IMPAC SECURED ASSETS CORP.,
                                    Company,


                            IMPAC FUNDING CORPORATION
                                Master Servicer,


                                       and


                    BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
                                     Trustee




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


                         POOLING AND SERVICING AGREEMENT

                             Dated as of May 1, 2001

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


                       Mortgage Pass-Through Certificates

                                  Series 2001-4








<PAGE>



                                TABLE OF CONTENTS
                                -----------------
                                                                          Page

ARTICLE I

          DEFINITIONS........................................................5
          1.01.  Defined Terms...............................................5
          Accrual Period.....................................................5
          Advance  ..........................................................5
          Aggregate Stated Principal Balance.................................5
          Agreement..........................................................5
          Allocated Realized Loss Amount.....................................5
          Anniversary........................................................5
          Assignment.........................................................5
          Available Distribution Amount......................................5
          Balloon Loan.......................................................6
          Balloon Payment....................................................6
          Bankruptcy Code....................................................6
          Basic Principal Distribution Amount................................6
          Book-Entry Certificate.............................................6
          Business Day.......................................................6
          Buydown Funds......................................................6
          Buydown Mortgage Loan..............................................6
          Cash Liquidation...................................................7
          Certificate........................................................7
          Certificate Account................................................7
          Certificate Account Deposit Date...................................7
          Certificateholder" or "Holder......................................7
          Certificate Owner..................................................7
          Certificate Principal Balance......................................7
          Certificate Register...............................................8
          Class    ..........................................................8
          Class A Certificate................................................8
          Class A-I Certificate..............................................8
          Class A-I-1 Certificate............................................8
          Class A-I-2 Certificate............................................8
          Class A-I-3 Component..............................................8
          Class A-I-4 Certificate............................................8
          Class A-I-5 Certificate............................................8
          Class A-II Certificate.............................................8
          Class A-II-1 Certificate...........................................8
          Class A-II-2 Component.............................................9
          Class A-II-3 Certificate...........................................9
          Class A-IO Rate....................................................9
          Class A-IO Certificate.............................................9


                                                           i

<PAGE>



          Class A-3 Certificate..............................................9
          Class A-3 Components...............................................9
          Class A Principal Distribution Amount..............................9
          Class B Certificate...............................................10
          Class B Principal Distribution Amount.............................10
          Class C Certificate...............................................10
          Class M-1 Certificate.............................................10
          Class M-1 Principal Distribution Amount...........................11
          Class M-2 Certificate.............................................11
          Class M-2 Principal Distribution Amount...........................11
          Class P Certificate...............................................11
          Class R Certificate...............................................12
          Class R-1 Interest................................................12
          Class R-2 Interest................................................12
          Class R-3 Interest................................................12
          Closing Date......................................................12
          Code     .........................................................12
          Collateral Value..................................................12
          Commission........................................................12
          Company  .........................................................12
          Compensating Interest.............................................12
          Component Principal Balance.......................................12
          Corporate Trust Office............................................12
          Corresponding Certificate or Component............................12
          Current Specified Overcollateralization Percentage................13
          Curtailment.......................................................13
          Custodial Account.................................................13
          Cut-off Date......................................................13
          Defaulted Mortgage Loan...........................................14
          Deficient Valuation...............................................14
          Definitive Certificate............................................14
          Deleted Mortgage Loan.............................................14
          Depository........................................................14
          Depository Participant............................................14
          Determination Date................................................14
          Disqualified Organization.........................................14
          Distribution Date.................................................15
          Due Date .........................................................15
          Due Period........................................................15
          Eligible Account..................................................15
          Event of Default..................................................15
          Excess Overcollateralized Amount..................................15
          Excess Proceeds...................................................15
          Extra Principal Distribution Amount...............................16
          Fannie Mae........................................................16
          FDIC     .........................................................16


                                       ii

<PAGE>



          Fitch    .........................................................16
          Freddie Mac.......................................................16
          Funding Date......................................................16
          GMAC     .........................................................16
          Group 1 Loan......................................................16
          Group 2 Loan......................................................16
          Group 1 Marker Rate...............................................16
          Group 1 Net WAC Rate..............................................17
          Group 2 Marker Rate...............................................17
          Group 2 Net WAC Rate..............................................18
          Initial Certificate Principal Balance.............................18
          Initial Component Principal Balance...............................18
          Initial Notional Amount...........................................18
          Insurance Policy..................................................18
          Insurance Proceeds................................................18
          Interest Remittance Amount........................................18
          Late Collections..................................................18
          Liquidated Mortgage Loan..........................................19
          Liquidation Proceeds..............................................19
          Loan-to-Value Ratio...............................................19
          Lost Note Affidavit...............................................19
          Majority Class C Certificateholder................................19
          Master Servicer...................................................19
          Master Servicer Prepayment Charge Payment Amount..................19
          Servicing Fees....................................................19
          Servicing Fee Rate................................................19
          Maximum Uncertificated Accrued Interest Deferral Amount...........20
          Mezzanine Certificate.............................................21
          Mezzanine Net WAC Rate............................................21
          Monthly Interest Distributable Amount.............................21
          Monthly Payment...................................................21
          Moody's  .........................................................22
          Mortgage .........................................................22
          Mortgage File.....................................................22
          Mortgage Loan.....................................................22
          Mortgage Loan Purchase Agreement..................................22
          Mortgage Loan Schedule............................................22
          Mortgage Note.....................................................23
          Mortgage Rate.....................................................24
          Mortgaged Property................................................24
          Mortgagor.........................................................24
          Net Liquidation Proceeds..........................................24
          Net Monthly Excess Cashflow.......................................24
          Net Mortgage Rate.................................................24
          Net Prepayment Interest Shortfall.................................24
          Net WAC Rate......................................................24


                                                          iii

<PAGE>



          Nonrecoverable Advance............................................25
          Non-United States Person..........................................25
          Notional Amount...................................................25
          Officers' Certificate.............................................25
          Opinion of Counsel................................................25
          Optional Termination Date.........................................25
          OTS      .........................................................25
          Outstanding Mortgage Loan.........................................25
          Overcollateralization Deficiency Amount...........................26
          Overcollateralization Release Amount..............................26
          Overcollateralization Target Amount...............................26
          Overcollateralized Amount.........................................26
          Ownership Interest................................................26
          Pass-Through Rate.................................................26
          Percentage Interest...............................................29
          Permitted Investment..............................................29
          Permitted Transferee..............................................31
          Person   .........................................................31
          Prepayment Assumption.............................................31
          Prepayment Charge.................................................31
          Prepayment Interest Shortfall.....................................31
          Prepayment Period.................................................31
          Primary Hazard Insurance Policy...................................31
          Primary Insurance Policy..........................................31
          Principal Distribution Amount.....................................31
          Principal Prepayment..............................................31
          Principal Prepayment in Full......................................32
          Principal Remittance Amount.......................................32
          Prospectus Supplement.............................................32
          Purchase Price....................................................32
          Qualified Insurer.................................................32
          Qualified Substitute Mortgage Loan................................32
          Radian   .........................................................33
          Radian Insured Loans..............................................33
          Radian Lender-Paid PMI Policy.....................................33
          Radian PMI Policy Rate............................................33
          Rating Agency.....................................................33
          Realized Loss.....................................................33
          Record Date.......................................................34
          Regular Certificate...............................................34
          Relief Act........................................................34
          Relief Act Interest Shortfall.....................................34
          REMIC    .........................................................34
          REMIC 1  .........................................................34
          REMIC 1 Regular Interest LT1A.....................................34
          REMIC 1 Regular Interest LT1B.....................................35


                                       iv

<PAGE>



          REMIC 1 Regular Interest LT1C.....................................35
          REMIC 1 Regular Interest LT1D.....................................35
          REMIC 1 Regular Interest LT1P.....................................35
          REMIC 1 Regular Interests.........................................35
          REMIC 2  .........................................................35
          REMIC 2 Group 1 Interest Loss Allocation Amount...................36
          REMIC 2 Group 2 Interest Loss Allocation Amount...................36
          REMIC 2 Group 1 Overcollateralized Amount.........................36
          REMIC 2 Group 2 Overcollateralized Amount.........................36
          REMIC 2 Group 1 Principal Loss Allocation Amount..................36
          REMIC 2 Group 2 Principal Loss Allocation Amount..................37
          REMIC 2 Overcollateralization Target Amount.......................37
          REMIC 2 Regular Interest LT2A-IO..................................37
          REMIC 2 Regular Interest LT2-1AA..................................37
          REMIC 2 Regular Interest LT2-AI1..................................37
          REMIC 2 Regular Interest LT2-AI2..................................37
          REMIC 2 Regular Interest LT2-AI3..................................38
          REMIC 2 Regular Interest LT2-AI4..................................38
          REMIC 2 Regular Interest LT2-AI5..................................38
          REMIC 2 Regular Interest LT2-1M1..................................38
          REMIC 2 Regular Interest LT2-1M2..................................38
          REMIC 2 Regular Interest LT2-1B...................................38
          REMIC 2 Regular Interest LT2-1ZZ..................................38
          REMIC 2 Regular Interest LT2-2AA..................................39
          REMIC 2 Regular Interest LT2-AII1.................................39
          REMIC 2 Regular Interest LT2-AII2.................................39
          REMIC 2 Regular Interest LT2-AII3.................................39
          REMIC 2 Regular Interest LT2-2M1..................................39
          REMIC 2 Regular Interest LT2-2M2..................................39
          REMIC 2 Regular Interest LT2-2B...................................40
          REMIC 2 Regular Interest LT2-2ZZ..................................40
          REMIC 2 Regular Interest LT2P.....................................40
          REMIC 2 Regular Interests.........................................40
          REMIC 3  .........................................................40
          REMIC Provisions..................................................40
          REMIC Regular Interest............................................41
          Remittance Report.................................................41
          REO Acquisition...................................................41
          REO Disposition...................................................41
          REO Imputed Interest..............................................41
          REO Proceeds......................................................41
          REO Property......................................................41
          Request for Release...............................................41
          Residual Interest.................................................41
          Responsible Officer...............................................41
          Seller   .........................................................42


                                        v

<PAGE>



          Servicing Account.................................................42
          Servicing Advances................................................42
          Servicing Guide...................................................42
          Servicing Officer.................................................42
          Single Certificate................................................42
          Special Deposit...................................................42
          Standard & Poor's.................................................42
          Startup Day.......................................................42
          Stated Principal Balance..........................................42
          Stepdown Date.....................................................43
          Sub-Servicer......................................................43
          Sub-Servicer Remittance Date......................................43
          Sub-Servicing Account.............................................43
          Sub-Servicing Agreement...........................................43
          Sub-Servicing Fees................................................43
          Sub-Servicing Fee Rate............................................43
          Substitution Adjustment...........................................43
          Tax Returns.......................................................43
          Transfer .........................................................44
          Transferor........................................................44
          Trigger Event.....................................................44
          Trust Fund........................................................44
          Trustee  .........................................................44
          Trustee's Fee.....................................................45
          Trustee Fee Rate..................................................45
          Uncertificated Accrued Interest...................................45
          Uncertificated Notional Amount....................................45
          Uncertificated Principal Balance..................................45
          Uncertificated Pass-Through Rate..................................45
          Uncertificated REMIC 1 Pass-Through Rate..........................45
          Uncertificated REMIC 2 Pass-Through Rate..........................46
          Uninsured Cause...................................................46
          United States Person..............................................46
          Unpaid Interest Shortfall Amount..................................47
          Voting Rights.....................................................47
          Weighted Average Net Mortgage Rate................................47
          Wendover .........................................................47
          1.02     Allocation of Certain Interest Shortfalls................47

ARTICLE II

          CONVEYANCE OF MORTGAGE LOANS;
          ORIGINAL ISSUANCE OF CERTIFICATES.................................50
          2.01.    Conveyance of Mortgage Loans.............................50
          2.02.    Acceptance of the Trust Fund by the Trustee..............53


                                       vi

<PAGE>



          2.03.    Representations, Warranties and Covenants of the Master
                   Servicer and the Company.................................54
          2.04.    Representations and Warranties of the Seller.............56
          2.05.    Issuance of Certificates; Conveyance of  REMIC
                   Regular Interests and Acceptance of REMIC 2 by the
                   Trustee..................................................58

ARTICLE III

          ADMINISTRATION AND SERVICING
          OF THE TRUST FUND.................................................60
          3.01.    Master Servicer to Act as Master Servicer................60
          3.02.    Sub-Servicing Agreements Between Master Servicer and
                   Sub-Servicers............................................61
          3.03.    Successor Sub-Servicers..................................63
          3.04.    Liability of the Master Servicer.........................63
          3.05.    No Contractual Relationship Between Sub-Servicers
                   and Trustee or Certificateholders........................63
          3.06.    Assumption or Termination of Sub-Servicing
                   Agreements by Trustee....................................64
          3.07.    Collection of Certain Mortgage Loan Payments.............64
          3.08.    Sub-Servicing Accounts...................................65
          3.09.    Collection of Taxes, Assessments and Similar Items;
                   Servicing Accounts.......................................66
          3.10.    Custodial Account........................................66
          3.11.    Permitted Withdrawals From the Custodial Account.........67
          3.12.    Permitted Investments....................................68
          3.13.    Maintenance of Primary Hazard Insurance. ................69
          3.14.    Enforcement of Due-on-Sale Clauses; Assumption
                   Agreements...............................................71
          3.15.    Realization Upon Defaulted Mortgage Loans................72
          3.16.    Trustee to Cooperate; Release of Mortgage Files..........73
          3.17.    Servicing Compensation...................................74
          3.18.    Maintenance of Certain Servicing Policies................75
          3.19.    Annual Statement as to Compliance........................76
          3.20.    Annual Independent Public Accountants' Servicing
                   Statement................................................76
          3.21.    Access to Certain Documentation..........................77
          3.22.    Title, Conservation and Disposition of REO Property......77
          3.23.    Additional Obligations of the Master Servicer............79
          3.24     .........................................................79
          Additional Obligations of the Company.............................79
          3.25.    Periodic Filings with the Securities and Exchange
                   Commission; Additional Information.......................80
          3.26.    Administration of Buydown Funds..........................80

ARTICLE IV

          PAYMENTS TO CERTIFICATEHOLDERS....................................82
          4.01.    Distributions............................................82
          4.02.    Statements to Certificateholders.........................87
          4.03.    Remittance Reports; Advances by the Master Servicer......90

                                       vii

<PAGE>



          4.04.    Distributions on the REMIC Regular Interests.............91
          4.05.    Allocation of Realized Losses............................94
          4.06.    Information Reports to Be Filed by the Master Servicer...96
          4.07.    Compliance with Withholding Requirements.................96

ARTICLE V

          THE CERTIFICATES..................................................97
          5.01.    The Certificates.........................................97
          5.02.    Registration of Transfer and Exchange of Certificates....99
          5.03.    Mutilated, Destroyed, Lost or Stolen Certificates.......103
          5.04.    Persons Deemed Owners...................................103
          5.05.    Rule 144A Information...................................104

ARTICLE VI

          THE COMPANY AND THE MASTER SERVICER..............................105
          6.01.    Liability of the Company and the Master Servicer........105
          6.02.    Merger, Consolidation or Conversion of the Company
                   or the Master Servicer..................................105
          6.03.    Limitation on Liability of the Company, the Master
                   Servicer and Others.....................................105
          6.04.    Limitation on Resignation of the Master Servicer........106
          6.05.    Sale and Assignment of Master Servicing.................106

ARTICLE VII

          DEFAULT..........................................................108
          7.01.    Events of Default.......................................108
          7.02.    Trustee to Act; Appointment of Successor................110
          7.03.    Notification to Certificateholders......................110
          7.04.    Waiver of Events of Default.............................111
          7.05.    List of Certificateholders..............................111

ARTICLE VIII

          CONCERNING THE TRUSTEE...........................................112
          8.01.    Duties of Trustee.......................................112
          8.02.    Certain Matters Affecting the Trustee...................113
          8.03.    Trustee Not Liable for Certificates or Mortgage Loans...114
          8.04.    Trustee May Own Certificates............................115
          8.05.    Trustee's Fees..........................................115
          8.06.    Eligibility Requirements for Trustee....................115
          8.07.    Resignation and Removal of the Trustee..................116
          8.08.    Successor Trustee.......................................117
          8.09.    Merger or Consolidation of Trustee......................117
          8.10.    Appointment of Co-Trustee or Separate Trustee...........117



                                      viii

<PAGE>




ARTICLE IX

          TERMINATION......................................................119
          9.01.    Termination Upon Repurchase or Liquidation of All
                   Mortgage Loans or upon Purchase of Certificates.........119
          9.02.    Termination of REMIC 2 and REMIC 3......................121
          9.03.    Additional Termination Requirements.....................121

ARTICLE X

          REMIC PROVISIONS.................................................122
          10.01.   REMIC Administration....................................122
          10.02.   Prohibited Transactions and Activities..................124
          10.03.   Master Servicer and Trustee Indemnification.............125

ARTICLE XI

          MISCELLANEOUS PROVISIONS.........................................126
          11.01.   Amendment...............................................126
          11.02.   Recordation of Agreement; Counterparts..................127
          11.03.   Limitation on Rights of Certificateholders..............127
          11.04.   Governing Law...........................................128
          11.05.   Notices.................................................128
          11.06.   Severability of Provisions..............................129
          11.07.   Successors and Assigns..................................129
          11.08.   Article and Section Headings............................129
          11.09.   Notice to Rating Agencies...............................129

          Signatures
          Acknowledgments

          Exhibit A         Form of Class A Certificate
          Exhibit B-1       Form of Class M and Class B Certificate
          Exhibit B-2       Form of Class P Certificate
          Exhibit B-3       Form of Class C Certificate
          Exhibit B-4       Form of Class R Certificate
          Exhibit C         Form of Trustee Initial Certification
          Exhibit D         Form of Trustee Final Certification
          Exhibit E         Form of Remittance Report
          Exhibit F-1       Request for Release
          Exhibit F-2       Request for Release for Mortgage Loans Paid in Full
          Exhibit G-1       Form of Investor Representation Letter
          Exhibit G-2       Form of Transferor Representation Letter
          Exhibit G-3       Form of Rule 144A Investment Representation
          Exhibit G-4       Transferor Certificate for Transfers of Residual
                            Certificates


                                       ix

<PAGE>



          Exhibit G-5       Transfer Affidavit and Agreement for Transfers of
                            Residual Certificates
          Exhibit G-6       Form of Investor Representation Letter for Insurance
                            Companies
          Exhibit H         Mortgage Loan Schedule
          Exhibit I         Seller Representations and Warranties
          Exhibit J         Form of Notice Under Section 3.24
          Exhibit K         Impac Funding Corporation Servicing Guide


                                        x

<PAGE>



                   This Pooling and Servicing Agreement, dated and effective as
of May 1, 2001, among Impac Secured Assets Corp., as company (the "Company"),
Impac Funding Corporation, as master servicer (the "Master Servicer"), and
Bankers Trust Company of California, N.A., as trustee (the "Trustee").

                             PRELIMINARY STATEMENT:

                   The Company intends to sell pass-through certificates
(collectively, the "Certificates"), to be issued hereunder in multiple classes,
which in the aggregate will evidence the entire beneficial ownership interest in
the Trust Fund created hereunder. The Certificates will consist of fourteen
classes of certificates, designated as (i) the Class A-I-1, Class A-I-2, Class
A-I-4, Class A-I-5, Class A-II-1, Class A-II-3, Class A-3 and Class A-IO
Certificates, (ii) the Class M-1 Certificates, (iii) the Class M-2 Certificates,
(iv) the Class B Certificates, (v) the Class P Certificates, (vi) the Class C
Certificates and (vii) the Class R Certificates.

                                     REMIC 1

          As provided herein, the Trustee will make an election to treat the
segregated pool of assets consisting of the Mortgage Loans and certain other
related assets subject to this Agreement as a real estate mortgage investment
conduit (a "REMIC") for federal income tax purposes, and such segregated pool of
assets will be designated as "REMIC 1." The Class R-1 Interest will represent
the sole class of "residual interests" in REMIC 1 for purposes of the REMIC
Provisions (as defined herein) under federal income tax law. The following table
irrevocably sets forth the designation, the Uncertificated REMIC 1 Pass-Through
Rate, the initial Uncertificated Principal Balance, and solely for purposes of
satisfying Treasury regulation Section 1.860G-1(a)(4)(iii), the "latest possible
maturity date" for each of the REMIC 1 Regular Interests. None of the REMIC 1
Regular Interests will be certificated.
<TABLE>
<CAPTION>


    Designation            Uncertificated REMIC 1           Initial Uncertificated              Assumed Final
---------------
                              Pass-Through Rate                Principal Balance              Maturity Date (1)
-------------------  ---------------------------------- ------------------------------        -----------------
<S>                        <C>                            <C>                                     <C>
       LT1A                     Variable(2)                   $180,252,804.60                        June 2031
       LT1B                     Variable(2)                     $1,218,878.66                        June 2031
       LT1C                     Variable (2)                      $601,856.74                        June 2031
       LT1D                     Variable(2)                    $20,230,000.00                        June 2031
       LT1P                     Variable(2)                           $100.00                        June 2031
</TABLE>
-------------------
(1)  Solely  for  purposes  of  Section   1.860G-1(a)(4)(iii)  of  the  Treasury
     regulations,  the  Distribution  Date in the month of the maturity date for
     the Mortgage Loan with the latest  maturity date has been designated as the
     "latest possible maturity date" for each REMIC 1 Regular Interest.

(2)  Calculated in accordance  with the  definition of  "Uncertificated  REMIC 1
     Pass-Through Rate" herein.

<PAGE>

                                     REMIC 2

        As provided herein, the Trustee will make an election to treat the
segregated pool of assets consisting of the REMIC 1 Regular Interests as a REMIC
for federal income tax purposes, and such segregated pool of assets will be
designated as "REMIC 2". The Class R-2 Interest will represent the sole class of
"residual interests" in REMIC 2 for purposes of the REMIC Provisions.

        The following table irrevocably sets forth the designation, the
Uncertificated REMIC 2 Pass- Through Rate, the initial Uncertificated Principal
Balance, and solely for purposes of satisfying Treasury regulation Section
1.860G-1(a)(4)(iii), the "latest possible maturity date" for each of the REMIC 2
Regular Interests. None of the REMIC 2 Regular Interests will be certificated.


<TABLE>
<CAPTION>
                    Uncertificated REMIC 2     Initial Uncertificated           Assumed Final
   Designation         Pass-Through Rate          Principal Balance           Maturity Date (1)
---------------- ---------------------------- ------------------------        -----------------
<S>                     <C>                      <C>                          <C>
    LT2-1AA              Variable(2)                 $132,722,052.68              June 2031
    LT2-AI1              Variable(2)                     $297,000.00              June 2031
    LT2-AI2              Variable(2)                     $181,000.00              June 2031
    LT2-AI3              Variable(2)                     $182,000.00              June 2031
    LT2-AI4              Variable(2)                     $307,000.00              June 2031
    LT2-AI5              Variable(2)                     $306,050.00              June 2031
    LT2-1M1              Variable(2)                      $38,858.78              June 2031
    LT2-1M2              Variable(2)                      $27,084.35              June 2031
     LT2-1B              Variable(2)                      $20,309.91              June 2031
    LT2-1ZZ              Variable(2)                   $1,354,310.27              June 2031
    LT2-2AA              Variable(2)                  $65,535,416.52              June 2031
    LT2-AII1             Variable(2)                     $168,600.00              June 2031
    LT2-AII2             Variable(2)                     $216,800.00              June 2031
    LT2-AII3             Variable(2)                     $243,200.00              June 2031
    LT2-2M1              Variable(2)                      $16,721.22              June 2031
    LT2-2M2              Variable(2)                      $13,375.65              June 2031
     LT2-2B              Variable(2)                      $10,030.09              June 2031
    LT2-2ZZ              Variable(2)                     $668,730.53              June 2031
    LT2A-IO              Variable(2)                       N/A(3)                 June 2031
      LT2P               Variable(2)                         $100.00              June 2031
</TABLE>
-------------------

(1)  Solely  for  purposes  of  Section   1.860G-1(a)(4)(iii)  of  the  Treasury
     regulations, the Distribution Date in the month following the maturity date
     for the Mortgage Loan with the latest  maturity date has been designated as
     the "latest possible maturity date" for each REMIC 2 Regular Interest.

(2)  Calculated in accordance  with the  definition of  "Uncertificated  REMIC 2
     Pass-Through Rate" herein.

(3)  REMIC 2 Regular Interest LT2A-IO will not have an Uncertificated  Principal
     Balance,  but will accrue  interest on its  Uncertificated  Notional Amount
     outstanding  from  time  to  time  which  shall  equal  the  Uncertificated
     Principal Balance of REMIC 1 Regular Interest LT1D.



                                        2

<PAGE>





                                     REMIC 3

        As provided herein, the Trustee will make an election to treat the
segregated pool of assets consisting of the REMIC 2 Regular Interests as a REMIC
for federal income tax purposes, and such segregated pool of assets will be
designated as "REMIC 3". The Class R-3 Interest will represent the sole class of
"residual interests" in REMIC 3 for purposes of the REMIC Provisions.

        The following table irrevocably sets forth the Class designation,
Pass-Through Rate and Initial Certificate Principal Balance for each Class of
Certificates that represents one or more of the "regular interests" in REMIC 3
created hereunder:

<TABLE>
<CAPTION>


                                    Initial
                             Certificate Principal         Pass-Through            Assumed Final
    Class Designation               Balance                    Rate               Maturity Date(1)
    -----------------               -------                    ----               ----------------
<S>                          <C>                         <C>                    <C>
Class A-I-1                    $29,700,000.00              Variable(2)              April 2016
Class A-I-2                    $18,100,000.00              Variable(2)             October 2019
Class A-I-4                    $30,700,000.00              Variable(2)             August 2027
Class A-I-5                    $30,605,000.00              Variable(2)              June 2031
Class A-II-1                   $16,860,000.00              Variable(2)               May 2016
Class A-II-3                   $24,320,000.00              Variable(2)              June 2031
Class A-3                      $39,880,000.00              Variable(2)              April 2024
Class A-IO                          N/A (4)                Variable(2)            November 2003
Class M-1                      $ 5,058,000.00              Variable(2)              June 2031
Class M-2                      $ 4,046,000.00              Variable(2)              June 2031
Class B                        $ 3,034,000.00              Variable(2)              June 2031
Class C                         $540.00(3)                 Variable(2)              June 2031
Class P                         $100.00                      N/A(5)                 June 2031
</TABLE>
-------------------

(1)  Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
     regulations, the Distribution Date in the month following the maturity date
     for the Mortgage Loan with the latest maturity date has been designated as
     the "latest possible maturity date" for each Class of Certificates that
     represents one or more of the "regular interests" in REMIC 3.

     (2)  Calculated in accordance with the definition of "Pass-Through Rate"
          herein.

(3)  The Class C Certificates will accrue interest at their variable
     Pass-Through Rate on the Notional Amount of the Class C Certificates
     outstanding from time to time which shall equal the aggregate of the
     Uncertificated Principal Balances of the REMIC 2 Regular Interests. The
     Class C Certificates will not accrue interest on their Certificate
     Principal Balance.

(4)  The Class A-IO Certificates do not have a Certificate Principal Balance and
     are not entitled to distributions of principal. The Class A-IO Certificates
     accrue interest on a Notional Amount calculated in accordance with the
     definition of "Notional Amount" herein.

(5)  The Class P Certificates do not accrue interest.




                                        3

<PAGE>



        Using the Structuring Assumptions (as defined in the Prospectus
Supplement), assuming prepayments at 0% of the Prepayment Assumption, no losses
or delinquencies on the Mortgage Loans, a Required Overcollateralization Amount
of $0, and no Excess Cash Flow, the final scheduled Distribution Date on each
Class of Certificates would be as follows: (i) for the Class A-I-1 Certificates,
the Distribution Date in April 2016; (ii) for the Class A-I-2 Certificates, the
Distribution Date in October 2019; (iii) for the Class A-I-4 Certificates, the
Distribution Date in August 2027; (iv) for the Class A-II-1 Certificates, the
Distribution Date in May 2016; (v) for the Class A-3 Certificates, the
Distribution Date in April 2024; (vi) for the Class A-IO Certificates, the
Distribution Date in November 2003; and (vii) for the Class A-I-5, Class A-II-3,
Class M, Class B and Class C Certificates, the Distribution Date in June 2031.

        Due to Realized Losses, principal prepayments (including Principal
Prepayments, liquidations of defaulted Mortgage Loans, repurchases of Mortgage
Loans) and other differences between the Structuring Assumptions and the actual
behavior that the Mortgage Loans will exhibit during the period that they are
held in the Trust Fund, the final scheduled Distribution Date on each Class of
Certificates may be substantially earlier or later than the dates indicated in
the preceding paragraph. The failure of any Class of Certificates to be retired
on or before the applicable date indicated in the preceding paragraph shall not
constitute an Event of Default or a breach by any party hereto, nor shall any
Certificateholder (or the Trustee on behalf of any Certificateholder) be
entitled to any remedy for such failure. The termination of the Trust Fund and
the final distribution on any Class of the Certificates shall only occur in
accordance with the provisions of Section 4.01 and Article IX of this Agreement.


                                        4

<PAGE>



                                    ARTICLE I

                                   DEFINITIONS

               SECTION 1.01.  Defined Terms.

               Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the meanings specified in this
Article. Unless otherwise specified, all calculations in respect of interest on
the Class A Certificates (including the Class A-3 Components), the Mezzanine
Certificates, the Class C Certificates, the REMIC 1 Regular Interests and the
REMIC 2 Regular Interests shall be made on the basis a 360-day year consisting
of twelve 30-day months. The Class P Certificates and the Class R Certificates
do not accrue interest.

               "Accrual Period": With respect to each Class of Regular
Certificates (other than the Class P Certificates), including, with respect to
the Class A-3 Certificates, the Class A-3 Components, and each Distribution
Date, the calendar month prior to the month of such Distribution Date.

               "Advance": As to any Mortgage Loan, any advance made by the
Master Servicer on any Distribution Date pursuant to Section 4.03.

               "Aggregate Stated Principal Balance": As of any date of
determination, the aggregate Stated Principal Balance of the Mortgage Loans.

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

               "Allocated Realized Loss Amount": With respect to any
Distribution Date and any Class of Mezzanine Certificates, the sum of (i) any
Realized Losses allocated to such Class of Certificates on any Distribution Date
and (ii) the amount of any Allocated Realized Loss Amount for such Class of
Certificates remaining unpaid from the previous Distribution Date.

               "Anniversary": Each anniversary of May 1, 2001.

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

               "Available Distribution Amount": With respect to any Distribution
Date, an amount equal to (a) the sum of (i) the balance on deposit in the
Custodial Account as of the close of business on the related Determination Date,
(ii) the aggregate amount of any Advances made and all amounts required to be
paid by the Master Servicer pursuant to Sections 3.13 and 3.23 by deposits into
the Certificate Account on the immediately preceding Certificate Account Deposit
Date, (iii) the aggregate amount of Mortgage Loan purchases made pursuant to
Section 9.01 and (iv) the aggregate


                                        5

<PAGE>



amount required to be deposited by the Master Servicer pursuant to Section
4.01(h), reduced by (b) the sum, as of the close of business on the related
Determination Date, of (i) Monthly Payments collected but due during a Due
Period subsequent to the Due Period ending on the first day of the month of the
related Distribution Date, (ii) all interest or other income earned on deposits
in the Custodial Account or the Certificate Account, (iii) any other amounts
reimbursable or payable to the Trustee, Master Servicer or any Sub-Servicer
pursuant to Section 3.11, (iv) the Master Servicing Fees, the Sub-Servicing Fees
and the fees of the Trustee payable on such Distribution Date, (v) any amounts
in respect of the premium payable to Radian under the Radian Lender-Paid PMI
Policy, (vi) Insurance Proceeds, Liquidation Proceeds, Principal Prepayments,
REO Proceeds and the proceeds of Mortgage Loan purchases made pursuant to
Section 2.02, 2.04, 3.14 or 3.22, in each case received or made after the first
day of the month of such Distribution Date and (vii) amounts on deposit in the
Custodial Account representing any Prepayment Charges or Master Servicer
Prepayment Charge Payment Amounts.

               "Balloon Loan": Each of the Mortgage Loans identified in the
Mortgage Loan Schedule as having an original term to maturity that is shorter
than the related amortization term.

               "Balloon Payment": With respect to any Balloon Loan, the related
Monthly Payment payable on the stated maturity date of such Balloon Loan.

               "Bankruptcy Code":  The Bankruptcy Code of 1978, as amended.

               "Basic Principal Distribution Amount": With respect to any
Distribution Date, the excess of (i) the Principal Remittance Amount for such
Distribution Date over (ii) the Overcollateralization Release Amount, if any,
for such Distribution Date.

               "Book-Entry Certificate": Any Certificate registered in the name
of the Depository or its nominee.

               "Business Day": Any day other than a Saturday, Sunday or a day on
which banking institutions in California or New York (and such other state or
states in which the Custodial Account or the Certificate Account are at the time
located) or in the city in which the Corporate Trust Office of the Trustee is
located are authorized or obligated by law or executive order to close.

               "Buydown Funds": Any amount contributed by the seller of a
Mortgaged Property, the Company or other source in order to enable the Mortgagor
to reduce the payments required to be made from the Mortgagor's funds in the
early years of a Mortgage Loan. Buydown Funds are not part of the Trust Fund
prior to deposit into the Custodial or Certificate Account.

               "Buydown Mortgage Loan": Any Mortgage Loan as to which a
specified amount of interest is paid out of related Buydown Funds in accordance
with a related buydown agreement.



                                        6

<PAGE>



               "Cash Liquidation": As to any defaulted Mortgage Loan other than
a Mortgage Loan as to which an REO Acquisition occurred, a determination by the
Master Servicer that it has received all Insurance Proceeds, Liquidation
Proceeds and other payments or cash recoveries which the Master Servicer
reasonably and in good faith expects to be finally recoverable with respect to
such Mortgage Loan.

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

               "Certificate Account": The trust account or accounts created and
maintained pursuant to Section 4.01, which shall be entitled "Bankers Trust
Company of California, N.A., in trust for registered holders of Impac Secured
Assets Corp., Mortgage Pass-Through Certificates, Series 2001-4, and which
account or accounts must each be an Eligible Account.

               "Certificate Account Deposit Date": With respect to any
Distribution Date, the third Business Day immediately preceding such
Distribution Date.

               "Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the Certificate Register, except that only a
Permitted Transferee shall be a holder of a Residual Certificate for any
purposes hereof and, solely for the purposes of giving any consent pursuant to
this Agreement, any Certificate registered in the name of the Company or the
Master Servicer or any affiliate thereof shall be deemed not to be outstanding
and the Voting Rights to which such Certificate is entitled shall not be taken
into account in determining whether the requisite percentage of Voting Rights
necessary to effect any such consent has been obtained, except as otherwise
provided in Section 11.01. The Trustee shall be entitled to rely upon a
certification of the Company or the Master Servicer in determining if any
Certificates are registered in the name of the respective affiliate. All
references herein to "Holders" or "Certificateholders" shall reflect the rights
of Certificate Owners as they may indirectly exercise such rights through the
Depository and participating members thereof, except as otherwise specified
herein; provided, however, that the Trustee shall be required to recognize as a
"Holder" or "Certificateholder" only the Person in whose name a Certificate is
registered in the Certificate Register.

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

               "Certificate Principal Balance": With respect to any Class of
Regular Certificates (other than the Class A-3, Class A-IO and Class C
Certificates) immediately prior to any Distribution Date, the Initial
Certificate Principal Balance thereof reduced by the sum of all amounts actually
distributed in respect of principal of such Class and, in the case of a
Mezzanine Certificate, Realized Losses allocated thereto on all prior
Distribution Dates. With respect to the Class A-3 Certificates, the sum of the
Component Principal Balances of the Class A-3 Components. With respect to the
Class C Certificates as of any date of determination, an amount equal to the
excess, if any, of (A) the


                                        7

<PAGE>



then aggregate Uncertificated Principal Balances of the REMIC 2 Regular
Interests over (B) the then aggregate Certificate Principal Balances of the
Class A Certificates, the Mezzanine Certificates and the Class P Certificates
then outstanding. The Class A-IO Certificates will not have a Certificate
Principal Balance.

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

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

               "Class A Certificate": Any one of the Class A-I-1, Class A-I-2,
Class A-I-4, Class A-I-5, Class A-II-1, Class A-II-3, Class A-3 and Class A-IO
Certificates.

               "Class A-I Certificate": Any one of the Class A-I-1, Class A-I-2,
Class A-I-4 or Class A-I-5 Certificates or the Class A-I-3 Component.

               "Class A-I-1 Certificate": Any one of the Class A-I-1
Certificates as designated on the face thereof substantially in the form annexed
hereto as Exhibit A, executed by the Trustee and authenticated and delivered by
the Trustee, representing the right to distributions as set forth herein and
therein and evidencing a Regular Interest in REMIC 3.

               "Class A-I-2 Certificate": Any one of the Class A-I-2
Certificates as designated on the face thereof substantially in the form annexed
hereto as Exhibit A, executed by the Trustee and authenticated and delivered by
the Trustee, representing the right to distributions as set forth herein and
therein and evidencing a Regular Interest in REMIC 3.

               "Class A-I-3 Component": The Class A-I-3 Component, representing
the right to distributions as set forth herein and therein and evidencing a
Regular Interest in REMIC 3.

               "Class A-I-4 Certificate": Any one of the Class A-I-4
Certificates as designated on the face thereof substantially in the form annexed
hereto as Exhibit A, executed by the Trustee and authenticated and delivered by
the Trustee, representing the right to distributions as set forth herein and
therein and evidencing a Regular Interest in REMIC 3.

               "Class A-I-5 Certificate": Any one of the Class A-I-5
Certificates as designated on the face thereof substantially in the form annexed
hereto as Exhibit A, executed by the Trustee and authenticated and delivered by
the Trustee, representing the right to distributions as set forth herein and
therein and evidencing a Regular Interest in REMIC 3.

               "Class A-II Certificate": Any one of the Class A-II-1 or Class
A-II-3 Certificates or the Class A-II-2 Component.

               "Class A-II-1 Certificate": Any one of the Class A-II-1
Certificates as designated on the face thereof substantially in the form annexed
hereto as Exhibit A, executed by the Trustee and


                                        8

<PAGE>



authenticated and delivered by the Trustee, representing the right to
distributions as set forth herein and therein and evidencing a Regular Interest
in REMIC 3.

               "Class A-II-2 Component": The Class A-II-2 Component,
representing the right to distributions as set forth herein and therein and
evidencing a Regular Interest in REMIC 3.

               "Class A-II-3 Certificate": Any one of the Class A-II-3
Certificates as designated on the face thereof substantially in the form annexed
hereto as Exhibit A, executed by the Trustee and authenticated and delivered by
the Trustee, representing the right to distributions as set forth herein and
therein and evidencing a Regular Interest in REMIC 3.

               "Class A-IO Rate": With respect to the Class A-IO Certificates
and (a) any of the first through the twelfth Distribution Dates, a per annum
rate equal to the excess of (i) the Weighted Average Net Mortgage Rate over (ii)
the excess (but not less than zero) of (x) the Weighted Average Net Mortgage
Rate over (y) 8.00% per annum, (b) any of the thirteenth through the eighteenth
Distribution Dates, a per annum rate equal to the excess of (i) the Weighted
Average Net Mortgage Rate over (ii) the excess (but not less than zero) of (x)
the Weighted Average Net Mortgage Rate over (y) 7.00% per annum, (c) any of the
nineteenth through the twenty-fourth Distribution Dates, a per annum rate equal
to the excess of (i) the Weighted Average Net Mortgage Rate over (ii) the excess
(but not less than zero) of (x) the Weighted Average Net Mortgage Rate over (y)
5.00% per annum, (d) any of the twenty-fifth through the thirtieth Distribution
Dates, a per annum rate equal to the excess of (i) the Weighted Average Net
Mortgage Rate over (ii) the excess (but not less than zero) of (x) the Weighted
Average Net Mortgage Rate over (y) 4.00% per annum and (e) any Distribution Date
after the thirtieth Distribution Date, 0.00% per annum.

               "Class A-IO Certificate": Any one of the Class A-IO Certificates
as designated on the face thereof substantially in the form annexed hereto as
Exhibit A, executed by the Trustee and authenticated and delivered by the
Trustee, representing the right to distributions as set forth herein and therein
and evidencing a Regular Interest in REMIC 3.

               "Class A-3 Certificate": Any one of the Class A-3 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A, executed by the Trustee and authenticated and delivered by the
Trustee, representing the right to distributions as set forth herein and therein
and evidencing an interest in the Class A-3 Components.

               "Class A-3 Components": The Class A-I-3 Component and the Class
A-II-2 Component.

               "Class A Principal Distribution Amount": For any applicable
Distribution Date, an amount equal to the excess (if any) of (x) the Certificate
Principal Balance of the Class A Certificates immediately prior to such
Distribution Date over (y) the difference between (a) the aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period (after giving effect to scheduled payments of principal due during the
related Due Period, to the extent received


                                        9

<PAGE>



or advanced, and unscheduled collections of principal received during the
related Prepayment Period, and after reduction for Realized Losses incurred
during the related Prepayment Period) and (b) the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period
(after giving effect to scheduled payments of principal due during the related
Due Period, to the extent received or advanced, and unscheduled collections of
principal received during the related Prepayment Period, and after reduction for
Realized Losses incurred during the related Prepayment Period) multiplied by the
sum of (A) approximately 12.00% and (B) the Current Specified
Overcollateralization Percentage.

               "Class B Certificate": Any one of the Class B Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit B-1, executed by the Trustee and authenticated and delivered by the
Trustee, representing the right to distributions as set forth herein and therein
and evidencing a Regular Interest in REMIC 3.

               "Class B Principal Distribution Amount": For any applicable
Distribution Date, an amount equal to the excess (if any) of (x) the Certificate
Principal Balance of the Class B Certificates immediately prior to such
Distribution Date over (y) the difference between (a) the aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period (after giving effect to scheduled payments of principal due during the
related Due Period, to the extent received or advanced, and unscheduled
collections of principal received during the related Prepayment Period, and
after reduction for Realized Losses incurred during the related Prepayment
Period) and (b) the sum of (1) the Certificate Principal Balance of the Class A
Certificates (after taking into account the payment of the Class A Principal
Distribution Amount on such Distribution Date), (2) the Certificate Principal
Balance of the Class M-1 Certificates (after taking into account the payment of
the Class M-1 Principal Distribution Amount on such Distribution Date), (3) the
Certificate Principal Balance of the Class M-2 Certificates (after taking into
account the payment of the Class M-2 Principal Distribution Amount on such
Distribution Date), and (4) the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period (after giving effect
to scheduled payments of principal due during the related Due Period, to the
extent received or advanced, and unscheduled collections of principal received
during the related Prepayment Period, and after reduction for Realized Losses
incurred during the related Prepayment Period) multiplied by the Current
Specified Overcollateralization Percentage.

               "Class C Certificate": Any one of the Class C Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit B-3, executed by the Trustee and authenticated and delivered by the
Trustee, representing the right to distributions as set forth herein and therein
and evidencing a Regular Interest in REMIC 3.

               "Class M-1 Certificate": Any one of the Class M-1 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit B-1, executed by the Trustee and authenticated and delivered by the
Trustee, representing the right to distributions as set forth herein and therein
and evidencing a Regular Interest in REMIC 3.



                                       10

<PAGE>



               "Class M-1 Principal Distribution Amount": For any applicable
Distribution Date, an amount equal to the excess (if any) of (x) the Certificate
Principal Balance of the Class M-1 Certificates immediately prior to such
Distribution Date over (y) the difference between (a) the aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period (after giving effect to scheduled payments of principal due during the
related Due Period, to the extent received or advanced, and unscheduled
collections of principal received during the related Prepayment Period, and
after reduction for Realized Losses incurred during the related Prepayment
Period) and (b) the sum of (1) the Certificate Principal Balance of the Class A
Certificates (after taking into account the payment of the Class A Principal
Distribution Amount on such Distribution Date) and (2) the aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period (after giving effect to scheduled payments of principal due during the
related Due Period, to the extent received or advanced, and unscheduled
collections of principal received during the related Prepayment Period, and
after reduction for Realized Losses incurred during the related Prepayment
Period) multiplied by the sum of (A) approximately 7.00% and (B) the Current
Specified Overcollateralization Percentage.

               "Class M-2 Certificate": Any one of the Class M-2 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit B-1, executed by the Trustee and authenticated and delivered by the
Trustee, representing the right to distributions as set forth herein and therein
and evidencing a Regular Interest in REMIC 3.

               "Class M-2 Principal Distribution Amount": For any applicable
Distribution Date, an amount equal to the excess (if any) of (x) the Certificate
Principal Balance of the Class M-2 Certificates immediately prior to such
Distribution Date over (y) the difference between (a) the aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period (after giving effect to scheduled payments of principal due during the
related Due Period, to the extent received or advanced, and unscheduled
collections of principal received during the related Prepayment Period, and
after reduction for Realized Losses incurred during the related Prepayment
Period), and (b) the sum of (1) the Certificate Principal Balance of the Class A
Certificates (after taking into account the payment of the Class A Principal
Distribution Amount on such Distribution Date), (2) the Certificate Principal
Balance of the Class M-1 Certificates (after taking into account the payment of
the Class M-1 Principal Distribution Amount on such Distribution Date), and (3)
the aggregate Stated Principal Balance of the Mortgage Loans as of the last day
of the related Due Period (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced,
and unscheduled collections of principal received during the related Prepayment
Period, and after reduction for Realized Losses incurred during the related
Prepayment Period) multiplied by the sum of (A) approximately 3.00% and (B) the
Current Specified Overcollateralization Percentage.

               "Class P Certificate": Any one of the Class P Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit B-2, executed by the Trustee and authenticated and delivered by the
Trustee, representing the right to distributions as set forth herein and therein
and evidencing a Regular Interest in REMIC 3.


                                       11

<PAGE>



               "Class R Certificate": Any one of the Class R Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit B-4, executed by the Trustee and authenticated and delivered by the
Trustee, evidencing the ownership of the Class R-1 Interest, Class R-2 Interest
and the Class R-3 Interest.

               "Class R-1 Interest": The uncertificated Residual Interest in
REMIC 1.

               "Class R-2 Interest": The uncertificated Residual Interest in
REMIC 2.

               "Class R-3 Interest": The uncertificated Residual Interest in
REMIC 3.

               "Closing Date":  May 30, 2001.

               "Code":  The Internal Revenue Code of 1986.

               "Collateral Value": The appraised value of a Mortgaged Property
based upon the lesser of (i) the appraisal (as reviewed and approved by the
Seller) made at the time of the origination of the related Mortgage Loan, or
(ii) the sales price of such Mortgaged Property at such time of origination.
With respect to a Mortgage Loan the proceeds of which were used to refinance an
existing mortgage loan, the appraised value of the Mortgaged Property based upon
the appraisal (as reviewed and approved by the Seller) obtained at the time of
refinancing.

               "Commission":  The Securities and Exchange Commission.

               "Company": Impac Secured Assets Corp., or its successor in
interest.

               "Compensating Interest": With respect to any Distribution Date,
an amount equal to Prepayment Interest Shortfalls resulting from Principal
Prepayments during the related Prepayment Period, but not more than the sum of
the Master Servicing Fees and the Sub-Servicing Fees for the immediately
preceding Due Period.

               "Component Principal Balance": With respect to any of the Class
A-3 Components, immediately prior to any Distribution Date, the Initial
Component Principal Balance thereof reduced by the sum of all amounts actually
distributed in respect of principal of such Class.

               "Corporate Trust Office": The principal corporate trust office of
the Trustee at which at any particular time its corporate trust business related
to this Agreement shall be administered, which office at the date of the
execution of this Agreement is located at 1761 East St. Andrew Place, Santa Ana,
California 92705, Attention: Corporate Trust, Impac Secured Assets Corp. Series
2001-4 IM01S4.

               "Corresponding Certificate or Component": With respect to:



                                       12

<PAGE>



                       (i) REMIC 2 Regular Interest LT2-AI1, the Class A-I-1
                       Certificates,

                       (ii) REMIC 2 Regular Interest LT2-AI2, the Class A-I-2
                       Certificates,

                       (iii) REMIC 2 Regular Interest LT2-AI3, the Class A-I-3
                       Component,

                       (iv) REMIC 2 Regular Interest LT2-AI4, the Class A-I-4
                       Certificates,

                       (v) REMIC 2 Regular Interest LT2-AI5, the Class A-I-5
                       Certificates,

                       (vi) REMIC 2 Regular Interest LT2-AII1, the Class A-II-1
                       Certificates,

                       (vii) REMIC 2 Regular Interest LT2-AII2, the Class A-II-2
                       Component,

                       (viii) REMIC 2 Regular Interest LT2-AII3, the Class
                       A-II-3 Certificates,

                       (ix) REMIC 2 Regular Interest LT2-1M1 and REMIC 2 Regular
                       Interest LT2- 2M1, the Class M-1 Certificates,

                       (x) REMIC 2 Regular Interest LT2-1M2 and REMIC 2 Regular
                       Interest LT2- 2M2, the Class M-2 Certificates,

                       (xi) REMIC 2 Regular Interest LT2-1B and REMIC 2 Regular
                       Interest LT2- 2B, the Class B Certificates, and

                       (xii) REMIC 2 Regular Interest LT2P, the Class P
                       Certificates.

               "Current Specified Overcollateralization Percentage": For any
Distribution Date, a percentage equal to (a) the Overcollateralization Target
Amount divided by (b) the aggregate Stated Principal Balance of the Mortgage
Loans as of the last day of the related Due Period (after giving effect to
scheduled payments of principal due during the related Due Period, to the extent
received or advanced, and unscheduled collections of principal received during
the related Prepayment Period, and after reduction for Realized Losses incurred
during the related Prepayment Period).

               "Curtailment": Any Principal Prepayment made by a Mortgagor which
is not a Principal Prepayment in Full.

               "Custodial Account": The custodial account or accounts created
and maintained pursuant to Section 3.10 in the name of a depository institution,
as custodian for the holders of the Certificates. Any such account or accounts
shall be an Eligible Account.

               "Cut-off Date":  May 1, 2001.



                                       13

<PAGE>



               "Defaulted Mortgage Loan" means any Mortgage Loan as to which the
Mortgagor has failed to make unexcused three or more consecutive scheduled
Monthly Payments.

               "Deficient Valuation": With respect to any Mortgage Loan, a
valuation by a court of competent jurisdiction of the Mortgaged Property in an
amount less than the then outstanding indebtedness under the Mortgage Loan, or
any reduction in the amount of principal to be paid in connection with any
scheduled Monthly Payment that constitutes a permanent forgiveness of principal,
which valuation or reduction results from a proceeding under the Bankruptcy
Code.

               "Definitive Certificate": Any definitive, fully registered
Certificate.

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

               "Depository" The Depository Trust Company, or any successor
Depository hereafter named. The nominee of the initial Depository for purposes
of registering those Certificates that are to be Book-Entry Certificates is Cede
& Co. The Depository shall at all times be a "clearing corporation" as defined
in Section 8-102(5) of the Uniform Commercial Code of the State of New York and
a "clearing agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934, as amended.

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

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

               "Disqualified Organization": Any organization defined as a
"disqualified organization" under Section 860E(e)(5) of the Code, which includes
any of the following: (i) the United States, any State or political subdivision
thereof, any possession of the United States, or any agency or instrumentality
of any of the foregoing (other than an instrumentality which is a corporation if
all of its activities are subject to tax and, except for the Freddie Mac, a
majority of its board of directors is not selected by such governmental unit),
(ii) a foreign government, any international organization, or any agency or
instrumentality of any of the foregoing, (iii) any organization (other than
certain farmers' cooperatives described in Section 521 of the Code) which is
exempt from the tax imposed by Chapter 1 of the Code (including the tax imposed
by Section 511 of the Code on unrelated business taxable income), (iv) rural
electric and telephone cooperatives described in Section 1381(a)(2)(C) of the
Code and (v) any other Person so designated by the Trustee based upon an Opinion
of Counsel that the holding of an Ownership Interest in a Class R Certificate by
such Person may cause any of REMIC 1, REMIC 2 or REMIC 3 or any Person having an
Ownership Interest in any Class of Certificates (other than such Person) to
incur a liability for any federal tax imposed under the Code that would not
otherwise be imposed but for the Transfer of an


                                       14

<PAGE>



Ownership Interest in a Class R Certificate to such Person. The terms "United
States", "State" and "international organization" shall have the meanings set
forth in Section 7701 of the Code or successor provisions.

               "Distribution Date": The 25th day of any month, or if such 25th
day is not a Business Day, the Business Day immediately following such 25th day,
commencing in June 2001.

               "Due Date": The first day of the month of the related
Distribution Date.

               "Due Period": With respect to any Distribution Date, the period
commencing on the second day of the month preceding the month of such
Distribution Date (or, with respect to the first Due Period, the day following
the Cut-off Date) and ending on the related Due Date.

               "Eligible Account": Any of (i) a segregated account maintained
with a federal or state chartered depository institution (A) the short-term
obligations of which are rated A-1+ or better by Standard & Poor's and P-1 by
Moody's (and F-1 by Fitch if rated by Fitch) at the time of any deposit therein
or (B) insured by the FDIC (to the limits established by such Corporation), the
uninsured deposits in which account are otherwise secured such that, as
evidenced by an Opinion of Counsel (obtained by the Person requesting that the
account be held pursuant to this clause (ii)) delivered to the Trustee prior to
the establishment of such account, the Certificateholders will have a claim with
respect to the funds in such account and a perfected first priority security
interest against any collateral (which shall be limited to Permitted
Investments, each of which shall mature not later than the Business Day
immediately preceding the Distribution Date next following the date of
investment in such collateral or the Distribution Date if such Permitted
Investment is an obligation of the institution that maintains the Certificate
Account or Custodial Account) securing such funds that is superior to claims of
any other depositors or general creditors of the depository institution with
which such account is maintained, (ii) a segregated trust account or accounts
maintained with a federal or state chartered depository institution or trust
company with trust powers acting in its fiduciary capacity or (iii) a segregated
account or accounts of a depository institution acceptable to the Rating
Agencies (as evidenced in writing by the Rating Agencies that use of any such
account as the Custodial Account or the Certificate Account will not have an
adverse effect on the then- current ratings assigned to the Classes of the
Certificates then rated by the Rating Agencies). Eligible Accounts may bear
interest.

               "Event of Default": One or more of the events described in
Section 7.01.

               "Excess Overcollateralized Amount": With respect to the Class A
Certificates (other than the Class A-IO Certificates) and the Mezzanine
Certificates and any Distribution Date, the excess, if any, of (i) the
Overcollateralized Amount for such Distribution Date, assuming that 100% of the
Principal Remittance Amount is applied as a principal payment on such
Distribution Date over (ii) the Overcollateralization Target Amount for such
Distribution Date.

               "Excess Proceeds":  As defined in Section 3.22.


                                       15

<PAGE>



               "Extra Principal Distribution Amount": With respect to any
Distribution Date, the lesser of (x) the Net Monthly Excess Cashflow for such
Distribution Date and (y) the Overcollateralization Deficiency Amount for such
Distribution Date.

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

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

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

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

               "Funding Date": With respect to each Mortgage Loan, the date on
which funds were advanced by or on behalf of the Seller and interest began to
accrue thereunder.

               "GMAC": GMAC Mortgage Corporation.

               "Group 1 Loan": Any Mortgage Loan identified as a Group 1 Loan on
the Mortgage Loan Schedule.

               "Group 2 Loan": Any Mortgage Loan identified as a Group 2 Loan on
the Mortgage Loan Schedule.

               "Group 1 Marker Rate": With respect to the Class C Certificates
and any Distribution Date, a per annum rate equal to two (2) times the weighted
average of the Uncertificated REMIC 2 Pass-Through Rates for REMIC 2 Regular
Interest LT2-AI1, REMIC 2 Regular Interest LT2-AI2, REMIC 2 Regular Interest
LT2-AI3, REMIC 2 Regular Interest LT2-AI4, REMIC 2 Regular Interest LT2-AI5,
REMIC 2 Regular Interest LT2-1MI, REMIC 2 Regular Interest LT2-1M2, REMIC 2
Regular Interest LT2-1B and REMIC 2 Regular Interest LT2-1ZZ, with the rate on
REMIC 2 Regular Interest LT2-AI1 subject to a cap equal to the lesser of (x)
5.15% per annum and (y) the Group 1 Net WAC Rate for the purpose of this
calculation; with the rate on REMIC 2 Regular Interest LT2-AI2 subject to a cap
equal to the lesser of (x) 5.53% per annum and (y) the Group 1 Net WAC Rate for
the purpose of this calculation; with the rate on REMIC 2 Regular Interest
LT2-AI3 subject to a cap equal to the lesser of (x) 6.38% per annum and (y) the
Group 1 Net WAC Rate for the purpose of this calculation; with the rate on REMIC
2 Regular Interest LT2-AI4 subject to a cap equal to the lesser of (x) 6.65% per
annum and (y) the Group 1 Net WAC Rate for the purpose of this calculation; with
the rate on REMIC 2 Regular Interest LT2-AI5 subject to a cap equal to (A) in
the case of any Distribution Date up to and including the Optional Termination
Date, the lesser of (x) 7.36% per annum and (y) the Group 1 Net WAC Rate and (B)
in the case of any Distribution Date after the Optional Termination Date, the
lesser of (x) 7.86% per annum and (y) the Group 1 Net WAC Rate for the purpose
of this calculation; with the rate on REMIC 2 Regular Interest LT2-1M1 subject
to a cap equal to (A) in the case of any Distribution Date up to and including
the Optional Termination Date, the lesser of (x) 7.250% per annum and (y) the
Mezzanine Net WAC Rate and


                                       16

<PAGE>



(B) in the case of any Distribution Date after the Optional Termination Date,
the lesser of (x) 7.750% per annum and (y) the Mezzanine Net WAC Rate for the
purpose of this calculation; with the rate on REMIC 2 Regular Interest LT2-1M2
subject to a cap equal to (A) in the case of any Distribution Date up to and
including the Optional Termination Date, the lesser of (x) 7.250% per annum and
(y) the Mezzanine Net WAC Rate and (B) in the case of any Distribution Date
after the Optional Termination Date, the lesser of (x) 7.750% per annum and (y)
the Mezzanine Net WAC Rate for the purpose of this calculation; with the rate on
REMIC 2 Regular Interest LT2-1B subject to a cap equal to (A) in the case of any
Distribution Date up to and including the Optional Termination Date, the lesser
of (x) 7.250% per annum and (y) the Mezzanine Net WAC Rate and (B) in the case
of any Distribution Date after the Optional Termination Date, the lesser of (x)
7.750% per annum and (y) the Mezzanine Net WAC Rate for the purpose of this
calculation; and with the rate on REMIC 2 Regular Interest LT2-1ZZ subject to a
cap of zero for the purpose of this calculation.

        "Group 1 Net WAC Rate": With respect to each Distribution Date through
and including the Distribution Date in November 2003, the Net WAC Rate and for
each Distribution Date thereafter, the weighted average of the Net Mortgage
Rates of the Group 1 Mortgage Loans, weighted on the basis of the Stated
Principal Balances thereof as of the close of business on the first day of the
calendar month preceding the month in which such Distribution Date occurs.

        "Group 2 Marker Rate": With respect to the Class C Certificates and any
Distribution Date, a per annum rate equal to two (2) times the weighted average
of the Uncertificated REMIC 2 Pass-Through Rates for REMIC 2 Regular Interest
LT2-AII1, REMIC 2 Regular Interest LT2-AII2, REMIC 2 Regular Interest LT2-AII3,
REMIC 2 Regular Interest LT2-2MI, REMIC 2 Regular Interest LT2-2M2, REMIC 2
Regular Interest LT2-2B and REMIC 2 Regular Interest LT2-2ZZ; with the rate on
REMIC 2 Regular Interest LT2-AII1 subject to a cap equal to the lesser of (x)
5.38% per annum and (y) the Group 2 Net WAC Rate for the purpose of this
calculation; with the rate on REMIC 2 Regular Interest LT2-AII2 subject to a cap
equal to the lesser of (x) 6.38% per annum and (y) the Group 2 Net WAC Rate for
the purpose of this calculation; with the rate on REMIC 2 Regular Interest
LT2-AII3 subject to a cap equal to (A) in the case of any Distribution Date up
to and including the Optional Termination Date, the lesser of (x) 7.250% per
annum and (y) the Group 2 Net WAC Rate and (B) in the case of any Distribution
Date after the Optional Termination Date, the lesser of (x) 7.750% per annum and
(y) the Group 2 Net WAC Rate for the purpose of this calculation; with the rate
on REMIC 2 Regular Interest LT2-2MI subject to a cap equal to (A) in the case of
any Distribution Date up to and including the Optional Termination Date, the
lesser of (x) 7.250% per annum and (y) the Mezzanine Net WAC Rate and (B) in the
case of any Distribution Date after the Optional Termination Date, the lesser of
(x) 7.750% per annum and (y) the Mezzanine Net WAC Rate for the purpose of this
calculation; with the rate on REMIC 2 Regular Interest LT2-2M2 subject to a cap
equal to (A) in the case of any Distribution Date up to and including the
Optional Termination Date, the lesser of (x) 7.250% per annum and (y) the
Mezzanine Net WAC Rate and (B) in the case of any Distribution Date after the
Optional Termination Date, the lesser of (x) 7.750% per annum and (y) the
Mezzanine Net WAC Rate for the purpose of this calculation; with the rate on
REMIC 2 Regular Interest LT2-2B subject to a cap equal to (A) in the case of any
Distribution Date up to and including the Optional Termination Date, the lesser
of (x) 7.250% per


                                       17

<PAGE>



annum and (y) the Mezzanine Net WAC Rate and (B) in the case of any Distribution
Date after the Optional Termination Date, the lesser of (x) 7.750% per annum and
(y) the Mezzanine Net WAC Rate for the purpose of this calculation; and with the
rate on REMIC 2 Regular Interest LT2-2ZZ subject to a cap of zero for the
purpose of this calculation.

               "Group 2 Net WAC Rate": With respect to each Distribution Date
through and including the Distribution Date in November 2003, the Net WAC Rate
and for each Distribution Date thereafter, the weighted average of the Net
Mortgage Rates of the Group 2 Mortgage Loans, weighted on the basis of the
Stated Principal Balances thereof as of the close of business on the first day
of the calendar month preceding the month in which such Distribution Date
occurs.

               "Initial Certificate Principal Balance": With respect to each
Class of Regular Certificates (other than the Class A-IO Certificates), the
Initial Certificate Principal Balance of such Class of Certificates as set forth
in the Preliminary Statement hereto, or with respect to any single Certificate,
the Initial Certificate Principal Balance as stated on the face thereof.

               "Initial Component Principal Balance": With respect to the Class
A-I-3 Component, $18,200,000, and with respect to the Class A-II-2 Component,
$21,680,000.

               "Initial Notional Amount": With respect to the Class A-IO
Certificates, $20,230,000.00 or with respect to any single Certificate, the
Initial Notional Amount as stated on the face thereof. With respect to the Class
C Certificate, the aggregate of the initial Uncertificated Principal Balance of
the REMIC 2 Regular Interests, or with respect to any single Certificate, the
Initial Notional Amount as stated on the face thereof.

               "Insurance Policy": With respect to any Mortgage Loan, any
insurance policy (including a Radian Lender-Paid PMI Policy) which is required
to be maintained from time to time under this Agreement in respect of such
Mortgage Loan.

               "Insurance Proceeds": Proceeds paid in respect of the Mortgage
Loans pursuant to any Primary Hazard Insurance Policy, any Primary Insurance
Policy, any title insurance policy or any other insurance policy covering a
Mortgage Loan, to the extent such proceeds are not applied to the restoration of
the related Mortgaged Property or released to the Mortgagor in accordance with
the procedures that the Master Servicer would follow in servicing mortgage loans
held for its own account.

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

               "Late Collections": With respect to any Mortgage Loan, all
amounts received during any Due Period, whether as late payments of Monthly
Payments or as Insurance Proceeds,


                                       18

<PAGE>



Liquidation Proceeds or otherwise, which represent late payments or collections
of Monthly Payments due but delinquent for a previous Due Period and not
previously recovered.

               "Liquidated Mortgage Loan": As to any Distribution Date, any
Mortgage Loan in respect of which the Master Servicer has determined, in
accordance with the servicing procedures specified herein, as of the end of the
related Prepayment Period, that all Liquidation Proceeds which it expects to
recover with respect to the liquidation of the Mortgage Loan or disposition of
the related REO Property have been recovered.

               "Liquidation Proceeds": Amounts (other than Insurance Proceeds)
received by the Master Servicer in connection with the taking of an entire
Mortgaged Property by exercise of the power of eminent domain or condemnation or
in connection with the liquidation of a defaulted Mortgage Loan through
trustee's sale, foreclosure sale or otherwise, other than amounts received in
respect of any REO Property.

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

               "Lost Note Affidavit": With respect to any Mortgage Note, an
original lost note affidavit from the Seller stating that the original Mortgage
Note was lost, misplaced or destroyed, together with a copy of the related
Mortgage Note.

               "Majority Class C Certificateholder": As defined in Section 9.01.

               "Master Servicer": Impac Funding Corporation, or any successor
master servicer appointed as herein provided.

               "Master Servicer Prepayment Charge Payment Amount": The amounts
payable by the Master Servicer in respect of any waived Prepayment Charges
pursuant to Section 2.03, and any amount paid to the Trust Fund by any Person to
remedy any breach of any representation, warranty of covenant made with respect
to the Prepayment Charges to the extent the Trust Fund, as assignee, is the
beneficiary of such representation, warranty or covenant.

               "Master Servicing Fees": As to each Mortgage Loan, an amount,
payable out of any payment of interest on the Mortgage Loan, equal to interest
at the Master Servicing Fee Rate on the Stated Principal Balance of such
Mortgage Loan for the calendar month preceding the month in which the payment is
due (alternatively, in the event such payment of interest accompanies a
Principal Prepayment in Full made by the Mortgagor, interest for the number of
days covered by such payment of interest).

               "Master Servicing Fee Rate": With respect to each Mortgage Loan,
the per annum rate of 0.03%.


                                       19

<PAGE>



               "Maximum Uncertificated Accrued Interest Deferral Amount": With
respect to any Distribution Date, the excess of (a) the sum of (I) accrued
interest at the Uncertificated REMIC 2 Pass-Through Rate applicable to REMIC 2
Regular Interest LT2-1ZZ for such Distribution Date on a balance equal to the
excess of (i) the Uncertificated Principal Balance of REMIC 2 Regular Interest
LT2-1ZZ and (ii) the REMIC 2 Group 1 Overcollateralized Amount for such
Distribution Date and (II) accrued interest at the Uncertificated REMIC 2
Pass-Through Rate applicable to REMIC 2 Regular Interest LT2-2ZZ for such
Distribution Date on a balance equal to the excess of (i) the Uncertificated
Principal Balance of REMIC 2 Regular Interest LT2-2ZZ and (ii) the REMIC 2 Group
2 Overcollateralized Amount for such Distribution Date, over (b) Uncertificated
Accrued Interest on REMIC 2 Regular Interest LT2-AI1, with the rate on REMIC 2
Regular Interest LT2-AI1 subject to a cap equal to the lesser of (x) 5.15% per
annum and (y) the Group 1 Net WAC Rate; Uncertificated Accrued Interest on REMIC
2 Regular Interest LT2-AI2, with the rate on REMIC 2 Regular Interest LT2-AI2
subject to a cap equal to the lesser of (x) 5.53% per annum and (y) the Group 1
Net WAC Rate; Uncertificated Accrued Interest on REMIC 2 Regular Interest
LT2-AI3, with the rate on REMIC 2 Regular Interest LT2-AI3 subject to a cap
equal to the lesser of (x) 6.38% per annum and (y) the Group 1 Net WAC Rate;
Uncertificated Accrued Interest on REMIC 2 Regular Interest LT2-AI4, with the
rate on REMIC 2 Regular Interest LT2-AI4 subject to a cap equal to the lesser of
(x) 6.65% per annum and (y) the Group 1 Net WAC Rate; Uncertificated Accrued
Interest on REMIC 2 Regular Interest LT2-AI5, with the rate on REMIC 2 Regular
Interest LT2-AI5 subject to a cap equal to (A) in the case of any Distribution
Date up to and including the Optional Termination Date, the lesser of (x) 7.36%
per annum and (y) the Group 1 Net WAC Rate and (B) in the case of any
Distribution Date after the Optional Termination Date, the lesser of (x) 7.86%
per annum and (y) the Group 1 Net WAC Rate; Uncertificated Accrued Interest on
REMIC 2 Regular Interest LT2-1M1 with the rate on REMIC 2 Regular Interest
LT2-1M1 subject to a cap equal to (A) in the case of any Distribution Date up to
and including the Optional Termination Date, the lesser of (x) 7.250% per annum
and (y) the Mezzanine Net WAC Rate and (B) in the case of any Distribution Date
after the Optional Termination Date, the lesser of (x) 7.750% per annum and (y)
the Mezzanine Net WAC Rate for the purpose of this calculation, Uncertificated
Accrued Interest on REMIC 2 Regular Interest LT2-1M2, with the rate on REMIC 2
Regular Interest LT2-1M2 subject to a cap equal to (A) in the case of any
Distribution Date up to and including the Optional Termination Date, the lesser
of (x) 7.250% per annum and (y) the Mezzanine Net WAC Rate and (B) in the case
of any Distribution Date after the Optional Termination Date, the lesser of (x)
7.750% per annum and (y) the Mezzanine Net WAC Rate for the purpose of this
calculation, Uncertificated Accrued Interest on REMIC 2 Regular Interest LT2-1B,
with the rate on REMIC 2 Regular Interest LT2-1B subject to a cap equal to (A)
in the case of any Distribution Date up to and including the Optional
Termination Date, the lesser of (x) 7.250% per annum and (y) the Mezzanine Net
WAC Rate and (B) in the case of any Distribution Date after the Optional
Termination Date, the lesser of (x) 7.750% per annum and (y) the Mezzanine Net
WAC Rate for the purpose of this calculation, Uncertificated Accrued Interest on
REMIC 2 Regular Interest LT2-OAII1, with the rate on REMIC 2 Regular Interest
LT2-OAII1 subject to a cap equal to the lesser of (x) 5.38% per annum and (y)
the Group 2 Net WAC Rate; Uncertificated Accrued Interest on REMIC 2 Regular
Interest LT2-AII2, with the rate on REMIC 2 Regular Interest LT2-AII2 subject to
a cap equal to the lesser of (x) 6.38% per annum and (y) the Group 2 Net WAC
Rate; Uncertificated Accrued Interest on REMIC 2 Regular Interest LT2-AII3, with
the rate on REMIC 2 Regular Interest LT2-AII3 subject to a cap


                                       20

<PAGE>



equal to (A) in the case of any Distribution Date up to and including the
Optional Termination Date, the lesser of (x) 7.250% per annum and (y) the Group
2 Net WAC Rate and (B) in the case of any Distribution Date after the Optional
Termination Date, the lesser of (x) 7.750% per annum and (y) the Group 2 Net WAC
Rate for the purpose of this calculation, Uncertificated Accrued Interest on
REMIC 2 Regular Interest LT2-2M1, with the rate on REMIC 2 Regular Interest
LT2-2M1 subject to a cap equal to (A) in the case of any Distribution Date up to
and including the Optional Termination Date, the lesser of (x) 7.250% per annum
and (y) the Mezzanine Net WAC Rate and (B) in the case of any Distribution Date
after the Optional Termination Date, the lesser of (x) 7.750% per annum and (y)
the Mezzanine Net WAC Rate for the purpose of this calculation, Uncertificated
Accrued Interest on REMIC 2 Regular Interest LT2-2M2, with the rate on REMIC 2
Regular Interest LT2-2M2 subject to a cap equal to (A) in the case of any
Distribution Date up to and including the Optional Termination Date, the lesser
of (x) 7.250% per annum and (y) the Mezzanine Net WAC Rate and (B) in the case
of any Distribution Date after the Optional Termination Date, the lesser of (x)
7.750% per annum and (y) the Mezzanine Net WAC Rate for the purpose of this
calculation, and Uncertificated Accrued Interest on REMIC 2 Regular Interest
LT2-2B, with the rate on REMIC 2 Regular Interest LT2-2B subject to a cap equal
to (A) in the case of any Distribution Date up to and including the Optional
Termination Date, the lesser of (x) 7.250% per annum and (y) the Mezzanine Net
WAC Rate and (B) in the case of any Distribution Date after the Optional
Termination Date, the lesser of (x) 7.750% per annum and (y) the Mezzanine Net
WAC Rate for the purpose of this calculation.

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

               "Mezzanine Net WAC Rate": (A) For the June 2001 Distribution Date
through the November 2003 Distribution Date, a per annum rate equal to the Net
WAC Rate and (B) for each Distribution Date thereafter, the lesser of (1) the
weighted average of the Net Mortgage Rates of the Group 1 Loans as of the first
day of the month preceding the month in which such Distribution Date occurs and
(2) the weighted average of the Net Mortgage Rates of the Group 2 Loans as of
the first day of the month preceding the month in which such Distribution Date
occurs.

               "Monthly Interest Distributable Amount": With respect to the
Class A Certificates, Mezzanine Certificates and Class C Certificates,
including, in the case of the Class A-3 Certificates, the Class A-3 Components,
and any Distribution Date, the amount of interest accrued during the related
Accrual Period at the related Pass-Through Rate on the Certificate Principal
Balance (or Notional Amount in the case of the Class A-IO Certificates and Class
C Certificates, or Component Principal Balance in the case of the Class A-3
Components) of such Class or Class A-3 Component immediately prior to such
Distribution Date, in each case, reduced by any Net Prepayment Interest
Shortfalls and Relief Act Interest Shortfalls (allocated to such Certificate or
Class A-3 Component as set forth in Section 1.02).

               "Monthly Payment": With respect to any Mortgage Loan, the
scheduled monthly payment of principal and interest on such Mortgage Loan which
is payable by a Mortgagor from time to time under the related Mortgage Note as
originally executed (after adjustment, if any, for Deficient


                                       21

<PAGE>



Valuations occurring prior to such Due Date, and after any adjustment by reason
of any bankruptcy or similar proceeding or any moratorium or similar waiver or
grace period).

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

               "Mortgage": The mortgage, deed of trust or any other instrument
securing the Mortgage Loan.

               "Mortgage File": The mortgage documents listed in Section 2.01
pertaining to a particular Mortgage Loan and any additional documents required
to be added to the Mortgage File pursuant to this Agreement; provided, that
whenever the term "Mortgage File" is used to refer to documents actually
received by the Trustee, such term shall not be deemed to include such
additional documents required to be added unless they are actually so added.

               "Mortgage Loan": Each of the mortgage loans, transferred and
assigned to the Trustee pursuant to Section 2.01 or Section 2.04 and from time
to time held in the Trust Fund (including any Qualified Substitute Mortgage
Loans), the Mortgage Loans so transferred, assigned and held being identified in
the Mortgage Loan Schedule. As used herein, the term "Mortgage Loan" includes
the related Mortgage Note and Mortgage.

               "Mortgage Loan Purchase Agreement": The Mortgage Loan Purchase
Agreement dated as of May 1, 2001, among Impac Funding Corporation, as seller,
Impac Mortgage Holdings, Inc., as guarantor, and the Company as purchaser, and
all amendments thereof and supplements thereto.

               "Mortgage Loan Schedule": As of any date of determination, the
schedule of Mortgage Loans included in the Trust Fund. The initial schedule of
Mortgage Loans with accompanying information transferred on the Closing Date to
the Trustee as part of the Trust Fund for the Certificates, attached hereto as
Exhibit H (as amended from time to time to reflect the addition of Qualified
Substitute Mortgage Loans) (and, for purposes of the Trustee pursuant to Section
2.02, in computer-readable form as delivered to the Trustee), which list shall
set forth the following information with respect to each Mortgage Loan:
<TABLE>
<CAPTION>

<S>      <C>          <C>
             (i)       the loan number and name of the Mortgagor;

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

           (iii)       (A) the original term to maturity and (B) if such Mortgage Loan is a Balloon
                       Loan, the amortization term thereof;

            (iv)       the original principal balance and the original Mortgage Rate;

             (v)       the first payment date;



                                       22

<PAGE>



            (vi)       whether the Mortgage Loan is a Balloon Mortgage Loan or a Mortgage Loan
                       the terms of which do not provide for a Balloon Payment;

           (vii)       the type of Mortgaged Property;

          (viii)       the Monthly Payment in effect as of the Cut-off Date;

            (ix)       the principal balance as of the Cut-off Date;

             (x)       the Mortgage Rate as of the Cut-off Date;

            (xi)       the occupancy status;

           (xii)       the purpose of the Mortgage Loan;

          (xiii)       the Collateral Value of the Mortgaged Property;

           (xiv)       the original term to maturity;

            (xv)       the paid-through date of the Mortgage Loan;

           (xvi)       the Master Servicing Fee Rate;

            (xvii)     the Sub-Servicing Fee Rate;

         (xviii)       the Net Mortgage Rate for such Mortgage Loan;

           (xix)       whether such Mortgage Loan is a Radian Insured Loan and, if so, the related
                       Radian PMI Policy Rate;

            (xx)       whether the Mortgage Loan is covered by a private mortgage insurance policy
                       or an original certificate of private mortgage insurance;

           (xxi)       the documentation type;

          (xxii)       the type and term of the related Prepayment Charge, if any; and

         (xxiii)       whether the Mortgage Loan is a Group 1 Loan or a Group 2 Loan.
</TABLE>

               The Mortgage Loan Schedule may be in the form of more than one
schedule, collectively setting forth all of the information required.

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


                                       23

<PAGE>



               "Mortgage Rate": With respect to any Mortgage Loan, the annual
rate at which interest accrues on such Mortgage Loan, as adjusted from time to
time in accordance with the provisions of the Mortgage Note.

               "Mortgaged Property": The underlying property securing a Mortgage
Loan.

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

               "Net Liquidation Proceeds": With respect to any Liquidated
Mortgage Loan or any other disposition of related Mortgaged Property (including
REO Property) the related Liquidation Proceeds net of Advances, Servicing
Advances, Master Servicing Fees, Sub-Servicing Fees and any other accrued and
unpaid servicing fees received and retained in connection with the liquidation
of such Mortgage Loan or Mortgaged Property.

               "Net Monthly Excess Cashflow": With respect to each Distribution
Date, the sum of (a) any Overcollateralization Release Amount for such
Distribution Date and (b) the excess of (x) Available Distribution Amount for
such Distribution Date over (y) the sum for such Distribution Date of (A) the
Monthly Interest Distributable Amounts for the Class A Certificates and the
Mezzanine Certificates, (B) the Unpaid Interest Shortfall Amounts for the Class
A Certificates and (C) the Principal Remittance Amount.

               "Net Mortgage Rate": With respect to each Mortgage Loan Due Date,
a per annum rate of interest equal to the then-applicable Mortgage Rate on such
Mortgage Loan less the sum of the Master Servicing Fee Rate, the Sub-Servicing
Fee Rate, the Trustee Fee Rate, and with respect to the Radian Insured Loans,
the Radian PMI Policy Rate.

               "Net Prepayment Interest Shortfall": With respect to any
Distribution Date, the excess, if any, of any Prepayment Interest Shortfalls for
such date over the related Compensating Interest.

               "Net WAC Rate": With respect to each class of the Class A
Certificates (other than the Class A-IO Certificates), each Class of the
Mezzanine Certificates and the REMIC 2 Regular Interests (other than REMIC 2
Regular Interest LT2A-IO) and any Distribution Date, a per annum rate (but not
less than zero) equal to the weighted average of (x) the Uncertificated REMIC 1
Pass- Through Rate with respect to REMIC 1 Regular Interest LT1A, REMIC 1
Regular Interest LT1B, REMIC 1 Regular Interest LT1C and REMIC 1 Regular
Interest LT1P for such Distribution Date and (y) the excess, if any, of (i) the
Uncertificated REMIC 1 Pass-Through Rate with respect to REMIC 1 Regular
Interest LT1D for such Distribution Date over (ii) (A) in the case of the
Distribution Dates beginning in June 2001 and ending in November 2003, the
applicable Class A-IO Rate, and (B) in the case of any Distribution Date
thereafter, 0.00% per annum, weighted, in the case of clause (x), on the basis
of the aggregate Uncertificated Principal Balance of REMIC 1 Regular Interest
LT1A, REMIC 1 Regular Interest LT1B, REMIC 1 Regular Interest LT1C and REMIC 1
Regular Interest LT1P, and in the case of clause (y), on the basis of the
Uncertificated Principal Balance of REMIC 1 Regular Interest LT1D, respectively.


                                       24

<PAGE>



               "Nonrecoverable Advance": Any Advance or Servicing Advance
previously made or proposed to be made in respect of a Mortgage Loan which, in
the good faith judgment of the Master Servicer, will not or, in the case of a
proposed Advance or Servicing Advance, would not be ultimately recoverable from
related Late Collections, Insurance Proceeds, Liquidation Proceeds or REO
Proceeds. The determination by the Master Servicer that it has made a
Nonrecoverable Advance or that any proposed Advance or Servicing Advance would
constitute a Nonrecoverable Advance, shall be evidenced by a certificate of a
Servicing Officer delivered to the Company and the Trustee.

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

               "Notional Amount": With respect to the Class A-IO Certificates,
immediately prior to any Distribution Date, an amount equal to the
Uncertificated Principal Balance of REMIC 1 Regular Interest LT1D. With respect
to the Class C Certificates, immediately prior to any Distribution Date, the
aggregate of the Uncertificated Principal Balances of the REMIC 2 Regular
Interests.

               "Officers' Certificate": A certificate signed by the Chairman of
the Board, the Vice Chairman of the Board, the President or a vice president and
by the Treasurer, the Secretary, or one of the assistant treasurers or assistant
secretaries of the Company, the Seller, the Master Servicer or of any
Sub-Servicer and delivered to the Company and Trustee.

               "Opinion of Counsel": A written opinion of counsel, who may be
counsel for the Company, the Seller, or the Master Servicer, reasonably
acceptable to the Trustee; except that any opinion of counsel relating to (a)
the qualification of any account required to be maintained pursuant to this
Agreement as an Eligible Account, (b) the qualification of REMIC 1, REMIC 2 or
REMIC 3 as REMICs, (c) compliance with the REMIC Provisions or (d) resignation
of the Master Servicer pursuant to Section 6.04 must be an opinion of counsel
who (i) is in fact independent of the Company and the Master Servicer, (ii) does
not have any direct financial interest or any material indirect financial
interest in the Company or the Master Servicer or in an affiliate of either and
(iii) is not connected with the Company or the Master Servicer as an officer,
employee, director or person performing similar functions.

               "Optional Termination Date": The first Distribution Date on which
the Majority Class C Certificateholders may opt to terminate the Trust Fund
pursuant to Section 9.01.

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

               "Outstanding Mortgage Loan": As to any Due Date, a Mortgage Loan
(including an REO Property) which was not the subject of a Principal Prepayment
in Full, Cash Liquidation or REO Disposition and which was not purchased prior
to such Due Date pursuant to Sections 2.02, 2.04 or 3.14.



                                       25

<PAGE>



               "Overcollateralization Deficiency Amount": With respect to any
Distribution Date, the amount, if any, by which the Overcollateralization Target
Amount exceeds the Overcollateralized Amount on such Distribution Date (after
giving effect to distributions in respect of the Basic Principal Distribution
Amount on such Distribution Date).

               "Overcollateralization Release Amount": With respect to any
Distribution Date, the lesser of (x) the Principal Remittance Amount for such
Distribution Date and (y) the Excess Overcollateralized Amount.

               "Overcollateralization Target Amount": With respect to any
Distribution Date, $1,011,518.20.

               "Overcollateralized Amount": With respect to any Distribution
Date, the amount, if any, by which (i) the aggregate Stated Principal Balance of
the Mortgage Loans (after giving effect to scheduled payments of principal due
during the related Due Period, to the extent received or advanced, and
unscheduled collections of principal received during the related Prepayment
Period and after reduction for Realized Losses incurred during the related
Prepayment Period) exceeds (ii) the aggregate Certificate Principal Balance of
the Class A Certificates (other than the Class A-IO Certificates), the Mezzanine
Certificates and the Class P Certificates as of such Distribution Date after
giving effect to distributions to be made on such Distribution Date.

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

               "Pass-Through Rate": With respect to any Distribution Date and

               (i) the Class A-I-1 Certificates, the lesser of (x) 5.15% per
annum and (y) the Group 1 Net WAC Rate;


         (ii)  the Class A-I-2 Certificates, the lesser of (x) 5.53% per annum
               and (y) the Group 1 Net WAC Rate;

        (iii)  the Class A-I-3 Component, the lesser of (x) 6.38% per annum and
               (y) the Group 1 Net WAC Rate;

         (iv)  the Class A-I-4 Certificates, the lesser of (x) 6.65% per annum
               and (y) the Group 1 Net WAC Rate;

        (v)    the Class A-I-5 Certificates, (A) in the case of any Distribution
               Date up to and including the Optional Termination Date, the
               lesser of (x) 7.36% per annum and (y) the Group 1 Net WAC Rate
               and (B) in the case of any Distribution Date after the Optional
               Termination Date, the lesser of (x) 7.86% per annum and (y) the
               Group 1 Net WAC Rate;


                                       26

<PAGE>



         (vi)  the Class A-II-1 Certificates, the lesser of (x) 5.38% per annum
               and (y) the Group 2 Net WAC Rate;

        (vii)  the Class A-II-2 Component, the lesser of (x) 6.38% per annum
               and (y) the Group 2 Net WAC Rate;

        (viii) the Class A-II-3 Certificates, (A) in the case of any
               Distribution Date up to and including the Optional Termination
               Date, the lesser of (x) 7.250% per annum and (y) the Group 2 Net
               WAC Rate and (B) in the case of any Distribution Date after the
               Optional Termination Date, the lesser of (x) 7.750% per annum and
               (y) the Group 2 Net WAC Rate;

         (ix)  the Class A-IO Certificates, 100% of the interest on REMIC 2
               Regular Interest LT2A-IO;

        (x)    the Class M-1 Certificates, (A) in the case of any Distribution
               Date up to and including the Optional Termination Date, the
               lesser of (x) 7.250% per annum and (y) the Mezzanine Net WAC Rate
               and (B) in the case of any Distribution Date after the Optional
               Termination Date, the lesser of (x) 7.750% per annum and (y) the
               Mezzanine Net WAC Rate;

        (xi)   the Class M-2 Certificates, (A) in the case of any Distribution
               Date up to and including the Optional Termination Date, the
               lesser of (x) 7.250% per annum and (y) the Mezzanine Net WAC Rate
               and (B) in the case of any Distribution Date after the Optional
               Termination Date, the lesser of (x) 7.750% per annum and (y) the
               Mezzanine Net WAC Rate;

        (xii)  the Class B Certificates, (A) in the case of any Distribution
               Date up to and including the Optional Termination Date, the
               lesser of (x) 7.250% per annum and (y) the Mezzanine Net WAC Rate
               and (B) in the case of any Distribution Date after the Optional
               Termination Date, the lesser of (x) 7.750% per annum and (y) the
               Mezzanine Net WAC Rate; and

        (vii)  the Class C Certificates, a per annum rate equal to the
               percentage equivalent of a fraction, the numerator of which is
               (x) the sum of the amounts calculated pursuant to clauses (A)
               through (S) below, and the denominator of which is (y) the
               aggregate of the Uncertificated Principal Balances of the REMIC 2
               Regular Interests. For purposes of calculating the Pass-Through
               Rate for the Class C Certificates, the numerator is equal to the
               sum of the following components:

               (A) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2
Regular Interest LT2-1AA minus the Group 1 Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC 2 Regular Interest
LT2-1AA;



                                       27

<PAGE>



               (B) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2
Regular Interest LT2-AI1 minus the Group 1 Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC 2 Regular Interest
LT2-AI1;

               (C) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2
Regular Interest LT2-AI2 minus the Group 1 Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC 2 Regular Interest
LT2-AI2;

               (D) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2
Regular Interest LT2-AI3 minus the Group 1 Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC 2 Regular Interest
LT2-AI3;

               (E) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2
Regular Interest LT2-AI4 minus the Group 1 Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC 2 Regular Interest
LT2-AI4;

               (F) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2
Regular Interest LT2-AI5 minus the Group 1 Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC 2 Regular Interest
LT2-AI5;

               (G) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2
Regular Interest LT2-1M1 minus the Group 1 Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC 2 Regular Interest
LT2-1M1;

               (H) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2
Regular Interest LT2-1M2 minus the Group 1 Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC 2 Regular Interest
LT2-1M2;

               (I) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2
Regular Interest LT2-1B minus the Group 1 Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC 2 Regular Interest
LT2-1B;

               (J) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2
Regular Interest LT2-1ZZ minus the Group 1 Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC 2 Regular Interest
LT2-1ZZ;

               (K) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2
Regular Interest LT2-2AA minus the Group 2 Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC 2 Regular Interest
LT2-2AA;

               (L) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2
Regular Interest LT2-AII1 minus the Group 2 Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC 2 Regular Interest
LT2-AII1;



                                       28

<PAGE>



               (M) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2
Regular Interest LT2-AII2 minus the Group 2 Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC 2 Regular Interest
LT2-AII2;

               (N) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2
Regular Interest LT2-AII3 minus the Group 2 Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC 2 Regular Interest
LT2-AII3;

               (O) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2
Regular Interest LT2-2M1 minus the Group 2 Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC 2 Regular Interest
LT2-2M1;

               (P) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2
Regular Interest LT2-2M2 minus the Group 2 Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC 2 Regular Interest
LT2-2M2;

               (Q) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2
Regular Interest LT2-2B minus the Group 2 Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC 2 Regular Interest
LT2-2B;

               (R) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2
Regular Interest LT2-2ZZ minus the Group 2 Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC 2 Regular Interest
LT2-2ZZ; and

               (S) 100% of the interest on REMIC 2 Regular Interest LT2P.

               The Class P Certificates will not accrue interest and therefore
will not have a Pass- Through Rate.

               "Percentage Interest": With respect to any Regular Certificate,
the undivided percentage ownership interest in the related Class evidenced by
such Certificate, which percentage ownership interest shall be equal to the
Initial Certificate Principal Balance thereof or Initial Notional Amount, as
applicable, thereof divided by the aggregate Initial Certificate Principal
Balance or Initial Notional Amount, as applicable, of all of the Certificates of
the same Class. With respect to any Class R Certificate, the interest in
distributions to be made with respect to such Class evidenced thereby, expressed
as a percentage, as stated on the face of each such Certificate.

               "Permitted Investment": One or more of the following:

               (i) obligations of or guaranteed as to principal and interest by
        the United States or any agency or instrumentality thereof when such
        obligations are backed by the full faith and credit of the United
        States;



                                       29

<PAGE>



               (ii) repurchase agreements on obligations specified in clause (i)
        maturing not more than one month from the date of acquisition thereof,
        provided that the unsecured obligations of the party agreeing to
        repurchase such obligations are at the time rated by each Rating Agency
        in its highest short-term rating available;

               (iii) federal funds, certificates of deposit, demand deposits,
        time deposits and bankers' acceptances (which shall each have an
        original maturity of not more than 90 days and, in the case of bankers'
        acceptances, shall in no event have an original maturity of more than
        365 days or a remaining maturity of more than 30 days) denominated in
        United States dollars of any U.S. depository institution or trust
        company incorporated under the laws of the United States or any state
        thereof or of any domestic branch of a foreign depository institution or
        trust company; provided that the debt obligations of such depository
        institution or trust company (or, if the only Rating Agency is Standard
        & Poor's, in the case of the principal depository institution in a
        depository institution holding company, debt obligations of the
        depository institution holding company) at the date of acquisition
        thereof have been rated by each Rating Agency in its highest short-term
        rating available; and provided further that, if the only Rating Agency
        is Standard & Poor's and if the depository or trust company is a
        principal subsidiary of a bank holding company and the debt obligations
        of such subsidiary are not separately rated, the applicable rating shall
        be that of the bank holding company; and, provided further that, if the
        original maturity of such short-term obligations of a domestic branch of
        a foreign depository institution or trust company shall exceed 30 days,
        the short-term rating of such institution shall be A-1+ in the case of
        Standard & Poor's if Standard & Poor's is the Rating Agency;

               (iv) commercial paper (having original maturities of not more
        than 365 days) of any corporation incorporated under the laws of the
        United States or any state thereof which on the date of acquisition has
        been rated by Moody's and Standard & Poor's (and by Fitch if rated by
        Fitch) in their highest short-term ratings available; provided that such
        commercial paper shall have a remaining maturity of not more than 30
        days;

               (v) a money market fund or a qualified investment fund rated by
        Moody's and Fitch in their respective highest long-term ratings
        available and rated AAAm or AAAm-G by Standard & Poor's, including any
        such funds for which Bankers Trust Company of California, N.A. or any
        affiliate thereof serves as an investment advisor, manager,
        administrator, shareholder, servicing agent, and/or custodian or
        sub-custodian; and

               (vi) other obligations or debt securities that are acceptable to
        each Rating Agency as a Permitted Investment hereunder and will not
        reduce the rating assigned to any Class of Certificates by such Rating
        Agency below the lower of the then-current rating or the rating assigned
        to such Certificates as of the Closing Date by such Rating Agency, as
        evidenced in writing;

provided, however, that no instrument shall be a Permitted Investment if it
represents, either (1) the right to receive only interest payments with respect
to the underlying debt instrument or (2) the right


                                       30

<PAGE>



to receive both principal and interest payments derived from obligations
underlying such instrument and the principal and interest payments with respect
to such instrument provide a yield to maturity greater than 120% of the yield to
maturity at par of such underlying obligations.

               "Permitted Transferee": Any transferee of a Residual Certificate
other than a Disqualified Organization, a Non-United States Person or an
"electing large partnership" (as defined in Section 775 of the Code).

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

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

               "Prepayment Charge": With respect to any Mortgage Loan, the
charges or premiums, if any, due in connection with a full or partial prepayment
of such Mortgage Loan in accordance with the terms thereof (other than any
Master Servicer Prepayment Charge Payment Amount).

               "Prepayment Interest Shortfall": As to any Distribution Date and
any Mortgage Loan (other than a Mortgage Loan relating to an REO Property) that
was the subject of (a) a Principal Prepayment in Full during the related
Prepayment Period, an amount equal to the excess of one month's interest at the
Net Mortgage Rate on the Stated Principal Balance of such Mortgage Loan over the
amount of interest (adjusted to the Net Mortgage Rate) paid by the Mortgagor for
such Prepayment Period to, but not including, the date of such Principal
Prepayment in Full or (b) a Curtailment during the prior calendar month, an
amount equal to one month's interest at the Net Mortgage Rate on the amount of
such Curtailment.

               "Prepayment Period": As to any Distribution Date, Determination
Date or Sub- Servicer Remittance Date, the calendar month preceding the month in
which such Distribution Date, Determination Date or Sub-Servicer Remittance Date
occurs.

               "Primary Hazard Insurance Policy": Each primary hazard insurance
policy required to be maintained pursuant to Section 3.13.

               "Primary Insurance Policy": Any primary policy of mortgage
guaranty insurance including the Radian Lender-Paid PMI Policy, or any
replacement policy therefor.

               "Principal Distribution Amount": With respect to any Distribution
Date, an amount equal to the sum of the Basic Principal Distribution Amount plus
the Extra Principal Distribution Amount.

               "Principal Prepayment": Any payment of principal made by the
Mortgagor on a Mortgage Loan which is received in advance of its scheduled Due
Date and which is not


                                       31

<PAGE>



accompanied by an amount of interest representing scheduled interest due on any
date or dates in any month or months subsequent to the month of prepayment.

               "Principal Prepayment in Full": Any Principal Prepayment made by
a Mortgagor of the entire unpaid principal balance of the Mortgage Loan.

               "Principal Remittance Amount": With respect to any Distribution
Date, the sum of (i) each scheduled payment of principal collected or advanced
on the Mortgage Loans by the Master Servicer that were due during the related
Due Period, (ii) the principal portion of all partial and full Principal
Prepayments of the Mortgage Loans applied by the Master Servicer during the
related Prepayment Period, (iii) the principal portion of all related Net
Liquidation Proceeds, REO Proceeds and Insurance Proceeds received during the
related Prepayment Period, (iv) the principal portion of proceeds of Mortgage
Loan purchases made pursuant to Section 2.02, 2.04, 3.14 or 3.22, in each case
received or made during the related Prepayment Period, (v) the principal portion
of any related Substitution Adjustments deposited in the Custodial Account
during the related Prepayment Period and (vi) on the Distribution Date on which
the Trust Fund is to be terminated pursuant to Section 9.01, the principal
portion of the termination price received from the Majority Class C
Certificateholders in connection with a termination of the Trust Fund to occur
on such Distribution Date.

               "Prospectus Supplement": That certain Prospectus Supplement dated
May 25, 2001 relating to the public offering of the Class A Certificates and the
Mezzanine Certificates.

               "Purchase Price": With respect to any Mortgage Loan (or REO
Property) required to be purchased pursuant to Section 2.02, 2.04 or 3.14, an
amount equal to the sum of (i) 100% of the Stated Principal Balance thereof,
(ii) unpaid accrued interest (or REO Imputed Interest) at the applicable Net
Mortgage Rate on the Stated Principal Balance thereof outstanding during each
Due Period that such interest was not paid or advanced, from the date through
which interest was last paid by the Mortgagor or advanced and distributed to
Certificateholders together with unpaid Master Servicing Fees, Sub-Servicing
Fees, Trustee's Fees and, if such Mortgage Loan is a Radian Insured Loan, fees
due Radian at the Radian PMI Policy Rate, from the date through which interest
was last paid by the Mortgagor, in each case to the first day of the month in
which such Purchase Price is to be distributed, plus (iii) the aggregate of all
Advances and Servicing Advances made in respect thereof that were not previously
reimbursed.

               "Qualified Insurer": Any insurance company duly qualified as such
under the laws of the state or states in which the related Mortgaged Property or
Mortgaged Properties is or are located, duly authorized and licensed in such
state or states to transact the type of insurance business in which it is
engaged and approved as an insurer by the Master Servicer, so long as the claims
paying ability of which is acceptable to the Rating Agencies for pass-through
certificates having the same rating as the Certificates rated by the Rating
Agencies as of the Closing Date.

               "Qualified Substitute Mortgage Loan": A Mortgage Loan substituted
by the Company for a Deleted Mortgage Loan which must, on the date of such
substitution, as confirmed


                                       32

<PAGE>



in an Officers' Certificate of the Seller delivered to the Trustee, (i) have an
outstanding principal balance, after deduction of the principal portion of the
monthly payment due in the month of substitution (or in the case of a
substitution of more than one Mortgage Loan for a Deleted Mortgage Loan, an
aggregate outstanding principal balance, after such deduction), not in excess of
the Stated Principal Balance of the Deleted Mortgage Loan (the amount of any
shortfall to be paid to the Master Servicer for deposit in the Custodial Account
in the month of substitution); (ii) have a Mortgage Rate and a Net Mortgage Rate
no lower than and not more than 1% per annum higher than the Mortgage Rate and
Net Mortgage Rate, respectively, of the Deleted Mortgage Loan as of the date of
substitution; (iii) have a Loan-to-Value Ratio at the time of substitution no
higher than that of the Deleted Mortgage Loan at the time of substitution; (iv)
have a remaining term to stated maturity not greater than (and not more than one
year less than) that of the Deleted Mortgage Loan; (v) comply with each
representation and warranty set forth in Section 2.04 hereof; and, (vi) comply
with each representation and warranty set forth in the Mortgage Loan Purchase
Agreement.

               "Radian": Radian Guaranty, Inc. (f/k/a Commonwealth Mortgage
Assurance Company), or its successors or assigns.

               "Radian Insured Loans": The Mortgage Loans included in the Trust
Fund covered by a Radian Lender-Paid PMI Policy, as indicated on the Mortgage
Loan Schedule.

               "Radian Lender-Paid PMI Policy": A Primary Insurance Policy
issued by Radian in accordance with a May 1, 2000 letter between the Seller and
Radian.

               "Radian PMI Policy Rate": With respect to any Radian Insured
Loan, the rate per annum at which the related premium on the Radian Lender-Paid
PMI Policy accrues.

               "Rating Agency": Standard & Poor's, Fitch or Moody's and each of
their successors. If such agencies and their successors are no longer in
existence, "Rating Agency" shall be such nationally recognized statistical
rating agency, or other comparable Person, designated by the Company, notice of
which designation shall be given to the Trustee and Master Servicer. References
herein to the two highest long term debt rating of a Rating Agency shall mean
"AA" or better in the case of Standard & Poor's, "AA" or better in the case of
Fitch and "Aa2" or better in the case of Moody's and references herein to the
highest short-term debt rating of a Rating Agency shall mean "A-1+" in the case
of Standard & Poor's, F-1 in the case of Fitch and "P-1" in the case of Moody's,
and in the case of any other Rating Agency such references shall mean such
rating categories without regard to any plus or minus.

               "Realized Loss": With respect to each Mortgage Loan or REO
Property as to which a Cash Liquidation or REO Disposition has occurred, an
amount (not less than zero) equal to (i) the Stated Principal Balance of the
Mortgage Loan as of the date of Cash Liquidation or REO Disposition, plus (ii)
interest (and REO Imputed Interest, if any) at the Net Mortgage Rate from the
Due Date as to which interest was last paid or advanced to Certificateholders up
to the date of the Cash Liquidation or REO Disposition on the Stated Principal
Balance of such Mortgage Loan outstanding during each Due Period that such
interest was not paid or advanced, minus (iii) the


                                       33

<PAGE>



proceeds, if any, received during the month in which such Cash Liquidation or
REO Disposition occurred, to the extent applied as recoveries of interest at the
Net Mortgage Rate and to principal of the Mortgage Loan, net of the portion
thereof reimbursable to the Master Servicer or any Sub- Servicer with respect to
related Advances or Servicing Advances not previously reimbursed. With respect
to each Mortgage Loan which has become the subject of a Deficient Valuation, the
difference between the principal balance of the Mortgage Loan outstanding
immediately prior to such Deficient Valuation and the principal balance of the
Mortgage Loan as reduced by the Deficient Valuation.

               "Record Date": With respect to each Class of Certificates and
each Distribution Date, the last Business Day of the month immediately preceding
the month of the related Distribution Date.

               "Regular Certificate": Any of the Certificates other than a
Residual Certificate.

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

               "Relief Act Interest Shortfall": With respect to any Distribution
Date, for any Mortgage Loan with respect to which there has been a reduction in
the amount of interest collectible thereon for the most recently ended Due
Period as a result of the application of the Relief Act, the amount by which (i)
interest collectible on such Mortgage Loan during such Due Period is less than
(ii) one month's interest on the Principal Balance of such Mortgage Loan at the
Loan Rate for such Mortgage Loan before giving effect to the application of the
Relief Act.

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

               "REMIC 1": The segregated pool of assets, with respect to which a
REMIC election is to be made, conveyed in trust to the Trustee, for the benefit
of the Holders of the REMIC 1 Regular Interests and the Holders of the Class R
Certificates (as holders of the Class R-1 Interest), consisting of: (i) each
Mortgage Loan (exclusive of payments of principal and interest due on or before
the Cut-off Date, if any, received by the Master Servicer which shall not
constitute an asset of the Trust Fund) as from time to time are subject to this
Agreement and all payments under and proceeds of such Mortgage Loans (exclusive
of any prepayment fees and late payment charges received on the Mortgage Loans),
together with all documents included in the related Mortgage File, subject to
Section 2.01; (ii) such funds or assets as from time to time are deposited in
the Custodial Account or the Certificate Account and belonging to the Trust
Fund; (iii) any REO Property; (iv) the Primary Hazard Insurance Policies, if
any, the Primary Insurance Policies, if any, and all other Insurance Policies
with respect to the Mortgage Loans; (v) [reserved]; and (vi) the Company's
interest in respect of the representations and warranties made by the Seller in
the Mortgage Loan Purchase Agreement as assigned to the Trustee pursuant to
Section 2.04 hereof.

               "REMIC 1 Regular Interest LT1A": One of the separate
non-certificated beneficial ownership interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC 1. REMIC 1 Regular Interest LT1A shall
accrue interest at the related Uncertificated REMIC 1 Pass-


                                       34

<PAGE>

Through Rate in effect from time to time, and shall be entitled to distributions
of principal, subject to the terms and conditions hereof, in an aggregate amount
equal to its initial Uncertificated Principal Balance as set forth in the
Preliminary Statement hereto.

               "REMIC 1 Regular Interest LT1B": One of the separate
non-certificated beneficial ownership interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC 1. REMIC 1 Regular Interest LT1B shall
accrue interest at the related Uncertificated REMIC 1 Pass- Through Rate in
effect from time to time, and shall be entitled to distributions of principal,
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Principal Balance as set forth in the Preliminary
Statement hereto.

               "REMIC 1 Regular Interest LT1C": One of the separate
non-certificated beneficial ownership interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC 1. REMIC 1 Regular Interest LT1C shall
accrue interest at the related Uncertificated REMIC 1 Pass- Through Rate in
effect from time to time, and shall be entitled to distributions of principal,
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Principal Balance as set forth in the Preliminary
Statement hereto.

               "REMIC 1 Regular Interest LT1D": One of the separate
non-certificated beneficial ownership interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC 1. REMIC 1 Regular Interest LT1D shall
accrue interest at the related Uncertificated REMIC 1 Pass- Through Rate in
effect from time to time, and shall be entitled to distributions of principal,
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Principal Balance as set forth in the Preliminary
Statement hereto.

               "REMIC 1 Regular Interest LT1P": One of the separate
non-certificated beneficial ownership interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC 1. REMIC 1 Regular Interest LT1P shall
accrue interest at the related Uncertificated REMIC 1 Pass- Through Rate in
effect from time to time, and shall be entitled to any Prepayment Charges
relating to the Mortgage Loans collected by the Master Servicer and to a
distribution of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto.

               "REMIC 1 Regular Interests": REMIC 1 Regular Interest LT1A, REMIC
1 Regular Interest LT1B, REMIC 1 Regular Interest LT1C, REMIC 1 Regular Interest
LT1D and REMIC 1 Regular Interest LT1P.

               "REMIC 2": The segregated pool of assets consisting of all of the
REMIC 1 Regular Interests conveyed in trust to the Trustee, for the benefit of
REMIC 3, as holder of the REMIC 2 Regular Interests, and the Class R
Certificateholders, as holders of the Class R-2 Interest, pursuant to Article II
hereunder, and all amounts deposited therein, with respect to which a separate
REMIC election is to be made.



                                       35

<PAGE>



               "REMIC 2 Group 1 Interest Loss Allocation Amount": With respect
to any Distribution Date, an amount equal to (a) the product of (i) the
aggregate Principal Balance of the Group 1 Loans and related REO Properties then
outstanding and (ii) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2
Regular Interest LT2-1AA minus the Group 1 Marker Rate, divided by (b) 12.

               "REMIC 2 Group 2 Interest Loss Allocation Amount": With respect
to any Distribution Date, an amount equal to (a) the product of (i) the
aggregate Principal Balance of the Group 2 Loans and related REO Properties then
outstanding and (ii) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2
Regular Interest LT2-2AA minus the Group 2 Marker Rate, divided by (b) 12.

               "REMIC 2 Group 1 Overcollateralized Amount": With respect to any
date of determination, (i) 1% of the aggregate Uncertificated Principal Balances
of REMIC 2 Regular Interest LT2-1AA, REMIC 2 Regular Interest LT2-AI1, REMIC 2
Regular Interest LT2-AI2, REMIC 2 Regular Interest LT2-AI3, REMIC 2 Regular
Interest LT2-AI4, REMIC 2 Regular Interest LT2- AI5, REMIC 2 Regular Interest
LT2-1M1, REMIC 2 Regular Interest LT2-1M2, REMIC 2 Regular Interest LT2-1B and
REMIC 2 Regular Interest LT2-1ZZ, minus (ii) the aggregate of the Uncertificated
Principal Balances of REMIC 2 Regular Interest LT2-AI1, REMIC 2 Regular Interest
LT2-AI2, REMIC 2 Regular Interest LT2-AI3, REMIC 2 Regular Interest LT2-AI4,
REMIC 2 Regular Interest LT2-AI5, REMIC 2 Regular Interest LT2-1M1, REMIC 2
Regular Interest LT2-1M2 and REMIC 2 Regular Interest LT2-1B, in each case as of
such date of determination.

               "REMIC 2 Group 2 Overcollateralized Amount": With respect to any
date of determination, (i) 1% of the aggregate Uncertificated Principal Balances
of REMIC 2 Regular Interest LT2-2AA, REMIC 2 Regular Interest LT2-AII1, REMIC 2
Regular Interest LT2-AII2, REMIC 2 Regular Interest LT2-AII3, REMIC 2 Regular
Interest LT2-2M1, REMIC 2 Regular Interest LT2-2M2, REMIC 2 Regular Interest
LT2-2B and REMIC 2 Regular Interest LT2-2ZZ, minus (ii) the aggregate of the
Uncertificated Principal Balances of REMIC 2 Regular Interest LT2-AII1, REMIC 2
Regular Interest LT2-AII2, REMIC 2 Regular Interest LT2-AII3, REMIC 2 Regular
Interest LT2-2M1, REMIC 2 Regular Interest LT2-2M2 and REMIC 2 Regular Interest
LT2-2B, in each case as of such date of determination.

               "REMIC 2 Group 1 Principal Loss Allocation Amount": With respect
to any Distribution Date and the Group 1 Loans, an amount equal to (a) the
product of (i) the aggregate Principal Balance of the Group 1 Loans and related
REO Properties then outstanding and (ii) 1 minus a fraction, the numerator of
which is two times the aggregate of the Uncertificated Principal Balances of
REMIC 2 Regular Interest LT2-AI1, REMIC 2 Regular Interest LT2-AI2, REMIC 2
Regular Interest LT2-AI3, REMIC 2 Regular Interest LT2-AI4, REMIC 2 Regular
Interest LT2-AI5, REMIC 2 Regular Interest LT2-1M1, REMIC 2 Regular Interest
LT2-1M2 and REMIC 2 Regular Interest LT2-1B, and the denominator of which is the
aggregate of the Uncertificated Principal Balances of REMIC 2 Regular Interest
LT2-AI1, REMIC 2 Regular Interest LT2-AI2, REMIC 2 Regular Interest LT2-AI3,
REMIC 2 Regular Interest LT2-AI4, REMIC 2 Regular Interest LT2-AI5, REMIC 2


                                       36

<PAGE>



Regular Interest LT2-1M1, REMIC 2 Regular Interest LT2-1M2, REMIC 2 Regular
Interest LT2-1B and REMIC 2 Regular Interest LT2-1ZZ.

               "REMIC 2 Group 2 Principal Loss Allocation Amount": With respect
to any Distribution Date and the Group 2 Loans, an amount equal to (a) the
product of (i) the aggregate Principal Balance of the Group 2 Loans and related
REO Properties then outstanding and (ii) 1 minus a fraction, the numerator of
which is two times the aggregate of the Uncertificated Principal Balances of
REMIC 2 Regular Interest LT2-AII1, REMIC 2 Regular Interest LT2-AII2, REMIC 2
Regular Interest LT2-AII3, REMIC 2 Regular Interest LT2-2M1, REMIC 2 Regular
Interest LT2-2M2 and REMIC 2 Regular Interest LT2-2B, and the denominator of
which is the aggregate of the Uncertificated Principal Balances of REMIC 2
Regular Interest LT2-AII1, REMIC 2 Regular Interest LT2-AII2, REMIC 2 Regular
Interest LT2-AII3, REMIC 2 Regular Interest LT2-2M1, REMIC 2 Regular Interest
LT2-2M2 and REMIC 2 Regular Interest LT2-2B.

               "REMIC 2 Overcollateralization Target Amount": 1% of the
Overcollateralization Target Amount.

               "REMIC 2 Regular Interest LT2A-IO": One of the separate
non-certificated beneficial ownership interests in REMIC 2 issued hereunder and
designated as a "regular interest" in REMIC 2. REMIC 2 Regular Interest LT2A-IO
shall accrue interest at the related Uncertificated REMIC 2 Pass-Through Rate on
its Uncertificated Notional Amount outstanding from time to time.

               "REMIC 2 Regular Interest LT2-1AA": One of the separate
non-certificated beneficial ownership interests in REMIC 2 issued hereunder and
designated as a "regular interest" in REMIC 2. REMIC 2 Regular Interest LT2-1AA
shall accrue interest at the related Uncertificated REMIC 2 Pass-Through Rate in
effect from time to time, and shall be entitled to distributions of principal,
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Principal Balance as set forth in the Preliminary
Statement hereto.

               "REMIC 2 Regular Interest LT2-AI1": One of the separate
non-certificated beneficial ownership interests in REMIC 2 issued hereunder and
designated as a "regular interest" in REMIC 2. REMIC 2 Regular Interest LT2-AI1
shall accrue interest at the related Uncertificated REMIC 2 Pass-Through Rate in
effect from time to time, and shall be entitled to distributions of principal,
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Principal Balance as set forth in the Preliminary
Statement hereto.

               "REMIC 2 Regular Interest LT2-AI2": One of the separate
non-certificated beneficial ownership interests in REMIC 2 issued hereunder and
designated as a "regular interest" in REMIC 2. REMIC 2 Regular Interest LT2-AI2
shall accrue interest at the related Uncertificated REMIC 2 Pass-Through Rate in
effect from time to time, and shall be entitled to distributions of principal,
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Principal Balance as set forth in the Preliminary
Statement hereto.



                                       37

<PAGE>



               "REMIC 2 Regular Interest LT2-AI3": One of the separate
non-certificated beneficial ownership interests in REMIC 2 issued hereunder and
designated as a "regular interest" in REMIC 2. REMIC 2 Regular Interest LT2-AI3
shall accrue interest at the related Uncertificated REMIC 2 Pass-Through Rate in
effect from time to time, and shall be entitled to distributions of principal,
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Principal Balance as set forth in the Preliminary
Statement hereto.

               "REMIC 2 Regular Interest LT2-AI4": One of the separate
non-certificated beneficial ownership interests in REMIC 2 issued hereunder and
designated as a "regular interest" in REMIC 2. REMIC 2 Regular Interest LT2-AI4
shall accrue interest at the related Uncertificated REMIC 2 Pass-Through Rate in
effect from time to time, and shall be entitled to distributions of principal,
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Principal Balance as set forth in the Preliminary
Statement hereto.

               "REMIC 2 Regular Interest LT2-AI5": One of the separate
non-certificated beneficial ownership interests in REMIC 2 issued hereunder and
designated as a "regular interest" in REMIC 2. REMIC 2 Regular Interest LT2-AI5
shall accrue interest at the related Uncertificated REMIC 2 Pass-Through Rate in
effect from time to time, and shall be entitled to distributions of principal,
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Principal Balance as set forth in the Preliminary
Statement hereto.

               "REMIC 2 Regular Interest LT2-1M1": One of the separate
non-certificated beneficial ownership interests in REMIC 2 issued hereunder and
designated as a "regular interest" in REMIC 2. REMIC 2 Regular Interest LT2-1M1
shall accrue interest at the related Uncertificated REMIC 2 Pass-Through Rate in
effect from time to time, and shall be entitled to distributions of principal,
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Principal Balance as set forth in the Preliminary
Statement hereto.

               "REMIC 2 Regular Interest LT2-1M2": One of the separate
non-certificated beneficial ownership interests in REMIC 2 issued hereunder and
designated as a "regular interest" in REMIC 2. REMIC 2 Regular Interest LT2-1M2
shall accrue interest at the related Uncertificated REMIC 2 Pass-Through Rate in
effect from time to time, and shall be entitled to distributions of principal,
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Principal Balance as set forth in the Preliminary
Statement hereto.

               "REMIC 2 Regular Interest LT2-1B": One of the separate
non-certificated beneficial ownership interests in REMIC 2 issued hereunder and
designated as a "regular interest" in REMIC 2. REMIC 2 Regular Interest LT2-1B
shall accrue interest at the related Uncertificated REMIC 2 Pass-Through Rate in
effect from time to time, and shall be entitled to distributions of principal,
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Principal Balance as set forth in the Preliminary
Statement hereto.

               "REMIC 2 Regular Interest LT2-1ZZ": One of the separate
non-certificated beneficial ownership interests in REMIC 2 issued hereunder and
designated as a "regular interest"


                                       38

<PAGE>



in REMIC 2. REMIC 2 Regular Interest LT2-1ZZ shall accrue interest at the
related Uncertificated REMIC 2 Pass-Through Rate in effect from time to time,
and shall be entitled to distributions of principal, subject to the terms and
conditions hereof, in an aggregate amount equal to its initial Uncertificated
Principal Balance as set forth in the Preliminary Statement hereto.

               "REMIC 2 Regular Interest LT2-2AA": One of the separate
non-certificated beneficial ownership interests in REMIC 2 issued hereunder and
designated as a "regular interest" in REMIC 2. REMIC 2 Regular Interest LT2-2AA
shall accrue interest at the related Uncertificated REMIC 2 Pass-Through Rate in
effect from time to time, and shall be entitled to distributions of principal,
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Principal Balance as set forth in the Preliminary
Statement hereto.

               "REMIC 2 Regular Interest LT2-AII1": One of the separate
non-certificated beneficial ownership interests in REMIC 2 issued hereunder and
designated as a "regular interest" in REMIC 2. REMIC 2 Regular Interest LT2-AII1
shall accrue interest at the related Uncertificated REMIC 2 Pass-Through Rate in
effect from time to time, and shall be entitled to distributions of principal,
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Principal Balance as set forth in the Preliminary
Statement hereto.

               "REMIC 2 Regular Interest LT2-AII2": One of the separate
non-certificated beneficial ownership interests in REMIC 2 issued hereunder and
designated as a "regular interest" in REMIC 2. REMIC 2 Regular Interest LT2-AII2
shall accrue interest at the related Uncertificated REMIC 2 Pass-Through Rate in
effect from time to time, and shall be entitled to distributions of principal,
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Principal Balance as set forth in the Preliminary
Statement hereto.

               "REMIC 2 Regular Interest LT2-AII3": One of the separate
non-certificated beneficial ownership interests in REMIC 2 issued hereunder and
designated as a "regular interest" in REMIC 2. REMIC 2 Regular Interest LT2-AII3
shall accrue interest at the related Uncertificated REMIC 2 Pass-Through Rate in
effect from time to time, and shall be entitled to distributions of principal,
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Principal Balance as set forth in the Preliminary
Statement hereto.

               "REMIC 2 Regular Interest LT2-2M1": One of the separate
non-certificated beneficial ownership interests in REMIC 2 issued hereunder and
designated as a "regular interest" in REMIC 2. REMIC 2 Regular Interest LT2-2M1
shall accrue interest at the related Uncertificated REMIC 2 Pass-Through Rate in
effect from time to time, and shall be entitled to distributions of principal,
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Principal Balance as set forth in the Preliminary
Statement hereto.

               "REMIC 2 Regular Interest LT2-2M2": One of the separate
non-certificated beneficial ownership interests in REMIC 2 issued hereunder and
designated as a "regular interest" in REMIC 2. REMIC 2 Regular Interest LT2-2M2
shall accrue interest at the related Uncertificated REMIC 2 Pass-Through Rate in
effect from time to time, and shall be entitled to distributions of


                                       39

<PAGE>



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

               "REMIC 2 Regular Interest LT2-2B": One of the separate
non-certificated beneficial ownership interests in REMIC 2 issued hereunder and
designated as a "regular interest" in REMIC 2. REMIC 2 Regular Interest LT2-2B
shall accrue interest at the related Uncertificated REMIC 2 Pass-Through Rate in
effect from time to time, and shall be entitled to distributions of principal,
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Principal Balance as set forth in the Preliminary
Statement hereto.

               "REMIC 2 Regular Interest LT2-2ZZ": One of the separate
non-certificated beneficial ownership interests in REMIC 2 issued hereunder and
designated as a "regular interest" in REMIC 2. REMIC 2 Regular Interest LT2-2ZZ
shall accrue interest at the related Uncertificated REMIC 2 Pass-Through Rate in
effect from time to time, and shall be entitled to distributions of principal,
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Principal Balance as set forth in the Preliminary
Statement hereto.

               "REMIC 2 Regular Interest LT2P": One of the separate
non-certificated beneficial ownership interests in REMIC 2 issued hereunder and
designated as a "regular interest" in REMIC 2. REMIC 2 Regular Interest LT2P
shall accrue interest at the related Uncertificated REMIC 2 Pass- Through Rate
in effect from time to time, and shall be entitled to any amounts distributed to
REMIC 1 Regular Interest LT1P.

               "REMIC 2 Regular Interests": REMIC 2 Regular Interest LT21AA,
REMIC 2 Regular Interest LT2A-IO, REMIC 2 Regular Interest LT2-AI1, REMIC 2
Regular Interest LT2-AI2, REMIC 2 Regular Interest LT2-AI3, REMIC 2 Regular
Interest LT2-AI4, REMIC 2 Regular Interest LT2-AI5, REMIC 2 Regular Interest
LT2-1M1, REMIC 2 Regular Interest LT2-1M2, REMIC 2 Regular Interest LT2-1B,
REMIC 2 Regular Interest LT2-1ZZ, REMIC 2 Regular Interest LT2-2AA, REMIC 2
Regular Interest LT2-AII1, REMIC 2 Regular Interest LT2-AII2, REMIC 2 Regular
Interest LT2-AII3, REMIC 2 Regular Interest LT2-2M1, REMIC 2 Regular Interest
LT2-2M2, REMIC 2 Regular Interest LT2-2B, REMIC 2 Regular Interest LT2-2ZZ and
REMIC 2 Regular Interest LT2P.

               "REMIC 3": The segregated pool of assets consisting of all of the
REMIC 2 Regular Interests conveyed in trust to the Trustee, for the benefit of
the Holders of the Regular Certificates and the Holders of the Class R
Certificates (as holders of the Class R-3 Interest), including, with respect to
the Class A-3 Certificates, the Class A-3 Components, pursuant to Article II
hereunder, and all amounts deposited therein, with respect to which a separate
REMIC election is to be made.

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


                                       40

<PAGE>



               "REMIC Regular Interest": A REMIC 1 Regular Interest or REMIC 2
Regular Interest.

               "Remittance Report": A report prepared by the Master Servicer
providing the information set forth in Exhibit E attached hereto.

               "REO Acquisition": The acquisition by the Master Servicer on
behalf of the Trustee for the benefit of the Certificateholders of any REO
Property pursuant to Section 3.15.

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

               "REO Imputed Interest": As to any REO Property, for any period,
an amount equivalent to interest (at the Mortgage Rate that would have been
applicable to the related Mortgage Loan had it been outstanding) on the unpaid
principal balance of the Mortgage Loan as of the date of acquisition thereof (as
such balance is reduced pursuant to Section 3.15 by any income from the REO
Property treated as a recovery of principal).

               "REO Proceeds": Proceeds, net of directly related expenses,
received in respect of any REO Property (including, without limitation, proceeds
from the rental of the related Mortgaged Property and of any REO Disposition),
which proceeds are required to be deposited into the Custodial Account as and
when received.

               "REO Property": A Mortgaged Property acquired by the Master
Servicer on behalf of the Trust Fund through foreclosure or deed-in-lieu of
foreclosure in connection with a defaulted Mortgage Loan.

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

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

               "Responsible Officer": When used with respect to the Trustee, the
Chairman or Vice Chairman of the Board of Directors or Trustees, the Chairman or
Vice Chairman of the Executive or Standing Committee of the Board of Directors
or Trustees, the President, the Chairman of the Committee on Trust Matters, any
vice president, any assistant vice president, the Secretary, any assistant
secretary, the Treasurer, any assistant treasurer, any trust officer or
assistant trust officer or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also, with respect to a particular matter, any other officer to
whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.


                                       41

<PAGE>



               "Seller": Impac Funding Corporation, or its successor in
interest.

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

               "Servicing Advances": All customary, reasonable and necessary
"out of pocket" costs and expenses incurred in connection with a default,
delinquency or other unanticipated event in the performance by the Master
Servicer or any Sub-Servicer of its servicing obligations, including, but not
limited to, the cost of (i) the preservation, restoration and protection of a
Mortgaged Property, (ii) any enforcement or judicial proceedings, including
foreclosures, (iii) the management and liquidation of any REO Property,
including reasonable fees paid to any independent contractor in connection
therewith, and (iv) compliance with the obligations under the fourth paragraph
of Section 3.01, Section 3.09 and Section 3.13 (other than any deductible
described in the last paragraph thereof).

               "Servicing Guide": The Impac Funding Corporation Servicing Guide
attached hereto as Exhibit K.

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

               "Single Certificate": A Regular Certificate of any Class (other
than a Class P Certificate) evidencing an Initial Certificate Principal Balance
or Initial Notional Amount, as applicable, of $1,000, or, in the case of a Class
P Certificate, a Certificate of such Class evidencing an Initial Certificate
Principal Balance of $100.

               "Special Deposit":  As defined in Section 2.01(a).

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

               "Startup Day": The day designated as such pursuant to Article X
hereof.

               "Stated Principal Balance": With respect to any Mortgage Loan or
related REO Property at any given time, (i) the principal balance of the
Mortgage Loan outstanding as of the Cut- off Date, after application of
principal payments due on or before such date, whether or not received, minus
(ii) the sum of (a) the principal portion of the Monthly Payments due with
respect to such Mortgage Loan or REO Property during each Due Period ending
prior to the most recent Distribution Date which were received or with respect
to which an Advance was made, and (b) all Principal Prepayments with respect to
such Mortgage Loan or REO Property, and all Insurance Proceeds, Liquidation
Proceeds and REO Proceeds to the extent applied by the Master Servicer as
recoveries of principal in accordance with Section 3.15 with respect to such
Mortgage Loan or REO Property,


                                       42

<PAGE>



which were distributed pursuant to Section 4.01 on any previous Distribution
Date, and (c) any Realized Loss with respect thereto allocated pursuant to
Section 4.05 for any previous Distribution Date.

               "Stepdown Date": The earlier to occur of (i) the Distribution
Date on which the aggregate Certificate Principal Balance of the Class A
Certificates has been reduced to zero and (ii) the later to occur of (x) the
Distribution Date occurring in June 2004 and (y) the first Distribution Date for
which the aggregate Certificate Principal Balance of the Mezzanine Certificates
divided by the aggregate Stated Principal Balance of the Mortgage Loans as of
the last day of the related Due Period (after giving effect to scheduled
payments of principal due during the related Due Period, to the extent received
or advanced, and unscheduled collections of principal received during the
related Prepayment Period, and after reduction for Realized Losses incurred
during the related Prepayment Period) is greater than or equal to 12.00%.

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

               "Sub-Servicer Remittance Date": The 18th day of each month, or if
such day is not a Business Day, the immediately preceding Business Day.

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

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

               "Sub-Servicing Fees": As to each Mortgage Loan, an amount,
payable out of any payment of interest on the Mortgage Loan, equal to interest
at the Sub-Servicing Fee Rate on the Stated Principal Balance of such Mortgage
Loan for the calendar month preceding the month in which the payment is due
(alternatively, in the event such payment of interest accompanies a Principal
Prepayment in Full made by the Mortgagor, interest for the number of days
covered by such payment of interest).

               "Sub-Servicing Fee Rate": With respect to each Mortgage Loan, the
per annum rate of 0.25%.

               "Substitution Adjustment":  As defined in Section 2.04 hereof.

               "Tax Returns": The federal income tax return on Internal Revenue
Service Form 1066, U.S. Real Estate Mortgage Investment Conduit Income Tax
Return, including Schedule Q thereto, Quarterly Notice to Residual Interest
Holders of REMIC Taxable Income or Net Loss Allocation, or any successor forms,
to be filed on behalf of REMIC 1, REMIC 2 and REMIC 3 due


                                       43

<PAGE>



to their classification as REMICs under the REMIC Provisions, together with any
and all other information, reports or returns that may be required to be
furnished to the Certificateholders or filed with the Internal Revenue Service
or any other governmental taxing authority under any applicable provisions of
federal, state or local tax laws.

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

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

               "Trigger Event": A Trigger Event is in effect with respect to any
Distribution Date if

          (i)  the aggregate Stated Principal Balance of Mortgage Loans that are
               60 or more days delinquent as of the close of business on the
               last day of the preceding calendar month exceeds 2.25% (in the
               case of the 36th Distribution Date through the 60th Distribution
               Date) or 3.25% (in the case of any Distribution Date thereafter)
               of the aggregate Stated Principal Balance of the Mortgage Loans
               as of such Distribution Date (prior to giving effect to scheduled
               payments of principal due during the related Due Period, to the
               extent received or advanced, and unscheduled collections of
               principal received during the related Prepayment Period); or

          (ii) in the case of any Distribution Date after the 36th Distribution
               Date, the cumulative amount of Realized Losses incurred on the
               Mortgage Loans from the Cut-off Date through the end of the
               calendar month immediately preceding such Distribution Date
               exceeds 10.00% of the sum of (x) the aggregate Certificate
               Principal Balance of the Mezzanine Certificates (or, if the
               Certificate Principal Balances of the Class A Certificates have
               been reduced to zero, the aggregate Certificate Principal Balance
               of the Mezzanine Certificates other than the Class of Mezzanine
               Certificates with the highest payment priority) after giving
               effect to distributions that would be made on such Distribution
               Date if no Trigger Event were in effect and (y) the
               Overcollateralized Amount.

For purposes of the foregoing calculation, a mortgage loan is considered "60
days" delinquent if a payment due on the first day of a month has not been
received by the second day of the second following month.

               "Trust Fund": REMIC 1, REMIC 2 and REMIC 3.

               "Trustee": Bankers Trust Company of California, N.A., or its
successor in interest, or any successor trustee appointed as herein provided.



                                       44

<PAGE>



               "Trustee's Fee": As to each Mortgage Loan and Distribution Date,
an amount equal to interest at the Trustee Fee Rate on the Stated Principal
Balance of such Mortgage Loan as of the Due Date in the month immediately
preceding the month in which such Distribution Date occurs.

               "Trustee Fee Rate": 0.005% per annum.

               "Uncertificated Accrued Interest": With respect to each REMIC
Regular Interest on each Distribution Date, an amount equal to one month's
interest at the related Uncertificated Pass- Through Rate on the Uncertificated
Principal Balance or Uncertificated Notional Amount, as applicable, of such
REMIC Regular Interest. In each case, Uncertificated Accrued Interest will be
reduced by any Net Prepayment Interest Shortfalls and Relief Act Interest
Shortfalls (allocated to such REMIC Regular Interests as set forth in Section
1.02).

               "Uncertificated Notional Amount": With respect to each of REMIC 2
Regular Interest LT2A-IO and any date of determination, the Uncertificated
Principal Balance of REMIC 1 Regular Interest LT1D for such Distribution Date.

               "Uncertificated Principal Balance": With respect to each REMIC 1
Regular Interest and REMIC 2 Regular Interest (other than REMIC 2 Regular
Interest LT2A-IO), the principal amount of such REMIC Regular Interest
outstanding as of any date of determination. As of the Closing Date, the
Uncertificated Principal Balance of each REMIC 1 Regular Interest, REMIC 2
Regular Interest (other than REMIC 2 Regular Interest LT2A-IO) shall equal the
amount set forth in the Preliminary Statement hereto as its initial
Uncertificated Principal Balance. On each Distribution Date, the Uncertificated
Principal Balance of each REMIC Regular Interest shall be reduced by all
distributions of principal made on such REMIC Regular Interest on such
Distribution Date pursuant to Section 4.04 and, if and to the extent necessary
and appropriate, shall be further reduced on such Distribution Date by Realized
Losses as provided in Section 4.05. The Uncertificated Principal Balance of each
of REMIC 2 Regular Interest LT2-1ZZ and REMIC 2 Regular Interest LT2-2ZZ shall
each be increased by interest deferrals as provided in Section 4.04. The
Uncertificated Principal Balance of each REMIC Regular Interest shall never be
less than zero. REMIC 2 Regular Interest LT2A-IO will not have an Uncertificated
Principal Balance.

               "Uncertificated Pass-Through Rate": The Uncertificated REMIC 1
Pass-Through Rate or the Uncertificated REMIC 2 Pass-Through Rate.

               "Uncertificated REMIC 1 Pass-Through Rate": With respect to any
Distribution Date and REMIC 1 Regular Interest LT1A, REMIC 1 Regular Interest
LT1D and REMIC 1 Regular Interest LT1P, a per annum rate equal to the average of
the Net Mortgage Rates of the Mortgage Loans, weighted on the basis of the
Stated Principal Balances thereof as of the close of business on the last day of
the calendar month preceding the month in which such Distribution Date occurs.
With respect to any Distribution Date and REMIC 1 Regular Interest LT1B, a per
annum rate equal to the average of the Net Mortgage Rates of the Group 1
Mortgage Loans, weighted on the basis of the Stated Principal Balances thereof
as of the close of business on the last day of the calendar month preceding the
month in which such Distribution Date occurs. With respect to any Distribution
Date


                                       45

<PAGE>



and REMIC 1 Regular Interest LT1C, a per annum rate equal to the average of the
Net Mortgage Rates of the Group 2 Mortgage Loans, weighted on the basis of the
Stated Principal Balances thereof as of the close of business on the last day of
the calendar month preceding the month in which such Distribution Date occurs.

               "Uncertificated REMIC 2 Pass-Through Rate":

               (a) With respect to REMIC 2 Regular Interest LT2-1AA, REMIC 2
Regular Interest LT2-AI1, REMIC 2 Regular Interest LT2-AI2, REMIC 2 Regular
Interest LT2-AI3, REMIC 2 Regular Interest LT2-AI4, REMIC 2 Regular Interest
LT2-AI5, REMIC 2 Regular Interest LT2-1M1, REMIC 2 Regular Interest LT2-1M2,
REMIC 2 Regular Interest LT2-1B, REMIC 2 Regular Interest LT2-1ZZ, REMIC 2
Regular Interest LT2-2AA, REMIC 2 Regular Interest LT2-AII1, REMIC 2 Regular
Interest LT2-AII2, REMIC 2 Regular Interest LT2-AII3, REMIC 2 Regular Interest
LT2-2M1, REMIC 2 Regular Interest LT2-2M2, REMIC 2 Regular Interest LT2-2B,
REMIC 2 Regular Interest LT2-2ZZ and REMIC 2 Regular Interest LT2P and any
Distribution Date prior to and including the Distribution Date in November 2003,
a per annum rate equal to the Net WAC Rate. With respect to REMIC 2 Regular
Interest LT2-1AA, REMIC 2 Regular Interest LT2-AI1, REMIC 2 Regular Interest
LT2-AI2, REMIC 2 Regular Interest LT2-AI3, REMIC 2 Regular Interest LT2-AI4,
REMIC 2 Regular Interest LT2-AI5, REMIC 2 Regular Interest LT2-1M1, REMIC 2
Regular Interest LT2-1M2, REMIC 2 Regular Interest LT2-1B, REMIC 2 Regular
Interest LT2-1ZZ, and REMIC 2 Regular Interest LT2P and any Distribution Date
after the Distribution Date in November 2003, a per annum rate equal to the
Uncertificated REMIC 1 Pass-Through Rate of the Uncertificated REMIC 1 Regular
Interest LT1B. With respect to REMIC 2 Regular Interest LT2-2AA, REMIC 2 Regular
Interest LT2-AII1, REMIC 2 Regular Interest LT2-AII2, REMIC 2 Regular Interest
LT2-AII3, REMIC 2 Regular Interest LT2-M1, REMIC 2 Regular Interest LT2-2M2,
REMIC 2 Regular Interest LT2-2B and REMIC 2 Regular Interest LT2-2ZZ and any
Distribution Date after the Distribution Date in November 2003, a per annum rate
equal to the Uncertificated REMIC 1 Pass-Through Rate of the Uncertificated
REMIC 1 Regular Interest LT1C.

               (b) With respect to REMIC 2 Regular Interest LT2A-IO and the
first 30 Distribution Dates, the Class A-IO Rate, and 0.00% per annum
thereafter.

               "Uninsured Cause": Any cause of damage to property subject to a
Mortgage such that the complete restoration of such property is not fully
reimbursable by the hazard insurance policies or flood insurance policies
required to be maintained pursuant to Section 3.13.

               "United States Person": A citizen or resident of the United
States, a corporation or a partnership (including an entity treated as a
corporation or partnership for United States federal income tax purposes)
created or organized in, or under the laws of, the United States or any State
thereof or the District of Columbia (except, in the case of a partnership, to
the extent provided in regulations) provided that, for purposes solely of the
restrictions on the transfer of Class R Certificates, no partnership or other
entity treated as a partnership for United States federal income tax purposes
shall be treated as a United States Person unless all persons that own an
interest in such partnership either directly or through any entity that is not a
corporation for United States federal


                                       46

<PAGE>



income tax purposes are required by the applicable operative agreement to be
United States Persons or an estate whose income is subject to United States
federal income tax regardless of its source, or a trust if a court within the
United States is able to exercise primary supervision over the administration of
the trust and one or more such United States Persons have the authority to
control all substantial decisions of the trust. To the extent prescribed in
regulations by the Secretary of the Treasury, which have not yet been issued, a
trust which was in existence on August 20, 1996 (other than a trust treated as
owned by the grantor under subpart E of part I of subchapter J of chapter 1 of
the Code), and which was treated as a United States person on August 20, 1996
may elect to continue to be treated as a United States person notwithstanding
the previous sentence.

               "Unpaid Interest Shortfall Amount": With respect to the Class A
Certificates and Mezzanine Certificates and (i) the first Distribution Date,
zero, and (ii) any Distribution Date after the first Distribution Date, the
amount, if any, by which (a) the sum of (1) the Monthly Interest Distributable
Amount for such Class for the immediately preceding Distribution Date and (2)
the outstanding Unpaid Interest Shortfall Amount, if any, for such Class for
such preceding Distribution Date exceeds (b) the aggregate amount distributed on
such Class in respect of interest pursuant to clause (a) of this definition on
such preceding Distribution Date, plus interest on the amount of interest due
but not paid on the Certificates of such Class on such preceding Distribution
Date, to the extent permitted by law, at the Pass-Through Rate for such Class
for the related Accrual Period.

               "Voting Rights": The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. At all times during the term
of this Agreement, (i) 97% of all Voting Rights will be allocated among the
Holders of the Class A Certificates (other than the Class A-IO Certificates),
the Mezzanine Certificates and the Class C Certificates in proportion to the
then outstanding Certificate Principal Balances of their respective
Certificates, (ii) 1% of all Voting Rights will be allocated to the Holders of
the Class A-IO Certificates, (iii) 1% of all Voting Rights will be allocated to
the Holders of the Class P Certificates and (iv) 1% of all Voting Rights will be
allocated to the Holders of the Class R Certificates. The Voting Rights
allocated to any Class of Certificates shall be allocated among all Holders of
the Certificates of such Class in proportion to the outstanding Percentage
Interests in such Class represented thereby.

               "Weighted Average Net Mortgage Rate": The weighted average of the
Net Mortgage Rates of the Mortgage Loans, weighted on the basis of the Stated
Principal Balances thereof as of the close of business on the first day of the
calendar month preceding the month in which such Distribution Date occurs.

               "Wendover": Wendover Funding, Inc.

        SECTION 1.02          Allocation of Certain Interest Shortfalls.

               For purposes of calculating the amount of the Monthly Interest
Distributable Amount for the Class A Certificates, the Mezzanine Certificates
and the Class C Certificates, including, with respect to the Class A-3
Certificates, the Class A-3 Components, for any Distribution Date, (1) the
aggregate amount of any Net Prepayment Interest Shortfalls and any Relief Act
Interest Shortfalls


                                       47

<PAGE>



incurred in respect of the Mortgage Loans for any Distribution Date shall be
allocated first, among the Class C Certificates on a pro rata basis based on,
and to the extent of, one month's interest at the then applicable Pass-Through
Rate on the Notional Amount of each such Certificate and, thereafter, among the
Class A Certificates and the Mezzanine Certificates, including, with respect to
the Class A-3 Certificates, the Class A-3 Components, on a pro rata basis based
on, and to the extent of, one month's interest at the then applicable respective
Pass-Through Rate on the respective Notional Amount, Certificate Principal
Balance or Component Principal Balance of each such Certificate or Class A-3
Component and (2) the aggregate amount of any Realized Losses incurred for any
Distribution Date shall be allocated among the Class C Certificates on a pro
rata basis based on, and to the extent of, one month's interest at the then
applicable Pass-Through Rate on the Notional Amount of each such Certificate.

        For purposes of calculating the amount of Uncertificated Accrued
Interest for the Uncertificated REMIC 1 Regular Interests for any Distribution
Date, the aggregate amount of any Net Prepayment Interest Shortfalls and any
Relief Act Interest Shortfalls incurred in respect of the Mortgage Loans for any
Distribution Date shall be allocated first: with respect to any Group 1 Loan, to
REMIC 1 Regular Interest LT1A and REMIC 1 Regular Interest LT1B, 99% and 1%,
respectively, and with respect to any Group 2 Loan, to REMIC 1 Regular Interest
LT1A and REMIC 1 Regular Interest LT1C, 99% and 1%, respectively, and then to
REMIC 1 Regular Interest LT1D, in each case to the extent of one month's
interest at the then applicable respective Uncertificated REMIC 1 Pass- Through
Rate on the respective Uncertificated Principal Balance of each such
Uncertificated REMIC 1 Regular Interest.

        For purposes of calculating the amount of Uncertificated Accrued
Interest for the Uncertificated REMIC 2 Regular Interests for any Distribution
Date, the aggregate amount of any Net Prepayment Interest Shortfalls and any
Relief Act Interest Shortfalls incurred in respect of the Mortgage Loans for any
Distribution Date shall be allocated (i) with respect to the Group 1 Loans,
first, to Uncertificated Accrued Interest payable to REMIC 2 Regular Interest
LT2-1AA and REMIC 2 Regular Interest LT2-1ZZ up to an aggregate amount equal to
the REMIC 2 Group 1 Interest Loss Allocation Amount, 98% and 2%, respectively,
and thereafter among REMIC 2 Regular Interest LT2A-IO, REMIC 2 Regular Interest
LT2-1AA, REMIC 2 Regular Interest LT2-AI1, REMIC 2 Regular Interest LT2-AI2,
REMIC 2 Regular Interest LT2-AI3, REMIC 2 Regular Interest LT2-AI4, REMIC 2
Regular Interest LT2-AI5, REMIC 2 Regular Interest LT2-1M1, REMIC 2 Regular
Interest LT2-1M2, REMIC 2 Regular Interest LT2-1B and REMIC 2 Regular Interest
LT2-1ZZ, PRO RATA based on, and to the extent of, one month's interest at the
then applicable respective Uncertificated REMIC 2 Pass-Through Rate on the
respective Uncertificated Principal Balance of each such Uncertificated REMIC 2
Regular Interest, and (ii) with respect to the Group 2 Loans, first, to
Uncertificated Accrued Interest payable to REMIC 2 Regular Interest LT2-2AA and
REMIC 2 Regular Interest LT2-2ZZ up to an aggregate amount equal to the REMIC 2
Group 2 Interest Loss Allocation Amount, 98% and 2%, respectively, and
thereafter among REMIC 2 Regular Interest LT2A-IO, REMIC 2 Regular Interest
LT2-2AA, REMIC 2 Regular Interest LT2-AII1, REMIC 2 Regular Interest LT2-AII2,
REMIC 2 Regular Interest LT2-AII3, REMIC 2 Regular Interest LT2-2M1, REMIC 2
Regular Interest LT2-2M2, REMIC 2 Regular Interest LT2-2B and REMIC 2 Regular
Interest LT2-2ZZ, PRO RATA based on, and to the extent of, one month's interest
at the then


                                       48

<PAGE>



applicable respective Uncertificated REMIC 2 Pass-Through Rate on the respective
Uncertificated Principal Balance of each such Uncertificated REMIC 2 Regular
Interest.


                                       49

<PAGE>



                                   ARTICLE II

                          CONVEYANCE OF MORTGAGE LOANS;
                        ORIGINAL ISSUANCE OF CERTIFICATES

               SECTION 2.01.          Conveyance of Mortgage Loans.

               The Company, as of the Closing Date, and concurrently with the
execution and delivery hereof, does hereby assign, transfer, sell, set over and
otherwise convey to the Trustee without recourse all the right, title and
interest of the Company in and to the Mortgage Loans identified on the Mortgage
Loan Schedule (exclusive of any prepayment fees and late payment charges
received thereon) and all other assets included or to be included in the Trust
Fund for the benefit of the Certificateholders. Such assignment includes all
principal and interest received by the Master Servicer on or with respect to the
Mortgage Loans (other than payment of principal and interest due on or before
the Cut-off Date).

               The Master Servicer hereby acknowledges the receipt by it of cash
in an amount equal to $455,530.20 (the "Special Deposit"), representing interest
at the Mortgage Rate, for the calendar month of May 2001, for those Mortgage
Loans which do not have Monthly Payments due on June 1, 2001. The Master
Servicer shall hold such amount in the Custodial Account and shall include such
amount in the Available Distribution Amount for the Distribution Date in June
2001.

               In connection with such transfer and assignment, the Company has
caused the Seller to deliver to, and deposit with the Trustee, as described in
the Mortgage Loan Purchase Agreement the following documents or instruments:

             (i) the original Mortgage Note endorsed without recourse, "Bankers
        Trust Company of California, N.A., as trustee under the Pooling and
        Servicing Agreement relating to Impac Secured Assets Corp., Mortgage
        Pass-Through Certificates, Series 2001-4" with all intervening
        endorsements showing an unbroken chain of endorsements from the
        originator to the Person endorsing it to the Trustee or, with respect to
        any Mortgage Loan as to which the original Mortgage Note has been
        permanently lost or destroyed and has not been replaced, a Lost Note
        Affidavit;

            (ii) the original recorded Mortgage or, if the original Mortgage has
        not been returned from the public recording office, a copy of the
        Mortgage certified by the Seller or the public recording office in which
        such Mortgage has been recorded to be a true and complete copy of the
        original Mortgage submitted for recording;

           (iii) a duly executed original Assignment of the Mortgage, without
        recourse, in recordable form to "Bankers Trust Company of California,
        N.A., as trustee," or to "Bankers Trust Company of California, N.A.,
        as trustee for holders of Impac Secured Assets Corp., Mortgage
        Pass-Through Certificates, Series 2001-4";



                                       50

<PAGE>



            (iv) the original recorded Assignment or Assignments of the Mortgage
        showing an unbroken chain of assignment from the originator thereof to
        the Person assigning it to the Trustee or, if any such Assignment has
        not been returned from the applicable public recording office, a copy of
        such Assignment certified by the Seller to be a true and complete copy
        of the original Assignment submitted to the title insurance company for
        recording;

             (v) the original title insurance policy, or, if such policy has not
        been issued, any one of an original or a copy of the preliminary title
        report, title binder or title commitment on the Mortgaged Property with
        the original policy of the insurance to be delivered promptly following
        the receipt thereof;

            (vi) a copy of the related hazard insurance policy; and

           (vii) a true and correct copy of any assumption, modification,
        consolidation or substitution agreement.

               The Seller is obligated as described in the Mortgage Loan
Purchase Agreement to deliver to the Trustee: (a) either the original recorded
Mortgage, or in the event such original cannot be delivered by the Seller, a
copy of such Mortgage certified as true and complete by the appropriate
recording office, in those instances where a copy thereof certified by the
Seller was delivered to the Trustee pursuant to clause (ii) above; and (b)
either the original Assignment or Assignments of the Mortgage, with evidence of
recording thereon, showing an unbroken chain of assignment from the originator
to the Seller, or in the event such original cannot be delivered by the Seller,
a copy of such Assignment or Assignments certified as true and complete by the
appropriate recording office, in those instances where copies thereof certified
by the Seller were delivered to the Trustee pursuant to clause (iv) above.
However, pursuant to the Mortgage Loan Purchase Agreement, the Seller need not
cause to be recorded any assignment in any jurisdiction under the laws of which,
as evidenced by an Opinion of Counsel delivered by the Seller to the Trustee and
the Rating Agencies, the recordation of such assignment is not necessary to
protect the Trustee's interest in the related Mortgage Loan; provided, however,
notwithstanding the delivery of any Opinion of Counsel, each assignment shall be
submitted for recording by the Seller in the manner described above, at no
expense to the Trust or the Trustee, upon the earliest to occur of: (i)
direction by the Holders of Certificates evidencing at least 25% of the Voting
Rights, (ii) the occurrence of a Event of Default, (iii) the occurrence of a
bankruptcy, insolvency or foreclosure relating to the Seller, (iv) the
occurrence of a servicing transfer as described in Section 7.02 hereof and (v)
if the Seller is not the Master Servicer and with respect to any one assignment,
the occurrence of a bankruptcy, insolvency or foreclosure relating to the
Mortgagor under the related Mortgage.

               Notwithstanding anything to the contrary contained in this
Section 2.01, in those instances where the public recording office retains the
original Mortgage after it has been recorded, the Seller shall be deemed to have
satisfied its obligations hereunder upon delivery to the Trustee of a copy of
such Mortgage certified by the public recording office to be a true and complete
copy of the recorded original thereof.



                                       51

<PAGE>



               If any Assignment is lost or returned unrecorded to the Trustee
because of any defect therein, the Seller is required, as described in the
Mortgage Loan Purchase Agreement, to prepare a substitute Assignment or cure
such defect, as the case may be, and the Seller shall cause such Assignment to
be recorded in accordance with this section.

               The Seller is required as described in the Mortgage Loan Purchase
Agreement to exercise its best reasonable efforts to deliver or cause to be
delivered to the Trustee within 120 days of the Closing Date the original or a
photocopy of the title insurance policy with respect to each Mortgage Loan
assigned to the Trustee pursuant to this Section 2.01.

               All original documents relating to the Mortgage Loans which are
not delivered to the Trustee are and shall be held by the Master Servicer in
trust for the benefit of the Trustee on behalf of the Certificateholders.

               Except as may otherwise expressly be provided herein, none of the
Company, the Master Servicer or the Trustee shall (and the Master Servicer shall
ensure that no Sub-Servicer shall) assign, sell, dispose of or transfer any
interest in the Trust Fund or any portion thereof, or cause the Trust Fund or
any portion thereof to be subject to any lien, claim, mortgage, security
interest, pledge or other encumbrance.

               It is intended that the conveyance of the Mortgage Loans by the
Company to the Trustee as provided in this Section be, and be construed as, a
sale of the Mortgage Loans and the REMIC 1 Regular Interests as provided for in
this Section 2.01 by the Company to the Trustee for the benefit of the
Certificateholders. It is, further, not intended that such conveyance be deemed
a pledge of the Mortgage Loans and the REMIC 1 Regular Interests by the Company
to the Trustee to secure a debt or other obligation of the Company. However, in
the event that the Mortgage Loans and the REMIC 1 Regular Interests are held to
be property of the Company, or if for any reason this Agreement is held or
deemed to create a security interest in the Mortgage Loans and the REMIC 1
Regular Interests, then it is intended that, (a) this Agreement shall also be
deemed to be a security agreement within the meaning of Articles 8 and 9 of the
New York Uniform Commercial Code and the Uniform Commercial Code of any other
applicable jurisdiction; (b) the conveyance provided for in this Section shall
be deemed to be (1) a grant by the Company to the Trustee of a security interest
in all of the Company's right (including the power to convey title thereto),
title and interest, whether now owned or hereafter acquired, in and to (A) the
Mortgage Loans, including the Mortgage Notes, the Mortgages, any related
Insurance Policies and all other documents in the related Mortgage Files, (B)
all amounts payable to the holders of the Mortgage Loans in accordance with the
terms thereof, (C) the REMIC 1 Regular Interests and (D) all proceeds of the
conversion, voluntary or involuntary, of the foregoing into cash, instruments,
securities or other property, including without limitation all amounts from time
to time held or invested in the Certificate Account or the Custodial Account,
whether in the form of cash, instruments, securities or other property and (2)
an assignment by the Company to the Trustee of any security interest in any and
all of the Seller's right (including the power to convey title thereto), title
and interest, whether now owned or hereafter acquired, in and to the property
described in the foregoing clauses (1)(A) through (D); (c) the possession by the
Trustee or any other agent of the Trustee of Mortgage Notes and such other items
of property as


                                       52

<PAGE>



constitute instruments, money, negotiable documents or chattel paper shall be
deemed to be "possession by the secured party" or possession by a purchaser or a
person designated by such secured party, for purposes of perfecting the security
interest pursuant to the New York Uniform Commercial Code and the Uniform
Commercial Code of any other applicable jurisdiction (including, without
limitation, Sections 9-115, 9-305, 8-102, 8-301, 8-501 and 8-503 thereof); and
(d) notifications to persons holding such property, and acknowledgments,
receipts or confirmations from persons holding such property, shall be deemed
notifications to, or acknowledgments, receipts or confirmations from, financial
intermediaries, bailees or agents (as applicable) of the Trustee for the purpose
of perfecting such security interest under applicable law. The Company and the
Trustee shall, to the extent consistent with this Agreement, take such actions
as may be necessary to ensure that, if this Agreement were deemed to create a
security interest in the Mortgage Loans and the REMIC 1 Regular Interests, such
security interest would be deemed to be a perfected security interest of first
priority under applicable law and will be maintained as such throughout the term
of the Agreement.

               SECTION 2.02.  Acceptance of the Trust Fund by the Trustee.

               The Trustee acknowledges receipt (subject to any exceptions noted
in the Initial Certification described below), of the documents referred to in
Section 2.01 above and all other assets included in the definition of "Trust
Fund" and declares that it holds and will hold such documents and the other
documents delivered to it constituting the Mortgage Files, and that it holds or
will hold such other assets included in the definition of "Trust Fund" (to the
extent delivered or assigned to the Trustee), in trust for the exclusive use and
benefit of all present and future Certificateholders.

               The Trustee agrees, for the benefit of the Certificateholders, to
review or cause to be reviewed on its behalf, each Mortgage File on or before
the Closing Date to ascertain that all documents required to be delivered to it
are in its possession, and the Trustee agrees to execute and deliver, or cause
to be executed and delivered, to the Company and the Master Servicer on the
Closing Date, an Initial Certification in the form annexed hereto as Exhibit C
to the effect that, as to each Mortgage Loan listed in the Mortgage Loan
Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan
specifically identified in such certification as not covered by such
certification), (i) all documents required to be delivered to it pursuant to
this Agreement with respect to such Mortgage Loan are in its possession, (ii)
such documents have been reviewed by it and appear regular on their face and
relate to such Mortgage Loan and (iii) based on its examination and only as to
the foregoing documents, the information set forth in items (i), (ii), (iii)(A)
and (iv) of the definition of the "Mortgage Loan Schedule" accurately reflects
information set forth in the Mortgage File. Neither the Trustee nor the Master
Servicer shall be under any duty to determine whether any Mortgage File should
include any of the documents specified in clause (vi) or (vii) of Section 2.01.
Neither the Trustee nor the Master Servicer shall be under any duty or
obligation to inspect, review or examine said documents, instruments,
certificates or other papers to determine that the same are genuine, enforceable
or appropriate for the represented purpose or that they have actually been
recorded, or they are in recordable form or that they are other than what they
purport to be on their face.


                                       53

<PAGE>



               Within 90 days of the Closing Date the Trustee shall deliver to
the Company and the Master Servicer a Final Certification in the form annexed
hereto as Exhibit D evidencing the completeness of the Mortgage Files, with any
applicable exceptions noted thereon.

               If in the process of reviewing the Mortgage Files and preparing
the certifications referred to above the Trustee finds any document or documents
constituting a part of a Mortgage File to be missing or defective in any
material respect, the Trustee shall promptly notify the Seller, the Master
Servicer and the Company. The Trustee shall promptly notify the Seller of such
defect and request that the Seller cure any such defect within 60 days from the
date on which the Seller was notified of such defect, and if the Seller does not
cure such defect in all material respects during such period, request on behalf
of the Certificateholders that the Seller purchase such Mortgage Loan from the
Trust Fund at the Purchase Price within 90 days after the date on which the
Seller was notified of such defect; provided that if such defect would cause the
Mortgage Loan to be other than a "qualified mortgage" as defined in Section
860G(a)(3) of the Code, any such cure or repurchase must occur within 90 days
from the date such breach was discovered. It is understood and agreed that the
obligation of the Seller to cure a material defect in, or purchase any Mortgage
Loan as to which a material defect in a constituent document exists shall
constitute the sole remedy respecting such defect available to
Certificateholders or the Trustee on behalf of Certificateholders. The Purchase
Price for the purchased Mortgage Loan shall be deposited or caused to be
deposited upon receipt by the Master Servicer in the Custodial Account and, upon
receipt by the Trustee of written notification of such deposit signed by a
Servicing Officer, the Trustee shall release or cause to be released to the
Seller the related Mortgage File and shall execute and deliver such instruments
of transfer or assignment, in each case without recourse, as the Seller shall
require as necessary to vest in the Seller ownership of any Mortgage Loan
released pursuant hereto and at such time the Trustee shall have no further
responsibility with respect to the related Mortgage File.

               SECTION 2.03.  Representations, Warranties and Covenants of the
                              Master Servicer and the Company.

               (a) The Master Servicer hereby represents and warrants to and
covenants with the Company and the Trustee for the benefit of Certificateholders
that:

                    (i) The Master Servicer is, and throughout the term hereof
        shall remain, a corporation duly organized, validly existing and in good
        standing under the laws of the state of its incorporation (except as
        otherwise permitted pursuant to Section 6.02), the Master Servicer is,
        and shall remain, in compliance with the laws of each state in which any
        Mortgaged Property is located to the extent necessary to perform its
        obligations under this Agreement, and the Master Servicer is, and shall
        remain, approved to sell mortgage loans to and service mortgage loans
        for Fannie Mae and Freddie Mac;

                   (ii) The execution and delivery of this Agreement by the
        Master Servicer, and the performance and compliance with the terms of
        this Agreement by the Master Servicer, will not violate the Master
        Servicer's articles of incorporation or bylaws or constitute a default
        (or an event which, with notice or lapse of time, or both, would
        constitute


                                       54

<PAGE>



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

                  (iii) The Master Servicer has the full power and authority to
        enter into and consummate all transactions contemplated by this
        Agreement, has duly authorized the execution, delivery and performance
        of this Agreement, and has duly executed and delivered this Agreement;

                   (iv) This Agreement, assuming due authorization, execution
        and delivery by the Company and the Trustee, constitutes a valid, legal
        and binding obligation of the Master Servicer, enforceable against the
        Master Servicer in accordance with the terms hereof, subject to (A)
        applicable bankruptcy, insolvency, reorganization, moratorium and other
        laws affecting the enforcement of creditors' rights generally, and (B)
        general principles of equity, regardless of whether such enforcement is
        considered in a proceeding in equity or at law;

                    (v) The Master Servicer is not in violation of, and its
        execution and delivery of this Agreement and its performance and
        compliance with the terms of this Agreement will not constitute a
        violation of, any law, any order or decree of any court or arbiter, or
        any order, regulation or demand of any federal, state or local
        governmental or regulatory authority, which violation is likely to
        affect materially and adversely either the ability of the Master
        Servicer to perform its obligations under this Agreement or the
        financial condition of the Master Servicer;

                   (vi) No litigation is pending (other than litigation with
        respect to which pleadings or documents have been filed with a court,
        but not served on the Master Servicer) or, the best of the Master
        Servicer's knowledge, threatened against the Master Servicer which would
        prohibit its entering into this Agreement or performing its obligations
        under this Agreement or is likely to affect materially and adversely
        either the ability of the Master Servicer to perform its obligations
        under this Agreement or the financial condition of the Master Servicer;

                  (vii) The Master Servicer will comply in all material respects
        in the performance of this Agreement with all reasonable rules and
        requirements of each insurer under each Insurance Policy;

                 (viii) The execution of this Agreement and the performance of
        the Master Servicer's obligations hereunder do not require any license,
        consent or approval of any state or federal court, agency, regulatory
        authority or other governmental body having jurisdiction over the Master
        Servicer, other than such as have been obtained;

                   (ix) No information, certificate of an officer, statement
        furnished in writing or report delivered to the Company, any affiliate
        of the Company or the Trustee by the Master Servicer in its capacity as
        Master Servicer, and not in its capacity as a Seller


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        hereunder, will, to the knowledge of the Master Servicer, contain any
        untrue statement of a material fact; and

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

               It is understood and agreed that the representations, warranties
and covenants set forth in this Section 2.03(a) shall survive the execution and
delivery of this Agreement, and shall inure to the benefit of the Company, the
Trustee and the Certificateholders. Upon discovery by the Company, the Trustee
or the Master Servicer of a breach of any of the foregoing representations,
warranties and covenants that materially and adversely affects the interests of
the Company or the Trustee, the party discovering such breach shall give prompt
written notice to the other parties. Notwithstanding the foregoing, within 90
days of the earlier of discovery by the Master Servicer or receipt of notice by
the Master Servicer of the breach of the covenant of the Master Servicer set
forth in Section 2.03(x) above which materially and adversely affects the
interests of the Holders of the Class P Certificates in any Prepayment Charge,
the Master Servicer shall remedy such breach as follows: the Master Servicer
shall pay the amount of such waived Prepayment Charge, for the benefit of the
holders of the Class P Certificates, by depositing such amount into the
Custodial Account (net of any amount actually collected by the Master Servicer
in respect of such Prepayment Charge and remitted by the Master Servicer, for
the benefit of the Holders of the Class P Certificates, in respect of such
Prepayment Charge, into the Custodial Account). The foregoing shall not,
however, limit any remedies available to the Certificateholders, the Company or
the Trustee on behalf of the Certificateholders, pursuant to the Mortgage Loan
Purchase Agreement respecting a breach of any of the representations, warranties
and covenants contained in the Mortgage Loan Purchase Agreement.

               (b) The Company hereby represents and warrants to the Master
Servicer and the Trustee for the benefit of Certificateholders that as of the
Closing Date, the representations and warranties of the Seller with respect to
the Mortgage Loans and the remedies therefor that are contained in the Mortgage
Loan Purchase Agreement are as set forth in Exhibit I hereto.

               It is understood and agreed that the representations and
warranties set forth in this Section 2.03(b) shall survive delivery of the
respective Mortgage Files to the Trustee.

               Upon discovery by either the Company, the Master Servicer or the
Trustee of a breach of any representation or warranty set forth in this Section
2.03 which materially and adversely affects the interests of the
Certificateholders in any Mortgage Loan, the party discovering such breach shall
give prompt written notice to the other parties.

               SECTION 2.04.   Representations and Warranties of the Seller.

               The Company hereby assigns to the Trustee for the benefit of
Certificateholders all of its rights (but none of its obligations) in, to and
under the Mortgage Loan Purchase Agreement. Insofar as the Mortgage Loan
Purchase Agreement relates to such representations and warranties and


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<PAGE>



any remedies provided thereunder for any breach of such representations and
warranties, such right, title and interest may be enforced by the Trustee on
behalf of the Certificateholders. Upon the discovery by the Company, the Master
Servicer or the Trustee of a breach of any of the representations and warranties
made in the Mortgage Loan Purchase Agreement in respect of any Mortgage Loan
which materially and adversely affects the interests of the Certificateholders
in such Mortgage Loan, the party discovering such breach shall give prompt
written notice to the other parties. The Trustee shall promptly notify the
Seller of such breach and request that the Seller shall, within 90 days from the
date that the Seller was notified or otherwise obtained knowledge of such
breach, either (i) cure such breach in all material respects or (ii) purchase
such Mortgage Loan from the Trust Fund at the Purchase Price and in the manner
set forth in Section 2.02; provided that if such breach would cause the Mortgage
Loan to be other than a "qualified mortgage" as defined in Section 860G(a)(3) of
the Code, any such cure or repurchase must occur within 90 days from the date
such breach was discovered. However, in the case of a breach under the Mortgage
Loan Purchase Agreement, subject to the approval of the Company, the Seller
shall have the option to substitute a Qualified Substitute Mortgage Loan or
Loans for such Mortgage Loan if such substitution occurs within two years
following the Closing Date, except that if the breach would cause the Mortgage
Loan to be other than a "qualified mortgage" as defined in Section 860G(a)(3) of
the Code, any such substitution must occur within 90 days from the date the
breach was discovered if such 90 day period expires before two years following
the Closing Date. In the event that the Seller elects to substitute a Qualified
Substitute Mortgage Loan or Loans for a Deleted Mortgage Loan pursuant to this
Section 2.04, the Trustee shall enforce the obligation of the Seller under the
Mortgage Loan Purchase Agreement to deliver to the Trustee and the Master
Servicer, as appropriate, with respect to such Qualified Substitute Mortgage
Loan or Loans, the original Mortgage Note, the Mortgage, an Assignment of the
Mortgage in recordable form, and such other documents and agreements as are
required by Section 2.01, with the Mortgage Note endorsed as required by Section
2.01. No substitution will be made in any calendar month after the Determination
Date for such month. Monthly Payments due with respect to Qualified Substitute
Mortgage Loans in the month of substitution, to the extent received by the
Master Servicer or any Sub-Servicer, shall not be part of the Trust Fund and
will be retained by the Master Servicer and remitted by the Master Servicer to
the Seller on the next succeeding Distribution Date. For the month of
substitution, distributions to Certificateholders will include the Monthly
Payment due on a Deleted Mortgage Loan for such month and thereafter the Seller
shall be entitled to retain all amounts received in respect of such Deleted
Mortgage Loan. The Company shall amend or cause to be amended the Mortgage Loan
Schedule for the benefit of the Certificateholders to reflect the removal of
such Deleted Mortgage Loan and the substitution of the Qualified Substitute
Mortgage Loan or Loans and the Company shall deliver the amended Mortgage Loan
Schedule to the Trustee. Upon such substitution, the Qualified Substitute
Mortgage Loan or Loans shall be subject to the terms of this Agreement in all
respects, the Seller shall be deemed to have made the representations and
warranties with respect to the Qualified Substitute Mortgage Loan contained in
the Mortgage Loan Purchase Agreement as of the date of substitution, and the
Company shall be deemed to have made with respect to any Qualified Substitute
Mortgage Loan or Loans, as of the date of substitution, the representations and
warranties set forth in Exhibit I hereof (other than representations (xiv),
(xvi), (xxix) and (xxxiii) through (xli)).



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<PAGE>



               In connection with the substitution of one or more Qualified
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Master
Servicer will determine the amount (the Substitution Adjustment"), if any, by
which the aggregate principal balance of all such Qualified Substitute Mortgage
Loans as of the date of substitution is less than the aggregate Stated Principal
Balance of all such Deleted Mortgage Loans (in each case after application of
the principal portion of the Monthly Payments due in the month of substitution
that are to be distributed to Certificateholders in the month of substitution).
The Trustee shall enforce the obligation of the Seller under the Mortgage Loan
Purchase Agreement to provide the Master Servicer on the day of substitution for
immediate deposit into the Custodial Account the amount of such shortfall,
without any reimbursement therefor. In accordance with the Mortgage Loan
Purchase Agreement, the Seller shall give notice in writing to the Trustee of
such event, which notice shall be accompanied by an Officers' Certificate as to
the calculation of such shortfall and by an Opinion of Counsel to the effect
that such substitution will not cause (a) any federal tax to be imposed on REMIC
1, REMIC 2 or REMIC 3, including without limitation, any federal tax imposed on
"prohibited transactions" under Section 860F(a)(1) of the Code or on
"contributions after the startup date" under Section 860G(d)(1) of the Code or
(b) any portion of REMIC 1, REMIC 2 or REMIC 3 to fail to qualify as a REMIC at
any time that any Certificate is outstanding. The costs of any substitution as
described above, including any related assignments, opinions or other
documentation in connection therewith shall be borne by the Seller.

               Except as expressly set forth herein neither the Trustee nor the
Master Servicer is under any obligation to discover any breach of the
above-mentioned representations and warranties. It is understood and agreed that
the obligation of the Seller to cure such breach, purchase or to substitute for
such Mortgage Loan as to which such a breach has occurred and is continuing
shall constitute the sole remedy respecting such breach available to
Certificateholders or the Trustee on behalf of Certificateholders.

          SECTION 2.05. Issuance of Certificates; Conveyance of REMIC Regular
                        Interests and Acceptance of REMIC 2 by the Trustee.

        (a) The Trustee acknowledges the assignment to it of the Mortgage Loans
and the delivery to it of the Mortgage Files, subject to the provisions of
Sections 2.01 and 2.02, together with the assignment to it of all other assets
included in the Trust Fund, receipt of which is hereby acknowledged.
Concurrently with such assignment and delivery and in exchange therefor, the
Trustee, pursuant to the written request of the Company executed by an officer
of the Company, has executed, authenticated and delivered to or upon the order
of the Company, the Certificates in authorized denominations. The interests
evidenced by the Certificates, constitute the entire beneficial ownership
interest in the Trust Fund.

        (b) The Company, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey in trust to the
Trustee without recourse all the right, title and interest of the Company in and
to the REMIC 1 Regular Interests for the benefit of the Holders of the REMIC 2
Regular Interests and Holders of the Class R Certificates (as holders of the
Class R-1 Interest). The Trustee acknowledges receipt of the REMIC 1 Regular
Interests (which are


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<PAGE>



uncertificated) and declares that it holds and will hold the same in trust for
the exclusive use and benefit of the Holders of the REMIC 2 Regular Interests
and Holders of the Class R Certificates (as holders of the Class R-1 Interest).
The interests evidenced by the Class R-2 Interest, together with the Regular
Certificates, constitute the entire beneficial ownership interest in REMIC 2.

        (c) The Company, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey in trust to the
Trustee without recourse all the right, title and interest of the Company in and
to the REMIC 2 Regular Interests for the benefit of the holders of the
Certificates. The Trustee acknowledges receipt of the REMIC 2 Regular Interests
(which are uncertificated) and declares that it holds and will hold the same in
trust for the exclusive use and benefit of the holders of the Certificates. The
interests evidenced by the Class R-3 Interest, together with the Regular
Certificates, constitute the entire beneficial ownership interest in REMIC 3.

        (d) In exchange for the REMIC 2 Regular Interests and, concurrently with
the assignment to the Trustee thereof, pursuant to the written request of the
Company executed by an officer of the Company, the Trustee has executed,
authenticated and delivered to or upon the order of the Company, the Regular
Certificates in authorized denominations evidencing (together with the Class R-3
Interest) the entire beneficial ownership interest in REMIC 3.

        (e) Concurrently with (i) the assignment and delivery to the Trustee of
REMIC 1 (including the Residual Interest therein represented by the Class R-1
Interest) and the acceptance by the Trustee thereof, (ii) the assignment and
delivery to the Trustee of REMIC 2 (including the Residual Interest therein
represented by the Class R-2 Interest), and (iii) the assignment and delivery to
the Trustee of REMIC 3 (including the Residual Interest therein represented by
the Class R-3 Interest), and the acceptance by the Trustee thereof, the Trustee,
pursuant to the written request of the Company executed by an officer of the
Company, has executed, authenticated and delivered to or upon the order of the
Company, the Class R Certificates in authorized denominations evidencing the
Class R-1 Interest, the Class R-2 Interest and the Class R-3 Interest.



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<PAGE>




                                   ARTICLE III

                          ADMINISTRATION AND SERVICING
                                OF THE TRUST FUND

               SECTION 3.01.          Master Servicer to Act as Master Servicer.

               The Master Servicer shall supervise, or take such actions as are
necessary to ensure, the servicing and administration of the Mortgage Loans and
any REO Property in accordance with this Agreement and its normal servicing
practices, which generally shall conform to the standards (i) of the Servicing
Guide, if Impac Funding Corporation is Master Servicer, or (ii) if Impac Funding
Corporation is not the Master Servicer, of an institution prudently servicing
mortgage loans for its own account and shall have full authority to do anything
it reasonably deems appropriate or desirable in connection with such servicing
and administration. To the extent consistent with the foregoing, the Master
Servicer shall waive (or permit a Sub-Servicer to waive) a Prepayment Charge
only under the following circumstances: (i) such waiver is standard and
customary in servicing similar Mortgage Loans and (ii) such waiver would, in the
reasonable judgement of the Master Servicer, maximize recovery of total proceeds
taking into account the value of such Prepayment Charge and the related Mortgage
Loan and, if such waiver is made in connection with a refinancing of the related
Mortgage Loan, such refinancing is related to a default or a reasonably
foreseeable default.

               The Master Servicer may perform its responsibilities relating to
servicing through other agents or independent contractors, but shall not thereby
be released from any of its responsibilities as hereinafter set forth. The
authority of the Master Servicer, in its capacity as master servicer, and any
Sub-Servicer acting on its behalf, shall include, without limitation, the power
to (i) consult with and advise any Sub-Servicer regarding administration of a
related Mortgage Loan, (ii) approve any recommendation by a Sub-Servicer to
foreclose on a related Mortgage Loan, (iii) supervise the filing and collection
of insurance claims and take or cause to be taken such actions on behalf of the
insured Person thereunder as shall be reasonably necessary to prevent the denial
of coverage thereunder, and (iv) effectuate foreclosure or other conversion of
the ownership of the Mortgaged Property securing a related Mortgage Loan,
including the employment of attorneys, the institution of legal proceedings, the
collection of deficiency judgments, the acceptance of compromise proposals, the
filing of claims under any Insurance Policy and any other matter pertaining to a
delinquent Mortgage Loan. The authority of the Master Servicer shall include, in
addition, the power on behalf of the Certificateholders, the Trustee or any of
them to (i) execute and deliver customary consents or waivers and other
instruments and documents, (ii) consent to transfer of any related Mortgaged
Property and assumptions of the related Mortgage Notes and Security Instruments
(in the manner provided in this Agreement) and (iii) collect any Insurance
Proceeds and Liquidation Proceeds. Without limiting the generality of the
foregoing, the Master Servicer and any Sub-Servicer acting on its behalf may,
and is hereby authorized, and empowered by the Trustee to, execute and deliver,
on behalf of itself, the Certificateholders or the Trustee or any of them, any
instruments of satisfaction, cancellation, partial or full release, discharge
and all other comparable instruments, with respect to the related Mortgage
Loans, the Insurance Policies and the accounts


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<PAGE>



related thereto, and the Mortgaged Properties. The Master Servicer may exercise
this power in its own name or in the name of a Sub-Servicer.

               Subject to Section 3.16, the Trustee shall execute, at the
written request of the Master Servicer, and furnish to the Master Servicer and
any Sub-Servicer such documents provided to it by the Master Servicer or any
Sub-Servicer as are necessary or appropriate to enable the Master Servicer or
any Sub-Servicer to carry out their servicing and administrative duties
hereunder, and the Trustee hereby grants to the Master Servicer a power of
attorney to carry out such duties. The Trustee shall not be liable for the
actions of the Master Servicer or any Sub-Servicers under such powers of
attorney.

               In accordance with the standards of the preceding paragraph, the
Master Servicer shall advance or cause to be advanced funds as necessary for the
purpose of effecting the payment of taxes and assessments on the Mortgaged
Properties, which advances shall be reimbursable in the first instance from
related collections from the Mortgagors pursuant to Section 3.09, and further as
provided in Section 3.11; provided that the Master Servicer shall not be
obligated to make such advance if, in its good faith judgment, the Master
Servicer determines that such advance to be a Nonrecoverable Advance.

               Notwithstanding anything in this Agreement to the contrary, the
Master Servicer shall not (unless the Mortgagor is in default with respect to
the Mortgage Loan or such default is, in the judgment of the Master Servicer,
reasonably foreseeable) make or permit any modification, waiver or amendment of
any term of any Mortgage Loan that would both (i) effect an exchange or
reissuance of such Mortgage Loan under Section 1001 of the Code (or Treasury
regulations promulgated thereunder) and (ii) cause any of REMIC 1, REMIC 2 or
REMIC 3 to fail to qualify as a REMIC under the Code or the imposition of any
tax on "prohibited transactions" or "contributions" after the startup date under
the REMIC Provisions.

               The relationship of the Master Servicer (and of any successor to
the Master 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.

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

               (a) The Master Servicer may enter into Sub-Servicing Agreements
with Sub- Servicers for the servicing and administration of the Mortgage Loans
and for the performance of any and all other activities of the Master Servicer
hereunder; provided, however, that such agreements would not result in a
withdrawal or a downgrading by Standard & Poor's of its rating on any Class of
Certificates. Each Sub-Servicer shall be either (i) an institution the accounts
of which are insured by the FDIC or (ii) another entity that engages in the
business of originating or servicing mortgage loans comparable to the Mortgage
Loans, and in either case shall be authorized to transact business in the state
or states in which the related Mortgaged Properties it is to service are
situated, if and to the extent required by applicable law to enable the
Sub-Servicer to perform its obligations hereunder


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<PAGE>



and under the Sub-Servicing Agreement, and in either case shall be a Freddie Mac
or Fannie Mae approved mortgage servicer. Any Sub-Servicing Agreement entered
into by the Master Servicer shall include the provision that such Agreement may
be immediately terminated (x) with cause and without any termination fee by any
Master Servicer hereunder or (y) without cause in which case the Master Servicer
shall be responsible for any termination fee or penalty resulting therefrom. In
addition, each Sub-Servicing Agreement shall provide for servicing of the
Mortgage Loans consistent with the terms of this Agreement. With the consent of
the Trustee, the Master Servicer and the Sub-Servicers may enter into
Sub-Servicing Agreements and make amendments to the Sub- Servicing Agreements or
enter into different forms of Sub-Servicing Agreements providing for, among
other things, the delegation by the Master Servicer to a Sub-Servicer of
additional duties regarding the administration of the Mortgage Loans; provided,
however, that any such amendments or different forms shall be consistent with
and not violate the provisions of this Agreement, and that no such amendment or
different form shall be made or entered into which could be reasonably expected
to be materially adverse to the interests of the Certificateholders, without the
consent of the Holders of Certificates entitled to at least 51% of the Voting
Rights. The parties hereto acknowledge that the initial Sub-Servicer shall be
Wendover.

        The Master Servicer has entered into a Sub-Servicing Agreement with
Wendover for the servicing and administration of the Mortgage Loans and may
enter into additional Sub-Servicing Agreements with Sub-Servicers acceptable to
the Trustee for the servicing and administration of certain of the Mortgage
Loans.

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

               (c) The Master Servicer represents that it has entered into a
contract regarding the sale of sub-servicing rights with respect to the Mortgage
Loans with GMAC and shall transfer the subservicing of such Mortgage Loans from
Wendover to GMAC on or about August 1, 2001. The Trustee hereby consents to such
transfer.

               (d) The Master Servicer represents that it will cause any
Sub-Servicer to accurately and fully report its borrower credit files to all
three credit repositories in a timely manner.



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<PAGE>



               SECTION 3.03.          Successor Sub-Servicers.

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

               SECTION 3.04.          Liability of the Master Servicer.

               Notwithstanding any Sub-Servicing Agreement, any of the
provisions of this Agreement relating to agreements or arrangements between the
Master Servicer and a Sub-Servicer or reference to actions taken through a
Sub-Servicer or otherwise, the Master Servicer shall under all circumstances
remain obligated and primarily liable to the Trustee and Certificateholders for
the servicing and administering of the Mortgage Loans and any REO Property in
accordance with the provisions of Article III without diminution of such
obligation or liability by virtue of such Sub- Servicing Agreements or
arrangements or by virtue of indemnification from the Sub-Servicer and to the
same extent and under the same terms and conditions as if the Master Servicer
alone were servicing and administering the Mortgage Loans. For purposes of this
Agreement, the Master Servicer shall be deemed to have received payments on
Mortgage Loans when the Sub-Servicer has received such payments. The Master
Servicer shall be entitled to enter into any agreement with a Sub-Servicer for
indemnification of the Master Servicer by such Sub-Servicer and nothing
contained in this Agreement shall be deemed to limit or modify such
indemnification.

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

               Any Sub-Servicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Sub-Servicer
in its capacity as such and not as an originator shall be deemed to be between
the Sub-Servicer and the Master Servicer alone, and the Trustee and
Certificateholders shall not be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to the Sub-Servicer
except as set forth in Section 3.06. The Master Servicer (or Sub-Servicer) shall
be liable for the payment of any franchise taxes which may be assessed by the
California Franchise Tax Board in connection with the activities of the Trust
under this Agreement.



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<PAGE>



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

               (a) If the Trustee or its designee shall assume the master
servicing obligations of the Master Servicer in accordance with Section 7.02
below, the Trustee, to the extent necessary to permit the Trustee to carry out
the provisions of Section 7.02 with respect to the Mortgage Loans, shall succeed
to all of the rights and obligations of the Master Servicer under each of the
Sub- Servicing Agreements. In such event, the Trustee or its designee as the
successor master servicer shall be deemed to have assumed all of the Master
Servicer's rights and obligations therein and to have replaced the Master
Servicer as a party to such Sub-Servicing Agreements to the same extent as if
such Sub-Servicing Agreements had been assigned to the Trustee or its designee
as a successor master servicer, except that the Trustee or its designee as a
successor master servicer shall not be deemed to have assumed any obligations or
liabilities of the Master Servicer arising prior to such assumption (other than
the obligation to make any Advances hereunder) and the Master Servicer shall not
thereby be relieved of any liability or obligations under such Sub-Servicing
Agreements arising prior to such assumption. Nothing in the foregoing shall be
deemed to entitle the Trustee or its designee as a successor master servicer at
any time to receive any portion of the servicing compensation provided under
Section 3.17 except for such portion as the Master Servicer would be entitled to
receive.

               (b) In the event that the Trustee or its designee as successor
master servicer for the Trustee assumes the servicing obligations of the Master
Servicer under Section 7.02, upon the reasonable request of the Trustee or such
designee as successor master servicer the Master Servicer shall at its own
expense deliver to the Trustee, or at its written request to such designee,
photocopies of all documents, files and records, electronic or otherwise,
relating to the Sub-Servicing Agreements and the related Mortgage Loans or REO
Property then being serviced and an accounting of amounts collected and held by
it, if any, and will otherwise cooperate and use its reasonable efforts to
effect the orderly and efficient transfer of the Sub-Servicing Agreements, or
responsibilities hereunder to the Trustee, or at its written request to such
designee as successor master servicer.

               SECTION 3.07.    Collection of Certain Mortgage Loan Payments.

               (a) The Master Servicer will coordinate and monitor remittances
by Sub-Servicers to the Master Servicer with respect to the Mortgage Loans in
accordance with this Agreement.

               (b) The Master Servicer shall make its reasonable efforts to
collect or cause to be collected all payments required under the terms and
provisions of the Mortgage Loans and shall follow, and use its reasonable
efforts to cause Sub-Servicers to follow, collection procedures comparable to
the collection procedures of prudent mortgage lenders servicing mortgage loans
for their own account to the extent such procedures shall be consistent with
this Agreement. Consistent with the foregoing, the Master Servicer may in its
discretion (i) waive or permit to be waived any late payment charge, prepayment
charge, assumption fee, or any penalty interest in connection with the
prepayment of a Mortgage Loan and (ii) suspend or reduce or permit to be
suspended or reduced regular monthly payments for a period of up to six months,
or arrange or permit an arrangement with


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a Mortgagor for a scheduled liquidation of delinquencies. In the event the
Master Servicer shall consent to the deferment of the due dates for payments due
on a Mortgage Note, the Master Servicer shall nonetheless make an Advance or
shall cause the related Sub-Servicer to make an advance to the same extent as if
such installment were due, owing and delinquent and had not been deferred
through liquidation of the Mortgaged Property; provided, however, that the
obligation of the Master Servicer or related Sub-Servicer to make an Advance
shall apply only to the extent that the Master Servicer believes, in good faith,
that such advances are not Nonrecoverable Advances.

               (c) On each Determination Date, with respect to each Mortgage
Loan for which during the related Prepayment Period the Master Servicer has
determined that all amounts which it expects to recover from or on account of
each such Mortgage Loan have been recovered and that no further Liquidation
Proceeds will be received in connection therewith, the Master Servicer shall
provide to the Trustee a certificate of a Servicing Officer that such Mortgage
Loan became a Liquidated Mortgage Loan in a Cash Liquidation or REO Disposition.

               The Master Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans, and
shall, to the extent such procedures shall be consistent with this Agreement and
the terms and provisions of any related Insurance Policy, follow such collection
procedures as it would follow with respect to mortgage loans comparable to the
Mortgage Loans and held for its own account. The Master Servicer shall not be
required to institute or join in litigation with respect to collection of any
payment (whether under a Mortgage, Mortgage Note, Primary Hazard Insurance
Policy or otherwise or against any public or governmental authority with respect
to a taking or condemnation) if it reasonably believes that it is prohibited by
applicable law from enforcing the provision of the Mortgage or other instrument
pursuant to which such payment is required. The Master Servicer shall be
responsible for preparing and distributing all information statements relating
to payments on the Mortgage Loans, in accordance with all applicable federal and
state tax laws and regulations.

               SECTION 3.08.    Sub-Servicing Accounts.

               In those cases where a Sub-Servicer is servicing a Mortgage Loan
pursuant to a Sub- Servicing Agreement, the Sub-Servicer will be required to
establish and maintain one or more accounts (collectively, the "Sub-Servicing
Account"). The Sub-Servicing Account shall be an Eligible Account and shall
otherwise be acceptable to the Master Servicer. All amounts held in a
Sub-Servicing Account shall be held in trust for the Trustee for the benefit of
the Certificateholders. Any investment of funds held in such an account shall be
in Permitted Investments maturing not later than the Business Day immediately
preceding the next Sub-Servicer Remittance Date. The Sub- Servicer will be
required to deposit into the Sub-Servicing Account no later than the first
Business Day after receipt all proceeds of Mortgage Loans received by the
Sub-Servicer, less its servicing compensation and any unreimbursed expenses and
advances, to the extent permitted by the Sub- Servicing Agreement. On each
Sub-Servicer Remittance Date the Sub-Servicer will be required to remit to the
Master Servicer for deposit in the Custodial Account all funds held in the
Sub-Servicing Account with respect to any Mortgage Loan as of the Sub-Servicer
Remittance Date, after deducting from such remittance an amount equal to the
servicing compensation (including interest on Permitted


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<PAGE>



Investments) and unreimbursed expenses and advances to which it is then entitled
pursuant to the related Sub-Servicing Agreement, to the extent not previously
paid to or retained by it. In addition, on each Sub-Servicer Remittance Date the
Sub-Servicer will be required to remit to the Master Servicer any amounts
required to be advanced pursuant to the related Sub-Servicing Agreement. The
Sub-Servicer will also be required to remit to the Master Servicer, within five
Business Days of receipt, the proceeds of any Principal Prepayment made by the
Mortgagor, and, on each Sub-Servicer Remittance Date, the amount of any
Insurance Proceeds or Liquidation Proceeds received during the related
Prepayment Period.

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

               The Master Servicer and the Sub-Servicers shall establish and
maintain one or more accounts (the "Servicing Accounts"), and shall deposit and
retain therein all collections from the Mortgagors (or related advances from
Sub-Servicers) for the payment of taxes, assessments, Primary Hazard Insurance
Policy premiums, and comparable items for the account of the Mortgagors, to the
extent that the Master Servicer customarily escrows for such amounts.
Withdrawals of amounts so collected from a Servicing Account may be made only to
(i) effect payment of taxes, assessments, Primary Hazard Insurance Policy
premiums and comparable items; (ii) reimburse the Master Servicer (or a
Sub-Servicer to the extent provided in the related Sub-Servicing Agreement) out
of related collections for any payments made pursuant to Sections 3.01 (with
respect to taxes and assessments), and 3.13 (with respect to Primary Hazard
Insurance Policies); (iii) refund to Mortgagors any sums as may be determined to
be overages; or (iv) clear and terminate the Servicing Account at the
termination of this Agreement pursuant to Section 9.01. As part of its servicing
duties, the Master Servicer or Sub-Servicers shall, if and to the extent
required by law, pay to the Mortgagors interest on funds in Servicing Accounts
from its or their own funds, without any reimbursement therefor.

               SECTION 3.10.          Custodial Account.

               (a) The Master Servicer shall establish and maintain one or more
accounts (collectively, the "Custodial Account") in which the Master Servicer
shall deposit or cause to be deposited on a daily basis, or as and when received
from the Sub-Servicers, the following payments and collections received or made
by or on behalf of it subsequent to the Cut-off Date, or received by it prior to
the Cut-off Date but allocable to a period subsequent thereto (other than in
respect of principal and interest on the Mortgage Loans due on or before the
Cut-off Date):

             (i) all payments (including advances by a Sub-Servicer) on account
        of principal, including Principal Prepayments, on the Mortgage Loans and
        all Prepayment Charges collected on the Mortgage Loans (and any Master
        Servicer Prepayment Charge Payment Amounts paid by, or collected on
        behalf of the Trust Fund by, the Master Servicer or any Sub-Servicer);



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            (ii) all payments (including advances by a Sub-Servicer) on account
        of interest on the Mortgage Loans, including Buydown Funds, if any, net
        of any portion thereof retained by the Master Servicer as Master
        Servicing Fees or any Sub-Servicer as Sub-Servicing Fees;

           (iii) all Insurance Proceeds, other than proceeds that represent
        reimbursement of costs and expenses incurred by the Master Servicer or
        any Sub-Servicer in connection with presenting claims under the related
        Insurance Policies, Liquidation Proceeds and REO Proceeds;

            (iv) all proceeds of any Mortgage Loan or REO Property repurchased
        or purchased in accordance with Sections 2.02, 2.04, 3.14 or 9.01; and
        all amounts required to be deposited in connection with the substitution
        of a Qualified Substitute Mortgage Loan pursuant to Section 2.04; and

             (v) any amounts required to be deposited pursuant to Section 3.12,
        3.13, 3.15 or 3.22.

               The foregoing requirements for deposit in the Custodial Account
shall be exclusive. In the event the Master Servicer shall deposit in the
Custodial Account any amount not required to be deposited therein, it may
withdraw such amount from the Custodial Account, any provision herein to the
contrary notwithstanding. The Custodial Account shall be maintained as a
segregated account, separate and apart from trust funds created for mortgage
pass-through certificates of other series, and the other accounts of the Master
Servicer.

               (b) Funds in the Custodial Account may be invested in Permitted
Investments in accordance with the provisions set forth in Section 3.12. The
Master Servicer shall give notice to the Trustee and the Company of the location
of the Custodial Account after any change thereof.

               SECTION 3.11.  Permitted Withdrawals From the Custodial Account.

               The Master Servicer may, from time to time as provided herein,
make withdrawals from the Custodial Account of amounts on deposit therein
pursuant to Section 3.10 that are attributable to the Mortgage Loans for the
following purposes:

                     (i) to make deposits into the Certificate Account in the
        amounts and in the manner provided for in Section 4.01;

                    (ii) to pay to itself, the Company, the Seller or any other
        appropriate person, as the case may be, with respect to each Mortgage
        Loan that has previously been purchased or repurchased pursuant to
        Sections 2.02, 2.04, 3.14 or 9.01 all amounts received thereon and not
        yet distributed as of the date of purchase or repurchase;

                     (iii) to reimburse itself or any Sub-Servicer for Advances
        not previously reimbursed, the Master Servicer's or any Sub-Servicer's
        right to reimbursement pursuant to


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        this clause (iii) being limited to amounts received which represent Late
        Collections (net of the related Master Servicing Fees and Sub-Servicing
        Fees) of Monthly Payments on Mortgage Loans with respect to which such
        Advances were made and as further provided in Section 3.15;

                    (iv) to reimburse or pay itself, the Trustee or the Company
        for expenses incurred by or reimbursable to the Master Servicer, the
        Trustee or the Company pursuant to Sections 3.22, 6.03, 8.05 or
        10.01(g), except as otherwise provided in such Sections hereof;

                     (v) to reimburse itself or any Sub-Servicer for costs and
        expenses incurred by or reimbursable to it relating to the prosecution
        of any claims pursuant to Section 3.13 that are in excess of the amounts
        so recovered;

                    (vi) to reimburse itself or any Sub-Servicer for unpaid
        Master Servicing Fees, Sub-Servicing Fees and unreimbursed Servicing
        Advances, the Master Servicer's or any Sub-Servicer's right to
        reimbursement pursuant to this clause (vi) with respect to any Mortgage
        Loan being limited to late recoveries of the payments for which such
        advances were made pursuant to Section 3.01 or Section 3.09 and any
        other related Late Collections;

                   (vii) to pay itself as servicing compensation (in addition to
        the Master Servicing Fee and Sub-Servicing Fee), on or after each
        Distribution Date, any interest or investment income earned on funds
        deposited in the Custodial Account for the period ending on such
        Distribution Date;

                  (viii) to reimburse itself or any Sub-Servicer for any Advance
        or Servicing Advance previously made, after a Realized Loss has been
        allocated with respect to the related Mortgage Loan if the Advance or
        Servicing Advance was not reimbursed pursuant to clauses (iii) and (vi);

                     (ix) to pay Radian the premium under the Radian Lender-Paid
        PMI Policy; and

                     (x) to clear and terminate the Custodial Account at the
        termination of this Agreement pursuant to Section 9.01.

               The Master Servicer shall keep and maintain separate accounting
records on a Mortgage Loan by Mortgage Loan basis, for the purpose of justifying
any withdrawal from the Custodial Account pursuant to such subclauses (ii)
through (x).

               SECTION 3.12.          Permitted Investments.

               Any institution maintaining the Custodial Account shall at the
direction of the Master Servicer invest the funds in such account in Permitted
Investments, each of which shall mature not later than (i) the Business Day
immediately preceding the date on which such funds are required to


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be withdrawn from such account pursuant to this Agreement, if a Person other
than the Trustee is the obligor thereon, and (ii) no later than the date on
which such funds are required to be withdrawn from such account pursuant to this
Agreement, if the Trustee is the obligor thereon and shall not be sold or
disposed of prior to its maturity. All income and gain realized from any such
investment as well as any interest earned on deposits in the Custodial Account
shall be for the benefit of the Master Servicer. The Master Servicer shall
deposit in the Custodial Account an amount equal to the amount of any loss
incurred in respect of any such investment immediately upon realization of such
loss without right of reimbursement.

               SECTION 3.13.          Maintenance of Primary Hazard Insurance.

               (a) The Master Servicer shall cause to be maintained for each
Mortgage Loan primary hazard insurance by a Qualified Insurer or other insurer
satisfactory to the Rating Agencies with extended coverage on the related
Mortgaged Property in an amount equal to the lesser of (i) 100% of the
replacement value of the improvements, as determined by the insurance company,
on such Mortgaged Property or (ii) the unpaid principal balance of the Mortgage
Loan. The Master Servicer shall also cause to be maintained on property acquired
upon foreclosure, or deed in lieu of foreclosure, of any Mortgage Loan, fire
insurance with extended coverage in an amount equal to the replacement value of
the improvements thereon. Any costs incurred in maintaining any insurance
described in this Section 3.13 (other than any deductible described in the last
paragraph hereof) shall be recoverable as a Servicing Advance. The Master
Servicer shall not be obligated to advance any amounts pursuant to this Section
3.13 if, in its good faith judgment, the Master Servicer determines that such
advance would be a Nonrecoverable Advance. Pursuant to Section 3.10, any amounts
collected by the Master Servicer under any such policies (other than amounts to
be applied to the restoration or repair of the related Mortgaged Property or
property thus acquired or amounts released to the Mortgagor in accordance with
the Master Servicer's normal servicing procedures) shall be deposited in the
Custodial Account, subject to withdrawal pursuant to Section 3.11. Any cost
incurred by the Master Servicer in maintaining any such insurance shall not, for
the purpose of calculating monthly distributions to Certificateholders, be added
to the amount owing under the Mortgage Loan, notwithstanding that the terms of
the Mortgage Loan so permit. It is understood and agreed that no earthquake or
other additional insurance is to be required of any Mortgagor or maintained 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.

               The Master Servicer shall, or shall cause the related
Sub-Servicer to, exercise its best reasonable efforts to maintain and keep in
full force and effect each Primary Insurance Policy by a Qualified Insurer, or
other insurer satisfactory to the Rating Agencies, with respect to each first
lien Mortgage Loan as to which as of the Cut-Off Date such a Primary Insurance
Policy was in effect (or, in the case of a Qualified Substitute Mortgage Loan,
the date of substitution) and the original principal amount of the related
Mortgage Note exceeded 80% of the Collateral Value in an amount at least equal
to the excess of such original principal amount over 75% of such Collateral
Value until the principal amount of any such first lien Mortgage Loan is reduced
below 80% of the Collateral Value or, based upon a new appraisal, the principal
amount of such first lien Mortgage Loan


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represents less than 80% of the new appraised value. The Master Servicer shall,
or shall cause the related Sub-Servicer to, effect the timely payment of the
premium on each Primary Insurance Policy. The Master Servicer and the related
Sub-Servicer shall have the power to substitute for any Primary Insurance Policy
another substantially equivalent policy issued by another Qualified Insurer,
provided, that, such substitution shall be subject to the condition that it will
not cause the ratings on the Certificates to be downgraded or withdrawn, as
evidenced in writing from each Rating Agency.

         The Master Servicer shall cooperate with Radian and shall use its best
efforts to furnish all reasonable aid, evidence and information in the
possession of the Master Servicer or to which the Master Servicer has access
with respect to any Radian Insured Loan.

        In the event of a default by Radian under the Radian Lender-Paid PMI
Policy (a "Replacement Event"), the Master Servicer shall use its best efforts
to obtain a substitute lender-paid primary mortgage insurance policy (a
"Substitute PMI Policy"); PROVIDED, HOWEVER, that the Master Servicer shall not
be obligated, and shall have no liability for failing, to obtain a Substitute
PMI Policy unless such Substitute PMI Policy can be obtained on the following
terms and conditions: (i) the Certificates shall be rated no lower than the
rating assigned by each Rating Agency to the Certificates immediately prior to
such Replacement Event, as evidenced by a letter from each Rating Agency
addressed to the Company, the Master Servicer and the Trustee, (ii) the timing
and mechanism for drawing on such new Substitute PMI Policy shall be reasonably
acceptable to the Master Servicer and the Trustee and (iii) the premiums under
the proposed Substitute PMI Policy shall not exceed such premiums under the
existing Radian Lender-Paid PMI Policy.

        With respect to the Radian PMI Insured Loans covered by a Radian
Lender-Paid PMI Policy, the Master Servicer will confirm with Radian, and Radian
will certify to the Trustee, on or before May 15, 2001, that the Mortgage Loans
indicated on the Mortgage Loan Schedule as being covered by Radian Lender-Paid
PMI Policy are so covered.

        No earthquake or other additional insurance is to be required of any
Mortgagor or maintained on property acquired with respect to a security
instrument other than pursuant to such applicable laws and regulations as shall
at any time be in force and shall require such additional insurance. When, at
the time of origination of the Mortgage Loan or at any subsequent time, the
Mortgaged Property is located in a federally designated special flood hazard
area, the Master Servicer shall cause with respect to the Mortgage Loans and
each REO Property flood insurance (to the extent available and in accordance
with mortgage servicing industry practice) to be maintained. Such flood
insurance shall cover the Mortgaged Property, including all items taken into
account in arriving at the Collateral Value on which the Mortgage Loan was
based, and shall be in an amount equal to the lesser of (i) the Stated Principal
Balance of the related Mortgage Loan and (ii) the minimum amount required under
the terms of coverage to compensate for any damage or loss on a replacement cost
basis, but not more than the maximum amount of such insurance available for the
related Mortgaged Property under either the regular or emergency programs of the
National Flood Insurance Program (assuming that the area in which such Mortgaged
Property is located is participating in such program). Unless applicable state
law requires a higher deductible, the deductible on such flood insurance may not
exceed $1,000 or 1% of the applicable amount of coverage, whichever is less.


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               In the event that the Master Servicer shall obtain and maintain a
blanket fire insurance policy with extended coverage insuring against hazard
losses on all of the Mortgage Loans, it shall conclusively be deemed to have
satisfied its obligations as set forth in the first two sentences of this
Section 3.13, it being understood and agreed that such policy may contain a
deductible clause, in which case the Master Servicer shall, in the event that
there shall not have been maintained on the related Mortgaged Property a policy
complying with the first two sentences of this Section 3.13 and there shall have
been a loss which would have been covered by such policy, deposit in the
Certificate Account from its own funds the amount not otherwise payable under
the blanket policy because of such deductible clause. Any such deposit by the
Master Servicer shall be made on the Certificate Account Deposit Date next
preceding the Distribution Date which occurs in the month following the month in
which payments under any such policy would have been deposited in the Custodial
Account. Any such deposit shall not be deemed Servicing Advances and the Master
Servicer shall not be entitled to reimbursement therefor. In connection with its
activities as administrator and servicer of the Mortgage Loans, the Master
Servicer agrees to present, on behalf of itself, the Trustee and
Certificateholders, claims under any such blanket policy.

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

               The Master Servicer will, to the extent it has knowledge of any
conveyance or prospective conveyance by any Mortgagor of the Mortgaged Property
(whether by absolute conveyance or by contract of sale, and whether or not the
Mortgagor remains or is to remain liable under the Mortgage Note or the
Mortgage), exercise or cause to be exercised its rights to accelerate the
maturity of such Mortgage Loan under any "due-on-sale" clause applicable
thereto; provided, however, that the Master Servicer shall not exercise any such
rights if it reasonably believes that it is prohibited by law from doing so. The
Master Servicer or the related Sub-Servicer may repurchase a Mortgage Loan at
the Purchase Price deposited into the Custodial Account when the Master Servicer
requires acceleration of the Mortgage Loan, but only if the Master Servicer is
satisfied, as evidenced by an Officer's Certificate delivered to the Trustee,
that either (i) such Mortgage Loan is in default or default is reasonably
foreseeable or (ii) if such Mortgage Loan is not in default or default is not
reasonably foreseeable, such repurchase will have no adverse tax consequences
for the Trust Fund or any Certificateholder. If the Master Servicer is unable to
enforce such "due-on-sale" clause (as provided in the second preceding sentence)
or if no "due-on-sale" clause is applicable, the Master Servicer or the
Sub-Servicer is authorized to enter into an assumption and modification
agreement with the Person to whom such property has been conveyed or is proposed
to be conveyed, pursuant to which such Person becomes liable under the Mortgage
Note and, to the extent permitted by applicable state law, the Mortgagor remains
liable thereon; provided, however, that the Master Servicer shall not enter into
any assumption and modification agreement if the coverage provided under the
Primary Insurance Policy, if any, would be impaired by doing so. The Master
Servicer shall notify the Trustee, whenever possible, before the completion of
such assumption agreement, and shall forward to the Trustee the original copy of
such assumption agreement, which copy shall be added by the Trustee to the
related Mortgage File and which shall, for all purposes, be considered a part of
such Mortgage File to the same extent as all other documents and instruments
constituting a part thereof. In connection with any such assumption agreement,
the interest rate on the related


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Mortgage Loan shall not be changed and no other material alterations in the
Mortgage Loan shall be made unless such material alteration would not cause any
of REMIC 1, REMIC 2 or REMIC 3 to fail to qualify as a REMIC for federal income
tax purposes, as evidenced by an Opinion of Counsel. The Master Servicer is also
authorized to enter into a substitution of liability agreement with such Person,
pursuant to which the original Mortgagor is released from liability and such
Person is substituted as the Mortgagor and becomes liable under the Mortgage
Note. Any fee collected by or on behalf of the Master Servicer for entering into
an assumption or substitution of liability agreement will be retained by or on
behalf of the Master Servicer as additional servicing compensation. In
connection with any such assumption, no material term of the Mortgage Note
(including but not limited to the Mortgage Rate, the amount of the Monthly
Payment and any other term affecting the amount or timing of payment on the
Mortgage Loan) may be changed. The Master Servicer shall not enter into any
substitution or assumption if such substitution or assumption shall (i) both
constitute a "significant modification" effecting an exchange or reissuance of
such Mortgage Loan under the Code (or Treasury regulations promulgated
thereunder) and cause any of REMIC 1, REMIC 2 or REMIC 3 to fail to qualify as a
REMIC under the REMIC Provisions or (ii) cause the imposition of any tax on
"prohibited transactions" or "contributions" after the Startup Day under the
REMIC Provisions. The Master Servicer shall notify the Trustee that any such
substitution or assumption agreement has been completed by forwarding to the
Trustee the original copy of such substitution or assumption agreement, which
copy shall be added to the related Mortgage File and shall, for all purposes, be
considered a part of such Mortgage File to the same extent as all other
documents and instruments constituting a part thereof. A portion equal to up to
2% of the Collateral Value of the related Mortgage Loan, of any fee or
additional interest collected by the related Sub- Servicer for consenting in any
such conveyance or entering into any such assumption agreement may be retained
by the related Sub-Servicer as additional servicing compensation.

               Notwithstanding the foregoing paragraph or any other provision of
this Agreement, the Master Servicer shall not be deemed to be in default, breach
or any other violation of its obligations hereunder by reason of any assumption
of a Mortgage Loan by operation of law or any assumption that the Master
Servicer may be restricted by law from preventing, for any reason whatsoever.
For purposes of this Section 3.14, the term "assumption" is deemed to also
include a sale of a Mortgaged Property that is not accompanied by an assumption
or substitution of liability agreement.

               SECTION 3.15.          Realization Upon Defaulted Mortgage Loans.

               The Master Servicer shall exercise reasonable efforts, consistent
with the procedures that the Master Servicer would use in servicing loans for
its own account, to foreclose upon or otherwise comparably convert (which may
include an REO Acquisition) the ownership of properties securing such of the
Mortgage Loans as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments
pursuant to Section 3.07, and which are not released from the Trust Fund
pursuant to any other provision hereof. The Master Servicer shall use reasonable
efforts to realize proceeds from such defaulted Mortgage Loans in such manner
(including short sales) as will maximize the receipt of principal and interest
by Certificateholders, taking into account, among other things, the timing of
foreclosure proceedings.


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The foregoing is subject to the provisions that, in any case in which Mortgaged
Property shall have suffered damage from an Uninsured Cause, the Master Servicer
shall not be required to expend its own funds toward the restoration of such
property unless it shall determine in its sole discretion (i) that such
restoration will increase the net proceeds of liquidation of the related
Mortgage Loan to Certificateholders after reimbursement to itself for such
expenses, and (ii) that such expenses will be recoverable by the Master Servicer
through Insurance Proceeds or Liquidation Proceeds from the related Mortgaged
Property, as contemplated in Section 3.11. The Master Servicer shall be
responsible for all other costs and expenses incurred by it in any such
proceedings; provided, however, that it shall be entitled to reimbursement
thereof from the related property, as contemplated in Section 3.11.

               The proceeds of any Cash Liquidation or REO Disposition, as well
as any recovery resulting from a partial collection of Insurance Proceeds or
Liquidation Proceeds or any income from an REO Property, will be deposited into
the Custodial Account and applied in the following order of priority: first, to
reimburse the Master Servicer or any Sub-Servicer for any related unreimbursed
Servicing Advances, pursuant to Section 3.11(vi) or 3.22; second, to accrued and
unpaid interest on the Mortgage Loan or REO Imputed Interest, at the Mortgage
Rate, to the date of the Cash Liquidation or REO Disposition, or to the Due Date
prior to the Distribution Date on which such amounts are to be distributed if
not in connection with a Cash Liquidation or REO Disposition; and third, as a
recovery of principal of the Mortgage Loan. If the amount of the recovery so
allocated to interest is less than a full recovery thereof, that amount will be
allocated as follows: first, to unpaid Master Servicing Fees and Sub-Servicing
Fees; and second, to interest at the Net Mortgage Rate. The portion of the
recovery so allocated to unpaid Master Servicing Fees and Sub-Servicing Fees
shall be reimbursed to the Master Servicer or any Sub-Servicer pursuant to
Section 3.11(vi). The portions of the recovery so allocated to interest at the
Net Mortgage Rate and to principal of the Mortgage Loan shall be applied as
follows: first, to reimburse the Master Servicer or any Sub- Servicer for any
related unreimbursed Advances in accordance with Section 3.11(iii) or 3.22,
second, payment to Radian in accordance with Sections 3.11(ix) and third, for
payment to the Trustee and distribution to the Certificateholders in accordance
with the provisions of Section 4.01, subject to Section 3.22 with respect to
certain recoveries from an REO Disposition constituting Excess Proceeds.

               SECTION 3.16.    Trustee to Cooperate; Release of Mortgage Files.

               Upon the payment in full of any Mortgage Loan, or the receipt by
the Master Servicer of a notification that payment in full shall be escrowed in
a manner customary for such purposes, the Master Servicer will immediately
notify the Trustee by a certification (which certification shall include a
statement to the effect that all amounts received or to be received in
connection with such payment which are required to be deposited in the Custodial
Account pursuant to Section 3.10 have been or will be so deposited) of a
Servicing Officer and shall request delivery to it of the Mortgage File in the
form of the Request for Release attached hereto as Exhibit F-2. Upon receipt of
such certification and request, the Trustee shall promptly release the related
Mortgage File to the Master Servicer. Subject to the receipt by the Master
Servicer of the proceeds of such payment in full and the payment of all related
fees and expenses, the Master Servicer shall arrange for the release to the


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Mortgagor of the original canceled Mortgage Note. All other documents in the
Mortgage File shall be retained by the Master Servicer to the extent required by
applicable law. The Master Servicer shall provide for preparation of the
appropriate instrument of satisfaction covering any Mortgage Loan which pays in
full and the Trustee shall cooperate in the execution and return of such
instrument to provide for its delivery or recording as may be required. No
expenses incurred in connection with any instrument of satisfaction or deed of
reconveyance shall be chargeable to the Custodial Account or the Certificate
Account.

               From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, including, for this purpose, collection under
any insurance policy relating to the Mortgage Loan, the Trustee shall, upon
request of the Master Servicer and delivery to the Trustee of a Request for
Release in the form attached hereto as Exhibit F-1, release the related Mortgage
File to the Master Servicer and the Trustee shall execute such documents as the
Master Servicer shall prepare and request as being necessary to the prosecution
of any such proceedings. Such Request for Release shall obligate the Master
Servicer to return each document previously requested from the Mortgage File to
the Trustee when the need therefor by the Master Servicer no longer exists; and
in any event within 21 days of the Master Servicer's receipt thereof, unless the
Mortgage Loan has been liquidated and the Liquidation Proceeds relating to the
Mortgage Loan have been deposited in the Custodial Account or the Mortgage File
or such document has been delivered to an attorney, or to a public trustee or
other public official as required by law, for purposes of initiating or pursuing
legal action or other proceedings for the foreclosure of the Mortgaged Property
either judicially or non- judicially, and the Master Servicer has delivered to
the Trustee a certificate of a Servicing Officer certifying as to the name and
address of the Person to which such Mortgage File or such document was delivered
and the purpose or purposes of such delivery. Upon receipt of a Request for
Release stating that such Mortgage Loan was liquidated and that all amounts
received or to be received in connection with such liquidation which are
required to be deposited into the Custodial Account have been or will be so
deposited, or that such Mortgage Loan has become an REO Property, a copy of the
Request for Release shall be released by the Trustee to the Master Servicer.

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

               SECTION 3.17.          Servicing Compensation.



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               As compensation for its activities hereunder, the Master Servicer
shall be entitled to withhold and retain, from deposits to the Custodial Account
of amounts representing payments or recoveries of interest, the Master Servicing
Fees with respect to each Mortgage Loan (less any portion of such amounts
retained by any Sub-Servicer). In addition, the Master Servicer shall be
entitled to recover unpaid Master Servicing Fees out of related Late Collections
to the extent permitted in Section 3.11.

               Each Sub-Servicing Agreement shall permit the related
Sub-Servicer to retain the Sub-Servicing Fees from collections on the related
Mortgage Loans, or shall provide that the Sub- Servicer be paid directly by the
Master Servicer from collections on the related Mortgage Loans. To the extent
the Master Servicer directly services a Mortgage Loan, the Master Servicer shall
be entitled to retain the Sub-Servicing Fees for that Mortgage Loan.

               The Master Servicer also shall be entitled pursuant to Section
3.11 to receive from the Custodial Account as additional servicing compensation
interest or other income earned on deposits therein, subject to Section 3.23, as
well as any assumption fees, late payment charges and reconveyance fees. The
Master Servicer shall not be entitled to retain any Prepayment Charges. The
Master Servicer shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder (including payment of the
premiums for any blanket policy insuring against hazard losses pursuant to
Section 3.13 and servicing compensation of the Sub-Servicer to the extent not
retained by it), and shall not be entitled to reimbursement therefor except as
specifically provided in Section 3.11. The Master Servicing Fee may not be
transferred in whole or in part except in connection with the transfer of all of
the Master Servicer's responsibilities and obligations under this Agreement.

               SECTION 3.18.          Maintenance of Certain Servicing Policies.

        The Master Servicer shall obtain and maintain at its own expense and
shall cause each Sub- Servicer to obtain and maintain for the duration of this
Agreement a blanket fidelity bond and an errors and omissions insurance policy
covering the Master Servicer's and such Sub-Servicer's officers, employees and
other persons acting on its behalf in connection with its activities under this
Agreement. The amount of coverage shall be at least equal to the coverage
maintained by the Master Servicer or Sub-Servicer in order to be acceptable to
Fannie Mae or Freddie Mac to service loans for it or otherwise in an amount as
is commercially available at a cost that is generally not regarded as excessive
by industry standards. The Master Servicer shall promptly notify the Trustee in
writing of any material change in the terms of such bond or policy. The Master
Servicer shall provide annually to the Trustee a certificate of insurance that
such bond and policy are in effect. If any such bond or policy ceases to be in
effect, the Master Servicer shall, to the extent possible, give the Trustee ten
days' notice prior to any such cessation and shall use its reasonable best
efforts to obtain a comparable replacement bond or policy, as the case may be.



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               SECTION 3.19.          Annual Statement as to Compliance.

               Within 120 days after December 31 of each year, commencing
December 2001, the Master Servicer at its own expense shall deliver to the
Trustee, with a copy to the Rating Agencies, a certificate signed by a Servicing
Officer stating, as to the signers thereof, that (i) a review of the activities
of the Master Servicer during the preceding calendar year and of performance
under this Agreement has been made under such officers' supervision, (ii) to the
best of such officers' knowledge, based on such review, the Master Servicer has
fulfilled all its obligations under this Agreement for such year, or, if there
has been a default in the fulfillment of any such obligation, specifying each
such default known to such officer and the nature and status thereof including
the steps being taken by the Master Servicer to remedy such default; (iii) a
review of the activities of each Sub-Servicer during the Sub-Servicer's most
recently ended fiscal year on or prior to such December 31 and its performance
under its Sub-Servicing Agreement has been made under such officer's
supervision; and (iv) to the best of the Servicing Officer's knowledge, based on
his review and the certification of an officer of the Sub-Servicer (unless the
Servicing Officer has reason to believe that reliance on such certification is
not justified), either each Sub-Servicer has performed and fulfilled its duties,
responsibilities and obligations under this Agreement and its Sub-Servicing
Agreement in all material respects throughout the year, or, if there has been a
default in performance or fulfillment of any such duties, responsibilities or
obligations, specifying the nature and status of each such default known to the
Servicing Officer. Copies of such statements shall be provided by the Master
Servicer to the Certificateholders upon request or by the Trustee at the expense
of the Master Servicer should the Master Servicer fail to provide such copies.

               SECTION 3.20.  Annual Independent Public Accountants' Servicing
                              Statement.

               (a) Within 120 days after December 31 of each year, commencing
December 2001, the Master Servicer, at its expense, shall cause a firm of
independent public accountants who are members of the American Institute of
Certified Public Accountants to furnish a statement to the Master Servicer,
which will be provided to the Trustee and the Rating Agencies, to the effect
that, in connection with the firm's examination of the Master Servicer's
financial statements as of the end of such calendar year, nothing came to their
attention that indicated that the Master Servicer was not in compliance with the
provisions of this Agreement except for (i) such exceptions as such firm
believes to be immaterial and (ii) such other exceptions as are set forth in
such statement.

               (b) Within 120 days after December 31 of each year, commencing
December 2001, the Master Servicer, at its expense, shall or shall cause each
Sub-Servicer to cause a nationally recognized firm of independent certified
public accountants to furnish to the Master Servicer or such Sub-Servicer a
report stating that (i) it has obtained a letter of representation regarding
certain matters from the management of the Master Servicer or such Sub-Servicer
which includes an assertion that the Master Servicer or such Sub-Servicer has
complied with certain minimum mortgage loan servicing standards (to the extent
applicable to commercial and multifamily mortgage loans) identified in the
Uniform Single Attestation Program for Mortgage Bankers established by the
Mortgage Bankers Association of America with respect to the servicing of first
and second lien


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conventional single family mortgage loans during the most recently completed
calendar year and (ii) on the basis of an examination conducted by such firm in
accordance with standards established by the American Institute of Certified
Public Accountants, such representation is fairly stated in all material
respects, subject to such exceptions and other qualifications that may be
appropriate. Immediately upon receipt of such report, the Master Servicer shall
or shall cause each Sub-Servicer to furnish a copy of such report to the Trustee
and the Rating Agencies.

               SECTION 3.21.          Access to Certain Documentation.

               The Master Servicer shall provide, and shall cause any
Sub-Servicer to provide, to the Trustee, access to the documentation in their
possession regarding the related Mortgage Loans and REO Properties and to the
Certificateholders, the FDIC, and the supervisory agents and examiners of the
FDIC (to which the Trustee shall also provide) access to the documentation
regarding the related Mortgage Loans required by applicable regulations, such
access being afforded without charge but only upon reasonable request and during
normal business hours at the offices of the Master Servicer or the Sub-Servicers
that are designated by these entities; provided, however, that, unless otherwise
required by law, the Trustee, the Master Servicer or the Sub-Servicer shall not
be required to provide access to such documentation if the provision thereof
would violate the legal right to privacy of any Mortgagor; provided, further,
however, that the Trustee shall coordinate its requests for such access so as
not to impose an unreasonable burden on, or cause an unreasonable interruption
of, the business of the Master Servicer or any Sub-Servicer. The Master
Servicer, the Sub-Servicers and the Trustee shall allow representatives of the
above entities to photocopy any of the documentation and shall provide equipment
for that purpose at a charge that covers their own actual out-of-pocket costs.

               SECTION 3.22.  Title, Conservation and Disposition of REO
                              Property.

               This Section shall apply only to REO Properties acquired for the
account of REMIC 1 and shall not apply to any REO Property relating to a
Mortgage Loan which was purchased or repurchased from REMIC 1 pursuant to
Sections 2.02, 2.04 or 3.14. In the event that title to any such REO Property is
acquired, the deed or certificate of sale shall be issued to the Trustee, or to
its nominee, on behalf of the Certificateholders. The Master Servicer, on behalf
of REMIC 1, shall either sell any REO Property before the close of the third
taxable year following the taxable year in which REMIC 1 acquires ownership of
such REO Property for purposes of Section 860G(a)(8) of the Code or, at the
expense of REMIC 1, request, more than 60 days before the day on which the
three-year grace period would otherwise expire an extension of the three-year
grace period, unless the Master Servicer has delivered to the Trustee an Opinion
of Counsel (which shall not be at the expense of the Trustee), addressed to the
Trustee and the Master Servicer, to the effect that the holding by REMIC 1 of
such REO Property subsequent to the close of the third taxable year following
the taxable year in which REMIC 1 acquires ownership of such REO Property will
not result in the imposition on REMIC 1 of taxes on "prohibited transactions"
thereof, as defined in Section 860F of the Code, or cause any of REMIC 1, REMIC
2 or REMIC 3 to fail to qualify as a REMIC under the REMIC Provisions or
comparable provisions of the laws of the State of California at any time that
any Certificates are outstanding. The Master Servicer shall manage, conserve,


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protect and operate each REO Property for the Certificateholders solely for the
purpose of its prompt disposition and sale in a manner which does not cause such
REO Property to fail to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) or result in the receipt by any of REMIC 1, REMIC 2 or REMIC
3 of any "income from non-permitted assets" within the meaning of Section
860F(a)(2)(B) of the Code or any "net income from foreclosure property" which is
subject to taxation under the REMIC Provisions. Pursuant to its efforts to sell
such REO Property, the Master Servicer shall either itself or through an agent
selected by the Master Servicer protect and conserve such REO Property in the
same manner and to such extent as is customary in the locality where such REO
Property is located and may, incident to its conservation and protection of the
interests of the Certificateholders, rent the same, or any part thereof, as the
Master Servicer deems to be in the best interest of the Certificateholders for
the period prior to the sale of such REO Property.

               Any REO Disposition shall be for cash only (unless changes in the
REMIC Provisions made subsequent to the Startup Day allow a sale for other
consideration).

               The Master Servicer shall segregate and hold all funds collected
and received in connection with the operation of any REO Property separate and
apart from its own funds and general assets. The Master Servicer shall deposit,
or cause to be deposited, on a daily basis in the Custodial Account all revenues
received with respect to the REO Properties, net of any directly related
expenses incurred or withdraw therefrom funds necessary for the proper
operation, management and maintenance of the REO Property.

               If as of the date of acquisition of title to any REO Property
there remain outstanding unreimbursed Servicing Advances with respect to such
REO Property or any outstanding Advances allocated thereto the Master Servicer,
upon an REO Disposition, shall be entitled to reimbursement for any related
unreimbursed Servicing Advances and any unreimbursed related Advances as well as
any unpaid Master Servicing Fees and Sub-Servicing Fees from proceeds received
in connection with the REO Disposition, as further provided in Section 3.15. The
Master Servicer shall not be obligated to advance any amounts with respect to an
REO Property if, in its good faith judgment, the Master Servicer determines that
such advance would constitute a Nonrecoverable Advance.

               The REO Disposition shall be carried out by the Master Servicer
at such price and upon such terms and conditions as the Master Servicer shall
determine.

               The Master Servicer shall deposit the proceeds from the REO
Disposition, net of any payment to the Master Servicer as provided above, in the
Custodial Account upon receipt thereof for distribution in accordance with
Section 4.01; provided, that any such net proceeds received by the Master
Servicer which are in excess of the applicable Stated Principal Balance plus all
unpaid REO Imputed Interest thereon through the last day of the month in which
the REO Disposition occurred ("Excess Proceeds") shall be retained by the Master
Servicer as additional servicing compensation.



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               With respect to any Mortgage Loan as to which the Master Servicer
has received notice of, or has actual knowledge of, the presence of any toxic or
hazardous substance on the Mortgaged Property, the Master Servicer shall not, on
behalf of the Trustee, either (i) obtain title to the related Mortgaged Property
as a result of or in lieu of foreclosure or otherwise, or (ii) otherwise acquire
possession of, the related Mortgaged Property, unless the Master Servicer has,
at least 30 days prior to taking such action, obtained and delivered to the
Trustee an environmental audit report prepared by a Person who regularly
conducts environmental audits using customary industry standards. The Master
Servicer shall take such action as it deems to be in the best economic interest
of the Trust Fund (other than proceeding against the Mortgaged Property) and is
hereby authorized at such time as it deems appropriate to release such Mortgaged
Property from the lien of the related Mortgage.

               The cost of the environmental audit report contemplated by this
Section 3.22 shall be advanced by the Master Servicer as an expense of the Trust
Fund, and the Master Servicer shall be reimbursed therefor from the Custodial
Account as provided in Section 3.11, any such right of reimbursement being prior
to the rights of the Certificateholders to receive any amount in the Custodial
Account.

               If the Master Servicer determines, as described above, that it is
in the best economic interest of the Trust Fund to take such actions as are
necessary to bring any such Mortgaged Property in compliance with applicable
environmental laws, or to take such action with respect to the containment,
clean-up or remediation of hazardous substances, hazardous materials, hazardous
wastes, or petroleum-based materials affecting any such Mortgaged Property, then
the Master Servicer shall take such action as it deems to be in the best
economic interest of the Trust Fund. The cost of any such compliance,
containment, clean-up or remediation shall be advanced by the Master Servicer as
an expense of the Trust Fund, and the Master Servicer shall be entitled to be
reimbursed therefor from the Custodial Account as provided in Section 3.11, any
such right of reimbursement being prior to the rights of the Certificateholders
to receive any amount in the Custodial Account.

               SECTION 3.23.  Additional Obligations of the Master Servicer.

               On each Certificate Account Deposit Date, the Master Servicer
shall deliver to the Trustee for deposit in the Certificate Account from its own
funds and without any right of reimbursement therefor, a total amount equal to
the amount of Compensating Interest for the related Distribution Date.

               SECTION 3.24   Additional Obligations of the Company.

               The Company agrees that on or prior to the tenth day after the
Closing Date, the Company shall provide the Trustee with a written notification,
substantially in the form of Exhibit J attached hereto, relating to each Class
of Certificates, setting forth (i) in the case of each Class of such
Certificates, (a) if less than 10% of the aggregate Certificate Principal
Balance or Notional Amount of such Class of Certificates has been sold as of
such date, the value calculated pursuant to clause (b)(iii) of Exhibit J hereto,
or, (b) if 10% or more of such Class of Certificates has been sold


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as of such date but no single price is paid for at least 10% of the aggregate
Certificate Principal Balance or Notional Amount of such Class of Certificates,
then the weighted average price at which the Certificates of such Class were
sold and the aggregate percentage of Certificates of such Class sold, (c) the
first single price at which at least 10% of the aggregate Certificate Principal
Balance or Notional Amount of such Class of Certificates was sold, or (d) if any
Certificates of each Class of Certificates are retained by the Company or an
affiliate corporation, or are delivered to the Seller, the fair market value of
such Certificates as of the Closing Date, (ii) the Prepayment Assumption used in
pricing the Certificates, and (iii) such other information as to matters of fact
as the Trustee may reasonably request to enable it to comply with its reporting
requirements with respect to each Class of such Certificates to the extent such
information can in the good faith judgment of the Company be determined by it.

               SECTION 3.25. Periodic Filings with the Securities and Exchange
                             Commission; Additional Information.

               The Trustee shall prepare or cause to be prepared for filing with
the Commission any and all reports, statements and information respecting the
Trust Fund and/or the Certificates required to be filed with the Commission
pursuant to the Securities Exchange Act of 1934, as amended, and shall solicit
any and all proxies of the Certificateholders whenever such proxies are required
to be solicited, pursuant to the Securities Exchange Act of 1934, as amended.
The Company shall promptly file, and exercise its reasonable best efforts to
obtain a favorable response to, no-action requests with, or other appropriate
exemptive relief from, the Commission seeking the usual and customary exemption
from such reporting requirements granted to issuers of securities similar to the
Certificates. Fees and expenses incurred by the Trustee in connection with this
Section shall not be reimbursable from the Trust Fund.

               The Master Servicer and the Company each agree to promptly
furnish to the Trustee, from time to time upon request, such further
information, reports and financial statements within their respective control
related to this Agreement and the Mortgage Loans as the Trustee reasonably deems
appropriate to prepare and file all necessary reports with the Commission.

               SECTION 3.26.          Administration of Buydown Funds.

               (a) With respect to any Buydown Mortgage Loan, the Sub-Servicer
has deposited Buydown Funds in an account that satisfies the requirements for a
Sub-Servicing Account (the "Buydown Account"). The Master Servicer shall cause
the Sub-Servicing Agreement to require that upon receipt from the Mortgagor of
the amount due on a Due Date for each Buydown Mortgage Loan, the Sub-Servicer
will withdraw from the Buydown Account the predetermined amount that, when added
to the amount due on such date from the Mortgagor, equals the full Monthly
Payment and transmit that amount in accordance with the terms of the
Sub-Servicing Agreement to the Master Servicer together with the related payment
made by the Mortgagor or advanced by the Sub-Servicer.

               (b) If the Mortgagor on a Buydown Mortgage Loan prepays such loan
in its entirety during the period (the "Buydown Period") when Buydown Funds are
required to be applied


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to such Buydown Mortgage Loan, the Sub-Servicer shall be required to withdraw
from the Buydown Account and remit any Buydown Funds remaining in the Buydown
Account in accordance with the related buydown agreement. The amount of Buydown
Funds which may be remitted in accordance with the related buydown agreement may
reduce the amount required to be paid by the Mortgagor to fully prepay the
related Mortgage Loan. If the Mortgagor on a Buydown Mortgage Loan defaults on
such Mortgage Loan during the Buydown Period and the property securing such
Buydown Mortgage Loan is sold in the liquidation thereof (either by the Master
Servicer or the insurer under any related Primary Insurance Policy), the
Sub-Servicer shall be required to withdraw from the Buydown Account the Buydown
Funds for such Buydown Mortgage Loan still held in the Buydown Account and remit
the same to the Master Servicer in accordance with the terms of the
Sub-Servicing Agreement for deposit in the Custodial Account or, if instructed
by the Master Servicer, pay to the insurer under any related Primary Insurance
Policy if the Mortgaged Property is transferred to such insurer and such insurer
pays all of the loss incurred in respect of such default. Any amount so remitted
pursuant to the preceding sentence will be deemed to reduce the amount owed on
the Mortgage Loan.


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                                   ARTICLE IV

                         PAYMENTS TO CERTIFICATEHOLDERS


               SECTION 4.01.          Distributions.

               (a) The Trustee shall establish and maintain a Certificate
Account, in which the Master Servicer shall cause to be deposited on behalf of
the Trustee on or before 5:00 P.M. New York time on each Certificate Account
Deposit Date by wire transfer of immediately available funds an amount equal to
the sum of (i) any Advance for the immediately succeeding Distribution Date,
(ii) any amount required to be deposited in the Certificate Account pursuant to
Sections 3.11, 3.13, 3.22 or 3.23, (iii) all other amounts constituting the
Available Distribution Amount for the immediately succeeding Distribution Date
and (iv) any amounts on deposit in the Custodial Account representing Prepayment
Charges collected by the Master Servicer (and any Master Servicer Prepayment
Charge Payment Amounts paid by, or collected on behalf of the Trust Fund by, the
Master Servicer or any Sub-Servicer), other than any such Prepayment Charges or
Master Servicer Prepayment Charge Payment Amounts relating to Principal
Prepayments that occurred after the end of the related Prepayment Period.

               On each Distribution Date, prior to making any other
distributions referred to in Section 4.01, the Trustee shall withdraw from the
Certificate Account and pay itself the Trustee's Fee for such Distribution Date.

               On each Distribution Date the Trustee shall distribute to each
Certificateholder of record as of the next preceding Record Date (other than as
provided in Section 9.01 respecting the final distribution) either in
immediately available funds (by wire transfer or otherwise) to the account of
such Certificateholder at a bank or other entity having appropriate facilities
therefor, if such Certificateholder has so notified the Trustee at least 5
Business Days prior to the related Record Date, or otherwise by check mailed to
such Certificateholder at the address of such Holder appearing in the
Certificate Register, such Certificateholder's share (based on the aggregate of
the Percentage Interests represented by Certificates of the applicable Class
held by such Holder) of the amounts required to be distributed to such Holder
pursuant to this Section 4.01.

               On each Distribution Date, the Trustee shall withdraw from the
Certificate Account that portion of Available Distribution Amount for such
Distribution Date consisting of the Interest Remittance Amount for such
Distribution Date, and make the following disbursements and transfers in the
order of priority described below, in each case to the extent of the Interest
Remittance Amount remaining for such Distribution Date:

                (i) to the Holders of the Class A-IO Certificates, the
        related Monthly Interest Distributable Amount for each such Class for
        such Distribution Date;



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               (ii) to the Holders of the Class A-IO Certificates, the related
        Unpaid Interest Shortfall Amount, if any, for each such Class for such
        Distribution Date;

               (iii) (a) from the remaining Interest Remittance Amount in
        respect of the Group I Loans, to the Class A-I-1, Class A-I-2, Class
        A-I-4 and Class A-I-5 Certificates, and the Class A-I-3 Component of the
        Class A-3 Certificates, pro rata, the related Monthly Interest
        Distributable Amount for such Class or Class A-3 Component for such
        Distribution Date, and (b) from the remaining Interest Remittance Amount
        in respect of the Group II Loans, to the Class A-II-1 Certificates and
        Class A-II-3 Certificates, and the Class A-3 Certificates in respect of
        the Class A-II-2 Component, pro rata, the related Monthly Interest
        Distributable Amount for such Class or Class A-3 Component for such
        Distribution Date;

               (iv) (a) from the remaining Interest Remittance Amount in respect
        of the Group I Loans, to the Class A-I-1, Class A-I-2, Class A-I-4 and
        Class A-I-5 Certificates, and the Class A-3 Certificates in respect of
        the Class A-I-3 Component, pro rata, the related Unpaid Interest
        Shortfall for such Class or Class A-3 Component for such Distribution
        Date, and (b) from the remaining Interest Remittance Amount in respect
        of the Group II Loans, to the Class A-II-1 Certificates and Class A-II-3
        Certificates, and the Class A-3 Certificates in respect of the Class
        A-II-2 Component, pro rata, the related Unpaid Interest Shortfall for
        such Class or Class A-3 Component for such Distribution Date;

               (v) (a) from the remaining Interest Remittance Amount in respect
        of the Group I Loans, to the Class A-II-1 Certificates and Class A-II-3
        Certificates, and the Class A-3 Certificates in respect of the Class
        A-II-2 Component, pro rata, any remaining Unpaid Interest Shortfall for
        such Class or Class A-3 Component for such Distribution Date, and (b)
        from the remaining Interest Remittance Amount in respect of the Group II
        Loans, to the Class A-I-1, Class A-I-2, Class A-I-4 and Class A-I-5
        Certificates, and the Class A-3 Certificates in respect of the Class
        A-II-2 Component, pro rata, any remaining Unpaid Interest Shortfall for
        such Class or Class A-3 Component for such Distribution Date;

               (vi) to the Holders of the Class M-1 Certificates, the Monthly
        Interest Distributable Amount for such Class for such Distribution Date;

               (vii) to the Holders of the Class M-2 Certificates, the Monthly
        Interest Distributable Amount for such Class for such Distribution Date;
        and

               (viii) to the Holders of the Class B Certificates, the Monthly
        Interest Distributable Amount for such Class for such Distribution Date.

               (b) On each Distribution Date (x) prior to the Stepdown Date or
(y) on which a Trigger Event is in effect, the Trustee shall withdraw from the
Certificate Account an amount equal to the Principal Distribution Amount and
distribute to the Certificateholders the following amounts, in the following
order of priority, in each case to the extent of the Principal Distribution
Amount remaining for such Distribution Date:


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               (i) first, (a) to the Class A-I-1 Certificates, the Class A-I-2
        Certificates, the Class A-3 Certificates in respect of the Class A-I-3
        Component, the Class A-I-4 Certificates and the Class A-I-5
        Certificates, sequentially, in that order, the Principal Distribution
        Amount for such Distribution Date from the Group I Loans and (b) to the
        holders of the Class A-II-1 Certificates, the Class A-3 Certificates in
        respect of the Class A-II-2 Component, and the Class A-II-3
        Certificates, sequentially, in that order, the Principal Distribution
        Amount for such Distribution Date from the Group II Loans, in each case
        until the Certificate Principal Balances or Component Principal Balances
        thereof are reduced to zero; provided that if on any Distribution Date,
        the Class A-I Certificates or Class A-II Certificates are no longer
        outstanding, the Principal Distribution Amount will be allocated to the
        Class A-II Certificates and Class A-I Certificates, respectively, in the
        order described above;

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

               (iii) third, to the holders of the Class M-2 Certificates, until
        the Certificate Principal Balance thereof has been reduced to zero; and

               (iv) fourth, to the holders of the Class B Certificates, until
        the Certificate Principal Balance thereof has been reduced to zero.

               (c) On each Distribution Date (x) on or after the Stepdown Date
and (y) on which a Trigger Event is not in effect, the Trustee shall withdraw
from the Certificate Account an amount equal to the Principal Distribution
Amount and distribute to the Certificateholders the following amounts, in the
following order of priority, in each case to the extent of the Principal
Distribution Amount remaining for such Distribution Date:

               (i) first, from the Class A Principal Distribution Amount, (a) to
        the Class A-I-1 Certificates, the Class A-I-2 Certificates, the Class
        A-3 Certificates in respect of the Class A-I-3 Component, the Class
        A-I-4 Certificates and the Class A-I-5 Certificates, sequentially, in
        that order, the pro rata portion of the Class A Principal Distribution
        Amount, based on the Principal Remittance Amount for such Distribution
        Date from the Group I Loans, and (b) to the holders of the Class A-II-1
        Certificates, the Class A-3 Certificates in respect of the Class A-II-2
        Component, and the Class A-II-3 Certificates, sequentially, in that
        order, the pro rata portion of the Class A Principal Distribution
        Amount, based on the Principal Remittance Amount for such Distribution
        Date from the Group II Loans, in each case until the Certificate
        Principal Balances or Component Principal Balances thereof, as
        applicable, are reduced to zero; provided that if on any Distribution
        Date, the Class A-I Certificates or Class A-II Certificates are no
        longer outstanding, the Class A Principal Distribution Amount will be
        allocated to the Class A-II Certificates and Class A-I Certificates,
        respectively, in the order described above;

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


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

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

               (d) On each Distribution Date, the Net Monthly Excess Cashflow
shall be distributed in the following order of priority, in each case to the
extent of the Net Monthly Excess Cashflow remaining for such Distribution Date:

               (i) to the Holders of the Class or Classes of Certificates then
        entitled to receive distributions in respect of principal, in an amount
        equal to any Extra Principal Distribution Amount, payable to such
        Holders as part of the Principal Distribution Amount as described under
        Section 4.01(b) or Section 4.01(c) above, as applicable;

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

               (iii) to the Holders of the Class M-1 Certificates, in an amount
        equal to the Allocated Realized Loss Amount allocable to such
        Certificates;

               (iv) to the Holders of the Class M-2 Certificates, in an amount
        equal to the Unpaid Interest Shortfall Amount allocable to such
        Certificates;

               (v) to the Holders of the Class M-2 Certificates, in an
        amount equal to the Allocated Realized Loss Amount allocable to such
        Certificates;

               (vi) to the Holders of the Class B Certificates, in an amount
        equal to the Unpaid Interest Shortfall Amount allocable to such
        Certificates;

               (vii) to the Holders of the Class B Certificates, in an amount
        equal to the Allocated Realized Loss Amount allocable to such
        Certificates;

               (viii) to the Holders of the Class C Certificates, interest equal
        to the Monthly Interest Distributable Amount for such Class and
        principal equal to any remaining Overcollateralization Release Amount
        for such Distribution Date;

               (ix) if such Distribution Date follows the Prepayment Period
        during which occurs the latest date on which a Prepayment Charge may be
        required to be paid in respect of any Mortgage Loans, to the Holders of
        the Class P Certificates, in reduction of the Certificate Principal
        Balance thereof, until the Certificate Principal Balance thereof is
        reduced to zero; and



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               (x) any remaining amounts to the Holders of the Class R
        Certificates (in respect of the appropriate Residual Interest).

               (e) On each Distribution Date, all amounts representing
Prepayment Charges in respect of the Mortgage Loans received during the related
Prepayment Period and any Master Servicer Prepayment Charge Amounts paid by the
Master Servicer during the related Prepayment Period will be withdrawn from the
Certificate Account and distributed by the Trustee to the Holders of the Class P
Certificates and shall not be available for distribution to the Holders of any
other Class of Certificates. The payment of the foregoing amounts to the Holders
of the Class P Certificates shall not reduce the Certificate Principal Balances
thereof.

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

               (g) The Trustee, upon the written direction of the Master
Servicer shall invest or cause the institution maintaining the Certificate
Account to invest the funds in the Certificate Account in Permitted Investments
designated in the name of the Trustee for the benefit of the Certificateholders,
which shall mature not later than the Business Day next preceding the
Distribution Date next following the date of such investment and shall not be
sold or disposed of prior to maturity. All income and gain realized from any
such investment prior to the Business Day next preceding the Distribution Date
shall be for the benefit of the Master Servicer. The amount of any losses
incurred in respect of any such investments shall be deposited in the
Certificate Account by the Master Servicer out of its own funds immediately as
realized without any right of reimbursement.

               (h) Except as otherwise provided in Section 9.01, if the Master
Servicer anticipates that a final distribution with respect to any Class of
Certificates will be made on the next Distribution Date, the Master Servicer
shall, no later than the Determination Date in the month of such final
distribution, notify the Trustee and the Trustee shall, no later than two (2)
Business Days after such Determination Date, mail on such date to each Holder of
such Class of Certificates a notice to the effect that: (i) the Trustee
anticipates that the final distribution with respect to such Class of
Certificates will be made on such Distribution Date but only upon presentation
and surrender of such Certificates at the office of the Trustee or as otherwise
specified therein, and (ii) no interest shall accrue on such Certificates from
and after the end of the prior calendar month.

               Any funds not distributed to any Holder or Holders of
Certificates of such Class on such Distribution Date because of the failure of
such Holder or Holders to tender their Certificates


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shall, on such date, be set aside and held in trust and credited to the account
of the appropriate non- tendering Holder or Holders. If any Certificates as to
which notice has been given pursuant to this Section 4.01(h) shall not have been
surrendered for cancellation within six months after the time specified in such
notice, the Trustee shall mail a second notice to the remaining non-tendering
Certificateholders to surrender their Certificates for cancellation in order to
receive the final distribution with respect thereto. If within six months after
the second notice all such Certificates shall not have been surrendered for
cancellation, the Trustee shall take reasonable steps as directed by the
Company, or appoint an agent to take reasonable steps, to contact the remaining
non-tendering Certificateholders concerning surrender of their Certificates. The
costs and expenses of maintaining the funds in trust and of contacting such
Certificateholders shall be paid out of the assets remaining in the Trust Fund.
If within nine months after the second notice any such Certificates shall not
have been surrendered for cancellation, the Class R Certificateholders shall be
entitled to all unclaimed funds and other assets which remain subject hereto. No
interest shall accrue or be payable to any Certificateholder on any amount held
in trust as a result of such Certificateholder's failure to surrender its
Certificate(s) for final payment thereof in accordance with this Section
4.01(h).

               SECTION 4.02.          Statements to Certificateholders.

               (a) On each Distribution Date, based, as applicable, on
information provided to it by the Master Servicer, the Trustee shall prepare and
make available on the Trustee's website,
http://www-apps.gis.deutsche-bank.com/invr (or deliver at the recipient's
option), to each Holder of the Regular Certificates, the Master Servicer and the
Rating Agencies, a statement as to the distributions made on such Distribution
Date:

               (i) (A) the amount of the distribution made on such Distribution
        Date to the Holders of each Class of Regular Certificates (other than
        the Class A-IO Certificates), including, with respect to the Class A-3
        Certificates, the Class A-3 Components, separately identified, allocable
        to principal and (B) the amount of the distribution made on such
        Distribution Date to the Holders of the Class P Certificates allocable
        to Prepayment Charges and Master Servicer Prepayment Charge Payment
        Amounts;

               (ii) the amount of the distribution made on such Distribution
        Date to the Holders of each Class of Regular Certificates (other than
        the Class P Certificates), including, with respect to the Class A-3
        Certificates, the Class A-3 Components, allocable to interest,
        separately identified;

               (iii) the Pass-Through Rate on each Class of Regular Certificates
        (other than the Class P Certificates), including, with respect to the
        Class A-3 Certificates, the Class A-3 Components, for such Distribution
        Date;

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

               (v) the number and aggregate Stated Principal Balance of the
        Mortgage Loans as of the end of the related Due Period;


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               (vi) the Overcollateralized Amount, the Excess Overcollateralized
        Amount, the Overcollateralization Release Amount, the
        Overcollateralization Deficiency Amount and the Overcollateralization
        Target Amount for such Distribution Date;

               (vii) the aggregate Certificate Principal Balance, Component
        Principal Balance or Notional Amount, as applicable, of each Class of
        Regular Certificates, including, with respect to the Class A-3
        Certificates, the Class A-3 Components, after giving effect to the
        amounts distributed on such Distribution Date (in the case of each Class
        of the Mezzanine Certificates, separately identifying any reduction
        thereof due to the allocation of Realized Losses thereto);

               (viii) the number and aggregate Stated Principal Balance of
        Mortgage Loans (a) delinquent 31 to 60 days, (b) delinquent 61 to 90
        days, (c) delinquent 91 days or more, in each case as of the end of the
        calendar month prior to such Distribution Date;

               (ix) the number, aggregate principal balance and book value of
        any REO Properties as of the close of business on the last day of the
        calendar month preceding the month in which such Distribution Date
        occurs;

               (x) the weighted average remaining term to maturity, weighted
        average Mortgage Rate and weighted average Net Mortgage Rate of the
        Mortgage Loans as of the close of business on the first day of the
        calendar month in which such Distribution Date occurs;

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

               (xii) the aggregate amount of Realized Losses incurred during the
        related Prepayment Period and the cumulative amount of Realized Losses;

               (xiii) the aggregate amount of extraordinary Trust Fund expenses
        withdrawn from the Custodial Account or the Certificate Account for such
        Distribution Date;

               (xiv) the aggregate amount of any Prepayment Interest Shortfalls
        for such Distribution Date, to the extent not covered by payments by the
        Master Servicer pursuant to Section 3.23, and the aggregate amount of
        Relief Act Interest Shortfalls for such Distribution Date;

               (xv) the Monthly Interest Distributable Amount in respect of each
        Class of the Class A Certificates and Mezzanine Certificates, including,
        with respect to the Class A-3 Certificates, the Class A-3 Components,
        for such Distribution Date and the Unpaid Interest Shortfall Amount, if
        any, with respect to each Class of the Class A Certificates, including,
        with respect to the Class A-3 Certificates, the Class A-3 Components,
        and Mezzanine Certificates for such Distribution Date;



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               (xvi) (A) the Overcollateralization Target Amount, (B) the
        Overcollateralized Amount and (C) the amount, if any, by which the
        Overcollateralization Target Amount exceeds the Overcollateralized
        Amount, in each case after giving effect to the distribution made on the
        Regular Certificates on such Distribution Date;

               (xvii)  when the Stepdown Date or a Trigger Event has occurred;

               (xviii) the aggregate amount of servicing compensation received
        by the Master Servicer with respect to the related Due Period and such
        other customary information as the Trustee deems necessary or desirable,
        or which a Certificateholder reasonably requests, to enable
        Certificateholders to prepare their tax returns; and

               (xix) the Available Distribution Amount for such Distribution
        Date.

               In the case of information furnished pursuant to subclauses (i)
and (ii) above, the amounts shall also be expressed as a dollar amount per
Single Certificate.

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

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

               On each Distribution Date the Trustee shall prepare and make
available on the Trustee's website, http://www-apps.gis.deutsche-bank.com/invr
(or deliver at the recipient's option), to each Holder of a Class R Certificate
a copy of the reports forwarded to the other Certificateholders on such
Distribution Date.

               Within a reasonable period of time after the end of each calendar
year, the Trustee shall prepare and forward, to each Person who at any time
during the calendar year was a Holder of a Class R Certificate a statement
containing the information provided pursuant to the previous paragraph
aggregated for such calendar year or applicable portion thereof during which
such Person was a Certificateholder. Such obligation of the Trustee shall be
deemed to have been satisfied to the extent that substantially comparable
information shall be provided by the Trustee pursuant to any requirements of the
Code as from time to time are in force.



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               SECTION 4.03. Remittance Reports; Advances by the Master
                             Servicer.

               (a) On the Business Day following each Determination Date, the
Master Servicer shall deliver to the Trustee a report, prepared as of the close
of business on the Determination Date (the "Remittance Report"), in the form of
an electromagnetic tape or disk. The Remittance Report and any written
information supplemental thereto shall include such information with respect to
the Mortgage Loans that is required by the Trustee for purposes of making the
calculations and preparing the statement described in Sections 4.01 and 4.02, as
set forth in written specifications or guidelines issued by the Trustee from
time to time. The Trustee shall have no obligation to recompute, recalculate or
verify any information provided to it by the Master Servicer.

               (b) The Master Servicer shall determine the aggregate amount of
Advances required to be made for the related Distribution Date, which shall be
in an aggregate amount equal to the sum of (1) the aggregate amount of Monthly
Payments (with each interest portion thereof adjusted to the Mortgage Rate less
the sum of the Master Servicing Fee Rate, the Sub-Servicing Fee Rate and any
applicable Radian PMI Policy Rate), other than Balloon Payments, less the amount
of any related Debt Service Reductions or reductions in the amount of interest
collectable from the Mortgagor pursuant to the Relief Act, on the Outstanding
Mortgage Loans as of the related Due Date, which Monthly Payments were
delinquent as of the close of business as of the related Determination Date plus
(2) with respect to each Balloon Loan delinquent in respect of its Balloon
Payment as of the close of business on the related Determination Date, an amount
equal to the assumed Monthly Payment (net of the related Master Servicing Fees
and Sub-Servicing Fees) that would have been due on the related Due Date based
on the original principal amortization scheduled for such Balloon Loan until
such Balloon Loan is finally liquidated; provided that no Advance shall be made
if it would be a Nonrecoverable Advance. On or before 4:00 P.M. New York time on
each Certificate Account Deposit Date, the Master Servicer shall either (i)
deposit in the Certificate Account from its own funds, or funds received
therefor from the Sub-Servicers, an amount equal to the Advances to be made by
the Master Servicer in respect of the related Distribution Date, (ii) withdraw
from amounts on deposit in the Custodial Account and deposit in the Certificate
Account all or a portion of the amounts held for future distribution in
discharge of any such Advance, or (iii) make advances in the form of any
combination of (i) and (ii) aggregating the amount of such Advance. Any portion
of the amounts held for future distribution so used shall be replaced by the
Master Servicer by deposit in the Certificate Account on or before 1:00 P.M. New
York time on any future Certificate Account Deposit Date to the extent that
funds attributable to the Mortgage Loans that are available in the Custodial
Account for deposit in the Certificate Account on such Certificate Account
Deposit Date shall be less than payments to Certificateholders required to be
made on the following Distribution Date. The amount of any reimbursement
pursuant to Section 3.11 in respect of outstanding Advances on any Distribution
Date shall be allocated to specific Monthly Payments due but delinquent for
previous Due Periods, which allocation shall be made, to the extent practicable,
to Monthly Payments which have been delinquent for the longest period of time.
Such allocations shall be conclusive for purposes of reimbursement to the Master
Servicer from recoveries on related Mortgage Loans pursuant to Section 3.11. The
determination by the Master Servicer that it has made a Nonrecoverable Advance
or that any proposed Advance, if made, would constitute a Nonrecoverable
Advance, shall be evidenced by a certificate of a Servicing Officer delivered to
the


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Seller and the Trustee with the Remittance Report. The Trustee shall deposit all
funds it receives pursuant to this Section 4.03 into the Certificate Account.

               (c) In the event that the Master Servicer determines as of any
Certificate Account Deposit Date that it will be unable to deposit in the
Certificate Account an amount equal to the Advance required to be made for the
immediately succeeding Distribution Date in the amount determined by the Master
Servicer pursuant to paragraph (b) above, it shall give notice to the Trustee of
its inability to Advance (such notice may be given by telecopy), not later than
4:00 P.M., New York time, on such date, specifying the portion of such amount
that it will be unable to deposit. Not later than 4:00 P.M., New York time, on
the earlier of (x) two Business Days following such Certificate Account Deposit
Date or (y) the Business Day preceding the related Distribution Date, unless by
such time the Master Servicer shall have directly or indirectly deposited in the
Certificate Account the entire amount of the Advances required to be made for
the related Distribution Date, pursuant to Section 7.01, the Trustee shall (a)
terminate all of the rights and obligations of the Master Servicer under this
Agreement in accordance with Section 7.01 and (b) assume the rights and
obligations of the Master Servicer hereunder, including the obligation to
deposit in the Certificate Account an amount equal to the Advance for the
immediately succeeding Distribution Date.

               SECTION 4.04.    Distributions on the REMIC Regular Interests.

               On each Distribution Date, the Trustee shall cause the Available
Distribution Amount, in the following order of priority, to be distributed by
REMIC 1 to REMIC 2 on account of the REMIC 1 Regular Interests or withdrawn from
the Certificate Account and distributed to the Holders of the Class R
Certificates (in respect of the Class R-1 Interest), as the case may be:

               (1) first, to the Holders of REMIC 1 Regular Interest LT1D, in an
        amount equal to (A) the Uncertificated Accrued Interest for such
        Distribution Date, plus (B) any amounts in respect thereof remaining
        unpaid from previous Distribution Dates and second, to Holders of REMIC
        1 Regular Interest LT1A, REMIC 1 Regular Interest LT1B, REMIC 1 Regular
        Interest LT1C and REMIC 1 Regular Interest LT1P in an amount equal to
        (A) the Uncertificated Accrued Interest for such Distribution Date, plus
        (B) any amounts in respect thereof remaining unpaid from previous
        Distribution Dates; and

               (2) second, to the Holders of REMIC 1 Regular Interests, in an
        amount equal to the remainder of the Available Distribution Amount for
        such Distribution Date after the distributions made pursuant to clause
        (1) above, allocated in the following order of priority:

                              (A) to the Holders of REMIC 1 Regular Interest
               LT1P, on the Distribution Date immediately following the
               expiration of the latest Prepayment Charge as identified on the
               Prepayment Charge Schedule or any Distribution Date thereafter
               until $100 has been distributed pursuant to this clause (A);

                              (B) with respect to the Group 1 Loans, to the
               Holders of REMIC 1 Regular Interest LT1A and REMIC 1 Regular
               Interest LT1B, 99% and 1%,


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               respectively, until the Uncertificated Principal Balance of those
               REMIC 1 Regular Interests are reduced to zero;

                              (C) with respect to the Group 2 Loans, to the
               Holders of REMIC Regular Interest LT1A and REMIC 1 Regular
               Interest LT1C, 99% and 1%, respectively, until the Uncertificated
               Principal Balance of those REMIC 1 Regular Interests are reduced
               to zero;

                              (D) to the Holders of REMIC 1 Regular Interest
               LT1D, until the Uncertificated Principal Balance of REMIC 1
               Regular Interest LT1D is reduced to zero; and

                              (E) any remaining amount to the Holders of the
               Class R Certificates (in respect of the Class R-1 Interest).

               On each Distribution Date, all amounts representing Prepayment
Charges in respect of the Mortgage Loans received during the related Prepayment
Period and any Master Servicer Prepayment Charge Payment Amounts paid by the
Master Servicer during the related Prepayment Period will be distributed by
REMIC 1 to the Holders of REMIC 1 Regular Interest LT1P. The payment of the
foregoing amounts to the Holders of REMIC 1 Regular Interest LT1P shall not
reduce the Uncertificated Principal Balance thereof.

               On each Distribution Date, the Trustee shall cause in the
following order of priority, the following amounts to be distributed by REMIC 2
to REMIC 3 on account of the REMIC 2 Regular Interests or withdrawn from the
Distribution Account and distributed to the holders of the Class R Certificates
(in respect of the Class R-2 Interest), as the case may be:

               (i) first, to the extent of Available Funds, to the Holders of
        REMIC 2 Regular Interest A-IO, in an amount equal to (A) the
        Uncertificated Accrued Interest for such Distribution Date, plus (B) any
        amounts in respect thereof remaining unpaid from previous Distribution
        Dates and then to Holders of REMIC 2 Regular Interest LT2-1AA, REMIC 2
        Regular Interest LT2-AI1, REMIC 2 Regular Interest LT2-AI2, REMIC 2
        Regular Interest LT2-AI3, REMIC 2 Regular Interest LT2-AI4, REMIC 2
        Regular Interest LT2-AI5, REMIC 2 Regular Interest LT2-1M1, REMIC 2
        Regular Interest LT2-1M2, REMIC 2 Regular Interest LT2-1B, REMIC 2
        Regular Interest LT2-1ZZ, REMIC 2 Regular Interest LT2-2AA, REMIC 2
        Regular Interest LT2-AII1, REMIC 2 Regular Interest LT2-AII2, REMIC 2
        Regular Interest LT2-AII3, REMIC 2 Regular Interest LT2-2M1, REMIC 2
        Regular Interest LT2-2M2, REMIC 2 Regular Interest LT2-2B, REMIC 2
        Regular Interest LT2-2ZZ and REMIC 2 Regular Interest LT2P, PRO RATA, in
        an amount equal to (A) the Uncertificated Accrued Interest for such
        Distribution Date, plus (B) any amounts in respect thereof remaining
        unpaid from previous Distribution Dates. Amounts payable as
        Uncertificated Accrued Interest in respect of REMIC 2 Regular Interest
        LT2-1ZZ and REMIC 2 Regular Interest LT2-2ZZ shall be reduced when the
        sum of REMIC 2 Group 1 Overcollateralized Amount and REMIC 2 Group 2
        Overcollateralized Amount is less than the REMIC 2


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        Overcollateralization Target Amount, by the lesser of (x) the amount of
        such difference and (y) the Maximum Uncertificated Accrued Interest
        Deferral Amount, and such amount will be payable to the Holders of REMIC
        2 Regular Interest LT2-AI1, REMIC 2 Regular Interest LT2-AI2, REMIC 2
        Regular Interest LT2-AI3, REMIC 2 Regular Interest LT2-AI4, REMIC 2
        Regular Interest LT2-AI5, REMIC 2 Regular Interest LT2-1M1, REMIC 2
        Regular Interest LT2-1M2, REMIC 2 Regular Interest LT2-1B, REMIC 2
        Regular Interest LT2-AII1, REMIC 2 Regular Interest LT2-AII2, REMIC 2
        Regular Interest LT2-AII3, REMIC 2 Regular Interest LT2-2M1, REMIC 2
        Regular Interest LT2-2M2 and REMIC 2 Regular Interest LT2-2B in the same
        proportion as the Overcollateralization Increase Amount is allocated to
        the Corresponding Certificates or Components;

               (ii) second, to the Holders of REMIC 2 Regular Interests, in an
        amount equal to the remainder of the Available Funds for such
        Distribution Date after the distributions made pursuant to clause (i)
        above, allocated as follows:

                       (a) with respect to the Group 1 Loans, to the Holders of
               REMIC 2 Regular Interest LT2-1AA, 98.00% of such remainder, until
               the Uncertificated Principal Balance of such Uncertificated REMIC
               2 Regular Interest is reduced to zero, and with respect to the
               Group 2 Loans, to the Holders of REMIC 2 Regular Interest
               LT2-2AA, 98.00% of such remainder, until the Uncertificated
               Principal Balance of such Uncertificated REMIC 2 Regular Interest
               is reduced to zero;

                       (b) with respect to the Group 1 Loans, to the Holders of
               REMIC 2 Regular Interest LT2-AI1, REMIC 2 Regular Interest
               LT2-AI2, REMIC 2 Regular Interest LT2-AI3, REMIC 2 Regular
               Interest LT2-AI4, REMIC 2 Regular Interest LT2-AI5, REMIC 2
               Regular Interest LT2-1M1, REMIC 2 Regular Interest LT2-1M2 and
               REMIC 2 Regular Interest LT2-1B, 1.00% of such remainder, in the
               same proportion as principal payments are allocated to the
               Corresponding Certificates, until the Uncertificated Principal
               Balances of such REMIC 2 Regular Interests are reduced to zero;
               and with respect to the Group 2 Loans, to the Holders of REMIC 2
               Regular Interest LT2-AII1, REMIC 2 Regular Interest LT2-AII2,
               REMIC 2 Regular Interest LT2-AII3, REMIC 2 Regular Interest
               LT2-2M1, REMIC 2 Regular Interest LT2-2M2 and REMIC 2 Regular
               Interest LT2-2B, 1.00% of such remainder, in the same proportion
               as principal payments are allocated to the Corresponding
               Certificates, until the Uncertificated Principal Balances of such
               REMIC 2 Regular Interests are reduced to zero;

                       (c) with respect to the Group 1 Loans, to the Holders of
               REMIC 2 Regular Interest LT2-1ZZ, 1.00% of such remainder, until
               the Uncertificated Principal Balance of such REMIC 2 Regular
               Interest is reduced to zero, and with respect to the Group 2
               Loans, to the Holders of REMIC 2 Regular Interest LT2-2ZZ, 1.00%
               of such remainder, until the Uncertificated Principal Balance of
               such REMIC 2 Regular Interest is reduced to zero;



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                       (d) to the Holders of REMIC 2 Regular Interest LT2P, on
               the Distribution Date immediately following the expiration of the
               latest Prepayment Charge as identified on the Prepayment Charge
               Schedule or any Distribution Date thereafter until $100 has been
               distributed pursuant to this clause; then

                       (e) any remaining amount to the Holders of the Class R
               Certificates (in respect of the Class R-2 Interest); and

               (iii) third, to REMIC 2 Regular Interest LT2P, 100% of the amount
        paid in respect of Prepayment Charges and Master Servicer Prepayment
        Charge Payment Amounts on REMIC 1 Regular Interest LT1P;

provided, however, that with respect to the Group 1 Loans, 98.00% and 2.00% of
any principal payments that are attributable to an Overcollateralization Release
Amount shall be allocated to Holders of REMIC 2 Regular Interest LT2-1AA and
REMIC 2 Regular Interest LT2-1ZZ, respectively, to the extent the principal
balance of the Group 1 Loans exceeds the sum of the Uncertificated Principal
Balances of REMIC 2 Regular Interest LT2-1AA, REMIC 2 Regular Interest LT2-AI1,
REMIC 2 Regular Interest LT2-AI2, REMIC 2 Regular Interest LT2-AI3, REMIC 2
Regular Interest LT2-AI4, REMIC 2 Regular Interest LT2-AI5, REMIC 2 Regular
Interest LT2-1M1, REMIC 2 Regular Interest LT2-1M2, REMIC 2 Regular Interest
LT2-1B and REMIC 2 Regular Interest LT2-1ZZ immediately following payments
pursuant to (c) above but prior to any payments pursuant to this proviso, and
with respect to the Group 2 Loans, 98.00% and 2.00% of any principal payments
that are attributable to an Overcollateralization Release Amount shall be
allocated to Holders of REMIC 2 Regular Interest LT2-2AA and REMIC 2 Regular
Interest LT2-2ZZ, respectively, to the extent the principal balance of the Group
2 Loans exceeds the sum of the Uncertificated Principal Balances of REMIC 2
Regular Interest LT2-2AA, REMIC 2 Regular Interest LT2-AII1, REMIC 2 Regular
Interest LT2-AII2, REMIC 2 Regular Interest LT2-AII3, REMIC 2 Regular Interest
LT2-2M1, REMIC 2 Regular Interest LT2-2M2, REMIC 2 Regular Interest LT2-2B and
REMIC 2 Regular Interest LT2-2ZZ immediately following payments pursuant to (c)
above but prior to any payments pursuant to this proviso.

               SECTION 4.05.          Allocation of Realized Losses.

               (a) All Realized Losses on the Mortgage Loans shall be allocated
by the Trustee on each Distribution Date as follows: first, to Net Monthly
Excess Cashflow; second, to the Class C Certificates, until the Certificate
Principal Balance thereof has been reduced to zero; third, to the Class B
Certificates, until the Certificate Principal Balance thereof has been reduced
to zero; fourth, to the Class M-2 Certificates, until the Certificate Principal
Balance thereof has been reduced to zero; and fifth, to the Class M-1
Certificates, until the Certificate Principal Balance thereof has been reduced
to zero. All Realized Losses to be allocated to the Certificate Principal
Balances of all Classes on any Distribution Date shall be so allocated after the
actual distributions to be made on such date as provided above. All references
above to the Certificate Principal Balance of any Class of Certificates shall be
to the Certificate Principal Balance of such Class immediately prior to the
relevant Distribution Date, before reduction thereof by any Realized Losses, in
each case to be


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allocated to such Class of Certificates, on such Distribution Date.

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

               (b) All Realized Losses on the Mortgage Loans shall be allocated
by the Trustee on each Distribution Date as follows: with respect to Realized
Losses on the Group 1 Loans, to REMIC 1 Regular Interest LT1A and REMIC 1
Regular Interest LT1B, 99% and 1%, respectively, and with respect to Realized
Losses on the Group 2 Loans, to REMIC 1 Regular Interest LT1A and REMIC 1
Regular Interest LT1C, 99% and 1%, respectively, until the Uncertificated
Principal Balance has been reduced to zero and then to REMIC 1 Regular Interest
LT1D until the Uncertificated Principal Balance has been reduced to zero.

               (c) All Realized Losses on the REMIC 1 Regular Interest LT1A,
REMIC 1 Regular Interest LT1B, REMIC 1 Regular Interest LT1C and REMIC 1 Regular
Interest LT1D shall be deemed to have been allocated in the specified
percentages, as follows: with respect to Realized Losses on the Group 1 Loans,
first, to Uncertificated Accrued Interest payable to the REMIC 2 Regular
Interest LT2-1AA and REMIC 2 Regular Interest LT2-1ZZ up to an aggregate amount
equal to the REMIC 2 Group 1 Interest Loss Allocation Amount, 98% and 2%,
respectively; second, to the Uncertificated Principal Balances of REMIC 2
Regular Interest LT2-1AA and REMIC 2 Regular Interest LT2-1ZZ up to an aggregate
amount equal to the REMIC 2 Group 1 Principal Loss Allocation Amount, 98% and
2%, respectively; third, to the Uncertificated Principal Balances of REMIC 2
Regular Interest LT2-1AA, REMIC 2 Regular Interest LT2-1B and REMIC 2 Regular
Interest LT2-1ZZ, 98%, 1% and 1%, respectively, until the Uncertificated
Principal Balance of REMIC 2 Regular Interest LT2-1B has been reduced to zero;
fourth, to the Uncertificated Principal Balances of REMIC 2 Regular Interest
LT2-1AA, REMIC 2 Regular Interest LT2-1M2 and REMIC 2 Regular Interest LT2-1ZZ,
98%, 1% and 1%, respectively, until the Uncertificated Principal Balance of
REMIC 2 Regular Interest LT2-1M2 has been reduced to zero; and fifth, to the
Uncertificated Principal Balances of REMIC 2 Regular Interest LT2-1AA, REMIC 2
Regular Interest LT2-1M1 and REMIC 2 Regular Interest LT2-1ZZ, 98%, 1% and 1%,
respectively, until the Uncertificated Principal Balance of REMIC 2 Regular
Interest LT2-1M1 has been reduced to zero, and with respect to Realized Losses
on the Group 2 Loans, first, to Uncertificated Accrued Interest payable to the
REMIC 2 Regular Interest LT2-2AA and REMIC 2 Regular Interest LT2-2ZZ up to an
aggregate amount equal to the REMIC 2 Group 2 Interest Loss Allocation Amount,
98% and 2%, respectively; second, to the Uncertificated Principal Balances of
REMIC 2 Regular Interest LT2-2AA and REMIC 2 Regular Interest LT2-2ZZ up to an
aggregate amount equal to the REMIC 2 Group 2 Principal Loss Allocation Amount,
98% and 2%, respectively; third, to the Uncertificated Principal Balances of
REMIC 2 Regular Interest LT2-2AA, REMIC 2 Regular Interest LT2-2B and REMIC 2
Regular Interest LT2-2ZZ, 98%, 1% and 1%, respectively, until the Uncertificated
Principal Balance of REMIC 2 Regular Interest LT2-2B has been reduced to zero;
fourth, to the


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Uncertificated Principal Balances of REMIC 2 Regular Interest LT2-2AA, REMIC 2
Regular Interest LT2-2M2 and REMIC 2 Regular Interest LT2-2ZZ, 98%, 1% and 1%,
respectively, until the Uncertificated Principal Balance of REMIC 2 Regular
Interest LT2-2M2 has been reduced to zero; and fifth, to the Uncertificated
Principal Balances of REMIC 2 Regular Interest LT2-2AA, REMIC 2 Regular Interest
LT2-2M1 and REMIC 2 Regular Interest LT2-2ZZ, 98%, 1% and 1%, respectively,
until the Uncertificated Principal Balance of REMIC 2 Regular Interest LT2-2M1
has been reduced to zero.

               SECTION 4.06. Information Reports to Be Filed by the Master
                             Servicer.

               The Master Servicer or the Sub-Servicers shall file information
reports with respect to the receipt of mortgage interest received in a trade or
business, foreclosures and abandonments of any Mortgaged Property and the
information returns relating to cancellation of indebtedness income with respect
to any Mortgaged Property required by Sections 6050H, 6050J and 6050P of the
Code, respectively, and deliver to the Trustee an Officers' Certificate stating
that such reports have been filed. Such reports shall be in form and substance
sufficient to meet the reporting requirements imposed by such Sections 6050H,
6050J and 6050P of the Code.

               SECTION 4.07.  Compliance with Withholding Requirements.

               Notwithstanding any other provision of this Agreement, the
Trustee shall comply with all federal withholding requirements respecting
payments to Certificateholders of interest or original issue discount on the
Mortgage Loans, that the Trustee reasonably believes are applicable under the
Code. The consent of Certificateholders shall not be required for such
withholding. In the event the Trustee withholds any amount from interest or
original issue discount payments or advances thereof to any Certificateholder
pursuant to federal withholding requirements, the Trustee shall, together with
its monthly report to such Certificateholders pursuant to Section 4.02 hereof,
indicate such amount withheld.



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                                    ARTICLE V

                                THE CERTIFICATES


               SECTION 5.01.          The Certificates.

               (a) The Certificates will be substantially in the respective
forms annexed hereto as Exhibits A, B-1, B-2, B-3 and B-4. The Certificates will
be issuable in registered form only. The Certificates (other than the Class P
Certificates, the Class C Certificates and the Class R Certificates) will be
issued in minimum denominations of $25,000 Initial Certificate Principal Balance
or Initial Notional Amount, as applicable, and integral multiples of $1 in
excess thereof. The Class C Certificates will be issued in minimum denominations
of $10,000 Initial Notional Amount and integral multiples of $1 in excess
thereof. The Class P Certificates and the Class R Certificates will each be
issuable in minimum denominations of any Percentage Interest representing 20.00%
and multiples of 0.01% in excess thereof.

               Upon original issue, the Certificates shall, upon the written
request of the Company executed by an officer of the Company, be executed and
delivered by the Trustee, authenticated by the Trustee and delivered to or upon
the order of the Company upon receipt by the Trustee of the documents specified
in Section 2.01. The Certificates shall be executed by manual or facsimile
signature on behalf of the Trustee in its capacity as trustee hereunder by a
Responsible Officer. Certificates bearing the manual or facsimile signatures of
individuals who were at the time they signed the proper officers of the Trustee
shall bind the Trustee, notwithstanding that such individuals or any of them
have ceased to hold such offices prior to the authentication and delivery of
such Certificates or did not hold such offices at the date of such Certificates.
No Certificate shall be entitled to any benefit under this Agreement, or be
valid for any purpose, unless there appears on such Certificate a certificate of
authentication substantially in the form provided for herein executed by the
Trustee by manual signature, and such certificate upon any Certificate shall be
conclusive evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates issued on the Closing
Date shall be dated the Closing Date and any Certificates delivered thereafter
shall be dated the date of their authentication.

               (b) The Class A Certificates and the Mezzanine Certificates shall
initially be issued as one or more Certificates registered in the name of the
Depository or its nominee and, except as provided below, registration of such
Certificates may not be transferred by the Trustee except to another Depository
that agrees to hold such Certificates for the respective Certificate Owners with
Ownership Interests therein. The Certificate Owners shall hold their respective
Ownership Interests in and to each of such Book-Entry Certificates through the
book-entry facilities of the Depository and, except as provided below, shall not
be entitled to Definitive Certificates in respect of such Ownership Interests.
All transfers by Certificate Owners of their respective Ownership Interests in
the Book-Entry Certificates shall be made in accordance with the procedures
established by the Depository Participant or brokerage firm representing such
Certificate Owner. Each Depository Participant shall transfer the Ownership
Interests only in the Book-Entry


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Certificates of Certificate Owners it represents or of brokerage firms for which
it acts as agent in accordance with the Depository's normal procedures. The
Trustee shall not be required to monitor, determine or inquire as to compliance
with the transfer restrictions with respect to the Book-Entry Certificates, and
the Trustee shall have no liability for transfers of Ownership Interests in the
Book Entry Certificates made through the book-entry facilities of the Depositary
or between or among Depositary Participants or Certificate Owners, made in
violation of the applicable restrictions.

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

               If (i)(A) the Company advises the Trustee in writing that the
Depository is no longer willing or able to properly discharge its
responsibilities as Depository and (B) the Company is unable to locate a
qualified successor or (ii) the Company at its option advises the Trustee in
writing that it elects to terminate the book-entry system through the
Depository, the Trustee shall notify all Certificate Owners, through the
Depository, of the occurrence of any such event and of the availability of
Definitive Certificates to Certificate Owners requesting the same. Upon
surrender to the Trustee of the Book-Entry Certificates by the Depository,
accompanied by registration instructions from the Depository for registration of
transfer, the Trustee shall, at the expense of the Company, issue the Definitive
Certificates. Neither the Company, the Master Servicer nor the Trustee shall be
liable for any actions taken by the Depository or its nominee, including,
without limitation, any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Certificates the Trustee and the Master Servicer
shall recognize the Holders of the Definitive Certificates as Certificateholders
hereunder.

               (c) Each Certificate is intended to be a "security" governed by
Article 8 of the Uniform Commercial Code as in effect in the State of New York
and any other applicable jurisdiction, to the extent that any of such laws may
be applicable.



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               SECTION 5.02. Registration of Transfer and Exchange of
                             Certificates.

               (a) The Trustee shall maintain a Certificate Register in which,
subject to such reasonable regulations as it may prescribe, the Trustee shall
provide for the registration of Certificates and of transfers and exchanges of
Certificates as herein provided.

               (b) Except as provided in Section 5.02(c), no transfer, sale,
pledge or other disposition of a Class P Certificate, Class C Certificate or a
Class R Certificate shall be made unless such transfer, sale, pledge or other
disposition is exempt from the registration requirements of the Securities Act
of 1933, as amended (the "Act"), and any applicable state securities laws or is
made in accordance with said Act and laws. In the event that a transfer of a
Class P Certificate, Class C Certificate or Class R Certificate is to be made
under this Section 5.02(b), (i) the Trustee shall require an Opinion of Counsel
acceptable to and in form and substance satisfactory to the Trustee that such
transfer shall be made pursuant to an exemption, describing the applicable
exemption and the basis therefor, from said Act and laws or is being made
pursuant to said Act and laws, which Opinion of Counsel shall not be an expense
of the Trustee, the Company or the Master Servicer, provided that such Opinion
of Counsel will not be required in connection with the initial transfer of any
such Certificate by the Company or any affiliate thereof, to a non-affiliate of
the Company and (ii) the Trustee shall require the transferee to execute a
representation letter, substantially in the form of Exhibit G-1 hereto, and the
Trustee shall require the transferor to execute a representation letter,
substantially in the form of Exhibit G-2 hereto, each acceptable to and in form
and substance satisfactory to the Trustee certifying to the Company and the
Trustee the facts surrounding such transfer, which representation letters shall
not be an expense of the Trustee, the Company or the Master Servicer; provided
however that such representation letters will not be required in connection with
any transfer of any such Certificate by the Company to an affiliate of the
Company and the Trustee shall be entitled to conclusively rely upon a
representation (which, upon the request of the Trustee, shall be a written
representation) from the Company of the status of such transferee as an
affiliate of the Company. Any such Certificateholder desiring to effect such
transfer shall, and does hereby agree to, indemnify the Trustee, the Company and
the Master Servicer against any liability that may result if the transfer is not
so exempt or is not made in accordance with such applicable federal and state
laws.

               (c) Notwithstanding the requirements of Section 5.02(b),
transfers of Class P Certificates, Class C Certificates and Class R Certificates
may be made in accordance with this Section 5.02(c) if the prospective
transferee of a Certificate provides the Trustee and the Company with an
investment letter substantially in the form of Exhibit G-3 attached hereto,
which investment letter shall not be an expense of the Trustee, the Company or
the Master Servicer, and which investment letter states that, among other
things, such transferee is a "qualified institutional buyer" as defined under
Rule 144A. Such transfers shall be deemed to have complied with the requirements
of Section 5.02(b) hereof; provided, however, that no Transfer of any of the
Class P Certificates, Class C Certificates or Class R Certificates may be made
pursuant to this Section 5.02(c) by the Company. Any such Certificateholder
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee, the Company and the Master Servicer against any liability that may
result


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if the transfer is not so exempt or is not made in accordance with such
applicable federal and state laws.

               The Trustee shall require an Opinion of Counsel from a
prospective transferee prior to the transfer of any Class P Certificate, Class C
Certificate or Class R Certificate to any employee benefit plan or other
retirement arrangement, including individual retirement accounts and Keogh
plans, that is subject to Section 406 of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") or Section 4975 of the Code (any of the
foregoing, a "Plan"), to a trustee or other Person acting on behalf of any Plan,
or to any other person who is using "plan assets" of any Plan to effect such
acquisition (including any insurance company using funds in its general or
separate accounts that may constitute "plan assets"). Such Opinion of Counsel
must establish to the satisfaction of the Company, the Trustee and the Master
Servicer that such transfer is permissible under applicable law, will not
constitute or result in a non-exempt prohibited transaction under ERISA or
Section 4975 of the Code, and will not subject the Trustee, the Master Servicer
or the Company to any obligation in addition to those undertaken in this
Agreement. Neither the Company, the Master Servicer nor the Trustee will be
required to obtain such Opinion of Counsel on behalf of any prospective
transferee.

               (d)     [Reserved].

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

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

               (B) In connection with any proposed Transfer of any Ownership
        Interest in a Class R Certificate, the Trustee shall require delivery to
        it, and shall not register the Transfer of any Class R Certificate until
        its receipt of (I) an affidavit and agreement (a "Transfer Affidavit and
        Agreement" in the form attached hereto as Exhibit G-5) from the proposed
        Transferee, in form and substance satisfactory to the Trustee
        representing and warranting, among other things, that it is a Permitted
        Transferee, that it is not acquiring its Ownership Interest in the Class
        R Certificate that is the subject of the proposed Transfer as a nominee,
        trustee or agent for any Person who is not a Permitted Transferee, that
        for so long as it retains its Ownership Interest in a Class R
        Certificate, it will endeavor to remain a Permitted Transferee, and that
        it has reviewed the provisions of this Section 5.02 and agrees to be
        bound by them, and (II) a certificate, in the form attached hereto as
        Exhibit G-4, from the Holder wishing to transfer


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<PAGE>



        the Class R Certificate, in form and substance satisfactory to the
        Trustee representing and warranting, among other things, that no purpose
        of the proposed Transfer is to impede the assessment or collection of
        tax.

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

               (D) Each Person holding or acquiring any Ownership Interest in a
        Class R Certificate shall agree (x) to require a Transfer Affidavit and
        Agreement from any other Person to whom such Person attempts to transfer
        its Ownership Interest in a Class R Certificate and (y) not to transfer
        its Ownership Interest unless it provides a certificate to the Trustee
        in the form attached hereto as Exhibit G-4.

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

               (ii) The Trustee will register the Transfer of any Class R
Certificate only if it shall have received the Transfer Affidavit and Agreement
in the form attached hereto as Exhibit G-5, a certificate of the Holder
requesting such transfer in the form attached hereto as Exhibit G-4 and all of
such other documents as shall have been reasonably required by the Trustee as a
condition to such registration. Transfers of the Class R Certificates other than
to Permitted Transferees are prohibited.

               (iii) (A) If any Person other than a Permitted Transferee shall
become a Holder of a Class R Certificate, then the last preceding Permitted
Transferee shall be restored, to the extent permitted by law, to all rights and
obligations as Holder thereof retroactive to the date of registration of such
Transfer of such Class R Certificate. If a Non-United States Person shall become
a Holder of a Class R Certificate, then the last preceding Permitted Transferee
shall be restored, to the extent permitted by law, to all rights and obligations
as Holder thereof retroactive to the date of registration of such Transfer of
such Class R Certificate. If a transfer of a Class R Certificate is disregarded
pursuant to the provisions of Treasury Regulations Section 1.860E-1 or Section
1.860G-3, then the last preceding Permitted Transferee shall be restored, to the
extent permitted by law, to all rights and obligations as Holder thereof
retroactive to the date of registration of such transfer of such Class R
Certificate. The prior Holder shall be entitled to recover from any purported
Holder of a Class R Certificate that was in fact not a Permitted Transferee
under this Section 5.05(b) at the time it became a Holder all payments made on
such Class R Certificate. Each Holder of a Class R Certificate, by acceptance
thereof, shall be deemed for all purposes to have consented to the


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provisions of this clause (b) and to any amendment of this Agreement deemed
necessary (whether as a result of new legislation or otherwise) by counsel of
the Company to ensure that the Class R Certificates are not transferred to any
Person who is not a Permitted Transferee and that any transfer of such Class R
Certificates will not cause the imposition of a tax upon the Trust or cause any
such REMIC to fail to qualify as a REMIC. The Trustee shall be under no
liability to any Person for any registration of Transfer of a Class R
Certificate that is in fact not permitted by this Section 5.02 or for making any
payments due on such Certificate to the holder thereof or for taking any other
action with respect to such holder under the provisions of this Agreement.

                       (B)  If any purported Transferee shall become a Holder of
a Class R Certificate in violation of the restrictions in this Section 5.02 and
to the extent that the retroactive restoration of the rights of the Holder of
such Class R Certificate as described in clause (iii)(A) above shall be invalid,
illegal or unenforceable, then the Trustee shall have the right, without notice
to the holder or any prior holder of such Class R Certificate, to sell such
Class R Certificate to a purchaser selected by the Trustee on such terms as the
Trustee may choose. Such purported Transferee shall promptly endorse and deliver
each Class R Certificate in accordance with the instructions of the Trustee.
Such purchaser may be the Trustee itself. The proceeds of such sale, net of the
commissions (which may include commissions payable to the Trustee), expenses and
taxes due, if any, will be remitted by the Trustee to such purported Transferee.
The terms and conditions of any sale under this clause (iii)(B) shall be
determined in the sole discretion of the Trustee, and the Trustee shall not be
liable to any Person having an Ownership Interest in a Class R Certificate as a
result of its exercise of such discretion.

               (iv) The Trustee shall make available to the Internal Revenue
Service and those Persons specified by the REMIC Provisions, all information
necessary to compute any tax imposed (A) as a result of the transfer of an
ownership interest in a Class R Certificate to any Person who is a Disqualified
Organization, including the information regarding "excess inclusions" of such
Class R Certificates required to be provided to the Internal Revenue Service and
certain Persons as described in Treasury Regulations Sections 1.860D-1(b)(5) and
1.860E-2(a)(5), and (B) as a result of any regulated investment company, real
estate investment trust, common trust fund, partnership, trust, estate or
organization described in Section 1381 of the Code that holds an Ownership
Interest in a Class R Certificate having as among its record holders at any time
any Person who is a Disqualified Organization. The Trustee may charge and shall
be entitled to reasonable compensation for providing such information as may be
required from those Persons which may have had a tax imposed upon them as
specified in clauses (A) and (B) of this paragraph for providing such
information.

               (f) Subject to the preceding paragraphs, upon surrender for
registration of transfer of any Certificate at the office of the Trustee
maintained for such purpose, the Trustee shall execute and the Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates of the same Class of a like aggregate
Percentage Interest. Every Certificate surrendered for transfer shall be
accompanied by notification of the account of the designated transferee or
transferees for the purpose of receiving distributions pursuant to Section 4.01
by wire transfer, if any such transferee desires and is eligible for
distribution by wire transfer.


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

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

               (i) All Certificates surrendered for transfer and exchange shall
be canceled and retained by the Trustee in accordance with the Trustee's
standard procedures.

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

               If (i) any mutilated Certificate is surrendered to the Trustee
and the Trustee receives evidence to its satisfaction of the destruction, loss
or theft of any Certificate, and (ii) there is delivered to the Trustee such
security or indemnity as may be required by it to save it harmless, then, in the
absence of notice to the Trustee that such Certificate has been acquired by a
bona fide purchaser, the Trustee shall execute, authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of the same Class and Percentage Interest. Upon
the issuance of any new Certificate under this Section, the Trustee may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses (including the
fees and expenses of the Trustee) connected therewith. Any replacement
Certificate issued pursuant to this Section shall constitute complete and
indefeasible evidence of ownership in the Trust Fund, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time.

               SECTION 5.04.          Persons Deemed Owners.

               The Company, the Master Servicer, the Trustee and any agent of
any of them may treat the person in whose name any Certificate is registered as
the owner of such Certificate for the purpose of receiving distributions
pursuant to Section 4.01 and for all other purposes whatsoever, and neither the
Company, the Master Servicer, the Trustee nor any agent of any of them shall be
affected by notice to the contrary.


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               SECTION 5.05.          Rule 144A Information.

               For so long as any Class P Certificates, Class C Certificates and
Class R Certificates are outstanding and are "restricted securities" within the
meaning of Rule 144(a)(3) of the Securities Act, (1) the Company will provide or
cause to be provided to any holder of such Certificates and any prospective
purchaser thereof designated by such a holder, upon the request of such holder
or prospective purchaser, the information required to be provided to such holder
or prospective purchaser by Rule 144A(d)(4) under the Securities Act; and (2)
the Company shall update such information from time to time in order to prevent
such information from becoming false and misleading and will take such other
actions as are necessary to ensure that the safe harbor exemption from the
registration requirements of the Securities Act under Rule 144A is and will be
available for resales of such Certificates conducted in accordance with Rule
144A. The Master Servicer shall cooperate with the Company and furnish the
Company such information in the Master Servicer's possession as the Company may
reasonably request.


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                                   ARTICLE VI

                       THE COMPANY AND THE MASTER SERVICER

               SECTION 6.01. Liability of the Company and the Master Servicer.

               The Company and the Master Servicer each shall be liable in
accordance herewith only to the extent of the obligations specifically imposed
upon and undertaken by the Company and the Master Servicer herein. Only the
Master Servicer, any successor Master Servicer or the Trustee acting as Master
Servicer shall be liable with respect to the servicing of the Mortgage Loans and
the REO Property for actions taken by any such Person in contravention of the
Master Servicer's duties hereunder.

               SECTION 6.02. Merger, Consolidation or Conversion of the Company
                             or the Master Servicer.

               The Company and the Master Servicer each will keep in full effect
its existence, rights and franchises as a corporation under the laws of the
state of its incorporation, and each will obtain and preserve its qualification
to do business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the Certificates or any of the Mortgage Loans
and to perform its respective duties under this Agreement.

               Any Person into which the Company or the Master Servicer may be
merged, consolidated or converted, or any corporation resulting from any merger
or consolidation to which the Company or the Master Servicer shall be a party,
or any Person succeeding to the business of the Company or the Master Servicer,
shall be the successor of the Company or the Master Servicer, as the case may
be, hereunder, without the execution or filing of any paper or any further act
on the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, however, that the successor or surviving Person to
the Master Servicer shall be qualified to sell mortgage loans to and service
mortgage loans for Fannie Mae or Freddie Mac.

               SECTION 6.03. Limitation on Liability of the Company, the Master
                             Servicer and Others.

               Neither the Company, the Master Servicer nor any of the
directors, officers, employees or agents of the Company or the Master Servicer
shall be under any liability to the Trust Fund or the Certificateholders for any
action taken or for refraining from the taking of any action in good faith
pursuant to this Agreement, or for errors in judgment; provided, however, that
this provision shall not protect the Company or the Master Servicer (but this
provision shall protect the above described persons) against any breach of
warranties or representations made herein, or against any specific liability
imposed on the Master Servicer pursuant to Section 3.01 or any other Section
hereof; and provided further that this provision shall not protect the Company,
the Master Servicer or any such person, against any liability which would
otherwise be imposed by reason of willful


                                       105

<PAGE>



misfeasance, bad faith or gross negligence in the performance of duties or by
reason of reckless disregard of obligations and duties hereunder. The Company,
the Master Servicer and any director, officer, employee or agent of the Company
or the Master 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 Company, the Master Servicer and any director, officer,
employee or agent of the Company or the Master Servicer shall be indemnified and
held harmless by the Trust Fund against any loss, liability or expense incurred
in connection with any legal action relating to this Agreement or the
Certificates (including reasonable legal fees and disbursements of counsel),
other than (a) any loss, liability or expense related to Master Servicer's
servicing obligations with respect to any specific Mortgage Loan or Mortgage
Loans (except as any such loss, liability or expense shall be otherwise
reimbursable pursuant to this Agreement) or related to the Master Servicer's
obligations under Section 3.01, or (b) any loss, liability or expense incurred
by reason of willful misfeasance, bad faith or gross negligence in the
performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder. Neither the Company nor the Master Servicer
shall be under any obligation to appear in, prosecute or defend any legal action
which is not incidental to its respective duties under this Agreement and which
in its opinion may involve it in any expense or liability; provided, however,
that the Company or the Master Servicer may in its sole discretion undertake any
such action which it may deem necessary or desirable with respect to this
Agreement and the rights and duties of the parties hereto and the interests of
the Certificateholders hereunder. In such event, the legal expenses and costs of
such action and any liability resulting therefrom (except any action or
liability related to the Master Servicer's obligations under Section 3.01) shall
be expenses, costs and liabilities of the Trust Fund, and the Company and the
Master Servicer shall be entitled to be reimbursed therefor from the Certificate
Account as provided in Section 3.11, any such right of reimbursement being prior
to the rights of Certificateholders to receive any amount in the Certificate
Account.

               SECTION 6.04. Limitation on Resignation of the Master Servicer.

               The Master Servicer shall not resign from the obligations and
duties hereby imposed on it except (a) upon appointment of a successor servicer
reasonably acceptable to the Trustee upon receipt by the Trustee of a letter
from each Rating Agency (obtained by the Master Servicer and at its expense)
that such a resignation and appointment will not, in and of itself, result in a
downgrading of the Certificates or (b) upon determination that its duties
hereunder are no longer permissible under applicable law. Any such determination
permitting the resignation of the Master Servicer shall be evidenced by an
Opinion of Counsel (at the expense of the resigning Master Servicer) to such
effect delivered to the Trustee. No such resignation shall become effective
until the Trustee or a successor servicer shall have assumed the Master
Servicer's responsibilities, duties, liabilities and obligations hereunder.

               SECTION 6.05. Sale and Assignment of Master Servicing.

               The Master Servicer may sell and assign its rights and delegate
its duties and obligations in their entirety as Master Servicer under this
Agreement; provided, however, that: (i) the purchaser or transferee accepting
such assignment and delegation (a) shall be a Person which


                                       106

<PAGE>



shall be qualified to service mortgage loans for Fannie Mae or Freddie Mac; (b)
shall, in the case of successor master servicers only, have a net worth of not
less than $10,000,000 (unless otherwise approved by each Rating Agency pursuant
to clause (ii) below); (c) shall be reasonably satisfactory to the Trustee (as
evidenced in a writing signed by the Trustee) as having a comparable servicing
ability to that of the Master Servicer on the Closing Date; (d) shall execute
and deliver to the Trustee an agreement, in form and substance reasonably
satisfactory to the Trustee, which contains an assumption by such Person of the
due and punctual performance and observance of each covenant and condition to be
performed or observed by it as master servicer under this Agreement and any
custodial agreement, from and after the effective date of such agreement; (ii)
each Rating Agency shall be given prior written notice of the identity of the
proposed successor to the Master Servicer and each Rating Agency's rating of the
Certificates in effect immediately prior to such assignment, sale and delegation
will not be downgraded or withdrawn as a result of such assignment, sale and
delegation, as evidenced by a letter to such effect obtained by the Master
Servicer at its expense and delivered to the Trustee; and (iii) the Master
Servicer assigning and selling the master servicing shall deliver to the Trustee
an Officer's Certificate and an Opinion of Counsel (at the expense of the Master
Servicer), each stating that all conditions precedent to such action under this
Agreement have been completed and such action is permitted by and complies with
the terms of this Agreement. No such assignment or delegation shall affect any
liability of the Master Servicer arising prior to the effective date thereof.



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                                   ARTICLE VII

                                     DEFAULT

               SECTION 7.01.          Events of Default.

               "Event of Default", wherever used herein, means any one of the
following events:

             (i) any failure by the Master Servicer to deposit into the
        Certificate Account on each Certificate Account Deposit Date the amounts
        required to be deposited therein (other than an Advance) under the terms
        of this Agreement which continues unremedied for two (2) Business Days
        after such amount was required to be remitted; or

            (ii) any failure on the part of the Master Servicer duly to observe
        or perform in any material respect any other of the covenants or
        agreements on the part of the Master Servicer contained in the
        Certificates or in this Agreement (including any breach of the Master
        Servicer's representations and warranties pursuant to Section 2.03(a)
        which materially and adversely affects the interests of the
        Certificateholders) which continues unremedied for a period of 60 days
        after the date on which written notice of such failure, requiring the
        same to be remedied, shall have been given to the Master Servicer by the
        Trustee, or to the Master Servicer and the Trustee by the Holders of
        Certificates entitled to at least 25% of the Voting Rights; or

           (iii) a decree or order of a court or agency or supervisory authority
        having jurisdiction in an involuntary case under any present or future
        federal or state bankruptcy, insolvency or similar law or the
        appointment of a conservator or receiver or liquidator in any
        insolvency, readjustment of debt, marshaling of assets and liabilities
        or similar proceedings, or for the winding-up or liquidation of its
        affairs, shall have been entered against the Master Servicer and such
        decree or order shall have remained in force undischarged or unstayed
        for a period of 60 consecutive days; or

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

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

            (vi) the Master Servicer shall fail to deposit in the Certificate
        Account on any Certificate Account Deposit Date an amount equal to any
        required Advance which continues


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        unremedied for the earlier of (a) a period of two (2) Business Days or
        (b) the Business Day immediately preceding the Distribution Date.

If an Event of Default described in clauses (i) - (v) of this Section shall
occur, then, and in each and every such case, so long as such Event of Default
shall not have been remedied, the Trustee or the Holders of Certificates
entitled to at least 51% of the Voting Rights, by notice in writing to the
Master Servicer (and to the Trustee if given by such Holders of Certificates),
with a copy to the Rating Agencies, may terminate all of the rights and
obligations (but not the liabilities) of the Master Servicer under this
Agreement and in and to the Trust Fund, other than its rights as a
Certificateholder hereunder; provided, however, that the successor to the Master
Servicer appointed pursuant to Section 7.02 shall have accepted the duties of
Master Servicer effective upon the resignation or termination of the Master
Servicer. If an Event of Default described in clause (vi) hereof shall occur,
the Trustee shall, by notice to the Master Servicer, and the Company, terminate
all of the rights and obligations of the Master Servicer under this Agreement
and in and to the Trust Fund, other than its rights as a Certificateholder
hereunder; provided, however, that if the Trustee determines (in its sole
discretion) that the failure by the Master Servicer to make any required Advance
was due to circumstances beyond its control, and the required Advance was
otherwise made, the Trustee shall not terminate the Master Servicer. On or after
the receipt by the Master Servicer of such notice, all authority and power of
the Master Servicer under this Agreement, whether with respect to the
Certificates (other than as a holder thereof) or the Mortgage Loans or
otherwise, shall pass to and be vested in the Trustee pursuant to and under this
Section, and, without limitation, the Trustee is hereby authorized and empowered
to execute and deliver, on behalf of the Master 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 or
assignment of the Mortgage Loans and related documents, or otherwise at the
expense of the Master Servicer. The Master Servicer agrees to cooperate with
(and pay any related costs and expenses of) the Trustee in effecting the
termination of the Master Servicer's responsibilities and rights hereunder,
including, without limitation, the transfer to the Trustee or the successor
Master Servicer for administration by it of (i) the property and amounts which
are then or should be part of the Trust Fund or which thereafter become part of
the Trust Fund; (ii) originals or copies of all documents of the Master Servicer
reasonably requested by the Trustee to enable it to assume the Master Servicer's
duties thereunder; (iii) the rights and obligations of the Master Servicer under
the Sub-Servicing Agreements with respect to the Mortgage Loans; and (iv) all
cash amounts which shall at the time be deposited by the Master Servicer or
should have been deposited to the Custodial or the Certificate Account or
thereafter be received with respect to the Mortgage Loans. The Trustee shall not
be deemed to have breached any obligation hereunder as a result of a failure to
make or delay in making any distribution as and when required hereunder caused
by the failure of the Master Servicer to remit any amounts received by it or to
deliver any documents held by it with respect to the Mortgage Loans. For
purposes of this Section 7.01, the Trustee shall not be deemed to have knowledge
of an Event of Default unless a Responsible Officer of the Trustee has actual
knowledge thereof or unless notice of any event which is in fact such an Event
of Default is received by the Trustee as provided in Section 11.05 and such
notice references the Certificates, the Trust Fund or this Agreement.



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               SECTION 7.02.          Trustee to Act; Appointment of Successor.

               Within 90 days of the time the Master Servicer receives a notice
of termination pursuant to Section 7.01(i) - (v), the Trustee or its appointed
agent shall be the successor in all respects to the Master Servicer in its
capacity as Master Servicer under this Agreement and the transactions set forth
or provided for herein and shall be subject thereafter to all the
responsibilities, duties and liabilities relating thereto placed on the Master
Servicer including the obligation to make Advances which have been or will be
required to be made (except for the responsibilities, duties and liabilities
contained in Section 2.03 and its obligations to deposit amounts in respect of
losses pursuant to Section 3.12 and 4.01(h)) by the terms and provisions hereof;
and provided further, that any failure to perform such duties or
responsibilities caused by the Master Servicer's failure to provide information
required by Section 4.03 shall not be considered a default by the Trustee
hereunder. As compensation therefor, the Trustee shall be entitled to all funds
relating to the Mortgage Loans which the Master Servicer would have been
entitled to charge to the Custodial Account and the Certificate Account if the
Master Servicer had continued to act hereunder. If the Trustee has become the
successor to the Master Servicer in accordance with Section 6.04 or Section
7.02, then notwithstanding the above, if the Trustee shall be unwilling to so
act, or shall be unable to so act, the Trustee may appoint, or petition a court
of competent jurisdiction or appoint, any established housing and home finance
institution, which is also a Fannie Mae- or Freddie Mac- approved mortgage
servicing institution, having a net worth of not less than $10,000,000 as the
successor to the Master Servicer hereunder in the assumption of all or any part
of the responsibilities, duties or liabilities of the Master Servicer hereunder.
Pending appointment of a successor to the Master Servicer hereunder, the Trustee
shall act in such capacity as herein above provided. In connection with such
appointment and assumption, the Trustee may make such arrangements for the
compensation of such successor out of payments on Mortgage Loans as it and such
successor shall agree; provided, however, that no such compensation shall be in
excess of that permitted the Master Servicer hereunder. Each of the Seller, the
Trustee and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession. In no event
shall the successor Master Servicer be liable for the acts or omissions of the
predecessor Master Servicer.

               Any successor, including the Trustee, to the Master Servicer
shall maintain in force during its term as master servicer hereunder policies
and fidelity bonds to the same extent as the Master Servicer is so required
pursuant to Section 3.18.

               Notwithstanding anything else herein to the contrary, in no event
shall the Trustee be liable for any Servicing Fee or for any differential in the
amount of the Servicing Fee paid hereunder and the amount necessary to induce
any successor Master Servicer or Servicer, as applicable, to act as successor
Master Servicer or Servicer, as applicable, under this Agreement and the
transactions set forth or provided for herein.

               SECTION 7.03.          Notification to Certificateholders.



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               (a) Upon any such termination or appointment of a successor to
the Master Servicer, the Trustee shall give prompt notice thereof to
Certificateholders and to the Rating Agencies.

               (b) Within 60 days after the occurrence of any Event of Default,
the Trustee shall transmit by mail to all Holders of Certificates notice of each
such Event of Default hereunder known to the Trustee, unless such Event of
Default shall have been cured or waived.

               SECTION 7.04.          Waiver of Events of Default.

               The Holders representing at least 51% of the Voting Rights of
Certificates affected by a default or Event of Default hereunder, may waive such
default or Event of Default (other than an Event of Default set forth in Section
7.01(vi)); PROVIDED, HOWEVER, that (a) a default or Event of Default under
clause (i) of Section 7.01 may be waived only by all of the Holders of
Certificates affected by such default or Event of Default and (b) no waiver
pursuant to this Section 7.04 shall affect the Holders of Certificates in the
manner set forth in the second paragraph of Section 11.01 or materially
adversely affect any non-consenting Certificateholder. Upon any such waiver of a
default or Event of Default by the Holders representing the requisite percentage
of Voting Rights of Certificates affected by such default or Event of Default,
such default or Event of Default shall cease to exist and shall be deemed to
have been remedied for every purpose hereunder. No such waiver shall extend to
any subsequent or other default or Event of Default or impair any right
consequent thereon except to the extent expressly so waived. The Master Servicer
shall give notice of any such waiver to the Rating Agencies.

               SECTION 7.05.          List of Certificateholders.

               Upon written request of three or more Certificateholders of
record, for purposes of communicating with other Certificateholders with respect
to their rights under this Agreement, the Trustee will afford such
Certificateholders access during business hours to the most recent list of
Certificateholders held by the Trustee.


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                                  ARTICLE VIII

                             CONCERNING THE TRUSTEE

               SECTION 8.01.          Duties of Trustee.

               The Trustee, prior to the occurrence of an Event of Default and
after the curing or waiver of all Events of Default which may have occurred,
undertakes to perform such duties and only such duties as are specifically set
forth in this Agreement. If an Event of Default occurs, is continuing and has
not been waived, the Trustee shall exercise such of the rights and powers vested
in it by this Agreement, and use the same degree of care and skill in their
exercise as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs. Any permissive right of the Trustee enumerated in
this Agreement shall not be construed as a duty.

               The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them in accordance with the
requirements of this Agreement. If any such instrument is found not to conform
to the requirements of this Agreement in a material manner, the Trustee shall
take such action as it deems appropriate to have the instrument corrected, and
if the instrument is not corrected to the Trustee's satisfaction, the Trustee
will provide notice thereof to the Certificateholders. Notwithstanding the
foregoing, the Trustee shall not be responsible for the accuracy or content of
any resolution, certificate, statement, opinion, report, document, order or
other instrument furnished by the Master Servicer hereunder or any Opinion of
Counsel required hereunder.

               The Trustee shall prepare and file or cause to be filed on behalf
of the Trust Fund any tax return that is required with respect to REMIC 1, REMIC
2 and REMIC 3 pursuant to applicable federal, state or local tax laws.

               The Trustee covenants and agrees that it shall perform its
obligations hereunder in a manner so as to maintain the status of REMIC 1, REMIC
2 and REMIC 3 under the REMIC Provisions and to prevent the imposition of any
federal, state or local income, prohibited transaction, contribution or other
tax on any of REMIC 1, REMIC 2 or REMIC 3 to the extent that maintaining such
status and avoiding such taxes are within the control of the Trustee and are
reasonably within the scope of its duties under this Agreement.

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

                     (i) Prior to the occurrence of an Event of Default, and
               after the curing or waiver of all such Events of Default which
               may have occurred, the duties and obligations of the Trustee
               shall be determined solely by the express provisions of this
               Agreement, the Trustee shall not be liable except for the
               performance of such duties


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               and obligations as are specifically set forth in this Agreement,
               no implied covenants or obligations shall be read into this
               Agreement against the Trustee and, in the absence of bad faith on
               the part of the Trustee, the Trustee may conclusively rely, as to
               the truth of the statements and the correctness of the opinions
               expressed therein, upon any certificates or opinions furnished to
               the Trustee and conforming to the requirements of this Agreement;

                    (ii) The Trustee shall not be liable for an error of
               judgment made in good faith by a Responsible Officer or
               Responsible Officers of the Trustee, unless it shall be proved
               that the Trustee was negligent in ascertaining the pertinent
               facts; and

                   (iii) The Trustee shall not be liable with respect to any
               action taken, suffered or omitted to be taken by it in good faith
               in accordance with the direction of the Holders of Certificates
               entitled to at least 25% of the Voting Rights relating to the
               time, method and place of conducting any proceeding for any
               remedy available to the Trustee, or exercising any trust or power
               conferred upon the Trustee, under this Agreement.

               SECTION 8.02.          Certain Matters Affecting the Trustee.

                       Except as otherwise provided in Section 8.01:

             (a) The Trustee may conclusively rely upon and shall be fully
        protected in acting or refraining from acting in reliance upon any
        resolution, Officers' Certificate, certificate of auditors or any other
        certificate, statement, instrument, opinion, report, notice, request,
        consent, order, appraisal, bond or other paper or document reasonably
        believed by it to be genuine and to have been signed or presented by the
        proper party or parties;

             (b) The Trustee may consult with counsel and any Opinion of Counsel
        shall be full and complete authorization and protection in respect of
        any action taken or suffered or omitted by it hereunder in good faith
        and in accordance therewith;

             (c) The Trustee shall be under no obligation to exercise any of the
        trusts or powers vested in it by this Agreement, other than its
        obligation to give notice pursuant to this Agreement, or to institute,
        conduct or defend any litigation hereunder or in relation hereto at the
        request, order or direction of any of the Certificateholders, pursuant
        to the provisions of this Agreement, unless such Certificateholders
        shall have offered to the Trustee security or indemnity satisfactory to
        it against the costs, expenses and liabilities which may be incurred
        therein or thereby; nothing contained herein shall, however, relieve the
        Trustee of the obligation, upon the occurrence of an Event of Default of
        which a Responsible Office of the Trustee's corporate trust department
        has actual knowledge (which has not been waived or cured), to exercise
        such of the rights and powers vested in it by this Agreement, and to use
        the same degree of care and skill in their exercise as a prudent man
        would exercise or use under the circumstances in the conduct of his own
        affairs;


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             (d) The Trustee shall not be liable for any action taken, suffered
        or omitted by it in good faith and believed by it to be authorized or
        within the discretion or rights or powers conferred upon it by this
        Agreement;

             (e) Prior to the occurrence of an Event of Default hereunder and
        after the curing or waiver of all Events of Default which may have
        occurred, the Trustee shall not be bound to make any investigation into
        the facts or matters stated in any resolution, certificate, statement,
        instrument, opinion, report, notice, request, consent, order, approval,
        bond or other paper or document, unless requested in writing to do so by
        the Holders of Certificates entitled to at least 25% of the Voting
        Rights; provided, however, that if the payment within a reasonable time
        to the Trustee of the costs, expenses or liabilities likely to be
        incurred by it in the making of such investigation is, in the opinion of
        the Trustee, reasonably assured to the Trustee by the security afforded
        to it by the terms of this Agreement reasonable expense of every such
        examination shall be paid by the Certificateholders requesting the
        investigation;

             (f) The Trustee may execute any of the trusts or powers hereunder
        or perform any duties hereunder either directly or by or through agents,
        nominees, custodians or attorneys appointed with due care, and shall not
        be responsible for any willful misconduct or negligence on the part of
        any agent, attorney, custodian or nominee so appointed;

             (g) The Trustee shall not be required to give any bond or surety
        with respect to the execution of the trust created hereby or the powers
        granted hereunder; and

             (h) Whenever in the administration of the provisions of this
        Agreement the Trustee shall deem it necessary or desirable that a matter
        be proved or established prior to taking or suffering any action to be
        taken hereunder, such matter (unless other evidence in respect thereof
        be herein specifically prescribed) may, in the absence of gross
        negligence or bad faith on the part of the Trustee, be deemed to be
        conclusively proved and established by a certificate signed and
        delivered to the Trustee and such certificate, in the absence of gross
        negligence or bad faith on the part of the Trustee, shall be full
        warrant to the Trustee for any action taken, suffered or omitted by it
        under the provisions of this Agreement upon the faith thereof.

               SECTION 8.03. Trustee Not Liable for Certificates or Mortgage
                             Loans.

               The recitals contained herein and in the Certificates (other than
the signature of the Trustee, the authentication of the Trustee on the
Certificates, the acknowledgments of the Trustee contained in Article II) shall
be taken as the statements of the Company and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representations or
warranties as to the validity or sufficiency of this Agreement or of the
Certificates (other than the signature and authentication of the Trustee on the
Certificates) or of any Mortgage Loan or related document. The Trustee shall not
be accountable for the use or application by the Company of any of the
Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the


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Company or the Master Servicer in respect of the Mortgage Loans or deposited in
or withdrawn from the Custodial Account by the Master Servicer.

               SECTION 8.04.          Trustee May Own Certificates.

               The Trustee in its individual or any other capacity (other than
as Trustee hereunder) may become the owner or pledgee of Certificates with the
same rights it would have if it were not Trustee and may otherwise deal with the
parties hereto.

               SECTION 8.05.          Trustee's Fees.

               On each Distribution Date, the Trustee shall be entitled to
withdraw from the Certificate Account as compensation hereunder the Trustee's
Fees. Such compensation (which shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust) shall be paid for
all services rendered by it (except as otherwise reimbursed by the Seller
pursuant to a separate fee letter between the Seller and the Trustee) in the
execution of the trusts hereby created and in the exercise and performance of
any of the powers and duties hereunder or of the Trustee. Except as otherwise
provided in this Agreement, the Trustee and any director, officer, employee or
agent of the Trustee shall be indemnified and held harmless by the Trust Fund
against any claim, loss, liability, fee or expense incurred in connection with
any Event of Default, any breach of this Agreement or any claim or legal action
(including any pending or threatened claim or legal action) relating to the
acceptance or administration of its trusts hereunder or the Trustee's
performance under the Certificates, other than any claim, loss, liability or
expense (i) sustained in connection with this Agreement related to the willful
misfeasance, bad faith or negligence of the Master Servicer in the performance
of its duties hereunder or (ii) incurred in connection with a breach
constituting willful misfeasance, bad faith or negligence of the Trustee in the
performance of its duties hereunder or by reason of reckless disregard of its
obligations and duties hereunder.

               The Master Servicer shall indemnify the Trustee and any director,
officer, employee or agent of the Trustee against any such claim or legal action
(including any pending or threatened claim or legal action), loss, liability,
fee or expense that may be sustained in connection with this Agreement related
to the willful misfeasance, bad faith, or negligence in the performance of the
Master Servicer's duties hereunder.

               The provisions of this Section 8.05 shall survive the resignation
or removal of the Trustee or the termination of this Agreement.

               SECTION 8.06.          Eligibility Requirements for Trustee.

               The Trustee hereunder shall at all times be a corporation or a
national banking association organized and doing business under the laws of any
state or the United States of America or the District of Columbia, authorized
under such laws to exercise corporate trust powers, having a combined capital
and surplus of at least $50,000,000 and subject to supervision or examination by
federal or state authority. In addition, the Trustee shall at all times be
acceptable to the Rating


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Agency rating the Certificates. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section the combined capital and surplus of such corporation shall be deemed to
be its combined capital and surplus as set forth in its most recent report of
condition so published. In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, the Trustee shall
resign immediately in the manner and with the effect specified in Section 8.07.
The corporation or national banking association serving as Trustee may have
normal banking and trust relationships with the Seller and their affiliates or
the Master Servicer and its affiliates; provided, however, that such corporation
cannot be an affiliate of the Master Servicer other than the Trustee in its role
as successor to the Master Servicer.

               SECTION 8.07.          Resignation and Removal of the Trustee.

               The Trustee may at any time resign and be discharged from the
trusts hereby created by giving written notice thereof to the Master Servicer;
with a copy to the Rating Agencies; provided, that such resignation shall not be
effective until a successor trustee is appointed and accepts appointment in
accordance with the following provisions; provided, however, that the resigning
Trustee shall not resign and be discharged from the trusts hereby created until
such time as the Rating Agency rating the Certificates approves the successor
trustee. Upon receiving such notice of resignation, the Master Servicer shall
promptly appoint a successor trustee who meets the eligibility requirements of
Section 8.06 by written instrument, in triplicate, one copy of which instrument
shall be delivered to each of the resigning Trustee and to the successor
trustee. If no successor trustee shall have been so appointed and have accepted
appointment within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor trustee.

               If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 8.06 and shall fail to resign after
written request therefor by the Master Servicer, or if at any time the Trustee
shall become incapable of acting, or shall be adjudged bankrupt or insolvent, or
a receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, the
Master Servicer may remove the Trustee and appoint a successor trustee who meets
the eligibility requirements of Section 8.06 by written instrument, in
triplicate, which instrument shall be delivered to the Trustee so removed and to
the successor trustee.

               The Holders of Certificates entitled to at least 51% of the
Voting Rights, may at any time remove the Trustee and appoint a successor
trustee by written instrument or instruments, in triplicate, signed by such
Holders or their attorneys-in-fact duly authorized, one complete set of which
instruments shall be delivered to the Master Servicer, one complete set to the
Trustee so removed and one complete set to the successor so appointed. A copy of
such instrument shall be delivered to the Certificateholders and the Company by
the Master Servicer.



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               Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor trustee as
provided in Section 8.08.

               SECTION 8.08.          Successor Trustee.

               Any successor trustee appointed as provided in Section 8.07 shall
execute, acknowledge and deliver to the Master Servicer and to its predecessor
trustee an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor trustee shall become effective and
such successor trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with the like effect as if originally named as trustee
herein. The predecessor trustee shall after payment of its outstanding fees and
expenses, promptly deliver to the successor trustee all assets and records of
the Trust Fund held by it hereunder, and the Master Servicer and the predecessor
trustee shall execute and deliver all such instruments and do such other things
as may reasonably be required for more fully and certainly vesting and
confirming in the successor trustee all such rights, powers, duties and
obligations.

               No successor trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 8.06.

               Upon acceptance of appointment by a successor trustee as provided
in this Section, the Master Servicer shall mail notice of the succession of such
trustee hereunder to all Holders of Certificates at their addresses as shown in
the Certificate Register. If the Master Servicer fails to mail such notice
within ten days after acceptance of appointment by the successor trustee, the
successor trustee shall cause such notice to be mailed at the expense of the
Master Servicer.

               SECTION 8.09.          Merger or Consolidation of Trustee.

               Any state bank or trust company or corporation or national
banking association into which the Trustee may be merged or converted or with
which it may be consolidated or any state bank or trust company or national
banking association resulting from any merger, conversion or consolidation to
which the Trustee shall be a party, or any state bank or trust company or
corporation or national banking association succeeding to all or substantially
all of the corporate trust business of the Trustee, shall be the successor of
the Trustee hereunder, provided such state bank or trust company or corporation
or national banking association shall be eligible under the provisions of
Section 8.06 without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding.

               SECTION 8.10. Appointment of Co-Trustee or Separate Trustee.

               Notwithstanding any other provisions hereof, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust Fund or property securing


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the same may at the time be located, the Master Servicer and the Trustee acting
jointly shall have the power and shall execute and deliver all instruments to
appoint one or more Persons approved by the Trustee to act as co-trustee or
co-trustees, jointly with the Trustee, or separate trustee or separate trustees,
of all or any part of the Trust Fund, and to vest in such Person or Persons, in
such capacity, such title to the Trust Fund, or any part thereof, and, subject
to the other provisions of this Section 8.10, such powers, duties, obligations,
rights and trusts as the Master Servicer and the Trustee may consider necessary
or desirable. If the Master Servicer shall not have joined in such appointment
within 15 days after the receipt by it of a request so to do, or in case an
Event of Default shall have occurred and be continuing, the Trustee alone shall
have the power to make such appointment without the Master Servicer. No
co-trustee or separate trustee hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 8.06 hereunder and no notice to
Holders of Certificates of the appointment of co-trustee(s) or separate
trustee(s) shall be required under Section 8.08 hereof.

               In the case of any appointment of a co-trustee or separate
trustee pursuant to this Section 8.10 all rights, powers, duties and obligations
conferred or imposed upon the Trustee and required to be conferred or such
co-trustee shall be conferred or imposed upon and exercised or performed by the
Trustee and such separate trustee or co-trustee jointly, except to the extent
that under any law of any jurisdiction in which any particular act or acts are
to be performed (whether as Trustee hereunder or as successor to the Master
Servicer hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust Fund or any portion thereof in any
such jurisdiction) shall be exercised and performed by such separate trustee or
co-trustee at the direction of the Trustee.

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

               Any separate trustee or co-trustee may, at any time, constitute
the Trustee, its agent or attorney-in-fact, with full power and authority, to
the extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.


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                                   ARTICLE IX

                                   TERMINATION

               SECTION 9.01. Termination Upon Repurchase or Liquidation of All
                             Mortgage Loans or upon Purchase of Certificates.

        (a) Subject to Section 9.03, the respective obligations and
responsibilities of the Company, the Master Servicer and the Trustee created
hereby (other than the obligations of the Master Servicer to the Trustee
pursuant to Section 8.05 and of the Master Servicer to provide for and the
Trustee to make payments to Certificateholders as hereafter set forth) shall
terminate upon payment to the Certificateholders of all amounts held by or on
behalf of the Trustee and required to be paid to them hereunder following the
earlier to occur of (i) the repurchase by the Holder of a 50.01% Percentage
Interest in the Class C Certificates (the "Majority Class C Certificateholders")
or its designee of all Mortgage Loans and each REO Property in respect thereof
remaining in the Trust Fund at a price equal to (a) 100% of the unpaid principal
balance of each Mortgage Loan (other than one as to which a REO Property was
acquired) on the day of repurchase together with accrued interest on such unpaid
principal balance at the Net Mortgage Rate to the first day of the month in
which the proceeds of such repurchase are to be distributed, plus (b) the
appraised value of any REO Property (but not more than the unpaid principal
balance of the related Mortgage Loan, together with accrued interest on that
balance at the Net Mortgage Rate to the first day of the month such repurchase
price is distributed), less the good faith estimate of the Majority Class C
Certificateholders of liquidation expenses to be incurred in connection with its
disposal thereof, such appraisal to be conducted by an appraiser mutually agreed
upon by the Majority Class C Certificateholders and the Trustee at the expense
of the Master Servicer, and (ii) the final payment or other liquidation (or any
Advance with respect thereto) of the last Mortgage Loan remaining in the Trust
Fund (or the disposition of all REO Property in respect thereof); provided,
however, that in no event shall the trust created hereby continue beyond the
earlier of (i) the Distribution Date occurring in May 2031 and (ii) the
expiration of 21 years from the death of the last survivor of the descendants of
Joseph P. Kennedy, the late ambassador of the United States to the Court of St.
James, living on the date hereof, and provided further that the purchase price
set forth above shall be increased as is necessary, as determined by the
Majority Class C Certificateholders, to avoid disqualification of any of REMIC
1, REMIC 2 or REMIC 3 as a REMIC. In the case of any repurchase by the Majority
Class C Certificateholders pursuant to clause (i), shall exercise reasonable
efforts to cooperate fully with the Trustee in effecting such repurchase and the
transfer of the Mortgage Loans and related Mortgage Files and related records to
the Majority Class C Certificateholders.

               The right of the Majority Class C Certificateholders or its
designee to repurchase all Mortgage Loans pursuant to (i) above shall be
conditioned upon the aggregate Stated Principal Balance of such Mortgage Loans
at the time of any such repurchase aggregating an amount equal to or less than
10% of the aggregate Stated Principal Balance of the Mortgage Loans at the
Cut-off Date. If such right is exercised, the Majority Class C
Certificateholders upon such repurchase shall provide to the Trustee, notice of
such exercise prior to the Determination Date in the month preceding the month
of purchase and the certification required by Section 3.16.


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               Written notice of any termination, specifying the Distribution
Date upon which the Certificateholders may surrender their Certificates to the
Trustee for payment of the final distribution and cancellation, shall be given
promptly by the Trustee by letter to the Certificateholders mailed (a) in the
event such notice is given in connection with the Majority Class C
Certificateholder's election to repurchase, not earlier than the 15th day and
not later than the 25th day of the month next preceding the month of such final
distribution or (b) otherwise during the month of such final distribution on or
before the Determination Date in such month, in each case specifying (i) the
Distribution Date upon which final payment of the Certificates will be made upon
presentation and surrender of Certificates at the office of the Trustee therein
designated, (ii) the amount of any such final payment and (iii) that the Record
Date otherwise applicable to such Distribution Date is not applicable, payments
being made only upon presentation and surrender of the Certificates at the
office of the Trustee therein specified. In the event such notice is given in
connection with the Majority Class C Certificateholder or its designee's
election to repurchase, the Majority Class C Certificateholder or its designee
shall deliver to the Trustee for deposit in the Certificate Account on the
Business Day immediately preceding the Distribution Date specified in such
notice an amount equal to the above-described repurchase price payable out of
its own funds. Upon presentation and surrender of the Certificates by the
Certificateholders, the Trustee shall first, pay itself the Trustee's Fees for
such Distribution Date and any other amounts owing to the Trustee under this
Agreement, and second, distribute to the Certificateholders (i) the amount
otherwise distributable on such Distribution Date, if not in connection with the
Majority Class C Certificateholder's election to repurchase, or (ii) if the
Majority Class C Certificateholder elected to so repurchase, an amount
determined as follows: with respect to each Regular Certificate (other than the
Class A-IO Certificates), the outstanding Certificate Principal Balance thereof,
plus with respect to each Regular Certificate (other than the Class P
Certificates), one month's interest thereon at the applicable Pass- Through Rate
and any Unpaid Interest Shortfall Amount, plus with respect to each Mezzanine
Certificate, any unpaid Allocated Realized Loss Amount; and with respect to the
Class R Certificates, the Percentage Interest evidenced thereby multiplied by
the difference, if any, between the above described repurchase price and the
aggregate amount to be distributed to the Holders of the Regular Certificates,
subject to the priorities set forth in Section 4.01. Notwithstanding the
foregoing, by acceptance of the Class R Certificates, the Holders of the Class R
Certificates agree, in connection with any termination hereunder, to assign and
transfer any amounts received in respect of such termination to the Holders of
the Class C Certificates and to pay any such amounts to the Holders of the Class
C Certificates. Upon certification to the Trustee by a Servicing Officer,
following such final deposit, the Trustee shall promptly release the Mortgage
Files as directed by the Majority Class C Certificateholder for the remaining
Mortgage Loans, and the Trustee shall execute all assignments, endorsements and
other instruments required by the Majority Class C Certificateholder as being
necessary to effectuate such transfer.

               In the event that all of the Certificateholders shall not
surrender their Certificates for cancellation within six months after the time
specified in the above-mentioned notice, the Trustee shall give a second notice
to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
six months after the second notice all of the Certificates shall not have been
surrendered for cancellation, the Trustee shall take reasonable steps as
directed by the Company in writing, or appoint an agent to take


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reasonable steps, to contact the remaining Certificateholders concerning
surrender of their Certificates, and the cost thereof shall be paid out of the
funds and other assets which remain subject hereto. If within nine months after
the second notice all the Certificates shall not have been surrendered for
cancellation, the Class R Certificateholders shall be entitled to all unclaimed
funds and other assets which remain subject hereto.

               SECTION 9.02.          Termination of REMIC 2 and REMIC 3.

               REMIC 2 shall be terminated on the earlier of the Final
Distribution Date and the date on which it is deemed to receive the last deemed
distributions on the REMIC 1 Regular Interests and the last distribution due on
the REMIC 2 Regular Interests and the Class R Certificates (in respect of the
Class R-2 Interest) is made. REMIC 3 shall be terminated on the earlier of the
Final Distribution Date and the date on which it is deemed to receive the last
deemed distributions on the REMIC 2 Regular Interests and the last distribution
due on the Regular Certificates and the Class R Certificates (in respect of the
Class R-3 Interest) is made.

               SECTION 9.03.          Additional Termination Requirements.

               (a) In the event the Majority Class C Certificateholder
repurchases the Mortgage Loans as provided in Section 9.01, the Trust Fund shall
be terminated in accordance with the following additional requirements, unless
the Majority Class C Certificateholder, at its own expense, obtains for the
Trustee an Opinion of Counsel to the effect that the failure of the Trust Fund
to comply with the requirements of this Section 9.03 will not (i) result in the
imposition on the Trust of taxes on "prohibited transactions," as described in
Section 860F of the Code, or (ii) cause either REMIC 1, REMIC 2 or REMIC 3 to
fail to qualify as a REMIC at any time that any Certificate is outstanding:

               (i) The Trustee shall establish a 90-day liquidation period for
        REMIC 1, REMIC 2 and REMIC 3, as the case may be, and specify the first
        day of such period in a statement attached to the Trust Fund's final Tax
        Return pursuant to Treasury regulations Section 1.860F-1. The Trustee
        also shall satisfy all of the requirements of a qualified liquidation
        for REMIC 1, REMIC 2 and REMIC 3, as the case may be, under Section 860F
        of the Code and regulations thereunder; and

               (ii) The Majority Class C Certificateholder shall notify the
        Trustee at the commencement of such 90-day liquidation period and, at or
        prior to the time of making of the final payment on the Certificates,
        the Trustee shall sell or otherwise dispose of all of the remaining
        assets of the Trust Fund in accordance with the terms hereof.

        (b) Each Holder of a Certificate and the Trustee hereby irrevocably
approves and appoints the Master Servicer as its attorney-in-fact to adopt a
plan of complete liquidation for REMIC 1, REMIC 2 and REMIC 3 at the expense of
the Trust Fund in accordance with the terms and conditions of this Agreement.


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                                    ARTICLE X

                                REMIC PROVISIONS

               SECTION 10.01.         REMIC Administration.

        (a) The Trustee shall make an election to treat the Trust Fund as three
REMICs under the Code and, if necessary, under applicable state law. Each such
election will be made on Form 1066 or other appropriate federal tax or
information return (including Form 8811) or any appropriate state return for the
taxable year ending on the last day of the calendar year in which the
Certificates are issued. For the purposes of the REMIC elections in respect of
the Trust Fund, (i) the Class R-1 Interest will constitute the sole class of
"residual interest" in REMIC 1, (ii) the Class R-2 Interest will constitute the
sole class of "residual interest" in REMIC 2, and (iii) the Class R-3 Interest
will constitute the sole class of "residual interest" in REMIC 3, and the
Regular Certificates shall be designated as the "regular interests" in REMIC 3.
The Master Servicer and the Trustee shall not permit the creation of any
"interests" (within the meaning of Section 860G of the Code) in REMIC 1, REMIC 2
or REMIC 3 other than the REMIC 1 Regular Interests and the Class R-1 Interest
(in the case of REMIC 1), the REMIC 2 Regular Interests and the Class R-2
Interest (in the case of REMIC 2), and the Regular Certificates and the Class
R-3 Interest (in the case of REMIC 3). The Trustee will apply for an Employee
Identification Number from the IRS via form SS-4 or any other acceptable method
for each of REMIC 1, REMIC 2 and REMIC 3.

        (b) The Closing Date is hereby designated as the "startup day" of the
Trust Fund within the meaning of Section 860G(a)(9) of the Code.

        (c) The Trustee shall pay out of its own funds, without any right of
reimbursement, any and all expenses relating to any tax audit of the REMICs
(including, but not limited to, any professional fees or any administrative or
judicial proceedings with respect to the REMICs that involve the Internal
Revenue Service or state tax authorities), other than the expense of obtaining
any tax related Opinion of Counsel except as specified herein. The Trustee, as
agent for the REMICs' tax matters person, shall (i) act on behalf of the REMICs
in relation to any tax matter or controversy involving the Trust Fund and (ii)
represent the Trust Fund in any administrative or judicial proceeding relating
to an examination or audit by any governmental taxing authority with respect
thereto. By their acceptance thereof, the holder of the largest Percentage
Interest of the Class R Certificates hereby agrees to irrevocably appoint the
Trustee or an Affiliate as its agent to perform all of the duties of the tax
matters person for the REMICs.

               (d) The Trustee shall prepare, sign and file all of the Tax
Returns (including Form 8811, which must be filed within 30 days of the Closing
Date) in respect of the REMICs created hereunder. The expenses of preparing and
filing such returns shall be borne by the Trustee without any right of
reimbursement therefor. The Master Servicer shall provide on a timely basis to
the Trustee or its designee such information with respect to the assets of the
REMICs as is in its possession and reasonably required by the Trustee to enable
it to perform its obligations under this Article X.


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               (e) The Trustee shall perform on behalf of the REMICs all
reporting and other tax compliance duties that are the responsibility of the
REMICs under the Code, the REMIC Provisions or other compliance guidance issued
by the Internal Revenue Service or any state or local taxing authority. Among
its other duties, as required by the Code, the REMIC Provisions or other such
compliance guidance, the Trustee shall provide (i) to any Transferor of a Class
R Certificate such information as is necessary for the application of any tax
relating to the transfer of a Class R Certificate to any Person who is not a
Permitted Transferee, (ii) to the Certificateholders such information or reports
as are required by the Code or the REMIC Provisions including reports relating
to interest, original issue discount and market discount or premium (using the
Prepayment Assumption as required) and (iii) to the Internal Revenue Service the
name, title, address and telephone number of the person who will serve as the
representative of the REMICs. The Master Servicer shall provide on a timely
basis to the Trustee such information with respect to the assets of the REMICs,
including, without limitation, the Mortgage Loans, as is in its possession and
reasonably required by the Trustee to enable it to perform its obligations under
this subsection. In addition, the Company shall provide or cause to be provided
to the Trustee, within ten (10) days after the Closing Date, all information or
data that the Trustee reasonably determines to be relevant for tax purposes as
to the valuations and issue prices of the Certificates, including, without
limitation, the price, yield, prepayment assumption and projected cash flow of
the Certificates.

               (f) The Trustee shall take such action and shall cause the REMICs
created hereunder to take such action as shall be necessary to create or
maintain the status thereof as REMICs under the REMIC Provisions (and the Master
Servicer shall assist it, to the extent reasonably requested by it). The Trustee
shall not take any action, cause the Trust Fund to take any action or fail to
take (or fail to cause to be taken) any action that, under the REMIC Provisions,
if taken or not taken, as the case may be, could (i) endanger the status of the
REMIC 1, REMIC 2 or REMIC 3 as REMICs or (ii) result in the imposition of a tax
upon the REMICs (including but not limited to the tax on prohibited transactions
as defined in Section 860F(a)(2) of the Code and the tax on contributions to a
REMIC set forth in Section 860G(d) of the Code) (either such event, an "Adverse
REMIC Event") unless the Trustee has received an Opinion of Counsel, addressed
to the Trustee (at the expense of the party seeking to take such action but in
no event at the expense of the Trustee) to the effect that the contemplated
action will not, with respect to the REMICs created hereunder, endanger such
status or result in the imposition of such a tax, nor shall the Master Servicer
take or fail to take any action (whether or not authorized hereunder) as to
which the Trustee has advised it in writing that it has received an Opinion of
Counsel to the effect that an Adverse REMIC Event could occur with respect to
such action. In addition, prior to taking any action with respect to the REMICs
or the assets of the REMICs, or causing the REMICs to take any action, which is
not contemplated under the terms of this Agreement, the Master Servicer will
consult with the Trustee or its designee, in writing, with respect to whether
such action could cause an Adverse REMIC Event to occur with respect to the
Trust Fund, and the Master Servicer shall not take any such action or cause the
Trust Fund to take any such action as to which the Trustee has advised it in
writing that an Adverse REMIC Event could occur. The Trustee may consult with
counsel to make such written advice, and the cost of same shall be borne by the
party seeking to take the action not permitted by this Agreement, but in no
event shall such cost be an expense of the Trustee. At all times as may be
required by the Code, the Trustee will ensure that substantially all of the
assets


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of the REMICs created hereunder will consist of "qualified mortgages" as defined
in Section 860G(a)(3) of the Code and "permitted investments" as defined in
Section 860G(a)(5) of the Code.

               (g) In the event that any tax is imposed on "prohibited
transactions" of the REMICs created hereunder as defined in Section 860F(a)(2)
of the Code, on the "net income from foreclosure property" of the REMICs as
defined in Section 860G(c) of the Code, on any contributions to the REMICs after
the Startup Day therefor pursuant to Section 860G(d) of the Code, or any other
tax is imposed by the Code or any applicable provisions of state or local tax
laws, such tax shall be charged (i) to the Trustee pursuant to Section 10.03
hereof, if such tax arises out of or results from a breach by the Trustee of any
of its obligations under this Article X, (ii) to the Master Servicer pursuant to
Section 10.03 hereof, if such tax arises out of or results from a breach by the
Master Servicer of any of its obligations under Article III or this Article X,
or otherwise, (iii) to the Master Servicer as provided in Section 3.05 and (iv)
against amounts on deposit in the Certificate Account and shall be paid by
withdrawal therefrom to the extent not required to be paid by the Master
Servicer or the Trustee pursuant to another provision of this Agreement.

               (h) On or before April 15 of each calendar year, commencing April
15, 2002, the Trustee shall deliver to the Master Servicer and the Rating Agency
a Certificate from a Responsible Officer of the Trustee stating the Trustee's
compliance with this Article X.

               (i) The Trustee shall, for federal income tax purposes, maintain
books and records with respect to the REMICs on a calendar year and on an
accrual basis.

               (j) Following the Startup Day, the Trustee shall not accept any
contributions of assets to the REMICs other than in connection with any
Qualified Substitute Mortgage Loan delivered in accordance with Section 2.04
unless it shall have received an Opinion of Counsel to the effect that the
inclusion of such assets in the REMICs will not cause the REMIC 1, REMIC 2 or
REMIC 3 to fail to qualify as REMICs at any time that any Certificates are
outstanding or subject either REMIC 1, REMIC 2 or REMIC 3 to any tax under the
REMIC Provisions or other applicable provisions of federal, state and local law
or ordinances.

               (k) Neither the Trustee nor the Master Servicer shall enter into
any arrangement by which the REMICs will receive a fee or other compensation for
services nor permit the REMICs to receive any income from assets other than
"qualified mortgages" as defined in Section 860G(a)(3) of the Code or "permitted
investments" as defined in Section 860G(a)(5) of the Code.

               SECTION 10.02.         Prohibited Transactions and Activities.

               None of the Company, the Master Servicer or the Trustee shall
sell, dispose of or substitute for any of the Mortgage Loans (except in
connection with (i) the foreclosure of a Mortgage Loan, including but not
limited to, the acquisition or sale of a Mortgaged Property acquired by deed in
lieu of foreclosure, (ii) the bankruptcy of the Trust Fund, (iii) the
termination of REMIC 1, REMIC 2 or REMIC 3 pursuant to Article IX of this
Agreement, (iv) a substitution pursuant to Article II of this Agreement or (v) a
purchase of Mortgage Loans pursuant to Article II or III of this


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Agreement), nor acquire any assets for the Trust Fund (other than REO Property
acquired in respect of a defaulted Mortgage Loan), nor sell or dispose of any
investments in the Custodial Account or the Certificate Account for gain, nor
accept any contributions to the REMICs after the Closing Date (other than a
Qualified Substitute Mortgage Loan delivered in accordance with Section 2.03),
unless it has received an Opinion of Counsel, addressed to the Trustee (at the
expense of the party seeking to cause such sale, disposition, substitution,
acquisition or contribution but in no event at the expense of the Trustee) that
such sale, disposition, substitution, acquisition or contribution will not (a)
affect adversely the status of REMIC 1, REMIC 2 or REMIC 3 as REMICs or (b)
cause the Trust Fund to be subject to a tax on "prohibited transactions" or
"contributions" pursuant to the REMIC Provisions.

               SECTION 10.03. Master Servicer and Trustee Indemnification.

               (a) The Trustee agrees to indemnify the Trust Fund, the Company,
and the Master Servicer for any taxes and costs including, without limitation,
any reasonable attorneys fees imposed on or incurred by the Trust Fund, the
Company or the Master Servicer, as a result of a breach of the Trustee's
covenants set forth in this Article X.

               (b) The Master Servicer agrees to indemnify the Trust Fund, the
Company and the Trustee for any taxes and costs including, without limitation,
any reasonable attorneys' fees imposed on or incurred by the Trust Fund, the
Company or the Trustee, as a result of a breach of the Master Servicer's
covenants set forth in Article III or this Article X, in each case with respect
to compliance with the REMIC Provisions.


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                                   ARTICLE XI

                            MISCELLANEOUS PROVISIONS

               SECTION 11.01.         Amendment.

               This Agreement may be amended from time to time by the Company,
the Master Servicer and the Trustee, without the consent of any of the
Certificateholders, (i) to cure any ambiguity, (ii) to correct or supplement any
provisions herein which may be defective or inconsistent with any other
provisions herein or to correct any error, (iii) to amend this Agreement in any
respect subject to the provisions in clauses (A) and (B) below, or (iv) if such
amendment, as evidenced by an Opinion of Counsel (provided by the Person
requesting such amendment) delivered to the Trustee, is reasonably necessary to
comply with any requirements imposed by the Code or any successor or amendatory
statute or any temporary or final regulation, revenue ruling, revenue procedure
or other written official announcement or interpretation relating to federal
income tax laws or any proposed such action which, if made effective, would
apply retroactively to the Trust Fund at least from the effective date of such
amendment; provided that such action (except any amendment described in (iv)
above) shall not adversely affect in any material respect the interests of any
Certificateholder (other than Certificateholders who shall consent to such
amendment), as evidenced by (A) an Opinion of Counsel (provided by the Person
requesting such amendment) delivered to the Trustee, and (B) a letter from each
Rating Agency, confirming that such amendment shall not cause it to lower its
rating on any of the Certificates.

               This Agreement may also be amended from time to time by the
Company, the Master Servicer and the Trustee and Holders of Certificates
entitled to at least 66-2/3% of the Voting Rights for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the Holders of
Certificates; provided, however, that no such amendment shall (i) reduce in any
manner the amount of, or delay the timing of, payments received on Mortgage
Loans which are required to be distributed on any Certificate without the
consent of the Holder of such Certificate, (ii) adversely affect in any material
respect the interests of the Holders of any Class of Certificates in a manner
other than as described in (i), without the consent of the Holders of
Certificates of such Class evidencing at least 66-2/3% of the Voting Rights of
such Class, or (iii) reduce the aforesaid percentage of Certificates the Holders
of which are required to consent to any such amendment, without the consent of
the Holders of all Certificates then outstanding. Notwithstanding any other
provision of this Agreement, for purposes of the giving or withholding of
consents pursuant to this Section 11.01, Certificates registered in the name of
the Seller or the Master Servicer or any affiliate thereof shall be entitled to
Voting Rights with respect to matters described in (i), (ii) and (iii) of this
paragraph.

               Notwithstanding any contrary provision of this Agreement, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel (provided by the Person requesting
such amendment) to the effect that such amendment will not result in the
imposition of any tax on either REMIC 1, REMIC 2 or REMIC 3 pursuant to the


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REMIC Provisions or cause either REMIC 1, REMIC 2 or REMIC 3 to fail to qualify
as a REMIC at any time that any Certificates are outstanding.

               Promptly after the execution of any such amendment the Trustee
shall furnish a copy of such amendment or a written statement describing the
amendment to each Certificateholder, with a copy to the Rating Agencies.

               It shall not be necessary for the consent of Certificateholders
under this Section 11.01 to approve the particular form of any proposed
amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject to
such reasonable regulations as the Trustee may prescribe.

               Prior to executing any amendment pursuant to this Section, the
Trustee shall be entitled to receive an Opinion of Counsel (provided by the
Person requesting such amendment) to the effect that such amendment is
authorized or permitted by this Agreement. The cost of any Opinion of Counsel
delivered pursuant to this Section 11.01 shall be an expense of the party
requesting such amendment, but in any case shall not be an expense of the
Trustee.

               The Trustee may, but shall not be obligated to enter into any
amendment pursuant to this Section that affects its rights, duties and
immunities under this Agreement or otherwise.

               SECTION 11.02.         Recordation of Agreement; Counterparts.

               To the extent permitted by applicable law, this Agreement is
subject to recordation in all appropriate public offices for real property
records in all the counties or other comparable jurisdictions in which any or
all of the properties subject to the Mortgages are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected by the Master Servicer at the expense of the Certificateholders, but
only upon direction of the Company accompanied by an Opinion of Counsel to the
effect that such recordation materially and beneficially affects the interests
of the Certificateholders.

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

               SECTION 11.03. Limitation on Rights of Certificateholders.

               The death or incapacity of any Certificateholder shall not
operate to terminate this Agreement or the Trust Fund, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of the
Trust Fund, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.


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               No Certificateholder shall have any right to vote (except as
expressly provided for herein) or in any manner otherwise control the operation
and management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of the Certificates,
be construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be under
any liability to any third party by reason of any action taken by the parties to
this Agreement pursuant to any provision hereof.

               No Certificateholder shall have any right by virtue of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a notice of an Event of
Default, or of a default by the Seller or the Trustee in the performance of any
obligation hereunder, and of the continuance thereof, as hereinbefore provided,
and unless also the Holders of Certificates entitled to at least 51% of the
Voting Rights shall have made written request upon the Trustee to institute such
action, suit or proceeding in its own name as Trustee hereunder and shall have
offered to the Trustee such reasonable indemnity as it may require against the
costs, expenses and liabilities to be incurred therein or thereby, and the
Trustee, for 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 is understood and intended, and expressly covenanted by each
Certificateholder with every other Certificateholder and the Trustee, that no
one or more Holders of Certificates shall have any right in any manner whatever
by virtue of any provision of this Agreement to affect, disturb or prejudice the
rights of the Holders of any other of such Certificates, or to obtain or seek to
obtain priority over or preference to any other such Holder, or to enforce any
right under this Agreement, except in the manner herein provided and for the
equal, ratable and common benefit of all Certificateholders. For the protection
and enforcement of the provisions of this Section, each and every
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.

               SECTION 11.04.         Governing Law.

               This Agreement and the Certificates 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 11.05.         Notices.

               All demands, notices and direction hereunder shall be in writing
and shall be deemed effective upon receipt when delivered to (a) in the case of
the Company, Impac Funding, 1401 Dove Street, Newport Beach, California 92660,
Attention: General Counsel, or such other address as may hereafter be furnished
to the other parties hereto in writing; (b) in the case of Impac Funding, 1401
Dove Avenue, Newport Beach, California 92660, Attention: General Counsel, or
such other address as may hereafter be furnished to the other parties hereto in
writing; (c) in the case of the Trustee, to its Corporate Trust Office, or such
other address as may hereafter be furnished to the other parties hereto in
writing; or (d) in the case of the Rating Agencies, Standard & Poor's, 55 Water
Street, 41st


                                       128

<PAGE>



Floor, New York, NY 10041 Attention: Residential Mortgage Surveillance Group;
Fitch, Fitch, Inc., One State Street, 30th Floor, New York, New York 10004,
Attention: Mortgage Backed Securities Department, Impac 2001-4; and Moody's,
Moody's Investors Service, Inc., ABS Monitoring Department, 99 Church Street,
New York, New York 10007. Any notice required or permitted to be mailed to a
Certificateholder shall be given by first class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register. Any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the Certificateholder receives
such notice.

               SECTION 11.06.         Severability of Provisions.

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

               SECTION 11.07.         Successors and Assigns.

               The provisions of this Agreement shall be binding upon and inure
to the benefit of the respective successors and assigns of the parties hereto,
and all such provisions shall inure to the benefit of the Trustee and the
Certificateholders.

               SECTION 11.08.         Article and Section Headings.

               The article and section headings herein are for convenience of
reference only, and shall not limit or otherwise affect the meaning hereof.

               SECTION 11.09.         Notice to Rating Agencies.

               The Trustee shall use its best efforts to promptly provide notice
to each Rating Agency referred to below with respect to each of the following of
which it has actual knowledge:
<TABLE>
<CAPTION>

<S>            <C>
               1.  Any material change or amendment to this Agreement;

               2.  The occurrence of any Event of Default that has not been cured;

               3.  The resignation or termination of the Master Servicer or the Trustee;

               4.  The repurchase or substitution of Mortgage Loans pursuant to Section 2.03;

               5.  The final payment to Certificateholders; and

               6.  Any change in the location of the Custodial Account or the Certificate Account.
</TABLE>


                                       129

<PAGE>



               In addition, the Trustee shall promptly furnish to the Rating
Agency copies of each report to Certificateholders described in Section 4.02;
and the Master Servicer shall promptly furnish to the Rating Agency copies of
each annual independent public accountants' servicing report received as
described in Section 3.20.

               Any such notice pursuant to this Section 11.09 shall be in
writing and shall be deemed to have been duly given if personally delivered or
mailed by first class mail, postage prepaid, or by express delivery service to
(i) in the case of Standard & Poor's, 55 Water Street, 41st Floor, New York, New
York 10041, (ii) in the case of Moody's, ABS Monitoring Department, 99 Church
Street, New York, New York 10007, and (iii) in the case of Fitch, One State
Street Plaza, 30th Floor, New York, New York 10004, or, in each case, such other
address as any such Rating Agency may designate in writing to the parties
thereto.



                                       130

<PAGE>



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

                                  IMPAC SECURED ASSETS CORP.,
                                          Company



                                  By:
                                     -----------------------------------
                                  Name:        Richard J. Johnson
                                  Title:        Chief Financial Officer


                                  IMPAC FUNDING CORPORATION,
                                          Master Servicer



                                  By:
                                     -----------------------------------
                                  Name:        Lisa A. Duehring
                                  Title:        Senior Vice President


                                  BANKERS TRUST COMPANY OF
                                  CALIFORNIA, N.A.,
                                          as Trustee



                                  By:
                                     ------------------------------------
                                  Name:      James F. Noriega
                                  Title:       Associate



<PAGE>



STATE OF CALIFORNIA                   )
                                      )  ss.:
COUNTY OF ORANGE                      )


               On the 30th day of May, 2001 before me, a notary public in and
for said State, personally appeared Richard J. Johnson, known to me to be the
Chief Financial Officer of Impac Secured Assets Corp., one of the corporations
that executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.

               IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

                                     ------------------------------
                                               Notary Public


[Notarial Seal]




<PAGE>




STATE OF CALIFORNIA                   )
                                      )  ss.:
COUNTY OF ORANGE                      )


               On the 30th day of May, 2001, before me, a notary public in and
for said State, personally appeared Lisa A. Duehring, known to me to be a Senior
Vice President of Impac Funding Corporation, one of the corporations that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.

               IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

                                             ------------------------------
                                                       Notary Public


[Notarial Seal]



<PAGE>


STATE OF CALIFORNIA                   )
                                      )  ss.:
COUNTY OF ORANGE                      )


               On the 30th day of May, 2001, before me, a notary public in and
for said State, personally appeared James F. Noriega, known to me to be an
Associate of Bankers Trust Company of California, N.A., the corporation that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.

               IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

                                       ------------------------------
                                                 Notary Public


[Notarial Seal]



<PAGE>