurance Agreement. The Trustee is authorized and
directed to execute and deliver the Insurance Agreement and to perform the
obligations of the Trustee thereunder.

         Section 9.12.    Nonpetition Covenant. Until one year plus one day
shall have elapsed since the termination of the Trust in accordance with Section
7.01, none of the Sponsor, the Company, the Servicer, nor the Trustee shall
petition or otherwise invoke the process of any court or government authority
for the purpose of commencing or sustaining a case against the


                                       52
<PAGE>


Sponsor or the Trust under any federal or state bankruptcy, insolvency or
similar law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Sponsor or the Trust or any
substantial part of its property, or ordering the winding up or liquidation of
the affairs of the Sponsor or the Trust.









                                       53
<PAGE>


         IN WITNESS WHEREOF, the Sponsor, the Servicer and the Trustee have
caused this Agreement to be duly executed by their respective officers all as of
the day and year first above written.

                                       GREENPOINT MORTGAGE SECURITIES INC.,
                                          as Sponsor



                                       By:  /s/ Becky Poisson
                                          -------------------------------------
                                          Name:   Becky Poisson
                                          Title:  Vice President


                                       GREENPOINT MORTGAGE FUNDING, INC.,
                                          as Company and Servicer



                                       By:  /s/ Becky Poisson
                                          -------------------------------------
                                          Name:   Becky Poisson
                                          Title:  Vice President


                                       BANKERS TRUST COMPANY,
                                          as Trustee



                                       By:  /s/ Barbara J. Campbell
                                          -------------------------------------
                                          Name:   Barbara J. Campbell
                                          Title:  Assistant Secretary


                                       GREENPOINT HOME EQUITY LOAN TRUST
                                          2000-1, as Issuer
                                          By: Wilmington Trust Company, not in
                                          its individual capacity but solely as
                                          Owner Trustee



                                       By:  /s/ Chris Sponenberg
                                          -------------------------------------
                                          Name:   Chris Sponenberg
                                          Title:  Assistant Vice President





                         [Sale and Servicing Agreement]
<PAGE>


State of  California       )
                           ) ss.:
County of Marin            )



On the 29th day of June, 2000 before me, a notary public in and for the State
of California, personally appeared Becky Poisson, known to me who, being by me
duly sworn, did depose and say that he resides at Larkspur, California; that
he is the Vice President of GreenPoint Mortgage Securities Inc., a
Delaware corporation, one of the parties that executed the foregoing instrument;
that he knows the seal of said corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by order of the Board
of Directors of said corporation; and that he signed his name thereto by like
order.

                                  /s/ Melissa S. Farley
                                  ----------------------------------------------
                                  Notary Public

[Notarial Seal]
<PAGE>


State of New York          )
                           ) ss.:
County of New York         )



On the 29th day of June, 2000 before me, a notary public in and for the State of
New York, personally appeared W. Chris Sponenberg, known to me who, being by me
duly sworn, did depose and say that he resides at Wilmington, Delaware; that he
is the Assistant Vice President of Wilmington Trust Corporation, a Delaware
corporation, one of the parties that executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by order of the Board of Directors
of said corporation; and that he signed his name thereto by like order.


                                  /s/ Erick C. Lane
                                  ----------------------------------------------
                                  Notary Public

[Notarial Seal]

<PAGE>


State of California        )
                           ) ss.:
County of Marin            )



On the 29th day of June, 2000 before me, a notary public in and for the State of
California, personally appeared Becky Poisson, known to me who, being by me duly
sworn, did depose and say that he resides at Larkspur, California; that he is
the Vice President of GreenPoint Mortgage Funding, Inc., a closely-held
California corporation, one of the parties that executed the foregoing
instrument; that he knows the seal of said corporation; that the seal affixed to
said instrument is such corporate seal; that it was so affixed by order of the
Board of Directors of said corporation; and that he signed his name thereto by
like order.


                                  /s/ Melissa S. Farley
                                  ----------------------------------------------
                                  Notary Public

[Notarial Seal]

<PAGE>


State of New York          )
                           ) ss.:
County of New York         )



On the 29th day of June, 2000 before me, a notary public in and for the State of
New York, personally appeared Barbara J. Campbell, known to me who, being by me
duly sworn, did depose and say that he resides at Santa Ana, California; that he
is the Assistant Secretary of Bankers Trust Company, a New York banking
corporation, one of the parties that executed the foregoing instrument; and that
he signed his name thereto by order of the Board of Directors of said
corporation.

                                  /s/ Eric C. Lane
                                  ----------------------------------------------
                                  Notary Public

[Notarial Seal]


<PAGE>


                                                                       EXHIBIT A


                             MORTGAGE LOAN SCHEDULE

                             [On file with Trustee]











                                      A-1
<PAGE>


                                                                       EXHIBIT B


                           FORM OF OPINION OF COUNSEL
                       WITH RESPECT TO SECTION 3.11 OF THE
                          SALE AND SERVICING AGREEMENT


The opinions set forth below may be subject to all the qualifications,
assumptions, limitations and exceptions taken or made in the opinions of counsel
to the Company delivered on the Closing Date. Unless otherwise indicated, all
capitalized terms used herein shall have the meanings ascribed to them in the
Sale and Servicing Agreement dated as of June 1, 2000 among GreenPoint Mortgage
Funding, Inc. (the "Company" and the "Servicer"), GreenPoint Mortgage Securities
Inc. (the "Sponsor") and Bankers Trust Company, as Trustee. Terms used but not
defined herein shall have the meaning given to such terms in the
above-referenced Sale and Servicing Agreement.

         The Trustee has a valid perfected first priority security interest with
respect to the Sponsor's right, title and interest in and to the Mortgage Loans
(including all Eligible Substitute Mortgage Loans).






                                      B-1
<PAGE>


                                                                     EXHIBIT C-1


                              OFFICER'S CERTIFICATE

                      REQUEST BY THE SERVICER FOR PERMANENT
                   RELEASE OF MORTGAGE LOANS AND MORTGAGE FILE


TO:      Bankers Trust Company,
           as Trustee
         123 Washington Street
         New York, New York 10006
         Attention: Corporate Trust Office

Gentlemen:

In connection with the payment in full of the Mortgage Loans held by you as
Trustee, under the Sale and Servicing Agreement dated as of June 1, 2000 among
GreenPoint Mortgage Funding, Inc., as Servicer, GreenPoint Mortgage Securities
Inc., as Sponsor, and you, as Trustee, the undersigned requests the release of
the Mortgage Loans and the Mortgage Files for the Mortgage Loans identified in
the schedule attached to this Request.

The undersigned hereby certifies that any and all payments received on the
Mortgage Loans identified in the schedule attached to this Request which are
required to be deposited in the Collection Account pursuant to Section 3.02 of
such Sale and Servicing Agreement have been so deposited.

                                        GREENPOINT MORTGAGE FUNDING, INC.,
                                            as Servicer

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

ACKNOWLEDGED BY:

BANKERS TRUST COMPANY,
  as Trustee

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



                                     C-1-1
<PAGE>


                                                                     EXHIBIT C-2


                              OFFICER'S CERTIFICATE

                      REQUEST BY THE SERVICER FOR TEMPORARY
                  RELEASE OF MORTGAGE LOANS AND MORTGAGE FILES


TO:      Bankers Trust Company
           as Trustee
         123 Washington Street
         New York, New York 10006
         Attention:  Corporate Trust Office

Gentlemen:

In connection with the administration of the Mortgage Loans held by you as
Trustee, under the Sale and Servicing Agreement dated as of June 1, 2000 among
GreenPoint Mortgage Funding, Inc., as Servicer, GreenPoint Mortgage Securities
Inc., as Sponsor, and you, as Trustee, the undersigned requests the temporary
release of the Mortgage Loans and the related Mortgage Files for the Mortgage
Loans identified in the schedule attached to this Request.


                                        GREENPOINT MORTGAGE FUNDING, INC.,
                                            as Servicer

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

ACKNOWLEDGED BY:

BANKERS TRUST COMPANY,
  as Trustee

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





                                     C-2-1
<PAGE>


                                                                       EXHIBIT D


                          FORM OF CREDIT LINE AGREEMENT







                                      D-1
<PAGE>


                                                                       EXHIBIT E


                            FORM OF MORTGAGE NOTE FOR
                           SECOND LIEN MORTGAGE LOANS







                                      E-1
<PAGE>

                                                                    EXHIBIT F-1

                        FORM OF FREDDIE MAC CERTIFICATE:
                             BOND SUMMARY REPORTING


<TABLE>
<CAPTION>
DETAIL RECORD FIELDS:                                                                         File Name:  T0nnMMYY.BND

-----------------------------------------------------------------------------------------------------------------------------
      Field Name         Fld         Format          Field                              Definition
                         Nbr                       Position
-----------------------------------------------------------------------------------------------------------------------------
<S>                      <C>    <C>              <C>           <C>
Series #  (Deal          1      10 (x)           001-010       As defined by issuer or as assigned - T0nn
Identifier)
-----------------------------------------------------------------------------------------------------------------------------
Blank                            1 (x)           011
-----------------------------------------------------------------------------------------------------------------------------
Class #                  2       2 (x)           012-013       As assigned or determined by issuer.  Input default value if
                                                               not applicable.
-----------------------------------------------------------------------------------------------------------------------------
Blank                            5 (x)           014-018
------------------------------------------------------------------------------------------------------------------------------
CUSIP #                  3       9 (x)           019-027       If not available, Input default value.  Freddie Mac may
                                                               provide dummy numbers, if CUSIP numbers are not assigned by
                                                               the issuer.
-----------------------------------------------------------------------------------------------------------------------------
Blank                            1 (x)           028
-----------------------------------------------------------------------------------------------------------------------------
Coupon - Current         4       6.3             029-034       Bond Coupon Rate
Pass-through Rate
-----------------------------------------------------------------------------------------------------------------------------
Blank                            1 (x)           035
-----------------------------------------------------------------------------------------------------------------------------
Original Face Value      5      13.2             036-048       Par Value, original issue amount, of Class
-----------------------------------------------------------------------------------------------------------------------------
Blank                            1 (x)           049
-----------------------------------------------------------------------------------------------------------------------------
Beginning Unpaid         6      13.2             050-062       Beginning Class UPB as of beginning of cycle
Principal Balance
-----------------------------------------------------------------------------------------------------------------------------
Blank                            1 (x)           063
-----------------------------------------------------------------------------------------------------------------------------
Principal payment        7      13.2             064-076       Dollar amount of class principal payment
amount
-----------------------------------------------------------------------------------------------------------------------------
Blank                            1 (x)           077
-----------------------------------------------------------------------------------------------------------------------------
Interest payment amount  8      13.2             078-090       Dollar amount of class interest payment
-----------------------------------------------------------------------------------------------------------------------------
Blank                            1 (x)           091
-----------------------------------------------------------------------------------------------------------------------------
Total Distribution       9      13.2             092-104       Dollar amount of principal & interest payment
-----------------------------------------------------------------------------------------------------------------------------
Blank                             1 (x)          105
-----------------------------------------------------------------------------------------------------------------------------
Deferred Interest        10     13.2             106-118       Dollar amount of overcollateralization  (Difference between
                                                               security principal and mortgage principal balances applied
                                                               this period.  This can include non-cash allocations)
-----------------------------------------------------------------------------------------------------------------------------
Blank                            1 (x)           119
-----------------------------------------------------------------------------------------------------------------------------
Principal Loss           11     13.2             120-132       Dollar amount of principal losses applied this period
-----------------------------------------------------------------------------------------------------------------------------
Blank                            1 (x)           133
-----------------------------------------------------------------------------------------------------------------------------
Interest Loss            12     13.2             134-146       Dollar amount of interest losses applied this period
-----------------------------------------------------------------------------------------------------------------------------
Blank                            1 (x)           147
-----------------------------------------------------------------------------------------------------------------------------
Ending Unpaid            13     13.2             148-160       Ending Class UPB as of beginning of cycle
Principal Balance
-----------------------------------------------------------------------------------------------------------------------------
Blank                            1 (x)           161
-----------------------------------------------------------------------------------------------------------------------------
Principal Distribution   14      9.7             162-170       Factor representing the principal payment divided by the
Factor                                                         Original UPB of the class.
-----------------------------------------------------------------------------------------------------------------------------
Blank                            1 (x)           171
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                      F-1-1
<PAGE>

<TABLE>
<S>                      <C>    <C>              <C>           <C>
-----------------------------------------------------------------------------------------------------------------------------
Interest Distribution    15      9.7             172-180       Factor representing the interest payment divided by the
Factor                                                         Beginning UPB of the class.
-----------------------------------------------------------------------------------------------------------------------------
Blank                            1 (x)           181
-----------------------------------------------------------------------------------------------------------------------------
Prepayment Interest      16      9.7             182-190       If loans were prepaid and an interest shortfall arose in
Shortfall                                                      this period, it should be entered in this field.  If not
                                                               applicable, a zero should be used.
-----------------------------------------------------------------------------------------------------------------------------
Blank                            1 (x)           191
-----------------------------------------------------------------------------------------------------------------------------
Total Distribution       17      9.7             192-200       Factor representing the combined principal and interest
Factor                                                         payment divided by the Original UPB of the class.
-----------------------------------------------------------------------------------------------------------------------------
Blank                            1 (x)           201
-----------------------------------------------------------------------------------------------------------------------------
Deferred Interest        18      9.7             202-210       Factor representing any increase in residual class due to
Factor                                                         credit enhancement requirements.  This is determined by
                                                               dividing the increase amount by the original UPB.
-----------------------------------------------------------------------------------------------------------------------------
Blank                            1 (x)           211
-----------------------------------------------------------------------------------------------------------------------------
Ending Principal         19      9.7             212-220       Ending UPB divided by original UPB.
Balance Factor
-----------------------------------------------------------------------------------------------------------------------------
Blank                            1 (x)           221
-----------------------------------------------------------------------------------------------------------------------------
Remaining Unpaid         20     13.2             222-234       If interest should be due, but not received on a given
Interest                                                       amount, then that amount should be entered.

-----------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                     F-1-2
<PAGE>

                                                                    EXHIBIT F-2

                        FORM OF FREDDIE MAC CERTIFICATE:
                              LOAN LEVEL REPORTING

DETAIL RECORD FIELDS:                                   File Name: T0##MMYY.LNS
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
   Data: T0nnMMYY.LNS     Field         Format       Definition
                            Nbr
-----------------------------------------------------------------------------------------------------------------------------
<S>                      <C>            <C>          <C>
Servicer Loan No.         1        13(X)             Unique loan number assigned to the mortgage by the Seller/Servicer
------------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
-----------------------------------------------------------------------------------------------------------------------------
Due Date of Last Paid     2        YYYYMMDD          Due Date of last full payment received from the borrower.
Installment  (DDLPI)
-----------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
-----------------------------------------------------------------------------------------------------------------------------
Last Payment Received     3        YYYYMMDD          Receipt Date of the last fully paid monthly installment of principal,
Date (LPRD)                                          interest, and escrow  (if any) that was received from the borrower.
                                                     Note: Dates of partial payments should not be entered here. {Data is when
                                                     payment was actually received from the borrower) If this information is
                                                     not available, then populate the field with the default value of
                                                     19000101.
-----------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
-----------------------------------------------------------------------------------------------------------------------------
Unpaid Principal          4        13.2              Unpaid Principal balance as of the end of the current period
Balance (UPB) 100%
-----------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
-----------------------------------------------------------------------------------------------------------------------------
Interest Paid             5        13.2              Gross / Coupon Interest payment amount
-----------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
-----------------------------------------------------------------------------------------------------------------------------
Principal Paid            6        13.2              Total principal paid down on the mortgage balance.  This amount will be
                                                     net of any draws made on the credit line for the current payment cycle.
                                                     Draws will be reported in field #7.
                                                     *  For approved payment reversals or principal applied incorrectly in a
                                                     prior cycle the amount of negative principal to bring the mortgage
                                                     balance in line with the correct UPB reported.
-----------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
-----------------------------------------------------------------------------------------------------------------------------

Draw Amount               7        13.2              Total draws made against the line of credit for the current month
-----------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
-----------------------------------------------------------------------------------------------------------------------------

</TABLE>

                                      F-2-1
<PAGE>

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
   Data: T0nnMMYY.LNS     Field         Format       Definition
                            Nbr
<S>                      <C>            <C>          <C>
Exception Code            8             2(x)         This field should contain an exception code only when exception activity
                                                     occurs for that period, otherwise this field should contain a 0.
                                                     DEFAULT VALUE IS 0.
                                                     40 Inactivate loan, deemed the loan non-recoverable
                                                     60 Payoff - mortgage matured
                                                     61 Payoff - mortgage prepaid
                                                     65 Payoff - mortgage repurchased
                                                     69 Payoff - mortgage liquidated
                                                     70 Transfer to REO (status change exception)
                                                     72 Foreclosure (change of status from Active to Foreclosure)
                                                     80 Substituted Loan - Loan is added as a substitute for
                                                        another loan
                                                     81 Reinstated Loan - Loan was previously delinquent, but the
                                                        borrower has brought it current.
                                                     90 Loan Modified - This is an exceptional activity code
                                                        which is reserved for future use. Modifications
                                                        typically require repurchase from the trust prior to
                                                        modifying the loan.
-----------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
-----------------------------------------------------------------------------------------------------------------------------
Exception Date            9        YYYYMMDD          Date the exception occurred.  If an exception has not occurred, this
                                                     field should contain the default value of 19000101.
-----------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
-----------------------------------------------------------------------------------------------------------------------------

Mortgage Note Rate        10       6.3               Rate associated with the borrower's scheduled payment
-----------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
-----------------------------------------------------------------------------------------------------------------------------
Mortgage P&I Amount       11       13.2              Principal and interest portion of the borrowers scheduled installment.
                                                     Note:  100% of the principal and interest amount should be entered in
                                                     this field, including servicing and guarantee fees.
-----------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
-----------------------------------------------------------------------------------------------------------------------------

Realized Losses           12       13.2              Amount of realized losses for that period.  This field will also include
                                                     any supplemental claims or proceeds for loans liquidated in a previous
                                                     cycle.
-----------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
-----------------------------------------------------------------------------------------------------------------------------
Cumulative Principal      13       13.2              Total principal payments advanced by the Servicer and not repaid by the
Advances                                             borrower.
-----------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
-----------------------------------------------------------------------------------------------------------------------------
Interest Advances         14       13.2              Amount of interest payment advanced by the Servicer for that period.
-----------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
-----------------------------------------------------------------------------------------------------------------------------
Loan Status               15       1(X)              Pertains to activity in the prior reporting cycle.
                                                     0 - Active
                                                     4 - Foreclosure
                                                     5 - REO
                                                     6 - Closed  (PAYOFFS & REPURCHASES)
                                                     9 - Bankruptcy (OVERRIDES Active Status)
                                                     Note: 30,60 & 90 day delinquency status will be derived from the DDLPI
                                                     field.
-----------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
-----------------------------------------------------------------------------------------------------------------------------
Subservicer No.           16        6                Subservicer ID# - S/S# assigned by Freddie Mac - 6 digits
-----------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
-----------------------------------------------------------------------------------------------------------------------------
Actual Loan Balance       17       13.2              Actual loan balance outstanding from the borrower and does not include
                                                     advances made by the servicer.
-----------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
-----------------------------------------------------------------------------------------------------------------------------
Next Interest Rate        18       YYYYMMDD          Applies only to ARM loans and reflects the next pending interest rate
Change Date                                          adjustment date. Default is 19000101.
-----------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                     F-2-2
<PAGE>

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
   Data: T0nnMMYY.LNS     Field         Format       Definition
                            Nbr
-----------------------------------------------------------------------------------------------------------------------------
<S>                      <C>            <C>          <C>
Next Interest Payment     19       YYYYMMDD          Applies only to payment capped ARM loans and reflects the next pending
Change Date                                          payment adjustment date. Default is 19000101.
-----------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
-----------------------------------------------------------------------------------------------------------------------------
Index Value at Reset      20       6.3               The index rate used in determining the ARM coupon.
Date                                                 Default value is 0 for an ARM loan if the index is not changing in the
                                                     current period.  Also populate 0 if the loan is a fixed rate loan.
-----------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
-----------------------------------------------------------------------------------------------------------------------------
Next Mortgage Rate        21       6.3               Should be populated in advance of the rate adjustment.. Default value is
expected at reset date                               0 for an ARM loan if the rate is not changing.  Default value is 0 if
                                                     the loan is a fixed rate loan.
-----------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
-----------------------------------------------------------------------------------------------------------------------------

Collateral Group No. #    22       2                 This is a collateral grouping number for whole loan directed collateral
                                                     deals. Default value is 0.
-----------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
-----------------------------------------------------------------------------------------------------------------------------
Current Arrearage Paid    23       13.2              The current amount of cashflow applied to the arrearage balance.
                                                     Applies to loans that have been or are currently in default. Default value
                                                     is 0.
-----------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
-----------------------------------------------------------------------------------------------------------------------------
Outstanding Arrearage     24       13.2              The total amount of outstanding interest accrued under forbearance
Balance                                              period, after current arrearage payment. Default value is 0.
-----------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
-----------------------------------------------------------------------------------------------------------------------------
Freddie Mac Loan Number   25       13(X)             Unique & permanent loan number assigned to the mortgage by Freddie Mac.
                                                     Used for disclosure.
-----------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
-----------------------------------------------------------------------------------------------------------------------------
Prepayment Premium        26       13.2              The borrowers penalty payment for prepaying his mortgage.  This amount
Amount                                               is allocated  in aggregate as a directed collateral amount to a specific
                                                     bond.  Default value is 0.
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>

The Notes:
o  File must be a text file (either space or tab delimited).
o  Any dates should be in YYYYMMDD format.  They should not contain slashes (/)
   or dashes (-).
o  Number fields should NOT include commas.
o  Any negative number should be denoted by a "-" in front of the number, do
   not put the "-" after the number or use parentheses.