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                   STRUCTURED ASSET MORTGAGE INVESTMENTS INC.

                                     Seller,

                           WASHINGTON MUTUAL BANK, FA

                    Mortgage Loan Seller and Master Servicer,

                    BANKERS TRUST COMPANY OF CALIFORNIA, N.A.

                                    Trustee,
                                 ---------------

                         POOLING AND SERVICING AGREEMENT

                             Dated as of May 1, 2001

                                   relating to

                      WASHINGTON MUTUAL MORTGAGE LOAN TRUST
                MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2001-7


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<TABLE>
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                                                 TABLE OF CONTENTS

                                                                                                               Page


ARTICLE I

<S>                                                                                                             <C>
         DEFINITIONS..............................................................................................2
                  SECTION 1.01      Calculations Respecting Mortgage Loans. .....................................25

ARTICLE II

         CONVEYANCE OF TRUST FUND;
         REPRESENTATIONS AND WARRANTIES..........................................................................26
                  SECTION 2.01      Conveyance of Trust Fund.....................................................26
                  SECTION 2.02      Acceptance by Trustee........................................................29
                  SECTION 2.03      Representations, Warranties and Covenants of the Master
                                    Servicer and Mortgage Loan Seller............................................30
                  SECTION 2.04      Representations, Warranties and Covenants of the Mortgage
                                    Loan Seller with respect to the Mortgage Loans...............................32
                  SECTION 2.05      Issuance of Certificates.....................................................40
                  SECTION 2.06      REMIC Provisions.............................................................40

ARTICLE III

         ADMINISTRATION AND SERVICING
         OF MORTGAGE LOANS.......................................................................................43
                  SECTION 3.01      Servicing Standard...........................................................43
                  SECTION 3.02      Enforcement of the Obligations of Sub-Servicers..............................44
                  SECTION 3.03      Termination of the Rights of Sub-Servicers...................................45
                  SECTION 3.04      Liability of the Master Servicer.............................................45
                  SECTION 3.05      Rights of the Seller and the Trustee in Respect of the Master
                                    Servicer.....................................................................46
                  SECTION 3.06      Trustee to Act as Master Servicer............................................46
                  SECTION 3.07      Collection of Mortgage Loan Payments.........................................46
                  SECTION 3.08      Collection of Taxes, Assessments and Similar Items; Escrow
                                    Accounts.....................................................................48
                  SECTION 3.09      Permitted Withdrawals from the Custodial Account.
                                     ............................................................................49
                  SECTION 3.10      Maintenance of Primary Mortgage Insurance Policies;
                                    Collections Thereunder.......................................................50
                  SECTION 3.11      Maintenance of Hazard Insurance and Other Insurance.
                                                                                                                 51
                  SECTION 3.12      Enforcement of Due-On-Sale Clauses; Assumption
                                    Agreements...................................................................52
                  SECTION 3.13      Realization Upon Defaulted Mortgage Loans....................................54


                                                         i

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                  SECTION 3.14      Trustee to Cooperate; Release of Trustee Mortgage Files.
                                                                                                                 56
                  SECTION 3.15      Documents, Records and Funds in Possession of Master
                                    Servicer to be Held for the Trustee for the Benefit of the
                                    Certificateholders...........................................................57
                  SECTION 3.16      Servicing Compensation; Compensating Interest................................57
                  SECTION 3.17      Reports to the Seller; Account Statements....................................58
                  SECTION 3.18      Annual Statement as to Compliance............................................58
                  SECTION 3.19      Annual Independent Public Accountants' Servicing Report......................58
                  SECTION 3.20      Reports to Trustee...........................................................59

ARTICLE IV

         ADMINISTRATION OF THE TRUST FUND........................................................................60
                  SECTION 4.01      Certificate Account..........................................................60
                  SECTION 4.02      Monthly Statements to Certificateholders.....................................60

ARTICLE V

         DISTRIBUTIONS TO CERTIFICATEHOLDERS.....................................................................63
                  SECTION 5.01      Distributions Generally......................................................63
                  SECTION 5.02      Distributions from the Certificate Account...................................63
                  SECTION 5.03      Allocation of Losses.........................................................65
                  SECTION 5.04      Monthly Advances by the Master Servicer......................................67
                  SECTION 5.05      Advances for Attorneys' Fees.................................................67
                  SECTION 5.06      Nonrecoverable Advances......................................................68
                  SECTION 5.07      Advance Procedures...........................................................68

ARTICLE VI

         THE CERTIFICATES........................................................................................69
                  SECTION 6.01      The Certificates.............................................................69
                  SECTION 6.02      Registration of Transfer and Exchange of Certificates.
                                     ............................................................................70
                  SECTION 6.03      Mutilated, Destroyed, Lost or Stolen Certificates............................72
                  SECTION 6.04      Persons Deemed Owners........................................................73
                  SECTION 6.05      Access to List of Certificateholders' Names and Addresses....................73
                  SECTION 6.06      Maintenance of Office or Agency..............................................73
                  SECTION 6.07      Book-Entry Certificates......................................................73
                  SECTION 6.08      Notices to Clearing Agency...................................................74
                  SECTION 6.09      Definitive Certificates......................................................75

ARTICLE VII

         THE SELLER, MORTGAGE LOAN SELLER AND THE MASTER SERVICER
          .......................................................................................................76

                                                        ii

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                  SECTION 7.01      Liabilities of the Seller, Mortgage Loan Seller and the Master
                                    Servicer.....................................................................76
                  SECTION 7.02      Merger or Consolidation of the Seller, the Mortgage Loan
                                    Seller or the Master Servicer................................................77
                  SECTION 7.03      Limitation on Liability of the Seller, the Master Servicer and
                                    Others.......................................................................78
                  SECTION 7.04      Master Servicer Not to Resign................................................78
                  SECTION 7.05      Errors and Omissions Insurance; Fidelity Bonds...............................78
                  SECTION 7.06      Mortgage Loan Seller and Master Servicer May Own
                                    Certificates.................................................................79

ARTICLE VIII

         DEFAULT.................................................................................................80
                  SECTION 8.01      Events of Default............................................................80
                  SECTION 8.02      Trustee to Act; Appointment of Successor.....................................81
                  SECTION 8.03      Notification to Certificateholders...........................................83
                  SECTION 8.04      Waiver of Events of Default..................................................83

ARTICLE IX

         CONCERNING THE TRUSTEE..................................................................................84
                  SECTION 9.01      Duties of Trustee............................................................84
                  SECTION 9.02      Certain Matters Affecting the Trustee........................................85
                  SECTION 9.03      Trustee Not Liable for Certificates or Mortgage Loans.
                                     ............................................................................87
                  SECTION 9.04      Trustee May Own Certificates.................................................87
                  SECTION 9.05      Trustee's Compensation and Expenses..........................................87
                  SECTION 9.06      Eligibility Requirements for Trustee.........................................87
                  SECTION 9.07      Resignation and Removal of Trustee...........................................88
                  SECTION 9.08      Successor Trustee............................................................88
                  SECTION 9.09      Merger or Consolidation of Trustee...........................................89
                  SECTION 9.10      Appointment of Co-Trustee or Separate Trustee................................89
                  SECTION 9.11      Office of the Trustee........................................................91
                  SECTION 9.12      Tax Returns, 1934 Act Reporting, Other Data..................................91

ARTICLE X

         TERMINATION.............................................................................................93
                  SECTION 10.01     Termination upon Liquidation or Repurchase of all Mortgage
                                    Loans........................................................................93
                  SECTION 10.02     Procedure Upon Optional or Other Final Termination.
                                     ............................................................................94
                  SECTION 10.03     Additional Termination Requirements..........................................95


                                                        iii

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ARTICLE XI

         MISCELLANEOUS PROVISIONS................................................................................96
                  SECTION 11.01     Amendment....................................................................96
                  SECTION 11.02     Recordation of Agreement; Counterparts.......................................97
                  SECTION 11.03     Governing Law................................................................98
                  SECTION 11.04     Intention of Parties.........................................................98
                  SECTION 11.05     Notices......................................................................99
                  SECTION 11.06     Severability of Provisions..................................................100
                  SECTION 11.07     Limitation on Rights of Certificateholders..................................100
                  SECTION 11.08     Certificates Nonassessable and Fully Paid...................................101
</TABLE>


EXHIBIT A         FORM OF CLASS A CERTIFICATE
EXHIBIT B         FORM OF CLASS M-1, M-2 AND M-3 CERTIFICATE
EXHIBIT C         FORM OF CLASS B-1, B-2 AND B-3 CERTIFICATE
EXHIBIT D         FORM OF CLASS R CERTIFICATE
EXHIBIT E         SCHEDULE OF MORTGAGE LOANS
EXHIBIT F-1       FORM OF INITIAL LOAN LIST CERTIFICATION
EXHIBIT F-2       FORM OF INITIAL CERTIFICATION OF TRUSTEE
EXHIBIT F-3       FORM OF FINAL CERTIFICATION OF TRUSTEE
EXHIBIT G         FORM OF REQUEST FOR RELEASE
EXHIBIT H         FORM OF RULE 144A TRANSFER CERTIFICATE
EXHIBIT I         FORM OF ERISA TRANSFER AFFIDAVIT
EXHIBIT J-1       FORM OF RESIDUAL CERTIFICATE TRANSFER AFFIDAVIT (TRANSFEREE)
EXHIBIT J-2       FORM OF RESIDUAL CERTIFICATE TRANSFER AFFIDAVIT (TRANSFEROR)
EXHIBIT K         FORM OF NOTE ALLONGE



                                                        iv

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         THIS POOLING AND SERVICING AGREEMENT, dated as of May 1, 2001, is
hereby executed by and among STRUCTURED ASSET MORTGAGE INVESTMENTS INC., a
Delaware corporation, as seller (the "Seller"), WASHINGTON MUTUAL BANK, FA
("Washington Mutual"), in its capacity as Mortgage Loan Seller (the "Mortgage
Loan Seller") and in its capacity as master servicer (the "Master Servicer"),
and BANKERS TRUST COMPANY OF CALIFORNIA, N.A., a national banking association,
as trustee (the "Trustee"). Capitalized terms used in this Agreement and not
otherwise defined herein will have the meanings assigned to them in Article I
below.

                              PRELIMINARY STATEMENT

         The Seller has acquired the Mortgage Loans from the Mortgage Loan
Seller on the Closing Date pursuant to the Mortgage Loan Purchase Agreement and
is the owner of the Mortgage Loans and the other property being conveyed by it
to the Trustee for inclusion in the Trust Fund. The Seller has duly authorized
the execution and delivery of this Agreement to provide for the conveyance to
the Trustee of the Mortgage Loans and the other property constituting the Trust
Fund in exchange for the Certificates.

         All covenants and agreements made by the Seller, the Mortgage Loan
Seller, the Master Servicer and the Trustee herein with respect to the Mortgage
Loans and the other property constituting the Trust Fund are for the benefit and
security of the Certificateholders. The Seller, the Mortgage Loan Seller and the
Master Servicer are entering into this Agreement, and the Trustee is accepting
the trusts created hereby and thereby, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged.

         The Trustee on behalf of the Trust shall make an election for the
assets constituting the Trust Fund to be treated for federal income tax purposes
as a REMIC. On the Closing Date, all the Classes of Certificates (other than the
Class R Certificates) will be designated "regular interests" in the REMIC and
the Class R Certificates will be designated the "residual interest" in the
REMIC.

         As of the Cut-off Date, the Mortgage Loans had an aggregate Scheduled
Principal Balance of $1,051,032,566.

         The parties hereto intend to effect an absolute sale and assignment of
the Mortgage Loans to the Trustee for the benefit of Certificateholders under
the Mortgage Loan Purchase Agreement and this Agreement. However, the Mortgage
Loan Seller and the Seller will hereunder absolutely assign, and as a
precautionary matter grant a security interest in and to, its rights, if any, in
the Trust Fund and the Mortgage Loans to the Trustee on behalf of
Certificateholders to ensure that the interest of the Certificateholders
hereunder in the Mortgage Loans is fully protected.

                          W I T N E S S E T H   T H A T:

         In consideration of the mutual agreements herein contained, the Seller,
the Master Servicer, the Mortgage Loan Seller and the Trustee agree as follows:




<PAGE>



                                    ARTICLE I

                                   DEFINITIONS

         Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:

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

         1934 ACT:  The Securities Exchange Act of 1934, as amended.

         ACCRUAL PERIOD: With respect to any Distribution Date and any Class of
Certificates, the calendar month immediately preceding the month of such
Distribution Date.

         ACCRUED CERTIFICATE INTEREST: For any Certificate for any Distribution
Date, will equal the sum of the following:

         (a) interest accrued during the related Accrual Period at the
         applicable Pass-Through Rate on the Current Principal Amount of such
         Certificate immediately prior to such Distribution Date less (i) in
         the case of a Senior Certificate, such Certificate's share of any Net
         Interest Shortfall from the Mortgage Loans and the interest portion of
         any Realized Losses on the Mortgage Loans allocated thereto and (ii)
         in the case of a Subordinate Certificate, such Certificate's share of
         any Net Interest Shortfall and the interest portion of any Realized
         Losses on the Mortgage Loans allocated thereto; and

         (b) such Certificate's pro rata share, based on the Current Principal
         Amount thereof, of any Prepayment Charges on the Mortgage Loans.

Any Net Interest Shortfalls pursuant to clause (a) above will be allocated among
the Certificates in proportion to the amount of Accrued Certificate Interest
that would have been allocated thereto in the absence of such shortfalls. The
interest portion of Realized Losses for the Mortgage Loans will be allocated
sequentially, in the following order, to the Class B-3, Class B-2, Class B-1,
Class M-3, Class M-2 and Class M-1 Certificates, and then to the Class A
Certificates. Accrued Certificate Interest is calculated on the basis of a
360-day year consisting of twelve 30-day months. No Accrued Certificate Interest
will be payable with respect to any Class of Certificates after the Distribution
Date on which the outstanding Current Principal Amount of such Certificate has
been reduced to zero.

         ADVERSE REMIC EVENT:  As defined in Section 2.06(f).

         AGGREGATE EXPENSE RATE: The sum of the Servicing Fee Rate, the Excess
Servicing Fee Rate (if applicable) and the Trustee Fee Rate.

         AGGREGATE LOAN BALANCE: The aggregate of the Scheduled Principal
Balances of all Mortgage Loans at the date of determination.



                                        2

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         AGGREGATE VOTING INTERESTS: The aggregate of the Voting Interests of
all Certificates under this Agreement.

         AGREEMENT: This Pooling and Servicing Agreement and any and all
exhibits, amendments or supplements hereto.

         APPRAISED VALUE: The appraised value of the Mortgaged Property based
upon the appraisal made for the originator at the time of the origination of the
related Mortgage Loan or the sales price of the Mortgaged Property at the time
of such origination, whichever is less, or with respect to any Mortgage Loan
that represents a refinancing, the lower of the appraised value at origination
or the appraised value of the Mortgaged Property based upon the appraisal made
at the time of such refinancing.

         ASSIGNMENT: An assignment from the Mortgage Loan Seller, in blank, of
the Mortgage, in recordable form, sufficient under the laws of the jurisdiction
wherein the related Mortgaged Property is located to reflect, if recorded, of
record the absolute sale and assignment of the Mortgage Loan to the Trustee for
the benefit of Certificateholders, which assignment, may be in the form of one
or more blanket assignments covering Mortgages secured by Mortgaged Properties
located in the same county, if permitted by law and accompanied by an Opinion of
Counsel to that effect. An assignment shall include all applicable recording
information, unless the related original Mortgage has been delivered for
recording to the appropriate public recording office but has not yet been
returned to the Mortgage Loan Seller.

         BANKRUPTCY CODE: The United States Bankruptcy Code, as amended from
time to time (11 U.S.C.).

         BENEFICIAL HOLDER: A Person holding a beneficial interest in any
Certificate through a Participant or an Indirect Participant or a Person holding
a beneficial interest in any Definitive Certificate.

         BLOOMBERG:  Bloomberg L.P.

         BOOK-ENTRY CERTIFICATES: The Class A, Class M-1, Class M-2 or Class M-3
Certificates, ownership and transfers of which shall be made through book
entries, as described in Section 6.07.

         BUSINESS DAY: Any day other than (i) a Saturday or a Sunday, or (ii) a
day on which banking institutions in New York or the state in which the Master
Servicer or the Corporate Trust Office are located are authorized or obligated
by law or executive order to be closed.

         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.


                                        3

<PAGE>



         CERTIFICATE: Any Class A, Class M-1, Class M-2, Class M-3, Class B-1,
Class B-2, Class B-3 and Class R Certificate executed and authenticated by the
Trustee for the benefit of the Certificateholders in substantially the form or
forms attached as Exhibits hereto.

         CERTIFICATE ACCOUNT: The separate account or accounts created and
maintained by the Trustee pursuant to Section 4.01, in the name of the Trustee
for the benefit of the Certificateholders for deposit of payments and
collections in respect of the Mortgage Loans pursuant to Section 4.01 hereof,
which account or accounts must be an Eligible Account or Accounts.

         CERTIFICATE REGISTER: The register maintained pursuant to Section
6.02(a) hereof.

         CERTIFICATEHOLDER OR HOLDER: The Person in whose name a Certificate is
registered in the Certificate Register.

         CLASS: Collectively, all of the Certificates bearing the same
designation.

         CLASS B-1 PRINCIPAL DISTRIBUTION AMOUNT: For any Distribution Date, an
amount equal to:

         (i) prior to the Stepdown Date or on or after the Stepdown Date if a
         Trigger Event is in effect, the remaining Principal Remittance Amount
         for that Distribution Date after distribution of the Senior, Class
         M-1, Class M-2 and Class M-3 Principal Distribution Amount, or

         (ii) on or after the Stepdown Date if a Trigger Event is not in effect
         for that Distribution Date, the lesser of:

                  (I) the remaining Principal Remittance Amount for that
                  Distribution Date after distribution of the Senior, Class
                  M-1, Class M-2 and Class M-3 Principal Distribution Amount;
                  and

                  (II) the excess of (A) the sum of (1) the aggregate Current
                  Principal Amount of the Senior, Class M-1, Class M-2 and
                  Class M-3 Certificates (after taking into account the
                  payment of the Senior, Class M-1, Class M-2 and Class M-3
                  Principal Distribution Amount for that Distribution Date)
                  and (2) the Current Principal Amount of the Class B-1
                  Certificates immediately prior to that Distribution Date
                  over (B) the lesser of (x) the product of (1) 98.70% and (2)
                  the aggregate Scheduled Principal Balance of the Mortgage
                  Loans as of the end of the related Due Period, not including
                  any Deferred Interest added to the Scheduled Principal
                  Balance of the Mortgage Loans during the related Due Period,
                  and (y) the amount, if any, by which (a) the aggregate
                  Scheduled Principal Balance of the Mortgage Loans as of the
                  end of the related Due Period, not including any Deferred
                  Interest added to the Scheduled Principal Balance of the
                  Mortgage Loans during the related Due Period, exceeds (b)
                  the Current Principal Amount of the Class B-3 Certificates
                  on the Closing Date.

         CLASS B-2 PRINCIPAL DISTRIBUTION AMOUNT: For any Distribution Date, an
amount equal to:


                                        4

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          (i) prior to the Stepdown Date or on or after the Stepdown Date if a
          Trigger Event is in effect, the remaining Principal Remittance Amount
          for that Distribution Date after distribution of the Senior, Class
          M-1, Class M-2, Class M-3 and Class B-1 Principal Distribution Amount,
          or

          (ii) on or after the Stepdown Date if a Trigger Event is not in effect
          for that Distribution Date, the lesser of:

                    (I) the remaining Principal Remittance Amount for that
                    Distribution Date after distribution of the Senior, Class
                    M-1, Class M-2, Class M-3 and Class B-1 Principal
                    Distribution Amount; and

                    (II) the excess of (A) the sum of (1) the aggregate Current
                    Principal Amount of the Senior, Class M-1, Class M-2, Class
                    M-3 and Class B-1 Certificates (after taking into account
                    the payment of the Senior, Class M-1, Class M-2, Class M-3
                    and Class B-1 Principal Distribution Amount for that
                    Distribution Date) and (2) the Current Principal Amount of
                    the Class B-2 Certificates immediately prior to that
                    Distribution Date over (B) the lesser of (x) the product of
                    (1) 99.10% and (2) the aggregate Scheduled Principal Balance
                    of the Mortgage Loans as of the end of the related Due
                    Period, not including any Deferred Interest added to the
                    Scheduled Principal Balance of the Mortgage Loans during the
                    related Due Period, and (y) the amount, if any, by which (a)
                    the aggregate Scheduled Principal Balance of the Mortgage
                    Loans as of the end of the related Due Period, not including
                    any Deferred Interest added to the Scheduled Principal
                    Balance of the Mortgage Loans during the related Due Period,
                    exceeds (b) the Current Principal Amount of the Class B-3
                    Certificates on the Closing Date.

          CLASS M-1 PRINCIPAL DISTRIBUTION AMOUNT: For any Distribution Date, an
          amount equal to:

          (i) prior to the Stepdown Date or on or after the Stepdown Date if a
          Trigger Event is in effect, the remaining Principal Remittance Amount
          for that Distribution Date after distribution of the Senior Principal
          Distribution Amount, or

          (ii) on or after the Stepdown Date if a Trigger Event is not in effect
          for that Distribution Date, the lesser of:

                    (I) the remaining Principal Remittance Amount for that
                    Distribution Date after distribution of the Senior Principal
                    Distribution Amount; and

                    (II) the excess of (A) the sum of (1) the aggregate Current
                    Principal Amount of the Senior Certificates (after taking
                    into account the payment of the Senior Principal
                    Distribution Amount for that Distribution Date) and (2) the
                    Current Principal Amount of the Class M-1 Certificates
                    immediately prior to that Distribution Date over (B) the
                    lesser of (x) the product of (1) 94.90% and (2) the
                    aggregate Scheduled Principal Balance of the Mortgage Loans
                    as of the end of the related Due Period, not including any
                    Deferred Interest added to the Scheduled Principal Balance
                    of the

                                        5

<PAGE>



                    Mortgage Loans during the related Due Period, and (y) the
                    amount, if any, by which (a) the aggregate Scheduled
                    Principal Balance of the Mortgage Loans as of the end of the
                    related Due Period, not including any Deferred Interest
                    added to the Scheduled Principal Balance of the Mortgage
                    Loans during the related Due Period, exceeds (b) the Current
                    Principal Amount of the Class B-3 Certificates on the
                    Closing Date.

          CLASS M-2 PRINCIPAL DISTRIBUTION AMOUNT: For any Distribution Date, an
          amount equal to:

          (i) prior to the Stepdown Date or on or after the Stepdown Date if a
          Trigger Event is in effect, the remaining Principal Remittance Amount
          for that Distribution Date after distribution of the Senior Principal
          Distribution Amount and the Class M-1 Principal Distribution Amount,
          or

          (ii) on or after the Stepdown Date if a Trigger Event is not in effect
          for that Distribution Date, the lesser of:

                    (I) the remaining Principal Remittance Amount for that
                    Distribution Date after distribution of the Senior Principal
                    Distribution Amount and the Class M-1 Principal Distribution
                    Amount; and

                    (II) the excess of (A) the sum of (1) the aggregate Current
                    Principal Amount of the Senior and Class M-1 Certificates
                    (after taking into account the payment of the Senior
                    Principal Distribution Amount and Class M-1 Principal
                    Distribution Amount for that Distribution Date) and (2) the
                    Current Principal Amount of the Class M-2 Certificates
                    immediately prior to that Distribution Date over (B) the
                    lesser of (x) the product of (1) 96.90% and (2) the
                    aggregate Scheduled Principal Balance of the Mortgage Loans
                    as of the end of the related Due Period, not including any
                    Deferred Interest added to the Scheduled Principal Balance
                    of the Mortgage Loans during the related Due Period, and (y)
                    the amount, if any, by which (a) the aggregate Scheduled
                    Principal Balance of the Mortgage Loans as of the end of the
                    related Due Period, not including any Deferred Interest
                    added to the Scheduled Principal Balance of the Mortgage
                    Loans during the related Due Period, exceeds (b) the Current
                    Principal Amount of the Class B-3 Certificates on the
                    Closing Date.

          CLASS M-3 PRINCIPAL DISTRIBUTION AMOUNT: For any Distribution Date, an
amount equal to:

          (i) prior to the Stepdown Date or on or after the Stepdown Date if a
          Trigger Event is in effect, the remaining Principal Remittance Amount
          for that Distribution Date after distribution of the Senior, Class M-1
          and Class M-2 Principal Distribution Amount, or

          (ii) on or after the Stepdown Date if a Trigger Event is not in effect
          for that Distribution Date, the lesser of:

                    (I) the remaining Principal Remittance Amount for that
                    Distribution Date after distribution of the Senior, Class
                    M-1 and Class M-2 Principal Distribution Amount; and

                                        6

<PAGE>



                    (II) the excess of (A) the sum of (1) the aggregate Current
                    Principal Amount of the Senior, Class M-1 and Class M-2
                    Certificates (after taking into account the payment of the
                    Senior, Class M-1 and Class M-2 Principal Distribution
                    Amount for that Distribution Date) and (2) the Current
                    Principal Amount of the Class M-3 Certificates immediately
                    prior to that Distribution Date over (B) the lesser of (x)
                    the product of (1) 98.20% and (2) the aggregate Scheduled
                    Principal Balance of the Mortgage Loans as of the end of the
                    related Due Period, not including any Deferred Interest
                    added to the Scheduled Principal Balance of the Mortgage
                    Loans during the related Due Period, and (y) the amount, if
                    any, by which (a) the aggregate Scheduled Principal Balance
                    of the Mortgage Loans as of the end of the related Due
                    Period, not including any Deferred Interest added to the
                    Scheduled Principal Balance of the Mortgage Loans during the
                    related Due Period, exceeds (b) the Current Principal Amount
                    of the Class B-3 Certificates on the Closing Date.

          CLEARING AGENCY: An organization registered as a "clearing agency"
pursuant to Section 17A of the 1934 Act, which initially shall be DTC.

          CLOSING DATE: May 24, 2001.

          CODE: The Internal Revenue Code of 1986, as amended.

          COMPENSATING INTEREST: With respect to any Distribution Date, an
amount equal to interest shortfalls resulting from Principal Prepayments in Full
by a Mortgagor during the related Prepayment Period, but not more than the
lesser of (x) one-twelfth of 0.25% of the aggregate Scheduled Principal Balance
of the Mortgage Loans immediately preceding such Distribution Date and (y) the
sum of the Servicing Fee and the Excess Servicing Fee to which the Master
Servicer is entitled on such Distribution Date.

          COOPERATIVE: A corporation that has been formed for the purpose of
cooperative apartment ownership.

          COOPERATIVE LOAN: The indebtedness of a Mortgagor evidenced by a
Mortgage Note which is secured by shares issued by a Cooperative, the related
lease and any other collateral securing such loan and which is being sold to the
Purchaser pursuant to this Agreement, the Mortgage Loans so sold being
identified in the Mortgage Loan Schedule.

          CORPORATE TRUST OFFICE: The designated office of the Trustee in the
State of California at which at any particular time its corporate trust business
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
92705-4934 Attention: Trust Administration WA0102.

          CURRENT PRINCIPAL AMOUNT: For any Certificate as of any Distribution
Date will equal such Certificate's Initial Current Principal Amount on the
Closing Date, as increased by any Deferred Interest allocated thereto pursuant
to Section 5.02(d), and as reduced by (i) all amounts distributed on previous
Distribution Dates on such Certificate on account of principal, (ii) the
principal portion of all Realized Losses previously allocated to such
Certificate (taking account of its applicable Loss

                                        7

<PAGE>



Allocation Limitation) and (iii) in the case of a Subordinate Certificate, such
Certificate's pro rata share, if any, of the Subordinate Certificate Writedown
Amount for previous Distribution Dates. With respect to any Class of
Certificates, the Current Principal Amount thereof will equal the sum of the
Current Principal Amounts of all Certificates in such Class.

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

          CUSTODIAL ACCOUNT: The deposit account or accounts created and
maintained by the Master Servicer pursuant to Section 3.07(b) hereof in a
depository institution which may be the Master Servicer for the benefit of the
Certificateholders, which account or accounts must be Eligible Accounts.

         CUT-OFF DATE:  May 1, 2001.

          CUT-OFF DATE AGGREGATE LOAN BALANCE: The Aggregate Loan Balance as of
the Cut-off Date.

          DEBT SERVICE REDUCTION: With respect to any Mortgage Loan, a reduction
in the scheduled Monthly Payment for such Mortgage Loan by a court of competent
jurisdiction in a proceeding under the Bankruptcy Code, except such a reduction
constituting a Deficient Valuation or any reduction that results in a permanent
forgiveness of principal.

          DEFERRED INTEREST: With respect to each Mortgage Loan and each related
Due Date, the excess, if any, of the amount of interest accrued on such Mortgage
Loan from the preceding Due Date to such Due Date over the amount of interest
included in the Monthly Payment payable on such Due Date.

          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 that results
in a permanent forgiveness of principal, which valuation in either case results
from a proceeding under the Bankruptcy Code.

          DEFINITIVE CERTIFICATE: A Certificate of any Class issued in
definitive, fully registered, certificated form.

          DELETED MORTGAGE LOAN: A Mortgage Loan replaced or to be replaced by a
Replacement Mortgage Loan.

          DELIVERED: With respect to any Eligible Investment, when the steps
applicable to such item as specified below are completed:

                    (i) if such item is an instrument, delivering such
          instrument to the Trustee endorsed to the Trustee or its
          nominee or custodian or endorsed in blank;


                                        8

<PAGE>



                    (ii) if such item is a certificated security, delivering
          such certificated security to the Trustee in bearer form or in
          registered form issued to the Trustee or endorsed to the Trustee or
          its nominee or custodian or endorsed in blank by an effective
          endorsement;

                    (iii) if such item is a security entitlement other than a
          United States Security Entitlement, causing a securities intermediary
          (who shall maintain the related financial asset in a quantity
          corresponding to the aggregate of all security entitlements it has
          established with respect to such financial asset) to indicate by book
          entry that such security entitlement has been credited to a securities
          account of the Trustee or its nominee or custodian with such
          securities intermediary;

                    (iv) if such item is a United States Security Entitlement,
          causing a securities intermediary (who shall maintain the related
          financial asset in a quantity corresponding to the aggregate of all
          security entitlements it has established with respect to such
          financial asset) to indicate by book entry that such United States
          Security Entitlement has been credited to a securities account of the
          Trustee or its nominee or custodian with such securities intermediary;

                    (v) if such item is a securities account, causing the
          securities intermediary to indicate by book entry that all security
          entitlements carried in the securities account have been credited to
          such securities account and such securities account is in the name of
          the Trustee or its nominee or custodian with such securities
          intermediary; and

                    (vi) if such item is an uncertificated security, causing the
          issuer of such uncertificated security to register the Trustee or its
          nominee or custodian as the registered owner of such uncertificated
          security.

         DEPOSITORY AGREEMENT:  The Letter of Representation by and among DTC,
the Seller and the Trustee with respect to the Book-Entry Certificates.

         DETERMINATION DATE:  The 18th day (or if such 18th day is not a
Business Day, the Business Day immediately preceding such 18th day) of the month
of the related Distribution Date.

         DISQUALIFIED ORGANIZATION:  Either (i) the United States, (ii) any
state or political subdivision thereof, (iii) any foreign government, (iv) any
international organization, (v) any agency or instrumentality of any of the
foregoing, (vi) any tax-exempt organization (other than a cooperative described
in section 521 of the Code) which is exempt from the tax imposed by Chapter 1 of
the Code unless such organization is subject to the tax imposed by section 511
of the Code, (vii) any organization described in section 1381(a)(2)(C) of the
Code, or (viii) any "electing large partnership" described in section 775 of the
Code, or (ix) any other entity designated as a Disqualified Organization by
relevant legislation amending the REMIC Provisions and in effect at or proposed
to be effective as of the time of the determination. In addition, a corporation
will not be treated as an instrumentality of the United States or of any state
or political subdivision thereof if all of its activities are subject to tax
and, with the exception of Freddie Mac, a majority of its board of directors is
not selected by such governmental unit.


                                        9

<PAGE>



         DISTRIBUTION DATE:  The 25th day of each month or, if such 25th day is
not a Business Day the next succeeding Business Day, commencing in June 2001.

         DOWNGRADE EVENT:  The date upon which the long-term unsecured debt
rating of Washington Mutual is downgraded by Moody's below "A2," and by Fitch
below "A".

         DTC:  The Depository Trust Company.

         DUE DATE:  The date specified in the Mortgage Note on which Monthly
Payments are due.

         DUE PERIOD:  With respect to any Distribution Date, the period
commencing on the second day of the month immediately preceding the month in
which such Distribution Date occurs and ending on the first day of the month in
which such Distribution Date occurs.

         ELIGIBLE ACCOUNT:  Either (i) an account or accounts maintained with
a federal or state- chartered depository institution or trust company (which may
be the Master Servicer or an affiliate of the Master Servicer or which may be
the Trustee or an affiliate of the Trustee) the short-term unsecured debt
obligations of which (or, in the case of a depository institution or trust
company that is the principal subsidiary of a holding company, the short-term
unsecured debt obligations of such holding company) are rated by each Rating
Agency in its highest short-term rating category, provided that so long as
Washington Mutual is the Master Servicer, any account maintained with the Master
Servicer shall be an Eligible Account if the long-term unsecured debt
obligations of Washington Mutual are rated "A2" by Moody's or "A" by Fitch (ii)
an account or accounts the deposits in which are fully insured by the FDIC,
provided that any such deposits not so insured shall be otherwise maintained
such that (as evidenced by an Opinion of Counsel delivered to the Trustee and
the Rating Agencies) the applicable Certificateholders have a claim with respect
to the funds in such account or a perfected first priority security interest
against any collateral (which shall be limited to Eligible Investments) securing
such funds that is superior to claims of any other depositors or creditors of
the depository institution or trust company with which such account is
maintained, (iii) a trust account or accounts maintained with the Trustee or the
trust department of a federal or state chartered depository institution or trust
company acting in its fiduciary capacity, provided that any such state chartered
depository institution is subject to regulation regarding funds on deposit
substantially similar to the regulations set forth in 12 C.F.R. ss. 9.10(b) or
(iv) any account maintained at any Federal Home Loan Bank.

         ELIGIBLE INVESTMENTS:  At any time, any one or more of the following
obligations, instruments and securities:

                    (i) obligations of the United States or any agency thereof,
          provided such obligations are backed by the full faith and credit of
          the United States;

                    (ii) general obligations of or obligations guaranteed by any
          state of the United States or the District of Columbia receiving the
          highest long-term rating of Moody's and Fitch, and will not result in
          the downgrading or withdrawal of the rating, if any, then assigned to
          the Certificates by each applicable Rating Agency;


                                       10

<PAGE>



                    (iii) commercial paper (having original maturities of not
          more than 270 days) which is then rated in the highest commercial
          paper rating category of Moody's and Fitch, and will not result in the
          downgrading or withdrawal of the rating, if any, then assigned to the
          Certificates by each applicable Rating Agency;

                    (iv) certificates of deposit, demand or time deposits,
          federal funds or bankers' acceptances (in each case having maturities
          of not more than 365 days) issued by any depository institution or
          trust company incorporated under the laws of the United States or of
          any state thereof and subject to supervision and examination by
          federal and/or state banking authorities, provided that the commercial
          paper and/or long-term debt obligations of such depository institution
          or trust company (or in the case of a depository institution or trust
          company that is the principal subsidiary of a holding company, the
          commercial paper or long-term debt obligations of such holding
          company) are then rated in the highest rating category of Moody's and
          Fitch, in the case of commercial paper, and in one of the two highest
          rating categories in the case of long-term debt obligations, and will
          not result in the downgrading or withdrawal of the rating, if any,
          then assigned to the Certificates by each applicable Rating Agency,
          and, in the case of short-term debt obligations which have maturities
          of 30 days or less, the highest rating assigned by each Rating Agency;

                    (v) repurchase obligations with respect to any security
          described in (i) and (ii) above or any other security issued or
          guaranteed by an agency or instrumentality of the United States, in
          either case entered into with a depository institution or trust
          company (acting as principal) described in (iv) above;

                    (vi) securities bearing interest or sold at a discount
          issued by any corporation incorporated under the laws of the United
          States or any state thereof which, at the time of such investment or
          contractual commitment providing for such investments are then rated
          in the highest rating category of each Rating Agency or in such lower
          rating category as will not result in the downgrading or withdrawal of
          the rating, if any, then assigned to the Certificates by each
          applicable Rating Agency; and

                    (vii) units of taxable money-market portfolios rated in the
          highest rating category by Moody's and Fitch and not restricted to
          obligations issued or guaranteed by any agency or instrumentality of
          the United States or entities whose obligations are backed by the full
          faith and credit of the United States and repurchase agreements
          collateralized by such obligations.

PROVIDED, that (A) such obligation or security is held for a temporary period
pursuant to Treasury Regulations Section 1.860G-2(g)(1), and (B) Eligible
Investments shall include only such obligations or securities that are payable
on demand or mature on or before the (i) Business Day immediately preceding the
next Distribution Date with respect to amounts on deposit in the Certificate
Account (except for Eligible Investments described in clauses (iii) and (iv) of
this definition which may mature on the Distribution Date) and (ii) the second
Business Day immediately preceding the next Distribution Date with respect to
amounts on deposit in the Custodial Account. In addition, no Eligible Investment
which incorporates a penalty for early withdrawal will be used unless the

                                       11

<PAGE>



maturity of such Eligible Investment is on or before the Business Day
immediately preceding the next Distribution Date.

         ERISA-RESTRICTED CERTIFICATE:  Any Class B-1, Class B-2, Class B-3 and
Class R Certificate.

         ESCROW ACCOUNT:  As defined in Section 3.08.

         EVENT OF DEFAULT:  As defined in Section 8.01 hereof.

         EXCESS SERVICING FEE:  As to any Distribution Date and each Mortgage
Loan, an amount equal to the product of the Excess Servicing Fee Rate and the
Scheduled Principal Balance of such Mortgage Loan as of the first day of the Due
Period.

         EXCESS SERVICING FEE RATE:  For each Mortgage Loan, the excess of (a)
the related Gross Margin less the Servicing Fee Rate over (b) 1.200% per annum;
provided, that, in the event the Index and Gross Margin are adjusted pursuant to
Section 3.01(d), the Excess Servicing Fee Rate shall be the rate per annum in
effect immediately prior to such adjustment.

          FANNIE MAE: The Federal National Mortgage Association, a federally
chartered and privately owned corporation organized and existing under the
Federal National Mortgage Association Charter Act, or any successor thereto.

          FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.

          FINAL DISTRIBUTION DATE: The Distribution Date on which the final
distribution in respect of the Certificates will be made pursuant to Section
10.01, which Final Distribution Date shall in no event be later than the end of
the 90-day liquidation period described in Section 10.03.

          FITCH: Fitch Inc. or any successor thereto.

          FREDDIE MAC: The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under Title III of the
Emergency Home Finance Act of 1970, as amended, or any successor thereto.

          GROSS MARGIN: The fixed percentage set forth in the related Mortgage
Note that is added to the related Index in accordance with the terms of the
related Mortgage Note used to determine the Mortgage Rate for such Mortgage
Loan, as modified pursuant to Section 3.01(d) hereof.

          INDEX: One-Year MTA as specified in the related Mortgage Note for
calculation of the Mortgage Rate thereof, as modified pursuant to Section
3.01(d) hereof.

          INDIRECT PARTICIPANTS: Entities, such as banks, brokers, dealers and
trust companies, that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly.

          INITIAL CURRENT PRINCIPAL AMOUNT: With respect to the Class A
Certificates in the aggregate, $1,003,735,900. With respect to the Class R
Certificates in the aggregate, $100.00. With respect to

                                       12

<PAGE>



the Class M-1 Certificates in the aggregate, $20,495,200. With respect to the
Class M-2 Certificates in the aggregate, $10,510,300. With respect to the Class
M-3 Certificates in the aggregate, $6,831,700. With respect to the Class B-1
Certificates in the aggregate, $2,627,600. With respect to the Class B-2
Certificates in the aggregate, $2,102,100. With respect to the Class B-3
Certificates in the aggregate, $4,729,656. With respect to any single
Certificate, the Initial Current Principal Amount as stated on the face thereof.

          INSURANCE PROCEEDS: Amounts paid pursuant to any insurance policy with
respect to a Mortgage Loan that have not been used to restore the related
property or to reimburse certain expenses.

          INTEREST REMITTANCE AMOUNT: With respect to any Distribution Date, the
sum of (i) all interest collected (other than Payaheads) or advanced in respect
of Monthly Payments on the Mortgage Loans during the related Due Period, less
(x) the Servicing Fee, the Excess Servicing Fee (if applicable) and the Trustee
Fee with respect to the Mortgage Loans, (y) unreimbursed Monthly Advances to the
extent allocable to interest and (z) other amounts due to the Master Servicer
with respect to the Mortgage Loans, to the extent allocable to interest, (ii)
any Compensating Interest paid by the Master Servicer with respect to the
Mortgage Loans with respect to the related Prepayment Period, (iii) the portion
of any Replacement Amount paid with respect to Replacement Mortgage Loans during
the related Prepayment Period allocable to interest, (iv) any Prepayment Charges
on the Mortgage Loans with respect to the related Prepayment Period, and (v) all
Liquidation Proceeds, Insurance Proceeds and other recoveries collected with
respect to such Mortgage Loans during the related Prepayment Period, to the
extent allocable to interest, as reduced by unreimbursed interest Monthly
Advances and other amounts due the Master Servicer, to the extent allocable to
interest.

          LATEST POSSIBLE MATURITY DATE: The latest possible maturity date for
purposes of Section 1.860G-1(a)(4)(iii) of the Treasury regulations is the
Distribution Date immediately following the maturity date for the Mortgage Loan
with the latest maturity date in the Trust Fund.

          LIQUIDATED LOAN: With respect to any Distribution Date, a Mortgage
Loan which, as of the close of business on the Business Day next preceding the
related Determination Date, (a) has been liquidated through deed in lieu of
foreclosure, sale in foreclosure, trustee's sale or other realization as
provided by applicable law of real property subject to the related Mortgage and
any security agreements or (b) with respect to which payment under related
private mortgage insurance or hazard insurance and/or from any public or
governmental authority on account of a taking or condemnation of any such
property has been received; provided, however, that any REO Property shall not
be treated as a Liquidated Loan until such property has been finally liquidated.

          LIQUIDATION EXPENSES: Customary and reasonable "out of pocket"
expenses incurred by the Master Servicer (or the related Sub-Servicer) in
connection with the liquidation of any defaulted Mortgage Loan and not recovered
by the Master Servicer (or the related Sub-Servicer) under a Primary Mortgage
Insurance Policy for reasons other than the Master Servicer's failure to comply
with Section 3.10 hereof, such expenses including, without limitation, legal
fees and expenses, any unreimbursed amount expended by the Master Servicer
pursuant to Section 3.11 hereof respecting the related Mortgage to the extent
not previously reimbursed under any hazard insurance policy for reasons other
than the Master Servicer's failure to comply with Section 3.11 hereof and any
related

                                       13

<PAGE>



and unreimbursed expenditures for real estate property taxes or for property
restoration or preservation.

          LIQUIDATION PROCEEDS: Amounts other than Insurance Proceeds received
in connection with the liquidation of a defaulted Mortgage Loan, whether through
trustee's sale, foreclosure sale or otherwise or amounts received in connection
with any condemnation or partial release of a Mortgaged Property.

          LOAN-TO-VALUE RATIO: As of any date, the fraction, expressed as a
percentage, the numerator of which is the principal balance of the related
Mortgage Loan at the date of determination and the denominator of which is the
Appraised Value of the related Mortgaged Property or, in the case of a
Replacement Mortgage Loan, the appraised value of the related Mortgaged Property
as of the date of its origination.

          LOSS ALLOCATION LIMITATION: As defined in Section 5.03(b).

          MASTER SERVICER: Washington Mutual Bank, FA or any successor under the
terms of this Agreement.

          MASTER SERVICER ADVANCE DATE: As defined in Section 5.07(a) hereof.

          MASTER SERVICER MORTGAGE FILE: All documents pertaining to a Mortgage
Loan not required to be included in the Trustee Mortgage File and held by the
Master Servicer or any Sub-Servicer.

          MASTER SERVICER REMITTANCE DATE: With respect to each Distribution
Date, the 18th day of the month, or if such 18th day is not a Business Day, the
Business Day immediately prior thereto.

          MONTHLY ADVANCE: The aggregate of the advances made by or on behalf of
the Master Servicer with respect to any Distribution Date pursuant to Section
5.04 hereof.

          MONTHLY PAYMENT: With respect to any Mortgage Loan and any month, the
scheduled payment on such Mortgage Loan which is allocated to principal (if any)
and interest due during such month as calculated pursuant to the terms of the
related Mortgage Note.

          MOODY'S: Moody's Investors Service, Inc. or any successor thereto.

          MORTGAGE: The mortgage, deed of trust or other instrument creating a
first lien on a fee simple or leasehold estate in real property securing a
Mortgage Note.

          MORTGAGE FILE: For each Mortgage Loan, the Trustee Mortgage File and
the Master Servicer Mortgage File.

          MORTGAGE LOAN: Each of the mortgage loans (including Cooperative
Loans) transferred and assigned to the Trustee pursuant to the provisions hereof
as from time to time are held as a part of the Trust Fund, evidenced by a
Mortgage Note and secured by a Mortgage, the mortgage loans so held being
identified in the Mortgage Loan Schedule, as amended from time to time.

                                       14

<PAGE>



          MORTGAGE LOAN PURCHASE AGREEMENT: The Mortgage Loan Purchase
Agreement, dated as of May 24, 2001, by and among the Seller, the Mortgage Loan
Seller and the Placement Agents, pursuant to which the Seller purchased the
Mortgage Loans from the Mortgage Loan Seller.

          MORTGAGE LOAN REPURCHASE PRICE: The price, calculated as set forth in
Section 10.01, to be paid in connection with the repurchase of the Mortgage
Loans pursuant to an Optional Termination of the Trust Fund.

          MORTGAGE LOAN SCHEDULE: The list of Mortgage Loans transferred to the
Trustee as part of the Trust Fund for the Certificates and from time to time
subject to this Agreement (as from time to time amended by the Master Servicer
to reflect the addition of Replacement Mortgage Loans and the deletion of
Deleted Mortgage Loans pursuant to the provisions of this Agreement), attached
hereto as Exhibit E, setting forth the following information with respect to
each Mortgage Loan:
<TABLE>
<CAPTION>

<S>      <C>
                  (i)      the loan number;

                  (ii)     the city, state and zip code for each Mortgaged Property;

                  (iii)    the original term to maturity;

                  (iv)     the remaining term to maturity as of the Cut-off Date;

                  (v)      the original principal balance;

                  (vi)     the Scheduled Principal Balance as of the Cut-off Date;

                  (vii)    the Mortgage Rate;

                  (viii)   the Servicing Fee Rate and the Excess Servicing Fee Rate, either separately
         stated or in the aggregate;

                  (ix)     the first Due Date;

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

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

                  (xii)    the Appraised Value of the Mortgaged Property;

                  (xiii)   a code indicating whether the Mortgaged Property is either (a) a detached
         single-family dwelling or a de minimis planned unit development, (b) a condominium unit
         or a dwelling in a planned unit development, (c) a two- to four-family residential property
         or (d) shares in a cooperative corporation;

                  (xiv)    a code indicating whether the Mortgaged Property at the time of origination
         was represented to be owner-occupied;

                                       15

<PAGE>



                  (xv)     the purpose for which the financing was made; and

                  (xvi)    a code indicating whether the Mortgage Loan is covered by a Primary
         Mortgage Insurance Policy.
</TABLE>

          Such schedule shall also set forth the total of the amounts described
under (vi) above for all of the Mortgage Loans. Such schedule may be in the form
of more than one list collectively setting forth all of the information required
and shall also be in a computer-readable format acceptable to the Trustee.

          MORTGAGE LOAN SELLER: Washington Mutual or its successor in interest.

          MORTGAGE NOTE: The original executed note or other evidence of the
indebtedness of a Mortgagor under a Mortgage Loan, including a lost note
affidavit with a copy of the related note.

          MORTGAGE RATE: The annual rate of interest borne by a Mortgage Note,
which is set forth in the related Mortgage Note.

          MORTGAGED PROPERTY: The underlying property securing a Mortgage Loan.

          MORTGAGOR: Each obligor on a Mortgage Note.

          MORTGAGOR PREPAYMENTS: Prepayments in Full or Curtailments.

          NEGATIVE AMORTIZATION LIMIT: On any date of determination, with
respect to a Mortgage Loan, the maximum permitted ratio of the unpaid principal
balance of such Mortgage Loan to the original principal amount of such Mortgage
Loan.

          NET INTEREST SHORTFALLS: The sum of (i) Net Prepayment Interest
Shortfalls, (ii) Relief Act Shortfalls and (iii) Deferred Interest.

          NET LIQUIDATION PROCEEDS: With respect to any Liquidated Mortgage
Loan, the related Liquidation Proceeds net of (i) Liquidation Expenses and (ii)
any unreimbursed Monthly Advances or other servicing advances, if any, received
and retained in connection with the liquidation of such Mortgage Loan.

          NET MORTGAGE RATE: As to each Mortgage Loan, a rate per annum equal to
the Mortgage Rate minus the Aggregate Expense Rate.

          NET PREPAYMENT INTEREST SHORTFALL: As to any Distribution Date and any
Mortgage Loan (other than a Mortgage Loan secured by an REO Property) that was
the subject of a Principal Prepayment during the related Prepayment Period by
the Mortgagor, an amount equal to the excess of (a) one month's interest at the
Mortgage Rate on the Principal Balance of such Mortgage Loan before taking into
account such Principal Prepayment over (b) the sum of (i) the amount of interest
paid by the Mortgagor for such Prepayment Period to the date of such Principal
Prepayment and (ii) the Compensating Interest payable by the Master Servicer on
such Distribution Date.

                                       16

<PAGE>



          NON-PERMITTED FOREIGN HOLDER: As defined in Section 6.02(g).

          NONRECOVERABLE ADVANCE: The portion of any Monthly Advance or any
other advance previously made or proposed to be made by the Master Servicer
that, in the good faith judgment of the Master Servicer, will not or, in the
case of a current delinquency, would not be, ultimately recoverable by the
Master Servicer from Insurance Proceeds or Liquidation Proceeds (net of
Liquidation Expenses) with respect to the related Mortgage Loan.

          NON-U.S. PERSON: Any Person other than a U.S. Person.

          OFFERING DOCUMENTS: Any prospectus (including any prospectus
supplement) or private placement memorandum relating to the offering and sale of
the Certificates.

          OFFICERS' CERTIFICATE: A certificate signed by the Chairman of the
Board, any Vice Chairman of the Board, the President, a Vice Chair, a Group
President, an Executive Vice President, a Senior Executive Vice President,
Senior Vice President, a Vice President, or other authorized officer, or by the
Treasurer, the Secretary, or one of the Assistant Vice Presidents, Assistant
Treasurers or Assistant Secretaries of the Seller, the Mortgage Loan Seller, the
Master Servicer, as the case may be, or in the case of the Trustee, a
Responsible Officer, and delivered to the Seller, the Mortgage Loan Seller, the
Master Servicer or the Trustee, as required by this Agreement.

          ONE-YEAR MTA: Except as provided in Section 3.01(d), the index used to
determine the Mortgage Rate for each Mortgage Loan which is a per annum rate
equal to the twelve-month average, determined by adding together the annual
yields for the most recently available twelve months and dividing by 12, of the
annual yields on actively traded United States Treasury Securities adjusted to a
constant maturity of one year as publicized by the Federal Reserve Board in the
Federal Reserve Statistical Release entitled "Selected Interest Rates (G.13)" as
most recently available as of the date fifteen days prior to the interest rate
adjustment date on such Mortgage Loan.

          OPINION OF COUNSEL: A written opinion of counsel, who may be counsel
for the Seller or the Master Servicer, reasonably acceptable to the Trustee.
With respect to any opinion dealing with the definition of Eligible Account in
this Article I, Sections 2.04 or 7.04 hereof or with the qualification of a
REMIC or compliance with the REMIC Provisions, such counsel must (i) in fact be
independent of the Seller and the Master Servicer, (ii) not have any direct
financial interest in the Seller or the Master Servicer or in any affiliate of
either of them and (iii) not be connected with the Seller or the Master Servicer
as an officer, employee, promoter, underwriter, trustee, partner, director or
Person performing similar functions.

          OPTIONAL TERMINATION: The purchase of the Mortgage Loans pursuant to
Section 10.01(a).

          OPTIONAL TERMINATION DATE: The date fixed by the Master Servicer for
the purchase of the Mortgage Loans pursuant to Section 10.01.

          OUTSTANDING MORTGAGE LOAN: As to any date of determination, a Mortgage
Loan (including an REO Property) which was not the subject of a Principal
Prepayment in Full, Cash Liquidation or

                                       17

<PAGE>



REO Disposition and which was not purchased, deleted or substituted for prior to
such date of determination pursuant to Section 2.02 or 2.04.

          PARTICIPANT: A broker, dealer, bank, other financial institution or
other Person for whom DTC effects book-entry transfers and pledges of securities
deposited with DTC.

          PASS-THROUGH RATE: With respect to each Class of Certificates, the
weighted average of the Net Mortgage Rates on the Mortgage Loans, weighted on
the Scheduled Principal Balances thereof.

          PAYAHEAD: With respect to any Mortgage Loan and any Due Date therefor,
any Monthly Payment received by the Master Servicer during any Due Period in
addition to the Monthly Payment due on such Due Date, intended by the related
Mortgagor to be applied on a subsequent Due Date.

          PERCENTAGE INTEREST: The percentage interest (which may be expressed
as a fraction) evidenced by any Certificate, which (a) in the case of each Class
of the Class A, Class M-1, Class M-2, Class M-3, Class B-1, Class B-2 and Class
B-3 Certificates, is equal to a fraction, the numerator of which is the initial
Current Principal Amount of such Certificate, and the denominator of which is
equal to the initial Current Principal Amount of all Certificates of the same
Class and (b) in the case of the Class R Certificates, shall be 100%.

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

          PLACEMENT AGENTS: Bear, Stearns & Co. Inc., Greenwich Capital Markets,
Inc., Lehman Brothers, Inc. and Salomon Smith Barney, Inc.

          PLAN: Any Person which is an employee benefit plan subject to ERISA or
a plan subject to section 4975 of the Code.

          PLAN ASSET REGULATIONS: The Department of Labor regulations set forth
in 29 C.F.R.ss.2510.3- 101.

          PREPAYMENT CHARGE: With respect to any Mortgage Loan, any prepayment
penalties and charges received by the Master Servicer thereon.

          PREPAYMENT PERIOD: With respect to any Distribution Date, the calendar
month prior to the month in which such Distribution Date occurs.

          PRIMARY MORTGAGE INSURANCE POLICY: Each primary policy of mortgage
guaranty insurance with respect to the Mortgage Loans or any replacement policy
therefor.

          PRINCIPAL PREPAYMENT: Any Mortgagor payment or other recovery of
principal on a Mortgage Loan, including a recovery that takes the form of
Liquidation Proceeds or Insurance Proceeds, that is received in advance of its
scheduled Due Date other than a Payahead.


                                       18

<PAGE>



          PRINCIPAL PREPAYMENT IN FULL: Any Principal Prepayment made by a
Mortgagor of the Scheduled Principal Balance of a Mortgage Loan.

          PRINCIPAL REMITTANCE AMOUNT: With respect to any Distribution Date,
the sum of (i) all principal collected (other than Payaheads) or advanced in
respect of Monthly Payments on the Mortgage Loans during the related Due Period,
(ii) all Principal Prepayments in Full or Curtailments received during the
related Prepayment Period, (iii) the outstanding principal balance of each
Mortgage Loan that was purchased from the Trust Fund during the related
Prepayment Period, (iv) the portion of any Replacement Amount paid during the
related Prepayment Period allocable to principal, (v) all Net Liquidation
Proceeds, Insurance Proceeds and other recoveries collected with respect to such
Mortgage Loans during the related Prepayment Period, to the extent allocable to
principal, as reduced, in each case to the extent applicable, by unreimbursed
Monthly Advances and other amounts due to the Master Servicer or the Trustee, to
the extent allocable to principal as determined by the Master Servicer, and (vi)
any amounts received by the Trustee from the Mortgage Loan Seller or Master
Servicer for deposit to the Certificate Account pursuant to Section 7.01(e).

          PURCHASE PRICE: With respect to any Mortgage Loan required to be
purchased by the Mortgage Loan Seller or Master Servicer pursuant to Section
2.01, 2.02, 2.04 or 3.12 the sum of (i) 100% of the unpaid principal balance of
the Mortgage Loan on the date of such purchase, (ii) accrued and unpaid interest
to the next Due Date on the Mortgage Loan at a rate equal to the Net Mortgage
Rate and (iii) the amount of any unreimbursed Monthly Advances and other
advances made by the Master Servicer with respect to such Mortgage Loan and
reimbursable to the Master Servicer hereunder; provided, however, that if the
Master Servicer shall so choose, the Purchase Price with respect to any Mortgage
Loan purchased by the Master Servicer may be net of advances that would
otherwise be reimbursable to the Master Servicer and the Master Servicer shall
have no further entitlement to reimbursement for such advances. With respect to
any Mortgage Loan required or allowed to be purchased, the Master Servicer or
Mortgage Loan Seller, as applicable, shall deliver to the Trustee an Officers'
Certificate as to the calculation of the Purchase Price.

          QUALIFIED INSURER: A mortgage guaranty insurance company duly
qualified as such under the laws of the state of its principal place of business
and each other state having jurisdiction over such insurer in connection with
the insurance policy issued by such insurer, duly authorized and licensed by the
insurance regulatory authority of the state of its principal place of business
and, to the extent required by applicable law, each such other state, to
transact a mortgage guaranty insurance business in such state and each such
other state and to write the insurance provided by the insurance policy issued
by it and approved as an insurer by Freddie Mac or Fannie Mae and whose
claims-paying ability will not adversely affect the rating on the Certificates.

          RATING AGENCY: Each of Moody's and Fitch or any successor thereto. The
ratings of the Rating Agencies of the Certificates do not address the receipt of
Prepayment Charges on the Mortgage Loans.

          REALIZED LOSS: An amount determined by the Master Servicer and
evidenced by an Officers' Certificate delivered to the Trustee, in connection
with any Mortgage Loan equal to (a) with respect to any Liquidated Loan, the
excess of the principal balance of such Liquidated Loan plus interest thereon at
a rate equal to the applicable Net Mortgage Rate from the Due Date as to which
interest

                                       19

<PAGE>



was last paid up to the Due Date next succeeding such liquidation over proceeds,
if any, received in connection with such liquidation, after application of all
withdrawals permitted to be made by the Master Servicer from the related
Custodial Account with respect to such Mortgage Loan, (b) with respect to any
Mortgage Loan which has become the subject of a Deficient Valuation, the excess
of the principal balance of the Mortgage Loan over the principal amount as
reduced in connection with the proceedings resulting in the Deficient Valuation,
(c) with respect to any Mortgage Loan which has become the subject of a Debt
Service Reduction, the present value of all monthly Debt Service Reductions on
such Mortgage Loan, assuming that the Mortgagor pays each Monthly Payment on the
applicable Due Date and that no Principal Prepayments are received with respect
to such Mortgage Loan, discounted monthly at the applicable Mortgage Rate or (d)
the amount of any reduction by the Master Servicer to the principal balance of
such Mortgage Loan pursuant to Section 3.01(c) hereof. In determining whether a
Realized Loss is a Realized Loss of principal, Liquidation Proceeds shall be
allocated, first, to payment of expenses related to such Liquidated Mortgage
Loan, then to accrued unpaid interest and finally to reduce the principal
balance of the Mortgage Loan.

          RECORD DATE: With respect to each Distribution Date, the close of
business on the last Business Day of the month preceding the month in which the
related Distribution Date occurs.

          REFERENCE BANKS: As defined in Section 4.02(c).

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

          RELIEF ACT SHORTFALLS: With respect to any Distribution Date and any
Mortgage Loan, the amount of any interest that is not collectible from the
Mortgagor during the related Due Period pursuant to the Relief Act or similar
legislation or regulations as in effect from time to time.

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

          REMIC PROVISIONS: Provisions of the federal income tax law relating to
REMICs, which appear at Section 860A through 860G of the Subchapter M of Chapter
1 of the Code and related provisions, and regulations (including proposed
regulations, rulings and administrative pronouncements) promulgated thereunder,
as the foregoing may be in effect from time to time.

          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 3.13.

          REO DISPOSITION: As to any REO Property, a determination by the Master
Servicer that it has received all Insurance Proceeds, Liquidation Proceeds, REO
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 PROPERTY: Any Mortgaged Property acquired by or in the name of the
Trustee for the benefit of the Certificateholders in foreclosure or by
deed-in-lieu of foreclosure or otherwise treated as having been so acquired
pursuant to the REMIC Provisions.


                                       20

<PAGE>



          REO PROCEEDS: Proceeds, net of expenses, received in respect of any
REO Property (including, without limitation, proceeds from the rental of the
related Mortgaged Property).

          REPLACEMENT AMOUNT: As defined in the definition of Replacement
Mortgage Loan.

          REPLACEMENT MORTGAGE LOAN: A Mortgage Loan substituted by the Master
Servicer or Mortgage Loan Seller for a Deleted Mortgage Loan which must, on the
date of such substitution, as confirmed in an Officers' Certificate delivered to
the Trustee, (i) have an outstanding Scheduled 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 Scheduled Principal Balance, after
such deduction), not greater than nor materially less than the Scheduled
Principal Balance of the Deleted Mortgage Loan (the amount of any shortage, the
"Replacement Amount") to be deposited by the Mortgage Loan Seller in the
Certificate Account in the month of substitution as set forth in Section 2.04 of
this Agreement and shall be treated as a Principal Prepayment thereunder); (ii)
at the time of substitution have a Net Mortgage Rate equal to or exceeding the
Net Mortgage Rate of the Deleted Mortgage Loan; (iii) have a Loan-to-Value Ratio
no higher than the Loan-to-Value Ratio of the Deleted Mortgage Loan; (iv) have a
remaining term to maturity no greater than (and not more than one year less
than) the Deleted Mortgage Loan; (v) be of the same or better credit quality
classification as that of the Deleted Mortgage Loan; (vi) comply with each
representation and warranty relating to the Mortgage Loans set forth in Section
2.04 hereof; and (vi) at the time of substitution have not been delinquent for a
period of more than 30 days or more than once in the twelve months immediately
preceding such date of substitution. In the event that either one mortgage loan
is substituted for more than one Deleted Mortgage Loan or more than one mortgage
loan is substituted for one or more Deleted Mortgage Loans, then (a) the
Scheduled Principal Balance referred to in clause (i) above shall be determined
in the aggregate, (b) the rate referred to in clause (ii) above shall be
determined on a loan-by-loan basis and (c) the Loan-to-Value Ratio referred to
in clause (iii) and the remaining term to maturity referred to in clause (iv)
above shall be determined on a weighted average basis; provided, further, that
the final scheduled maturity date of any Replacement Mortgage Loan shall not
exceed the latest Scheduled Final Distribution Date of any Class of
Certificates. Whenever a Replacement Mortgage Loan is substituted for a Deleted
Mortgage Loan pursuant to this Agreement, the party effecting such substitution
shall certify such qualification in writing to the Trustee.

          REQUIRED INSURANCE POLICY: With respect to any Mortgage Loan, any
insurance policy that is required to be maintained from time to time under this
Agreement in respect of such Mortgage Loan, including each standard hazard and,
if applicable, flood insurance policy.

          RESERVE INTEREST RATE: As defined in Section 4.02.

         RESIDUAL CERTIFICATE:  The Class R Certificate.

          RESPONSIBLE OFFICER: When used with respect to the Trustee, any Vice
President, any Assistant Vice President, the Secretary, any Assistant Secretary,
the Treasurer, any Assistant Treasurer 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

                                       21

<PAGE>



other officer to whom such matter is referred because of such officer's
knowledge of and familiarity with the particular subject.

          RESTRICTED CERTIFICATE: Any Class B-1, Class B-2 or Class B-3
Certificate.

          RULE 144A: Rule 144A promulgated under the rules of the 1933 Act, as
in effect from time to time.

          SCHEDULED FINAL DISTRIBUTION DATE: The Distribution Date occurring in
May 2041.

          SCHEDULED PRINCIPAL BALANCE: With respect to (i) any Mortgage Loan as
of any Distribution Date, the principal balance of such Mortgage Loan at the
close of business on the Cut-off Date, after giving effect to principal payments
due on or before the Cut-off Date, whether or not received, less an amount equal
to principal payments due after the Cut-off Date and on or before the Due Date
in the related Due Period, whether or not received from the Mortgagor or
advanced by the Master Servicer, and all amounts allocable to unscheduled
principal payments (including Principal Prepayments, Liquidation Proceeds,
Insurance Proceeds and condemnation proceeds, in each case to the extent
identified and applied prior to or during the related Prepayment Period) and
(ii) any REO Property as of any Distribution Date, the Scheduled Principal
Balance of the related Mortgage Loan on the Due Date immediately preceding the
date of acquisition of such REO Property by or on behalf of the Trustee (reduced
by any amount applied as a reduction of principal on the Mortgage Loan), plus
(iii) any Deferred Interest allocated to such Mortgage Loan. With respect to any
Mortgage Loan and the Cut-off Date, as specified in the Mortgage Loan Schedule.

          SELLER: Structured Asset Mortgage Investments Inc., a Delaware
corporation, or its successor in interest.

         SENIOR CERTIFICATE:  Any Class A Certificate or Class R Certificate.

          SENIOR ENHANCEMENT PERCENTAGE: With respect to any Distribution Date,
the fraction, expressed as a percentage, the numerator of which is the sum of
the Current Principal Amounts of the Subordinate Certificates and the
denominator of which is the aggregate Scheduled Principal Balance of the
Mortgage Loans as of the end of the related Due Period.

          SENIOR PRINCIPAL DISTRIBUTION AMOUNT: For any Distribution Date, an
amount equal to:

          (i) prior to the Stepdown Date or on or after the Stepdown Date if a
          Trigger Event is in effect, the Principal Remittance Amount for that
          Distribution Date, or

          (ii) on or after the Stepdown Date if a Trigger Event is not in effect
          for that Distribution Date, the lesser of:

                    (I) the Principal Remittance Amount for that Distribution
                    Date; and

                    (II) the excess of (A) the aggregate Current Principal
                    Amount of the Senior Certificates immediately prior to that
                    Distribution Date over (B) the lesser of (x) the

                                       22

<PAGE>



                    product of (1) 91.00% and (2) the aggregate Scheduled
                    Principal Balance of the Mortgage Loans as of the end of the
                    related Due Period, not including any Deferred Interest
                    added to the Scheduled Principal Balance of the Mortgage
                    Loans during the related Due Period, and (y) the amount, if
                    any, by which (a) the aggregate Scheduled Principal Balance
                    of the Mortgage Loans as of the end of the related Due
                    Period, not including any Deferred Interest added to the
                    Scheduled Principal Balance of the Mortgage Loans during the
                    related Due Period, exceeds (b) the Current Principal Amount
                    of the Class B-3 Certificates on the Closing Date.

          SERVICING FEE: As to any Distribution Date and each Mortgage Loan, an
amount equal to the product of the Servicing Fee Rate and the Scheduled
Principal Balance of such Mortgage Loan as of the first day of the Due Period.

          SERVICING FEE RATE: For each Mortgage Loan, 0.375% per annum.

          SERVICING OFFICER: Any officer of the Master Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name appears on a list of servicing officers furnished to the Trustee on the
Closing Date by the Master Servicer pursuant to this Agreement, as such list may
from time to time be amended.

          SIXTY-PLUS DELINQUENCY PERCENTAGE: With respect to any Distribution
Date, the fraction, expressed as a percentage, equal to (x) the aggregate
Scheduled Principal Balance of the Mortgage Loans that are 60 or more days
delinquent in payment of principal and interest for that Distribution Date,
including Mortgage Loans in foreclosure and REO Properties, over (y) the
aggregate Scheduled Principal Balance of all of the Mortgage Loans immediately
preceding that Distribution Date.

          STEPDOWN DATE: The later to occur of (x) the Distribution Date in June
2004 and (y) the first Distribution Date on which the Senior Enhancement
Percentage is greater than or equal to 9.00%.

          SUBORDINATE CERTIFICATE: Any Class M-1, Class M-2, Class M-3, Class
B-1, Class B-2 or Class B-3 Certificate.

          SUBORDINATE CERTIFICATE WRITEDOWN AMOUNT: As of any Distribution Date,
the amount by which (a) the sum of the Current Principal Amounts of all of the
Certificates (after giving effect to the distribution of principal and the
allocation of Realized Losses in reduction of the Current Principal Amounts of
such Certificates on such Distribution Date) exceeds (b) the Scheduled Principal
Balances of the Mortgage Loans on the Due Date related to such Distribution
Date. The Subordinate Certificate Writedown Amount will be allocated to the
Subordinate Certificates in inverse order of their numerical Class designations,
until the Current Principal Amount of each such Class has been reduced to zero.

          SUB-SERVICER: Any other entity with respect to any Mortgage Loan under
any Sub-Servicing Agreement, either currently or in the future, applicable to
such Mortgage Loan and any successors and assigns under such Sub-Servicing
Agreement.


                                       23

<PAGE>



          SUB-SERVICING AGREEMENT: Any servicing agreement between the Master
Servicer and a Sub- Servicer pursuant to which the Master Servicer delegates any
of its servicing responsibilities with respect to any of the Mortgage Loans.

          TOTAL DISTRIBUTION AMOUNT: With respect to any Distribution Date, the
sum of the Interest Remittance Amount and Principal Remittance Amount for such
date.

          TRIGGER EVENT: A Trigger Event will have occurred with respect to any
Distribution Date on or after the Stepdown Date if the three-month average of
the Sixty-Plus Delinquency Percentage, as determined on that Distribution Date
and the immediately preceding two Distribution Dates, exceeds the Senior
Enhancement Percentage.

          TRUST: The Trust created pursuant to this Agreement, known as the
"Washington Mutual Mortgage Loan Trust 2001-7."

          TRUST FUND: The corpus of the Trust Fund created by this Agreement
consisting of (a) the Mortgage Loans listed in the Mortgage Loan Schedule,
including all interest and principal received or receivable by the Seller on or
with respect to the Mortgage Loans after the Cut-off Date, but not including (i)
payments of principal and interest due and payable on the Mortgage Loans on or
before the Cut-off Date, and (ii) the Mortgage Files relating to the Mortgage
Loans, (b) REO Property, (c) the Custodial Account, the Certificate Account, and
all amounts deposited therein pursuant to the applicable provisions of this
Agreement, (d) any insurance policies with respect to the Mortgage Loans, (e)
any REO Property, (f) all proceeds of the conversion, voluntary or involuntary,
of any of the foregoing into cash or other liquid property and (g) the Seller's
rights under the Mortgage Loan Purchase Agreement.

          TRUSTEE: Bankers Trust Company of California, N.A., a national banking
association, not in its individual capacity, but solely in its capacity as
trustee for the benefit of the Certificateholders under this Agreement, and any
successor thereto, as provided herein.

          TRUSTEE FEE: As to any Distribution Date and each Mortgage Loan, an
amount equal to the product of the Trustee Fee Rate and the Scheduled Principal
Balance of such Mortgage Loan as of the first day of the Due Period.

          TRUSTEE FEE RATE: For each Mortgage Loan, 0.004% per annum.

          TRUSTEE MORTGAGE FILE: The mortgage documents listed in Section
2.01(b)(i)-(v) hereof pertaining to a particular Mortgage Loan and any
additional documents required to be added to the Trustee Mortgage File pursuant
to this Agreement.

          UNITED STATES REGULATIONS: 31 C.F.R. Part 357; 12 C.F.R. Part 615,
Subpart O; 12 C.F.R. Part 912; 12 C.F.R. Part 1511; 24 C.F.R. Part 81; 31 C.F.R.
Part 354; and 18 C.F.R. Part 1314.

          UNITED STATES SECURITIES ENTITLEMENT: A "Security Entitlement" as
defined in a United States Regulation.


                                       24

<PAGE>



          U.S. PERSON: Shall mean (i) a citizen or resident of the United
States; (ii) a corporation (or entity treated as a corporation for tax purposes)
created or organized in the United States or under the laws of the United States
or of any state thereof, including, for this purpose, the District of Columbia;
(iii) a partnership (or entity treated as a partnership for tax purposes)
organized in the United States or under the laws of the United States or of any
state thereof, including, for this purpose, the District of Columbia (unless
provided otherwise by future Treasury regulations) provided that, for purposes
solely of the Class R Certificates, no partnership or other entity treated as a
partnership for United States federal income tax purposes shall be treated as a
United States Person unless all persons that own an interest in such partnership
either directly or through any entity that is not a corporation for United
States federal income tax purposes are United States Persons; (iv) an estate
whose income is includible in gross income for United States income tax purposes
regardless of its source; or (v) 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 U.S. Persons have authority to control all substantial decisions of
the trust. Notwithstanding the last clause of the preceding sentence, to the
extent provided in Treasury regulations, certain trusts in existence on August
20, 1996, and treated as U.S. Persons prior to such date, may elect to continue
to be U.S. Persons.

          VOTING INTERESTS: The portion of the voting rights of all the
Certificates that is allocated to any Certificate for purposes of the voting
provisions of this Agreement. At all times during the term of this Agreement,
99% of all Voting Interests shall be allocated among the Class A, Class M-1,
Class M-2, Class M-3, Class B-1, Class B-2 and Class B-3 Certificates and 1%
shall be allocated to the Class R Certificates. The portion of such 99% Voting
Interests allocated among the Class A, Class M-1, Class M-2, Class M-3, Class
B-1, Class B-2 and Class B-3 Certificates shall be based on the fraction,
expressed as a percentage, the numerator of which is the aggregate Current
Principal Amount then outstanding of such Class and the denominator of which is
the Aggregate Loan Balance. Voting Interests shall be allocated among the
Certificates within each such Class in proportion to their outstanding Current
Principal Amounts or Percentage Interest (in the case of the Class R
Certificates).

          WASHINGTON MUTUAL: Washington Mutual Bank, FA.


          SECTION 1.01 CALCULATIONS RESPECTING MORTGAGE LOANS.

          Calculations required to be made pursuant to this Agreement with
respect to any Mortgage Loan in the Trust Fund shall be made based upon current
information as to the terms of the Mortgage Loans and reports of payments
received from the Mortgagor on such Mortgage Loans and payments to be made to
the Trustee as supplied to the Trustee by the Master Servicer. The Trustee shall
not be required to recompute, verify or recalculate the information supplied to
it by the Master Servicer.

          SECTION 1.02 CALCULATIONS RESPECTING ACCRUED INTEREST.

          Accrued interest, if any, on any Certificate shall be calculated based
upon a 360-day year consisting of twelve 30-day months.



                                       25

<PAGE>



                                   ARTICLE II

                            CONVEYANCE OF TRUST FUND;
                         REPRESENTATIONS AND WARRANTIES

         SECTION 2.01 CONVEYANCE OF TRUST FUND.

         (a) Concurrently with the execution and delivery of this Agreement, the
Seller does hereby transfer, assign, set over, deposit with and otherwise convey
to the Trustee, without recourse, in trust, all the right, title and interest of
the Seller in and to the Mortgage Loans. Such conveyance includes, without
limitation, the right to all distributions of principal and interest due with
respect to the Mortgage Loans after the Cut-off Date, together with all of the
Seller's right, title and interest in and to the Certificate Account and all
amounts from time to time credited to and the proceeds of the Custodial Account,
the Certificate Account, any REO Property and the proceeds thereof, the Seller's
rights under any Insurance Proceeds related to the Mortgage Loans, and the
Seller's security interest in any collateral pledged to secure the Mortgage
Loans, including the Mortgaged Properties, to have and to hold, in trust; and
the Trustee declares that it shall hold the Trust Fund, as trustee, in trust,
for the benefit and use of the Holders of the Certificates and for the purposes
and subject to the terms and conditions set forth in this Agreement, and,
concurrently with such receipt, has caused to be executed, authenticated and
delivered to or upon the order of the Seller, in exchange for the Trust Fund,
Certificates in the authorized denominations evidencing the entire ownership of
the Trust Fund.

         Concurrently with the execution and delivery of this agreement, the
Seller does hereby assign to the Trustee all of its rights and interest under
the Mortgage Loan Purchase Agreement to the Trustee. The Trustee hereby accepts
such assignment, and shall be entitled to exercise all such rights (but shall
not be responsible for any obligations thereunder), of the Seller under the
Mortgage Loan Purchase Agreement as if, for such purpose, it were the Seller.

         (b) In connection with any such transfer and assignment, the Mortgage
Loan Seller does hereby deliver to, and deposit with, the Trustee or its agents,
the following documents or instruments with respect to (A) each Mortgage Loan
(other than a Cooperative Loan) so assigned:

                  (i) the Mortgage Note, endorsed, in blank by facsimile
         signature (which such endorsement may be pursuant to the use of a note
         allonge in the form attached as Exhibit K), with all intervening
         endorsements showing a complete chain of endorsement from the Mortgage
         Loan Seller to the last endorser (or an original lost note affidavit
         from the Mortgage Loan Seller stating that the Mortgage Note was lost,
         misplaced or destroyed, with respect to such Mortgage Loans identified
         in the Trustee's Certification referenced in Section 2.02), and if the
         Mortgage Note or Mortgage or any other material document or instrument
         relating to the Mortgage Loan has been signed on behalf of the
         Mortgagor by another person, the original power of attorney or other
         instrument that authorized and empowered such person to sign, or a copy
         of the original power of attorney or other instrument;

                  (ii) the original Mortgage, as recorded, with evidence of
         recording indicated thereon establishing the Mortgage Loan Seller as
         mortgagee thereof;


                                       26

<PAGE>




                  (iii) an original assignment or assignments of Mortgage (other
         than an Assignment) showing an unbroken chain of title from the
         originator to the Mortgage Loan Seller with evidence of recording
         indicated thereon or a copy of the original certified by the Mortgage
         Loan Seller;

                  (iv) the original or a copy, certified by the Mortgage Loan
         Seller, of each assumption, modification, written assurance or
         substitution agreement, if provided, with respect to such Mortgage
         Loan, as identified on the Mortgage Loan Schedule; and

                  (v) an Assignment.

and (B) each Cooperative Loan so assigned:

                  (i) the original Mortgage Note, endorsed, in blank by
         facsimile signature (which such endorsement may be pursuant to the use
         of a note allonge in the form attached as Exhibit K) with all
         intervening endorsements showing a complete chain of endorsement from
         the Mortgage Loan Seller to the last endorser (or an original lost note
         affidavit from the Mortgage Loan Seller stating that the Mortgage Note
         was lost, misplaced or destroyed, with respect to such Mortgage Loans
         identified in the Trustee's Certification referenced in Section 2.02),
         and if the Mortgage Note or any other material document or instrument
         relating to the Mortgage Loan has been signed on behalf of the
         Mortgagor by another person, the original power of attorney or other
         instrument that authorized and empowered such person to sign, or a copy
         of the original power of attorney or other instrument or, in the case
         of a Mortgage Loan that is subject to the terms of a consolidation and
         modification agreement, an assignment of such agreement to the Trustee;

                  (ii) the original duly executed assignment of security
         agreement in blank;

                  (iii) the acknowledgment copy of the original executed Form
         UCC-1 (or certified copy thereof) with respect to the security
         agreement, and any required continuation statements, with evidence of
         filing indicated thereon;

                  (iv) the acknowledgment copy of the original executed Form
         UCC-3 with respect to the security agreement, indicating the Trustee as
         the assignee of the secured party, with evidence of filing indicated
         thereon;

                  (v) a copy of the stock certificate representing the stock
         allocated to the cooperative unit, with a stock power in blank
         attached;

                  (vi) the original collateral assignment of the lease by
         Mortgagor to the originator and the assignment of the collateral
         assignment of the lease in blank (which may be in blanket form),
         accompanied by the original lease

                  (vii) a copy of the recognition agreement by the Cooperative
         of the interests of the mortgagee with respect to the related
         Cooperative Loan;


                                       27

<PAGE>




                  (viii) if applicable and to the extent available, the original
         intervening assignments, including warehousing assignments, if any,
         showing, to the extent available, an unbroken chain of the related
         Mortgage Loan to the Trustee, together with a copy of the related Form
         UCC-3 with evidence of filing thereon; and

                  (ix) the originals of each assumption, modification or
         substitution agreement, if provided;

         Notwithstanding the foregoing, in the event that in connection with any
Mortgage Loan the Mortgage Loan Seller cannot deliver an original recorded
counterpart of any of the documents required to be delivered pursuant to clauses
of (A)(ii) and (B)(ii) or (A)(iii) and (B)(viii) above with evidence of
recording thereon concurrently with the execution and delivery hereof, the
Mortgage Loan Seller shall deliver to the Trustee a duplicate original or true
copy of such document certified by the Mortgage Loan Seller or the applicable
public recording office to be a true and complete duplicate original or copy of
the original thereof submitted for recording, or a copy of the Mortgage
certified by a title insurance or escrow company or companies, evidencing that
such Mortgage or assignment of Mortgage has been delivered to the appropriate
public recording office for recordation. In the event that the Mortgage Loan
Seller cannot deliver a duplicate original or true copy certified as stated
above of such document required to be delivered pursuant to clauses (ii) or
(iii) above, within 90 days of the Closing Date, the Mortgage Loan Seller shall
purchase the related Mortgage Loan at the Purchase Price therefor or replace the
Mortgage Loan with a Replacement Mortgage Loan if such substitution occurs
within the time periods for substitution set forth in Section 2.04.

         In addition, notwithstanding the foregoing, if the Form of UCC-3
referred to in clause (B)(iv) above has not been filed by the Closing Date, the
Trustee shall complete, and shall cause the Master Servicer, at its expense, to
file, this document within 90 days of the Closing Date.

         (c) The Mortgage Loan Seller shall promptly deliver to the Trustee (1)
the original recorded documents referred to in clauses (A)(ii) and (iii) or
(B)(ii) and (B)(viii) above with evidence of recording indicated thereon or a
photocopy thereof certified by the appropriate county recorder's office to be a
true and complete copy of the original thereof, upon receipt thereof from the
public recording office, and (2) upon discovery of any defect or omission in the
deliveries of any of items (A)(ii) through (iv) or (B)(i), (viii) and (ix) in
subsection (b) above with respect to any Mortgage Loan, a correct and complete
document or instrument meeting the requirements of such item, but in no event
shall any such delivery be made later than 90 days following the Closing Date
(unless, in the case of the foregoing clause (1), such document has not been
returned from the relevant recording office at such time, in which case the
Master Servicer shall make such delivery within 270 days of the Closing Date;
provided, however, that such 270 day period shall be extended to 360 days upon
presentation of an Officer's Certificate of the Mortgage Loan Seller to the
effect that such document has not yet been returned from the relevant recording
office, and shall be extended for additional thirty-day periods). In the event
the Mortgage Loan Seller cannot deliver such original document with evidence of
recording indicated thereon within the time period set forth in the preceding
sentence, the Mortgage Loan Seller shall purchase the related Mortgage Loan at
the Purchase Price therefor or replace the Mortgage Loan with a Replacement
Mortgage Loan if such substitution occurs within the time periods for
substitution set forth in Section 2.04.


                                       28

<PAGE>




         From time to time the Mortgage Loan Seller or the Master Servicer may
forward or cause to be forwarded to the Trustee for the benefit of the
Certificateholders additional original documents evidencing an assumption or
modification of a Mortgage Loan.

         (d) The Mortgage Loan Seller will promptly notify, in writing, the
Seller, the Master Servicer and the Trustee of the occurrence of a Downgrade
Event.

         Within 90 days of the Closing Date, with respect to any Mortgage Loan
for which the related Mortgage Property is located in the States of Maryland or
Florida, and, with respect to all of the other Mortgage Loans, within 60 days
following the receipt of the notice of a Downgrade Event, the Trustee shall (a)
complete each endorsement referred to in clause (i) of subsection (b)(A) and (B)
above, each Assignment referred to in (v) of subsection (b)(A) above, each
assignment of security agreement referred to in (ii) of subsection (b)(B) above,
and the assignment of collateral assignment referred to in (vi) of subsection
(b)(B) above, by inserting "to the Trustee for the benefit of the Holders of the
Washington Mutual Mortgage Loan Trust Mortgage Pass-Through Certificates, Series
2001-7" and (b) cause the Master Servicer to record (and the Master Servicer
hereby agrees to record), at the expense of the Master Servicer, in the
appropriate public office for real property records each original assignment
referred to in (v) above with respect to each Mortgaged Property, and the
Trustee shall release any such Assignment to the Master Servicer for such
purpose. The Master Servicer shall promptly deliver to the Trustee each original
Assignment with evidence of recording indicated thereon or a photocopy thereof
certified by the appropriate county recorder's office to be a true and complete
copy of the original thereof, upon receipt thereof from the public recording
official. If any Assignment is returned unrecorded to the Master Servicer
because of any defect therein, the Mortgage Loan Seller or the Master Servicer
shall cure or correct such defect and cause such Assignment to be recorded in
accordance with this paragraph and if such defect is not cured within 60 days
the Mortgage Loan Seller shall purchase the Mortgage Loan at the Purchase Price
therefor or replace the Mortgage Loan with a Replacement Mortgage Loan if such
substitution occurs within the time periods for substitution set forth in
Sections 2.04.

         SECTION 2.02      ACCEPTANCE BY TRUSTEE.

         (a) The Trustee will hold the documents referred to in Section
2.01(b)(i)-(v) above and the other documents constituting a part of the Trustee
Mortgage Files delivered to it pursuant to Section 2.01 in trust for the use and
benefit of all present and future Certificateholders. Upon execution and
delivery of this Agreement, the Trustee shall deliver to the Seller, the
Mortgage Loan Seller and the Master Servicer a certification (upon execution and
delivery of this Agreement, the "Initial Loan List Certification") in the form
set forth as Exhibit F-1 hereto to the effect that, as to each Mortgage Loan
listed in the Mortgage Loan Schedule, a Mortgage File has been delivered to the
Trustee. If, in the course of such review, the Trustee finds that a Mortgage
File for any Mortgage Loan listed on the Mortgage Loan Schedule has not been
delivered to the Trustee, the Trustee shall promptly notify the Mortgage Loan
Seller, the Master Servicer and the Seller in writing, and request that the
Mortgage Loan Seller correct or cure such defect. In the event the Mortgage Loan
Seller shall fail to deliver a Mortgage File reflected in the Initial Loan List
Certification within five days of such Initial Loan List Certification, the
Mortgage Loan Seller shall purchase the Mortgage Loan at the Purchase Price
therefor or replace the Mortgage Loan with a Replacement Mortgage Loan if


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such substitution occurs within the time periods for substitution set forth in
Section 2.04(b). Within 30 days after the execution and delivery of this
Agreement, the Trustee shall ascertain whether all documents required to be
delivered to it pursuant to Section 2.01(b) hereof are in its possession, and
shall deliver to the Seller, the Mortgage Loan Seller and the Master Servicer a
certification (within 30 days after execution and delivery of this Agreement,
the "Initial Certification" and within 90 days after the Initial Certification,
the "Final Certification", respectively) in the forms set forth as Exhibits F-2
and F-3 hereto to the effect that, as to each Mortgage Loan listed in the
Mortgage Loan Schedule: (a) all documents required to be delivered to the
Trustee pursuant to this Agreement are in its possession, (b) such documents
have been reviewed by it and have not been mutilated, damaged, defaced, torn or
otherwise physically altered, and such documents relate to such Mortgage Loan
and (c) each Mortgage Note has been endorsed and each assignment of Mortgage has
been delivered as provided in Section 2.01(b) hereof. The Trustee shall deliver
to the Seller, the Mortgage Loan Seller and the Master Servicer a copy of each
of the Initial Certification and the Final Certification. If, in the course of
such review, the Trustee finds any document or documents constituting a part of
a Mortgage File which do not meet the requirements of the foregoing clauses
(a)-(c), the Trustee shall promptly notify the Mortgage Loan Seller, the Master
Servicer and the Seller in writing, and request that the Mortgage Loan Seller
correct or cure such defect. In the event the Mortgage Loan Seller shall fail to
cure any document deficiency or defect reflected in the Final Certification
within 60 days of such Final Certification, or such longer period of time as may
be permitted in Section 2.01(c), it shall not be the obligation of the Trustee
hereunder to cure the same, and the Mortgage Loan Seller shall purchase the
Mortgage Loan at the Purchase Price therefor or replace the Mortgage Loan with a
Replacement Mortgage Loan if such substitution occurs within the time periods
for substitution set forth in Section 2.04.

         (b) The Seller agrees that at any time and from time to time upon
written request of the Trustee, the Seller shall promptly and duly execute and
deliver any and all such further documents and assurances, and take such further
actions as the Trustee reasonably may request in order to obtain or more fully
vest the benefits of the assignment intended hereunder (as set forth in Section
2.01 and in Section 2.04) and of the rights and powers herein granted.

         (c) The Trustee shall retain possession and custody of each Trustee
Mortgage File in accordance with and subject to the terms and conditions set
forth herein.

         SECTION 2.03  REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE MASTER
                       SERVICER AND MORTGAGE LOAN SELLER.

         Washington Mutual, as Mortgage Loan Seller and Master Servicer, hereby
represents and warrants to, and covenants with, the Seller and the Trustee that,
as of the date hereof:

                  (i) Washington Mutual is a federally chartered savings
         association, validly existing and in good standing under the laws of
         the United States of America and is duly authorized and qualified to
         transact any and all business contemplated by this Agreement in any
         state in which a Mortgaged Property is located or is otherwise not
         required under applicable law to effect such qualification and, in any
         event, is in compliance with the doing business laws of any such state,
         to the extent necessary to ensure the enforceability of each


                                       30

<PAGE>



         Mortgage Loan and the servicing of the Mortgage Loans in accordance
         with the terms of this Agreement;

                  (ii) Washington Mutual has the full corporate power and
         authority to service each Mortgage Loan, and to execute, deliver and
         perform, and to enter into and consummate the transactions contemplated
         by this Agreement, and has duly authorized by all necessary corporate
         action on the part of Washington Mutual the execution, delivery and
         performance of this Agreement; and this Agreement, assuming the due
         authorization, execution and delivery thereof by the Seller and the
         Trustee, constitutes a legal, valid and binding obligation of
         Washington Mutual, enforceable against Washington Mutual in accordance
         with its terms, except that (A) the enforceability thereof may be
         limited to bankruptcy, insolvency, moratorium, receivership and other
         similar laws relating to creditors' rights generally and (B) the remedy
         of specific performance and injunctive and other forms of equitable
         relief may be subject to the equitable defenses and to the discretion
         of the court before which any proceeding therefor may be brought;

                  (iii) the execution and delivery of this Agreement by
         Washington Mutual, the servicing of the Mortgage Loans by Washington
         Mutual hereunder, the consummation of any other of the transactions
         herein contemplated, and the fulfillment of or compliance with the
         terms hereof are in the ordinary course of business of Washington
         Mutual and will not (A) result in a material breach of any term or
         provision of the charter or bylaws of Washington Mutual or (B)
         materially conflict with, result in a material breach, violation or
         acceleration of, or result in a material default under, the terms of
         any other material agreement or instrument to which Washington Mutual
         is a party or by which it may be bound, or any statute, order or
         regulation applicable to Washington Mutual of any court, regulatory
         body, administrative agency or governmental body having jurisdiction
         over Washington Mutual; and Washington Mutual is not a party to, bound
         by, or in breach or violation of any material indenture or other
         material agreement or instrument, or subject to or in violation of any
         statute, order or regulation of any court, regulatory body,
         administrative agency or governmental body having jurisdiction over it,
         which materially and adversely affects, (1) the ability of Washington
         Mutual to perform its obligations under this Agreement or (2) the
         business, operations, financial condition, properties or assets of the
         Master Servicer taken as a whole;

                  (iv) Washington Mutual is, and will remain, subject to
         supervision and examination by any state or federal authority as may be
         applicable and will remain in good standing and qualified to do
         business where so required by applicable law and is, and will remain an
         approved servicer of conventional mortgage loans for Fannie Mae or
         Freddie Mac;

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



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<PAGE>



                  (vi) Washington Mutual will at all times comply in the
         performance of its obligations under this Agreement with all reasonable
         rules and requirements of the insurer under each Required Insurance
         Policy;

                  (vii) no written information, certificate of an officer,
         statement furnished in writing or written report delivered to the
         Seller, any affiliate of the Seller or the Trustee and prepared by
         Washington Mutual pursuant to this Agreement will contain any untrue
         statement of a material fact or omit to state a material fact necessary
         to make the information, certificate, statement or report not
         misleading;

                  (viii) except for permits and similar authorizations required
         under the securities or "blue sky" laws, no consent, approval,
         authorization or order of any court or governmental agency or body is
         required for the execution, delivery and performance by Washington
         Mutual of, or compliance by Washington Mutual with, this Agreement or
         the consummation of the transactions contemplated hereby, or if any
         such consent, approval, authorization or order is required, Washington
         Mutual has obtained the same; and

                  (ix) Washington Mutual will service the Mortgage Loans in
         accordance with the standards set forth in this Agreement.

         SECTION 2.04 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
                      MORTGAGE LOAN SELLER WITH RESPECT TO THE MORTGAGE LOANS.

         (a)      The Mortgage Loan Seller hereby represents and warrants to,
and covenants with, the Seller and the Trustee for the benefit of the
Certificateholders that, as to each Mortgage Loan, as of the Cut-off Date or
such other date specifically set forth herein, and with respect to
representation (i) listed below, as of the Closing Date:

                  (i) The information set forth in the Mortgage Loan Schedule is
         complete, true and correct.

                  (ii) None of the Mortgage Loans (by Scheduled Principal
         Balance) are more than 30 days delinquent; Washington Mutual has not
         advanced funds to, or induced, solicited or knowingly received any
         advance of funds from a party other than the owner of the Mortgaged
         Property subject to the Mortgage, directly or indirectly, for the
         payment of any amount required by the Mortgage Loan.

                  (iii) There are no delinquent taxes, ground rents, water
         charges, sewer rents, assessments, insurance premiums, leasehold
         payments, including assessments payable in future installments or other
         outstanding charges affecting the related Mortgaged Property.

                  (iv) The terms of the Mortgage Note and the Mortgage have not
         been impaired, waived, altered or modified in any respect, except by
         written instruments which have been recorded, if necessary to protect
         the interests of the Trustee, and which are included in the Trustee
         Mortgage File, the substance of which waiver, alteration or
         modification has been approved by the primary mortgage guaranty
         insurer, if any, and by the title insurer, to the


                                       32

<PAGE>



         extent required by the related policy and is reflected on the Mortgage
         Loan Schedule. No instrument of waiver, alteration or modification has
         been executed, and no Mortgagor has been released, in whole or in
         part, except in connection with an assumption agreement approved by
         the primary mortgage insurer, if any, and title insurer, to the extent
         required by the policy, and which assumption agreement is part of the
         Mortgage File.

                  (v) The Mortgage Note and the Mortgage are not subject to any
         right of rescission, set-off, counterclaim or defense, including the
         defense of usury, nor will the operation of any of the terms of the
         Mortgage Note and Mortgage, or the exercise of any right thereunder,
         render the Mortgage unenforceable, in whole or in part, or subject to
         any right of rescission, set-off, counterclaim or defense, including
         the defense of usury and no such right of rescission, set-off,
         counterclaim or defense has been asserted with respect thereto.

                  (vi) All buildings upon the Mortgaged Property are insured by
         a generally acceptable insurer against loss by fire, hazards of
         extended coverage and such other hazards as are customary in the area
         where the Mortgaged Property is located. All such insurance policies
         contain a standard mortgagee clause naming the Master Servicer, its
         successors and assigns as mortgagee and all premiums due thereon have
         been paid. If upon origination of the Mortgage Loan, the Mortgaged
         Property was in an area identified in the Federal Register by the
         Federal Emergency Management Agency as having special flood hazards
         (and such flood insurance has been made available) a flood insurance
         policy meeting the requirements of the current guidelines of the
         Federal Insurance Administration is in effect which policy conforms to
         the requirements of Fannie Mae or Freddie Mac. The Mortgage obligates
         the Mortgagor thereunder to maintain all such insurance at Mortgagor's
         cost and expense, and on the Mortgagor's failure to do so, authorizes
         the holder of the Mortgage to maintain such insurance at Mortgagor's
         cost and expense and to seek reimbursement therefor from the Mortgagor.

                  (vii) Any and all requirements of any federal, state or local
         law including, without limitation, environmental, usury, truth in
         lending, real estate settlement procedures, consumer credit protection,
         equal credit opportunity or disclosure laws applicable to the Mortgage
         Loan and the related Mortgaged Property have been complied with.

                  (viii) The Mortgage has not been satisfied, canceled or
         subordinated, or rescinded, in whole or in part, and the Mortgaged
         Property has not been released from the lien of the Mortgage, in whole
         or in part, nor has any instrument been executed that would effect any
         such release, cancellation, subordination or rescission.

                  (ix) The Mortgage is a valid, existing and enforceable first
         lien on the Mortgaged Property, including all improvements on the
         Mortgaged Property subject only to (A) the lien of current real
         property taxes and assessments not yet due and payable, (B) covenants,
         conditions and restrictions, rights of way, easements and other matters
         of the public record as of the date of recording being acceptable to
         mortgage lending institutions generally and specifically referred to in
         lender's title insurance policy delivered to the originator of the
         Mortgage Loan and which do not adversely affect the Appraised Value of
         the Mortgaged Property, and (C) other matters to which like properties
         are commonly subject which do not


                                       33

<PAGE>



         materially interfere with the benefits of the security intended to be
         provided by the Mortgage or the use, enjoyment, value or marketability
         of the related Mortgaged Property. Any security agreement, chattel
         mortgage or equivalent document related to and delivered in connection
         with the Mortgage establishes and creates a valid, existing and
         enforceable first lien and first priority security interest on the
         property described therein and the Mortgage Loan Seller has full right
         to sell and assign the same to the Mortgage Loan Seller.

                  (x) The Mortgage Note and the related Mortgage are genuine and
         each is the legal, valid and binding obligation of the maker thereof,
         enforceable in accordance with its terms, except as the enforceability
         thereof may be limited by bankruptcy, insolvency, or reorganization.

                  (xi) All parties to the Mortgage Note and the Mortgage had
         legal capacity to enter into the Mortgage Loan and to execute and
         deliver the Mortgage Note and the Mortgage, and the Mortgage Note and
         the Mortgage have been duly and properly executed by such parties.

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

                  (xiii) As of the Closing Date, the Mortgage Note and the
         Mortgage are not assigned or pledged, and immediately prior to the sale
         of the Mortgage Loan to the Mortgage Loan Seller, the Mortgage Loan
         Seller was the sole owner of record and holder thereof and with full
         right to transfer and sell the Mortgage Loan to the Seller free and
         clear of any encumbrance, equity, lien, pledge, charge, claim or
         security interest and with full right and authority subject to no
         interest or participation of, or agreement with, any other party, to
         sell and assign each Mortgage Loan pursuant to the Mortgage Loan
         Purchase Agreement.

                  (xiv) The Originator or, if the Mortgage Loan was not
         originated by the Originator, the originator is or was (or, during the
         period in which they held and disposed of such interest, were) (A) in
         compliance with any and all applicable licensing requirements of the
         laws of the state wherein the Mortgaged Property is located, and (B)
         either (i) organized under the laws of such state, or (ii) qualified to
         do business in such state, or (iii) federal savings and loan
         associations or national banks having principal offices in such state,
         or (iv) not doing business in such state.

                  (xv) The Mortgage Loan is covered by an ALTA lender's title
         insurance policy acceptable to Fannie Mae or Freddie Mac, issued by a
         title insurer acceptable to Fannie Mae or Freddie Mac and qualified to
         do business in the jurisdiction where the Mortgaged Property is
         located, insuring (subject to the exceptions contained in (ix)(A)
         through (C) above) the Mortgage Loan Seller, its successors and assigns
         as to the first priority lien of the Mortgage in the original principal
         amount of the Mortgage Loan. The original title policy (or a copy
         thereof sufficient to entitle the insured to make a claim thereunder)
         and all riders thereto are


                                       34

<PAGE>



         in the Master Servicer Mortgage File or otherwise maintained by the
         Master Servicer. Additionally, such lender's title insurance policy
         affirmatively insures ingress and egress, and against encroachments by
         or upon the Mortgaged Property or any interest therein. The Mortgage
         Loan Seller is the sole insured of such lender's title insurance
         policy, and such lender's title insurance policy is in full force and
         effect and will be in full force and effect upon the consummation of
         the transactions contemplated by this Agreement. No claims have been
         made under such lender's title insurance policy, and no prior holder
         of the related Mortgage, including the Mortgage Loan Seller, has done,
         by act or omission, anything which would impair the coverage of such
         lender's title insurance policy.

                  (xvi) Except for Mortgage Loans which are delinquent in
         payment not more than 30 days, there is no default, breach, violation
         or event of acceleration existing under the Mortgage or the Mortgage
         Note and no event which, with the passage of time or with notice and
         the expiration of any grace or cure period, would constitute a default,
         breach, violation or event of acceleration, and the Mortgage Loan
         Seller has not waived any default, breach, violation or event of
         acceleration.

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

                  (xviii) All improvements which were considered in determining
         the Appraised Value of the related Mortgaged Property lay wholly within
         the boundaries and building restriction lines of the Mortgaged
         Property, and no improvements on adjoining properties encroach upon the
         Mortgaged Property.

                  (xix) The Mortgage Loan was originated by the Mortgage Loan
         Seller. Principal payments on the Mortgage Loan commenced no more than
         sixty-two days after funds were disbursed in connection with the
         Mortgage Loan. Each Mortgage Note has a Mortgage Rate that is
         adjustable, based on One-Year MTA, in the following manner: Monthly
         Payments are due on the Due Date specified in the Mortgage Loan
         Schedule. Following the first interest rate adjustment date, the
         Mortgage Rate is subject to adjustment monthly on each interest rate
         adjustment date to a new Mortgage Rate (rounded as provided in the
         related Mortgage Note) equal to the Index (determined as of the date
         specified in the related Mortgage Note) plus the Gross Margin as
         specified in the Mortgage Loan Schedule, subject to a maximum lifetime
         interest rate as specified in the Mortgage Loan Schedule. For a
         Mortgage Loan whose payments are fixed for an initial five years or ten
         year period, the amount of each Monthly Payment is subject to
         adjustment annually thereafter. For any other Mortgage Loan, the amount
         of each Monthly Payment is subject to adjustment on the anniversary of
         the first Due Date and annually on the same date thereafter. In either
         case, such adjustment is subject to the conditions that (i) the amount
         of a Monthly Payment will not increase or decrease by an amount that is
         more or less than 7.5% of the current Monthly Payment, (ii) on the
         fifth anniversary of the first Due Date (or for a Mortgage Loan whose
         Monthly Payment is fixed for an initial period of ten years, on the
         tenth anniversary of the first Due Date) and on the same day every five
         years thereafter, the Monthly Payment will


                                       35

<PAGE>



         be adjusted, without regard to the limitation in clause (i), to fully
         amortize the then unpaid principal balance over the remaining term to
         maturity and (iii) in the event that, as a result of Deferred
         Interest, the unpaid principal balance at any time would exceed the
         Negative Amortization Limit, the Monthly Payment will be adjusted at
         such time, without regard to the limitation in clause (i), to fully
         amortize the then unpaid principal balance over the remaining term to
         maturity. Any Deferred Interest will be added to the unpaid principal
         balance of the Mortgage Note on each Due Date, unless the Mortgagor
         (to the extent permitted in the Mortgage Note) elects to increase the
         amount of the Monthly Payment to include the amount of Deferred
         Interest or make a payment of the amount of Deferred Interest.

                  (xx) The origination practices used by the Mortgage Loan
         Seller and the collection practices used by the Master Servicer with
         respect to each Mortgage Note and Mortgage have been in all respects
         legal, proper, prudent and customary in the mortgage origination and
         servicing business. With respect to escrow deposits and escrow
         payments, if any, all such payments are in the possession of, or under
         the control of, the Master Servicer and there exist no deficiencies in
         connection therewith for which customary arrangements for repayment
         thereof have not been made.

                  (xxi) The Mortgaged Property is free of material damage and
         waste and there is no proceeding pending for the total or partial
         condemnation thereof.

                  (xxii) The Mortgage contains customary and enforceable
         provisions such as to render the rights and remedies of the holder
         thereof adequate for the realization against the Mortgaged Property of
         the benefits of the security provided thereby, including, (A) in the
         case of a Mortgage designated as a deed of trust, by trustee's sale,
         and (B) otherwise by judicial foreclosure. There is no other exemption
         available to the Mortgagor which would interfere with the right to sell
         the Mortgaged Property at a trustee's sale or the right to foreclose
         the Mortgage. The Mortgagor has not notified the Master Servicer and
         the Master Servicer has no knowledge of any relief requested or allowed
         to the Mortgagor under the Relief Act.

                  (xxiii) The Mortgage Loan was underwritten generally in
         accordance with the Mortgage Loan Seller's underwriting standards in
         effect at the time the Mortgage Loan was originated.

                  (xxiv) The Mortgage Note is not secured by any collateral
         except the lien of the corresponding Mortgage and the security interest
         of any applicable security agreement or chattel mortgage referred to in
         (ix) above.

                  (xxv) The Master Servicer Mortgage File contains an appraisal
         of the related Mortgaged Property signed prior to the approval of the
         Mortgage Loan application by a qualified appraiser, duly appointed by
         the originator of the Mortgage Loan, who had no interest, direct or
         indirect in the Mortgaged Property or in any loan made on the security
         thereof, and whose compensation is not affected by the approval or
         disapproval of the Mortgage Loan.


                                       36

<PAGE>




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

                  (xxvii) No Mortgage Loan (A) contains provisions pursuant to
         which Monthly Payments are paid or partially paid with funds deposited
         in any separate account established by the Mortgage Loan Seller, the
         Mortgagor, or anyone on behalf of the Mortgagor or paid by any source
         other than the Mortgagor or (B) contains any provision permitting a
         temporary "buydown" of the related Mortgage Rate. No Mortgage Loan was
         a graduated payment mortgage loan as of the date of its origination. No
         Mortgage Loan has a shared appreciation or other contingent interest
         feature.

                  (xxviii) The Mortgage Loan Seller has no knowledge of any
         circumstances or condition existing on the Cut-off Date with respect to
         the Mortgage, the Mortgaged Property, the Mortgagor or the Mortgagor's
         credit standing that as of the Cut-off Date causes the Mortgage Loan to
         be an unacceptable investment, causes the Mortgage Loan to become
         delinquent, or adversely affects the value of the Mortgage Loan.

                  (xxix) Each such Mortgage Loan with a Loan-to-Value Ratio at
         origination in excess of 80% is and will be subject to a Primary
         Mortgage Insurance Policy, issued by a Fannie Mae or Freddie Mac
         approved insurer, which provided private mortgage insurance in an
         amount meeting Fannie Mae and Freddie Mac requirements. All provisions
         of such Primary Mortgage Insurance Policy have been and are being
         complied with, such policy is in full force and effect, and all
         premiums due thereunder have been paid. Any Mortgage subject to any
         such Primary Mortgage Insurance Policy obligates the Mortgagor
         thereunder to maintain such insurance and to pay all premiums and
         charges in connection therewith.

                  (xxx) The Mortgaged Property is lawfully occupied under
         applicable law. All inspections, licenses and certificates required to
         be made or issued with respect to all occupied portions of the related
         Mortgaged Property and, with respect to the use and occupancy of the
         same, including but not limited to certificates of occupancy, had been
         made or obtained from the appropriate authorities.

                  (xxxi) No defense against coverage under any private mortgage
         insurance (including, without limitation, any exclusions, denials or
         defenses which would limit or reduce the availability of the timely
         payment of the full amount of the loss otherwise due thereunder to the
         insured) exists arising out of actions, representations, errors,
         omissions, negligence, or fraud of the Mortgage Loan Seller, and the
         Mortgage Loan Seller is not aware of any fact that could reasonably
         lead the Mortgage Loan Seller to believe that any such defense exists
         arising out of the actions, representations, errors, omissions,
         negligence or fraud of the related Mortgagor or any party involved in
         the application for such coverage.



                                       37

<PAGE>



                  (xxxii) The Assignment is in recordable form, is acceptable
         for recording under the laws of the jurisdiction in which the Mortgaged
         Property is located and includes all applicable recording information,
         except where the related original Mortgage has been delivered for
         recording to the appropriate public recording office but has not yet
         been returned to the Mortgage Loan Seller.

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

                  (xxxiv) If the Mortgaged Property is a condominium unit or a
         planned unit development (other than a de minimis planned unit
         development) such condominium or planned unit development project meets
         the Mortgage Loan Seller's eligibility requirements.

                  (xxxv) Each Mortgage Loan is a "qualified mortgage" for
         purposes of the REMIC Provisions.

                  (xxxvi) No fraud was committed by the originator of the
         Mortgage Loan and the Mortgage Loan Seller is not aware of any fact
         that would reasonably lead the Mortgage Loan Seller to believe that any
         Mortgagor had committed fraud in connection with the origination of
         such Mortgage Loan.

         (b)      Upon the discovery by the Seller, the Mortgage Loan Seller,
the Master Servicer or the Trustee (or upon notice thereof in writing from a
Certificateholder) of a breach or breaches of any of the representations and
warranties of the Mortgage Loan Seller made in Section 2.04(a) in respect of any
Mortgage Loan, or any breach of a representation or warranty of the Mortgage
Loan Seller or Master Servicer set forth in Section 2.03 or any breach of
representation or warranty of the Mortgage Loan Seller in Section 2 of the
Mortgage Loan Purchase Agreement, which breach or breaches, individually or in
the aggregate, materially and adversely affect the interests of the
Certificateholders, the party discovering such breach shall give prompt written
notice to the other parties. The Trustee shall promptly notify the Mortgage Loan
Seller and Master Servicer of such breach of which a Responsible Officer has
actual knowledge or receives written notice and request that the Mortgage Loan
Seller or Master Servicer, as the case may be, cure such breach within 60 days
(or if such breach is not capable of being cured within 60 days and provided the
Mortgage Loan Seller or the Master Servicer, as the case may be is diligently
pursuing the cure thereof, within 120 days) from the date of such notice, and if
the Mortgage Loan Seller or Master Servicer does not cure such breach in all
material respects, the Mortgage Loan Seller or Master Servicer, as the case may
be, shall either (i) substitute a Replacement Mortgage Loan or Loans for the
related Mortgage Loan, which substitution must be made as specified in this
Section or (ii) purchase such Mortgage Loan held for the benefit of the
Certificateholders from the Trustee at the Purchase Price therefor.



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<PAGE>



         The Mortgage Loan Seller or Master Servicer shall not have any right to
substitute a Replacement Mortgage Loan or Loans for the affected Mortgage Loan
more than two years after the Closing Date if the related Mortgage Loan is a
"defective obligation" within the meaning of Section 860G(a)(4)(B)(ii) of the
Code, and any substitution must be accompanied by an Officers' Certificate
delivered to the Trustee, certifying that such Replacement Mortgage Loan
conforms to the requirements of this Agreement, and by an Opinion of Counsel to
the effect that such substitution will not cause the Trust Fund to fail to
qualify as a REMIC and will not result in a prohibited transaction tax, which
Opinion of Counsel shall be paid for by the Mortgage Loan Seller or Master
Servicer, as the case may be. Notwithstanding the foregoing, if any such breach
would cause a Mortgage Loan to be other than a "qualified mortgage loan" as
described in Section 860G(a)(3) of the Code, any substitution or purchase shall
occur within 90 days of the discovery of the breach.

         As to any Replacement Mortgage Loan or Loans, the Mortgage Loan Seller
or Master Servicer shall deliver to the Trustee or its agent for such
Replacement Mortgage Loan or Loans, the Mortgage Note, the Mortgage, and such
other documents and agreements as are required by Section 2.01(b), with the
Mortgage Note (i) endorsed in blank by facsimile signature if no Downgrade Event
has occurred or (ii) if a Downgrade Event has occurred, endorsed by facsimile
signature to the Trustee for the benefit of the Holders of the Washington Mutual
Mortgage Loan Trust Mortgage Pass-Through Certificates, Series 2001-7 (which
endorsement, in either case, may be in the form of a note allonge). As to any
Replacement Mortgage Loan or Loans, the Mortgage Loan Seller or Master Servicer
shall deliver to the Trustee the related Assignment (i) in blank in recordable
form or (ii) if a Downgrade Event has occurred, assigned to the Trustee for the
benefit of the Holders of the Washington Mutual Mortgage Loan Trust Mortgage
Pass-Through Certificates, Series 2001-7. No substitution will be made in any
calendar month after the Determination Date for such month. Monthly Payments due
with respect to Replacement Mortgage Loans in the month of substitution shall
not be part of the Trust Fund and will be remitted by the Master Servicer to the
Mortgage Loan Seller on the next succeeding Distribution Date. For the month of
substitution, distributions to Certificateholders will include the Monthly
Payment due on such Deleted Mortgage Loan for such month and thereafter the
Mortgage Loan Seller or Master Servicer, as the case may be, shall be entitled
to retain all amounts received in respect of such Deleted Mortgage Loan.

         Upon such substitution, the Master Servicer shall amend or cause to be
amended the Mortgage Loan Schedule to reflect the removal of such Deleted
Mortgage Loan and the substitution of the Replacement Mortgage Loan or Loans and
shall deliver such amended Mortgage Loan Schedule to the Seller, the Mortgage
Loan Seller and the Trustee. Upon such substitution, the Replacement Mortgage
Loan or Loans shall be subject to the terms of this Agreement in all respects
and the Mortgage Loan Seller shall be deemed to have made, as of the date of
substitution, with respect to the Replacement Mortgage Loan or Loans, the
representations and warranties pertaining to the Mortgage Loans contained in
Section 2.04(a) hereof. Upon receipt of the Trustee Mortgage File pertaining to
any Replacement Mortgage Loans, the Trustee shall release, or cause to be
released, the Trustee Mortgage File held for the benefit of the
Certificateholders relating to such Deleted Mortgage Loan to the Mortgage Loan
Seller or Master Servicer as applicable and shall execute and deliver such
instruments of transfer or assignment, in each case without recourse, as shall
be necessary to vest title (to the extent that such title was transferred to the
Trustee) in the Mortgage Loan Seller or Master Servicer as applicable, or its
designee, to any Deleted Mortgage Loan substituted for pursuant to this Section
2.04(b).


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<PAGE>



         In any month in which the Mortgage Loan Seller or Master Servicer
substitutes one or more Replacement Mortgage Loans for one or more Deleted
Mortgage Loans, the Master Servicer will determine the Replacement Amount (if
any) (after application of scheduled principal portion of the Monthly Payments
received in the month of substitution). Such Replacement Amount shall be
deposited into the Custodial Account by the Mortgage Loan Seller or Master
Servicer in the month of substitution pursuant to Section 3.07, without any
reimbursement thereof. The Master Servicer shall give notice in writing to the
Trustee of such event, which notice shall be accompanied by a certificate of a
Servicing Officer as to the calculation of such shortage.

         In the event that the Mortgage Loan Seller or Master Servicer shall
have repurchased a Mortgage Loan, upon receipt by the Trustee of written
notification of the deposit of the Purchase Price, the Trustee shall release, or
cause to be released, the related Trustee Mortgage File held for the benefit of
the Certificateholders to the Mortgage Loan Seller or Master Servicer as
applicable and the Trustee shall execute and deliver the related instruments of
transfer or assignment, in each case without recourse, as shall be necessary to
transfer title (to the extent that such title was transferred to the Trustee)
from the Trustee for the benefit of the Certificateholders and vest title in the
Mortgage Loan Seller or Master Servicer, or the designee thereof, as the case
may be, to any Mortgage Loan purchased pursuant to this Section 2.04(b). It is
understood and agreed that the obligation under this Agreement of any Person to
repurchase or substitute any Mortgage Loan as to which such breach has occurred
and is continuing shall constitute the sole and exclusive remedy respecting such
breach available to Certificateholders or the Trustee on their behalf.

         SECTION 2.05      ISSUANCE OF CERTIFICATES.

         The Trustee acknowledges the assignment to it of the Mortgage Loans
together with the assignment to it of all other assets included in the Trust
Fund. Concurrently with such assignment and delivery, the Trustee, pursuant to
the written request of the Seller executed by an officer of the Seller, has
executed the Class A, Class M-1, Class M-2, Class M-3, Class B-1, Class B-2,
Class B-3 and Class R Certificates and caused them to be authenticated and
delivered to or upon the order of the Seller in authorized denominations which
evidence ownership of the Trust Fund. The rights of the Holders of such
Certificates to receive distributions from the Trust Fund and all ownership
interests of the Holders of the Class A, Class M-1, Class M-2, Class M-3, Class
B-1, Class B-2, Class B-3 and Class R Certificates in such distributions shall
be as set forth in this Agreement.

         SECTION 2.06      REMIC PROVISIONS.

         (a) As set forth in the Preliminary Statement hereto, the Trustee shall
elect to treat the Trust Fund as a REMIC in accordance with the REMIC
Provisions. The Trustee shall make such election on Form 1066 or other
appropriate federal tax or information return for the taxable year ending on the
last day of the calendar year in which the Certificates are issued. For the
purposes of such election, each Class of Certificates, other than the Class R
Certificates, is hereby designated as a regular interest in the REMIC, and the
Class R Certificates are hereby designated as the sole residual interest in the
REMIC.

         (b) The Closing Date is hereby designated as the "Startup Day" of each
REMIC within the meaning of section 86OG(a)(9) of the Code.


                                       40

<PAGE>




         (c) The Trustee shall pay any and all tax related expenses (not
including taxes) of the REMIC, including but not limited to any professional
fees or expenses related to audits or any administrative or judicial proceedings
with respect to such REMIC that involve the Internal Revenue Service or state
tax authorities, but only to the extent that (i) such expenses are ordinary or
routine expenses, including expenses of a routine audit but not expenses of
litigation (except as described in (ii)); or (ii) such expenses or liabilities
(including taxes and penalties) are attributable to the negligence or willful
misconduct of the Trustee in fulfilling its duties hereunder (including its
duties as tax return preparer). The Trustee shall be entitled to reimbursement
of expenses to the extent provided in clause (i) above from the Certificate
Account.

         (d) The Trustee shall prepare, sign and timely file, all of the REMIC's
federal and state tax and information returns as such REMIC's direct
representative. The expenses of preparing and filing such returns shall be borne
by the Trustee.

         (e) The Trustee or its designee shall perform as directed by the Master
Servicer on behalf of the REMIC all reporting and other tax compliance duties
that are the responsibility of such REMIC under the Code, the REMIC Provisions,
or other compliance guidance issued by the Internal Revenue Service or any state
or local taxing authority. Among its other duties, if required by the Code, the
REMIC Provisions, or other such guidance, the Trustee shall provide (i) to the
Treasury or other governmental authority such information as is necessary for
the application of any tax relating to the transfer of a Residual Certificate to
any disqualified person or organization and (ii) to the Certificateholders such
information or reports as are required by the Code or REMIC Provisions.

         (f) The Trustee, the Master Servicer and the Holders of Certificates
shall take any action or cause the REMIC to take any action necessary to create
or maintain the status of such REMIC as a REMIC under the REMIC Provisions and
shall assist each other as necessary to create or maintain such status. Neither
the Trustee, the Master Servicer nor the Holder of any Residual Certificate
shall take any action, cause the REMIC 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 such REMIC as
a REMIC or (ii) result in the imposition of a tax upon such REMIC (including but
not limited to the tax on prohibited transactions as defined in Code Section
860F(a)(2) and the tax on prohibited contributions set forth on Section 860G(d)
of the Code) (either such event, an "Adverse REMIC Event") unless the Trustee
and the Master Servicer have received an Opinion of Counsel (at the expense of
the party seeking to take such action) to the effect that the contemplated
action will not endanger such status or result in the imposition of such a tax.
In addition, prior to taking any action with respect to the REMIC or the assets
therein, or causing such REMIC to take any action, which is not expressly
permitted under the terms of this Agreement, any Holder of a Residual
Certificate will consult with the Trustee and the Master Servicer, or their
respective designees, in writing, with respect to whether such action could
cause an Adverse REMIC Event to occur with respect to such REMIC, and no such
Person shall take any such action or cause such REMIC to take any such action as
to which the Trustee or the Master Servicer has advised it in writing that an
Adverse REMIC Event could occur.



                                       41

<PAGE>



         (g) Each Holder of a Residual Certificate shall pay when due any and
all taxes imposed on the REMIC by federal or state governmental authorities. To
the extent that such Trust taxes are not paid by a Residual Certificateholder,
the Trustee shall pay any remaining REMIC taxes out of current or future amounts
otherwise distributable to the Holder of the Residual Certificate in the REMIC
or, if no such amounts are available, out of other amounts held in the
Certificate Account, and shall reduce amounts otherwise payable to holders of
regular interests in the REMIC.

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

         (i) Within 30 days after the Closing Date, the Trustee shall prepare
and file with the Internal Revenue Service Form 8811, "Information Return for
Real Estate Mortgage Investment Conduits (REMIC) and Issuers of Collateralized
Debt Obligations" for the REMIC.

         (j) Neither the Trustee nor the Master Servicer shall sell, dispose of
or substitute for any of the Mortgage Loans (except in connection with (i) the
default, imminent default or 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 the Trust Fund pursuant to Article X of this Agreement or (iv) a
purchase of Mortgage Loans pursuant to Article II or III of this Agreement) nor
acquire any assets for the Trust Fund, nor sell or dispose of any investments in
the Custodial Account or the Certificate Account for gain nor accept any
contributions to the Trust Fund after the Closing Date (a) unless it has
received an Opinion of Counsel that such sale, disposition, substitution or
acquisition will not affect adversely the status of the Trust Fund as a REMIC or
(b) unless the Master Servicer has determined in its sole discretion to
indemnify the Trust Fund against such tax.

         (k) In order to enable the Trustee to perform its duties as set forth
herein, the Seller shall provide, or cause to be provided to the Trustee, within
ten days after the Closing Date, all information or data that the Trustee
determines to be relevant for tax purposes to the valuations and offering prices
of the Certificates, including, without limitation, the price, yield, prepayment
assumption and projected cash flows of the Certificates and the Mortgage Loans
and the Trustee shall be entitled to rely upon any and all such information and
data in the performance of its duties set forth herein. Thereafter, the Master
Servicer shall provide, promptly upon request therefor, any such additional
information or data that the Trustee may from time to time reasonably request in
order to enable the Trustee to perform its duties as set forth herein and the
Trustee shall be entitled to rely upon any and all such information and data in
the performance of its duties set forth herein. The Seller shall indemnify the
Trustee and hold it harmless for any loss, liability, damage, claim or expense
of the Trustee arising from any failure of the Seller to provide, or to cause to
be provided, accurate information or data to the Trustee on a timely basis. The
Master Servicer shall indemnify the Trustee and hold it harmless for any loss,
liability, damage, claim or expense of the Trustee arising from any failure of
the Master Servicer to provide, or to cause to be provided, accurate information
or data to the Trustee on a timely basis. The indemnification provisions
hereunder shall survive the termination of this Agreement and shall extend to
any co-trustee appointed pursuant to this Agreement.



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<PAGE>



         (l) The Department of Labor has granted administrative exemptions to
Bear, Stearns & Co. Inc. (Prohibited Transaction Exemption 90-30, 55 F.R.
21461), Lehman Brothers, Inc. (Prohibited Transaction Exemption 91-14, 56 F.R.
7413), Salomon Smith Barney, Inc. (Prohibited Transaction Exemption 91-23, 56
F.R. 15936) and Greenwich Capital Markets, Inc. (Prohibited Transaction
Exemption 90-59, 55 F.R. 36724), each as amended (each an "Exemption") from
certain of the prohibited transaction rules of ERISA and the Code.


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<PAGE>




                                   ARTICLE III

                          ADMINISTRATION AND SERVICING
                                OF MORTGAGE LOANS

         SECTION 3.01      SERVICING STANDARD.

         (a) For and on behalf of the Trustee and the Certificateholders, the
Master Servicer shall service and administer the Mortgage Loans in accordance
with prudent mortgage loan servicing standards and procedures generally accepted
in the mortgage banking industry and generally in a manner consistent with
Fannie Mae guidelines except as otherwise expressly provided in this Agreement.
In connection with such servicing and administration, the Master Servicer,
acting alone and/or through any Sub-Servicer as provided in Section 3.02 hereof,
shall have the power and authority, subject to the terms hereof (i) to execute
and deliver, on behalf of the Certificateholders and the Trustee, customary
consents or waivers and other instruments and documents (including, without
limitation, estoppel certificates), (ii) to consent to transfers of any
Mortgaged Property and assumptions of the Mortgage Notes and related Mortgages
(but only in the manner provided in this Agreement), (iii) to collect any
Insurance Proceeds and Liquidation Proceeds, (iv) to consent to any subordinate
financings to be secured by any Mortgaged Property to the extent that such
consent is required pursuant to the terms of the related Mortgage, (v) to
consent to the application of any proceeds of insurance policies or condemnation
awards to the restoration of the applicable Mortgaged Property or otherwise, and
(vi) subject to the provisions of Section 3.07 and 3.13, to effectuate
foreclosure or other conversion of the ownership of the Mortgage Property
securing any Mortgage Loan; provided, however, that the Master Servicer shall
take no action that is materially inconsistent with or materially prejudices the
interest of the Trustee or the Certificateholders in any Mortgage Loan or the
rights and interest of the Seller, the Trustee and the Certificateholders under
the terms of this Agreement unless such action is specifically called for by the
terms hereof.

         (b) Without limiting the generality of the foregoing, but subject to
the terms hereof, the Master Servicer, in its own name or in the name of the
Trustee, is hereby authorized and empowered by the Seller and the Trustee, when
a prudent servicer of mortgage loans would so act under similar circumstances,
to execute and deliver, on behalf of the Trustee, the Certificateholders or any
of them, any and all instruments of modification, satisfaction, cancellation or
assignment, or of partial or full release or discharge and all other comparable
instruments, with respect to the Mortgage Loans, and with respect to the
Mortgaged Properties held for the benefit of the Certificateholders. The Master
Servicer shall promptly notify the Trustee of any such execution and delivery.
The Trustee for the benefit of the Certificateholders shall execute any powers
of attorney and other documents necessary or appropriate to enable the Master
Servicer to service and administer the Mortgage Loans.

         (c) 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,
imminent) permit any modification with respect to any Mortgage Loan (i) that
would change the Net Mortgage Rate or, reduce or increase the principal balance
(except for increases resulting from the addition of Deferred Interest and
reductions resulting from actual payments of principal) or (ii) that would both
constitute a sale or exchange of such Mortgage


                                       44

<PAGE>



Loan within the meaning of Section 1001 of the Code (including any proposed,
temporary or final regulations promulgated thereunder) (other than in connection
with a proposed conveyance or assumption of such Mortgage Loan that is a
Principal Prepayment made (or treated as made) by the Mortgagor of the entire
principal balance of a Mortgage Loan) and cause the Trust Fund to fail to
qualify as a REMIC under the Code.

         (d) If an Index of One-Year MTA is not available with respect to any
Mortgage Loan, the Master Servicer will select an alternative Index which is
based on comparable information. In such event, the Master Servicer will also
determine a new Gross Margin. The new Gross Margin will be the difference
between the average of the last available Index for the most recent three-year
period which ends on the last date the last available Index was available plus
the Gross Margin on the last date the last available Index was available and the
average of the new Index for the most recent three year period which ends on
that date (or, if not available for such three-year period, for such time as it
is available), rounded as provided in the Mortgage Note.

         SECTION 3.02      ENFORCEMENT OF THE OBLIGATIONS OF SUB-SERVICERS.

         (a) For purposes of this Agreement, the Master Servicer shall be deemed
to have received the payments on the Mortgage Loans referred to in Sections 3.07
and 3.08 hereof when the related Sub-Servicer, if any, has received such
payments and shall remain obligated to deposit such payments in accordance with
Sections 3.07 and 3.08 hereof, regardless of whether such payments are remitted
by the Sub-Servicer to the Master Servicer. The Master Servicer and the related
Sub- Servicer may enter into amendments to any applicable Sub-Servicing
Agreement; provided, however, that any such amendments shall be consistent with
and shall not violate the provisions of this Agreement.

         (b) As part of its servicing activities hereunder, the Master Servicer,
for the benefit of the Seller, the Trustee and the Certificateholders, shall
supervise, administer, monitor and oversee the servicing of the Mortgage Loans
that are not serviced by it directly, and shall enforce the obligations of each
Sub-Servicer, if any, under the related Sub-Servicing Agreement. Such
enforcement shall include, without limitation, the legal prosecution of claims,
termination of Sub-Servicing Agreements, as appropriate, and the pursuit of
other appropriate remedies, and 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 Loans or (ii) from a specific
recovery of costs, expenses or attorneys fees against the party against whom
such enforcement is directed. The Master Servicer shall not waive any event of
default by a Sub-Servicer under a Sub-Servicing Agreement which is a failure to
remit any payment required to be made by such Sub-Servicer that would result in
an Event of Default under this Agreement.

         (c) During the term of this Agreement, the Master Servicer shall
consult fully with each of the Sub-Servicers as may be necessary from time to
time to perform and carry out the Master Servicer's obligations hereunder and
receive, review and evaluate all reports, information and other data that are
provided to the Master Servicer by each Sub-Servicer and otherwise exercise
reasonable


                                       45

<PAGE>



efforts to cause each Sub-Servicer to perform and observe the covenants,
obligations and conditions to be performed or observed by it under its
Sub-Servicing Agreement.

         SECTION 3.03      TERMINATION OF THE RIGHTS OF SUB-SERVICERS.

         If the Master Servicer terminates the rights of a Sub-Servicer under
any Sub-Servicing Agreement, the Master Servicer shall service the Mortgage
Loans directly pursuant to and in accordance with the terms of this Agreement,
or at the Master Servicer's election, enter into a substitute servicing
agreement with another mortgage loan servicing company reasonably acceptable to
the Master Servicer under which such mortgage loan servicing company shall
assume, satisfy, perform and carry out all liabilities, duties, responsibilities
and obligations that are to be, or otherwise were to have been, satisfied,
performed and carried out by the terminated Sub-Servicer, regardless of whether
such liabilities, duties, responsibilities or obligations shall have accrued
before or after the termination of the rights of such Sub-Servicer; provided,
however, that any such substitute servicer and any such substitute servicing
shall satisfy the requirements of Sections 3.01 and 3.02. If the Master Servicer
does not elect to enter into a substitute servicing agreement with a successor
servicer, the Master Servicer shall nevertheless service the Mortgage Loans
directly pursuant to and in accordance with the terms of this Agreement, until a
substitute Sub-Servicer has been appointed and designated and a substitute
servicing agreement has been entered into by the Master Servicer and such
substitute Sub-Servicer. Each Sub-Servicing Agreement shall provide that any
successor to the Master Servicer shall be able to terminate the Sub-Servicer and
the Master Servicer (and not the successor Master Servicer) shall be liable for
the payment of any termination fee.

         SECTION 3.04      LIABILITY OF THE MASTER SERVICER.

         Notwithstanding the provisions of any Sub-Servicing Agreement, any of
the provisions of this Agreement relating to agreements or arrangements between
the Master Servicer or a Sub- Servicer or reference to actions taken through a
Sub-Servicer or otherwise, the Master Servicer shall remain obligated and liable
to the Seller, the Trustee and the Certificateholders for the servicing and
administering of the Mortgage Loans included in the Trust Fund in accordance
with (and subject to the limitations contained within) the provisions of this
Agreement without diminution of such obligation or liability by virtue of such
Sub-Servicing Agreements or 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. The Master Servicer shall be entitled to enter
into any agreement with a Sub-Servicer for indemnification of the Master
Servicer and nothing contained in this Agreement shall be deemed to limit or
modify such indemnification.

         SECTION 3.05 RIGHTS OF THE SELLER AND THE TRUSTEE IN RESPECT OF THE
                      MASTER SERVICER.

         The Master Servicer shall afford the Seller and the Trustee, without
charge but only upon reasonable notice and during normal business hours, access
to all records and documentation in the Master Servicer's possession regarding
the Mortgage Loans and to all accounts, insurance policies and other matters in
the Master Servicer's possession relating to this Agreement and access to


                                       46

<PAGE>



officers of the Master Servicer responsible for its obligations hereunder. The
Seller may, but is not obligated to, enforce the obligations of the Master
Servicer hereunder. The Seller shall not have any responsibility or liability
for any action or failure to act by the Master Servicer and is not obligated to
supervise the performance of the Master Servicer hereunder or otherwise.

         SECTION 3.06      TRUSTEE TO ACT AS MASTER SERVICER.

         In the event that the Master Servicer shall for any reason no longer be
the Master Servicer hereunder (including by reason of an Event of Default), the
Trustee shall thereupon assume all of the rights and obligations of the Master
Servicer hereunder arising thereafter (except that the Trustee shall not be
liable for losses in connection with Eligible Investments required to be paid by
the Master Servicer pursuant to Section 3.07 or 4.01 hereof, obligated to make
Monthly Advances if prohibited by applicable law, liable for any actions or
omissions of the predecessor Master Servicer, nor obligated to effectuate
repurchases or substitutions of Mortgage Loans hereunder as substitute Master
Servicer, including pursuant to Section 2.04 hereof and except that the Trustee
makes no representations and warranties hereunder, including pursuant to Section
2.04 hereof). If the Master Servicer shall for any reason no longer be the
Master Servicer (including by reason of any Event of Default), the Trustee (or
any other successor master servicer) may, at its sole option, succeed to any
rights and obligations of the Master Servicer under any Sub-Servicing Agreement
and shall be deemed to have assumed the Master Servicer's interest therein;
provided, however, that the Master Servicer shall not thereby be relieved of any
liability or obligations under this Agreement, any Sub- Servicing or substitute
servicing agreement arising prior to the date of such succession, including,
without limitation, payment of any termination fee that may become due to a
Sub-Servicer upon termination of the Sub-Servicing Agreement.

         The Master Servicer shall, upon request of the Trustee, but at the
expense of the Master Servicer, deliver to the assuming party all documents and
records relating to the Mortgage Loans then being serviced thereunder and an
accounting of amounts collected and held by it and otherwise use its best
efforts to effect the orderly and efficient transfer of servicing to the
assuming party.

         SECTION 3.07      COLLECTION OF MORTGAGE LOAN PAYMENTS.

         (a) 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,
follow such collection procedures as it follows with respect to mortgage loans
comparable to the Mortgage Loans held in its own portfolio and serviced by the
Master Servicer. Consistent with the foregoing, the Master Servicer may in its
discretion (a) waive any late payment charge and (b) subject to Section 3.01,
only upon determining that the coverage of such Mortgage Loan by any related
Primary Mortgage Insurance Policy will not be affected, extend the due dates for
payments due on a Mortgage Note for a period not greater than 365 days, but in
no event beyond the maturity date of any Mortgage Loan. In the event of any such
arrangement described in clause (b) of the preceding sentence, the Master
Servicer shall continue to make timely Monthly Advances on the related Mortgage
Loan, pursuant to and in accordance with Section 5.04 of this Agreement (but
subject to any limitations contained therein), during the scheduled period in
accordance with the amortization schedule of such Mortgage Loan without
modification thereof by reason of such arrangements. The Master Servicer
covenants and agrees that the Master Servicer


                                       47

<PAGE>



shall waive a Prepayment Charge only under the following circumstances: (i) 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, or (ii) such waiver is otherwise
required by applicable law or, upon the advice of counsel to the Master
Servicer, would expose the Master Servicer to liability under applicable law.

         (b) The Master Servicer shall establish and maintain, in its name on
behalf of the Certificateholders, the Custodial Account. The Master Servicer
shall deposit into the Custodial Account within two Business Days of receipt by
the Master Servicer, or receipt from the Sub- Servicers except as otherwise
specifically provided herein, the following payments and collections received or
made by it subsequent to the Cut-off Date (other than in respect of principal of
and interest and any other payments on the Mortgage Loans due on or before the
Cut-off Date):

                  (i) all payments on account of principal, including Principal
         Prepayments, on the Mortgage Loans;

                  (ii) all payments on account of interest on the Mortgage
         Loans, including Prepayment Charges, less the Servicing Fee and the
         Excess Servicing Fee;

                  (iii) all Insurance Proceeds and Liquidation Proceeds, other
         than proceeds to be applied to the restoration or repair of the
         Mortgaged Property or released to the Mortgagor in accordance with the
         Master Servicer's normal servicing procedures, net of Liquidation
         Expenses, unpaid servicing compensation and unreimbursed Monthly
         Advances;

                  (iv) any amount of any losses required to be deposited by the
         Master Servicer pursuant to Section 3.07(c) in connection with any
         losses on Eligible Investments;

                  (v) any amounts required to be deposited by the Master
         Servicer pursuant to Section 3.11 hereof;

                  (vi) all proceeds of any purchase by the Mortgage Loan Seller
         or the Master Servicer, as the case may be, of any Mortgage Loans or
         property acquired in respect of the Mortgage Loans pursuant to Sections
         2.01, 2.02, 2.03, 2.04, 3.12 or 10.01 hereof and any Replacement
         Amounts required to be deposited in connection with the substitution of
         Replacement Mortgage Loans pursuant to Sections 2.01, 2.02, 2.03, 2.04
         or 3.12 hereof; and

                  (vii) any other amounts required to be deposited in the
         Custodial Account pursuant to this Agreement including, without
         limitation, the amounts required to be deposited therein pursuant to
         Section 3.13 hereof.

         The foregoing requirements for remittance by the Master Servicer shall
be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, the Servicing Fee, the Excess Servicing Fee, late
payment charges and assumption fees and any excess interest charges payable by
the Mortgagor by virtue of any default or other non-compliance by the Mortgagor
with


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the terms of the Mortgage or any other instrument or document executed in
connection therewith or otherwise, if collected, need not be remitted or
deposited into the Custodial Account by the Master Servicer. In the event that
the Master Servicer shall remit or deposit any amount not required to be
remitted or deposited and not otherwise subject to withdrawal pursuant to
Section 3.09 hereof, it may at any time withdraw such amount from the Custodial
Account on the following Distribution Date, any provision herein to the contrary
notwithstanding. All funds deposited in the Custodial Account shall be held by
the Master Servicer in trust for the Certificateholders until disbursed in
accordance with this Agreement or withdrawn in accordance with Section 3.09. In
no event shall the Trustee incur liability for withdrawals from the Custodial
Account at the direction of the Master Servicer.

         (c) Any investments of amounts on deposit in the Custodial Account
shall be made by the Master Servicer in Eligible Investments, which shall mature
not later than the second Business Day preceding the Distribution Date following
the date of such investment (except that if such Eligible Investment is an
obligation of the institution that maintains the Custodial Account, then such
Eligible Investment shall mature not later than such Distribution Date). All
such Eligible Investments shall be made in the name of the Trustee for the
benefit of the Certificateholders. All income and gain net of any losses
realized from any such investment shall be for the benefit of the Master
Servicer and shall be subject to withdrawal at its direction from time to time.
The amount of any losses net of any gains incurred by the Master Servicer in
respect of any such investments shall be remitted to the Trustee or deposited in
the Custodial Account out of the Master Servicer's own funds promptly following
the date the same are realized.

         (d) The Master Servicer shall promptly give notice to the Trustee, the
Rating Agencies and the Seller of the location of the Custodial Account and of
any change thereof.

         SECTION 3.08 COLLECTION OF TAXES, ASSESSMENTS AND SIMILAR ITEMS;
                      ESCROW ACCOUNTS.

         (a) In addition to the Custodial Account, the Master Servicer shall
establish and maintain one or more custodial accounts (each, an "Escrow
Account") and deposit and retain therein all collections from the Mortgagors (or
advances by the Master Servicer) for the payment of taxes, assessments and
hazard insurance premiums or comparable items for the account of the Mortgagors.
Escrow Accounts shall be Eligible Accounts. All costs incurred by the Master
Servicer or by the related Sub-Servicer in effecting the timely payments of
taxes and assessments on the Mortgaged Properties and related insurance premiums
shall not, for the purpose of calculating monthly distributions to the
Certificateholders, be added to the Scheduled Principal Balance under the
related Mortgage Loans, notwithstanding that the terms of such Mortgage Loans so
permit.

         (b) Withdrawals of amounts so collected from the Escrow Accounts may be
made only to effect timely payment of taxes, assessments, hazard insurance
premiums or Primary Mortgage Insurance Policy premiums, condominium or PUD
association dues, or comparable items, to reimburse the Master Servicer pursuant
to Section 3.10 hereof (with respect to the Primary Mortgage Insurance Policy)
and this Section 3.08 (with respect to taxes and assessments) and Section 3.11
hereof (with respect to hazard insurance), to refund to any Mortgagors any sums
as may be determined to be overages, to pay interest, if required, to Mortgagors
on balances in the Escrow Account or to clear and terminate the Escrow Account
at the termination of this Agreement in


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accordance with Section 10.01 hereof. As part of its servicing duties, the
Master Servicer shall, and the Sub-Servicers shall, pursuant to any
Sub-Servicing Agreement, be required to, pay to the Mortgagors interest on funds
in the Escrow Account, to the extent required by law.

         (c) The Master Servicer shall, with respect to each Mortgage Loan, to
the extent any related Sub-Servicer does not do so, advance the payments
referred to in Section 3.08(b) that are not timely paid by the Mortgagors;
provided, however, that the Master Servicer shall be required to so advance only
to the extent that such advances, in the good faith judgment of the Master
Servicer, will be recoverable by the Master Servicer out of Insurance Proceeds,
Liquidation Proceeds or otherwise out of the related Mortgage Loan; and provided
further, that such payments shall be advanced when the tax, premium or other
cost for which such payment is intended is due.

         SECTION 3.09      PERMITTED WITHDRAWALS FROM THE CUSTODIAL ACCOUNT.

         (a) The Master Servicer may (and, with respect to clauses (v) and (vii)
below, shall), from time to time, make, to the extentt required or authorized
hereunder, withdrawals from the Custodial Account for the following purposes:

                  (i) to pay to the Master Servicer from funds on deposit in the
         Custodial Account earnings on or investment income with respect to
         funds in the Custodial Account less losses referred to in Section
         3.07(iv);

                  (ii) to reimburse the Master Servicer for advances made
         pursuant to Sections 3.01, 3.08, 3.10, 3.11, 3.13, 5.04 and 5.05
         hereof, such right of reimbursement pursuant to this subclause (ii)
         being limited to amounts received in respect of the particular Mortgage
         Loan (including, for this purpose, Insurance Proceeds, Liquidation
         Proceeds, amounts representing proceeds of other insurance policies, if
         any, covering the related Mortgaged Property, rental and other income
         from REO Property and proceeds of any purchase or repurchase of the
         related Mortgage Loan);

                  (iii) to reimburse the Master Servicer for any Nonrecoverable
         Advances made in respect of any Mortgage Loan;

                  (iv) to reimburse the Master Servicer from Liquidation
         Proceeds for Liquidation Expenses and, to the extent that Liquidation
         Proceeds after such reimbursement are in excess of the Scheduled
         Principal Balance of the related Mortgage Loan together with accrued
         and unpaid interest thereon at a rate equal to the Mortgage Rate, to
         pay out of such excess the amount of any unpaid servicing compensation
         to the Master Servicer with respect to any Mortgage Loan, which may
         include any unpaid servicing compensation to a Sub-Servicer (for
         disbursement in accordance with Section 3.16 hereof);

                  (v) to pay to the Mortgage Loan Seller or the Master Servicer,
         as the case may be, with respect to each Mortgage Loan or property
         acquired in respect thereof that has been purchased pursuant to
         Sections 2.01, 2.02, 2.04 or 3.12 hereof all amounts received thereon
         and not taken into account in determining the Purchase Price of such
         repurchased Mortgage Loan;


                                       50

<PAGE>




                  (vi) to reimburse the Master Servicer or the Seller for
         expenses incurred by and reimbursable to the Master Servicer or the
         Seller pursuant to Section 7.03 hereof or Section 9.10(f);

                  (vii) to withdraw any amount deposited in the Custodial
         Account pursuant to Section 3.07 and not required to be deposited
         therein; and

                  (viii) to clear and terminate the Custodial Account upon
         termination of this Agreement pursuant to Section 10.01 hereof.

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

         (b) On or prior to the Master Servicer Remittance Date, after payment
of items (i) through (viii) of Section 3.09(a), the Master Servicer shall
withdraw from the Custodial Account and remit the following:

                  (i) to the Trustee, in immediately available funds, an amount
         equal to the Total Distribution Amount for such Distribution Date,
         which the Trustee, upon receipt thereof, shall deposit in the
         Certificate Account.

         SECTION 3.10      MAINTENANCE OF PRIMARY MORTGAGE INSURANCE POLICIES;
                           COLLECTIONS THEREUNDER.

         (a) The Master Servicer shall not take, or permit any Sub-Servicer to
take, any action that would result in loss of coverage under any applicable
Primary Mortgage Insurance Policy for any loss which, but for the actions of the
Master Servicer or Sub-Servicer, would have been covered thereunder.

         (b) The Master Servicer shall keep in full force and effect each
Primary Mortgage Insurance Policy applicable to a Mortgage Loan being serviced
by it until the principal balance of the related Mortgage Loan, in the case of a
Mortgage Loan having a Loan-to-Value Ratio at origination in excess of 80%, is
reduced to (i) 80% or less of the Appraised Value or (ii) 80% or less of its
current value based on a new appraisal. The Master Servicer agrees to pay to the
extent the related Mortgagor does not do so, the premiums for each Primary
Mortgage Insurance Policy on a timely basis and shall use its best reasonable
efforts to cause itself or the Sub-Servicer to be named as loss payee; provided,
however, that the Master Servicer shall be required to pay such premiums only to
the extent that such advances, in the good faith judgment of the Master
Servicer, will be recoverable by the Master Servicer out of Insurance Proceeds,
Liquidation Proceeds or otherwise out of the related Mortgage Loan. In the event
that the insurer under any Primary Mortgage Insurance Policy shall cease to be
qualified to transact a mortgage guaranty insurance business under the laws of
the state of its organization or any other state that has jurisdiction over such
insurer (or if such insurer's claims-paying ability shall adversely affect the
rating on the Class A Certificates) or such Primary Mortgage Insurance Policy is
cancelled or terminated for any reason, the Master Servicer


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<PAGE>



shall exercise its best reasonable efforts to obtain, or to cause the related
Sub-Servicer to obtain, from another Qualified Insurer, a replacement policy
comparable to such Primary Mortgage Insurance Policy at the expense of the
Mortgagor. The Master Servicer shall not consent to the cancellation or refusal
to renew any such Primary Mortgage Insurance Policy applicable to any Mortgage
Loan, which is in effect at the date of the initial issuance of the Certificates
and is required to be kept in force hereunder unless the replacement Primary
Mortgage Insurance Policy for such cancelled or non-renewed policy is maintained
with an insurer with a rating not lower than the insurer issuing the Primary
Mortgage Insurance Policy in effect at the date of the initial issuance of the
Certificates or whose claims-paying will not adversely affect the rating on the
Certificates or unless any such cancellation or refusal, or consent thereto,
will not adversely affect the rating on the Certificates. In connection with any
assumption and modification agreement entered into by the Master Servicer or a
Sub-Servicer pursuant to Section 3.12, the Master Servicer shall obtain a
replacement Primary Mortgage Insurance Policy, as provided above.

         (c) In connection with its activities as administrator and servicer of
the Mortgage Loans, the Master Servicer agrees to present, on behalf of itself,
and on behalf of the Trustee for the benefit of the Certificateholders, claims
to the insurer under any Primary Mortgage Insurance Policies, in this regard, to
take such reasonable action as shall be necessary to permit recovery under any
Primary Mortgage Insurance Policies respecting defaulted Mortgage Loans.
Pursuant to Section 3.07 hereof, any amounts collected by the Master Servicer
under any Primary Mortgage Insurance Policy shall be deposited in the Custodial
Account, subject to withdrawal pursuant to Section 3.09 hereof.

         SECTION 3.11      MAINTENANCE OF HAZARD INSURANCE AND OTHER INSURANCE.

         (a) The Master Servicer shall cause to be maintained for each Mortgage
Loan, hazard insurance with extended coverage in an amount that is at least
equal to the replacement cost of improvements securing such Mortgage Loan or its
Scheduled Principal Balance, whichever is less.

         (b) Each policy of standard hazard insurance shall contain, or have an
accompanying endorsement that contains, a standard mortgagee clause complying in
all material respects in form and substance to applicable Fannie Mae guidelines.
The Master Servicer shall cause to be maintained on property acquired upon
foreclosure or deed in lieu of foreclosure of any Mortgage Loan, liability
insurance and, to the extent described below, flood insurance. Pursuant to
Section 3.07 hereof, 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 terms of the applicable Mortgage or the Master
Servicer's normal servicing procedures) shall be deposited in the Custodial
Account, subject to withdrawal pursuant to Section 3.09 hereof.

         Any cost incurred by the Master Servicer or the related Sub-Servicer in
maintaining any such insurance shall not, for the purpose of calculating monthly
distributions to the Certificateholders or remittances to the Trustee for their
benefit, be added to the Scheduled Principal Balance of the Mortgage Loan,
notwithstanding that the terms of the Mortgage Loan so permit. Such costs shall
be recoverable by the Master Servicer out of payments by the related Mortgagor
or out of Insurance Proceeds or Liquidation Proceeds to the extent permitted by
Section 3.09 hereof. If the Mortgaged Property is located at the time of
origination of the Mortgage Loan in a federally designated special


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<PAGE>



flood hazard area, the Master Servicer shall cause flood insurance to be
maintained. Such flood insurance shall be in an amount equal to the lesser of
(i) the unpaid Scheduled Principal Balance of the related Mortgage Loan or (ii)
the maximum amount of such insurance available for the related Mortgaged
Property under the national flood insurance program, if the area in which such
Mortgaged Property is located is participating in such program. Notwithstanding
anything in this paragraph to the contrary, the Master Servicer shall be
required to pay the costs of maintaining any insurance contemplated by this
Section 3.11 only to the extent that such advances, in the good faith judgment
of the Master Servicer, will be recoverable by the Master Servicer out of
Insurance Proceeds, Liquidation Proceeds or otherwise out of the related
Mortgage Loan.

         (c) In the event that the Master Servicer shall obtain and maintain a
blanket policy 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 sentence of Section 3.11(a), it being understood and agreed that such
policy may contain a deductible clause on terms substantially equivalent to
those commercially available and maintained by comparable servicers, and
provided that the provider of such blanket policy is rated by A.M. Best Company
A:V or higher and the claims-paying ability of such provider is rated in one of
the three highest rating categories by at least one nationally recognized
statistical rating organization. If such policy contains a deductible clause,
the Master Servicer shall, to the extent that there shall not have been
maintained on the related Mortgaged Property a policy complying with the first
sentence of Section 3.11(a) and there shall have been a loss that would have
been covered by such policy, remit to the Trustee for deposit in the Custodial
Account the amount not otherwise payable under the blanket policy because of
such deductible clause, accompanied by a certificate of a Servicing Officer
describing the calculation of such amount. In connection with its activities as
administrator and servicer of the Mortgage Loans, the Master Servicer agrees to
present, on behalf of itself, the Seller, the Trustee or its agent for the
benefit of the Certificateholders, claims under any such blanket policy.

         SECTION 3.12 ENFORCEMENT OF DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS.

         (a) Except as otherwise provided in this Section 3.12(a), when any
property subject to a Mortgage has been conveyed by the Mortgagor, the Master
Servicer shall, to the extent that it has knowledge of such conveyance, enforce
any due-on-sale clause contained in any Mortgage Note or Mortgage, to the extent
permitted under applicable law and governmental regulations, but only to the
extent that such enforcement will not adversely affect or jeopardize coverage
under any Required Insurance Policy. In the event that the Master Servicer or
the related Sub-Servicer is prohibited by law from enforcing any such
due-on-sale clause, or if coverage under any Required Insurance Policy would be
adversely affected, the Master Servicer is authorized, subject to Section
3.12(b), to take or enter into an assumption and modification agreement from or
with the person to whom such property has been or is about to be conveyed,
pursuant to which such person becomes liable under the Mortgage Note and, unless
prohibited by applicable state law, the Mortgagor remains liable thereon,
provided that the Mortgage Loan shall continue to be covered (if so covered
before the Master Servicer enters such agreement) by the applicable Required
Insurance Policies. The Master Servicer, subject to Section 3.12(b), is also
authorized with the prior approval of the insurers under any Required Insurance
Policies 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 Mortgagor and becomes liable under the Mortgage Note.
Notwithstanding the foregoing, the Master


                                       53

<PAGE>



Servicer shall not be deemed to be in default under this Section 3.12(a) by
reason of any transfer or assumption which the Master Servicer is restricted by
law from preventing, for any reason whatsoever.

         (b) Subject to the Master Servicer's duty to enforce any due-on-sale
clause to the extent set forth in Section 3.12(a) hereof, in any case in which a
Mortgaged Property has been conveyed to a Person by a Mortgagor, if an
assumption is permitted under Section 3.12(a) and such Person is to enter into
an assumption agreement or modification agreement or supplement to the Mortgage
Note or Mortgage held for the benefit of the Certificateholders that requires
the signature of the Trustee, or if an instrument of release signed by the
Trustee is required releasing the Mortgagor from liability on the Mortgage Loan,
the Master Servicer shall deliver or cause to be delivered to the Trustee for
signature the assumption agreement with the Person to whom the Mortgaged
Property is to be conveyed and such modification agreement or supplement to the
Mortgage Note or Mortgage or other instruments as are reasonable or necessary to
carry out the terms of the Mortgage Note or Mortgage or otherwise to comply with
any applicable laws regarding assumptions or the transfer of the Mortgaged
Property to such Person. The Master Servicer shall also deliver or cause to be
delivered to the Trustee with the foregoing documents a letter explaining the
nature of such documents and the reason or reasons why the Trustee's signature
is required.

         With such letter, the Master Servicer shall deliver to the Trustee a
certificate of a Servicing Officer certifying that: (i) a Servicing Officer has
examined and approved such documents as to form and substance, (ii) the
Trustee's execution and delivery thereof will not conflict with or violate any
terms of this Agreement or cause the unpaid balance and interest on the Mortgage
Loan to be uncollectible in whole or in part, (iii) any required consents of
insurers under any Required Insurance Policies have been obtained and (iv)
subsequent to the closing of the transaction involving the assumption or
transfer (A) the Mortgage Loan will continue to be secured by a first mortgage
lien pursuant to the terms of the Mortgage, (B) such transaction will not
adversely affect the coverage under any Required Insurance Policies, (C) the
Mortgage Loan will fully amortize over the remaining term thereof or, if the
Mortgage Loan provided that the amortization period on which the Monthly
Payments were based was a longer period, such period has not been extended, (D)
the interest rate on the Mortgage Loan will not be altered nor will the term of
the Mortgage Loan be increased as a result of such assumption or transfer and
(E) if the seller/transferor of the Mortgaged Property is to be released from
liability on the Mortgage Loan, the Master Servicer used the same underwriting
standards in evaluating the creditworthiness of the purchaser/transferee as were
used in making the original Mortgage Loan, and, based on such underwriting
criteria, such release will not (based on the Master Servicer's good faith
determination) adversely affect the collectibility of the Mortgage Loan. Upon
receipt of such certificate, the Trustee for the benefit of the
Certificateholders shall execute any necessary instruments for such assumption
or substitution of liability. Upon the closing of the transactions contemplated
by such documents, the Master Servicer shall cause the originals of the
assumption agreement, the release (if any), or the modification or supplement to
the Mortgage Note or Mortgage to be delivered to the Trustee or its agent for
the benefit of the Certificateholders and deposited with the Trustee Mortgage
File for such Mortgage Loan. Any fee collected by the Master Servicer for
entering into an assumption or substitution of liability agreement will be
retained by the Master Servicer as additional servicing compensation.



                                       54

<PAGE>



         In the event that the Master Servicer, in connection with any such
assumption or modification agreement or supplement to the Mortgage Note, is
unable to deliver the certificate of the Servicing Officer set forth above, the
Master Servicer shall purchase, or cause the related Sub-Servicer to purchase,
the related Mortgage Loan in the manner, and at the Purchase Price, set forth in
Section 2.04(b) hereof.

         SECTION 3.13      REALIZATION UPON DEFAULTED MORTGAGE LOANS.

         (a) The Master Servicer shall foreclose upon or otherwise comparably
convert the ownership of properties securing such of the Mortgage Loans as come
into and continue in default and as to which no satisfactory arrangements can be
made for collection of delinquent payments pursuant to Section 3.01 hereof. In
connection with such foreclosure or other conversion, the Master Servicer shall
follow prudent mortgage loan servicing standards and procedures generally
accepted in the mortgage banking industry, as shall be normal and usual in its
general mortgage servicing activities and for its own portfolio and as are in
accordance with the requirements of the insurer under any Required Insurance
Policy. The Master Servicer shall deliver to the Trustee a liquidation report
with respect to the related Mortgage Loan on the form of report customarily
prepared by the Master Servicer. In particular, the Master Servicer will service
each Mortgage Loan in a manner that preserves the right to proceed against all
collateral securing such Mortgage Loan (e.g., in accordance with any applicable
"single action" rule). The Master Servicer shall not be required to expend its
own funds in connection with any foreclosure or towards the restoration, repair,
protection or maintenance of any property unless it shall determine in its sole
discretion that such expenses will be recoverable to it as Liquidation Expenses
either through Liquidation Proceeds (respecting which it shall have priority for
purposes of withdrawals from the Custodial Account pursuant to Section 3.09(a)
hereof) or through Insurance Proceeds (respecting which it shall have similar
priority). 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 proceeds of liquidation of
the related Mortgaged Property, as contemplated in Section 3.09 hereof.

         (b) In the event that any Mortgaged Property becomes an REO Property,
the deed or certificate of sale shall be taken in the name of the Trustee for
the benefit of the Certificateholders, or its nominee, on behalf of the
Certificateholders. 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 Master Servicer and the
Certificateholders for the period prior to the sale of such REO Property on such
terms and conditions and for such periods as the Master Servicer deems to be in
the best interest of the Master Servicer and the Certificateholders.
Notwithstanding anything herein to the contrary, in the event that the Trust
Fund acquires any REO Property as aforesaid or otherwise in connection with a
default or imminent default on a Mortgage Loan, the Master Servicer, on behalf
of the Trust Fund, shall dispose of such REO Property as soon as practicable,
and in any event within three full years after the taxable year of its
acquisition by the Trust Fund for purposes of Section 860G(a)(8) of the Code (or
such shorter period as may be necessary under applicable state (including any
state in which such property is located) law to maintain the status of any REMIC
as a REMIC under applicable state law and avoid taxes resulting


                                       55

<PAGE>



from such property failing to be foreclosure property under applicable state
law) or, at the expense of the Trust Fund, request, more than 60 days before the
day on which such grace period would otherwise expire, an extension of such
grace period unless the Master Servicer obtains for the Trustee an Opinion of
Counsel, addressed to the Trustee and the Master Servicer, to the effect that
the holding by the Trust Fund of such REO Property subsequent to such period
will not result in the imposition of taxes on "prohibited transactions" as
defined in Section 860F of the Code, or cause any REMIC to fail to qualify as a
REMIC under the Code at any time that any Certificates are outstanding, in which
case the Trust Fund may continue to hold such REO Property (subject to any
conditions contained in such Opinion of Counsel). The Master Servicer shall be
entitled to be reimbursed from the Custodial Account for any costs incurred in
obtaining such Opinion of Counsel. Notwithstanding any other provision of this
Agreement, no REO Property acquired by the Trust Fund shall be rented (or
allowed to continue to be rented) or otherwise used by or on behalf of the Trust
Fund in such circumstances or manner or pursuant to any terms that would (i)
cause such REO Property to fail to qualify as "foreclosure property" within the
meaning of Section 860G(a)(8) of the Code or (ii) subject any REMIC to the
imposition of any federal income taxes on the income earned from such REO
Property, including any taxes imposed by reason of Section 860G(c) of the Code,
unless the Master Servicer has agreed to indemnify and hold harmless the Trust
Fund with respect to the imposition of any such taxes.

         (c) The decision of the Master Servicer to foreclose on a defaulted
Mortgage Loan shall be subject to a determination by the Master Servicer that
the proceeds of such foreclosure would exceed the costs and expenses of bringing
such a proceeding. The income earned from the management of any Mortgaged
Properties acquired through foreclosure or other judicial proceeding on behalf
of the Certificateholders, net of reimbursement to the Master Servicer for
expenses incurred (including any taxes) in connection with such management,
advances made by the Master Servicer pursuant to Sections 3.01, 3.08, 3.10,
3.11, 3.13, 5.04 or 5.05 in connection with the related Mortgage Loan or REO
Property and Liquidation Expenses incurred by the Master Servicer in connection
with the related Mortgage Loan, shall be applied to the payment of principal of
and interest on the related defaulted Mortgage Loans (with interest accruing and
principal amortizing as though such Mortgage Loans were still current) and all
such income shall be deemed, for all purposes in this Agreement, to be payments
on account of principal of and interest on the related Mortgage Notes and shall
be deposited into the Custodial Account.

         (d) Prior to obtaining or causing the Trustee to obtain a deed as a
result of or in lieu of foreclosure, or otherwise acquiring (or causing the
Trustee to acquire) possession of or title to any Mortgaged Property, if the
Master Servicer determines that obtaining a deed or otherwise acquiring title or
possession of such Mortgaged Property would likely subject the Master Servicer,
the Trustee or the Trust Fund to substantial liability in respect of
environmental conditions concerning the Mortgaged Property, (a) the Master
Servicer shall (i) notify the Trustee and the Seller of such determination and
(ii) refrain from obtaining or directing the Trustee to obtain a deed as a
result of or in lieu of foreclosure or otherwise acquiring title or possession
to such Mortgaged Property and (b) the obligations of the Master Servicer to
make advances, including, without limitation, Monthly Advances, in connection
with the Mortgage Loan in question shall cease as of the date that the Master
Servicer makes such determination.



                                       56

<PAGE>



         SECTION 3.14 TRUSTEE TO COOPERATE; RELEASE OF TRUSTEE 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 will be escrowed in a
manner customary for such purposes, and upon notification by the Master Servicer
in the form of 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 have been or
will be so deposited) of a Servicing Officer and a Request for Release of the
Trustee Mortgage File in the form of Exhibit G hereto the Trustee shall promptly
release the related Trustee Mortgage File to the Master Servicer, and the
Trustee shall execute and deliver to the Master Servicer the request for
reconveyance, deed of reconveyance or release, satisfaction or assignment of
mortgage or such instrument releasing the lien of the Mortgage, and, in each
case, such other documents or instruments as may be reasonably required in
connection therewith, as directed by the Master Servicer, together with the
Mortgage Note with written evidence of cancellation thereon. The provisions of
the immediately preceding sentence shall not, in any manner, limit or impair the
right of the Master Servicer to execute and deliver, on behalf of the Trustee,
the Certificateholders or any of them, any and all instruments of satisfaction,
cancellation or assignment, or of partial or full release or discharge and all
other comparable instruments, with respect to the Mortgage Loans, and with
respect to the Mortgaged Properties held for the benefit of the
Certificateholders. No expenses incurred in connection with any instrument of
satisfaction or deed of reconveyance shall be chargeable to the Certificate
Account but shall be paid by the Master Servicer. From time to time and as shall
be appropriate for the servicing or foreclosure of any Mortgage Loan, including,
without limitation, for such purpose, collection under any policy of flood
insurance, any fidelity bond or errors or omissions policy, or for the purposes
of effecting a partial or total release of any Mortgaged Property from the lien
of the Mortgage or the making of any corrections to the Mortgage Note or the
Mortgage or any of the other documents included in the Trustee Mortgage File,
the Trustee shall, upon request of the Master Servicer and the delivery to the
Trustee of a Request for Release signed by a Servicing Officer, in the form of
Exhibit G hereto, release the Trustee Mortgage File to the Master Servicer. If
the Master Servicer at any time seeks to initiate a foreclosure proceeding in
respect of any Mortgaged Property, the Master Servicer shall deliver to the
Trustee, for signature as appropriate, any court pleadings, requests for
trustee's sale or other documents necessary to effectuate such foreclosure or
any legal action brought to obtain judgment against the Mortgagor on the
Mortgage Note or the Mortgage or to obtain a deficiency judgment or to enforce
any other remedies or rights provided by the Mortgage Note or the Mortgage or
otherwise available at law or in equity, together with a certificate of a
Servicing Officer requesting that such pleadings or documents be executed by the
Trustee. A Servicing Officer shall certify as to the reason such documents or
pleadings are required and that the execution and delivery thereof by the
Trustee will not invalidate the insurance coverage under any Required Insurance
Policy or invalidate or otherwise affect the lien of the Mortgage except for the
termination of such lien upon completion of the foreclosure.

         SECTION 3.15   DOCUMENTS, RECORDS AND FUNDS IN POSSESSION OF MASTER
                        SERVICER TO BE HELD FOR THE TRUSTEE FOR THE BENEFIT OF
                        THE CERTIFICATEHOLDERS.

         Notwithstanding any other provisions of this Agreement, the Master
Servicer shall transmit to the Trustee to the extent required by this Agreement
all documents and instruments coming into


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the possession of the Master Servicer from time to time and shall account fully
to the Trustee for the benefit of the Certificateholders for any funds received
by the Master Servicer or which otherwise are collected by the Master Servicer
as Liquidation Proceeds or Insurance Proceeds in respect of any Mortgage Loan.
All Master Servicer Mortgage Files or Trustee Mortgage Files and funds collected
or held by, or under the control of, the Master Servicer in respect of any
Mortgage Loans, whether from the collection of principal and interest payments
or from Liquidation Proceeds or Insurance Proceeds, including but not limited
to, any funds on deposit in the Custodial Account, shall be held by the Master
Servicer for and on behalf of the Trustee for the benefit of the
Certificateholders and shall be and remain the sole and exclusive property of
the Trustee, subject to the applicable provisions of this Agreement. The Master
Servicer also agrees that it shall not create, incur or subject any Master
Servicer Mortgage File or Trustee Mortgage File or any funds that are deposited
in the Custodial Account or any Escrow Account, or any funds that otherwise are
or may become due or payable to the Trustee for the benefit of the
Certificateholders, to any claim, lien, security interest, judgment, levy, writ
of attachment or other encumbrance, or assert by legal action or otherwise any
claim or right of setoff against any Master Servicer Mortgage File or Trustee
Mortgage File or any funds collected on, or in connection with, a Mortgage Loan,
except, however, that the Master Servicer shall be entitled to set off against
and deduct from any such funds any amounts that are properly due and payable to
the Master Servicer under this Agreement subject to the terms of this Agreement.

         SECTION 3.16      SERVICING COMPENSATION; COMPENSATING INTEREST.

         (a) As compensation for its activities hereunder, the Master Servicer
shall be entitled to (i) retain from the Monthly Payments the Servicing Fee and
the Excess Servicing Fee for each Mortgage Loan and (ii) retain from the
Custodial Account or withdraw from the Custodial Account the amounts specified
in subclause (i) of Section 3.09(a) hereof as payable to it.

         (b) Additional servicing compensation in the form of assumption fees,
modification fees, late payment charges or otherwise or any excess interest
charges payable by the Mortgagor by virtue of any default or other
non-compliance by the Mortgagor with the terms of the Mortgage or any other
instrument or document executed in connection therewith or otherwise shall be
retained by the Master Servicer to the extent not required to be deposited in
the Custodial Account pursuant to Section 3.07 hereof. To the extent provided in
this Agreement, the Master Servicer shall be required to pay all expenses
incurred by it in connection with its servicing activities hereunder (including
the payment of premiums for Primary Mortgage Insurance Policies, to the extent
such premiums are not required to be paid or have not been paid by the related
Mortgagor or the related Sub-Servicer, payment of any premiums for hazard
insurance, as required by Section 3.11 hereof and maintenance of the other forms
of insurance coverage required by Section 3.11 hereof, the payment of servicing
compensation to any Sub-Servicers pursuant to any Sub-Servicing Agreement and
the payment of the expenses of the Trustee to the extent provided in Section
9.05), and shall not be entitled to reimbursement therefor except as
specifically provided in Sections 3.09, 3.13, 4.01 and 5.05 hereof.

         (c) Notwithstanding any other provision herein, the amount of servicing
compensation that the Master Servicer shall be entitled to receive for its
activities hereunder for the period ending on each Distribution Date shall be
reduced (but not below zero) by an amount equal to Compensating Interest (if
any) for such Distribution Date. The Master Servicer shall, within one Business
Day of


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each Distribution Date, remit to the Trustee (but without duplication of any
Compensating Interest taken into account in any Monthly Advance made on such
date) the Compensating Interest due on such Distribution Date.

         SECTION 3.17      REPORTS TO THE SELLER; ACCOUNT STATEMENTS.

         Within five Business Days following each Distribution Date, the Master
Servicer shall deliver to the Trustee a statement setting forth the status of
the Custodial Account, if any, as of the close of business on such Distribution
Date showing, for the period covered by such statement, the aggregate of
deposits in or withdrawals from the Custodial Account, if any, for each category
of deposit specified in Section 3.07 hereof and each category of withdrawal
specified in Section 3.09 hereof. The Master Servicer shall forward a copy of
such statement to the Rating Agencies.

         SECTION 3.18      ANNUAL STATEMENT AS TO COMPLIANCE.

         The Master Servicer shall deliver to the Seller and the Trustee on or
before March 31 of each year, commencing March 31, 2002, an Officers'
Certificate stating, as to each signer thereof, that (a) a review of the
activities of the Master Servicer during the year ended on the preceding
December 31 and of the performance of the Master Servicer under this Agreement
has been made under such officer's supervision, (b) to the best of such
officer's knowledge, based on such review, the Master Servicer has fulfilled all
its obligations under this Agreement in all material respects throughout such
year, or, if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officer and the nature and status
thereof, (c) a Servicing Officer has conducted an examination of the activities
of each Sub-Servicer during the immediately preceding year and its performance
under any Sub-Servicing Agreement, and (d) to the best of such Servicing
Officer's knowledge, based on such examination, each Sub-Servicer has performed
and fulfilled its duties, responsibilities and obligations under such
Sub-Servicing Agreement in all material respects throughout such year, or if
there has been a default in the performance or fulfillment of any such duties,
responsibilities or obligations, specifying each such default known to such
Servicing Officer and the nature and status thereof. The Master Servicer shall
forward a copy of each such statement to the Rating Agencies.

         SECTION 3.19 ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING REPORT.

         On or before March 31 of each year, beginning with the first March 31
that occurs at least eleven months after the Cut-off Date, the Master Servicer,
at its expense, shall cause a firm of independent public accountants that is a
member of the American Institute of Certified Public Accountants to furnish a
statement to the Seller and the Trustee for the benefit of the
Certificateholders to the effect that such firm has examined certain documents
substantially similar to this Agreement and records relating to the servicing of
mortgage loans serviced by the Master Servicer or any successor master servicer
that are substantially similar to the Mortgage Loans and that, on the basis of
an examination conducted substantially in compliance with the Uniform Single
Audit Program for Mortgage Bankers or the Audit Program for Mortgages serviced
for Freddie Mac, such servicing has been conducted in compliance with such
agreements except for such significant exceptions or errors in records that, in
the opinion of such firm, the Uniform Single Audit Program for Mortgage Bankers
or the Audit Program for Mortgages serviced for Freddie Mac requires it to


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report. In rendering such statement such firm may rely, as to matters relating
to direct servicing of Mortgage Loans by Sub-Servicers, if any, upon comparable
statements for examinations conducted substantially in compliance with the
Uniform Single Audit Program for Mortgage Bankers or the Audit Program for
Mortgages serviced for Freddie Mac (rendered within one year of such statement)
of independent public accounts with respect to the related Sub-Servicer. The
Master Servicer shall forward a copy of each such report to the Rating Agencies.

         SECTION 3.20      REPORTS TO TRUSTEE.

         On or prior to each Determination Date, the Master Servicer shall cause
to be delivered to the Trustee a monthly servicing report in electronic format
containing the information necessary to enable the Trustee to make the
distribution required by Section 5.02 and prepare the information set forth in
Section 4.02(a). The Trustee may conclusively rely on information provided by
the Master Servicer and shall have no obligation to recompute, recalculate, or
verify the accuracy of such information.


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                                   ARTICLE IV

                        ADMINISTRATION OF THE TRUST FUND

         SECTION 4.01      CERTIFICATE ACCOUNT.

         (a) The Trustee shall establish, prior to the Closing Date, and shall
maintain, in the name of the Trustee on behalf of the Holders of interests in
the Trust Fund, the Certificate Account, which shall be an Eligible Account,
into which the Trustee upon receipt from the Master Servicer shall deposit all
payments remitted by the Master Servicer and any amounts required to be remitted
by the Seller pursuant to the terms hereof. All distributions to be made from
time to time to Holders of interests in the Trust Fund out of funds in the
Certificate Account shall be made by or on behalf of the Trustee. The
Certificate Account shall relate solely to the Certificates issued hereunder and
funds in the Certificate Account shall be held separate and apart from and shall
not be commingled with any monies including, without limitation, other monies of
the Trustee held under this Agreement. Funds held in the Certificate Account and
may be invested by the Trustee in Eligible Investments selected by the Trustee
for the benefit of the Trustee or shall remain uninvested. All income and gain
net of any losses realized from any such investment shall be for the benefit of
the Trustee and shall be subject to withdrawal at the Trustee's direction from
time to time. The amount of any losses net of any gains incurred by the Trustee
in respect of any such investments shall be deposited in the Certificate Account
out of the Trustee's own funds immediately as realized.

         (b) The Trustee shall make, to the extent required or authorized
hereunder, withdrawals from the Certificate Account for the following purposes:

                  (i) as directed by the Master Servicer, to withdraw any amount
         deposited in the Certificate Account and not required to be deposited
         therein;

                  (ii) to reimburse the Master Servicer for any unreimbursed
         Nonrecoverable Advance;

                  (iii) to pay itself the Trustee Fee;

                  (iv) to make required distributions pursuant to Section 5.02;
         and

                  (v) to pay to the Seller or the Master Servicer any amount to
         which it is entitled pursuant to Section 7.03.

         SECTION 4.02      MONTHLY STATEMENTS TO CERTIFICATEHOLDERS.

         (a) Not later than each Distribution Date, the Trustee shall prepare
(on the basis of information obtained by the Master Servicer) and the Trustee
shall make available at its website, http://www-apps.gis.deutsche-bank.com/invr,
or, upon written request, cause to be forwarded by first-class mail to each
Certificateholder, the Master Servicer, the Seller, Bloomberg, and the Rating


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Agencies a statement setting forth the following information as to each Class of
Certificates to the extent received from the Master Servicer.

                  (i) the aggregate amount of the distribution to be made on
         such Distribution Date to the Holders of each Class of Certificates, to
         the extent applicable, allocable to principal on the Mortgage Loans,
         including Liquidation Proceeds and Insurance Proceeds, stating
         separately the amount attributable to scheduled principal payments and
         unscheduled payments in the nature of principal;

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

                  (iii) (A) the aggregate amount of any Monthly Advances
         required to be made by or on behalf of the Master Servicer with respect
         to such Distribution Date, (B) the aggregate amount of such Monthly
         Advances actually made, and (C) the amount, if any, by which (A) above
         exceeds (B) above;

                  (iv) the Aggregate Loan Balance as of the close of business on
         the last day of the related Due Period, after giving effect to payments
         allocated to principal reported under clause (i) above;

                  (v) the Current Principal Amount of each Class of
         Certificates, to the extent applicable, as of such Distribution Date
         after giving effect to payments allocated to principal reported under
         clause (i) above, separately identifying any reduction of any of the
         foregoing Current Principal Amounts due to Realized Losses;

                  (vi) any Realized Losses realized with respect to the Mortgage
         Loans in (x) in the applicable Prepayment Period and (y) in the
         aggregate since the Cut-off Date;

                  (vii) the amount of the Servicing Fees and the Excess
         Servicing Fees retained by the Master Servicer during the Due Period to
         which such distribution relates;

                  (viii) the number and aggregate Scheduled Principal Balance of
         Mortgage Loans, as reported to the Trustee by the Master Servicer, (a)
         remaining outstanding as of the end of the prior calendar month, and
         (b) delinquent 30 to 59 days on a contractual basis, (c) delinquent 60
         to 89 days on a contractual basis, (d) delinquent 90 or more days on a
         contractual basis, and (e) as to which foreclosure proceedings have
         been commenced, in each case as of the close of business on the last
         Business Day of the immediately preceding month;

                  (ix) the book value (within the meaning of 12 C.F.R. ss.
         571.13 or comparable provision) of each REO Property as of the close of
         business on the last Business Day of the calendar month immediately
         preceding the month in which such Distribution Date occurs;

                  (x) with respect to any Mortgage Loan that became an REO
         Property during the preceding calendar month, the principal balance of
         such Mortgage Loan and the number of


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         such Mortgage Loans as of the close of business on the
         Distribution Date in such preceding month;

                  (xi) with respect to replacement of Mortgage Loans in the
         preceding calendar month, the Scheduled Principal Balance of each
         Deleted Mortgage Loan and of each Replacement Mortgage Loan;

                  (xii) the aggregate outstanding Net Prepayment Interest
         Shortfalls, if any, for each Class of Certificates, after giving effect
         to the distribution made on such Distribution Date; and

                  (xiii) the Pass-Through Rate applicable to such Distribution
         Date with respect to each Class of Certificates.

         In the case of information furnished pursuant to subclauses (i), (ii)
and (vi) above, the amounts shall be expressed as a dollar amount per $1,000 of
original principal amount of Certificates.

         (b) Upon reasonable advance notice in writing, if required by federal
regulation, the Trustee will provide to each Certificateholder that is a savings
association, bank or insurance company certain reports and access to information
and documentation regarding the Mortgage Loans sufficient to permit such
Certificateholder to comply with applicable regulations of the Office of Thrift
Supervision or other regulatory authorities with respect to investment in the
Certificates and the Master Servicer shall cooperate with the Trustee in
providing such information; provided, however, that the Trustee shall be
entitled to be reimbursed by each such Certificateholder for the Trustee's
actual expenses incurred in providing such reports and access. The Trustee will
provide to any Certificateholder upon request the outstanding Current Principal
Amounts as of the date requested and, if then known by the Trustee, the
outstanding Current Principal Amount after giving effect to any distribution to
be made on the next following Distribution Date.

         (c) Upon the written request of any Certificateholder, the Trustee, as
soon as reasonably practicable, shall provide the Certificateholder with such
information as has been provided by the Seller to the Trustee, for purposes of
satisfying applicable information reporting requirements under Rule 144A.

         (d) Within 90 days, or such shorter period as may be required by
statute or regulation, after the end of each calendar year, the Trustee shall
send to each Person who at any time during the calendar year was a
Certificateholder of record, and make available to each Beneficial Holder
(identified as such by the Clearing Agency) in accordance with applicable
regulations, a report summarizing the items provided to Certificateholders
pursuant to Section 4.02(a) on an annual basis as may be required to enable such
Holders to prepare their federal income tax returns. Such information shall
include the amount of original issue discount accrued on each Class of
Certificates and information regarding the expenses of the Trust Fund. The
Master Servicer shall provide the Trustee with such information as is necessary
for the Trustee to prepare such reports.


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                                    ARTICLE V

                       DISTRIBUTIONS TO CERTIFICATEHOLDERS

         SECTION 5.01      DISTRIBUTIONS GENERALLY.

         (a) Subject to Section 10.01 respecting the final distribution on the
Certificates, on each Distribution Date the Trustee shall make distributions in
accordance with this Article V. Such distributions will be made by wire transfer
to a United States dollar account maintained by the payee at any United States
depository institution with appropriate facilities for receiving such a wire
transfer; provided; provided, however, that the final distribution in respect of
any Certificate shall be made only upon presentation and surrender of such
Certificate at the Corporate Trust Office. Wire transfers will be made at the
expense of the Holder requesting such wire transfer by deducting a wire transfer
fee from the related distribution. Notwithstanding such final payment of
principal of any of the Certificates, the Residual Certificate will remain
outstanding until the termination of the REMIC and the payment in full of all
other amounts due with respect to such Certificates and at such time such final
payment in retirement of any Residual Certificate will be made only upon
presentation and surrender of such Certificate at the Corporate Trust Office or
at the office of the Trustee's New York presenting agent. If any payment
required to be made on the Certificates is to be made on a day that is not a
Business Day, then such payment will be made on the next succeeding Business
Day.

         (b) All distributions or allocations made with respect to
Certificateholders within each Class on each Distribution Date shall be
allocated among the outstanding Certificates in such Class equally in proportion
to their respective initial Current Principal Amounts (or Percentage Interests).

         SECTION 5.02               DISTRIBUTIONS FROM THE CERTIFICATE ACCOUNT.

         (a) On each Distribution Date the Trustee shall withdraw from the
Certificate Account the Total Distribution Amount for such date, shall allocate
such amount to the interests issued in respect of the Trust Fund and shall
distribute such amount as specified in this Section.

         (b) On each Distribution Date, the Trustee shall distribute the
Interest Remittance Amount for such date in the following order of priority:

                  (i) to the Senior Certificates, pro rata, Accrued Certificate
         Interest for such Class and such Distribution Date, plus any unpaid
         Accrued Certificate Interest remaining unpaid from any prior
         Distribution Date;

                  (ii) to the Class M-1 Certificates, Accrued Certificate
         Interest for such Class and such Distribution Date, plus any unpaid
         Accrued Certificate Interest remaining unpaid from any prior
         Distribution Date;



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                  (iii) to the Class M-2 Certificates, Accrued Certificate
         Interest for such Class and such Distribution Date, plus any unpaid
         Accrued Certificate Interest remaining unpaid from any prior
         Distribution Date;

                  (iv) to the Class M-3 Certificates, Accrued Certificate
         Interest for such Class and such Distribution Date, plus any unpaid
         Accrued Certificate Interest remaining unpaid from any prior
         Distribution Date;

                  (v) to the Class B-1 Certificates, Accrued Certificate
         Interest for such Class and such Distribution Date, plus any unpaid
         Accrued Certificate Interest remaining unpaid from any prior
         Distribution Date;

                  (vi) to the Class B-2 Certificates, Accrued Certificate
         Interest for such Class and such Distribution Date, plus any unpaid
         Accrued Certificate Interest remaining unpaid from any prior
         Distribution Date;

                  (vii) to the Class B-3 Certificates, Accrued Certificate
         Interest for such Class and such Distribution Date, plus any unpaid
         Accrued Certificate Interest remaining unpaid from any prior
         Distribution Date; and

                  (viii) any remaining Interest Remittance Amount to the Class R
         Certificates.

         (c) On each Distribution Date, the Trustee shall distribute the
Principal Remittance Amount for such date as follows:

                  (i) to the holders of the Class R Certificates and Class A
         Certificates, in that order, to the extent of the Principal Remittance
         Amount, the Senior Principal Distribution Amount, in reduction of the
         Current Principal Amounts thereof, until the Current Principal Amounts
         thereof have been reduced to zero;

                  (ii) to the holders of the Class M-1 Certificates, to the
         extent of the portion of the Principal Remittance Amount remaining
         after the distribution in clause (i) above, the Class M-1 Principal
         Distribution Amount, in reduction of the Current Principal Amount
         thereof, until the Current Principal Amount thereof has been reduced to
         zero;

                  (iii) to the holders of the Class M-2 Certificates, to the
         extent of the portion of the Principal Remittance Amount remaining
         after distributions in clauses (i) and (ii) above, the Class M-2
         Principal Distribution Amount, in reduction of the Current Principal
         Amount thereof, until the Current Principal Amount thereof has been
         reduced to zero;

                  (iv) to the holders of the Class M-3 Certificates, to the
         extent of the portion of the Principal Remittance Amount remaining
         after distributions in clauses (i) through (iii) above, the Class M-3
         Principal Distribution Amount, in reduction of the Current Principal
         Amount thereof, until the Current Principal Amount thereof has been
         reduced to zero;



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                  (v) to the holders of the Class B-1 Certificates, to the
         extent of the portion of the Principal Remittance Amount remaining
         after the distributions in clauses (i) through (iv) above, the Class
         B-1 Principal Distribution Amount, in reduction of the Current
         Principal Amount thereof, until the Current Principal Amount thereof
         has been reduced to zero;

                  (vi) to the holders of the Class B-2 Certificates, to the
         extent of the portion of the Principal Remittance Amount remaining
         after the distributions in clauses (i) through (v) above, the Class B-2
         Principal Distribution Amount, in reduction of the Current Principal
         Amount thereof, until the Current Principal Amount thereof has been
         reduced to zero; and

                  (vii) to the holders of the Class B-2, Class B-1, Class M-3,
         Class M-2, Class M-1, Class A and Class B-3 Certificates, in that
         order, the Principal Remittance Amount remaining after the
         distributions in clauses (i) through (vi) above, in reduction of the
         Current Principal Amounts thereof, until the Current Principal Amounts
         thereof have been reduced to zero; and

                  (viii)   to the holders of the Class R Certificates.

         Notwithstanding the foregoing, on any Distribution Date on which the
Class Principal Amount of each Class of Certificates having a higher priority of
distribution has been reduced to zero, any remaining Principal Remittance Amount
will be distributed to the remaining Certificates in the order of priority set
forth above until the Class Principal Amount of each such Class has been reduced
to zero.

         (d) On or prior to each Determination Date, the Master Servicer shall
determine the amount of any Deferred Interest in respect of each Mortgage Loan
that occurred during the immediately preceding calendar month and provide such
information to the Trustee pursuant to Section 3.20. With respect to any
Distribution Date, the aggregate amount of Deferred Interest, if any, that is
added to the Scheduled Principal Balance of the Mortgage Loans on the Due Date
occurring in the month in which such Distribution Date occurs will be added to
the Current Principal Amounts of the Certificates on a pro rata basis based on a
fraction, the numerator of which is the Current Principal Amount of each such
Class and the denominator of which is the aggregate Current Principal Amount of
such Classes of Certificates, in each case immediately prior to such
Distribution Date. Deferred Interest allocated to any Certificate on any
Distribution Date will be added to the Current Principal Amount thereof on such
Distribution Date and will thereafter bear interest at the then applicable
Pass-Through Rate.

         SECTION 5.03               ALLOCATION OF LOSSES.

         (a) On each Distribution Date, Realized Losses will be allocated to the
Class A, Class M-1, Class M-2, Class M-3, Class B-1, Class B-2 and Class B-3
Certificates, in the following order of priority:

                  (i) to the Class B-3 Certificates, until the Current Principal
         Amount thereof has been reduced to zero;



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                  (ii) to the Class B-2 Certificates, until the Current
         Principal Amount thereof has been reduced to zero;

                  (iii) to the Class B-1 Certificates, until the Current
         Principal Amount thereof has been reduced to zero;

                  (iv) to the Class M-3 Certificates, until the Current
         Principal Amount thereof has been reduced to zero;

                  (v) to the Class M-2 Certificates, until the Current Principal
         Amount thereof has been reduced to zero;

                  (vi) to the Class M-1 Certificates, until the Current
         Principal Amount thereof has been reduced to zero; and

                  (vii) to the Class A Certificates, until the Current Principal
         Amount thereof has been reduced to zero.

         (b) Notwithstanding the foregoing, no such allocation of any Realized
Loss shall be made on a Distribution Date to any Class of Certificates to the
extent that such allocation would result in the reduction of the aggregate
Current Principal Amounts of all the Certificates as of such Distribution Date,
after giving effect to all distributions and prior allocations of Realized
Losses on such date, to an amount less than the aggregate Scheduled Principal
Balance of all of the Mortgage Loans as of the first day of the month of such
Distribution Date (such limitation, the "Loss Allocation Limitation").

         (c) Any Realized Losses allocated to a Class of Certificates shall be
allocated among the Certificates of such Class in proportion to their respective
Current Principal Amounts. Any allocation of Realized Losses shall be
accomplished by reducing the Current Principal Amount of the related
Certificates on the related Distribution Date.

         (d) Realized Losses shall be allocated on the Distribution Date in the
month following the month in which such loss was incurred and, in the case of
the principal portion thereof, after giving effect to distributions made on such
Distribution Date.

         (e) On each Distribution Date, the Trustee shall determine the
Subordinate Certificate Writedown Amount based solely on the information
received from the Master Servicer. Any such Subordinate Certificate Writedown
Amount shall effect a corresponding reduction in the Current Principal Amount of
the Current Principal Amounts of the Subordinate Certificates, in the reverse
order of their numerical Class designations, and then the Senior Certificates,
pro rata based on their respective Current Principal Amounts, which reduction
shall occur on such Distribution Date after giving effect to distributions made
on such Distribution Date.



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         SECTION 5.04               MONTHLY ADVANCES BY THE MASTER SERVICER.

         (a) Subject to the conditions of this Article V, the Master Servicer,
as required below, on each Master Servicer Advance Date shall make an advance (a
"Monthly Advance") to the Certificate Account, in the amount, if any, of the
aggregate Monthly Payments less Net Prepayment Interest Shortfalls and Relief
Act Shortfalls, after adjustment of the interest portion of each such Monthly
Payment to the Mortgage Rate less the sum of the Servicing Fee Rate and the
Excess Servicing Fee Rate, on the Mortgage Loans that were due on the Due Date
but that were not received and remitted to the Certificate Account on or prior
to such Master Servicer Advance Date. The Master Servicer shall be obligated to
make any such Monthly Advance only to the extent that such advance, in the good
faith judgment of the Master Servicer, will not be a Nonrecoverable Advance.

         (b) On the Determination Date immediately preceding the related
Distribution Date, the Master Servicer shall determine whether and to what
extent any Mortgagor has failed to make any Monthly Payment due on the Due Date
and whether such deficiencies, if advanced by the Master Servicer, would be a
Nonrecoverable Advance. If the Master Servicer shall have determined that it is
not obligated to make the entire Monthly Advance because all or a lesser portion
of such Monthly Advance would not be recoverable by the Master Servicer from
related Insurance Proceeds or Liquidation Proceeds (net of Liquidation
Expenses), the Master Servicer shall deliver to the Trustee, not less than one
Business Day after the related Determination Date, for the benefit of the
Certificateholders, a certificate of a Servicing Officer setting forth the
reasons for such determination.

         (c) In lieu of making all or a portion of any Monthly Advance, the
Master Servicer may cause to be made an appropriate entry in its records
relating to the Custodial Account that funds in such account, including but not
limited to any amounts received in respect of scheduled principal and interest
on any Mortgage due after the related Due Period, in excess of the Total
Distribution Amount (less the amount of such Monthly Advance) for the related
Distribution Date have been used by the Master Servicer in discharge of its
obligation to make any such Monthly Advance. Any funds so applied shall be
replaced by the Master Servicer by deposit, in the manner set forth above, in
the Custodial Account no later than the next Master Servicer Advance Date to the
extent that funds in the Custodial Account on such date are less than the
amounts required to be distributed on the related Distribution Date. The Master
Servicer shall be entitled to be reimbursed from the Custodial Account and the
Certificate Account for all Monthly Advances of its own funds made pursuant to
this Section as provided in Section 3.09 and 4.01.

         SECTION 5.05               ADVANCES FOR ATTORNEYS' FEES.

         The Master Servicer shall make advances from time to time for
attorneys' fees and court costs incurred, or which reasonably can be expected to
be incurred, for the foreclosure of any Mortgage Loan or for any transaction in
which the Trustee for the benefit of the Certificateholders is expected to
receive a deed-in-lieu of foreclosure, unless the Master Servicer has made a
good faith determination that such advances would be Nonrecoverable Advances. If
the Master Servicer shall make a good faith determination that such advances
would not be so recoverable, the Master Servicer shall promptly deliver to the
Trustee a Certificate of a Servicing Officer setting forth the reasons for


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such determination. The Master Servicer shall be entitled to reimbursement for
any such advance as provided in Section 3.09 hereof.

         SECTION 5.06               NONRECOVERABLE ADVANCES.

         The determination by the Master Servicer that it has made a
Nonrecoverable Advance shall be evidenced by a certificate of a Servicing
Officer promptly delivered to the Trustee setting forth the reasons for such
determination. Following the Trustee's receipt of such certificate, the Master
Servicer shall be entitled to reimbursement for such Nonrecoverable Advance as
provided in Section 3.09 and 4.01 hereof.

         SECTION 5.07               ADVANCE PROCEDURES.

         (a) If, on any Determination Date, the Master Servicer determines to
make a Monthly Advance in accordance with Section 5.04, it shall make such
Monthly Advance on or before noon, New York time, on the Business Day prior to
the related Distribution Date (the "Master Servicer Advance Date"). The Master
Servicer shall notify the Trustee of the aggregate amount of Monthly Advances
for a Distribution Date on or before three Business Days prior to such
Distribution Date. Any such Monthly Advance shall be included with the
distribution on the related Distribution Date pursuant to Section 5.02.

         (b) In the event that the Master Servicer fails to make a Monthly
Advance required to be made pursuant to Section 5.04 on or before the close of
business, on the Master Servicer Advance Date, the Trustee shall on or before 12
noon, New York time on the next Business Day provide notice to the Master
Servicer, by telephone and by writing (which may be by telecopy) of such failure
and the amount of such failure and that continuance of such failure for a period
of one Business Day thereafter will be an Event of Default.


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                                   ARTICLE VI

                                THE CERTIFICATES

         SECTION 6.01               THE CERTIFICATES.

         (a) The Certificates shall be in substantially the forms set forth in
Exhibits A, B, C and D hereto, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Agreement or as may in the reasonable judgment of the Trustee or the Seller be
necessary, appropriate or convenient to comply, or facilitate compliance, with
applicable laws, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange on which any of the
Certificates may be listed, or as may, consistently herewith, be determined by
the officers executing such Certificates, as evidenced by their execution
thereof.

         (b) The Definitive Certificates shall be printed, typewritten,
lithographed or engraved or produced by any combination of these methods or may
be produced in any other manner permitted by the rules of any securities
exchange on which any of the Certificates may be listed, all as determined by
the officers executing such Certificates, as evidenced by their execution
thereof.

         (c) Each Class of Book-Entry Certificates will be evidenced by one or
more certificates, beneficial ownership of which will be held in the dollar
denominations in Current Principal Amount specified in this paragraph. Each
Class of Class A Certificates will be issued in minimum denominations of a
$1,000 Current Principal Amount and integral multiples of $1 in excess thereof.
Each Class of Class M Certificates will be issued in minimum denominations of a
$25,000 Current Principal Amount and integral multiples of $1 in excess thereof.
Each Class of Class B Certificates will be maintained in definitive, fully
registered form in minimum denominations of $100,000 Current Principal Amount
and integral multiples of $1 in excess thereof. The Class R Certificates will be
issued as a single Certificate and maintained in definitive, fully registered
form in a minimum denomination equal to 100% of the Percentage Interest of such
Class. One Certificate of each Class of Certificates other than the Class R
Certificates may be issued in any denomination in excess of the minimum
denomination.

         (d) The Certificates shall be executed by manual or facsimile signature
on behalf of the Trust Fund by the Trustee by a Responsible Officer.
Certificates bearing the manual or facsimile signatures of individuals who were,
at the time when such signatures were affixed, authorized to sign on behalf of
the Trustee shall bind the Trust Fund, notwithstanding that such individuals or
any of them have ceased to be so authorized prior to the authentication and
delivery of such Certificates or did not hold such offices at the date of such
Certificate. 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 executed by the Trustee by manual signature, and
such certificate of authentication upon any Certificate shall be conclusive
evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates shall be dated the date
of their authentication.



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         SECTION 6.02 REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES.

         (a) The Trustee shall maintain, or cause to be maintained, 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. Upon surrender for
registration of transfer of any Certificate, the Trustee shall execute,
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates in like aggregate interest and of the
same Class.

         (b) At the option of a Certificateholder, Certificates (other than
Book-Entry Certificates which shall be subject to Section 6.07 hereof) may be
exchanged for other Certificates of authorized denominations and the same
aggregate interest in the Trust Fund and of the same Class, upon surrender of
the Certificates to be exchanged at the office or agency of the Trustee in the
City of New York at 123 Washington Street, New York, New York 10006, where
Certificates may be surrendered for registration of transfer or exchange. The
Trustee will give prompt written notice to Certificateholders of any change in
the location of the any such office or agency. The Certificate Register will be
kept in Santa Ana, California at the offices of the Trustee located at the
Corporate Trust Office and may be kept in an electronic form capable of printing
out a hard copy of the Certificate Register. 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 registration of transfer
or exchange shall be accompanied by a written instrument of transfer in form
satisfactory to the Trustee duly executed by the Holder thereof or his attorney
duly authorized in writing.

         (c) All Certificates surrendered for registration of transfer and
exchange shall be canceled and subsequently destroyed by the Trustee in
accordance with the Trustee's customary procedures.

         (d) By acceptance of a Restricted Certificate, whether upon original
issuance or subsequent transfer, each Holder of such a Certificate acknowledges
the restrictions on the transfer of such Certificate set forth thereon and
agrees that it will transfer such a Certificate only as provided herein. With
respect to the transfer and registration of transfer of a Restricted Certificate
to a transferee that takes delivery in the form of a Definitive Certificate, the
Trustee shall register the transfer of a Restricted Certificate if the requested
transfer is (x) to the Seller or the Placement Agents, an affiliate (as defined
in Rule 405 under the 1933 Act) of the Seller or the Placement Agents or (y)
being made to a "qualified institutional buyer" (a "QIB") as defined in Rule
144A under the 1933 Act by a transferor that has provided the Trustee with a
certificate in the form of Exhibit H hereto.

         (e) No transfer of an ERISA-Restricted Certificate in the form of a
Definitive Certificate shall be made to any Person unless the Trustee has
received (A) in the case of a Class B-1, Class B-2 or Class B-3 Certificate, a
certificate substantially in the form of Exhibit I hereto from such transferee
or (B) an Opinion of Counsel satisfactory to the Trustee, the Master Servicer
and the Seller to the effect that the purchase and holding of such a Certificate
will not constitute or result in the assets of the Trust Fund being deemed to be
"plan assets" subject to the prohibited transactions provisions of ERISA or
Section 4975 of the Code and will not subject the Trustee, the Master Servicer
or the Seller to any obligation in addition to those undertaken in the
Agreement; provided,


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however, that the Trustee will not require such certificate or opinion in the
event that, as a result of a change of law or otherwise, counsel satisfactory to
the Trustee has rendered an opinion to the effect that the purchase and holding
of an ERISA-Restricted Certificate by a Plan or a Person that is purchasing or
holding such a Certificate with the assets of a Plan will not constitute or
result in a prohibited transaction under ERISA or Section 4975 of the Code. The
preparation and delivery of the certificate and opinions referred to above shall
not be an expense of the Trust Fund, the Trustee or the Seller. Notwithstanding
the foregoing, no opinion or certificate shall be required for the initial
issuance of the ERISA-Restricted Certificates.

         (f) As a condition of the registration of transfer or exchange of any
Certificate, the Trustee may require the certified taxpayer identification
number of the owner of the Certificate and the payment of a sum sufficient to
cover any tax or other governmental charge imposed in connection therewith;
provided, however, that the Trustee shall have no obligation to require such
payment or to determine whether or not any such tax or charge may be applicable.
No service charge shall be made to the Certificateholder for any registration,
transfer or exchange of Certificate.

         (g) Notwithstanding anything to the contrary contained herein, no
Residual Certificate may be owned, pledged or transferred, directly or
indirectly, by or to (i) a Disqualified Organization or (ii) an individual,
corporation or partnership or other person unless such person (A) is not a Non-
U.S. Person or (B) is a Non-U.S. Person that holds a Residual Certificate in
connection with the conduct of a trade or business within the United States and
has furnished the transferor and the Trustee with an effective Internal Revenue
Service Form W-8ECI or successor form at the time and in the manner required by
the Code (any such person who is not covered by clause (A) or (B) above is
referred to herein as a "Non-permitted Foreign Holder").

         Prior to and as a condition of the registration of any transfer, sale
or other disposition of a Residual Certificate, the proposed transferee shall
deliver to the Trustee an affidavit in substantially the form attached hereto as
Exhibit J-1 representing and warranting, among other things, that such
transferee is neither a Disqualified Organization, an agent or nominee acting on
behalf of a Disqualified Organization, nor a Non-permitted Foreign Holder (any
such transferee, a "Permitted Transferee") and the proposed transferor shall
deliver to the Trustee an affidavit in substantially the form attached hereto as
Exhibit J-2. In addition, the Trustee may (but shall have no obligation to)
require, prior to and as a condition of any such transfer, the delivery by the
proposed transferee of an Opinion of Counsel, addressed to the Seller and the
Trustee satisfactory in form and substance to the Seller, that such proposed
transferee or, if the proposed transferee is an agent or nominee, the proposed
beneficial owner, is not a Disqualified Organization, agent or nominee thereof,
or Non- permitted Foreign Holder. Notwithstanding the registration in the
Certificate Register of any transfer, sale, or other disposition of a Residual
Certificate to a Disqualified Organization, an agent or nominee thereof, or
Non-permitted Foreign Holder, such registration shall be deemed to be of no
legal force or effect whatsoever and such Disqualified Organization, agent or
nominee thereof, or Non-permitted Foreign Holder shall not be deemed to be a
Certificateholder for any purpose hereunder, including, but not limited to, the
receipt of distributions on such Residual Certificate. The Trustee shall not be
under any liability to any person for any registration or transfer of a Residual
Certificate to a Disqualified Organization, agent or nominee thereof, or
Non-permitted Foreign Holder or for the maturity of any payments due on such
Residual Certificate to the Holder thereof or for taking any other action with
respect to such Holder under the provisions of the Agreement, so


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long as the transfer was effected in accordance with this Section 6.02(g),
unless the Trustee shall have actual knowledge at the time of such transfer or
the time of such payment or other action that the transferee is a Disqualified
Organization, agent or nominee thereof, or Non-permitted Foreign Holder. The
Trustee shall be entitled to recover from any Holder of a Residual Certificate
that was a Disqualified Organization, agent or nominee thereof, or Non-permitted
Foreign Holder at the time it became a Holder or any subsequent time it became a
Disqualified Organization, agent or nominee thereof, or Non-permitted Foreign
Holder, all payments made on such Residual Certificate at and after either such
times (and all costs and expenses, including but not limited to attorneys' fees,
incurred in connection therewith). Any payment (not including any such costs and
expenses) so recovered by the Trustee shall be paid and delivered to the last
preceding Holder of such Residual Certificate.

         If any purported transferee shall become a registered Holder of a
Residual Certificate in violation of the provisions of this Section 6.02(g),
then upon receipt of written notice to the Trustee that the registration of
transfer of such Residual Certificate was not in fact permitted by this Section
6.02(g), the last preceding Permitted Transferee shall be restored to all rights
as Holder thereof retroactive to the date of such registration of transfer of
such Residual Certificate. The Trustee shall be under no liability to any Person
for any registration of transfer of a Residual Certificate that is in fact not
permitted by this Section 6.02(g), for making any payment due on such
Certificate to the registered Holder thereof or for taking any other action with
respect to such Holder under the provisions of this Agreement so long as the
transfer was registered upon receipt of the affidavit described in the preceding
paragraph of this Section 6.02(g).

         (h) Each Holder of a Residual Certificate, by such Holder's acceptance
thereof, shall be deemed for all purposes to have consented to the provisions of
this section.

         SECTION 6.03 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.

         If (a) any mutilated Certificate is surrendered to the Trustee, or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate and (b) there is delivered to the Master Servicer and the
Trustee such security or indemnity as may be required by them to save each of
them 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 like
tenor and interest in the Trust Fund. In connection with the issuance of any new
Certificate under this Section 6.03, 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 6.03 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.



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         SECTION 6.04 PERSONS DEEMED OWNERS.

         Subject to the provisions of Section 6.07 with respect to any
Book-Entry Certificates, prior to due presentation of a Certificate for
registration of transfer, the Master Servicer, the Trustee, and any agent of the
Master Servicer or the Trustee may treat the person in whose name any
Certificate is registered as the owner of such Certificate for the purpose of
receiving distributions as provided in this Agreement and for all other purposes
whatsoever, and neither the Master Servicer, the Trustee nor any agent of the
Master Servicer or the Trustee shall be affected by any notice to the contrary.

         SECTION 6.05 ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND ADDRESSES.

         (a) If three or more Certificateholders (i) request in writing from the
Trustee a list of the names and addresses of Certificateholders, (ii) state that
such Certificateholders desire to communicate with other Certificateholders with
respect to their rights under this Agreement or under the Certificates and (iii)
provide a copy of the communication which such Certificateholders propose to
transmit, then the Trustee shall, within ten Business Days after the receipt of
such request, afford such Certificateholders access during normal business hours
to a current list of the Certificateholders. The expense of providing any such
information requested by a Certificateholder shall be borne by the
Certificateholders requesting such information and shall not be borne by the
Trustee. Every Certificateholder, by receiving and holding a Certificate, agrees
that the Trustee shall not be held accountable by reason of the disclosure of
any such information as to the list of the Certificateholders hereunder,
regardless of the source from which such information was derived.

         (b) The Master Servicer, so long as it is the Master Servicer
hereunder, shall have unlimited access to a list of the names and addresses of
the Certificateholders which list shall be provided by the Trustee promptly upon
the request of the Master Servicer.

         SECTION 6.06 MAINTENANCE OF OFFICE OR AGENCY.

         The Trustee will maintain or cause to be maintained at its expense an
office or offices or agency or agencies where Certificates may be surrendered
for registration of transfer or exchange of the Certificates. The Trustee
initially designates its office at 123 Washington Street as its office for such
purpose. All notices and demands to or upon the Trustee in respect of this
Agreement may be served at the Corporate Trust Office as provided in Section
9.11. The Trustee will give prompt written notice to the Certificateholders of
any change in the location of any such office or agency.

         SECTION 6.07 BOOK-ENTRY CERTIFICATES.

         (a) Each class of Book-Entry Certificates, upon original issuance,
shall be issued in the form of one or more typewritten Certificates representing
the Book-Entry Certificates, to be delivered to DTC, the initial Clearing
Agency, by, or on behalf of, the Seller. The Book-Entry Certificates shall
initially be registered on the Certificate Register in the name of the nominee
of DTC, and no Beneficial Holder will receive a definitive certificate
representing such Beneficial Holder's interest in the Book-Entry Certificates,
except as provided in Section 6.09. Unless and until Definitive Certificates
have been issued to the Beneficial Holders pursuant to Section 6.09:



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                  (i) the provisions of this Section 6.07 shall be in full force
         and effect with respect to such Book-Entry Certificates;

                  (ii) the Seller and the Trustee may deal with the Clearing
         Agency for all purposes with respect to such Book-Entry Certificates
         (including the making of distributions on such Certificates) as the
         sole Holder of such Certificates;

                  (iii) to the extent that the provisions of this Section 6.07
         conflict with any other provisions of this Agreement, the provisions of
         this Section 6.07 shall control;

                  (iv) the rights of the Beneficial Holders of such Book-Entry
         Certificates shall be exercised only through the Clearing Agency and
         the Participants and shall be limited to those established by law and
         agreements between such Beneficial Holders and the Clearing Agency
         and/or the Participants. Pursuant to the Depository Agreement, unless
         and until Definitive Certificates are issued pursuant to Section 6.09,
         the initial Clearing Agency will make book- entry transfers among the
         Participants and receive and transmit distributions of principal and
         interest on the related Certificates to such Participants; and

                  (v) any transferee of a beneficial interest in a Restricted
         Certificate in the form of a Book-Entry Certificate will be deemed to
         have made one of the representations set forth in Exhibit H hereto and
         if any purported transferee shall become a registered Holder of a
         Restricted Certificate in violation of such representations, then the
         last preceding qualified transferee shall be deemed restored to all
         rights as Holder thereof retroactive to the date of such transfer of
         such Restricted Certificate.

         (b) For purposes of any provision of this Agreement requiring or
permitting actions with the consent of, or at the direction of, Holders of each
Class of such Book-Entry Certificates evidencing a specified percentage of the
aggregate unpaid principal amount of such Certificates, such direction or
consent may be given by the Clearing Agency at the direction of Beneficial
Holders owning such Certificates evidencing the requisite percentage of
principal amount of such Certificates. The Clearing Agency may take conflicting
actions with respect to each Class of such Book-Entry Certificates to the extent
that such actions are taken on behalf of the Beneficial Holders.

         SECTION 6.08 NOTICES TO CLEARING AGENCY.

         Whenever notice or other communication to the Holders of each Class of
Book-Entry Certificates is required under this Agreement, unless and until
Definitive Certificates shall have been issued to the related Certificateholders
pursuant to Section 6.09, the Trustee shall give all such notices and
communications specified herein to be given to Holders of each Class of the
Book-Entry Certificates to the Clearing Agency which shall give such notices and
communications to the related Participants in accordance with its applicable
rules, regulations and procedures.



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         SECTION 6.09               DEFINITIVE CERTIFICATES.

         If (a) the Seller advises the Trustee in writing that the Clearing
Agency is no longer willing or able to properly discharge its responsibilities
under the Depository Agreement with respect to the Certificates and the Trustee
or the Seller is unable to locate a qualified successor, (b) the Seller, at its
option, advises the Trustee in writing that it elects to terminate the
book-entry system with respect to any or all of the Book-Entry Certificates
through the Clearing Agency or (c) after the occurrence of an Event of Default,
Holders of each Class of Book-Entry Certificates evidencing not less than
66-2/3% of the aggregate Current Principal Amount of such Class of the
Book-Entry Certificates advise the Trustee in writing that the continuation of a
book-entry system with respect to the such Certificates through the Clearing
Agency is no longer in the best interests of the Holders of such Certificates
with respect to such Class of the Book-Entry Certificates, the Trustee shall
notify all Holders of such Certificates of the occurrence of any such event and
the availability of Definitive Certificates. Upon surrender to the Trustee of
the such Certificates by the Clearing Agency, accompanied by registration
instructions from the Clearing Agency for registration, the Trustee shall
authenticate and deliver the Definitive Certificates. Neither the Seller nor the
Trustee shall be liable for 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 all references herein to
obligations imposed upon or to be performed by the Clearing Agency shall be
deemed to be imposed upon and performed by the Trustee, to the extent applicable
with respect to such Definitive Certificates, and the Trustee shall recognize
the Holders of Definitive Certificates as Certificateholders hereunder.


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                                   ARTICLE VII

            THE SELLER, MORTGAGE LOAN SELLER AND THE MASTER SERVICER

         SECTION 7.01   LIABILITIES OF THE SELLER, MORTGAGE LOAN SELLER AND THE
                        MASTER SERVICER.

         (a) The Seller, Mortgage Loan Seller and the Master Servicer shall each
be liable in accordance herewith only to the extent of the obligations
specifically and respectively imposed upon and undertaken by them herein.

         (b) It is understood and agreed that the obligation under this
Agreement of the Mortgage Loan Seller or the Master Servicer to repurchase or
substitute any Mortgage Loan as to which any breach of representation or
warranty or other obligation contained in Section 2.01, 2.02, 2.03, 2.04 or 3.12
of this Agreement or in Section 2 of the Mortgage Loan Purchase Agreement has
occurred and is continuing shall constitute the sole and exclusive remedy
respecting such breach available to the Seller, the Certificateholders or the
Trustee on their behalf so long as the Mortgage Loan Seller repurchases or
substitutes any such Mortgage Loan. Neither the Certificateholders nor the
Trustee on their behalf shall be entitled to any consequential damages.

         (c) Without limiting the effect of Section 7.01(b), the Master Servicer
shall defend and indemnify the Trust Fund, the Trustee, the Seller, the
Certificate Registrar, the Mortgage Loan Seller and the Certificateholders
against any and all costs, expenses, losses, damages, claims or liabilities,
including reasonable fees and expenses of counsel and expenses of litigation,
arising from third party claims or actions (including penalties or fees imposed
by any governmental or regulatory body or agency) in respect of any breach of
the Master Servicer's covenants, representations or warranties set forth herein
or in respect of any action taken or omitted by the Master Servicer with respect
to any Mortgage Loan constituting a failure by the Master Servicer to perform
its obligations under this Agreement. This indemnity shall survive any Event of
Default (but a Master Servicer's obligations under this Section 7.01 shall not
relate to any actions of any predecessor or subsequent Master Servicer after an
Event of Default) and any payment of the amount owing under, or any repurchase
by the Master Servicer of, any such Mortgage Loan.

         (d) Without limiting the effect of Section 7.01(b), the Mortgage Loan
Seller shall defend and indemnify the Trust Fund, the Trustee, the Seller, the
Certificate Registrar, the Master Servicer and the Certificateholders against
any and all costs, expenses, losses, damages, claims or liabilities, including
reasonable fees and expenses of counsel and expenses of litigation, arising from
third party claims or actions (including penalties or fees imposed by any
governmental or regulatory body or agency) in respect of any breach of the
Mortgage Loan Seller's covenants, representations or warranties set forth herein
or in respect of any action taken or omitted by the Mortgage Loan Seller with
respect to any Mortgage Loan constituting a failure by the Mortgage Loan Seller
to perform its obligations under this Agreement. This indemnity shall survive
any payment of the amount owing under, or any repurchase by the Mortgage Loan
Seller of, any such Mortgage Loan.



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         (e) Any amounts received by the Trustee from the Mortgage Loan Seller
or Master Servicer on behalf of the Trust Fund pursuant to this Article VII
shall be deposited in the Certificate Account and shall be distributed as part
of the Total Distribution Amount. If either the Mortgage Loan Seller or the
Master Servicer has made any indemnity payments to the Trustee pursuant to this
Article VII and the Trustee thereafter collects any of such amounts from others,
the Trustee will repay such amounts collected to the Mortgage Loan Seller or
Master Servicer, as applicable, together with any interest collected thereon.

         SECTION 7.02  MERGER OR CONSOLIDATION OF THE SELLER, THE MORTGAGE LOAN
                       SELLER OR THE MASTER SERVICER.

         (a) Subject to Section 7.02(b), the Seller, the Mortgage Loan Seller
and the Master Servicer will each do or cause to be done all things necessary to
preserve and keep in full force and effect its existence, rights and franchises
(charter and statutory) and will each 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, or any of the Mortgage Loans and to perform
its respective duties under this Agreement.

         (b) Any of the Mortgage Loan Seller, the Master Servicer or the Seller
may merge or consolidate with any Person, and any Person into which the Mortgage
Loan Seller, the Master Servicer or the Seller may be merged or consolidated, or
any Person resulting from any merger or consolidation to which the Mortgage Loan
Seller or the Master Servicer shall be a party, or any Person succeeding to the
business of the Mortgage Loan Seller, Master Servicer or the Seller, shall be
the successor of the Mortgage Loan Seller, the Master Servicer or the Seller, 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
to service mortgage loans on behalf of, Fannie Mae or Freddie Mac.

         (c) Notwithstanding anything else in this Section 7.02 or in Section
7.04 hereof to the contrary, the Master Servicer may assign its rights and
delegate its duties and obligations under this Agreement (except for the
obligation of the Master Servicer or Mortgage Loan Seller to effectuate
repurchases or substitutions of Mortgage Loans hereunder, including pursuant to
Section 2.01, 2.02 or 2.04 hereof, which shall remain with Washington Mutual
hereunder); provided, however, that the Master Servicer gives the Seller and the
Trustee notice of such assignment; and provided further, that such purchaser or
transferee accepting such assignment and delegation shall be an institution that
is a Fannie Mae and Freddie Mac approved seller/servicer in good standing, which
has a net worth of at least $15,000,000, and which is willing to service the
Mortgage Loans and executes and delivers to the Seller and the Trustee an
agreement accepting such delegation and assignment, which contains an assumption
by such Person of the rights, powers, duties, responsibilities, obligations and
liabilities of the Master Servicer, with like effect as if originally named as a
party to this Agreement. In the case of any such assignment and delegation, the
Master Servicer shall be released from its obligations under this Agreement
(except as provided above), except that the Master Servicer shall remain liable
for all liabilities and obligations incurred by it as Master Servicer hereunder
prior to the satisfaction of the conditions to such assignment and delegation
set forth in the preceding sentence.


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         SECTION 7.03 LIMITATION ON LIABILITY OF THE SELLER, THE MASTER SERVICER
                      AND OTHERS.

         Neither the Seller nor the Master Servicer nor any of the directors,
officers, employees or agents of the Seller or the Master Servicer shall be
under any liability to 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 Seller or the Master Servicer against any breach of
representations or warranties made by it herein or protect the Seller or the
Master Servicer or any such person from any liability which would otherwise be
imposed by reasons of willful misfeasance, bad faith or negligence in the
performance of duties or by reason of reckless disregard of obligations and
duties hereunder. The Seller, the Master Servicer and any director, officer,
employee or agent of the Seller 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 Seller, the Master Servicer
and any director, officer, employee or agent of the Seller or the Master
Servicer shall be indemnified by the Trust Fund and held harmless against any
loss, liability or expense incurred in connection with any legal action relating
to this Agreement or the Certificates, other than any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or negligence in the
performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder. Neither the Seller nor the Master Servicer
shall be under any obligation to appear in, prosecute or defend any legal action
that is not incidental to their respective duties hereunder and which in its
opinion may involve it in any expense or liability; provided, however, that
either the Seller or the Master Servicer may in its discretion undertake any
such action that it may deem necessary or desirable in respect of this Agreement
and the rights and duties of the parties hereto and interests of the Trustee and
the Certificateholders hereunder.

         SECTION 7.04 MASTER SERVICER NOT TO RESIGN.

         The Master Servicer shall not resign from the obligations and duties
imposed upon it hereunder except upon determination that such obligations and
duties hereunder are no longer permissible under applicable law or except in
connection with a permitted assignment pursuant to Section 7.02. Any such
determination that the Master Servicer's obligations are no longer permissible
shall be evidenced by an Opinion of Counsel to such effect delivered to the
Trustee. The Master Servicer shall give notice of any proposed resignation to
the Trustee, the Certificateholders and the Rating Agencies. No such resignation
by the Master Servicer shall become effective until the Trustee or a successor
master servicer shall have assumed the Master Servicer's responsibilities and
obligations in accordance with Section 8.02 hereof or shall affect any
obligation of the Mortgage Loan Seller hereunder.

         SECTION 7.05 ERRORS AND OMISSIONS INSURANCE; FIDELITY BONDS.

         The Master Servicer shall, for so long as it acts as master servicer
under this Agreement, obtain and maintain in force (a) a policy or policies of
insurance covering errors and omissions in the performance of its obligations as
master servicer hereunder, and (b) a fidelity bond in respect of its officers,
employees and agents. Each such policy or policies and bond shall, together,
comply


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with the requirements from time to time of Fannie Mae or Freddie Mac for persons
performing servicing for mortgage loans purchased by Fannie Mae or Freddie Mac.
In the event that any such policy or bond ceases to be in effect, the Master
Servicer shall obtain a comparable replacement policy or bond from an insurer or
issuer, meeting the requirements set forth above as of the date of such
replacement.

         SECTION 7.06    MORTGAGE LOAN SELLER AND MASTER SERVICER MAY OWN
                         CERTIFICATES.

         Each of the Mortgage Loan Seller and the Master Servicer in its
individual or any other capacity may become the owner or pledgee of Certificates
with the same rights as it would have if it were not the Mortgage Loan Seller or
the Master Servicer, as the case may be.


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                                  ARTICLE VIII

                                     DEFAULT

         SECTION 8.01 EVENTS OF DEFAULT.

         (a) "Event of Default," wherever used herein, means any one of the
following events (whatever reason for such Event of Default and whether it shall
be voluntary or involuntary or be effected by operation of law or pursuant to
any judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body):

                  (i) any failure by the Master Servicer to remit to the Trustee
         any payment other than a Monthly Advance required to be made by the
         Master Servicer under the terms of this Agreement, which failure shall
         continue unremedied for a period of three Business Days after the date
         upon which written notice of such failure shall have been given to the
         Master Servicer by the Trustee or the Seller or to the Master Servicer
         and the Trustee by the Holders of Certificates having not less than 25%
         of the Voting Interests evidenced by the Certificates; or

                  (ii) any failure by the Master Servicer to observe or perform
         in any material respect any other of the covenants or agreements on the
         part of the Master Servicer contained in this Agreement (except as set
         forth in (iii) below) which failure (A) materially affects the rights
         of the Certificateholders and (B) shall continue unremedied for a
         period of 60 days after the date on which written notice of such
         failure shall have been given to the Master Servicer by the Trustee or
         the Seller, or to the Master Servicer and the Trustee by the Holders of
         Certificates evidencing not less than 25% of the Voting Interests
         evidenced by the Certificates; or

                  (iii) if a representation or warranty set forth in Section
         2.03 hereof shall prove to be materially incorrect as of the time made
         in any respect that materially and adversely affects interests of the
         Certificateholders, and the circumstances or condition in respect of
         which such representation or warranty was incorrect shall not have been
         eliminated or cured, or any affected Mortgage Loan shall not have been
         substituted for or repurchased, within 60 days (or, if such breach is
         not capable of being cured within 60 days and is not subject to the
         remedies set forth in Section 2.04 and provided that the Master
         Servicer believes in good faith that such breach can be cured and is
         diligently pursuing the cure thereof, within 120 days) after the date
         on which written notice thereof shall have been given to the Master
         Servicer and Mortgage Loan Seller by the Trustee for the benefit of the
         Certificateholders or by the Seller; or

                  (iv) a decree or order of a court or agency or supervisory
         authority having jurisdiction in the premises for the appointment of a
         conservator or receiver or liquidator in any insolvency, readjustment
         of debt, marshalling of assets and liabilities or similar proceedings,
         or for the winding-up or liquidation of its affairs, shall have been
         entered


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         against the Master Servicer and such decree or order shall have
         remained in force undischarged or unstayed for a period of 60 days; or

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

                  (vi) 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 commence a voluntary case under, any applicable
         insolvency or reorganization statute, make an assignment for the
         benefit of its creditors, or voluntarily suspend payment of its
         obligations; or

                  (vii) either Rating Agency shall lower or withdraw the
         outstanding rating of the Certificates because the existing or
         prospective financial condition or mortgage loan servicing capability
         of the Master Servicer is insufficient to maintain such outstanding
         rating; or

                  (viii) any failure of the Master Servicer to make any Monthly
         Advance in the manner and at the time required to be made from its own
         funds pursuant to this Agreement and after receipt of notice from the
         Trustee pursuant to Section 5.04, which failure continues unremedied
         after the close of business on the Business Day immediately following
         the Distribution Date.

         (b) If an Event of Default due to the actions or inaction of the Master
Servicer described in clauses (i) through (vii) of Section 8.01(a) shall occur,
then, and in each and every such case, so long as such Event of Default shall
not have been remedied, the Trustee shall, if so directed by the Holders of
Certificates evidencing not less than 25% of the Voting Interests evidenced by
the Certificates, by notice in writing to the Master Servicer (with a copy to
the Rating Agencies), terminate all of the rights and obligations of the Master
Servicer under this Agreement (other than rights to reimbursement for Monthly
Advances or other advances previously made, as provided in Section 3.09 or
4.01).

         (c) If an Event of Default described in clause (viii) shall occur, the
Trustee shall, prior to the next Distribution Date, terminate the rights and
obligations of the Master Servicer hereunder (other than rights to reimbursement
for Monthly Advances or other advances previously made, as provided in Section
3.09 or 4.01) and succeed to the rights and obligations of the Master Servicer
hereunder pursuant to Section 8.02, including the obligation to make Monthly
Advances on such Distribution Date pursuant to the terms hereof.

         SECTION 8.02 TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.

         (a) On and after the time the Master Servicer receives a notice of
termination pursuant to Section 8.01 hereof or resigns pursuant to Section 7.04
hereof, subject to the provisions of Section 3.06 hereof, the Trustee shall be
the successor in all respects to the Master Servicer in its capacity as master
servicer under this Agreement and with respect to the transactions set forth or
provided


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for herein and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Master Servicer by the terms and
provisions hereof, provided that neither the Trustee nor any other successor to
the Master Servicer pursuant to this Section 8.02 shall be deemed to have made
any representation or warranty made by the Master Servicer, shall be obligated
to effect any repurchase or substitute of any Mortgage Loan, or shall have any
responsibility for an act or omission of any predecessor Master Servicer. As
compensation therefor, the Trustee shall be entitled to all funds relating to
the Mortgage Loans that the Master Servicer would have been entitled to charge
to the related Custodial Account if the Master Servicer had continued to act
hereunder (except that the terminated Master Servicer shall retain the right to
be reimbursed for advances (including, without limitation, Monthly Advances)
theretofore made by the Master Servicer with respect to which it would be
entitled to be reimbursed if it had not been so terminated as Master Servicer).

         Notwithstanding the foregoing, if the Trustee has become the successor
to the Master Servicer in accordance with this Section 8.02, the Trustee may, if
it shall be unwilling to so act, or shall, if it is unable to so act, appoint,
or petition a court of competent jurisdiction to appoint, any established
mortgage loan servicing institution, the appointment of which does not adversely
affect the then current rating of the Certificates, 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. Pending
appointment of a successor to the Master Servicer hereunder, the Trustee, unless
the Trustee is prohibited by law from so acting, shall act in such capacity as
provided herein. 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. The Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession.

         (b) The Master Servicer that has been terminated shall, at the request
of the Trustee but at the expense of such Master Servicer, deliver to the
assuming party all documents and records relating to each Sub-Servicing
Agreement and the related Mortgage Loans and an accounting of amounts collected
and held by it and otherwise use its best efforts to effect the orderly and
efficient transfer of each Sub-Servicing Agreement to the assuming party.

         (c) The Master Servicer shall cooperate with the Trustee and any
successor Master Servicer in effecting the termination of the Master Servicer's
responsibilities and rights hereunder, including without limitation, the
transfer to such successor for administration by it of all cash amounts which
shall at the time be credited by the Master Servicer to the Custodial Account or
thereafter received with respect to the Mortgage Loans and the Master Servicer
Mortgage Files.

         (d) Neither the Trustee nor any other successor master servicer shall
be deemed to be in default hereunder by reason of any failure to make, or any
delay in making, any distribution hereunder or any portion thereof caused by (a)
the failure of the Master Servicer to (i) deliver, or any delay in delivering,
cash, documents or records to it, (ii) cooperate as required by this Agreement,
or (iii) deliver the Master Servicer Mortgage Files to the Trustee as required
by this Agreement, or (b) restrictions imposed by any regulatory authority
having jurisdiction over the Master Servicer.



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         (e) Any successor to the Master Servicer as master servicer shall
during the term of its service as master servicer maintain in force the policy
or policies that the Master Servicer is required to maintain pursuant to Section
7.05 hereof. No termination of the Master Servicer shall have any effect on the
obligations of the Mortgage Loan Seller hereunder.

         SECTION 8.03 NOTIFICATION TO CERTIFICATEHOLDERS.

         (a) Upon any termination or appointment of a successor to the Master
Servicer, the Trustee shall give prompt written notice thereof to the
Certificateholders at their respective addresses appearing in the Certificate
Register and to the Rating Agencies.

         (b) Within 2 Business Days after its notice of the occurrence of any
Event of Default, the Trustee shall transmit by mail to all Certificateholders
and the Rating Agencies notice of each such Event of Default hereunder known to
the Trustee, unless such Event of Default shall have been cured or waived.

         SECTION 8.04 WAIVER OF EVENTS OF DEFAULT.

         The Holders representing at least 66-2/3% of the Voting Interests of
Certificates affected by a default or Event of Default hereunder may waive any
default or Event of Default, provided, however, that (a) a default or Event of
Default under clause (i) or (viii) of Section 8.01(a) may be waived only by
Holders of Certificates of 100% of the Class affected by such default or Event
of Default and (b) no waiver pursuant to this Section 8.04 shall affect the
Holders of Certificates in the manner set forth in Section 11.01(b)(i), (ii) or
(iii). Upon any such waiver of a default or Event of Default by the Holders
representing the requisite percentage of Voting Interests 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.


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                                   ARTICLE IX

                             CONCERNING THE TRUSTEE

         SECTION 9.01 DUTIES OF TRUSTEE.

         (a) The Trustee, prior to the occurrence of an Event of Default and
after the curing or waiver of all Events of Default that may have occurred,
undertakes with respect to the Trust Fund to perform such duties and only such
duties as are specifically set forth in this Agreement. In case an Event of
Default has occurred and remains uncured and not 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 person would
exercise or use under the circumstances in the conduct of such person's own
affairs. Any permissive right of the Trustee set forth in this Agreement shall
not be construed as a duty.

         (b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee that are specifically required to be furnished pursuant to any
provision of this Agreement shall examine them to determine whether they conform
to the requirements of this Agreement. The Trustee shall have no duty to
recompute, recalculate or verify the accuracy of any resolution, certificate,
statement, opinion, report, document, order or other instrument so furnished to
the Trustee.

         (c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own misconduct, its negligent failure to perform its obligations
in compliance with this Agreement, or any liability which would be imposed by
reason of its willful misfeasance or bad faith; 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 that 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 personally liable except for the performance of such duties and
         obligations as are specifically set forth in this Agreement, no implied
         covenants or obligations shall be read into this Agreement against the
         Trustee and 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 which it reasonably believed in good
         faith to be genuine and to have been duly executed by the proper
         authorities respecting any matters arising hereunder;

                  (ii) the Trustee shall not be personally liable for an error
         of judgment made in good faith by a Responsible Officer or Responsible
         Officers of the Trustee, unless the Trustee was negligent or acted in
         bad faith or with willful misfeasance;

                  (iii) the Trustee shall not be personally liable with respect
         to any action taken, suffered or omitted to be taken by it in good
         faith in accordance with the direction of Holders of Certificates
         evidencing not less than 25% of the Voting Interests allocated to each
         Class


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                  of Certificates 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; and

                  (iv) no provision of this Agreement shall require the Trustee
         to expend or risk its own funds or otherwise incur any financial
         liability in the performance of any of its duties hereunder or in the
         exercise of any of its rights or powers if it shall have reasonable
         grounds for believing that repayment of such funds or adequate
         indemnity against such risk or liability is not reasonably assured to
         it.

         (d) Except with respect to an Event of Default described in clause (i)
of Section 8.01(a), the Trustee shall not be deemed to have knowledge of any
Event of Default or event which, with notice or lapse of time, or both, would
become an Event of Default, unless a Responsible Officer of the Trustee shall
have received written notice thereof from the Master Servicer, the Seller or a
Certificateholder, or a Responsible Officer of the Trustee has actual notice
thereof, and in the absence of such notice no provision hereof requiring the
taking of any action or the assumption of any duties or responsibility by the
Trustee following the occurrence of any Event of Default or event which, with
notice or lapse of time or both, would become an Event of Default, shall be
effective as to the Trustee.

         (e) The Trustee shall have no duty hereunder with respect to any
complaint, claim, demand, notice or other document it may receive or which may
be alleged to have been delivered to or served upon it by the parties as a
consequence of the assignment of any Mortgage Loan hereunder; provided, however,
that the Trustee shall use its best efforts to remit to the Master Servicer,
upon receipt, any such complaint, claim, demand, notice or other document (i)
which is delivered to the Corporate Trust Office of the Trustee, (ii) of which a
Responsible Officer has actual knowledge, and (iii) which contains information
sufficient to permit the Trustee to make a determination that the real property
to which such document relates is a Mortgaged Property.

         SECTION 9.02 CERTAIN MATTERS AFFECTING THE TRUSTEE.

         (a)      Except as otherwise provided in Section 9.01:

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

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

                  (iii) the Trustee shall be under no obligation to exercise any
         of the trusts or powers vested in it by this Agreement or to institute,
         conduct or defend any litigation hereunder or in relation hereto at the
         request, order or direction of any of the Certificateholders, pursuant


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         to the provisions of this Agreement, unless such Certificateholders
         shall have offered to the Trustee reasonable security or indemnity
         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 (which has not been cured or waived), to exercise such of the
         rights and powers vested in it by this Agreement, and to use the same
         degree of care and skill in their exercise as a prudent person would
         exercise or use under the circumstances in the conduct of such
         person's own affairs;

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

                  (v) prior to the occurrence of an Event of Default hereunder
         and after the curing or waiving of all Events of Default that 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 so to do
         by Holders of Certificates evidencing not less than 25% of the Voting
         Interests allocated to each Class of Certificates; provided, however,
         that if the payment within a reasonable time to the Trustee of the
         costs, expenses or liabilities likely to be incurred by it in the
         making of such investigation is, in the opinion of the Trustee, not
         reasonably assured to the Trustee by the security afforded to it by the
         terms of this Agreement, the Trustee may require reasonable indemnity
         against such expense or liability as a condition to taking any such
         action; the reasonable expense of every such investigation shall be
         paid by the Master Servicer in the event that such investigation
         relates to an Event of Default by the Master Servicer, if an Event of
         Default by the Master Servicer shall have occurred and is continuing,
         and otherwise by the Certificateholders requesting the investigation;

                  (vi) the Trustee may execute any of the trusts or powers
         hereunder or perform any duties hereunder either directly or by or
         through affiliates, agents or attorneys;

                  (vii) the Trustee shall not be required to expend its own
         funds or otherwise incur any financial liability in the performance of
         any of its duties hereunder if it shall have reasonable grounds for
         believing that repayment of such funds or adequate indemnity against
         such liability is not assured to it; and

                  (viii) the Trustee shall not be liable for any loss on any
         investment of funds pursuant to this Agreement.

         (b) All rights of action under this Agreement or under any of the
Certificates, enforceable by the Trustee, may be enforced by it without the
possession of any of the Certificates, or the production thereof at the trial or
other proceeding relating thereto, and any such suit, action or proceeding
instituted by the Trustee shall be brought in its name for the benefit of all
the Holders of such Certificates, subject to the provisions of this Agreement.



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         SECTION 9.03 TRUSTEE NOT LIABLE FOR CERTIFICATES OR MORTGAGE LOANS.

         The recitals contained herein shall be taken as the statements of the
Seller or the Master Servicer, as the case may be, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Agreement, the Certificates or of any
Mortgage Loan or related document. The Trustee shall not be accountable for the
use or application by the Seller, the Mortgage Loan Seller or the Master
Servicer of any funds paid to the Seller, the Mortgage Loan Seller or the Master
Servicer in respect of the Mortgage Loans or deposited in or withdrawn from the
Certificate Account by the Seller, the Mortgage Loan Seller or the Master
Servicer.

         SECTION 9.04 TRUSTEE MAY OWN CERTIFICATES.

         The Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates and may transact business with the other
parties with the same rights as it would have if it were not the Trustee.

         SECTION 9.05 TRUSTEE'S COMPENSATION AND EXPENSES.

         (a) As compensation for its services hereunder, the Trustee shall be
entitled to the Trustee Fee on each Distribution Date.

         (b) The Trustee and any director, officer, employee or agent of the
Trustee shall be indemnified by the Master Servicer and held harmless against
any loss, liability or expense (i) incurred in connection with any legal action
relating to this Agreement or the Certificates, or the performance of any of the
Trustee's duties hereunder, other than any loss, liability or expense incurred
by reason of willful misfeasance, bad faith or negligence in the performance of
any of the Trustee's duties hereunder or by reason of reckless disregard of the
Trustee's obligations and duties hereunder and (ii) resulting from the exercise
of any power of attorney granted by the Trustee to the Master Servicer in
accordance with this Agreement. Such indemnity shall survive the termination of
this Agreement or the resignation or removal of the Trustee hereunder.

         SECTION 9.06 ELIGIBILITY REQUIREMENTS FOR TRUSTEE.

         The Trustee hereunder shall at all times be a corporation or
association having its principal office in a state and city acceptable to the
Seller and the Master Servicer and organized and doing business under the laws
of such state or the United States of America, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus of at
least $50,000,000 and subject to supervision or examination by federal or state
authority. If such corporation or association publishes reports of 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 9.06
the combined capital and surplus of such corporation or association 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 9.06, the Trustee
shall resign immediately in the manner and with the effect specified in Section
9.07 hereof.



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         SECTION 9.07 RESIGNATION AND REMOVAL OF TRUSTEE.

         (a) The Trustee may at any time resign and be discharged from the
trusts hereby created by (i) giving written notice of resignation to the Seller,
the Mortgage Loan Seller and the Master Servicer and by mailing notice of
resignation by first class mail, postage prepaid, to the Certificateholders at
their addresses appearing on the Certificate Register, and to the Rating
Agencies, not less than 60 days before the date specified in such notice when,
subject to Section 9.08, such resignation is to take effect, and (ii) acceptance
by a successor trustee in accordance with Section 9.08 meeting the
qualifications set forth in Section 9.06. 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.

         (b) If at any time (i) the Trustee shall cease to be eligible in
accordance with the provisions of Section 9.06 hereof and shall fail to resign
after written request thereto by the Master Servicer, (ii) the Trustee shall
become incapable of acting, or shall be adjudged a 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, (iii) a
tax is imposed or threatened with respect to the Trust Fund by any state in
which the Trustee or the Trust Fund held by the Trustee is located, (iv) the
continued use of the Trustee would result in a downgrading of the rating by the
Rating Agencies of any Class of Certificates with a rating or (v) the Trustee
breaches any of its obligations or representations hereunder, then the Seller,
with the consent of the Master Servicer, may remove the Trustee and, with the
consent of the Master Servicer, appoint a successor trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
Trustee and one copy to the successor trustee. The Trustee may also be removed
at any time by the Holders of Certificates evidencing not less than 50% of the
Voting Interests evidenced by the Certificates. Notice of any removal of the
Trustee and acceptance of appointment by the successor trustee shall be given to
the Rating Agencies by the Master Servicer.

         (c) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 9.07 shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 9.08 hereof.

         SECTION 9.08 SUCCESSOR TRUSTEE.

         (a) If the Trustee resigns pursuant to Section 9.07, the Seller, with
the consent of the Master Servicer, shall appoint a successor trustee that
satisfies the requirements of Section 9.06. Any successor trustee appointed as
provided in Section 9.07 hereof shall execute, acknowledge and deliver to the
Seller and 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 Seller and the
predecessor trustee shall execute and deliver such instruments and do such other
things as may reasonably be required


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for more fully and certainly vesting and confirming in the successor trustee all
such rights, powers, duties, and obligations.

         (b) No successor trustee shall accept appointment as provided in this
Section 9.08 unless at the time of such acceptance such successor trustee shall
be eligible under the provisions of Section 9.06 hereof and shall not adversely
affect the then current rating of the Certificates.

         (c) Upon acceptance of appointment by a successor trustee as provided
in this Section 9.08, 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
Seller.

         SECTION 9.09 MERGER OR CONSOLIDATION OF TRUSTEE.

         Any Person into which the Trustee may be merged or converted or with
which it may be consolidated or any Person resulting from any merger, conversion
or consolidation to which the Trustee shall be a party, or any Person succeeding
to the business of the Trustee, shall be the successor of the Trustee hereunder,
provided that such Person shall be eligible under the provisions of Section 9.06
hereof without the execution or filing of any paper or further act on the part
of any of the parties hereto, anything herein to the contrary notwithstanding.

         SECTION 9.10 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.

         (a) Notwithstanding any other provisions of this Agreement, 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 any Mortgage Note 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 and
for the benefit of the applicable Certificateholders, such title to the Trust
Fund, or any part thereof, and, subject to the other provisions of this Section
9.10, 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 fifteen days after the receipt
by it of a request to do so, or in the case an Event of Default shall have
occurred and be continuing, the Trustee alone shall have the power to make such
appointment. No co-trustee or separate trustee hereunder shall be required to
meet the terms of eligibility as a successor trustee under Section 9.06 and no
notice to Certificateholders of the appointment of any co-trustee or separate
trustee shall be required under Section 9.08.

         (b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:

                  (i) all rights, powers, duties and obligations conferred or
         imposed upon the Trustee, except for any obligation of the Trustee
         under this Agreement to advance funds on behalf of the Master Servicer,
         shall be conferred or imposed upon and exercised or


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         performed by the Trustee and such separate trustee or co-trustee
         jointly (it being understood that such separate trustee or co-trustee
         is not authorized to act separately without the Trustee joining in
         such act), except to the extent that under any law of any jurisdiction
         in which any particular act or acts are to be performed by the Trustee
         (whether as Trustee hereunder or as successor to the Master Servicer),
         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
         singly by such separate trustee or co-trustee, but solely at the
         direction of the Trustee;

                  (ii) no trustee hereunder shall be held personally liable by
         reason of any act or omission of any other trustee hereunder; and

                  (iii) the Master Servicer and the Trustee acting jointly may
         at any time accept the resignation of or remove any separate trustee or
         co-trustee.

                  (c) 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 IX. 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 and a copy thereof given to the Master Servicer
         and the Seller.

         (d) 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.

         (e) The Trustee agrees to instruct the co-trustees, if any, to the
extent necessary to fulfill the Trustee's obligations hereunder.

         (f) The Master Servicer shall pay what it determines in its sole
discretion to be the reasonable compensation of any co-trustee required to be
appointed hereunder, provided that any such expenditure shall be a reimbursable
expense of the Master Servicer from funds on deposit in the Custodial Account
pursuant to Section 3.09(a)(vii).



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<PAGE>



         SECTION 9.11 OFFICE OF THE TRUSTEE.

         The office of the Trustee for purposes of receipt of notices and
demands is the Corporate Trust Office.

         SECTION 9.12 TAX RETURNS, 1934 ACT REPORTING, OTHER DATA.

         (a) The Trustee shall prepare or cause to be prepared on behalf of the
Trust Fund, based upon the information furnished by the Master Servicer or
calculated by the Trustee in accordance with this Agreement pursuant to
instructions given by the Seller, and shall file federal tax returns and
appropriate state income tax returns and such other returns as may be required
by applicable law relating to the Trust Fund and shall forward copies to the
Seller of all such returns and Form 1099 information and such other information
within the control of the Trustee as the Seller may reasonably request in
writing, and shall forward to each Certificateholder such forms and furnish such
information within the control of the Trustee as are required by the Code and
the REMIC Provisions to be furnished to them, and will prepare and disseminate
to Certificateholders Form 1099s (or otherwise furnish information within the
control of the Trustee) to the extent required by applicable law.

         (b) The Trustee shall prepare and file with the Internal Revenue
Service ("IRS"), on behalf of the Trust Fund, an application on IRS Form SS-4.

         (c) Within 15 days after each Distribution Date, the Trustee shall, in
accordance with industry standards, file with the Securities and Exchange
Commission via the Electronic Data Gathering and Retrieval System ("EDGAR"), a
Form 8-K with a copy of the statement to the Certificateholders for such
Distribution Date as an exhibit thereto. The Trustee shall, in accordance with
industry standards and only when instructed by the Seller, file a Form 15
Suspension Notice with respect to the Trust Fund, if applicable. Prior to March
31 of each calendar year commencing March 31, 2002, the Trustee shall file a
Form 10-K, in substance conforming to industry standards, with respect to the
Trust Fund. The Seller hereby grants to the Trustee a limited power of attorney
to execute and file each such document on behalf of the Seller. Such power of
attorney shall continue until either the earlier of (i) receipt by the Trustee
from the Seller of written termination of such power of attorney and (ii) the
termination of the Trust Fund. The Seller agrees to promptly furnish to the
Trustee, from time to time upon request, such further information, reports and
financial statements within its control related to this Agreement and the
Mortgage Loans as the Trustee reasonably deems appropriate to prepare and file
all necessary reports with the Securities and Exchange Commission. The Trustee
shall have no responsibility to file any items other than those specified in
this Section 9.12(c); provided, however, the Trustee will cooperate with the
Seller in connection with any additional filings with respect to the Trust Fund
as the Seller deems necessary under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Copies of all reports filed by the Trustee under
the Exchange Act shall be sent to: the Seller c/o Bear, Stearns & Co. Inc.,
Attn: Managing Director-Analysis and Control, One Metrotech Center North,
Brooklyn, New York 11202-3859. Fees and expenses incurred by the Trustee in
connection with this Section 9.12(c) shall not be reimbursable from the Trust
Fund.



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         (d) The Trustee will provide all information to Bloomberg that is
necessary to have the information regarding the Certificates and the transaction
posted on Bloomberg and the Trustee will provide Bloomberg with all necessary
information (including information regarding the Mortgage Loans) for Bloomberg
to update information necessary regarding the Certificates and the transaction
on Bloomberg.

         (e) The Trustee is hereby designated as agent for the majority interest
Class R Holder, who shall be the "tax matters person" within the meaning of
Treas. Reg.ss.1.860F-4(d) for the REMIC.


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                                    ARTICLE X

                                   TERMINATION

         SECTION 10.01  TERMINATION UPON LIQUIDATION OR REPURCHASE OF ALL
                        MORTGAGE LOANS.

         (a) The obligations and responsibilities of the Master Servicer, the
Mortgage Loan Seller, the Seller and the Trustee created hereby with respect to
the Trust Fund created hereby shall terminate upon the earlier of:

                  (i) the repurchase by the Master Servicer or its designee at
         its election, of all Mortgage Loans and all property acquired in
         respect of any Mortgage Loan remaining in the Trust Fund, which
         repurchase right the Master Servicer or its designee may exercise at
         its sole and exclusive election as of any Distribution Date (such
         applicable Distribution Date being herein referred to as the "Optional
         Termination Date") following the Distribution Date on which the
         aggregate Scheduled Principal Balance of the Mortgage Loans at the time
         of the repurchase is less than or equal to 1% of the aggregate
         Scheduled Principal Balance of the Mortgage Loans as of the Cut-off
         Date; and

                  (ii) the later of (A) twelve months after the maturity of the
         last Mortgage Loan remaining in the Trust Fund, (B) the liquidation (or
         any advance with respect thereto) of the last Mortgage Loan remaining
         in the Trust Fund and the disposition of all REO Property and (C) the
         distribution to Certificateholders of all amounts required to be
         distributed to them pursuant to this Agreement.

         In no event shall the trust created hereby continue beyond the
expiration of 21 years from the death of the last survivor of the descendants of
Mr. Joseph P. Kennedy, former Ambassador of the United States to Great Britain,
living on the date of execution of this Agreement. Any termination of the Trust
Fund pursuant to clause (i) above shall be carried out in such a manner so that
the termination of the REMIC included therein shall qualify as a "qualified
liquidation" under the REMIC Provisions.

         (b) The Mortgage Loan Repurchase Price for any such Optional
Termination of the Trust Fund shall be equal to the Aggregate Loan Balance of
the Mortgage Loans as of the date of repurchase, together with accrued and
unpaid interest thereon from the date to which such interest was paid or
advanced at the sum of the applicable Net Mortgage Rate with respect to each
Mortgage Loan to, but not including, the first day of the month of such
repurchase, plus any sums on account of such Mortgage Loan that have been
advanced by the Master Servicer and are reimbursable to the Master Servicer
hereunder (including the Scheduled Principal Balance of each Mortgage Loan that
was secured by any REO Property). The Trustee shall give notice to the Rating
Agencies of the Seller's election to purchase the Mortgage Loans pursuant to
this Section 10.01 and of the Optional Termination Date.



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<PAGE>



         SECTION 10.02 PROCEDURE UPON OPTIONAL OR OTHER FINAL TERMINATION.

         (a) In case of any Optional Termination pursuant to Section 10.01, the
Seller or its designee shall, at least twenty days prior to the date notice is
to be mailed to the affected Certificateholders pursuant to Section 10.02(c),
notify the Trustee of such Optional Termination Date and of the Mortgage Loan
Repurchase Price.

         (b) Any repurchase of the Mortgage Loans by the Seller or its designee
shall be made on an Optional Termination Date by deposit of the Mortgage Loan
Repurchase Price into the Certificate Account before the Distribution Date on
which such repurchase is effected. Upon receipt by the Trustee of an Officers'
Certificate of the Seller or its designee certifying as to the deposit of such
repurchase price into the Certificate Account, the Seller or its designee shall
prepare and the Trustee and each co-trustee and separate trustee, if any, then
acting as such under this Agreement, shall, upon request and at the expense of
the Seller or its designee execute and deliver all such instruments of transfer
or assignment, in each case without recourse, as shall be necessary, to vest
title in the Seller or its designee in the Mortgage Loans so repurchased and
shall transfer or deliver to the Seller or its designee the repurchased Mortgage
Loans. Any distributions on the Mortgage Loans received by the Trustee
subsequent to (or with respect to any period subsequent to) the Optional
Termination Date shall be promptly remitted by it to the Seller or its designee.

         (c) Notice of the Distribution Date on which the Seller or its designee
anticipates that the final distribution shall be made (whether upon Optional
Termination or otherwise), shall be given promptly by the Seller or its designee
to the Trustee and by the Trustee by first class mail to Holders of the affected
Certificates. Such notice shall be mailed no earlier than the 15th day and not
later than the 10th day preceding the Optional Termination Date or date of final
distribution, as the case may be. Such notice shall specify (i) the Distribution
Date upon which final distribution on the affected Certificates will be made
upon presentation and surrender of such Certificates at the office or agency
therein designated, (ii) the amount of such final distribution and (iii) that
the Record Date otherwise applicable to such Distribution Date is not
applicable, such distribution being made only upon presentation and surrender of
such Certificates at the office or agency maintained for such purposes (the
address of which shall be set forth in such notice).

         (d) In the event that any Certificateholders shall not surrender
Certificates for cancellation within six months after the date specified in the
above mentioned written notice, the Trustee shall give a second written notice
to the remaining such Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
six months after the second notice all the Certificates shall not have been
surrendered for cancellation, the Trustee may take appropriate steps, or may
appoint an agent to take appropriate 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 to
the Trust Fund. If, after such actions have been taken, such Certificates have
not been surrendered for cancellation, the Trustee shall pay over all such
remaining funds to the Seller.



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<PAGE>



         SECTION 10.03 ADDITIONAL TERMINATION REQUIREMENTS.

         (a) In the event the Seller or its designee exercises its purchase
option pursuant to Section 10.01, the Trust Fund shall be terminated in
accordance with the following additional requirements, unless the Trustee has
received an Opinion of Counsel to the effect that the failure of the Trust Fund
to comply with the requirements of this Section will not (i) result in the
imposition of taxes on a "prohibited transaction" of the Trust Fund, as
described in Section 860F of the Code, or (ii) cause the Trust Fund to fail to
qualify as a REMIC at any time that any Certificates are outstanding:

                  (i) within 90 days prior to the final Distribution Date set
         forth in the notice given by the Seller or its designee under Section
         10.02, the Trustee shall adopt a plan of complete liquidation of the
         Trust Fund and specify the first day of the applicable 90-day
         liquidation period in a statement attached to the Trust Fund's final
         tax return pursuant to Treasury Regulations Section 1.860F-1, and
         satisfy (or cause to be satisfied) all of the requirements of a
         qualified liquidation under the REMIC Provisions; and

                  (ii) at or after the time of adoption of any such plan of
         complete liquidation for the Trust Fund at or prior to the Final
         Distribution Date, the Trustee shall sell all of the assets (if any) of
         the Trust Fund to the Seller or its designee for cash; provided,
         however, that in the event that a calendar quarter ends after the time
         of adoption of such a plan of complete liquidation but prior to the
         final Distribution Date, the Trustee shall not sell any of the assets
         of the Trust Fund prior to the close of that calendar quarter.

         (b) By its acceptance of a Class R Certificate, the Holders thereof
hereby agree to adopt such a plan of complete liquidation and to take such other
action in connection therewith as may be reasonably required to liquidate and
otherwise terminate the Trust Fund.


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                                   ARTICLE XI

                            MISCELLANEOUS PROVISIONS

         SECTION 11.01 AMENDMENT.

         (a) This Agreement may be amended from time to time by the Seller, the
Master Servicer, the Mortgage Loan Seller and the Trustee without the consent of
any of the Certificateholders,

                  (i) to cure any ambiguity,

                  (ii) to correct or supplement any provisions herein that may
         be inconsistent with any other provisions herein or that may be
         inconsistent with information provided in the Offering Documents,

                  (iii) to modify, eliminate or add to any of its provisions to
         such extent as shall be necessary or desirable to maintain the
         qualification of the Trust Fund as a REMIC at all times that any
         Certificate is outstanding or to avoid or minimize the risk of the
         imposition of any tax on the Trust Fund pursuant to the Code that would
         be a claim against the Trust Fund, provided that the Trustee has
         received an Opinion of Counsel to the effect that (A) such action is
         necessary or desirable to maintain such qualification or to avoid or
         minimize the risk of the imposition of any such tax and (B) such action
         will not adversely affect the status of the Trust Fund as a REMIC or
         adversely affect in any material respect the interests of any
         Certificateholder,

                  (iv) to make any other provisions with respect to matters or
         questions arising under this Agreement that are not materially
         inconsistent with the provisions of this Agreement, provided that such
         action shall not adversely affect in any material respect the interests
         of any Certificateholder or adversely affect the status of the Trust
         Fund as a REMIC as evidenced by an Opinion of Counsel or written
         confirmation received by each Rating Agency then rating the
         Certificates that such amendment to this Agreement will not result in a
         downgrade of the current rating then assigned to any Class of
         Certificates affected by such amendment, and further provided that (A)
         such action shall not affect in any material respect the permitted
         activities of the Trust and (B) such action shall not increase in any
         material respect the degree of discretion which the Master Servicer is
         allowed to exercise in servicing the Mortgage Loans, or

                  (v) To add appropriate restrictions and legends to any of the
         Class A, Class M-1, Class M-2 or Class M-3 Certificates that are no
         longer registered under the 1933 Act.

         (b) This Agreement may be amended from time to time by the Seller, the
Master Servicer, the Mortgage Loan Seller and the Trustee with the consent of
the Holders of Certificates evidencing, in the aggregate, not less than 66-2/3%
of the Voting Interests of all the Certificates for the purpose of adding any
provisions to or changing in any manner or eliminating any of the


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<PAGE>



provisions of this Agreement or of modifying in any manner the rights of the
Holders of the Certificates; provided, however, that no such amendment may (i)
reduce in any manner the amount of, delay the timing of or change the manner in
which payments received on or with respect to Mortgage Loans are required to be
distributed with respect to any Certificate without the consent of the Holder of
such Certificate, (ii) adversely affect in any material respect the interests of
the Holders of a Class of Certificates in a manner other than as set forth in
(i) above without the consent of the Holders of Certificates evidencing not less
than 66-2/3% of the Voting Interests of such Class, (iii) reduce the aforesaid
percentages of Voting Interests, the holders of which are required to consent to
any such amendment without the consent of 100% of the Holders of Certificates of
the Class affected thereby, (iv) change the percentage of the Scheduled
Principal Balance of the Mortgage Loans specified in Section 10.01(a) relating
to optional termination of the Trust Fund without the consent of 100% of the
Holders of Certificates, (v) modify the provisions of this Section 11.01 without
the consent of 100% of the Holders of Certificates, or (vi) terminate this
Agreement or the Trust Fund created hereunder other than as provided in Article
X hereof without the consent of 100% of the Holders of Certificates.

         It shall not be necessary for the consent of Certificateholders under
this Section 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.

         (c) Promptly after the execution of any amendment to this Agreement,
the Trustee shall furnish written notification of the substance of such
amendment to each Certificateholder and the Rating Agencies.

         (d) Prior to the execution of any amendment to this Agreement, the
Trustee shall receive an Opinion of Counsel that any such amendment is
authorized by and permitted hereunder and that it will not adversely affect the
status of the Trust Fund as a REMIC.

         SECTION 11.02 RECORDATION OF AGREEMENT; COUNTERPARTS.

         (a) 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 Mortgaged Properties are situated, and
in any other appropriate public recording office or elsewhere. Such recordation,
if any, shall be effected by the Master Servicer at its expense on direction of
the Trustee, but only upon direction of the Trustee accompanied by an Opinion of
Counsel to the effect that such recordation materially and beneficially affects
the interests of the Certificateholders of the Trust Fund.

         (b) 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.



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         SECTION 11.03 GOVERNING LAW.

         THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE
TO AGREEMENTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK AND
THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HERETO AND THE
CERTIFICATEHOLDERS SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

         SECTION 11.04 INTENTION OF PARTIES.

         (a) It is the express intent of the Seller, the Master Servicer and the
Trustee that the conveyance by the Seller to the Trustee as provided for in
Section 2.01 of the Seller's right, title and interest in and to the Mortgage
Loans be, and be construed as, an absolute sale and assignment by the Seller to
the Trustee of the Mortgage Loans for the benefit of the Certificateholders.
Further, it is not intended that either conveyance be deemed to be a pledge of
the Mortgage Loans by the Seller to the Trustee to secure a debt or other
obligation. However, in the event that the Mortgage Loans are held to be
property of the Seller, or if for any reason this Agreement is held or deemed to
create a security interest in the Mortgage Loans, then it is intended that (i)
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; (ii) the
conveyances provided for in Section 2.01 shall be deemed to be a grant by the
Seller to the Trustee on behalf of the Certificateholders, to secure payment in
full of the Secured Obligations (as defined below), of a security interest in
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 Mortgage
Loans, including the Mortgage Notes, the Mortgages, any related insurance
policies and all other documents in the related Trustee Mortgage Files, and all
accounts, general intangibles, chattel paper, instruments, documents, money,
deposit accounts, certificates of deposit, goods, letters of credit, advices of
credit and investment property consisting of the Trust Fund, arising from or
relating to (A) the Mortgage Loans, including with respect to each Mortgage
Loan, the Mortgage Note and related Mortgage, and all other documents in the
related Trustee Mortgage Files, and including any Replacement Mortgage Loans;
(B) pool insurance policies, hazard insurance policies and any bankruptcy bond
relating to the foregoing, if applicable; (C) the Certificate Account; (D) the
Custodial Account; (E) all amounts payable on or after the Cut-off Date to the
holders of the Mortgage Loans in accordance with the terms thereof; (F) all
income, payments, proceeds and products 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, whether in the form of cash, instruments,
securities or other property; and (G) all cash and non-cash proceeds of any of
the foregoing; (iii) the possession or control by the Trustee or any other agent
of the Trustee of Mortgage Notes or such other items of property as constitute
instruments, money, documents, advices of credit, letters of credit, goods,
certificated securities or chattel paper shall be deemed to be possession or
control by the secured party, or possession or control by a purchaser, for
purposes of perfecting the security interest pursuant to the Uniform Commercial
Code (including, without limitation, Sections 9-305 or 9-115 thereof); and (iv)
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, securities
intermediaries, bailees or agents of, or persons holding for, the Trustee, as
applicable, for the purpose


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of perfecting such security interest under applicable law. "Secured Obligations"
means (i) the rights of each Certificateholder to be paid any amount owed to it
under this Agreement, (ii) all other obligations of the Seller under this
Agreement and (iii) the right of the Certificateholders to the Mortgage Loans.

         (b) The Seller, and, at the Seller's direction, the Master Servicer and
the Trustee, shall, to the extent consistent with this Agreement, take such
reasonable actions as may be necessary to ensure that, if this Agreement were
deemed to create a security interest in the Mortgage Loans and the other Trust
Fund property described above, such security interest would be deemed to be a
perfected security interest of first priority as applicable. The Master Servicer
shall file, at its expense, all filings necessary to maintain the effectiveness
of any original filings necessary under the Uniform Commercial Code as in effect
in any jurisdiction to perfect the Trustee's security interest in or lien on the
Mortgage Loans, including without limitation (i) continuation statements, (ii)
such other statements as may be occasioned by any transfer of any interest of
the Master Servicer or the Seller in any Mortgage Loan; and filings necessary as
a result in any change in the UCC.

         SECTION 11.05 NOTICES.

         In addition to other notices provided under this Agreement, the Trustee
shall notify the Rating Agencies in writing of: (a) any amendment of this
Agreement pursuant to 11.01; (b) the final payment of any amounts owing to a
Class of Certificates; (c) any Event of Default of which a Responsible Officer
has actual knowledge under this Agreement; and (d) in the event any Mortgage
Loan is repurchased in accordance with this Agreement; and (e) the appointment
of any successor to the Master Servicer.

         All directions, demands and notices hereunder shall be in writing
(except where also required to be given telephonically) and shall be deemed to
have been duly given when received (i) in the case of the Seller, Structured
Asset Mortgage Investments Inc., 245 Park Avenue, New York, New York 10167,
Attention: Legal Department; (ii) in the case of the Trustee, Bankers Trust
Company of California, N.A., 1761 East St. Andrew Place, Santa Ana, California
92705, Attention: Trust Administration WA0102 or such other address as may
hereafter be furnished to the Seller, the Mortgage Loan Seller and the Master
Servicer in writing by the Trustee; (iii) in the case of the Mortgage Loan
Seller or Master Servicer, Washington Mutual Bank, FA, 540 E. Main Street,
Stockton, California 95290, Attention: Jess G. Almanza and to 9451 Corbin
Avenue, Northridge, California 91324, Attention: Gabriel V. Barroso (with a copy
to 9200 Oakdale Avenue, Chatsworth, California 91311, Attention: Fay L. Chapman,
Senior Executive Vice President); and (iv) in the case of the Rating Agencies,
Moody's Investors Service, Inc., 99 Church Street, New York, New York 10007,
Attention: Mortgage-Backed Securities Rating Group; and Fitch Inc., One State
Street, 30th Floor, New York, New York 10004. Notices given by telecopy shall be
deemed received when request is confirmed by telephone. Notices of default are
also required to be given by registered mail. Notices to Certificateholders
shall be deemed given when mailed, first class postage prepaid.



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         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 LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS.

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

         (b) No Certificateholder shall have any right to vote (except as
provided 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.

         (c) No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Agreement,
unless such Holder previously shall have given to the Trustee a written notice
of an Event of Default and of the continuance thereof, as provided herein, and
unless the Holders of Certificates evidencing not less than 25% of the Voting
Interests evidenced by the Certificates shall also have made written request
upon the Trustee to institute such action, suit or proceeding in its own name as
Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses, and liabilities to be
incurred therein or thereby, and the Trustee, for 60 days after its receipt of
such notice, request and offer of indemnity, shall have neglected or refused to
institute any such action, suit or proceeding; it being understood and intended,
and being expressly covenanted by each 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 or by availing itself or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the Holders of any other of the 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
common benefit of all Certificateholders. For the protection and enforcement of
the provisions of this Section 11.07, each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.



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         SECTION 11.08 CERTIFICATES NONASSESSABLE AND FULLY PAID.

         It is the intention of the Seller that Certificateholders shall not be
personally liable for obligations of the Trust Fund, that the interests in the
Trust Fund represented by the Certificates shall be nonassessable for any reason
whatsoever, and that the Certificates, upon due authentication thereof by the
Trustee pursuant to this Agreement, are and shall be deemed fully paid.



                                       102

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         IN WITNESS WHEREOF, the Seller, the Mortgage Loan Seller and Master
Servicer and the Trustee have caused their names to be signed hereto by their
respective officers thereunto duly authorized all as of the 24th day of May,
2001.

                                                STRUCTURED ASSET MORTGAGE
                                                INVESTMENTS INC.,
                                                as Seller

                                                By:_____________________________
                                                Name:
                                                Title:


                                                WASHINGTON MUTUAL BANK, FA,
                                                as Mortgage Loan Seller and
                                                Master Servicer

                                                By:_____________________________
                                                Name:
                                                Title:


                                                BANKERS TRUST COMPANY OF
                                                CALIFORNIA, N.A.,
                                                not in its individual capacity,
                                                but solely as Trustee

                                                By:_____________________________
                                                Name:
                                                Title:



                                       103

<PAGE>



STATE OF CALIFORNIA   )
                      :  ss.:
COUNTY OF             )

         On this _____ day of May, 2001, before me, personally appeared
________________ _______________________, known to me to be a
_____________________________ of Bankers Trust Company of California, N.A., that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said bank, and acknowledged to me that such bank
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]




                                       104

<PAGE>



STATE OF NEW YORK      )
                       :  ss.:
COUNTY OF NEW YORK     )

         On the _____ day of May, 2001, before me, personally appeared
________________ ____________________, known to me to be a
______________________________ of Structured Asset Mortgage Investments Inc.,
one of the corporations that executed the within instrument and also known to me
to be the person who executed it on behalf of said corporation, and acknowledged
to me that such corporation executed the within instrument.

         IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.


                                                 _______________________________
                                                 Notary Public

[NOTARIAL SEAL]



                                       105

<PAGE>



STATE OF WASHINGTON    )
                       :  ss.:
COUNTY OF              )

         On the ____ day of May, 2001, before me, a Notary Public in and for
said State, personally appeared _____________________________, known to me to be
a the _________________ of Washington Mutual Bank, FA, the federally chartered
savings association, that executed the within instrument and also known to me to
be the person who executed it on behalf of said bank, and acknowledged to me
that such bank 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]




                                       106

<PAGE>



                                    EXHIBIT A

                           FORM OF CLASS A CERTIFICATE

                  SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE").

                  THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE
DECREASED BY THE PRINCIPAL PAYMENTS HEREON AND REALIZED LOSSES ALLOCABLE HERETO.
ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE CURRENT
PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DIFFERENT FROM THE DENOMINATION
SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT
PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE NAMED HEREIN.

                  UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS
MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.



                                       A-1

<PAGE>



Certificate No. __                   Variable Pass-Through Rate

Class A Senior                       Percentage Interest: ___%

Date of Pooling and Servicing        Aggregate Initial Current Principal Amount
Agreement and Cut-off Date:          of this Certificate as of the Cut-off Date:
May 1, 2001                          $______________

First Distribution Date:             Initial Current Principal Amount of this
June 25, 2001                        Certificate as of the Cut-off Date:
                                     $____________

Master Servicer:
Washington Mutual Bank, FA

Assumed Final Distribution Date:     CUSIP __________
May 25, 2041


                        MORTGAGE PASS-THROUGH CERTIFICATE
                                  SERIES 2001-7

         evidencing a percentage interest in the distributions
         allocable to the Class A Certificates with respect to a Trust
         Fund consisting primarily of a pool of conventional one- to
         four-family adjustable interest rate mortgage loans sold by
         STRUCTURED ASSET MORTGAGE INVESTMENTS INC.

                  This Certificate is payable solely from the assets of the
Trust Fund, and does not represent an obligation of or interest in Structured
Asset Mortgage Investments Inc., the Master Servicer or the Trustee referred to
below or any of their affiliates or any other person. Neither this Certificate
nor the underlying Mortgage Loans are guaranteed or insured by any governmental
entity or by Structured Asset Mortgage Investments Inc., the Master Servicer or
the Trustee or any of their affiliates or any other person. None of Structured
Asset Mortgage Investments Inc., the Master Servicer or any of their affiliates
will have any obligation with respect to any certificate or other obligation
secured by or payable from payments on the Certificates.

                  This certifies that ________ is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
Initial Current Principal Amount of this Certificate by the aggregate Initial
Current Principal Amount of all Class A Certificates, both as specified above)
in the beneficial ownership interest of Certificates of the same Class as this
Certificate in a trust (the "Trust Fund") generally consisting of conventional
first lien, adjustable rate mortgages loans secured by one- to four- family
residences, units in planned unit developments and individual condominium units
(collectively, the "Mortgage Loans") sold by Structured Asset Mortgage
Investments Inc. ("SAMI"). The Mortgage Loans were sold by Washington Mutual
Bank, FA (in such capacity, the "Mortgage Loan Seller") to SAMI. Washington
Mutual Bank, FA will act as master servicer of the Mortgage Loans (in such
capacity, the "Master Servicer," which term includes any successors thereto
under the Agreement referred to below). The Trust Fund was created


                                       A-2

<PAGE>



pursuant to the Pooling and Servicing Agreement dated as of the Cut-off Date
specified above (the "Agreement"), between SAMI, as seller (the "Seller"), the
Master Servicer, and Bankers Trust Company of California, N.A., as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, capitalized terms used herein
shall have the meaning ascribed to them in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of its
acceptance hereof assents and by which such Holder is bound.

               Interest on this Certificate will accrue during the month prior
to the month in which a Distribution Date (as hereinafter defined) occurs on the
Current Principal Amount hereof at a per annum rate equal to the Pass-Through
Rate set forth above. The Trustee will distribute on the 25th day of each month,
or, if such 25th day is not a Business Day, the immediately following Business
Day (each, a "Distribution Date"), commencing on the First Distribution Date
specified above, to the Person in whose name this Certificate is registered at
the close of business on the last Business Day (or if such last day is not a
Business Day, the Business Day immediately preceding such last day) of the
calendar month preceding the month of such Distribution Date, an amount equal to
the product of the Percentage Interest evidenced by this Certificate and the
amount (of interest and principal, if any) required to be distributed to the
Holders of Certificates of the same Class as this Certificate. The Assumed Final
Distribution Date is the first anniversary of the Distribution Date immediately
following the latest scheduled maturity date of any Mortgage Loan and is not
likely to be the date on which the Current Principal Amount of this Class of
Certificates will be reduced to zero.

               Distributions on this Certificate will be made by the Trustee by
check mailed to the address of the Person entitled thereto as such name and
address shall appear on the Certificate Register or, if such Person so requests
by notifying the Trustee in writing as specified in the Agreement.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose and designated in such notice. The
Initial Current Principal Amount of this Certificate is set forth above. The
Current Principal Amount hereof will be reduced to the extent of distributions
allocable to principal hereon and any Realized Losses allocable hereto.

               This Certificate is one of a duly authorized issue of
Certificates designated as set forth on the face hereof (the "Certificates"),
issued in eight Classes. The Certificates, in the aggregate, evidence the entire
beneficial ownership interest in the Trust Fund formed pursuant to the
Agreement.

               The Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the Trust Fund for payment hereunder and that
the Trustee is not liable to the Certificateholders for any amount payable under
this Certificate or the Agreement or, except as expressly provided in the
Agreement, subject to any liability under the Agreement.



                                       A-3

<PAGE>



               This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.

               The Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of the
Seller, the Mortgage Loan Seller and the Master Servicer and the rights of the
Certificateholders under the Agreement from time to time by the Seller, the
Mortgage Loan Seller, the Master Servicer and the Trustee with the consent of
the Holders of Certificates evidencing Voting Interests aggregating not less
than 66-2/3% (or in certain cases, Holders of Certificates of affected Classes
evidencing such percentage of the Voting Interests thereof). Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

               As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable with the
Trustee upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Trustee for such purposes, duly endorsed
by, or accompanied by a written instrument of transfer in form satisfactory to
the Trustee duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates in authorized
denominations representing a like aggregate Percentage Interest will be issued
to the designated transferee.

               The Certificates are issuable only as registered Certificates
without coupons in the Classes and denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set forth,
this Certificate is exchangeable for one or more new Certificates evidencing the
same Class and in the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

               No service charge will be made to the Certificateholders for any
such registration of transfer, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. The Seller, the Master Servicer, the Trustee and any agent of any of
them may treat the Person in whose name this Certificate is registered as the
owner hereof for all purposes, and none of Seller, the Master Servicer, the
Trustee or any such agent shall be affected by notice to the contrary.

               The obligations created by the Agreement and the Trust Fund
created thereby (other than the obligations to make payments to
Certificateholders with respect to the termination of the Agreement) shall
terminate upon the earlier of (i) the later of the (A) final payment or other
liquidation (or Advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund and (B) disposition of all property acquired upon
foreclosure or deed in lieu of foreclosure of any Mortgage Loan and the
remittance of all funds due under the Agreement, or (ii) the optional repurchase
by the party named in the Agreement of all the Mortgage Loans and other assets
of the Trust Fund in accordance with the terms of the Agreement. Such optional
repurchase may be made only on or after the Distribution Date on which the
aggregate scheduled principal balance of the


                                       A-4

<PAGE>



Mortgage Loans is less than the percentage of the aggregate Scheduled Principal
Balance specified in the Agreement of the Mortgage Loans at the Cut-off Date.
The exercise of such right will effect the early retirement of the Certificates.
In no event, however, will the Trust Fund created by the Agreement continue
beyond the expiration of 21 years after the death of certain persons identified
in the Agreement.

               Unless this Certificate has been countersigned by an authorized
signatory of the Trustee by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement, or be valid for any purpose.


                                       A-5

<PAGE>



               IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.


Dated: May __, 2001                   BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
                                             Not in its individual capacity but
                                             solely as Trustee


                                      By:_______________________________________
                                                     Authorized Signatory



                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

               This is one of the Class A Certificates referred to in the
within-mentioned Agreement.

                                        BANKERS TRUST COMPANY OF CALIFORNIA,
                                        N.A.
                                        Authorized signatory of Bankers Trust
                                        Company of California, N.A., not in its
                                        individual capacity but solely as
                                        Trustee


                                        By:_____________________________________
                                                    Authorized Signatory




                                       A-6

<PAGE>



                                   ASSIGNMENT
                                   ----------


               FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto (Please print or typewrite name and address including postal
zip code of assignee) a Percentage Interest evidenced by the within Mortgage
Pass- Through Certificate and hereby authorizes the transfer of registration of
such interest to assignee on the Certificate Register of the Trust Fund.

               I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:______________________________

________________________________________________________________________________

________________________________________________________________________________




Dated:                 _________________________________________________________
                              Signature by or on behalf of assignor



                                             -----------------------------------
                                                     Signature Guaranteed

                            DISTRIBUTION INSTRUCTIONS

               The assignee should include the following for purposes of
distribution:

               Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
for the account of _______________________________ account number __________,
or, if mailed by check, to _________________________________________. Applicable
statements should be mailed to ________________________________________________.

               This information is provided by ______________________, the
assignee named above, or ____________________________, as its agent.





<PAGE>



                                    EXHIBIT B

                   FORM OF CLASS M-1, M-2 AND M-3 CERTIFICATE

               SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS
A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE").

               THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE
DECREASED BY THE PRINCIPAL PAYMENTS HEREON AND ANY REALIZED LOSSES ALLOCABLE
HERETO. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE
CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DIFFERENT FROM THE
DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS
CURRENT PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE NAMED HEREIN.

               UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS
MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.



                                       B-1

<PAGE>



Certificate No. __                   Variable Pass-Through Rate

Class M-__                           Percentage Interest: ___%

Date of Pooling and Servicing        Aggregate Initial Current Principal of this
Agreement and Cut-off Date:          Certificate as of the Cut-off Date:
May 1, 2001                          $__________

First Distribution Date:             Initial Current Principal Amount of this
June 25, 2001                        Certificate as of the Cut-off Date:
                                     $____________

Master Servicer:
Washington Mutual Bank, FA

Assumed Final Distribution Date:     CUSIP ___________
May 25, 2041


                        MORTGAGE PASS-THROUGH CERTIFICATE
                                  SERIES 2001-7

        evidencing a percentage interest in the distributions
        allocable to the Class M-__ Certificates with respect to a
        Trust Fund consisting primarily of a pool of conventional one-
        to four-family adjustable interest rate mortgage loans sold by
        STRUCTURED ASSET MORTGAGE INVESTMENTS INC.

               This Certificate is payable solely from the assets of the Trust
Fund, and does not represent an obligation of or interest in Structured Asset
Mortgage Investments Inc., the Master Servicer or the Trustee referred to below
or any of their affiliates or any other person. Neither this Certificate nor the
underlying Mortgage Loans are guaranteed or insured by any governmental entity
or by Structured Asset Mortgage Investments Inc., the Master Servicer or the
Trustee or any of their affiliates or any other person. None of Structured Asset
Mortgage Investments Inc., the Master Servicer or any of their affiliates will
have any obligation with respect to any certificate or other obligation secured
by or payable from payments on the Certificates.

               This certifies that ________ is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
Initial Current Principal Amount of this Certificate by the aggregate Initial
Current Principal Amount of all Class M-__ Certificates, both as specified
above) in the beneficial ownership interest of Certificates of the same Class as
this Certificate in a trust (the "Trust Fund") generally consisting of
conventional first lien, adjustable rate mortgages loans secured by one- to
four- family residences, units in planned unit developments and individual
condominium units (collectively, the "Mortgage Loans") sold by Structured Asset
Mortgage Investments Inc. ("SAMI"). The Mortgage Loans were sold by Washington
Mutual Bank, FA (in such capacity, the "Mortgage Loan Seller") to SAMI.
Washington Mutual Bank, FA will act as master servicer of the Mortgage Loans (in
such capacity, the "Master Servicer," which term includes any successors thereto
under the Agreement referred to below). The Trust Fund was created


                                       B-2

<PAGE>



pursuant to the Pooling and Servicing Agreement dated as of the Cut-off Date
specified above (the "Agreement"), between SAMI, as seller (the "Seller"), the
Master Servicer, and Bankers Trust Company of California, N.A., as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, capitalized terms used herein
shall have the meaning ascribed to them in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of its
acceptance hereof assents and by which such Holder is bound.

               Interest on this Certificate will accrue during the month prior
to the month in which a Distribution Date (as hereinafter defined) occurs on the
Current Principal Amount hereof at a per annum rate equal to the Pass-Through
Rate set forth above. The Trustee will distribute on the 25th day of each month,
or, if such 25th day is not a Business Day, the immediately following Business
Day (each, a "Distribution Date"), commencing on the First Distribution Date
specified above, to the Person in whose name this Certificate is registered at
the close of business on the last Business Day (or if such last day is not a
Business Day, the Business Day immediately preceding such last day) of the
calendar month preceding the month of such Distribution Date, an amount equal to
the product of the Percentage Interest evidenced by this Certificate and the
amount (of interest and principal, if any) required to be distributed to the
Holders of Certificates of the same Class as this Certificate. The Assumed Final
Distribution Date is the first anniversary of the Distribution Date immediately
following the latest scheduled maturity date of any Mortgage Loan and is not
likely to be the date on which the Current Principal Amount of this Class of
Certificates will be reduced to zero.

               Distributions on this Certificate will be made by the Trustee by
check mailed to the address of the Person entitled thereto as such name and
address shall appear on the Certificate Register or, if such Person so requests
by notifying the Trustee in writing as specified in the Agreement.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose and designated in such notice. The
Initial Current Principal Amount of this Certificate is set forth above. The
Current Principal Amount hereof will be reduced to the extent of distributions
allocable to principal hereon and any Realized Losses allocable hereto.

               This Certificate is one of a duly authorized issue of
Certificates designated as set forth on the face hereof (the "Certificates"),
issued in eight Classes. The Certificates, in the aggregate, evidence the entire
beneficial ownership interest in the Trust Fund formed pursuant to the
Agreement.

               The Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the Trust Fund for payment hereunder and that
the Trustee is not liable to the Certificateholders for any amount payable under
this Certificate or the Agreement or, except as expressly provided in the
Agreement, subject to any liability under the Agreement.



                                       B-3

<PAGE>



               This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.

               The Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of the
Seller, the Mortgage Loan Seller and the Master Servicer and the rights of the
Certificateholders under the Agreement from time to time by the Seller, the
Mortgage Loan Seller, the Master Servicer and the Trustee with the consent of
the Holders of Certificates evidencing Voting Interests aggregating not less
than 66-2/3% (or in certain cases, Holders of Certificates of affected Classes
evidencing such percentage of the Voting Interests thereof). Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

               As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable with the
Trustee upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Trustee for such purposes, duly endorsed
by, or accompanied by a written instrument of transfer in form satisfactory to
the Trustee duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates in authorized
denominations representing a like aggregate Percentage Interest will be issued
to the designated transferee.

               The Certificates are issuable only as registered Certificates
without coupons in the Classes and denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set forth,
this Certificate is exchangeable for one or more new Certificates evidencing the
same Class and in the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

               No service charge will be made to the Certificateholders for any
such registration of transfer, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. The Seller, the Master Servicer, the Trustee and any agent of any of
them may treat the Person in whose name this Certificate is registered as the
owner hereof for all purposes, and none of the Seller, the Master Servicer, the
Trustee or any such agent shall be affected by notice to the contrary.

               The obligations created by the Agreement and the Trust Fund
created thereby (other than the obligations to make payments to
Certificateholders with respect to the termination of the Agreement) shall
terminate upon the earlier of (i) the later of the (A) final payment or other
liquidation (or Advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund and (B) disposition of all property acquired upon
foreclosure or deed in lieu of foreclosure of any Mortgage Loan and the
remittance of all funds due under the Agreement, or (ii) the optional repurchase
by the party named in the Agreement of all the Mortgage Loans and other assets
of the Trust Fund in accordance with the terms of the Agreement. Such optional
repurchase may be made only on or after the Distribution Date on which the
aggregate scheduled principal balance of the


                                       B-4

<PAGE>



Mortgage Loans is less than the percentage of the aggregate Scheduled Principal
Balance specified in the Agreement of the Mortgage Loans at the Cut-off Date.
The exercise of such right will effect the early retirement of the Certificates.
In no event, however, will the Trust Fund created by the Agreement continue
beyond the expiration of 21 years after the death of certain persons identified
in the Agreement.

               Unless this Certificate has been countersigned by an authorized
signatory of the Trustee by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement, or be valid for any purpose.


                                       B-5

<PAGE>



               IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.


Dated: May __, 2001                   BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
                                             Not in its individual capacity but
                                             solely as Trustee


                                      By:_______________________________________
                                                     Authorized Signatory



                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

               This is one of the Class M-__ Certificates referred to in the
within-mentioned Agreement.

                                        BANKERS TRUST COMPANY OF CALIFORNIA,
                                        N.A.
                                        Authorized signatory of Bankers Trust
                                        Company of California, N.A., not in its
                                        individual capacity but solely as
                                        Trustee


                                        By:_____________________________________
                                                    Authorized Signatory




                                       B-6

<PAGE>



                                   ASSIGNMENT
                                   ----------


               FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto (Please print or typewrite name and address including postal
zip code of assignee) a Percentage Interest evidenced by the within Mortgage
Pass- Through Certificate and hereby authorizes the transfer of registration of
such interest to assignee on the Certificate Register of the Trust Fund.

               I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:______________________________

________________________________________________________________________________

________________________________________________________________________________




Dated:                 _________________________________________________________
                              Signature by or on behalf of assignor



                                             -----------------------------------
                                                     Signature Guaranteed

                            DISTRIBUTION INSTRUCTIONS

               The assignee should include the following for purposes of
distribution:

               Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
for the account of _______________________________ account number __________,
or, if mailed by check, to _________________________________________. Applicable
statements should be mailed to ________________________________________________.

               This information is provided by ______________________, the
assignee named above, or ____________________________, as its agent.





                                       B-7

<PAGE>



                                    EXHIBIT C

                   FORM OF CLASS B-1, B-2 AND B-3 CERTIFICATE

               SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS
A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE").

               THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE
DECREASED BY THE PRINCIPAL PAYMENTS HEREON AND ANY REALIZED LOSSES ALLOCABLE
HERETO. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE
CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DIFFERENT FROM THE
DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS
CURRENT PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE NAMED HEREIN.

               THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY
STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES
THAT THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED
ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND ONLY
(1) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON
THAT THE HOLDER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN
THE MEANING OF RULE 144A (A "QIB"), PURCHASING FOR ITS OWN ACCOUNT OR A QIB
PURCHASING FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS INFORMED, IN EACH CASE,
THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
UNDER THE SECURITIES ACT (IF AVAILABLE) OR (3) IN CERTIFICATED FORM TO AN
"INSTITUTIONAL ACCREDITED INVESTOR" WITHIN THE MEANING THEREOF IN RULE
501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE ACT OR ANY ENTITY IN WHICH
ALL OF THE EQUITY OWNERS COME WITHIN SUCH PARAGRAPHS PURCHASING NOT FOR
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, SUBJECT TO (A) THE RECEIPT BY
THE TRUSTEE OF A LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE AGREEMENT AND
(B) THE RECEIPT BY THE TRUSTEE OF SUCH OTHER EVIDENCE ACCEPTABLE TO THE TRUSTEE
THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT AND OTHER APPLICABLE LAWS OR IN EACH CASE IN ACCORDANCE WITH ALL
APPLICABLE SECURITIES LAWS OF THE UNITED STATES AND ANY OTHER APPLICABLE
JURISDICTION.

               THIS CERTIFICATE MAY NOT BE ACQUIRED DIRECTLY OR INDIRECTLY BY,
OR ON BEHALF OF, AN EMPLOYEE BENEFIT PLAN OR OTHER


                                       C-1

<PAGE>



RETIREMENT ARRANGEMENT WHICH IS SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED, AND/OR SECTION 4975 OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED, UNLESS SUCH PERSON PROVIDES A CERTIFICATE
SUBSTANTIALLY IN THE FORM OF EXHIBIT J TO THE EFFECT THAT THE PROPOSED TRANSFER
AND/OR HOLDING OF A CERTIFICATE AND THE SERVICING, MANAGEMENT AND/OR OPERATION
OF THE TRUST AND ITS ASSETS: (I) WILL NOT RESULT IN ANY PROHIBITED TRANSACTION
WHICH IS NOT COVERED UNDER AN INDIVIDUAL OR CLASS PROHIBITED TRANSACTION
EXEMPTION, INCLUDING, BUT NOT LIMITED TO, PROHIBITED TRANSACTION EXEMPTION
("PTE") 84-14, PTE 91-38, PTE 90-1, PTE 95-60 OR PTE 96-23 AND (II) WILL NOT
GIVE RISE TO ANY ADDITIONAL FIDUCIARY OBLIGATIONS ON THE PART OF THE SELLER, THE
MASTER SERVICER OR THE TRUSTEE, WHICH WILL BE EVIDENCED BY A REPRESENTATION OR
AN OPINION OF COUNSEL TO SUCH EFFECT BY OR ON BEHALF OF AN INSTITUTIONAL
ACCREDITED INVESTOR.



                                       C-2

<PAGE>



Certificate No. __                  Variable Pass-Through Rate

Class B-__                          Percentage Interest: ___%

Date of Pooling and Servicing       Aggregate Initial Current Principal of this
Agreement and Cut-off Date:         Certificate as of the Cut-off Date:
May 1, 2001                         $___________

First Distribution Date:            Initial Current Principal Amount of this
June 25, 2001                       Certificate as of the Cut-off Date:
                                    $______________

Master Servicer:
Washington Mutual Bank, FA

Assumed Final Distribution Date:    CUSIP _________
May 25, 2041


                        MORTGAGE PASS-THROUGH CERTIFICATE
                                  SERIES 2001-7

        evidencing a percentage interest in the distributions
        allocable to the Class B-__ Certificates with respect to a
        Trust Fund consisting primarily of a pool of conventional one-
        to four-family adjustable interest rate mortgage loans sold by
        STRUCTURED ASSET MORTGAGE INVESTMENTS INC.

               This Certificate is payable solely from the assets of the Trust
Fund, and does not represent an obligation of or interest in Structured Asset
Mortgage Investments Inc., the Master Servicer or the Trustee referred to below
or any of their affiliates or any other person. Neither this Certificate nor the
underlying Mortgage Loans are guaranteed or insured by any governmental entity
or by Structured Asset Mortgage Investments Inc., the Master Servicer or the
Trustee or any of their affiliates or any other person. None of Structured Asset
Mortgage Investments Inc., the Master Servicer or any of their affiliates will
have any obligation with respect to any certificate or other obligation secured
by or payable from payments on the Certificates.

               This certifies that ________ is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
Initial Current Principal Amount of this Certificate by the aggregate Initial
Current Principal Amount of all Class B-__ Certificates, both as specified
above) in the beneficial ownership interest of Certificates of the same Class as
this Certificate in a trust (the "Trust Fund") generally consisting of
conventional first lien, adjustable rate mortgages loans secured by one- to
four- family residences, units in planned unit developments and individual
condominium units (collectively, the "Mortgage Loans") sold by Structured Asset
Mortgage Investments Inc. ("SAMI"). The Mortgage Loans were sold by Washington
Mutual Bank, FA (in such capacity, the "Mortgage Loan Seller") to SAMI.
Washington Mutual Bank, FA will act as master servicer of the Mortgage Loans (in
such capacity, the "Master Servicer," which term includes any successors thereto
under the Agreement referred to below). The Trust Fund was created


                                       C-3

<PAGE>



pursuant to the Pooling and Servicing Agreement dated as of the Cut-off Date
specified above (the "Agreement"), between SAMI, as seller (the "Seller"), the
Master Servicer, and Bankers Trust Company of California, N.A., as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, capitalized terms used herein
shall have the meaning ascribed to them in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of its
acceptance hereof assents and by which such Holder is bound.

               Interest on this Certificate will accrue during the month prior
to the month in which a Distribution Date (as hereinafter defined) occurs on the
Current Principal Amount hereof at a per annum rate equal to the Pass-Through
Rate set forth above. The Trustee will distribute on the 25th day of each month,
or, if such 25th day is not a Business Day, the immediately following Business
Day (each, a "Distribution Date"), commencing on the First Distribution Date
specified above, to the Person in whose name this Certificate is registered at
the close of business on the last Business Day (or if such last day is not a
Business Day, the Business Day immediately preceding such last day) of the
calendar month preceding the month of such Distribution Date, an amount equal to
the product of the Percentage Interest evidenced by this Certificate and the
amount (of interest and principal, if any) required to be distributed to the
Holders of Certificates of the same Class as this Certificate. The Assumed Final
Distribution Date is the first anniversary of the Distribution Date immediately
following the latest scheduled maturity date of any Mortgage Loan and is not
likely to be the date on which the Current Principal Amount of this Class of
Certificates will be reduced to zero.

               Distributions on this Certificate will be made by the Trustee by
check mailed to the address of the Person entitled thereto as such name and
address shall appear on the Certificate Register or, if such Person so requests
by notifying the Trustee in writing as specified in the Agreement.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose and designated in such notice. The
Initial Current Principal Amount of this Certificate is set forth above. The
Current Principal Amount hereof will be reduced to the extent of distributions
allocable to principal hereon and any Realized Losses allocable hereto.

               This Certificate may not be acquired directly or indirectly by,
or on behalf of, an employee benefit plan or other retirement arrangement which
is subject to Title I of the Employee Retirement Income Security Act of 1974, as
amended, and/or Section 4975 of the Internal Revenue Code of 1986, as amended,
unless such person provides a certificate substantially in the form of Exhibit J
to the effect that the proposed transfer and/or holding of a Certificate and the
servicing, management and/or operation of the trust and its assets: (i) will not
result in any prohibited transaction which is not covered under an individual or
class prohibited transaction exemption, including, but not limited to,
Prohibited Transaction Exemption ("PTE") 84-14, PTE 91-38, PTE 90-1, PTE 95-60
or PTE 96-23 and (ii) will not give rise to any additional fiduciary obligations
on the part of the Seller, the Master Servicer or the Trustee, which will be
evidenced by a representation or an Opinion of Counsel to such effect by or on
behalf of an Institutional Accredited Investor.



                                       C-4

<PAGE>



               This Certificate is one of a duly authorized issue of
Certificates designated as set forth on the face hereof (the "Certificates"),
issued in eight Classes. The Certificates, in the aggregate, evidence the entire
beneficial ownership interest in the Trust Fund formed pursuant to the
Agreement.

               The Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the Trust Fund for payment hereunder and that
the Trustee is not liable to the Certificateholders for any amount payable under
this Certificate or the Agreement or, except as expressly provided in the
Agreement, subject to any liability under the Agreement.

               This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.

               The Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of the
Seller, the Mortgage Loan Seller and the Master Servicer and the rights of the
Certificateholders under the Agreement from time to time by the Seller, the
Mortgage Loan Seller, the Master Servicer and the Trustee with the consent of
the Holders of Certificates evidencing Voting Interests aggregating not less
than 66-2/3% (or in certain cases, Holders of Certificates of affected Classes
evidencing such percentage of the Voting Interests thereof). Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

               As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable with the
Trustee upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Trustee for such purposes, duly endorsed
by, or accompanied by a written instrument of transfer in form satisfactory to
the Trustee duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates in authorized
denominations representing a like aggregate Percentage Interest will be issued
to the designated transferee.

               The Certificates are issuable only as registered Certificates
without coupons in the Classes and denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set forth,
this Certificate is exchangeable for one or more new Certificates evidencing the
same Class and in the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

               No service charge will be made to the Certificateholders for any
such registration of transfer, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. The Seller, the Master Servicer, the Trustee and any agent of any of
them may treat the Person in whose name this Certificate is registered as the
owner hereof for all purposes, and none of the Seller, the Master Servicer, the
Trustee or any such agent shall be affected by notice to the contrary.


                                       C-5

<PAGE>



               The obligations created by the Agreement and the Trust Fund
created thereby (other than the obligations to make payments to
Certificateholders with respect to the termination of the Agreement) shall
terminate upon the earlier of (i) the later of the (A) final payment or other
liquidation (or Advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund and (B) disposition of all property acquired upon
foreclosure or deed in lieu of foreclosure of any Mortgage Loan and the
remittance of all funds due under the Agreement, or (ii) the optional repurchase
by the party named in the Agreement of all the Mortgage Loans and other assets
of the Trust Fund in accordance with the terms of the Agreement. Such optional
repurchase may be made only on or after the Distribution Date on which the
aggregate scheduled principal balance of the Mortgage Loans is less than the
percentage of the aggregate Scheduled Principal Balance specified in the
Agreement of the Mortgage Loans at the Cut-off Date. The exercise of such right
will effect the early retirement of the Certificates. In no event, however, will
the Trust Fund created by the Agreement continue beyond the expiration of 21
years after the death of certain persons identified in the Agreement.

               Unless this Certificate has been countersigned by an authorized
signatory of the Trustee by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement, or be valid for any purpose.


                                       C-6

<PAGE>



               IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.


Dated: May __, 2001                   BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
                                             Not in its individual capacity but
                                             solely as Trustee


                                      By:_______________________________________
                                                     Authorized Signatory



                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

               This is one of the Class B-__ Certificates referred to in the
within-mentioned Agreement.

                                        BANKERS TRUST COMPANY OF CALIFORNIA,
                                        N.A.
                                        Authorized signatory of Bankers Trust
                                        Company of California, N.A., not in its
                                        individual capacity but solely as
                                        Trustee


                                        By:_____________________________________
                                                    Authorized Signatory




                                       C-7

<PAGE>



                                   ASSIGNMENT
                                   ----------


               FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto (Please print or typewrite name and address including postal
zip code of assignee) a Percentage Interest evidenced by the within Mortgage
Pass- Through Certificate and hereby authorizes the transfer of registration of
such interest to assignee on the Certificate Register of the Trust Fund.

               I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:______________________________

________________________________________________________________________________

________________________________________________________________________________




Dated:                 _________________________________________________________
                              Signature by or on behalf of assignor



                                             -----------------------------------
                                                     Signature Guaranteed

                            DISTRIBUTION INSTRUCTIONS

               The assignee should include the following for purposes of
distribution:

               Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
for the account of _______________________________ account number __________,
or, if mailed by check, to _________________________________________. Applicable
statements should be mailed to ________________________________________________.

               This information is provided by ______________________, the
assignee named above, or ____________________________, as its agent.





                                       C-8

<PAGE>



                                    EXHIBIT D

                           FORM OF CLASS R CERTIFICATE

               THIS CERTIFICATE MAY NOT BE HELD BY OR TRANSFERRED TO A
NON-UNITED STATES PERSON, A PUBLICLY TRADED PARTNERSHIP OR A DISQUALIFIED
ORGANIZATION (AS DEFINED BELOW).

               SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS
A "RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE").

               THIS CERTIFICATE MAY NOT BE ACQUIRED DIRECTLY OR INDIRECTLY BY,
OR ON BEHALF OF, AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT WHICH
IS SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED, AND/OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED,
UNLESS THE PROPOSED TRANSFER AND/OR HOLDING OF A CERTIFICATE AND THE SERVICING,
MANAGEMENT AND/OR OPERATION OF THE TRUST AND ITS ASSETS: (I) WILL NOT RESULT IN
ANY PROHIBITED TRANSACTION WHICH IS NOT COVERED UNDER AN INDIVIDUAL OR CLASS
PROHIBITED TRANSACTION EXEMPTION, INCLUDING, BUT NOT LIMITED TO, PROHIBITED
TRANSACTION EXEMPTION ("PTE") 84-14, PTE 91-38, PTE 90-1, PTE 95-60 OR PTE 96-23
AND (II) WILL NOT GIVE RISE TO ANY ADDITIONAL FIDUCIARY OBLIGATIONS ON THE PART
OF THE SELLER, THE MASTER SERVICER OR THE TRUSTEE, WHICH WILL BE EVIDENCED BY AN
OPINION OF COUNSEL TO SUCH EFFECT BY OR ON BEHALF OF AN INSTITUTIONAL ACCREDITED
INVESTOR.

        ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE
MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO THE MASTER
SERVICER AND THE TRUSTEE THAT (1) SUCH TRANSFEREE IS NOT (A) THE UNITED STATES,
ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY FOREIGN GOVERNMENT, ANY
INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE
FOREGOING, (B) ANY ORGANIZATION (OTHER THAN A COOPERATIVE DESCRIBED IN SECTION
521 OF THE CODE) WHICH IS EXEMPT FROM THE TAX IMPOSED BY CHAPTER 1 OF THE CODE
UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE
CODE, (C) ANY ORGANIZATION DESCRIBED IN SECTION 1381(A)(2)(C) OF THE CODE, (ANY
SUCH PERSON DESCRIBED IN THE FOREGOING CLAUSES (A), (B) OR (C) BEING HEREIN
REFERRED TO AS A "DISQUALIFIED ORGANIZATION") OR (D) AN AGENT OF A DISQUALIFIED
ORGANIZATION, (2) NO PURPOSE OF SUCH TRANSFER IS TO IMPEDE THE ASSESSMENT OR
COLLECTION OF TAX AND (3) SUCH TRANSFEREE SATISFIES CERTAIN ADDITIONAL
CONDITIONS RELATING TO THE FINANCIAL



<PAGE>



CONDITION OF THE PROPOSED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN THE
CERTIFICATE REGISTER OR ANY TRANSFER, SALE OR OTHER DISPOSITION OF THIS
CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR AN AGENT OF A DISQUALIFIED
ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR
EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO BE A CERTIFICATEHOLDER
FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF
DISTRIBUTIONS ON THIS CERTIFICATE. EACH HOLDER OF THIS CERTIFICATE BY ACCEPTANCE
OF THIS CERTIFICATE SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS
PARAGRAPH.


                                       D-2

<PAGE>



Certificate No. __                  Variable Pass-Through Rate

Class R Senior                      Percentage Interest: ___%

Date of Pooling and Servicing       Aggregate Initial Current Principal Amount
Agreement and Cut-off Date:         of this Certificate as of the Cut-off Date:
May 1, 2001                         $______

First Distribution Date:            Initial Current Principal Amount of this
June 25, 2001                       Certificate as of the Cut-off Date: $_____

Master Servicer:
Washington Mutual Bank, FA

Assumed Final Distribution Date:    CUSIP ___________
May 25, 2041




                        MORTGAGE PASS-THROUGH CERTIFICATE
                                  SERIES 2001-7

        evidencing a percentage interest in the distributions
        allocable to the Class R Certificates with respect to a Trust
        Fund consisting primarily of a pool of conventional one- to
        four-family adjustable interest rate mortgage loans sold by
        STRUCTURED ASSET MORTGAGE INVESTMENTS INC.

               This Certificate is payable solely from the assets of the Trust
Fund, and does not represent an obligation of or interest in Structured Asset
Mortgage Investments Inc., the Master Servicer or the Trustee referred to below
or any of their affiliates or any other person. Neither this Certificate nor the
underlying Mortgage Loans are guaranteed or insured by any governmental entity
or by Structured Asset Mortgage Investments Inc., the Master Servicer or the
Trustee or any of their affiliates or any other person. None of Structured Asset
Mortgage Investments Inc., the Master Servicer or any of their affiliates will
have any obligation with respect to any certificate or other obligation secured
by or payable from payments on the Certificates.

               This certifies that ________ is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
Initial Current Principal Amount of this Certificate by the aggregate Initial
Current Principal Amount of all Class R Certificates, both as specified above)
in the beneficial ownership interest of Certificates of the same Class as this
Certificate in a trust (the "Trust Fund") generally consisting of conventional
first lien, adjustable rate mortgages loans secured by one- to four- family
residences, units in planned unit developments and individual condominium units
(collectively, the "Mortgage Loans") sold by Structured Asset Mortgage
Investments Inc. ("SAMI"). The Mortgage Loans were sold by Washington Mutual
Bank, FA (in such capacity, the "Mortgage Loan Seller") to SAMI. Washington
Mutual Bank, FA will act


                                       D-3

<PAGE>



as master servicer of the Mortgage Loans (in such capacity, the "Master
Servicer," which term includes any successors thereto under the Agreement
referred to below). The Trust Fund was created pursuant to the Pooling and
Servicing Agreement dated as of the Cut-off Date specified above (the
"Agreement"), between SAMI, as seller (the "Seller"), the Master Servicer, and
Bankers Trust Company of California, N.A., as trustee (the "Trustee"), a summary
of certain of the pertinent provisions of which is set forth hereafter. To the
extent not defined herein, capitalized terms used herein shall have the meaning
ascribed to them in the Agreement. This Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Certificate by virtue of its acceptance hereof
assents and by which such Holder is bound.

               Interest on this Certificate will accrue during the month prior
to the month in which a Distribution Date (as hereinafter defined) occurs on the
Current Principal Amount hereof at a per annum rate equal to the Pass-Through
Rate set forth above. The Trustee will distribute on the 25th day of each month,
or, if such 25th day is not a Business Day, the immediately following Business
Day (each, a "Distribution Date"), commencing on the First Distribution Date
specified above, to the Person in whose name this Certificate is registered at
the close of business on the last Business Day (or if such last day is not a
Business Day, the Business Day immediately preceding such last day) of the
calendar month preceding the month of such Distribution Date, an amount equal to
the product of the Percentage Interest evidenced by this Certificate and the
amount (of interest and principal, if any) required to be distributed to the
Holders of Certificates of the same Class as this Certificate. The Assumed Final
Distribution Date is the first anniversary of the Distribution Date immediately
following the latest scheduled maturity date of any Mortgage Loan and is not
likely to be the date on which the Current Principal Amount of this Class of
Certificates will be reduced to zero.

               Distributions on this Certificate will be made by the Trustee by
check mailed to the address of the Person entitled thereto as such name and
address shall appear on the Certificate Register. Notwithstanding the above, the
final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency appointed by the Trustee
for that purpose and designated in such notice. The Initial Current Principal
Amount of this Certificate is set forth above. The Current Principal Amount
hereof will be reduced to the extent of distributions allocable to principal
hereon and any Realized Losses allocable hereto.

               Each Holder of this Certificate will be deemed to have agreed to
be bound by the restrictions set forth in the Agreement to the effect that (i)
each person holding or acquiring any Ownership Interest in this Certificate must
be a United States Person and a Permitted Transferee, (ii) the transfer of any
Ownership Interest in this Certificate will be conditioned upon the delivery to
the Trustee of, among other things, an affidavit to the effect that it is a
United States Person and Permitted Transferee, (iii) any attempted or purported
transfer of any Ownership Interest in this Certificate in violation of such
restrictions will be absolutely null and void and will vest no rights in the
purported transferee, and (iv) if any person other than a United States Person
and a Permitted Transferee acquires any Ownership Interest in this Certificate
in violation of such restrictions, then the Seller will have the right, in its
sole discretion and without notice to the Holder of this


                                       D-4

<PAGE>



Certificate, to sell this Certificate to a purchaser selected by the Company,
which purchaser may be the Seller, or any affiliate of the Seller, on such terms
and conditions as the Seller may choose.

               This Certificate may not be acquired directly or indirectly by,
or on behalf of, an employee benefit plan or other retirement arrangement which
is subject to Title I of the Employee Retirement Income Security Act of 1974, as
amended, and/or Section 4975 of the Internal Revenue Code of 1986, as amended,
unless such person provides a certificate substantially in the form of Exhibit J
to the effect that the proposed transfer and/or holding of a Certificate and the
servicing, management and/or operation of the trust and its assets: (i) will not
result in any prohibited transaction which is not covered under an individual or
class prohibited transaction exemption, including, but not limited to,
Prohibited Transaction Exemption ("PTE") 84-14, PTE 91-38, PTE 90-1, PTE 95-60
or PTE 96-23 and (ii) will not give rise to any additional fiduciary obligations
on the part of the Seller, the Master Servicer or the Trustee, which will be
evidenced by a representation or an Opinion of Counsel to such effect by or on
behalf of an Institutional Accredited Investor.

               This Certificate is one of a duly authorized issue of
Certificates designated as set forth on the face hereof (the "Certificates"),
issued in eight Classes. The Certificates, in the aggregate, evidence the entire
beneficial ownership interest in the Trust Fund formed pursuant to the
Agreement.

               The Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the Trust Fund for payment hereunder and that
the Trustee is not liable to the Certificateholders for any amount payable under
this Certificate or the Agreement or, except as expressly provided in the
Agreement, subject to any liability under the Agreement.

               This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.

               The Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of the
Seller, the Mortgage Loan Seller and the Master Servicer and the rights of the
Certificateholders under the Agreement from time to time by the Seller, the
Mortgage Loan Seller, the Master Servicer and the Trustee with the consent of
the Holders of Certificates evidencing Voting Interests aggregating not less
than 66-2/3% (or in certain cases, Holders of Certificates of affected Classes
evidencing such percentage of the Voting Interests thereof). Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

               As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable with the
Trustee upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Trustee for such purposes, duly endorsed
by, or accompanied by a written instrument of transfer in form satisfactory to
the Trustee duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and


                                       D-5

<PAGE>



thereupon one or more new Certificates in authorized denominations representing
a like aggregate Percentage Interest will be issued to the designated
transferee.

               The Certificates are issuable only as registered Certificates
without coupons in the Classes and denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set forth,
this Certificate is exchangeable for one or more new Certificates evidencing the
same Class and in the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

               No service charge will be made to the Certificateholders for any
such registration of transfer, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. The Seller, the Master Servicer, the Trustee and any agent of any of
them may treat the Person in whose name this Certificate is registered as the
owner hereof for all purposes, and none of the Seller, the Master Servicer, the
Trustee or any such agent shall be affected by notice to the contrary.

               The obligations created by the Agreement and the Trust Fund
created thereby (other than the obligations to make payments to
Certificateholders with respect to the termination of the Agreement) shall
terminate upon the earlier of (i) the later of the (A) final payment or other
liquidation (or Advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund and (B) disposition of all property acquired upon
foreclosure or deed in lieu of foreclosure of any Mortgage Loan and the
remittance of all funds due under the Agreement, or (ii) the optional repurchase
by the party named in the Agreement of all the Mortgage Loans and other assets
of the Trust Fund in accordance with the terms of the Agreement. Such optional
repurchase may be made only on or after the Distribution Date on which the
aggregate scheduled principal balance of the Mortgage Loans is less than the
percentage of the aggregate Scheduled Principal Balance specified in the
Agreement of the Mortgage Loans at the Cut-off Date. The exercise of such right
will effect the early retirement of the Certificates. In no event, however, will
the Trust Fund created by the Agreement continue beyond the expiration of 21
years after the death of certain persons identified in the Agreement.

               Unless this Certificate has been countersigned by an authorized
signatory of the Trustee by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement, or be valid for any purpose.


                                       D-6

<PAGE>



               IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.


Dated: May __, 2001                   BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
                                             Not in its individual capacity but
                                             solely as Trustee


                                      By:_______________________________________
                                                     Authorized Signatory



                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

               This is one of the Class R Certificates referred to in the
within-mentioned Agreement.

                                        BANKERS TRUST COMPANY OF CALIFORNIA,
                                        N.A.
                                        Authorized signatory of Bankers Trust
                                        Company of California, N.A., not in its
                                        individual capacity but solely as
                                        Trustee


                                        By:_____________________________________
                                                    Authorized Signatory




                                       D-7

<PAGE>



                                   ASSIGNMENT
                                   ----------


               FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto (Please print or typewrite name and address including postal
zip code of assignee) a Percentage Interest evidenced by the within Mortgage
Pass- Through Certificate and hereby authorizes the transfer of registration of
such interest to assignee on the Certificate Register of the Trust Fund.

               I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:______________________________

________________________________________________________________________________

________________________________________________________________________________




Dated:                 _________________________________________________________
                              Signature by or on behalf of assignor



                                             -----------------------------------
                                                     Signature Guaranteed

                            DISTRIBUTION INSTRUCTIONS

               The assignee should include the following for purposes of
distribution:

               Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
for the account of _______________________________ account number __________,
or, if mailed by check, to _________________________________________. Applicable
statements should be mailed to ________________________________________________.

               This information is provided by ______________________, the
assignee named above, or ____________________________, as its agent.





                                       D-8

<PAGE>



                                    EXHIBIT E

                           SCHEDULE OF MORTGAGE LOANS*


*Information will be provided on an attached diskette in "read-only" format.



                                       E-1

<PAGE>



                                   EXHIBIT F-1

                     FORM OF INITIAL LOAN LIST CERTIFICATION


                                                     May ___, 2001

Structured Asset Mortgage Investments Inc.
245 Park Avenue
New York, New York 10167

               Re:     Pooling and Servicing Agreement ("Pooling and Servicing
                       Agreement") relating to Washington Mutual Mortgage Loan
                       Trust Mortgage Pass-Through Certificates, Series 2001-7

Ladies and Gentlemen:

        In accordance with and subject to the provisions of Section 2.02 of the
Pooling and Servicing Agreement, the undersigned, as Trustee, hereby certifies
that, except for the exceptions noted on the schedule attached hereto, it has
received a Trustee Mortgage File with respect to each Mortgage Loan listed on
the Mortgage Loan Schedule. The Trustee has made no independent examination of
any documents contained in each Trustee Mortgage File beyond the review
specifically mentioned above. The Trustee makes no representations as to: (i)
the validity, legality, sufficiency, enforceability or genuineness of any of the
documents delivered in accordance with Section 2.01 of the Pooling and Servicing
Agreement or any of the Mortgage Loans identified in the Mortgage Loan Schedule,
or (ii) the collectibility, insurability, effectiveness or suitability of any
such Mortgage Loan.

        The Trustee acknowledges receipt of notice that the Seller has granted
to the Trustee for the benefit of the Certificateholders a security interest in
all of the Seller's right, title and interest in and to the Mortgage Loans.

        Capitalized terms used herein without definition shall have the meaning
assigned to them in the Pooling and Servicing Agreement.

                                                     BANKERS TRUST COMPANY OF
                                                     CALIFORNIA, N.A.,
                                                     as Trustee

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



                                      F-1-1

<PAGE>



                                   EXHIBIT F-2

                    FORM OF INITIAL CERTIFICATION OF TRUSTEE


                                                     May __, 2001

Structured Asset Mortgage Investments Inc.
245 Park Avenue
New York, New York 10167

               Re:     Pooling and Servicing Agreement ("Pooling and Servicing
                       Agreement") relating to Washington Mutual Mortgage Loan
                       Trust Mortgage Pass-Through Certificates, Series 2001-7

Ladies and Gentlemen:

        In accordance with and subject to the provisions of Section 2.02 of the
Pooling and Servicing Agreement, the undersigned, as Trustee, hereby certifies
that, except for the exceptions noted on the schedule attached hereto, it has
(a) received an original Mortgage Note with respect to each Mortgage Loan listed
on the Mortgage Loan Schedule and (b) received an original Mortgage (or a
certified copy thereof) in accordance with Section 2.01(b) of the Pooling and
Servicing Agreement with respect to each Mortgage Loan listed on the Mortgage
Loan Schedule. The Trustee has made no independent examination of any documents
contained in each Trustee Mortgage File beyond the review specifically mentioned
above. The Trustee makes no representations as to: (i) the validity, legality,
sufficiency, enforceability or genuineness of any of the documents delivered in
accordance with Section 2.01 of the Pooling and Servicing Agreement or any of
the Mortgage Loans identified in the Mortgage Loan Schedule, or (ii) the
collectibility, insurability, effectiveness or suitability of any such Mortgage
Loan.

        The Trustee acknowledges receipt of notice that the Seller has granted
to the Trustee for the benefit of the Certificateholders a security interest in
all of the Seller's right, title and interest in and to the Mortgage Loans.

        Capitalized terms used herein without definition shall have the meaning
assigned to them in the Pooling and Servicing Agreement.

                                                     BANKERS TRUST COMPANY OF
                                                     CALIFORNIA, N.A.,
                                                     as Trustee

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



                                      F-2-1

<PAGE>



                                   EXHIBIT F-3

                     FORM OF FINAL CERTIFICATION OF TRUSTEE

                                                     ------------------
                                                            [date]

Washington Mutual Bank, FA
1201 Third Avenue, 5th Floor
Seattle, Washington 98101

Structured Asset Mortgage Investments Inc.
245 Park Avenue
New York, New York 10167

               Re:     Pooling and Servicing Agreement ("Pooling and Servicing
                       Agreement") relating to Washington Mutual Mortgage Loan
                       Trust Mortgage Pass-Through Certificates, Series 2001-7

Ladies and Gentlemen:

        In accordance with and subject to the provisions of Section 2.02 of the
above-referenced Pooling and Servicing Agreement the undersigned, as Trustee,
hereby certifies that, except for the exceptions noted on the schedule attached
hereto, as to each Mortgage Loan listed in the Mortgage Loan Schedule it has
reviewed the Trustee Mortgage File and has determined that (based solely on its
review of each such documents on its face) (i) all documents described in
clauses (A)(i)-(v) and (B)(i)-(ix)of Section 2.01(b) of the Pooling and
Servicing Agreement are in its possession or its agent, (ii) such documents have
been reviewed by it and have not been mutilated, damaged, defaced, torn or
otherwise physically altered and such documents relate to such Mortgage Loan and
(iii) each Mortgage Note has been endorsed and each assignment of Mortgage has
been delivered as provided in Section 2.01(b) of the Pooling and Servicing
Agreement. The Trustee has made no independent examination of any documents
required to be delivered in accordance with Section 2.01(b) of the Pooling and
Servicing Agreement beyond the review specifically required therein. The Trustee
makes no representations as to: (i) the validity, legality, sufficiency,
enforceability or genuineness of any of the documents required to be delivered
in accordance with Section 2.01(b) of the Pooling and Servicing Agreement or any
of the Mortgage Loans identified on the Mortgage Loan Schedule, or (ii) the
collectibility, insurability, effectiveness or suitability of any such Mortgage
Loan.




                                      F-3-1

<PAGE>



        Capitalized terms used herein without definition have the meanings
ascribed to them in the Pooling and Servicing Agreement.

                                                     BANKERS TRUST COMPANY OF
                                                     CALIFORNIA, N.A.,
                                                     as Trustee

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



                                      F-3-2

<PAGE>



                                    EXHIBIT G

                           FORM OF REQUEST FOR RELEASE

                                                     ------------------
                                                            [date]

To:

        In connection with the administration of the Mortgage Loans held by you
as Trustee under the Pooling and Servicing Agreement dated as of May 1, 2001,
among Structured Asset Mortgage Investments Inc., as Seller, Washington Mutual
Bank, FA, as mortgage loan seller and master servicer, and you, as Trustee (the
"Pooling and Servicing Agreement"), the undersigned hereby requests a release of
the Trustee Mortgage File held by you as Trustee with respect to the following
described Mortgage Loan for the reason indicated below.

        Mortgagor's Name:

        Address:

        Loan No.:

        Reason for requesting file:

_____   1.     Mortgage Loan paid in full.
               (The Master Servicer hereby certifies that all amounts received
               in connection with the Mortgage Loan have been or will be
               credited to the Custodial Account pursuant to the Pooling and
               Servicing Agreement.)

_____   2.     Mortgage Loan repurchased.
               (The Master Servicer hereby certifies that the Purchase Price has
               been credited to the Custodial Account pursuant to the Pooling
               and Servicing Agreement.)

_____   3.     The Mortgage Loan is being foreclosed.

_____   4.     Other.  (Describe)

        The undersigned acknowledges that the above Trustee Mortgage File will
be held by the undersigned in accordance with the provisions of the Pooling and
Servicing Agreement and will be returned, except if the Mortgage Loan has been
paid in full or repurchased (in which case the Trustee Mortgage File will be
retained by us permanently) when no longer required by us for such purpose.




                                       G-1

<PAGE>



        Capitalized terms used herein shall have the meanings ascribed to them
in the Pooling and Servicing Agreement.

                                                     [MASTER SERVICER]

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




                                       G-2

<PAGE>



                                    EXHIBIT H

                     FORM OF RULE 144A TRANSFER CERTIFICATE

                                                     ------------------
                                                            [date]

Bankers Trust Company of California, N.A., as Trustee
1761 East St. Andrew Place
Santa Ana, California  92705

               Re:     Pooling and Servicing Agreement relating to Washington
                       Mutual Mortgage Loan Trust Mortgage Pass-Through
                       Certificates, Series 2001-7

        Reference is hereby made to the Pooling and Servicing Agreement (the
"Agreement") among Structured Asset Mortgage Investments Inc., as Seller,
Bankers Trust Company of California, N.A., as Trustee and Washington Mutual
Bank, FA, as Mortgage Loan Seller and Master Servicer, dated as of May 1, 2001.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Agreement.

        This letter relates to $___________ initial Current Principal Amount of
Class ____ Certificates which are held in the form of Definitive Certificates
registered in the name of _______________________ (the "Transferor"). The
Transferor has requested a transfer of such Definitive Certificates for
Definitive Certificates of such Class registered in the name of
_______________________ (the "Transferee").

        In connection with such request, and in respect of such Certificates,
the Transferor hereby certifies that such Certificates are being transferred in
accordance with (i) the transfer restrictions set forth in the Agreement and the
Certificates and (ii) Rule 144A under the 1933 Act to a purchaser that the
Transferor reasonably believes is a "qualified institutional buyer" within the
meaning of Rule 144A purchasing for its own account or for the account of a
"qualified institutional buyer", which purchaser is aware that the sale to it is
being made in reliance upon Rule 144A, in a transaction meeting the requirements
of Rule 144A and in accordance with any applicable securities laws of any state
of the United States or any other applicable jurisdiction.

        This certificate and the statements contained herein are made for your
benefit and the benefit of the Placement Agents and the Seller.


                                                     ___________________________
                                                     [Name of Transferor]

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




                                       H-1

<PAGE>



                                    EXHIBIT I

                        FORM OF ERISA TRANSFER AFFIDAVIT

STATE OF NEW YORK       )
                        )  ss.:
COUNTY OF NEW YORK      )

        The undersigned, being first duly sworn, deposes and says as follows:

        1. That he [she] is [title of officer] ________________________ of [name
of Investor] _________________________________________ (the "Investor"), a
_______________________ [description of type of entity] duly organized and
existing under the laws of the [State of _______________] [United States], on
behalf of which he [she] makes this affidavit.

        2. The Investor either (x) is not an employee benefit plan subject to
Section 406 or Section 407 of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or Section 4975 of the Internal Revenue Code of
1986, as amended (the "Code"), the Trustee of any such plan or a person acting
on behalf of any such plan nor a person using the assets of any such plan or (2)
if the Investor is an insurance company, such Investor is purchasing such
Certificates with funds contained in an "Insurance Company General Account" (as
such term is defined in Section v(e) of the Prohibited Transaction Class
Exemption 95-60 ("PTCE 95-60")) and that the purchase and holding of such
Certificates are covered under Sections I and III of PTCE 95-60; or (y) shall
deliver to the Trustee and the Seller a representation or an opinion of counsel
(a "Benefit Plan Opinion") satisfactory to the Trustee and the Seller, and upon
which the Trustee, the Master Servicer and the Seller shall be entitled to rely,
to the effect that the purchase or holding of such Certificate by the Investor
and the servicing, management and/or operation of the Trust and its assets: (i)
will not result in any prohibited transaction which is not covered under an
individual or class prohibited transaction exemption, including, but not limited
to, Prohibited Transaction Exemption ("PTE") 84- 14, PTE 91-38, PTE 90-1, PTE
95-60 or PTE 96-23 and (ii) will not give rise to any additional fiduciary
obligations on the part of the Seller, the Master Servicer or the Trustee, which
will be evidenced by a representation or an Opinion of Counsel to such effect by
or on behalf of an Institutional Accredited Investor.

        3. The Investor hereby acknowledges that under the terms of the
Agreement, no transfer of a Class [B-1][B-2][B-3] Certificate shall be permitted
to be made to any person unless the Seller and Trustee have received a
certificate from such transferee in the form hereof.




                                       I-1

<PAGE>



        IN WITNESS WHEREOF, the Investor has caused this instrument to be
executed on its behalf, pursuant to proper authority, by its duly authorized
officer, duly attested, this _____ day of _______________, 20__.

                                                     ___________________________
                                                     [Investor]

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

ATTEST:

_____________________

STATE OF               )
                       )  ss.:
COUNTY OF              )

        Personally appeared before me the above-named
___________________________, known or proved to me to be the same person who
executed the foregoing instrument and to be the _____________________ of the
Investor, and acknowledged that he executed the same as his free act and deed
and the free act and deed of the Investor.

        Subscribed and sworn before me this _____ day of ___________ 20___.

                                                     ___________________________
                                                     NOTARY PUBLIC

                                                     My commission expires the
                                                     ____ day of ____________,
                                                     20__.




                                       I-2

<PAGE>



                                   EXHIBIT J-1

          FORM OF RESIDUAL CERTIFICATE TRANSFER AFFIDAVIT (TRANSFEREE)

STATE OF        )
                )  ss.:
COUNTY OF       )

        [NAME OF OFFICER], ___________________________ being first duly sworn,
deposes and says:

        1. That he [she] is [title of officer] ________________________ of [name
of Purchaser] _________________________________________ (the "Purchaser"), a
_______________________ [description of type of entity] duly organized and
existing under the laws of the [State of _______________] [United States], on
behalf of which he [she] makes this affidavit.

        2. That the Purchaser's Taxpayer Identification Number is
______________.

        3. That the Purchaser is not a "disqualified organization" within the
meaning of Section 860E(e)(5) of the Internal Revenue Code of 1986, as amended
(the "Code") and will not be a "disqualified organization" as of
____________________ [date of transfer], and that the Purchaser is not acquiring
a Residual Certificate (as defined in the Agreement) for the account of, or as
agent (including a broker, nominee, or other middleman) for, any person or
entity from which it has not received an affidavit substantially in the form of
this affidavit. For these purposes, a "disqualified organization" means the
United States, any state or political subdivision thereof, any foreign
government, any international organization, any agency or instrumentality of any
of the foregoing (other than an instrumentality if all of its activities are
subject to tax and a majority of its board of directors is not selected by such
governmental entity), any cooperative organization furnishing electric energy or
providing telephone service to persons in rural areas as described in Code
Section 1381(a)(2)(C), any "electing large partnership" within the meaning of
Section 775 of the Code, or any organization (other than a farmers' cooperative
described in Code Section 521) that is exempt from federal income tax unless
such organization is subject to the tax on unrelated business income imposed by
Code Section 511.

        4. That the Purchaser is not, and on ____________________ [date of
transfer] will not be, and is not and on such date will not be investing the
assets of, an employee benefit plan subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or a plan subject to Code Section
4975 or a person or entity that is using the assets of any employee benefit plan
or other plan to acquire a Residual Certificate.

        5. That the Purchaser hereby acknowledges that under the terms of the
Pooling and Servicing Agreement (the "Agreement") among Structured Asset
Mortgage Investments Inc., as Seller, Bankers Trust Company of California, N.A.,
as Trustee and Washington Mutual Bank, FA, as Mortgage Loan Seller and Master
Servicer, dated as of May 1, 2001, no transfer of a Residual Certificate shall
be permitted to be made to any person unless the Trustee has received a
certificate from such transferee to the effect that such transferee is not an
employee benefit plan subject to


                                      J-1-1

<PAGE>



ERISA or a plan subject to Section 4975 of the Code and is not using the assets
of any employee benefit plan or other plan to acquire a Residual Certificate.

        6. That the Purchaser does not hold REMIC residual securities as nominee
to facilitate the clearance and settlement of such securities through electronic
book-entry changes in accounts of participating organizations (such entity, a
"Book-Entry Nominee").

        7. That the Purchaser does not have the intention to impede the
assessment or collection of any federal, state or local taxes legally required
to be paid with respect to such Residual Certificate.

        8. That the Purchaser will not transfer a Residual Certificate to any
person or entity (i) as to which the Purchaser has actual knowledge that the
requirements set forth in paragraph 3, 4, 6 or 10 hereof are not satisfied or
that the Purchaser has reason to believe does not satisfy the requirements set
forth in paragraph 7 hereof, and (ii) without obtaining from the prospective
Purchaser an affidavit substantially in this form and providing to the Trustee a
written statement substantially in the form of Exhibit I to the Agreement.

        9. That the Purchaser understands that, as the holder of a Residual
Certificate, the Purchaser may incur tax liabilities in excess of any cash flows
generated by the interest and that it intends to pay taxes associated with
holding such Residual Certificate as they become due.

        10. That the Purchaser (i) is a U.S. Person or (ii) is a Non-U.S. Person
that holds a Residual Certificate in connection with the conduct of a trade or
business within the United States and has furnished the transferor and the
Trustee with an effective Internal Revenue Service Form W-8ECI or successor form
at the time and in the manner required by the Code. "Non-U.S. Person" means any
person other than (i) a citizen or resident of the United States; (ii) a
corporation (or entity treated as a corporation for tax purposes) created or
organized in the United States or under the laws of the United States or of any
state thereof, including, for this purpose, the District of Columbia; (iii) a
partnership (or entity treated as a partnership for tax purposes) organized in
the United States or under the laws of the United States or of any state
thereof, including, for this purpose, the District of Columbia (unless provided
otherwise by future Treasury regulations) provided that, for purposes solely of
the Class R Certificates, no partnership or other entity treated as a
partnership for United States federal income tax purposes shall be treated as a
United States Person unless all persons that own an interest in such partnership
either directly or through any entity that is not a corporation for United
States federal income tax purposes are United States Persons; (iv) an estate
whose income is includible in gross income for United States income tax purposes
regardless of its source; or (v) 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 U.S. Persons have authority to control all substantial decisions of
the trust. Notwithstanding the last clause of the preceding sentence, to the
extent provided in Treasury regulations, certain trusts in existence on August
20, 1996, and treated as U.S. Persons prior to such date, may elect to continue
to be U.S. Persons.

        11. That the Purchaser agrees to such amendments of the Agreement as may
be required to further effectuate the restrictions on transfer of any Residual
Certificate to such a "disqualified organization," an agent thereof, a
Book-Entry Nominee, or a person that does not satisfy the requirements of
paragraph 7 and paragraph 10 hereof.


                                      J-1-2

<PAGE>



        12. That the Purchaser consents to the designation of the Trustee as its
agent to act as "tax matters person" of the Trust Fund pursuant to the
Agreement.

        IN WITNESS WHEREOF, the Purchaser has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
______________________ this _____ day of ____________, 20__.

                                                     ___________________________
                                                     [name of Purchaser]

                                                     By:________________________
                                                     Name:
                                                     Title:

        Personally appeared before me the above-named _________
________________, known or proved to me to be the same person who executed the
foregoing instrument and to be the __________ _________________ of the
Purchaser, and acknowledged to me that he [she] executed the same as his [her]
free act and deed and the free act and deed of the Purchaser.

        Subscribed and sworn before me this _____ day of __________, 20__.

NOTARY PUBLIC

______________________________

COUNTY OF_____________________

STATE OF_______________________

My commission expires the _____ day of __________, 20__.





                                      J-1-3

<PAGE>



                                   EXHIBIT J-2

          FORM OF RESIDUAL CERTIFICATE TRANSFER AFFIDAVIT (TRANSFEROR)

                                                     ------------------
                                                            [date]

Bankers Trust Company of California, N.A., as Trustee
1761 East St. Andrew Place
Santa Ana, California  92705

               Re:     Pooling and Servicing Agreement relating to Washington
                       Mutual Mortgage Loan Trust Mortgage Pass-Through
                       Certificates, Series 2001-7

        _______________________ (the "Transferor") has reviewed the attached
affidavit of _____________________________ (the "Transferee"), and has no actual
knowledge that such affidavit is not true and has no reason to believe that the
information contained in paragraphs 3, 4, 6, 7 and 10 thereof is not true, and
has no reason to believe that the Transferee has the intention to impede the
assessment or collection of any federal, state or local taxes legally required
to be paid with respect to a Residual Certificate. In addition, the Transferor
has conducted a reasonable investigation at the time of the transfer and found
that the Transferee had historically paid its debts as they came due and found
no significant evidence to indicate that the Transferee will not continue to pay
its debts as they become due.

                                                     Very truly yours,

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



                                      J-2-1

<PAGE>


                                    EXHIBIT K

                              FORM OF NOTE ALLONGE


                                  NOTE ALLONGE


        Pay the note affixed to this allonge to the order of __________________,
without recourse.


                                                     WASHINGTON MUTUAL BANK, FA


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


                                       K-1