STRUCTURED ASSET MORTGAGE INVESTMENTS INC.,

                                     SELLER

                         BANK ONE, NATIONAL ASSOCIATION,

                                     TRUSTEE

                WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,

                                 MASTER SERVICER

                WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,

                            SECURITIES ADMINISTRATOR

                                       and

                            EMC MORTGAGE CORPORATION




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


                         POOLING AND SERVICING AGREEMENT

                             Dated as of May 1, 2001

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



                   Structured Asset Mortgage Investments Inc.
           Bear Stearns ARM Trust, Mortgage Pass-Through Certificates

                                  Series 2001-4



<PAGE>



                                TABLE OF CONTENTS


                                    ARTICLE I

                                   Definitions


                                   ARTICLE II

                          Conveyance of Mortgage Loans;
                        Original Issuance of Certificates
<TABLE>
<CAPTION>

<S>      <C>               <C>                                                                                  <C>
         Section 2.01.     Conveyance of Mortgage Loans to Trustee...............................................27
                           ---------------------------------------
         Section 2.02.     Acceptance of Mortgage Loans by Trustee...............................................28
                           ---------------------------------------
         Section 2.03.     Assignment of Interest in the Mortgage Loan Purchase Agreement........................30
                           --------------------------------------------------------------
         Section 2.04.     Substitution of Mortgage Loans........................................................31
                           ------------------------------
         Section 2.05.     Issuance of Certificates..............................................................32
                           ------------------------
         Section 2.06.     Representations and Warranties Concerning the Seller..................................33
                           ----------------------------------------------------

                                                    ARTICLE III

                                  Administration and Servicing of Mortgage Loans

         Section 3.01.     Master Servicer.......................................................................35
                           ---------------
         Section 3.02.     REMIC-Related Covenants...............................................................36
                           -----------------------
         Section 3.03.     Monitoring of Servicers and Wells Fargo Sub-Servicers.................................36
                           -----------------------------------------------------
         Section 3.04.     Fidelity Bond.........................................................................37
                           -------------
         Section 3.05.     Power to Act; Procedures..............................................................37
                           ------------------------
         Section 3.06.     Due-on-Sale Clauses; Assumption Agreements............................................38
                           ------------------------------------------
         Section 3.07.     Release of Mortgage Files.............................................................38
                           -------------------------
         Section 3.08.     Documents, Records and Funds in Possession of Master Servicer To Be Held for
                           ----------------------------------------------------------------------------
Trustee..........................................................................................................39
-------
         Section 3.09.     Standard Hazard Insurance and Flood Insurance Policies................................40
                           ------------------------------------------------------
         Section 3.10.     Presentment of Claims and Collection of Proceeds......................................40
                           ------------------------------------------------
         Section 3.11.     Maintenance of the Primary Mortgage Insurance Policies................................41
                           ------------------------------------------------------
         Section 3.12.     Trustee to Retain Possession of Certain Insurance Policies and Documents..............41
                           ------------------------------------------------------------------------
         Section 3.13.     Realization Upon Defaulted Mortgage Loans.............................................42
                           -----------------------------------------
         Section 3.14.     Compensation for the Master Servicer..................................................42
                           ------------------------------------
         Section 3.15.     REO Property..........................................................................43
                           ------------
         Section 3.16.     Annual Officer's Certificate as to Compliance.........................................43
                           ---------------------------------------------
         Section 3.17.     Annual Independent Accountant's Servicing Report......................................44
                           ------------------------------------------------
         Section 3.18.     Reports Filed with Securities and Exchange Commission.................................44
                           -----------------------------------------------------
         Section 3.19.     EMC...................................................................................45
                           ---
         Section 3.20.     UCC...................................................................................45
                           ---


                                                        -i-

<PAGE>




                                                    ARTICLE IV

                                                     Accounts

         Section 4.01.     Protected Accounts....................................................................46
                           ------------------
         Section 4.02.     Master Servicer Collection Account....................................................47
                           ----------------------------------
         Section 4.03.     Permitted Withdrawals and Transfers from the Master Servicer Collection Account
                           -------------------------------------------------------------------------------
                                                                                                                 49
         Section 4.04.     Distribution Account..................................................................49
                           --------------------
         Section 4.05.     Permitted Withdrawals and Transfers from the Distribution Account.....................50
                           -----------------------------------------------------------------

                                                     ARTICLE V

                                                   Certificates

         Section 5.01.     Certificates..........................................................................53
                           ------------
         Section 5.02.     Registration of Transfer and Exchange of Certificates.................................57
                           -----------------------------------------------------
         Section 5.03.     Mutilated, Destroyed, Lost or Stolen Certificates.....................................61
                           -------------------------------------------------
         Section 5.04.     Persons Deemed Owners.................................................................61
                           ---------------------
         Section 5.05.     Transfer Restrictions on Residual Certificates........................................61
                           ----------------------------------------------
         Section 5.06.     Restrictions on Transferability of Certificates.......................................62
                           -----------------------------------------------
         Section 5.07.     ERISA Restrictions....................................................................63
                           ------------------
         Section 5.08.     Rule 144A Information.................................................................64
                           ---------------------

                                                    ARTICLE VI

                                          Payments to Certificateholders

         Section 6.01.     Distributions on the Certificates.....................................................65
                           ---------------------------------
         Section 6.02.     Allocation of Losses..................................................................68
                           --------------------
         Section 6.03.     Payments..............................................................................69
                           --------
         Section 6.04.     Statements to Certificateholders......................................................69
                           --------------------------------
         Section 6.05.     Monthly Advances......................................................................72
                           ----------------
         Section 6.06.     Compensating Interest Payments........................................................72
                           ------------------------------

                                                    ARTICLE VII

                                                The Master Servicer

         Section 7.01.     Liabilities of the Master Servicer....................................................74
                           ----------------------------------
         Section 7.02.     Merger or Consolidation of the Master Servicer........................................74
                           ----------------------------------------------
         Section 7.03.     Indemnification of the Trustee, the Master Servicer and the Securities Administrator
                           ------------------------------------------------------------------------------------
                                                                                                                 74
         Section 7.04.     Limitations on Liability of the Master Servicer and Others............................74
                           ----------------------------------------------------------
         Section 7.05.     Master Servicer Not to Resign.........................................................76
                           -----------------------------


                                      -ii-

<PAGE>



         Section 7.06.     Successor Master Servicer.............................................................76
                           -------------------------
         Section 7.07.     Sale and Assignment of Master Servicing...............................................76
                           ---------------------------------------

                                                   ARTICLE VIII

                                                      Default

         Section 8.01.     Events of Default.....................................................................77
                           -----------------
         Section 8.02.     Trustee to Act; Appointment of Successor..............................................78
                           ----------------------------------------
         Section 8.03.     Notification to Certificateholders....................................................79
                           ----------------------------------
         Section 8.04.     Waiver of Defaults....................................................................79
                           ------------------
         Section 8.05.     List of Certificateholders............................................................79
                           --------------------------

                                                    ARTICLE IX

                              Concerning the Trustee and the Securities Administrator

         Section 9.01.     Duties of Trustee.....................................................................80
                           -----------------
         Section 9.02.     Certain Matters Affecting the Trustee and the Securities Administrator................82
                           ----------------------------------------------------------------------
         Section 9.03.     Trustee and Securities Administrator Not Liable for Certificates or Mortgage Loans
                           ----------------------------------------------------------------------------------
                                                                                                                 83
         Section 9.04.     Trustee and Securities Administrator May Own Certificates.............................84
                           ---------------------------------------------------------
         Section 9.05.     Trustee's and Securities Administrator's Fees and Expenses............................84
                           ----------------------------------------------------------
         Section 9.06.     Eligibility Requirements for Trustee and Securities Administrator.....................85
                           -----------------------------------------------------------------
         Section 9.07.     Insurance.............................................................................85
                           ---------
         Section 9.08.     Resignation and Removal of the Trustee and Securities Administrator...................85
                           -------------------------------------------------------------------
         Section 9.09.     Successor Trustee and Successor Securities Administrator..............................86
                           --------------------------------------------------------
         Section 9.10.     Merger or Consolidation of Trustee or Securities Administrator........................87
                           --------------------------------------------------------------
         Section 9.11.     Appointment of Co-Trustee or Separate Trustee.........................................87
                           ---------------------------------------------
         Section 9.12.     Federal Information Returns and Reports to Certificateholders; REMIC
                           --------------------------------------------------------------------
Administration...................................................................................................88
--------------

                                                     ARTICLE X

                                                    Termination

         Section 10.01.    Termination Upon Repurchase by the Seller or its Designee or Liquidation of the
                           -------------------------------------------------------------------------------
Mortgage Loans...................................................................................................90
--------------
         Section 10.02.    Additional Termination Requirements...................................................92
                           -----------------------------------

                                                    ARTICLE XI

                                             Miscellaneous Provisions

         Section 11.01.    Intent of Parties.....................................................................94
                           -----------------
         Section 11.02.    Amendment.............................................................................94
                           ---------


                                      -iii-

<PAGE>



         Section 11.03.    Recordation of Agreement..............................................................95
                           ------------------------
         Section 11.04.    Limitation on Rights of Certificateholders............................................95
                           ------------------------------------------
         Section 11.06.    Governing Law.........................................................................97
                           -------------
         Section 11.07.    Notices...............................................................................97
                           -------
         Section 11.08.    Severability of Provisions............................................................97
                           --------------------------
         Section 11.09.    Successors and Assigns................................................................97
                           ----------------------
         Section 11.10.    Article and Section Headings..........................................................97
                           ----------------------------
         Section 11.11.    Counterparts..........................................................................98
                           ------------
         Section 11.12.    Notice to Rating Agencies.............................................................98
                           -------------------------
</TABLE>



                                      -iv-

<PAGE>



                                    EXHIBITS

Exhibit A-1         -    Form of Class A Certificates
Exhibit A-2         -    Form of Class B Certificates
Exhibit A-3         -    Form of Class R Certificates
Exhibit B           -    Mortgage Loan Schedule
Exhibit C           -    [Reserved]
Exhibit D           -    Request for Release of Documents
Exhibit E           -    Form of Affidavit pursuant to Section 860E(e)(4)
Exhibit F-1         -    Form of Investment Letter
Exhibit F-1         -    Form of Rule 144A and Related Matters Certificate
Exhibit G           -    Form of Custodial Agreement
Exhibit H-1 to H-4  -    Servicing Agreements
Exhibit I-1 to I-2  -    Servicing Guides
Exhibit J           -    Assignment Agreements


                                       -v-

<PAGE>



                         POOLING AND SERVICING AGREEMENT


         Pooling and Servicing Agreement dated as of May 1, 2001, among
Structured Asset Mortgage Investments Inc., a Delaware corporation, as seller
(the "Seller"), Bank One, National Association, a national banking association,
not in its individual capacity but solely as trustee (the "Trustee"), Wells
Fargo Bank Minnesota, National Association, as master servicer (in such
capacity, the "Master Servicer") and securities administrator (in such capacity,
the "Securities Administrator"), and EMC Mortgage Corporation ("EMC").

                              PRELIMINARY STATEMENT

         On or prior to the Closing Date, the Seller acquired the Mortgage Loans
from EMC. On the Closing Date, the Seller will sell the Mortgage Loans and
certain other property to the Trust Fund and receive in consideration therefor
Certificates evidencing the entire beneficial ownership interest in the Trust
Fund.

         The Trustee on behalf of the Trust shall make an election for the
assets constituting REMIC I to be treated for federal income tax purposes as a
REMIC. On the Startup Day, the REMIC I Regular Interests will be designated
"regular interests" in such REMIC and the Class R-I Certificate will be
designated the "residual interests" in such REMIC.

         The Trustee on behalf of the Trust shall make an election for the
assets constituting REMIC II to be treated for federal income tax purposes as a
REMIC. On the Startup Day, all the Classes of REMIC II Regular Certificates will
be designated "regular interests" in such REMIC and the Class R-II Certificate
will be designated the "residual interests" in such REMIC.

         The Mortgage Loans will have an Outstanding Principal Balance as of the
Cut-off Date, after deducting all Scheduled Principal due on or before the
Cut-off Date, of approximately $102,274,651. The initial principal amount of the
Certificates will not exceed such Outstanding Principal Balance.

         In consideration of the mutual agreements herein contained, the Seller,
the Master Servicer, the Securities Administrator, EMC and the Trustee agree as
follows:




<PAGE>





                                    ARTICLE I

                                   Definitions

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

         ACCEPTED MASTER SERVICING PRACTICES: With respect to any Mortgage Loan,
as applicable, either (x) those customary mortgage servicing practices of
prudent mortgage servicing institutions that master service mortgage loans of
the same type and quality as such Mortgage Loan in the jurisdiction where the
related Mortgaged Property is located, to the extent applicable to the Trustee
or the Master Servicer (except in its capacity as successor to a Servicer or
Wells Fargo Sub- Servicer), or (y) as provided in the applicable Servicing
Agreement or Servicing Guide, to the extent applicable to any Servicer or Wells
Fargo Sub-Servicer, but in no event below the standard set forth in clause (x).

         ACCOUNT:  The Master  Servicer  Collection  Account  and the  Protected
Account as the contextV may require.

         ACCRUED CERTIFICATE INTEREST: For any Certificate for any Distribution
Date, the interest accrued during the related Interest Accrual Period at the
applicable Pass-Through Rate on the Current Principal Amount, calculated on the
basis of a 360-day year consisting of twelve 30-day months, less (i) in the case
of a Group 1 Senior Certificate, such Certificate's share of any Net Interest
Shortfall and, after the Cross-Over Date, the interest portion of any Realized
Losses on the Group 1 Mortgage Loans allocated thereto in accordance with
Section 6.02(g), (ii) in the case of a Group 2 Senior Certificate, such
Certificate's share of any Net Interest Shortfall and, after the Cross- Over
Date, the interest portion of any Realized Losses on the Group 2 Mortgage Loans
allocated thereto in accordance with Section 6.02(g) and (iii) 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 in accordance with Section 6.02(g).

         AFFILIATE: As to any Person, any other Person controlling, controlled
by or under common control with such Person. "Control" means the power to direct
the management and policies of a Person, directly or indirectly, whether through
ownership of voting securities, by contract or otherwise. "Controlled" and
"Controlling" have meanings correlative to the foregoing. The Trustee may
conclusively presume that a Person is not an Affiliate of another Person unless
a Responsible Officer of the Trustee has actual knowledge to the contrary.

         AGGREGATE SUBORDINATE PERCENTAGE: As of any date of determination, a
fraction, expressed as a percentage, the numerator of which is the aggregate
Current Principal Amount of the Subordinate Certificates as of such date of
determination and the denominator of which is the aggregate Scheduled Principal
Balance of the Mortgage Loans in both Loan Groups as of such date of
determination.



                                                        -2-

<PAGE>



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

         ALLOCABLE SHARE: With respect to each Class of Subordinate
Certificates:

                  (a) as to any Distribution Date and amounts distributable
         pursuant to clauses (i) and (iii) of the definition of Subordinate
         Optimal Principal Amount, the fraction, expressed as a percentage, the
         numerator of which is the Current Principal Amount of such Class and
         the denominator of which is the aggregate Current Principal Amount of
         all Classes of the Subordinate Certificates; and

                  (b) as to any Distribution Date and amounts distributable
         pursuant to clauses (ii), (iv) and (v) of the definition of Subordinate
         Optimal Principal Amount, and as to each Class of Subordinate
         Certificates (other than the Class of Subordinate Certificates having
         the lowest numerical designation as to which the Class Prepayment
         Distribution Trigger shall not be applicable) for which (x) the related
         Class Prepayment Distribution Trigger has been satisfied on such
         Distribution Date, the fraction, expressed as a percentage, the
         numerator of which is the Current Principal Amount of such Class and
         the denominator of which is the aggregate Current Principal Amount of
         all such Classes of Subordinate Certificates and (y) the related Class
         Prepayment Distribution Trigger has not been satisfied on such
         Distribution Date, 0%; provided that if on a Distribution Date, the
         Current Principal Amount of any Class of Subordinate Certificates for
         which the related Class Prepayment Distribution Trigger was satisfied
         on such Distribution Date is reduced to zero, any amounts distributed
         pursuant to this clause (b), to the extent of such Class's remaining
         Allocable Share, shall be distributed to the remaining Classes of
         Subordinate Certificates which satisfy the related Class Prepayment
         Distribution Trigger and to the Class of Subordinate Certificates
         having the lowest numerical designation in reduction of their
         respective Current Principal Amounts in the order of their numerical
         Class designations.

         APPLICABLE CREDIT RATING: For any long-term deposit or security, a
credit rating of AAA in the case of S&P, Aaa in the case of Moody's or AAA in
the case of Fitch. For any short-term deposit or security, or a rating of A-l+
in the case of S&P, P-1 in the case of Moody's or F-1+ in the case of Fitch.

         APPLICABLE STATE LAW: For purposes of Section 9.12(d), the Applicable
State Law shall be (a) the law of the State of New York and (b) such other state
law whose applicability shall have been brought to the attention of the
Securities Administrator and the Trustee by either (i) an Opinion of Counsel
reasonably acceptable to the Securities Administrator and the Trustee delivered
to it by the Master Servicer or the Seller, or (ii) written notice from the
appropriate taxing authority as to the applicability of such state law.

         APPRAISED VALUE: For any Mortgaged Property related to a Mortgage Loan,
the amount set forth as the appraised value of such Mortgaged Property in an
appraisal made for the mortgage originator in connection with its origination of
the related Mortgage Loan.



                                       -3-

<PAGE>



         ASSIGNMENT AGREEMENTS: The agreements attached hereto as Exhibit O,
whereby the Servicing Agreements were assigned to the Trustee for the benefit of
the Certificateholders

         ASSUMED FINAL DISTRIBUTION DATE: May 25, 2031, or if such day is not a
Business Day, the next succeeding Business Day.

         AVAILABLE FUNDS: With respect to any Distribution Date, the sum of the
Group 1 Available Funds and the Group 2 Available Funds for such Distribution
Date.

         AVERAGE LOSS SEVERITY: With respect to any period and each Loan Group,
the fraction obtained by dividing (x) the aggregate amount of Realized Losses
for the related Mortgage Loans for such period by (y) the number of related
Mortgage Loans which had Realized Losses for such period.

         BANKRUPTCY CODE: The United States Bankruptcy Code, as amended as
codified in 11 U.S.C. ss.ss.101-1330.

         BOOK-ENTRY CERTIFICATES: Initially, all Classes of Certificates other
than the Private Certificates and the Residual Certificates.

         BUSINESS DAY: Any day other than (i) a Saturday or a Sunday, or (ii) a
day on which the New York Stock Exchange is closed or on which banking
institutions in New York City, Maryland, Pennsylvania, Iowa, North Carolina,
Minnesota, Illinois, Texas or California, or the jurisdiction in which the
Trustee, the Master Servicer or the Securities Administrator is authorized or
obligated by law or executive order to be closed.

         CERTIFICATE: Any mortgage pass-through certificate evidencing a
beneficial ownership interest in the Trust Fund signed and countersigned by the
Trustee in substantially the forms annexed hereto as Exhibits A-1, A-2 and A-3,
with the blanks therein appropriately completed.

         CERTIFICATE GROUP: The Group 1 Certificates or Group 2 Certificates, as
applicable.

         CERTIFICATE OWNER: Any Person who is the beneficial owner of a
Certificate registered in the name of the Depository or its nominee.

         CERTIFICATE REGISTER: The register maintained pursuant to Section 5.02.

         CERTIFICATEHOLDER:  A Holder of a Certificate.

         CLASS: With respect to the Certificates, I-A, II-A, R-I, R-II, B-1,
B-2, B-3, B-4, B-5 and B-6.

         CLASS PREPAYMENT DISTRIBUTION TRIGGER: For a Class of Subordinate
Certificates for any Distribution Date, the Class Prepayment Distribution
Trigger is satisfied if the fraction (expressed as a percentage), the numerator
of which is the aggregate Current Principal Amount of such Class and each Class
of Subordinate Certificates subordinate thereto, if any, and the denominator of
which


                                       -4-

<PAGE>



is the Scheduled Principal Balance of all of the Mortgage Loans as of the
related Due Date, equals or exceeds such percentage calculated as of the Closing
Date.

         CLASS R CERTIFICATES:  The Class R-I and Class R-II Certificates.

         CLEAN-UP CALL MORTGAGE LOAN: Any Mortgage Loan being serviced in
accordance with a Servicing Guide, as indicated on the Mortgage Loan Schedule.

         CLOSING DATE:  May 31, 2001.

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

         COMPENSATING INTEREST PAYMENTS: The amounts described in Section 6.06
of this Agreement.

         CORPORATE TRUST OFFICE: The office of the Trustee at which at any
particular time its corporate trust business is administered, which office, at
the date of the execution of this Agreement, is located at 1 Bank One Plaza,
Mail Suite IL1-0126, Chicago, Illinois 60670, Attention: Global Corporate Trust
Services.

         CROSS-OVER DATE: The first Distribution Date on which the aggregate
Current Principal Amount of the Subordinate Certificates has been reduced to
zero (giving effect to all distributions on such Distribution Date).

         CURRENT PRINCIPAL AMOUNT: With respect to any Certificate as of any
Distribution Date, the initial principal amount of such Certificate, and reduced
by (i) all amounts distributed on previous Distribution Dates on such
Certificate with respect to principal, (ii) the principal portion of all
Realized Losses allocated prior to such Distribution Date to such Certificate,
taking account of the Loss 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. Notwithstanding the foregoing, solely for purposes of giving consents,
directions, waivers, approvals, requests and notices, the Class R-I and Class
R-II Certificates after the Distribution Date on which they each receive the
distribution of the last dollar of their respective original principal amount
shall be deemed to have Current Principal Amounts equal to their respective
Current Principal Amounts on the day immediately preceding such Distribution
Date.

         CUSTODIAL AGREEMENT: An agreement, dated as of the Closing Date among
the Seller, the Master Servicer, the Trustee and the Custodian in substantially
the form of Exhibit G hereto.

         CUSTODIAN: Wells Fargo Bank Minnesota, National Association, or any
successor custodian appointed pursuant to the provisions hereof and of the
Custodial Agreement.

         CUT-OFF DATE:  May 1, 2001.

         CUT-OFF DATE BALANCE:  $102,274,651.


                                       -5-

<PAGE>



         DEBT SERVICE REDUCTION: Any reduction of the Scheduled Payments which a
Mortgagor is obligated to pay with respect to a Mortgage Loan as a result of any
proceeding under the Bankruptcy Code or any other similar state law or other
proceeding.

         DEFICIENT VALUATION: With respect to any Mortgage Loan, a valuation of
the Mortgaged Property by a court of competent jurisdiction in an amount less
than the then outstanding indebtedness under the Mortgage Loan, which valuation
results from a proceeding initiated under the Bankruptcy Code or any other
similar state law or other proceeding.

         DEPOSITORY: The Depository Trust Company, the nominee of which is Cede
& Co., or any successor thereto.

         DEPOSITORY AGREEMENT: The meaning specified in Subsection 5.01(a)
hereof.

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

         DESIGNATED DEPOSITORY INSTITUTION: A depository institution (commercial
bank, federal savings bank mutual savings bank or savings and loan association)
or trust company (which may include the Trustee), the deposits of which are
fully insured by the FDIC to the extent provided by law.

         DETERMINATION DATE: As defined or specified in the related Servicing
Agreement or Servicing Guide.

         DISQUALIFIED ORGANIZATION: Any of the following: (i) the United States,
any State or political subdivision thereof, any possession of the United States,
or any agency or instrumentality of any of the foregoing (other than an
instrumentality which is a corporation if all of its activities are subject to
tax and, except for the Freddie Mac or any successor thereto, a majority of its
board of directors is not selected by such governmental unit), (ii) any foreign
government, any international organization, or any agency or instrumentality of
any of the foregoing, (iii) any organization (other than certain farmers'
cooperatives described in Section 521 of the Code) which is exempt from the tax
imposed by Chapter 1 of the Code (including the tax imposed by Section 511 of
the Code on unrelated business taxable income), (iv) rural electric and
telephone cooperatives described in Section 1381(a)(2)(C) of the Code or (v) any
other Person so designated by the Trustee based upon an Opinion of Counsel that
the holding of an ownership interest in a Residual Certificate by such Person
may cause the Trust or any Person having an ownership interest in the Residual
Certificate (other than such Person) to incur a liability for any federal tax
imposed under the Code that would not otherwise be imposed but for the transfer
of an ownership interest in a Residual Certificate to such Person. The terms
"United States," "State" and "international organization" shall have the
meanings set forth in Section 7701 of the Code or successor provisions.

         DISTRIBUTION ACCOUNT: The trust account or accounts created and
maintained pursuant to Section 4.04, which shall be denominated "Bank One,
National Association, as Trustee f/b/o holders


                                       -6-

<PAGE>



of Structured Asset Mortgage Investments Inc., Bear Stearns ARM Trust, Mortgage
Pass-Through Certificates, Series 2001-4 - Distribution Account."

         DISTRIBUTION ACCOUNT DEPOSIT DATE: The Business Day prior to each
Distribution Date (or if such day is not a Business Day, the Business Day prior
to such day).

         DISTRIBUTION DATE: The 25th day of any month, beginning in the month
immediately following the month of the Closing Date, or, if such 25th day is not
a Business Day, the Business Day immediately following.

         DTC CUSTODIAN: Bank One, National Association, or its successors in
interest as custodian for the Depository.

         DUE DATE: With respect to each Mortgage Loan, the date in each month on
which its Scheduled Payment is due if such due date is the first day of a month
and otherwise is deemed to be the first day of the following month or such other
date specified in the related Servicing Agreement or Servicing Guide.

         DUE PERIOD: With respect to any Distribution Date and each Mortgage
Loan, the period commencing on the second day of the month preceding the month
in which the Distribution Date occurs and ending at the close of business on the
first day of the month in which the Distribution Date occurs.

         EMC:  EMC Mortgage Corporation.

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

         EVENT OF DEFAULT:  An event of default described in Section 8.01.

         EXCESS LIQUIDATION PROCEEDS: To the extent that such amount is not
required by law to be paid to the related Mortgagor, the amount, if any, by
which Liquidation Proceeds with respect to a Liquidated Mortgage Loan exceed the
sum of (i) the Outstanding Principal Balance of such Mortgage Loan and accrued
but unpaid interest at the related Mortgage Interest Rate through the last day
of the month in which the related Liquidation Date occurs, plus (ii) related
Liquidation Expenses.

         FANNIE MAE: Federal National Mortgage Association or any successor
thereto.

         FDIC: Federal Deposit Insurance Corporation or any successor thereto.

         FINAL CERTIFICATION: The certification substantially in the form of
Exhibit Three to the Custodial Agreement.

         FIRST UNION:  First Union National Bank.

         FITCH:  Fitch, Inc. and its successors in interest.


                                       -7-

<PAGE>



         FORECLOSURE RESTRICTED LOAN: Any Mortgage Loan that is 60 or more days
delinquent as of the Closing Date, unless the Mortgage Loan has become current
for three consecutive Scheduled Payments after the Closing Date.

         FRACTIONAL UNDIVIDED INTEREST: With respect to any Class of
Certificates, the fractional undivided interest evidenced by any Certificate of
such Class the numerator of which is the Current Principal Amount of such
Certificate and the denominator of which is the Current Principal Amount of such
Class. With respect to the Certificates in the aggregate, the fractional
undivided interest evidenced by (i) a Residual Certificate will be deemed to
equal 0.5% multiplied by the percentage interest of such Residual Certificate
and (ii) a Certificate of any other Class will be deemed to equal 99.00%
multiplied by a fraction, the numerator of which is the Current Principal Amount
of such Certificate and the denominator of which is the aggregate Current
Principal Amount of all the Certificates.

         FREDDIE MAC: Freddie Mac, formerly the Federal Home Loan Mortgage
Corporation, or any successor thereto.

         GLOBAL CERTIFICATE: Any Private Certificate registered in the name of
the Depository or its nominee, beneficial interests in which are reflected on
the books of the Depository or on the books of a Person maintaining an account
with such Depository (directly or as an indirect participant in accordance with
the rules of such depository).

         GROSS MARGIN: As to each Mortgage Loan, the fixed percentage set forth
in the related Mortgage Note and indicated on the Mortgage Loan Schedule which
percentage is added to the related Index on each Interest Adjustment Date to
determine (subject to rounding, the minimum and maximum Mortgage Interest Rate
and the Periodic Rate Cap) the Mortgage Interest Rate until the next Interest
Adjustment Date.

         GROUP 1 AVAILABLE FUNDS OR GROUP 2 AVAILABLE FUNDS: With respect to any
Distribution Date, an amount equal to the aggregate of the following amounts
with respect to the Mortgage Loans in the related Loan Group: (a) all previously
undistributed payments on account of principal (including the principal portion
of Scheduled Payments, Principal Prepayments and the principal portion of Net
Liquidation Proceeds) and all previously undistributed payments on account of
interest received after the Cut-off Date and on or prior to the related
Determination Date, (b) any Monthly Advances and Compensating Interest Payments
by the Servicer, Wells Fargo Sub-Servicer or the Master Servicer with respect to
such Distribution Date and (c) any reimbursed amount in connection with losses
on investments of deposits in an account, except:

                  (i) all payments that were due on or before the Cut-off Date;

                  (ii) all Principal Prepayments and Liquidation Proceeds
         received after the applicable Prepayment Period (other than such
         Principal Prepayments and Liquidation Proceeds with respect to the
         Mortgage Loans serviced by Wells Fargo Home Mortgage, Inc. in
         accordance with the Saxon Guide that the Master Servicer has received
         after the end of such Prepayment Period but has elected to deem
         received in such Prepayment Period);



                                       -8-

<PAGE>



                  (iii) all payments, other than Principal Prepayments, that
         represent early receipt of Scheduled Payments due on a date or dates
         subsequent to the related Due Date;

                  (iv) amounts received on particular Mortgage Loans as late
         payments of principal or interest and respecting which, and to the
         extent that, there are any unreimbursed Monthly Advances;

                  (v)  amounts representing Monthly Advances determined to be
         Nonrecoverable Advances;

                  (vi) any investment earnings on amounts on deposit in the
         Master Servicer Collection Account and the Distribution Account and
         amounts permitted to be withdrawn from the Master Servicing Collection
         Account and the Distribution Account pursuant to this Agreement;

                  (vii)    amounts representing insurance premiums;

                  (viii) to pay the Servicing Fees or to reimburse any Servicer,
         Wells Fargo Sub- Servicer or the Master Servicer for such amounts as
         are due under the applicable Servicing Agreement, Servicing Guide and
         this Agreement and have not been retained by or paid to such Servicer,
         Wells Fargo Sub-Servicer or the Master Servicer; and

                  (ix) and any expenses of the Trustee pursuant to Section 9.05.

         GROUP 1 MORTGAGE LOANS: The Mortgage Loans identified as such on the
Mortgage Loan Schedule.

         GROUP 2 MORTGAGE LOANS: The Mortgage Loans identified as such on the
Mortgage Loan Schedule.

         GROUP 2 SENIOR CERTIFICATES: The Class I-A Certificates.

         GROUP 2 SENIOR CERTIFICATES: The Class II-A and Class R-I and Class
R-II Certificates.

         GROUP 1 SENIOR OPTIMAL PRINCIPAL AMOUNT or GROUP 2 SENIOR OPTIMAL
PRINCIPAL AMOUNT: As to any Distribution Date, an amount equal to the sum,
without duplication, of:

                  (i) the applicable Senior Percentage of all scheduled payments
         of principal allocated to the Scheduled Principal Balance due on each
         Outstanding Mortgage Loan in the related Loan Group on the related Due
         Date as specified in the amortization schedule at the time applicable
         thereto (after adjustments for previous Principal Prepayments but
         before any adjustment to such amortization schedule by reason of any
         bankruptcy or similar proceeding or any moratorium or similar waiver or
         grace period);

                  (ii) the applicable Senior Prepayment Percentage of all
         Principal Prepayments in part received during the related Prepayment
         Period with respect to each Mortgage Loan in


                                       -9-

<PAGE>



         the related Loan Group, together with the applicable Senior Prepayment
         Percentage of the Scheduled Principal Balance of each Mortgage Loan in
         the related Loan Group which was the subject of a Principal Prepayment
         in full during the related Prepayment Period;

                  (iii) the lesser of (a) the applicable Senior Prepayment
         Percentage of all Net Liquidation Proceeds, allocable to principal
         received in respect of each Mortgage Loan in the related Loan Group
         which became a Liquidated Mortgage Loan during the related Prepayment
         Period; and (b) the applicable Senior Percentage of the Scheduled
         Principal Balance of each Mortgage Loan in the related Loan Group which
         became a Liquidated Mortgage Loan during the related Prepayment Period;
         and

                  (iv) the applicable Senior Prepayment Percentage of the sum of
         (a) the Scheduled Principal Balance of each Mortgage Loan or related
         REO Property in the related Loan Group which was purchased by EMC on
         such Distribution Date and (b) the excess, if any, of the Scheduled
         Principal Balance of a Mortgage Loan in the related Loan Group that has
         been replaced by EMC with a Substitute Mortgage Loan pursuant to
         Section 2.04 on such Distribution Date over the Scheduled Principal
         Balance of such Substitute Mortgage Loan.

         GROUP 1 SENIOR PERCENTAGE: Initially 95.50%. On any Distribution Date,
the lesser of (i) 100% and (ii) the percentage (carried to six places rounded
up) obtained by dividing the aggregate Current Principal Amounts of the Group 1
Senior Certificates (other than the Class I-A-IO Certificates) immediately
preceding such Distribution Date by the aggregate Scheduled Principal Balance of
the Group 1 Mortgage Loans as of the beginning of the related Due Period.

         GROUP 2 SENIOR PERCENTAGE: Initially 95.50%. On any Distribution Date,
the lesser of (i) 100% and (ii) the percentage (carried to six places rounded
up) obtained by dividing the Current Principal Amount of the Group 2 Senior
Certificates immediately preceding such Distribution Date by the aggregate
Scheduled Principal Balance of the Group 2 Mortgage Loans as of the beginning of
the related Due Period.

         GROUP 1 SENIOR PREPAYMENT PERCENTAGE or GROUP 2 SENIOR PREPAYMENT
PERCENTAGE: On any Distribution Date occurring during the periods set forth
below, as follows:


Period (dates inclusive)          Senior Prepayment Percentage
June 25, 2001 - May 25, 2011      100%
June 25, 2011 - May 25, 2012      applicable Senior Percentage plus 70% of the
                                  Subordinate Percentage
June 25, 2012 - May 25, 2013      applicable Senior Percentage plus 60% of the
                                  Subordinate Percentage
June 25, 2013 - May 25, 2014      applicable Senior Percentage plus 40% of the
                                  Subordinate Percentage



                                      -10-

<PAGE>




June 25, 2014 - May 25, 2015      applicable Senior Percentage plus 20% of the
                                  Subordinate Percentage
June 25, 2015 and thereafter      applicable Senior Percentage

         In addition, no reduction of the applicable Senior Prepayment
Percentage shall occur on any Distribution Date unless, as of the last day of
the month preceding such Distribution Date, either (A) (i) (x) the aggregate
Scheduled Principal Balance of the Mortgage Loans delinquent 60 days or more
(including for this purpose any such Mortgage Loans in foreclosure and Mortgage
Loans with respect to which the related Mortgaged Property has been acquired by
the Trust), averaged over the last six months, as a percentage of the sum of the
aggregate Current Principal Amount of the Subordinate Certificates does not
exceed 50%, or (y) the aggregate Scheduled Principal Balance of the Mortgage
Loans delinquent 60 days or more (including for this purpose any such Mortgage
Loans in foreclosure and such Mortgage Loans with respect to which the related
Mortgaged Property has been acquired by the Trust), averaged over the last six
months, as a percentage of the aggregate Scheduled Principal Balances of the
Mortgage Loans averaged over the last six months, does not exceed 2.0%; and (ii)
cumulative Realized Losses on the Mortgage Loans do not exceed (a) 30% of the
Original Subordinate Principal Balance if such Distribution Date occurs between
and including June 2011 and May 2012, (b) 35% of the Original Subordinate
Principal Balance if such Distribution Date occurs between and including June
2012 and May 2013, (c) 40% of the Original Subordinate Principal Balance if such
Distribution Date occurs between and including June 2013 and May 2014, (d) 45%
of the Original Subordinate Principal Balance if such Distribution Date occurs
between and including June 2014 and May 2015, and (e) 50% of the Original
Subordinate Principal Balance if such Distribution Date occurs during or after
June 2015; or (B) (i) the aggregate Scheduled Principal Balance of the Mortgage
Loans delinquent 60 days or more (including for this purpose any such Mortgage
Loans in foreclosure and such Mortgage Loans with respect to which the related
Mortgaged Property has been acquired by the Trust), averaged over the last six
months, does not exceed 4.0% of the then-current aggregate Scheduled Principal
Balance of the Mortgage Loans; and (ii) cumulative Realized Losses on the
Mortgage Loans do not exceed (a) 10% of the Original Subordinate Principal
Balance if such Distribution Date occurs between and including June 2011 and May
2012, (b) 15% of the Original Subordinate Principal Balance if such Distribution
Date occurs between and including June 2012 and May 2013, (c) 20% of the
Original Subordinate Principal Balance if such Distribution Date occurs between
and including June 2013 and May 2014, (d) 25% of the Original Subordinate
Principal Balance if such Distribution Date occurs between and including June
2014 and May 2015, and (e) 30% of the Original Subordinate Principal Balance if
such Distribution Date occurs during or after June 2015.

         In addition, if the current weighted average Subordinate Percentage is
equal to or greater than two times the initial weighted average Subordinate
Percentage for the Certificates, and (a) the aggregate Scheduled Principal
Balance of the Mortgage Loans in both Loan Groups delinquent 60 days or more
(including for this purpose any such Mortgage Loans in foreclosure and such
Mortgage Loans with respect to which the related Mortgaged Property has been
acquired by the Trust), averaged over the last six months, as a percentage of
the sum of the aggregate Current Principal Amount of the Subordinate
Certificates does not exceed 50% and (b) (i) prior to the Distribution Date in
June 2004, cumulative Realized Losses on the Mortgage Loans do not exceed 10% of
the Original Subordinate Principal Balance and (ii) on or after the Distribution
Date in June 2004,


                                      -11-

<PAGE>



cumulative Realized Losses on the Mortgage Loans do not exceed 25% of the
Original Subordinate Principal Balance, then, in each case the related Senior
Prepayment Percentages for such Distribution Date will equal the applicable
Senior Percentage; provided, however, if the current weighted average
Subordinate Percentage for the Certificates is equal to or greater than two
times the initial weighted average Subordinate Percentage for the Certificates
prior to June 25, 2004, then the related Senior Prepayment Percentage for such
Distribution Date will equal the applicable Senior Percentage plus 50% of the
Subordinate Percentage.

         Notwithstanding the foregoing, if on any Distribution Date the related
Senior Percentage exceeds the related Senior Percentage as of the Cut-Off Date,
the related Senior Prepayment Percentage for such Distribution Date will equal
100%. On the Distribution Date on which the Current Principal Amounts of the
related Senior Certificates are reduced to zero, the related Senior Prepayment
Percentage shall be the minimum percentage sufficient to effect such reduction
and thereafter shall be zero.

         GROUP 1 SUBORDINATE OPTIMAL PRINCIPAL AMOUNT: As to any Distribution
Date, an amount equal to the sum, without duplication, of the following (but in
no event greater than the aggregate Current Principal Amount of the Subordinate
Certificates immediately prior to such Distribution Date):

                  (i) the applicable Group 1 Subordinate Percentage of the
         principal portion of all Scheduled Payments due on each Outstanding
         Mortgage Loan in Loan Group 1 on the related Due Date as specified in
         the amortization schedule at the time applicable thereto (after
         adjustment for previous Principal Prepayments but before any adjustment
         to such amortization schedule by reason of any bankruptcy or similar
         proceeding or any moratorium or similar waiver or grace period);

                  (ii) the applicable Group 1 Subordinate Prepayment Percentage
         of each Principal Payment in part during the related Prepayment Period
         with respect to each Group 1 Mortgage Loan and the applicable Group 1
         Subordinate Prepayment Percentage of the Scheduled Principal Balance of
         each Group 1 Mortgage Loan that was the subject of a Principal
         Prepayment in full during the related Prepayment Period;

                  (iii) the excess, if any, of (A) all Net Liquidation Proceeds
         with respect to the Group 1 Mortgage Loans allocable to principal
         received during the related Prepayment Period over (B) the sum of the
         amounts distributable pursuant to clause (iii) of the definition of
         Group 1 Senior Optimal Principal Amount on such Distribution Date;

                  (iv) the applicable Group 1 Subordinate Prepayment Percentage
         of the sum of (a) the Scheduled Principal Balance of each Group 1
         Mortgage Loan or related REO Property which was purchased with respect
         to such Distribution Date and (b) the difference, if any, between the
         Scheduled Principal Balance of a Group 1 Mortgage Loan that has been
         replaced with a Substitute Mortgage Loan on such Distribution Date over
         the Scheduled Principal Balance of such Substitute Mortgage Loan; and



                                      -12-

<PAGE>



                  (v) on the Distribution Date on which the Current Principal
         Amounts of the Group 1 Senior Certificates have all been reduced to
         zero, 100% of any Group 1 Senior Optimal Principal Amount.

After the aggregate Current Principal Amount of the Subordinate Certificates has
been reduced to zero, the Group 1 Subordinate Optimal Principal Amount shall be
zero.

         GROUP 2 SUBORDINATE OPTIMAL PRINCIPAL AMOUNT: As to any Distribution
Date, an amount equal to the sum, without duplication, of the following (but in
no event greater than the aggregate Current Principal Amount of the Subordinate
Certificates immediately prior to such Distribution Date):

                  (i) the applicable Group 2 Subordinate Percentage of the
         principal portion of all Scheduled Payments due on each Outstanding
         Mortgage Loan in Loan Group 2 on the related Due Date as specified in
         the amortization schedule at the time applicable thereto (after
         adjustment for previous Principal Prepayments but before any adjustment
         to such amortization schedule by reason of any bankruptcy or similar
         proceeding or any moratorium or similar waiver or grace period);

                  (ii) the applicable Group 2 Subordinate Prepayment Percentage
         of each Principal Payment in part during the related Prepayment Period
         with respect to each Group 2 Mortgage Loan and the applicable Group 2
         Subordinate Prepayment Percentage of the Scheduled Principal Balance of
         each Group 2 Mortgage Loan that was the subject of a Principal
         Prepayment in full during the related Prepayment Period;

                  (iii) the excess, if any, of (A) all Net Liquidation Proceeds
         with respect to the Group 2 Mortgage Loans allocable to principal
         received during the related Prepayment Period over (B) the sum of the
         amounts distributable pursuant to clause (iii) of the definition of
         Group 2 Senior Optimal Principal Amount on such Distribution Date;

                  (iv) the applicable Group 2 Subordinate Prepayment Percentage
         of the sum of (a) the Scheduled Principal Balance of each Group 2
         Mortgage Loan or related REO Property which was purchased with respect
         to such Distribution Date and (b) the difference, if any, between the
         Scheduled Principal Balance of a Group 2 Mortgage Loan that has been
         replaced with a Substitute Mortgage Loan on such Distribution Date over
         the Scheduled Principal Balance of such Substitute Mortgage Loan; and

                  (v) on the Distribution Date on which the Current Principal
         Amount of the Group 2 Senior Certificates has all been reduced to zero,
         100% of any Group 2 Senior Optimal Principal Amount.

After the aggregate Current Principal Amount of the Subordinate Certificates has
been reduced to zero, the Group 2 Subordinate Optimal Principal Amount shall be
zero.

         HOLDER: The Person in whose name a Certificate is registered in the
Certificate Register, except that, subject to Subsections 12.02(b) and 12.05(e),
solely for the purpose of giving any


                                      -13-

<PAGE>



consent pursuant to this Agreement, any Certificate registered in the name of
the Seller, the Master Servicer or the Trustee or any Affiliate thereof shall be
deemed not to be outstanding and the Fractional Undivided Interest evidenced
thereby shall not be taken into account in determining whether the requisite
percentage of Fractional Undivided Interests necessary to effect any such
consent has been obtained.

         INDEMNIFIED PERSONS: The Trustee, the Master Servicer and the
Securities Administrator and their officers, directors, agents and employees
and, with respect to the Trustee, any separate co- trustee and its officers,
directors, agents and employees.

         INDEPENDENT: When used with respect to any specified Person, this term
means that such Person (a) is in fact independent of the Seller or the Master
Servicer and of any Affiliate of the Seller or the Master Servicer, (b) does not
have any direct financial interest or any material indirect financial interest
in the Seller or the Master Servicer or any Affiliate of the Seller or the
Master Servicer and (c) is not connected with the Seller or the Master Servicer
or any Affiliate as an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions.

         INDEX: The index, if any, specified in a Mortgage Note by reference to
which the related Mortgage Interest Rate will be adjusted from time to time.

         INDIVIDUAL CERTIFICATE: Any Private Certificate registered in the name
of the Holder other than the Depository or its nominee.

         INITIAL CERTIFICATION: The certification substantially in the form of
Exhibit One to the Custodial Agreement.

         INSTITUTIONAL ACCREDITED INVESTOR: Any Person meeting the requirements
of Rule 501(a)(l), (2), (3) or (7) of Regulation D under the Securities Act or
any entity all of the equity holders in which come within such paragraphs.

         INSURANCE POLICY: With respect to any Mortgage Loan, any standard
hazard insurance policy, flood insurance policy or title insurance policy.

         INSURANCE PROCEEDS: Amounts paid by the insurer under any Insurance
Policy covering any Mortgage Loan or Mortgaged Property other than amounts
required to be paid over to the Mortgagor pursuant to law or the related
Mortgage Note or Security Instrument and other than amounts used to repair or
restore the Mortgaged Property or to reimburse insured expenses.

         INTEREST ACCRUAL PERIOD: With respect to each Distribution Date, for
each Class of Certificates, the calendar month preceding the month in which such
Distribution Date occurs.

         INTEREST ADJUSTMENT DATE: With respect to a Mortgage Loan, the date, if
any, specified in the related Mortgage Note on which the Mortgage Interest Rate
is subject to adjustment.



                                      -14-

<PAGE>



         INTEREST SHORTFALL: With respect to any Distribution Date and each
Mortgage Loan that during the related Prepayment Period was the subject of a
Principal Prepayment or constitutes a Relief Act Mortgage Loan, an amount
determined as follows:

                  (a) Partial principal prepayments received during the relevant
         Prepayment Period: The difference between (i) one month's interest at
         the applicable Net Rate on the amount of such prepayment and (ii) the
         amount of interest for the calendar month of such prepayment (adjusted
         to the applicable Net Rate) received at the time of such prepayment;

                  (b) Principal prepayments in full received during the relevant
         Prepayment Period: The difference between (i) one month's interest at
         the applicable Net Rate on the Scheduled Principal Balance of such
         Mortgage Loan immediately prior to such prepayment and (ii) the amount
         of interest for the calendar month of such prepayment (adjusted to the
         applicable Net Rate) received at the time of such prepayment; and

                  (c) Relief Act Mortgage Loans: As to any Relief Act Mortgage
         Loan, the excess of (i) 30 days' interest (or, in the case of a
         principal prepayment in full, interest to the date of prepayment) on
         the Scheduled Principal Balance thereof (or, in the case of a principal
         prepayment in part, on the amount so prepaid) at the related Net Rate
         over (ii) 30 days' interest (or, in the case of a principal prepayment
         in full, interest to the date of prepayment) on such Scheduled
         Principal Balance (or, in the case of a Principal Prepayment in part,
         on the amount so prepaid) at the Net Rate required to be paid by the
         Mortgagor as limited by application of the Relief Act.

         INTERIM CERTIFICATION: The certification substantially in the form of
Exhibit Two to the Custodial Agreement.

         INVESTMENT LETTER: The letter to be furnished by each Institutional
Accredited Investor which purchases any of the Private Certificates in
connection with such purchase, substantially in the form set forth as Exhibit
F-1 hereto.

         LIQUIDATED MORTGAGE LOAN: Any defaulted Mortgage Loan as to which the
Master Servicer or the related Servicer or Wells Fargo Sub-Servicer has
determined that all amounts it expects to recover from or on account of such
Mortgage Loan have been recovered.

         LIQUIDATION DATE: With respect to any Liquidated Mortgage Loan, the
date on which the Master Servicer or the related Servicer or Wells Fargo
Sub-Servicer has certified that such Mortgage Loan has become a Liquidated
Mortgage Loan.

         LIQUIDATION EXPENSES: With respect to a Mortgage Loan in liquidation,
unreimbursed expenses paid or incurred by or for the account of the Master
Servicer, such expenses including (a) property protection expenses, (b) property
sales expenses, (c) foreclosure and sale costs, including court costs and
reasonable attorneys' fees, and (d) similar expenses reasonably paid or incurred
in connection with liquidation.



                                      -15-

<PAGE>



         LIQUIDATION PROCEEDS: Cash received in connection with the liquidation
of a defaulted Mortgage Loan, whether through trustee's sale, foreclosure sale,
Insurance Proceeds, condemnation proceeds or otherwise.

         LOAN GROUP:  Loan Group 1 or Loan Group 2, as applicable.

         LOAN GROUP 1: The group of Mortgage Loans designated as belonging to
Loan Group 1 on the Mortgage Loan Schedule.

         LOAN GROUP 2: The group of Mortgage Loans designated as belonging to
Loan Group 2 on the Mortgage Loan Schedule.

         LOAN-TO-VALUE RATIO: With respect to any Mortgage Loan, the fraction,
expressed as a percentage, the numerator of which is the original principal
balance of the related Mortgage Loan and the denominator of which is the
Original Value of the related Mortgaged Property.

         LOSS ALLOCATION LIMITATION: The meaning specified in Section 6.02(c)
hereof.

         LOST NOTES: The original Mortgage Notes that have been lost, as
indicated on the Mortgage Loan Schedule.

         MASTER SERVICER: As of the Closing Date, Wells Fargo Bank Minnesota,
National Association and, thereafter, its respective successors in interest who
meet the qualifications of the Servicing Agreements and this Agreement.

         MASTER SERVICER COLLECTION ACCOUNT: The trust account or accounts
created and maintained pursuant to Section 4.02, which shall be denominated
"Bank One, National Association, as Trustee f/b/o holders of Structured Asset
Mortgage Investments Inc., Bear Stearns ARM Trust, Mortgage Pass-Through
Certificates, Series 2001-4 - Master Servicer Collection Account."

         MAXIMUM LIFETIME MORTGAGE RATE: The maximum level to which a Mortgage
Interest Rate can adjust in accordance with its terms, regardless of changes in
the applicable Index.

         MINIMUM LIFETIME MORTGAGE RATE: The minimum level to which a Mortgage
Interest Rate can adjust in accordance with its terms, regardless of changes in
the applicable Index.

         MONTHLY ADVANCE: An advance of principal or interest required to be
made by the applicable Servicer or Wells Fargo Sub-Servicer pursuant to the
related Servicing Agreement or the related Servicing Guide or the Master
Servicer pursuant to Section 6.05.

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

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



                                      -16-

<PAGE>



         MORTGAGE INTEREST RATE: The annual rate at which interest accrues from
time to time on any Mortgage Loan pursuant to the related Mortgage Note, which
rate is equal to the "Mortgage Interest Rate" set forth with respect thereto on
the Mortgage Loan Schedule.

         MORTGAGE LOAN: A mortgage loan transferred and assigned to the Trustee
pursuant to Section 2.01 or Section 2.04 and held as a part of the Trust Fund,
as identified in the Mortgage Loan Schedule, including a mortgage loan the
property securing which has become an REO Property.

         MORTGAGE LOAN PURCHASE AGREEMENT: The Mortgage Loan Purchase Agreement
dated as of May 31, 2001, between EMC, as seller, and Structured Asset Mortgage
Investments Inc., as purchaser, and all amendments thereof and supplements
thereto.

         MORTGAGE LOAN SCHEDULE: The schedule, attached hereto as Exhibit B with
respect to the Mortgage Loans and as amended from time to time to reflect the
repurchase or substitution of Mortgage Loans pursuant to this Agreement.

         MORTGAGE LOAN SELLER: EMC Mortgage Corporation, as mortgage loan seller
under the Mortgage Loan Purchase Agreement.

         MORTGAGE NOTE: The originally executed note or other evidence of the
indebtedness of a Mortgagor under the related Mortgage Loan.

         MORTGAGED PROPERTY: Land and improvements securing the indebtedness of
a Mortgagor under the related Mortgage Loan or, in the case of REO Property,
such REO Property.

         MORTGAGOR:  The obligor on a Mortgage Note.

         NET INTEREST SHORTFALL: With respect to any Distribution Date, the
Interest Shortfall, if any, for such Distribution Date net of Compensating
Interest Payments made with respect to such Distribution Date.

         NET LIQUIDATION PROCEEDS: As to any Liquidated Mortgage Loan,
Liquidation Proceeds net of (i) Liquidation Expenses which are payable therefrom
by the related Servicer or Wells Fargo Sub- Servicer in accordance with the
Servicing Agreements, the Servicing Guides or this Agreement and (ii)
unreimbursed advances by the related Servicer or Wells Fargo Sub-Servicer and
Monthly Advances.

         NET RATE: With respect to each Mortgage Loan, the Mortgage Interest
Rate in effect from time to time less the related Servicing Fee Rate (expressed
as a per annum rate).

         NONRECOVERABLE ADVANCE: Any advance (i) which was previously made or is
proposed to be made by the Master Servicer, the Trustee or the related Servicer
or Wells Fargo Sub-Servicer and (ii) which, in the good faith judgment of the
Master Servicer, the Trustee, the related Servicer or Wells Fargo Sub-Servicer,
will not or, in the case of a proposed advance, would not, be ultimately
recoverable by the Master Servicer or the Trustee from Liquidation Proceeds,
Insurance Proceeds or future payments on the Mortgage Loan for which such
advance was made.


                                      -17-

<PAGE>



         OFFERED CERTIFICATE: Any Senior Certificate or Offered Subordinate
Certificate.

         OFFERED SUBORDINATE CERTIFICATES: The Class B-l, Class B-2 and Class
B-3 Certificates.

         OFFICER'S CERTIFICATE: A certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, the President or a Vice President or
Assistant Vice President or other authorized officer of the Master Servicer or
the Seller, as applicable, and delivered to the Trustee, as required by this
Agreement.

         OPINION OF COUNSEL: A written opinion of counsel who is or are
acceptable to the Trustee and who, unless required to be Independent (an
"Opinion of Independent Counsel"), may be internal counsel for EMC, the Master
Servicer or the Seller.

         ORIGINAL SUBORDINATE PRINCIPAL BALANCE: The sum of the aggregate
Current Principal Amounts of each Class of Subordinate Certificates as of the
Closing Date.

         ORIGINAL VALUE: The lesser of (i) the Appraised Value or (ii) the sales
price of a Mortgaged Property at the time of origination of a Mortgage Loan,
except in instances where either clauses (i) or (ii) is unavailable, the other
may be used to determine the Original Value, or if both clauses (i) and (ii) are
unavailable, Original Value may be determined from other sources reasonably
acceptable to the Seller.

         OUTSTANDING MORTGAGE LOAN: With respect to any Due Date, a Mortgage
Loan which, prior to such Due Date, was not the subject of a Principal
Prepayment in full, did not become a Liquidated Mortgage Loan and was not
purchased or replaced.

         OUTSTANDING PRINCIPAL BALANCE: As of the time of any determination, the
principal balance of a Mortgage Loan remaining to be paid by the Mortgagor, or,
in the case of an REO Property, the principal balance of the related Mortgage
Loan remaining to be paid by the Mortgagor at the time such property was
acquired by the Trust Fund less any Net Liquidation Proceeds with respect
thereto to the extent applied to principal.

         PASS-THROUGH RATE: As to each Class of Certificates, the rate of
interest determined as provided with respect thereto, in Section 5.01(d). Any
monthly calculation of interest at a stated rate shall be based upon annual
interest at such rate divided by twelve.

         PERIODIC RATE CAP: With respect to each Mortgage Loan, the maximum
adjustment that can be made to the Mortgage Interest Rate on each Interest
Adjustment Date in accordance with its terms, regardless of changes in the
applicable Index.

         PERMITTED INVESTMENTS: Any one or more of the following obligations or
securities held in the name of the Trustee for the benefit of the
Certificateholders:

                  (i) direct obligations of, and obligations the timely payment
         of which are fully guaranteed by the United States of America or any
         agency or instrumentality of the United


                                      -18-

<PAGE>



         States of America the obligations of which are backed by the full faith
         and credit of the United States of America;

                  (ii) (a) demand or time deposits, federal funds or bankers'
         acceptances issued by any depository institution or trust company
         incorporated under the laws of the United States of America or any
         state thereof (including the Trustee or Master Servicer each acting in
         its commercial banking capacity) and subject to supervision and
         examination by federal and/or state banking authorities, provided that
         the commercial paper and/or the short-term debt rating and/or the
         long-term unsecured debt obligations of such depository institution or
         trust company at the time of such investment or contractual commitment
         providing for such investment have the Applicable Credit Rating or
         better from each Rating Agency and (b) any other demand or time deposit
         or certificate of deposit that is fully insured by the Federal Deposit
         Insurance Corporation;

                  (iii) repurchase obligations with respect to (a) any security
         described in clause (i) above or (b) any other security issued or
         guaranteed by an agency or instrumentality of the United States of
         America, the obligations of which are backed by the full faith and
         credit of the United States of America, in either case entered into
         with a depository institution or trust company (acting as principal)
         described in clause (ii)(a) above where the Trustee holds the security
         therefor;

                  (iv) securities bearing interest or sold at a discount issued
         by any corporation (including the Trustee or Master Servicer)
         incorporated under the laws of the United States of America or any
         state thereof that have the Applicable Credit Rating or better from
         each Rating Agency at the time of such investment or contractual
         commitment providing for such investment; PROVIDED, HOWEVER, that
         securities issued by any particular corporation will not be Permitted
         Investments to the extent that investments therein will cause the then
         outstanding principal amount of securities issued by such corporation
         and held as part of the Trust to exceed 10% of the aggregate
         Outstanding Principal Balances of all the Mortgage Loans and Permitted
         Investments held as part of the Trust;

                  (v) commercial paper (including both non-interest-bearing
         discount obligations and interest-bearing obligations payable on demand
         or on a specified date not more than one year after the date of
         issuance thereof) having the Applicable Credit Rating or better from
         each Rating Agency at the time of such investment;

                  (vi) a Reinvestment Agreement issued by any bank, insurance
         company or other corporation or entity;

                  (vii) any other demand, money market or time deposit,
         obligation, security or investment as may be acceptable to each Rating
         Agency as evidenced in writing by each Rating Agency to the Trustee;
         and

                  (viii) any money market or common trust fund having the
         Applicable Credit Rating or better from each Rating Agency, including
         any such fund for which the Trustee or Master Servicer or any affiliate
         of the Trustee or Master Servicer acts as a manager or an advisor;


                                      -19-

<PAGE>




PROVIDED, HOWEVER, that no instrument or security shall be a Permitted
Investment if such instrument or security evidences a right to receive only
interest payments with respect to the obligations underlying such instrument or
if such security provides for payment of both principal and interest with a
yield to maturity in excess of 120% of the yield to maturity at par or if such
instrument or security is purchased at a price greater than par.

         PERMITTED TRANSFEREE: Any Person other than a Disqualified Organization
or an "electing large partnership" (as defined by Section 775 of the Code).

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

         PHYSICAL CERTIFICATES: The Residual Certificates and the Private
Certificates.

         PREPAYMENT CHARGE: With respect to any Mortgage Loan, the charges or
premiums, if any, due in connection with a full or partial prepayment of such
Mortgage Loan in accordance with the terms thereof.

         PREPAYMENT PERIOD: With respect to any Mortgage Loan and any
Distribution Date, the calendar month preceding the month in which such
Distribution Date occurs.

         PRINCIPAL PREPAYMENT: Any payment (whether partial or full) or other
recovery of principal on a Mortgage Loan which is received in advance of its
scheduled Due Date to the extent that it is not accompanied by an amount as to
interest representing scheduled interest due on any date or dates in any month
or months subsequent to the month of prepayment, including Insurance Proceeds
and the purchase price in connection with any purchase of a Mortgage Loan, any
cash deposit in connection with the substitution of a Mortgage Loan, and the
principal portion of Net Liquidation Proceeds.

         PRIVATE CERTIFICATES: Any Class B-4, Class B-5 and Class B-6
Certificate.

         PROTECTED ACCOUNT: An account established and maintained for the
benefit of Certificateholders by each Servicer and Wells Fargo Sub-Servicer with
respect to the related Mortgage Loans and with respect to REO Property in
accordance with the related Servicing Agreement or Servicing Guide.

         QIB: A Qualified Institutional Buyer as defined in Rule 144A
promulgated under the Securities Act.

         QUALIFIED INSURER: Any insurance company duly qualified as such under
the laws of the state or states in which the related Mortgaged Property or
Mortgaged Properties is or are located, duly authorized and licensed in such
state or states to transact the type of insurance business in which it is
engaged and approved as an insurer by the Master Servicer, so long as the claims
paying ability


                                      -20-

<PAGE>



of which is acceptable to the Rating Agencies for pass-through certificates
having the same rating as the Certificates rated by the Rating Agencies as of
the Closing Date.

         RATING AGENCIES:  S&P, Moody's and Fitch.

         REALIZED LOSS: Any (i) Deficient Valuation or (ii) as to any Liquidated
Mortgage Loan, (x) the Outstanding Principal Balance of such Liquidated Mortgage
Loan plus accrued and unpaid interest thereon at the Mortgage Interest Rate
through the last day of the month of such liquidation, LESS (y) the related Net
Liquidation Proceeds with respect to such Mortgage Loan.

         RECORD DATE: With respect to any Distribution Date, the close of
business on the last Business Day of the month immediately preceding the month
of such Distribution Date.

         REINVESTMENT AGREEMENTS: One or more reinvestment agreements,
acceptable to the Rating Agencies, from a bank, insurance company or other
corporation or entity (including the Trustee).

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

         RELIEF ACT MORTGAGE LOAN: Any Mortgage Loan as to which the Scheduled
Payment thereof has been reduced due to the application of the Relief Act

         REMIC: A real estate mortgage investment conduit, as defined in the
Code.

         REMIC I: That group of assets contained in the Trust Fund designated as
a REMIC consisting of the REMIC I Regular Interests.

         REMIC I INTERESTS: The REMIC I Regular Interests and the Class R-I
Certificates.

         REMIC I REGULAR INTERESTS: REMIC I Regular Interest 1A, REMIC I Regular
Interest 1B, REMIC I Regular Interest 2A, REMIC I Regular Interest 2B and REMIC
I Regular Interest 2C with such terms as described in Section 5.01(c).

         REMIC II: That group of assets contained in the Trust Fund designated
as a REMIC consisting of the REMIC II Regular Interests.

         REMIC II CERTIFICATES: The REMIC II Regular Certificates and the Class
R-II Certificates.

         REMIC II REGULAR CERTIFICATES: As defined in Section 5.01(c).

         REMIC OPINION: An Opinion of Independent Counsel, to the effect that
the proposed action described therein would not, under the REMIC Provisions, (i)
cause REMIC I or REMIC II to fail to qualify as a REMIC while any regular
interest in such REMIC is outstanding, (ii) result in a tax on prohibited
transactions with respect to any REMIC or (iii) constitute a taxable
contribution to any REMIC after the Startup Day.



                                      -21-

<PAGE>



         REMIC PROVISIONS: The provisions of the federal income tax law relating
to the REMIC, which appear at Sections 860A through 860G of the Code, and
related provisions and regulations promulgated thereunder, as the foregoing may
be in effect from time to time.

         REO PROPERTY: A Mortgaged Property acquired in the name of the Trustee,
for the benefit of Certificateholders, by foreclosure or deed-in-lieu of
foreclosure in connection with a defaulted Mortgage Loan.

         REPURCHASE PRICE: With respect to any Mortgage Loan (or any property
acquired with respect thereto) required to be repurchased by EMC pursuant to the
Mortgage Loan Purchase Agreement or Article II of this Agreement, an amount
equal to the sum of (i) 100% of the Outstanding Principal Balance of such
Mortgage Loan as of the date of repurchase (or if the related Mortgaged Property
was acquired with respect thereto, 100% of the Outstanding Principal Balance at
the date of the acquisition), plus (ii) accrued but unpaid interest on the
Outstanding Principal Balance at the related Mortgage Interest Rate, through and
including the last day of the month of repurchase, and reduced by (iii) any
portion of the Servicing Fees, Monthly Advances and advances payable to the
purchaser of the Mortgage Loan.

         REQUEST FOR RELEASE: A request for release in the form attached hereto
as Exhibit D.

         REQUIRED INSURANCE POLICY: With respect to any Mortgage Loan, any
insurance policy which is required to be maintained from time to time under this
Agreement with respect to such Mortgage Loan.

         RESIDUAL CERTIFICATES:  Any of the Class R Certificates.

         RESPONSIBLE OFFICER: Any officer assigned to the Corporate Trust Office
(or any successor thereto), including any Vice President, Assistant Vice
President, Trust Officer, any Assistant Secretary, any trust officer or any
other officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and having direct
responsibility for the administration of this Agreement, and any other officer
of the Trustee to whom a matter arising hereunder may be referred.

         RULE 144A CERTIFICATE: The certificate to be furnished by each
purchaser of a Private Certificate (which is also a Physical Certificate) which
is a Qualified Institutional Buyer as defined under Rule 144A promulgated under
the Securities Act, substantially in the form set forth as Exhibit F-2 hereto.

         SAXON GUIDE: The Saxon Mortgage Funding Corporation Seller and
Servicing Guide.

         S&P: Standard and Poor's, a division of The McGraw-Hill Companies,
Inc., and its successors in interest.

         SCHEDULED PAYMENT: With respect to any Mortgage Loan and any month, the
scheduled payment or payments of principal and interest due during such month on
such Mortgage Loan which


                                      -22-

<PAGE>



either is payable by a Mortgagor in such month under the related Mortgage Note
or, in the case of REO Property, would otherwise have been payable under the
related Mortgage Note.

         SCHEDULED PRINCIPAL:  The principal portion of any Scheduled Payment.

         SCHEDULED PRINCIPAL BALANCE: With respect to any Mortgage Loan on any
Distribution Date, (i) the unpaid principal balance of such Mortgage Loan as of
the close of business on the related Due Date (i.e., taking account of the
principal payment to be made on such Due Date and irrespective of any
delinquency in its payment), as specified in the amortization schedule at the
time relating thereto (before any adjustment to such amortization schedule by
reason of any bankruptcy or similar proceeding occurring after the Cut-off Date
(other than a Deficient Valuation) or any moratorium or similar waiver or grace
period) and less (ii) any Principal Prepayments (including the principal portion
of Net Liquidation Proceeds) received during or prior to the related Prepayment
Period; provided that the Scheduled Principal Balance of a Liquidated Mortgage
Loan is zero.

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

         SECURITIES ADMINISTRATOR: Wells Fargo Bank Minnesota, National
Association, or its successor in interest, or any successor securities
administrator appointed as herein provided.

         SECURITIES LEGEND: "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 RETIREMENT
ARRANGEMENT WHICH


                                      -23-

<PAGE>



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 DUTIES ON THE PART OF
THE SELLER, THE SECURITIES ADMINISTRATOR, THE MASTER SERVICER OR THE TRUSTEE,
WHICH WILL BE DEEMED REPRESENTED BY AN OWNER OF A BOOK- ENTRY CERTIFICATE OR A
GLOBAL CERTIFICATE AND WILL BE EVIDENCED BY A REPRESENTATION OR AN OPINION OF
COUNSEL TO SUCH EFFECT BY OR ON BEHALF OF AN INSTITUTIONAL ACCREDITED INVESTOR."

         SECURITY INSTRUMENT: A written instrument creating a valid first lien
on a Mortgaged Property securing a Mortgage Note, which may be any applicable
form of mortgage, deed of trust, deed to secure debt or security deed, including
any riders or addenda thereto.

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

         SENIOR CERTIFICATES: Group 1 Senior Certificates and Group 2 Senior
Certificates.

         SENIOR PERCENTAGE: The Group 1 Senior Percentage or Group 2 Senior
Percentage.

         SENIOR PREPAYMENT PERCENTAGE: The Group 1 Senior Prepayment Percentage
or Group 2 Senior Prepayment Percentage.

         SERVICER: Any of GMAC Mortgage Corporation, Wells Fargo Home Mortgage,
Inc. First Union and Atlantic Mortgage and Investment Corporation, or any of
their successors under the related Servicing Agreement.

         SERVICER REMITTANCE DATE: With respect to each Mortgage Loan, the date
set forth in the related Servicing Agreement or Servicing Guide when the related
Servicer or Wells Fargo Sub- Servicer is required to remit funds in the related
Protected Account to the Master Servicer.

         SERVICING AGREEMENT: One of the following agreements, attached hereto
as Exhibits H-1 through H-4: (i) the Servicing Agreement, dated as of June 1,
2000, between Core Cap, Inc. and GMAC Mortgage Corporation; (ii) the Servicing
Agreement, dated as of May 1, 2001, between EMC and First Union; (iii) the
Servicing Agreement, dated as of May 1, 2001, between EMC and Wells Fargo Home
Mortgage, Inc.; and (iv) the Servicing Agreement, dated as of January 1, 2001,
between EMC and Atlantic Mortgage and Investment Corporation.



                                      -24-

<PAGE>



         SERVICING FEE: As to any Mortgage Loan and Distribution Date, an amount
equal to the product of (i) the Scheduled Principal Balance of such Mortgage
Loan as of the Due Date in the preceding calendar month and (ii) the applicable
Servicing Fee Rate.

         SERVICING FEE RATE: As to any Mortgage Loan, a per annum rate as set
forth in the Mortgage Loan Schedule.

         SERVICING GUIDES: One of the following servicing guides, attached
hereto as Exhibits I-1 and I-2: (i) the Saxon Guide and (ii) the Ryland Mortgage
Securities Corporation Servicer Guide.

         STARTUP DAY:  May 31, 2001.

         SUBORDINATE CERTIFICATES: The Class B-1, Class B-2, Class B-3, Class
B-4, Class B-5 and Class B-6 Certificates.

         SUBORDINATE CERTIFICATE WRITEDOWN AMOUNT: As to any Distribution Date,
the amount by which (a) the sum of the Current Principal Amounts of all the
Certificates (after giving effect to the distribution of principal and the
allocation of applicable Realized Losses in reduction of the Current Principal
Amounts of such Certificates on such Distribution Date) exceeds (b) the
aggregate Scheduled Principal Balances of the Mortgage Loans on the Due Date
related to such Distribution Date.

         SUBORDINATE OPTIMAL PRINCIPAL AMOUNT: The Group 1 Subordinate Optimal
Principal Amount or the Group 2 Subordinate Optimal Principal Amount, as
applicable.

         SUBORDINATE PERCENTAGE: On any Distribution Date, as determined
separate for each Loan Group, 100% minus the applicable Senior Percentage.

         SUBORDINATE PREPAYMENT PERCENTAGE: With respect to each Loan Group, on
any Distribution Date, 100% minus the applicable Senior Prepayment Percentage,
except that on any Distribution Date after the Current Principal Amounts of the
applicable Senior Certificates have each been reduced to zero, the Subordinate
Prepayment Percentage will equal 100%.

         SUBSTITUTE MORTGAGE LOAN: A mortgage loan tendered to the Trustee
pursuant to the Mortgage Loan Purchase Agreement or Section 2.04 of this
Agreement, as applicable, in each case, (i) which has an Outstanding Principal
Balance not greater nor materially less than the Mortgage Loan for which it is
to be substituted; (ii) which has a Mortgage Interest Rate and Net Rate not less
than, and not materially greater than, such Mortgage Loan; (iii) which has a
maturity date not materially earlier or later than such Mortgage Loan and not
later than the latest maturity date of any Mortgage Loan; (iv) which is of the
same property type and occupancy type as such Mortgage Loan; (v) which has a
Loan-to-Value Ratio not greater than the Loan-to-Value Ratio of such Mortgage
Loan; (vi) which is current in payment of principal and interest as of the date
of substitution; (vii) as to which the payment terms do not vary in any material
respect from the payment terms of the Mortgage Loan for which it is to be
substituted and (viii) which has a Gross Margin, Periodic Rate Cap and Maximum
Lifetime Mortgage Rate no less than those of such Mortgage Loan, has the same


                                      -25-

<PAGE>



Index and interval between Interest Adjustment Dates as such Mortgage Loan, and
a Minimum Lifetime Mortgage Rate no lower than that of such Mortgage Loan.

         TAX ADMINISTRATION AND TAX MATTERS PERSON: The Securities Administrator
or any successor thereto or assignee thereof shall serve as tax administrator
hereunder and as agent for the Tax Matters Person. The Holder of each Class of
Residual Certificates shall be the Tax Matters Person for the related REMIC, as
more particularly set forth in Section 9.12 hereof.

         TRUST FUND or TRUST: The corpus of the trust created by this Agreement,
consisting of the Mortgage Loans and the other assets described in Section
2.01(a).

         TRUSTEE: Bank One, National Association, or its successor in interest,
or any successor trustee appointed as herein provided.

         UNCERTIFICATED PRINCIPAL BALANCE: With respect to any REMIC I Regular
Interest, the balance thereof as indicated in Section 5.01, as reduced by
amounts allocated thereto in reduction thereof in accordance with Section 5.01.

         UNINSURED CAUSE: Any cause of damage to a Mortgaged Property or related
REO Property such that the complete restoration of such Mortgaged Property or
related REO Property is not fully reimbursable by the hazard insurance policies
required to be maintained pursuant to the related provisions of the related
Servicing Agreement or the related Servicing Guide, without regard to whether or
not such policy is maintained.

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

         WELLS FARGO SUB-SERVICER: With respect to each Mortgage Loan being
serviced in accordance with a Servicing Guide and master serviced by the Master
Servicer, the related servicer, as indicated in the Mortgage Loan Schedule.


                                      -26-

<PAGE>




                                   ARTICLE II

                          Conveyance of Mortgage Loans;
                        Original Issuance of Certificates

         Section 2.01. CONVEYANCE OF MORTGAGE LOANS TO TRUSTEE. (a) The Seller
concurrently with the execution and delivery of this Agreement, sells, transfers
and assigns to the Trust without recourse all its right, title and interest in
and to (i) the Mortgage Loans identified in the Mortgage Loan Schedule,
including all interest and principal due with respect to the Mortgage Loans
after the Cut-off Date, but excluding any payments of principal and interest due
on or prior to the Cut-off Date; (ii) such assets as shall from time to time be
credited or are required by the terms of this Agreement to be credited to the
Master Servicer Collection Account, (iii) such assets relating to the Mortgage
Loans as from time to time may be held by the Servicers and Wells Fargo
Sub-Servicers in Protected Accounts, the Master Servicer in the Master Servicer
Collection Account and the Trustee in the Distribution Account for the benefit
of the Trustee on behalf of the Certificateholders, (iv) any REO Property, (v)
the Required Insurance Policies and any amounts paid or payable by the insurer
under any Insurance Policy (to the extent the mortgagee has a claim thereto),
(vi) the Mortgage Loan Purchase Agreement to the extent provided in Subsection
2.03(a), (vii) the Servicing Agreements and the Servicing Guides, (viii) the
Assignment Agreements and (ix) any proceeds of the foregoing. Although it is the
intent of the parties to this Agreement that the conveyance of the Seller's
right, title and interest in and to the Mortgage Loans and other assets in the
Trust Fund pursuant to this Agreement shall constitute a purchase and sale and
not a loan, in the event that such conveyance is deemed to be a loan, it is the
intent of the parties to this Agreement that the Seller shall be deemed to have
granted to the Trustee a first priority perfected security interest in all of
the Seller's right, title and interest in, to and under the Mortgage Loans and
other assets in the Trust Fund, and that this Agreement shall constitute a
security agreement under applicable law.

         (b) In connection with the above transfer and assignment, the Seller
hereby deposits with the Trustee or the Custodian, as its agent, with respect to
each Mortgage Loan, (i) the original Mortgage Note, endorsed without recourse to
the order of the Trustee and showing an unbroken chain of endorsements from the
original payee thereof to the Person endorsing it to the Trustee, (ii) the
original Security Instrument, which shall have been recorded, with evidence of
such recording indicated thereon, (iii) a certified copy of the assignment
(which may be in the form of a blanket assignment if permitted in the
jurisdiction in which the Mortgaged Property is located) to "Bank One National
Association, as Trustee", with evidence of recording with respect to each
Mortgage Loan in the name of the Trustee thereon (or if clause (x) in the
proviso below applies, shall be in recordable form), (iv) all intervening
assignments of the Security Instrument, if applicable and only to the extent
available to the Seller with evidence of recording thereon, (v) the original or
a copy of the policy or certificate of primary mortgage guaranty insurance, to
the extent available, if any, (vi) the original policy of title insurance or
mortgagee's certificate of title insurance or commitment or binder for title
insurance and (vii) originals of all modification agreements, if applicable and
available;

PROVIDED, HOWEVER, that in lieu of the foregoing, the Seller may deliver the
following documents, under the circumstances set forth below: (x) in lieu of the
original Security Instrument, assignments


                                      -27-

<PAGE>



to the Trustee or intervening assignments thereof which have been delivered, are
being delivered or will, upon receipt of recording information relating to the
Security Instrument required to be included thereon, be delivered to recording
offices for recording and have not been returned to the Seller in time to permit
their delivery as specified above, the Seller may deliver a true copy thereof
with a certification by the Seller or the Master Servicer, on the face of such
copy, substantially as follows: "Certified to be a true and correct copy of the
original, which has been transmitted for recording"; (y) in lieu of the Security
Instrument, assignment to the Trustee or intervening assignments thereof, if the
applicable jurisdiction retains the originals of such documents (as evidenced by
a certification from the Seller or the Master Servicer, to such effect) the
Seller may deliver photocopies of such documents containing an original
certification by the judicial or other governmental authority of the
jurisdiction where such documents were recorded; and (z) the Seller shall not be
required to deliver intervening assignments or Mortgage Note endorsements
between the related Underlying Seller and EMC Mortgage Corporation, between EMC
Mortgage Corporation and the Depositor, and between the Depositor and the
Trustee; and PROVIDED, FURTHER, HOWEVER, that in the case of Mortgage Loans
which have been prepaid in full after the Cut-off Date and prior to the Closing
Date, the Seller, in lieu of delivering the above documents, may deliver to the
Trustee or the Custodian, as its agent, a certification to such effect and shall
deposit all amounts paid in respect of such Mortgage Loans in the Master
Servicer Collection Account on the Closing Date. The Seller shall deliver such
original documents (including any original documents as to which certified
copies had previously been delivered) to the Trustee or the Custodian, as its
agent, promptly after they are received. The Seller shall cause, at its expense,
the assignment of the Security Instrument to the Trustee to be recorded not
later than 180 days after the Closing Date, unless such recordation is not
required by the Rating Agencies or an Opinion of Counsel has been provided as
set forth below in this Section 2.01(b). The Seller need not cause to be
recorded any assignment in any jurisdiction under any state other than Maryland,
Florida, Mississippi, South Carolina and Tennessee; provided, however, that each
assignment shall be submitted for recording by the Seller in the manner
described above, at no expense to the Trust or the Trustee or the Custodian, as
its agent, upon the earliest to occur of : (i) reasonable direction by the
Holders of Certificates evidencing Fractional Undivided Interests aggregating
not less than 25% of the Trust, (ii) the occurrence of an Event of Default,
(iii) the occurrence of a bankruptcy, insolvency or foreclosure relating to the
Seller and (iv) the occurrence of a servicing transfer as described in Section
8.02 hereof. Notwithstanding the foregoing, if the Seller fails to pay the cost
of recording the assignments, such expense will be paid by the Trustee and the
Trustee shall be reimbursed for such expenses by the Trust in accordance with
Section 9.05.

         Section 2.02. ACCEPTANCE OF MORTGAGE LOANS BY TRUSTEE. (a) The Trustee
acknowledges the sale, transfer and assignment of the Trust to it by the Seller
and receipt of, subject to further review and the exceptions which may be noted
pursuant to the procedures described below, and declares that it holds, the
documents (or certified copies thereof) delivered to it pursuant to Section
2.01, and declares that it will continue to hold those documents and any
amendments, replacements or supplements thereto and all other assets of the
Trust Fund delivered to it as Trustee in trust for the use and benefit of all
present and future Holders of the Certificates. On the Closing Date, the
Custodian, with respect to the Mortgage Loans, shall acknowledge with respect to
each Mortgage Loan by an Initial Certification substantially in the form of
Exhibit One to the Custodial Agreement receipt of the Mortgage File, but without
review of such Mortgage File, except to the extent necessary to confirm that
such Mortgage File contains the related Mortgage Note or lost note affidavit. No
later than 45 days after the Closing Date (or, with respect to any Substitute
Mortgage


                                      -28-

<PAGE>



Loan, within five Business Days after the receipt by the Trustee or Custodian
thereof), the Trustee agrees, for the benefit of the Certificateholders, to
review or cause to be reviewed by the Custodian on its behalf (under the
Custodial Agreement), each Mortgage File delivered to it and to execute and
deliver, or cause to be executed and delivered, to the Seller and the Master
Servicer an Interim Certification substantially in the form annexed as Exhibit
Two to the Custodial Agreement. In conducting such review, the Trustee or
Custodian will ascertain whether all required documents have been executed and
received, and based on the Mortgage Loan Schedule, whether those documents
relate, determined on the basis of the Mortgagor name, original principal
balance and loan number, to the Mortgage Loans it has received, as identified in
the Mortgage Loan Schedule. In performing any such review, the Trustee or the
Custodian, as its agent, may conclusively rely on the purported due execution
and genuineness of any such document and on the purported genuineness of any
signature thereon. If the Trustee finds any document constituting part of the
Mortgage File not to have been executed or received, or to be unrelated to the
Mortgage Loans identified in Exhibit B or to appear to be defective on its face,
the Trustee shall promptly notify the Mortgage Loan Seller. In accordance with
the Mortgage Loan Purchase Agreement, the Mortgage Loan Seller shall correct or
cure any such defect within sixty (60) days from the date of notice from the
Trustee of the defect and if the Mortgage Loan Seller fails to correct or cure
the defect within such period, and such defect materially and adversely affects
the interests of the Certificateholders in the related Mortgage Loan, the
Trustee shall enforce the Mortgage Loan Seller's obligation pursuant to the
Mortgage Loan Purchase Agreement, within 60 days from the Trustee's
notification, to purchase such Mortgage Loan at the Repurchase Price; provided
that, if such defect would cause the Mortgage Loan to be other than a "qualified
mortgage" as defined in Section 860G(a)(3) of the Code, any such cure or
repurchase must occur within 90 days from the date such breach was discovered;
PROVIDED, HOWEVER, that if such defect relates solely to the inability of the
Mortgage Loan Seller to deliver the original Security Instrument or intervening
assignments thereof, or a certified copy because the originals of such
documents, or a certified copy have not been returned by the applicable
jurisdiction, the Mortgage Loan Seller shall not be required to purchase such
Mortgage Loan if the Mortgage Loan Seller delivers such original documents or
certified copy promptly upon receipt, but in no event later than 360 days after
the Closing Date. The foregoing repurchase obligation shall not apply in the
event that the Mortgage Loan Seller cannot deliver such original or copy of any
document submitted for recording to the appropriate recording office in the
applicable jurisdiction because such document has not been returned by such
office; provided that the Mortgage Loan Seller shall instead deliver a recording
receipt of such recording office or, if such receipt is not available, a
certificate confirming that such documents have been accepted for recording, and
delivery to the Trustee or the Custodian, as its agent, shall be effected by the
Mortgage Loan Seller within thirty days of its receipt of the original recorded
document.

         (b) No later than 180 days after the Closing Date, the Trustee or the
Custodian, as its agent, will review, for the benefit of the Certificateholders,
the Mortgage Files delivered to it and will execute and deliver or cause to be
executed and delivered to the Seller a Final Certification substantially in the
form annexed as Exhibit Three to the Custodial Agreement. In conducting such
review, the Trustee or the Custodian, as its agent, will ascertain whether an
original of each document required to be recorded has been returned from the
recording office with evidence of recording thereon or a certified copy has been
obtained from the recording office. If the Trustee or the Custodian, as its
agent, finds any document constituting part of the Mortgage File has not been
received, or to be unrelated, determined on the basis of the Mortgagor name,
original principal


                                      -29-

<PAGE>



balance and loan number, to the Mortgage Loans identified in Exhibit B or to
appear defective on its face, the Trustee shall promptly notify the Mortgage
Loan Seller (PROVIDED, HOWEVER, that with respect to those documents described
in subsection (b)(iv), (b)(v) and (b)(vi) of Section 2.01, the Trustee's,
obligations shall extend only to the documents actually delivered pursuant to
such subsections). In accordance with the Mortgage Loan Purchase Agreement, the
Mortgage Loan Seller shall correct or cure any such defect or EMC shall deliver
to the Trustee an Opinion of Counsel to the effect that such defect does not
materially or adversely affect the interests of Certificateholders in such
Mortgage Loan within 90 days from the date of notice from the Trustee of the
defect and if the Mortgage Loan Seller is unable to cure such defect within such
period, and if such defect materially and adversely affects the interests of the
Certificateholders in the related Mortgage Loan, the Trustee shall enforce the
Mortgage Loan Seller's obligation under the Mortgage Loan Purchase Agreement to
purchase such Mortgage Loan at the Repurchase Price, PROVIDED, HOWEVER, that if
such defect relates solely to the inability of the Mortgage Loan Seller to
deliver the original Security Instrument or intervening assignments thereof, or
a certified copy, because the originals of such documents. or a certified copy,
have not been returned by the applicable jurisdiction, the Mortgage Loan Seller
shall not be required to purchase such Mortgage Loan, if the Mortgage Loan
Seller delivers such original documents or certified copy promptly upon receipt,
but in no event later than 360 days after the Closing Date.

         (c) In the event that a Mortgage Loan is purchased by the Mortgage Loan
Seller in accordance with Subsections 2.02(a) or (b) above, the Trustee shall
deposit the Repurchase Price in the Master Servicer Collection Account and the
Mortgage Loan Seller shall provide to the Trustee written notification detailing
the components of the Repurchase Price. Upon deposit of the Repurchase Price in
the Master Servicer Collection Account, the Trustee or the Custodian, as its
agent, shall release to the Mortgage Loan Seller the related Mortgage File and
the Trustee shall execute and deliver all instruments of transfer or assignment,
without recourse, furnished to it by the Mortgage Loan Seller as are necessary
to vest in the Mortgage Loan Seller title to and rights under the Mortgage Loan.
Such purchase shall be deemed to have occurred on the date on which the
Repurchase Price in available funds is received by the Trustee. The Trustee
shall amend the Mortgage Loan Schedule, which was previously delivered to it by
Seller in a form agreed to between the Seller and the Trustee, to reflect such
repurchase and shall promptly notify the Rating Agencies of such amendment. The
obligation of the Mortgage Loan Seller to repurchase any Mortgage Loan as to
which such a defect in a constituent document exists shall be the sole remedy
respecting such defect available to the Certificateholders or to the Trustee on
their behalf.

         Section 2.03. ASSIGNMENT OF INTEREST IN THE MORTGAGE LOAN PURCHASE
AGREEMENT. (a) The Seller hereby assigns to the Trustee, on behalf of the
Certificateholders, all of its right, title and interest in the Mortgage Loan
Purchase Agreement, including but not limited to Seller's rights and obligations
pursuant to the Servicing Agreements (noting that the Mortgage Loan Seller has
retained the right in the event of breach of the representations, warranties and
covenants, if any, with respect to the related Mortgage Loans of the related
Servicer under the related Servicing Agreement to enforce the provisions thereof
and to seek all or any available remedies). The obligations of the Mortgage Loan
Seller to substitute or repurchase, as applicable, a Mortgage Loan shall be the
Trustee's and the Certificateholders' sole remedy for any breach thereof. At the
request of the Trustee, the Seller shall take such actions as may be necessary
to enforce the above right, title and


                                      -30-

<PAGE>



interest on behalf of the Trustee and the Certificateholders or shall execute
such further documents as the Trustee may reasonably require in order to enable
the Trustee to carry out such enforcement.

         (b) If the Seller, the Securities Administrator or the Trustee
discovers a breach of any of the representations and warranties set forth in the
Mortgage Loan Purchase Agreement, which breach materially and adversely affects
the value of the interests of Certificateholders or the Trustee in the related
Mortgage Loan, the party discovering the breach shall give prompt written notice
of the breach to the other parties. The Mortgage Loan Seller, within 60 days of
its discovery or receipt of notice that such breach has occurred (whichever
occurs earlier), shall cure the breach in all material respects or, subject to
the Mortgage Loan Purchase Agreement or Section 2.04 of this Agreement, as
applicable, shall purchase the Mortgage Loan or any property acquired with
respect thereto from the Trustee; PROVIDED, HOWEVER, that if there is a breach
of any representation set forth in the Mortgage Loan Purchase Agreement or
Section 2.04 of this Agreement, as applicable, and the Mortgage Loan or the
related property acquired with respect thereto has been sold, then the Mortgage
Loan Seller shall pay, in lieu of the Repurchase Price, any excess of the
Repurchase Price over the Net Liquidation Proceeds received upon such sale. (If
the Net Liquidation Proceeds exceed the Repurchase Price, any excess shall be
paid to the Mortgage Loan Seller to the extent not required by law to be paid to
the borrower.) Any such purchase by the Mortgage Loan Seller shall be made by
providing an amount equal to the Repurchase Price to the Trustee for deposit in
the Distribution Account and the Trustee, upon deposit of the Repurchase Price
in the Distribution Account and of written notification detailing the components
of such Repurchase Price, shall release, or the Trustee shall cause the
Custodian to release, to the Mortgage Loan Seller the related Mortgage File and
the Trustee shall execute and deliver all instruments of transfer or assignment
furnished to it by the Mortgage Loan Seller, without recourse, as are necessary
to vest in the Mortgage Loan Seller title to and rights under the Mortgage Loan
or any property acquired with respect thereto. Such purchase shall be deemed to
have occurred on the date on which the Repurchase Price in available funds is
received by the Trustee. The Trustee shall amend the Mortgage Loan Schedule to
reflect such repurchase and shall promptly notify the Master Servicer and the
Rating Agencies of such amendment. Enforcement of the obligation of the Mortgage
Loan Seller to purchase (or substitute a Substitute Mortgage Loan for) any
Mortgage Loan or any property acquired with respect thereto (or pay the
Repurchase Price as set forth in the above proviso) as to which a breach has
occurred and is continuing shall constitute the sole remedy respecting such
breach available to the Certificateholders or the Trustee on their behalf.

         Section 2.04. SUBSTITUTION OF MORTGAGE LOANS. Notwithstanding anything
to the contrary in this Agreement, in lieu of purchasing a Mortgage Loan
pursuant to the Mortgage Loan Purchase Agreement or Sections 2.02 or 2.03 of
this Agreement, the Mortgage Loan Seller may, no later than the date by which
such purchase by the Mortgage Loan Seller would otherwise be required, tender to
the Trustee a Substitute Mortgage Loan accompanied by a certificate of an
authorized officer of the Mortgage Loan Seller that such Substitute Mortgage
Loan conforms to the requirements set forth in the definition of "Substitute
Mortgage Loan" in the Mortgage Loan Purchase Agreement or this Agreement, as
applicable; PROVIDED, HOWEVER, that substitution pursuant to the Mortgage Loan
Purchase Agreement or Section 2.04 of this Agreement, as applicable, in lieu of
purchase shall not be permitted after the termination of the two-year period
beginning on the Startup Day. The Trustee or the Custodian, as its agent, shall
examine the Mortgage File for any Substitute Mortgage Loan in the manner set
forth in Section 2.02(a) and the Trustee shall notify the Mortgage Loan Seller,
in


                                      -31-

<PAGE>



writing, within five Business Days after receipt, whether or not the documents
relating to the Substitute Mortgage Loan satisfy the requirements of the fourth
sentence of Subsection 2.02(a). Within two Business Days after such
notification, the Mortgage Loan Seller shall provide to the Trustee for deposit
in the Distribution Account the amount, if any, by which the Outstanding
Principal Balance as of the next preceding Due Date of the Mortgage Loan for
which substitution is being made, after giving effect to Scheduled Principal due
on such date, exceeds the Outstanding Principal Balance as of such date of the
Substitute Mortgage Loan, after giving effect to Scheduled Principal due on such
date, which amount shall be treated for the purposes of this Agreement as if it
were the payment by the Mortgage Loan Seller of the Repurchase Price for the
purchase of a Mortgage Loan by the Mortgage Loan Seller. After such notification
to the Mortgage Loan Seller and, if any such excess exists, upon receipt of such
deposit, the Trustee shall accept such Substitute Mortgage Loan which shall
thereafter be deemed to be a Mortgage Loan hereunder. In the event of such a
substitution, accrued interest on the Substitute Mortgage Loan for the month in
which the substitution occurs and any Principal Prepayments made thereon during
such month shall be the property of the Trust Fund and accrued interest for such
month on the Mortgage Loan for which the substitution is made and any Principal
Prepayments made thereon during such month shall be the property of the Mortgage
Loan Seller. The Scheduled Principal on a Substitute Mortgage Loan due on the
Due Date in the month of substitution shall be the property of the Mortgage Loan
Seller and the Scheduled Principal on the Mortgage Loan for which the
substitution is made due on such Due Date shall be the property of the Trust
Fund. Upon acceptance of the Substitute Mortgage Loan, the Trustee shall release
to the Mortgage Loan Seller the related Mortgage File related to any Mortgage
Loan released pursuant to the Mortgage Loan Purchase Agreement or Section 2.04
of this Agreement, as applicable, and shall execute and deliver all instruments
of transfer or assignment, without recourse, in form as provided to it as are
necessary to vest in the Mortgage Loan Seller title to and rights under any
Mortgage Loan released pursuant to the Mortgage Loan Purchase Agreement or
Section 2.04 of this Agreement, as applicable. The Mortgage Loan Seller shall
deliver the documents related to the Substitute Mortgage Loan in accordance with
the provisions of the Mortgage Loan Purchase Agreement or Subsections 2.01(b)
and 2.02(b) of this Agreement, as applicable, with the date of acceptance of the
Substitute Mortgage Loan deemed to be the Closing Date for purposes of the time
periods set forth in those Subsections. The representations and warranties set
forth in the Mortgage Loan Purchase Agreement shall be deemed to have been made
by the Mortgage Loan Seller with respect to each Substitute Mortgage Loan as of
the date of acceptance of such Mortgage Loan by the Trustee. The Trustee shall
amend the Mortgage Loan Schedule to reflect such substitution and shall provide
a copy of such amended Mortgage Loan Schedule to the Master Servicer and the
Rating Agencies.

         Section 2.05. ISSUANCE OF CERTIFICATES. The Trustee acknowledges the
assignment to it of the Mortgage Loans and the other assets comprising the Trust
Fund and, concurrently therewith, has signed, and countersigned and delivered to
the Seller, in exchange therefor, Certificates in such authorized denominations
representing such Fractional Undivided Interests as the Seller has requested.
The Trustee agrees that it will hold the Mortgage Loans and such other assets as
may from time to time be delivered to it segregated on the books of the Trustee
in trust for the benefit of the Certificateholders.

         The Seller, concurrently with the execution and delivery hereof, does
hereby transfer, assign, set over and otherwise convey in trust to the Trustee
without recourse all the right, title and interest


                                      -32-

<PAGE>



of the Seller in and to the REMIC I Regular Interests for the benefit of the
holders of the REMIC II Certificates. The Trustee acknowledges receipt of the
REMIC I Regular Interests (which are uncertificated) and declares that it holds
and will hold the same in trust for the exclusive use and benefit of the holders
of the REMIC II Certificates.

         Section 2.06. REPRESENTATIONS AND WARRANTIES CONCERNING THE SELLER. The
Seller hereby represents and warrants to the Trustee and the Securities
Administrator as follows:

                  (i) the Seller (a) is a corporation duly organized, validly
         existing and in good standing under the laws of the State of Delaware
         and (b) is qualified and in good standing as a foreign corporation to
         do business in each jurisdiction where such qualification is necessary,
         except where the failure so to qualify would not reasonably be expected
         to have a material adverse effect on the Seller's business as presently
         conducted or on the Purchaser's ability to enter into this Agreement
         and to consummate the transactions contemplated hereby;

                  (ii) the Seller has full corporate power to own its property,
         to carry on its business as presently conducted and to enter into and
         perform its obligations under this Agreement;

                  (iii) the execution and delivery by the Seller of this
         Agreement have been duly authorized by all necessary corporate action
         on the part of the Seller; and neither the execution and delivery of
         this Agreement, nor the consummation of the transactions herein
         contemplated, nor compliance with the provisions hereof, will conflict
         with or result in a breach of, or constitute a default under, any of
         the provisions of any law, governmental rule, regulation, judgment,
         decree or order binding on the Seller or its properties or the articles
         of incorporation or by-laws of the Seller, except those conflicts,
         breaches or defaults which would not reasonably be expected to have a
         material adverse effect on the Seller's ability to enter into this
         Agreement and to consummate the transactions contemplated hereby;

                  (iv) the execution, delivery and performance by the Seller of
         this Agreement and the consummation of the transactions contemplated
         hereby do not require the consent or approval of, the giving of notice
         to, the registration with, or the taking of any other action in respect
         of, any state, federal or other governmental authority or agency,
         except those consents, approvals, notices, registrations or other
         actions as have already been obtained, given or made;

                  (v) this Agreement has been duly executed and delivered by the
         Seller and, assuming due authorization, execution and delivery by the
         other parties hereto, constitutes a valid and binding obligation of the
         Seller enforceable against it in accordance with its terms (subject to
         applicable bankruptcy and insolvency laws and other similar laws
         affecting the enforcement of the rights of creditors generally);

                  (vi) there are no actions, suits or proceedings pending or, to
         the knowledge of the Seller, threatened against the Seller, before or
         by any court, administrative agency, arbitrator or governmental body
         (i) with respect to any of the transactions contemplated by this
         Agreement or (ii) with respect to any other matter which in the
         judgment of the Seller will


                                      -33-

<PAGE>



         be determined adversely to the Seller and will if determined adversely
         to the Seller materially and adversely affect the Seller's ability to
         enter into this Agreement or perform its obligations under this
         Agreement; and the Seller is not in default with respect to any order
         of any court, administrative agency, arbitrator or governmental body so
         as to materially and adversely affect the transactions contemplated by
         this Agreement; and

                  (vii) immediately prior to the transfer and assignment to the
         Trustee, each Mortgage Note and each Mortgage were not subject to an
         assignment or pledge, and the Seller had good and marketable title to
         and was the sole owner thereof and had full right to transfer and sell
         such Mortgage Loan to the Trustee free and clear of any encumbrance,
         equity, lien, pledge, charge, claim or security interest.



                                      -34-

<PAGE>



                                   ARTICLE III

                 Administration and Servicing of Mortgage Loans

         Section 3.01. MASTER SERVICER. The Master Servicer shall supervise,
monitor and oversee the obligation of the Servicers and the Wells Fargo
Sub-Servicers to service and administer their respective Mortgage Loans in
accordance with the terms of the applicable Servicing Agreement or Servicing
Guide and shall have full power and authority to do any and all things which it
may deem necessary or desirable in connection with such master servicing and
administration. In performing its obligations hereunder, the Master Servicer
shall act in a manner consistent with Accepted Master Servicing Practices.
Furthermore, the Master Servicer shall oversee and consult with each Servicer
and Wells Fargo Sub-Servicer as necessary from time-to-time to carry out the
Master Servicer's obligations hereunder, shall receive, review and evaluate all
reports, information and other data provided to the Master Servicer by each
Servicer and Wells Fargo Sub-Servicer and shall cause each Servicer and Wells
Fargo Sub-Servicer to perform and observe the covenants, obligations and
conditions to be performed or observed by such Servicer or Wells Fargo
Sub-Servicer under the applicable Servicing Agreement or Servicing Guide. The
Master Servicer shall independently and separately monitor each Servicer's and
Wells Fargo Sub-Servicer's servicing activities with respect to each related
Mortgage Loan, reconcile the results of such monitoring with such information
provided in the previous sentence on a monthly basis and coordinate corrective
adjustments to the Servicers,' Wells Fargo Sub-Servicers' and Master Servicer's
records, and based on such reconciled and corrected information, prepare the
statements specified in Section 6.03 and any other information and statements
required hereunder. The Master Servicer shall reconcile the results of its
Mortgage Loan monitoring with the actual remittances of the Servicers and the
Wells Fargo Sub- Servicers to the Protected Account pursuant to the applicable
Servicing Agreements or Servicing Guide.

         The Trustee shall furnish the Servicers, Wells Fargo Sub-Servicers and
the Master Servicer with any powers of attorney and other documents in form as
provided to it necessary or appropriate to enable the Servicers, Wells Fargo
Sub-Servicers and the Master Servicer to service and administer the related
Mortgage Loans and REO Property.

         The Trustee shall provide access to the records and documentation in
possession of the Trustee regarding the related Mortgage Loans and REO Property
and the servicing thereof to the Certificateholders, the FDIC, and the
supervisory agents and examiners of the FDIC, such access being afforded only
upon reasonable prior written request and during normal business hours at the
office of the Trustee; PROVIDED, HOWEVER, that, unless otherwise required by
law, the Trustee shall not be required to provide access to such records and
documentation if the provision thereof would violate the legal right to privacy
of any Mortgagor. The Trustee shall allow representatives of the above entities
to photocopy any of the records and documentation and shall provide equipment
for that purpose at a charge that covers the Trustee's actual costs.

         The Trustee shall execute and deliver to related Servicer or Wells
Fargo Sub-Servicer and the Master Servicer any court pleadings, requests for
trustee's sale or other documents necessary or desirable to (i) the foreclosure
or trustee's sale with respect to a Mortgaged Property; (ii) any legal action
brought to obtain judgment against any Mortgagor on the Mortgage Note or
Security


                                      -35-

<PAGE>



Instrument; (iii) obtain a deficiency judgment against the Mortgagor; or (iv)
enforce any other rights or remedies provided by the Mortgage Note or Security
Instrument or otherwise available at law or equity.

         Section 3.02. REMIC-RELATED COVENANTS. For as long as each REMIC shall
exist, the Trustee shall act in accordance herewith to assure continuing
treatment of such REMIC as a REMIC, and the Trustee shall comply with any
directions of the Seller, the related Servicer or Wells Fargo Sub-Servicer, or
the Master Servicer to assure such continuing treatment. In particular, the
Trustee shall not (a) sell or permit the sale of all or any portion of the
Mortgage Loans or of any investment of deposits in an Account unless such sale
is as a result of a repurchase of the Mortgage Loans pursuant to this Agreement
or the Trustee has received a REMIC Opinion prepared at the expense of the Trust
Fund; and (b) other than with respect to a substitution pursuant to the Mortgage
Loan Purchase Agreement or Section 2.04 of this Agreement, as applicable, accept
any contribution to any REMIC after the Startup Day without receipt of a REMIC
Opinion.

         Section 3.03. MONITORING OF SERVICERS AND WELLS FARGO SUB-SERVICERS.
(a) The Master Servicer shall be responsible for reporting to the Trustee and
the Seller the compliance by each Servicer and Wells Fargo Sub-Servicer with its
duties under the related Servicing Agreement or Servicing Guide. In the review
of each Servicer's and Wells Fargo Sub-Servicer's activities, the Master
Servicer may rely upon an officer's certificate of the Servicer or Wells Fargo
Sub-Servicer with regard to such Servicer's or Wells Fargo Sub-Servicer's
compliance with the terms of its Servicing Agreement or Servicing Guide. In the
event that the Master Servicer, in its judgment, determines that a Servicer or
Wells Fargo Sub-Servicer should be terminated in accordance with its Servicing
Agreement or Servicing Guide, or that a notice should be sent pursuant to such
Servicing Agreement or Servicing Guide with respect to the occurrence of an
event that, unless cured, would constitute grounds for such termination, the
Master Servicer shall notify the Seller and the Trustee thereof and the Master
Servicer shall issue such notice or take such other action as it deems
appropriate.

         (b) The Master Servicer, for the benefit of the Trustee and the
Certificateholders, shall enforce the obligations of each Servicer and Wells
Fargo Sub-Servicer under the related Servicing Agreement or Servicing Guide, and
shall, in the event that a Servicer or Wells Fargo Sub-Servicer fails to perform
its obligations in accordance with the related Servicing Agreement or Servicing
Guide, subject to the preceding paragraph, terminate the rights and obligations
of such Servicer or Wells Fargo Sub-Servicer thereunder and act as servicer of
the related Mortgage Loans or (i) in the case of a Servicer, to cause the
Trustee to enter in to a new Servicing Agreement with a successor Servicer
selected by the Master Servicer (which new Servicing Agreement shall have terms
generally in accordance with the terms of the terminated Servicing Agreement) or
(ii) in the case of a Wells Fargo Sub-Servicer, to select a new Wells Fargo
Sub-Servicer in accordance with the related Servicing Guide; provided, however,
it is understood and acknowledged by the parties hereto that there will be a
period of transition (not to exceed 90 days) before the actual servicing
functions can be fully transferred to such successor Servicer or Wells Fargo
Sub-Servicer. Such enforcement, including, without limitation, the legal
prosecution of claims, termination of Servicing Agreements, removal of Wells
Fargo Sub-Servicers and the pursuit of other appropriate remedies, shall be in
such form and carried out to such an extent and at such time as the Master
Servicer, in its good faith business judgment, would require were it the owner
of the related Mortgage Loans. The Master


                                      -36-

<PAGE>



Servicer shall pay the costs of such enforcement at its own expense, provided
that the Master Servicer shall not be required to prosecute or defend any legal
action except to the extent that the Master Servicer shall have received
reasonable indemnity for its costs and expenses in pursuing such action.

         (c) To the extent that the costs and expenses of the Master Servicer
related to any termination of a Servicer or Wells Fargo Sub-Servicer,
appointment of a successor Servicer or Wells Fargo Sub-Servicer or the transfer
and assumption of servicing by the Master Servicer with respect to any Servicing
Agreement or Servicing Guide (including, without limitation, (i) all legal costs
and expenses and all due diligence costs and expenses associated with an
evaluation of the potential termination of the Servicer or Wells Fargo
Sub-Servicer as a result of an event of default by such Servicer or Wells Fargo
Sub-Servicer and (ii) all costs and expenses associated with the complete
transfer of servicing, including all servicing files and all servicing data and
the completion, correction or manipulation of such servicing data as may be
required by the successor servicer to correct any errors or insufficiencies in
the servicing data or otherwise to enable the successor service to service the
Mortgage Loans in accordance with the related Servicing Agreement or Servicing
Guide) are not fully and timely reimbursed by the terminated Servicer or Wells
Fargo Sub-Servicer, the Master Servicer shall be entitled to reimbursement of
such costs and expenses from the Master Servicer Collection Account.

         (d) The Master Servicer shall require each Servicer and Wells Fargo
Sub-Servicer to comply with the remittance requirements and other obligations
set forth in the related Servicing Agreement or related Servicing Guide.

         (e) If the Master Servicer assumes the servicing with respect to any of
the Mortgage Loans, it will not assume liability for the representations and
warranties of any Servicer or Wells Fargo Sub-Servicer, if any, that it
replaces.

         Section 3.04. FIDELITY BOND. The Master Servicer, at its expense, shall
maintain in effect a blanket fidelity bond and an errors and omissions insurance
policy, affording coverage with respect to all directors, officers, employees
and other Persons acting on such Master Servicer's behalf, and covering errors
and omissions in the performance of the Master Servicer's obligations hereunder.
The errors and omissions insurance policy and the fidelity bond shall be in such
form and amount generally acceptable for entities serving as master servicers or
trustees.

         Section 3.05. POWER TO ACT; PROCEDURES. The Master Servicer shall
master service the Mortgage Loans and shall have full power and authority,
subject to the REMIC Provisions and the provisions of Article X hereof, to do
any and all things that it may deem necessary or desirable in connection with
the master servicing and administration of the Mortgage Loans, including but not
limited to the power and authority (i) to execute and deliver, on behalf of the
Certificateholders and the Trustee, customary consents or waivers and other
instruments and documents, (ii) to consent to transfers of any Mortgaged
Property and assumptions of the Mortgage Notes and related Mortgages, (iii) to
collect any Insurance Proceeds and Liquidation Proceeds, and (iv) to effectuate
foreclosure or other conversion of the ownership of the Mortgaged Property
securing any Mortgage Loan, in each case, in accordance with the provisions of
this Agreement and the related Servicing Agreement or Servicing Guide, as
applicable. The Trustee shall furnish the Master Servicer, upon written


                                      -37-

<PAGE>



request from a Servicing Officer, with any powers of attorney empowering the
Master Servicer or any Servicer or Wells Fargo Sub-Servicer to execute and
deliver instruments of satisfaction or cancellation, or of partial or full
release or discharge, and to foreclose upon or otherwise liquidate Mortgaged
Property, and to appeal, prosecute or defend in any court action relating to the
Mortgage Loans or the Mortgaged Property, in accordance with the applicable
Servicing Agreement or Servicing Guide and this Agreement, and the Trustee shall
execute and deliver such other documents, as the Master Servicer may request, to
enable the Master Servicer to master service and administer the Mortgage Loans
and carry out its duties hereunder, in each case in accordance with Accepted
Master Servicing Practices (and the Trustee shall have no liability for misuse
of any such powers of attorney by the Master Servicer or any Servicer or Wells
Fargo Sub-Servicer). If the Master Servicer or the Trustee has been advised that
it is likely that the laws of the state in which action is to be taken prohibit
such action if taken in the name of the Trustee or that the Trustee would be
adversely affected under the "doing business" or tax laws of such state if such
action is taken in its name, the Master Servicer shall join with the Trustee in
the appointment of a co-trustee pursuant to Section 9.11 hereof. In the
performance of its duties hereunder, the Master Servicer shall be an independent
contractor and shall not, except in those instances where it is taking action in
the name of the Trustee, be deemed to be the agent of the Trustee.

         Section 3.06. DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS. To the extent
provided in the applicable Servicing Agreement or Servicing Guide, to the extent
Mortgage Loans contain enforceable due-on-sale clauses, the Master Servicer
shall cause the related Servicer or Wells Fargo Sub-Servicer to enforce such
clauses in accordance with the applicable Servicing Agreement or Servicing
Guide. If applicable law prohibits the enforcement of a due-on-sale clause or
such clause is otherwise not enforced in accordance with the applicable
Servicing Agreement or Servicing Guide, and, as a consequence, a Mortgage Loan
is assumed, the original Mortgagor may be released from liability in accordance
with the applicable Servicing Agreement or Servicing Guide.

         Section 3.07. RELEASE OF MORTGAGE FILES. (a) Upon becoming aware of the
payment in full of any Mortgage Loan, or the receipt by any Servicer or Wells
Fargo Sub-Servicer of a notification that payment in full has been escrowed in a
manner customary for such purposes for payment to Certificateholders on the next
Distribution Date, the Servicer or Wells Fargo Sub- Servicer will, if required
under the applicable Servicing Agreement or Servicing Guide, promptly furnish to
the Custodian on behalf of the Trustee two copies of a certification
substantially in the form of Exhibit D hereto signed by a Servicing Officer or
in a mutually agreeable electronic format which will, in lieu of a signature on
its face, originate from a Servicing Officer (which certification shall include
a statement to the effect that all amounts received in connection with such
payment that are required to be deposited in the Protected Account maintained by
the Master Servicer pursuant to Section 4.01 or by the applicable Servicer or
Wells Fargo Sub-Servicer pursuant to its Servicing Agreement or Servicing Guide
have been or will be so deposited) and shall request that the Custodian on
behalf of the Trustee deliver to the applicable Servicer or Wells Fargo
Sub-Servicer the related Mortgage File. Upon receipt of such certification and
request, the Custodian on behalf of the Trustee shall promptly release the
related Mortgage File to the applicable Servicer or Wells Fargo Sub-Servicer and
the Trustee shall have no further responsibility with regard to such Mortgage
File. Upon any such payment in full, each Servicer or Wells Fargo Sub-Servicer
is authorized, to give, as agent for the Trustee, as the mortgagee under the
Mortgage that secured the Mortgage Loan, an instrument of satisfaction (or
assignment of mortgage without recourse) regarding the Mortgaged


                                      -38-

<PAGE>



Property subject to the Mortgage, which instrument of satisfaction or
assignment, as the case may be, shall be delivered to the Person or Persons
entitled thereto against receipt therefor of such payment, it being understood
and agreed that no expenses incurred in connection with such instrument of
satisfaction or assignment, as the case may be, shall be chargeable to the
Protected Account.

         (b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan and in accordance with the applicable Servicing
Agreement or Servicing Guide, the Trustee shall execute such documents as shall
be prepared and furnished to the Trustee by a Servicer, Wells Fargo Sub-Servicer
or the Master Servicer (in form reasonably acceptable to the Trustee) and as are
necessary to the prosecution of any such proceedings. The Custodian on behalf of
the Trustee shall, upon the request of a Servicer, Wells Fargo Sub-Servicer or
the Master Servicer, and delivery to the Custodian on behalf of the Trustee, of
two copies of a request for release signed by a Servicing Officer substantially
in the form of Exhibit D (or in a mutually agreeable electronic format which
will, in lieu of a signature on its face, originate from a Servicing Officer),
release the related Mortgage File held in its possession or control to the
Servicer, Wells Fargo Sub-Servicer or the Master Servicer, as applicable. Such
trust receipt shall obligate the Servicer, Wells Fargo Sub- Servicer or the
Master Servicer to return the Mortgage File to the Custodian on behalf of the
Trustee, when the need therefor by the Servicer or the Master Servicer no longer
exists unless the Mortgage Loan shall be liquidated, in which case, upon receipt
of a certificate of a Servicing Officer similar to that hereinabove specified,
the Mortgage File shall be released by the Custodian on behalf of the Trustee,
to the Servicer, Wells Fargo Sub-Servicer or the Master Servicer.

         Section 3.08. DOCUMENTS, RECORDS AND FUNDS IN POSSESSION OF MASTER
SERVICER TO BE HELD FOR TRUSTEE.

         (a) The Master Servicer shall transmit and each Servicer and Wells
Fargo Sub-Servicer (to the extent required by the related Servicing Agreement or
the related Servicing Guide) shall transmit to the Trustee or Custodian such
documents and instruments coming into the possession of the Master Servicer or
such Servicer or Wells Fargo Sub-Servicer from time to time as are required by
the terms hereof, or in the case of the Servicers and Wells Fargo Sub-Servicers,
the applicable Servicing Agreement or Servicing Guide, to be delivered to the
Trustee or Custodian. Any funds received by the Master Servicer, a Servicer or a
Wells Fargo Sub-Servicer in respect of any Mortgage Loan or which otherwise are
collected by the Master Servicer, a Servicer or a Wells Fargo Sub- Servicer as
Liquidation Proceeds or Insurance Proceeds in respect of any Mortgage Loan shall
be held for the benefit of the Trustee and the Certificateholders subject to the
Master Servicer's right to retain or withdraw from the Master Servicer
Collection Account the Master Servicer's compensation and other amounts provided
in this Agreement, and to the right of each Servicer or Wells Fargo Sub-Servicer
to retain its Servicing Fee and other amounts as provided in the applicable
Servicing Agreement or Servicing Guide. The Master Servicer shall, and (to the
extent provided in the applicable Servicing Agreement or Servicing Guide) shall
cause each Servicer and Wells Fargo Sub-Servicer to, provide access to
information and documentation regarding the Mortgage Loans to the Trustee, its
agents and accountants at any time upon reasonable request and during normal
business hours, and to Certificateholders that are savings and loan
associations, banks or insurance companies, the Office of Thrift Supervision,
the FDIC and the supervisory agents and examiners of such Office and Corporation
or examiners of any other federal or state banking or insurance


                                      -39-

<PAGE>



regulatory authority if so required by applicable regulations of the Office of
Thrift Supervision or other regulatory authority, such access to be afforded
without charge but only upon reasonable request in writing and during normal
business hours at the offices of the Master Servicer designated by it. In
fulfilling such a request the Master Servicer shall not be responsible for
determining the sufficiency of such information.

         (b) All 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, shall be held by the Master Servicer for and on behalf of
the Trustee and the Certificateholders and shall be and remain the sole and
exclusive property of the Trustee; provided, however, that the Master Servicer
and each Servicer and Wells Fargo Sub-Servicer shall be entitled to setoff
against, and deduct from, any such funds any amounts that are properly due and
payable to the Master Servicer or such Servicer or Wells Fargo Sub-Servicer
under this Agreement or the applicable Servicing Agreement or Servicing Guide.

         Section 3.09. STANDARD HAZARD INSURANCE AND FLOOD INSURANCE POLICIES.

         (a) For each Mortgage Loan, the Master Servicer shall enforce any
obligation of the Servicers and Wells Fargo Sub-Servicers under the related
Servicing Agreement or Servicing Guide to maintain or cause to be maintained
standard fire and casualty insurance and, where applicable, flood insurance, all
in accordance with the provisions of the related Servicing Agreement or
Servicing Guide. It is understood and agreed that such insurance shall be with
insurers meeting the eligibility requirements set forth in the applicable
Servicing Agreement or Servicing Guide and that no earthquake or other
additional insurance is to be required of any Mortgagor or to be maintained on
property acquired in respect of a defaulted loan, other than pursuant to such
applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance.

         (b) Pursuant to Section 4.01, any amounts collected by the Master
Servicer, or by any Servicer or Wells Fargo Sub-Servicer, under any insurance
policies (other than amounts to be applied to the restoration or repair of the
property subject to the related Mortgage or released to the Mortgagor in
accordance with the applicable Servicing Agreement or Servicing Guide) shall be
deposited into the Master Servicer Collection Account, subject to withdrawal
pursuant to Section 4.03. Any cost incurred by the Master Servicer or any
Servicer or Wells Fargo Sub-Servicer in maintaining any such insurance if the
Mortgagor defaults in its obligation to do so shall be added to the amount owing
under the Mortgage Loan where the terms of the Mortgage Loan so permit;
provided, however, that the addition of any such cost shall not be taken into
account for purposes of calculating the distributions to be made to
Certificateholders and shall be recoverable by the Master Servicer or such
Servicer or Wells Fargo Sub-Servicer pursuant to Section 4.03.

         Section 3.10. PRESENTMENT OF CLAIMS AND COLLECTION OF PROCEEDS. The
Master Servicer shall (to the extent provided in the applicable Servicing
Agreement or Servicing Guide) cause the related Servicer or Wells Fargo
Sub-Servicer to, prepare and present on behalf of the Trustee and the
Certificateholders all claims under the Insurance Policies and take such actions
(including the negotiation, settlement, compromise or enforcement of the
insured's claim) as shall be necessary to realize recovery under such policies.
Any proceeds disbursed to the Master Servicer (or disbursed to a Servicer or
Wells Fargo Sub-Servicer and remitted to the Master Servicer or, in the case of
First


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<PAGE>



Union, to the Trustee) in respect of such policies, bonds or contracts shall be
promptly deposited in the Master Servicer Collection Account upon receipt,
except that any amounts realized that are to be applied to the repair or
restoration of the related Mortgaged Property as a condition precedent to the
presentation of claims on the related Mortgage Loan to the insurer under any
applicable Insurance Policy need not be so deposited (or remitted).

         Section 3.11. MAINTENANCE OF THE PRIMARY MORTGAGE INSURANCE POLICIES.
(a) The Master Servicer shall not take, or permit any Servicer or Wells Fargo
Sub-Servicer (to the extent such action is prohibited under the applicable
Servicing Agreement or Servicing Guide) to take, any action that would result in
noncoverage under any applicable Primary Mortgage Insurance Policy of any loss
which, but for the actions of such Master Servicer, Servicer or Wells Fargo
Sub-Servicer, would have been covered thereunder. The Master Servicer shall use
its best reasonable efforts to cause each Servicer and Wells Fargo Sub-Servicer
(to the extent required under the related Servicing Agreement or Servicing
Guide) to keep in force and effect (to the extent that the Mortgage Loan
requires the Mortgagor to maintain such insurance), primary mortgage insurance
applicable to each Mortgage Loan in accordance with the provisions of this
Agreement and the related Servicing Agreement or Servicing Guide, as applicable.
The Master Servicer shall not, and shall not permit any Servicer or Wells Fargo
Sub-Servicer (to the extent required under the related Servicing Agreement or
Servicing Guide) to, cancel or refuse to renew any such Primary Mortgage
Insurance Policy that is in effect at the date of the initial issuance of the
Mortgage Note and is required to be kept in force hereunder except in accordance
with the provisions of this Agreement and the related Servicing Agreement or
Servicing Guide, as applicable.

         (b) The Master Servicer agrees to present, or to cause each Servicer
and Wells Fargo Sub- Servicer (to the extent required under the related
Servicing Agreement or Servicing Guide) to present, on behalf of the Trustee and
the Certificateholders, claims to the insurer under any Primary Mortgage
Insurance Policies and, 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 4.01, any amounts
collected by the Master Servicer or any Servicer or Wells Fargo Sub-Servicer
under any Primary Mortgage Insurance Policies shall be deposited in the Master
Servicer Collection Account, subject to withdrawal pursuant to Section 4.03.

         Section 3.12. TRUSTEE TO RETAIN POSSESSION OF CERTAIN INSURANCE
                       POLICIES AND DOCUMENTS.

         The Trustee (or the Custodian, as directed by the Trustee), shall
retain possession and custody of the originals (to the extent available) of the
PMI Policy or any other Primary Mortgage Insurance Policies, or certificate of
insurance if applicable, and any certificates of renewal as to the foregoing as
may be issued from time to time as contemplated by this Agreement. Until all
amounts distributable in respect of the Certificates have been distributed in
full and the Master Servicer otherwise has fulfilled its obligations under this
Agreement, the Trustee (or its Custodian, if any, as directed by the Trustee)
shall also retain possession and custody of each Mortgage File in accordance
with and subject to the terms and conditions of this Agreement. The Master
Servicer shall promptly deliver or cause to be delivered to the Trustee (or the
Custodian, as directed by the Trustee), upon the execution or receipt thereof
the originals of the PMI Policy or any other Primary Mortgage Insurance
Policies, any certificates of renewal, and such other documents or instruments
that constitute portions of the Mortgage File that come into the possession of
the Master Servicer from time to time.


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<PAGE>



         Section 3.13. REALIZATION UPON DEFAULTED MORTGAGE LOANS. (a) The Master
Servicer shall cause each Servicer and Wells Fargo Sub-Servicer (to the extent
required under the related Servicing Agreement or Servicing Guide) to foreclose
upon, repossess or otherwise comparably convert the ownership of Mortgaged
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, all in accordance with the applicable Servicing
Agreement or Servicing Guide.

         (b) Notwithstanding the foregoing paragraph of this Section 3.13, in
the event that a Foreclosure Restricted Loan goes into foreclosure, if acquiring
title to the related Mortgaged Property by foreclosure or by deed in lieu of
foreclosure would cause the adjusted bases of the Mortgaged Properties
underlying the Foreclosure Restricted Loans that are in foreclosure (along with
any other assets owned by REMIC I other than "qualified mortgages" and
"permitted investments" within the meaning of Section 860G of the Code) to
exceed 0.75% of the adjusted tax bases of the total assets in REMIC I, the
Master Servicer will not acquire title or permit the related Servicer or Wells
Fargo Sub-Servicer to acquire title to such Mortgage Loan on behalf of the Trust
Fund. Instead, the Master Servicer will dispose of or cause the related Servicer
or Wells Fargo Sub- Servicer to dispose of such Mortgage Loan for cash in a
foreclosure sale. In addition, if the Master Servicer determines that following
a distribution on any Distribution Date the adjusted bases of the Mortgaged
Properties underlying the Foreclosure Restricted Loans that are in foreclosure
(along with any other assets owned by REMIC I other than "qualified mortgages"
and "permitted investments" within the meaning of Section 860G of the Code)
exceed 1.0% of the adjusted tax bases of the total assets of REMIC I immediately
after the distribution, then prior to such Distribution Date, the Master
Servicer shall dispose of enough of such Mortgaged Properties in foreclosure,
for cash, so that the adjusted bases of such Mortgaged Properties in foreclosure
(along with any other assets owned by REMIC I other than "qualified mortgages"
and "permitted investments" within the meaning of Section 860G of the Code) will
be less than 1.0% of the adjusted bases of the assets of REMIC I. In either
event, the Master Servicer or the related Servicer or Wells Fargo Sub-Servicer
is permitted to acquire (for its own account and not on behalf of the Trust
Fund) the Mortgaged Property at the foreclosure sale for an amount not less than
the greater of: (i) the highest amount bid by any other person at the
foreclosure sale, or (ii) the estimated fair value of the Mortgaged Property, as
determined by the Master Servicer or the related Servicer or Wells Fargo
Sub-Servicer in good faith.

         Section 3.14. COMPENSATION FOR THE MASTER SERVICER. Servicing
compensation in the form of assumption fees, if any, late payment charges, as
collected, if any, or otherwise (but not including any prepayment premium or
penalty) shall be retained by the Master Servicer (or the applicable Servicer)
and shall not be deposited in the Master Servicer Collection Account. The Master
Servicer will be entitled to retain, as additional compensation, any interest
remitted by a Servicer or Wells Fargo Sub-Servicer in connection with a
Principal Prepayment in full or otherwise in excess of amounts required to be
remitted to the Master Servicer Collection Account. The Master Servicer shall be
required to pay all expenses incurred by it in connection with its activities
hereunder and shall not be entitled to reimbursement therefor except as provided
in this Agreement. Pursuant to Article IV all income and gain realized from any
investment of funds in the Distribution Account and the Master Servicer
Collection Account shall be for the benefit of the Master Servicer as additional
compensation.



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<PAGE>



         (b) The amount of the aggregate compensation payable to the Master
Servicer in respect of any Distribution Date shall be reduced in accordance with
Section 6.06.

         Section 3.15. REO PROPERTY. (a) In the event the Trust Fund acquires
ownership of any REO Property in respect of any related Mortgage Loan, the deed
or certificate of sale shall be issued to the Trustee, or to its nominee, on
behalf of the related Certificateholders. The Master Servicer shall, to the
extent provided in the applicable Servicing Agreement or Servicing Guide, cause
the applicable Servicer or Wells Fargo Sub-Servicer to sell, any REO Property as
expeditiously as possible and in accordance with the provisions of this
Agreement and the related Servicing Agreement or Servicing Guide, as applicable.
Pursuant to its efforts to sell such REO Property, the Master Servicer shall
cause the applicable Servicer or Wells Fargo Sub-Servicer to protect and
conserve, such REO Property in the manner and to the extent required by the
applicable Servicing Agreement or Servicing Guide, subject to the REMIC
Provisions.

         (b) The Master Servicer shall, to the extent required by the related
Servicing Agreement or Servicing Guide, cause the applicable Servicer or Wells
Fargo Sub-Servicer to deposit all funds collected and received in connection
with the operation of any REO Property in the Protected Account.

         (c) The Master Servicer and the applicable Servicer or Wells Fargo
Sub-Servicer, upon the final disposition of any REO Property, shall be entitled
to reimbursement for any related unreimbursed Monthly Advances and other
unreimbursed advances as well as any unpaid Master Servicing Fees or Servicing
Fees from Liquidation Proceeds received in connection with the final disposition
of such REO Property; provided, that any such unreimbursed Monthly Advances as
well as any unpaid Master Servicing Fees or Servicing Fees may be reimbursed or
paid, as the case may be, prior to final disposition, out of any net rental
income or other net amounts derived from such REO Property.

         (d) The Liquidation Proceeds from the final disposition of the REO
Property, net of any payment to the Master Servicer and the applicable Servicer
or Wells Fargo Sub-Servicer as provided above shall be deposited in the
Protected Account on or prior to the Determination Date in the month following
receipt thereof and be remitted by wire transfer in immediately available funds
to the Trustee for deposit into the related Master Servicer Collection Account
on the next succeeding Distribution Account Deposit Date.

         Section 3.16. ANNUAL OFFICER'S CERTIFICATE AS TO COMPLIANCE. (a) The
Master Servicer shall deliver to the Trustee and the Rating Agencies on or
before May 31 of each year, commencing on May 31, 2002, an Officer's
Certificate, certifying that with respect to the period ending December 31 of
the prior year: (i) such Servicing Officer has reviewed the activities of such
Master Servicer during the preceding calendar year or portion thereof and its
performance under this Agreement, (ii) to the best of such Servicing Officer's
knowledge, based on such review, such Master Servicer has performed and
fulfilled its duties, responsibilities and obligations under this Agreement in
all material respects throughout such year, or, if there has been a default in
the fulfillment of any such duties, responsibilities or obligations, specifying
each such default known to such Servicing Officer and the nature and status
thereof, (iii) nothing has come to the attention of such Servicing Officer to
lead such Servicing Officer to believe that any Servicer or Wells Fargo


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<PAGE>



Sub-Servicer has failed to perform any of its duties, responsibilities and
obligations under its Servicing Agreement or Servicing Guide in all material
respects throughout such year, or, if there has been a material 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.

         (b) Copies of such statements shall be provided to any
Certificateholder upon request, by the Master Servicer or by the Trustee at the
Master Servicer's expense if the Master Servicer failed to provide such copies
(unless (i) the Master Servicer shall have failed to provide the Trustee with
such statement or (ii) the Trustee shall be unaware of the Master Servicer's
failure to provide such statement).

         Section 3.17. ANNUAL INDEPENDENT ACCOUNTANT'S SERVICING REPORT. If the
Master Servicer has, during the course of any fiscal year, directly serviced any
of the Mortgage Loans, then the Master Servicer at its expense shall cause a
nationally recognized firm of independent certified public accountants to
furnish a statement to the Trustee, the Rating Agencies and the Seller on or
before May 31 of each year, commencing on May 31, 2002 to the effect that, with
respect to the most recently ended fiscal year, such firm has examined certain
records and documents relating to the Master Servicer's performance of its
servicing obligations under this Agreement and pooling and servicing and trust
agreements in material respects similar to this Agreement and to each other and
that, on the basis of such examination conducted substantially in compliance
with the audit program for mortgages serviced for Freddie Mac or the Uniform
Single Attestation Program for Mortgage Bankers, such firm is of the opinion
that the Master Servicer's activities have been conducted in compliance with
this Agreement, or that such examination has disclosed no material items of
noncompliance except for (i) such exceptions as such firm believes to be
immaterial, (ii) such other exceptions as are set forth in such statement and
(iii) such exceptions that the Uniform Single Attestation Program for Mortgage
Bankers or the Audit Program for Mortgages Serviced by Freddie Mac requires it
to report. Copies of such statements shall be provided to any Certificateholder
upon request by the Master Servicer, or by the Trustee at the expense of the
Master Servicer if the Master Servicer shall fail to provide such copies. If
such report discloses exceptions that are material, the Master Servicer shall
advise the Trustee whether such exceptions have been or are susceptible of cure,
and will take prompt action to do so.

         Section 3.18. REPORTS FILED WITH SECURITIES AND EXCHANGE COMMISSION.
Within 15 days after each Distribution Date, the Securities Administrator shall,
in accordance with industry standards, file with the Commission via the
Electronic Data Gathering and Retrieval System ("EDGAR"), a Form 8-K with a copy
of the statement to the Trustee who shall furnish a copy of the statement to the
Certificateholders for such Distribution Date as an exhibit thereto. Prior to
January 30, 2002, the Securities Administrator shall, in accordance with
industry standards and only if instructed by the Seller, file a Form 15
Suspension Notice with respect to the Trust Fund, if applicable. Prior to March
30, 2002, the Securities Administrator shall file a Form 10-K, in substance
conforming to industry standards, with respect to the Trust Fund. The Seller
hereby grants to the Securities Administrator 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
Securities Administrator 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 Securities Administrator,


                                      -44-

<PAGE>



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 Securities Administrator reasonably deems appropriate to prepare and file
all necessary reports with the Commission. The Securities Administrator shall
have no responsibility to file any items other than those specified in this
Section 3.03; provided, however, the Securities Administrator 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
Securities Administrator 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 Securities Administrator in connection with this Section 3.03
shall not be reimbursable from the Trust Fund.

         Section 3.19. EMC. On the Closing Date, EMC will receive from the
Seller a payment of $5,000.

         Section 3.20. UCC. The Trustee agrees to file continuation statements
for any Uniform Commercial Code financing statements which the Seller has
informed the Trustee and the Trustee were filed on the Closing Date in
connection with the Trust. The Seller shall file any financing statements or
amendments thereto required by any change in the Uniform Commercial Code.

         Section 3.21. OPTIONAL PURCHASE OF DEFAULTED MORTGAGE LOANS.

                  As to any Mortgage Loan which is delinquent in payment by 90
days or more, the Master Servicer or the related Servicer may, at its option,
purchase such Mortgage Loan from the Trustee at the Repurchase Price therefor.
If at any time the Master Servicer or a Servicer makes a payment to the Master
Servicer Collection Account covering the amount of the Repurchase Price for such
a Mortgage Loan, and the Master Servicer or a Servicer provides to the Trustee a
certification signed by a Servicing Officer stating that the amount of such
payment has been deposited in the Master Servicer Collection Account, then the
Trustee shall execute the assignment of such Mortgage Loan at the request of the
Master Servicer or the Servicer without recourse to the Master Servicer or the
Servicer which shall succeed to all the Trustee's right, title and interest in
and to such Mortgage Loan, and all security and documents relative thereto. Such
assignment shall be an assignment outright and not for security. The Master
Servicer or the Servicer will thereupon own such Mortgage, and all such security
and documents, free of any further obligation to the Trustee or the
Certificateholders with respect thereto.


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<PAGE>




                                   ARTICLE IV

                                    Accounts

         Section 4.01. PROTECTED ACCOUNTS. (a) The Master Servicer shall enforce
the obligation of each Servicer and Wells Fargo Sub-Servicer to establish and
maintain a Protected Account in accordance with the applicable Servicing
Agreement or Servicing Guide, with records to be kept with respect thereto on a
Mortgage Loan by Mortgage Loan basis, into which accounts shall be deposited
within 48 hours (or as of such other time specified in the related Servicing
Agreement or Servicing Guide) of receipt all collections of principal and
interest on any Mortgage Loan and with respect to any REO Property received by a
Servicer or Wells Fargo Sub-Servicer, including Principal Prepayments, Insurance
Proceeds, Liquidation Proceeds, and advances made from the Servicer's or Wells
Fargo Sub-Servicer's own funds (less servicing compensation as permitted by the
applicable Servicing Agreement or Servicing Guide in the case of any Servicer or
Wells Fargo Sub-Servicer) and all other amounts to be deposited in the Protected
Account. The Servicers or Wells Fargo Sub- Servicer is hereby authorized to make
withdrawals from and deposits to the related Protected Account for purposes
required or permitted by this Agreement. The Protected Account shall be held in
a Designated Depository Institution and segregated on the books of such
institution in the name of the Trustee for the benefit of Certificateholders.

         (b) Amounts on deposit in a Protected Account may be invested in
Permitted Investments in the name of the Trustee for the benefit of
Certificateholders and, except as provided in the preceding paragraph, not
commingled with any other funds, such Permitted Investments to mature, or to be
subject to redemption or withdrawal, no later than the date on which such funds
are required to be withdrawn for deposit in the Master Servicer Collection
Account or the Distribution Account, as applicable, and shall be held until
required for such deposit. The income earned from Permitted Investments made
pursuant to this Section 4.01 shall be paid to the related Servicer or Wells
Fargo Sub-Servicer under the applicable Servicing Agreement or Servicing Guide,
and the risk of loss of moneys required to be distributed to the
Certificateholders resulting from such investments shall be borne by and be the
risk of the related Servicer or Wells Fargo Sub-Servicer. The related Servicer
or Wells Fargo Sub-Servicer (to the extent provided in the Servicing Agreement
or Servicing Guide) shall deposit the amount of any such loss in the Protected
Account within two Business Days of receipt of notification of such loss but not
later than the second Business Day prior to the Distribution Date on which the
moneys so invested are required to be distributed to the Certificateholders.

         (c) Subject to this Article IV, on or before each Servicer Remittance
Date, the related Servicer or Wells Fargo Sub-Servicer shall withdraw or shall
cause to be withdrawn from the Protected Accounts and shall immediately deposit
or cause to be deposited in the Master Servicer Collection Account amounts
representing the following collections and payments (other than with respect to
principal of or interest on the Mortgage Loans due on or before the Cut-off
Date) with respect to each Loan Group:

                  (i) Scheduled Payments on the Mortgage Loans received or any
         related portion thereof advanced by the related Servicers or Wells
         Fargo Sub-Servicers (other than First


                                      -46-

<PAGE>



         Union) pursuant to the Servicing Agreements or Servicing Guides which
         were due on or before the related Due Date, net of the amount thereof
         comprising the Servicing Fees;

                  (ii) Full Principal Prepayments and any Liquidation Proceeds
         received by the Servicers or Wells Fargo Sub-Servicer (other than First
         Union) with respect to such Mortgage Loans in the related Prepayment
         Period, with interest to the date of prepayment or liquidation, net of
         the amount thereof comprising the Servicing Fees;

                  (iii)    Partial Principal Prepayments received by the
         Servicers or Wells Fargo Sub- Servicers (other than First Union) for
         such Mortgage Loans in the related Prepayment Period; and

                  (iv)     Any amount to be used as an Advance.

         (d) Withdrawals may be made from a Protected Account only to make
remittances as provided in Section 4.01(b); to reimburse the Master Servicer or
a Servicer or Wells Fargo Sub- Servicer for Monthly Advances which have been
recovered by subsequent collection from the related Mortgagor; to remove amounts
deposited in error; to remove fees, charges or other such amounts deposited on a
temporary basis; or to clear and terminate the account at the termination of
this Agreement in accordance with Section 10.01. As provided in Section 4.02(b)
certain amounts otherwise due to the Servicers and Wells Fargo Sub-Servicers may
be retained by them and need not be deposited in the Master Servicer Collection
Account.

         Section 4.02. MASTER SERVICER COLLECTION ACCOUNT. (a) The Master
Servicer shall establish and maintain in the name of the Trustee, for the
benefit of the Certificateholders, the Master Servicer Collection Account as a
segregated trust account or accounts. The Master Servicer will deposit in the
Master Servicer Collection Account as identified by the Master Servicer and as
received by the Master Servicer, the following amounts (other than amounts
remitted by First Union, as Servicer):

                  (i)      Any amounts withdrawn from a Protected Account;

                  (ii)     Any Monthly Advance and any Compensating Interest
         Payments;

                  (iii) Any Insurance Proceeds or Liquidation Proceeds received
         by or on behalf of the Master Servicer or which were not deposited in a
         Protected Account;

                  (iv) The Repurchase Price with respect to any Mortgage Loans
         purchased by the Mortgage Loan Seller or Section 2.02 or 2.03, any
         amounts which are to be treated pursuant to Section 2.04 of this
         Agreement as the payment of such a Repurchase Price, the Repurchase
         Price with respect to any Mortgage Loans purchase by the Master
         Servicer or the related Servicer pursuant to Section 3.21, and all
         proceeds of any Mortgage Loans or property acquired with respect
         thereto repurchased by the Seller or its designee pursuant to Section
         10.01;

                  (v)      Any amounts required to be deposited with respect to
         losses on investments of deposits in an Account; and


                                      -47-

<PAGE>




                  (vi) Any other amounts received by or on behalf of the Master
         Servicer or the Trustee and required to be deposited in the Master
         Servicer Collection Account pursuant to this Agreement.

         (b) All amounts deposited to the Master Servicer Collection Account
shall be held by the Master Servicer in the name of the Trustee in trust for the
benefit of the Certificateholders in accordance with the terms and provisions of
this Agreement. The requirements for crediting the Master Servicer Collection
Account or the Distribution Account shall be exclusive, it being understood and
agreed that, without limiting the generality of the foregoing, payments in the
nature of (i) prepayment or late payment charges or assumption, tax service,
statement account or payoff, substitution, satisfaction, release and other like
fees and charges and (ii) the items enumerated in Subsections 4.05(a)(i), (ii),
(iii), (iv), (vi), (vii), (ix) and (xi) need not be credited by the Master
Servicer or the related Servicer or Wells Fargo Sub-Servicer to the Distribution
Account or the Master Servicer Collection Account, as applicable. In the event
that the Master Servicer shall deposit or cause to be deposited to the
Distribution Account any amount not required to be credited thereto, the
Trustee, upon receipt of a written request therefor signed by a Servicing
Officer of the Master Servicer, shall promptly transfer such amount to the
Master Servicer, any provision herein to the contrary notwithstanding.

         (c) The amount at any time credited to the Master Servicer Collection
Account shall be invested, in the name of the Trustee, or its nominee, for the
benefit of the Certificateholders, in Permitted Investments as directed by the
Master Servicer. All Permitted Investments shall mature or be subject to
redemption or withdrawal on or before, and shall be held until, the next
succeeding Distribution Account Deposit Date. Any and all investment earnings
from the Master Servicer Collection Account shall be paid to the Master
Servicer. The risk of loss of moneys required to be distributed to the
Certificateholders resulting from such investments shall be borne by and be the
risk of the Master Servicer. The Master Servicer shall deposit the amount of any
such loss in the Master Servicer Collection Account within two Business Days of
receipt of notification of such loss but not later than the second Business Day
prior to the Distribution Date on which the moneys so invested are required to
be distributed to the Certificateholders.

         (d) On or before each Distribution Account Deposit Date, the Master
Servicer shall deposit in the Distribution Account (or remit to the Trustee for
deposit therein) any Monthly Advances required to be made by the Master Servicer
with respect to the Mortgage Loans. First Union will deposit in the Distribution
Account (or remit to the Trustee for deposit therein) the collections and
payments described above to the extent required under the related Servicing
Agreement or Servicing Guide.

         Section 4.03. PERMITTED WITHDRAWALS AND TRANSFERS FROM THE MASTER
SERVICER COLLECTION ACCOUNT. (a) The Master Servicer will, from time to time on
demand of the Master Servicer or the Securities Administrator, make or cause to
be made such withdrawals or transfers from the Master Servicer Collection
Account as the Master Servicer has designated for such transfer or withdrawal
pursuant to the Servicing Agreements and Servicing Guides. The Master Servicer
may clear and terminate the Master Servicer Collection Account pursuant to
Section 10.01 and remove amounts from time to time deposited in error.


                                      -48-

<PAGE>




         (b) On an ongoing basis, the Master Servicer shall withdraw from the
Master Servicer Collection Account any expenses recoverable by the Trustee, the
Master Servicer or the Securities Administrator pursuant to Sections 3.03, 7.01,
7.04 and 9.05.

         (c) No later than 1:00 p.m. New York time on each Distribution Account
Deposit Date, the Master Servicer will transfer all amounts on deposit in the
Master Servicer Collection Account to the Distribution Account.

         Section 4.04. DISTRIBUTION ACCOUNT. (a) The Trustee shall establish and
maintain in the name of the Trustee, for the benefit of the Certificateholders,
the Distribution Account as a segregated trust account or accounts.

         (b) All amounts deposited to the Distribution Account shall be held by
the Trustee in the name of the Trustee in trust for the benefit of the
Certificateholders in accordance with the terms and provisions of this
Agreement.

         (c) The Distribution Account shall constitute a trust account of the
Trust Fund segregated on the books of the Trustee and held by the Trustee in
trust in its Corporate Trust Office, and the Distribution Account and the funds
deposited therein shall not be subject to, and shall be protected from, all
claims, liens, and encumbrances of any creditors or depositors of the Trustee or
the Master Servicer (whether made directly, or indirectly through a liquidator
or receiver of the Trustee or the Master Servicer). The amount at any time
credited to the Distribution Account shall be (i) fully insured by the FDIC to
the maximum coverage provided thereby or (ii) invested in the name of the
Trustee, in such Permitted Investments selected by the Master Servicer or
deposited in demand deposits with such depository institutions as selected by
the Master Servicer, provided that time deposits of such depository institutions
would be a Permitted Investment. All Permitted Investments shall mature or be
subject to redemption or withdrawal on or before, and shall be held until, the
next succeeding Distribution Date if the obligor for such Permitted Investment
is the Trustee or, if such obligor is any other Person, the Business Day
preceding such Distribution Date. All investment earnings on amounts on deposit
in the Distribution Account or benefit from funds uninvested therein from time
to time shall be for the account of the Master Servicer. The Master Servicer
shall be permitted to withdraw or receive distribution of any and all investment
earnings from the Distribution Account on each Distribution Date. If there is
any loss on a Permitted Investment or demand deposit, the Trustee shall deposit
the amount of the loss in the Distribution Account. With respect to the
Distribution Account and the funds deposited therein, the Master Servicer shall
take such action as may be necessary to ensure that the Certificateholders shall
be entitled to the priorities afforded to such a trust account (in addition to a
claim against the estate of the Trustee) as provided by 12 U.S.C. ss. 92a(e),
and applicable regulations pursuant thereto, if applicable, or any applicable
comparable state statute applicable to state chartered banking corporations.

         Section 4.05. PERMITTED WITHDRAWALS AND TRANSFERS FROM THE DISTRIBUTION
ACCOUNT. (a) The Trustee will, from time to time on demand of the Master
Servicer or the Securities Administrator, make or cause to be made such
withdrawals or transfers from the Distribution Account as the Master Servicer
has designated for such transfer or withdrawal pursuant to the Servicing
Agreements and Servicing Guides or as the Securities Administrator has
instructed hereunder for the following


                                      -49-

<PAGE>



purposes (limited in the case of amounts due the Master Servicer to those not
withdrawn from the Master Servicer Collection Account in accordance with the
terms of this Agreement):

                  (i) to reimburse the Master Servicer or any Servicer or Wells
         Fargo Sub-Servicer for any Monthly Advance of its own funds or any
         advance of such Servicer's or Wells Fargo Sub-Servicer's own funds, the
         right of the Master Servicer or a Servicer or Wells Fargo Sub- Servicer
         to reimbursement pursuant to this subclause (i) being limited to
         amounts received on a particular Mortgage Loan (including, for this
         purpose, the Repurchase Price therefor, Insurance Proceeds and
         Liquidation Proceeds) which represent late payments or recoveries of
         the principal of or interest on such Mortgage Loan respecting which
         such Monthly Advance or advance was made;

                  (ii) to reimburse the Master Servicer or any Servicer or Wells
         Fargo Sub-Servicer from Insurance Proceeds or Liquidation Proceeds
         relating to a particular Mortgage Loan for amounts expended by the
         Master Servicer or such Servicer or Wells Fargo Sub-Servicer in good
         faith in connection with the restoration of the related Mortgaged
         Property which was damaged by an Uninsured Cause or in connection with
         the liquidation of such Mortgage Loan;

                  (iii) to reimburse the Master Servicer or any Servicer or
         Wells Fargo Sub-Servicer from Insurance Proceeds relating to a
         particular Mortgage Loan for insured expenses incurred with respect to
         such Mortgage Loan and to reimburse the Master Servicer or such
         Servicer or Wells Fargo Sub-Servicer from Liquidation Proceeds from a
         particular Mortgage Loan for Liquidation Expenses incurred with respect
         to such Mortgage Loan; PROVIDED THAT the Master Servicer shall not be
         entitled to reimbursement for Liquidation Expenses with respect to a
         Mortgage Loan to the extent that (i) any amounts with respect to such
         Mortgage Loan were paid as Excess Liquidation Proceeds pursuant to
         clause (xi) of this Subsection (a) to the Master Servicer; and (ii)
         such Liquidation Expenses were not included in the computation of such
         Excess Liquidation Proceeds;

                  (iv) to pay the Master Servicer or any Servicer or Wells Fargo
         Sub-Servicer (payment to any Servicer or Wells Fargo Sub-Servicer to be
         subject to prior payment to the Master Servicer of an amount equal to
         the Master Servicing Fee), as appropriate, from Liquidation Proceeds or
         Insurance Proceeds received in connection with the liquidation of any
         Mortgage Loan, the amount which it or such Servicer or Wells Fargo
         Sub-Servicer would have been entitled to receive under subclause (ix)
         of this Subsection 4.03(a) as servicing compensation on account of each
         defaulted scheduled payment on such Mortgage Loan if paid in a timely
         manner by the related Mortgagor;

                  (v) to pay the Master Servicer or any Servicer or Wells Fargo
         Sub-Servicer (payment to any Servicer or Wells Fargo Sub-Servicer to be
         subject to prior payment to the Master Servicer of the portion of the
         Master Servicing Fee which the Master Servicer is entitled to retain)
         from the Repurchase Price for any Mortgage Loan, the amount which it or
         such Servicer or Wells Fargo Sub-Servicer would have been entitled to
         receive under subclause (ix) of this Subsection (a) as servicing
         compensation;



                                      -50-

<PAGE>



                  (vi) to reimburse the Master Servicer or any Servicer or Wells
         Fargo Sub-Servicer for advances of funds pursuant to Sections, and the
         right to reimbursement pursuant to this subclause being limited to
         amounts received on the related Mortgage Loan (including, for this
         purpose, the Repurchase Price therefor, Insurance Proceeds and
         Liquidation Proceeds) which represent late recoveries of the payments
         for which such advances were made;

                  (vii) to reimburse the Master Servicer or any Servicer or
         Wells Fargo Sub-Servicer for any Monthly Advance or advance, after a
         Realized Loss has been allocated with respect to the related Mortgage
         Loan if the Monthly Advance or advance has not been reimbursed pursuant
         to clauses (i) and (vi);

                  (viii) to pay the Master Servicer as set forth in Section
         3.14;

                  (ix) to reimburse the Master Servicer for expenses, costs and
         liabilities incurred by and reimbursable to it pursuant to Sections
         3.03, 7.04(c) and (d) and 11.03;

                  (x) to pay to the Master Servicer, as additional servicing
         compensation, any Excess Liquidation Proceeds to the extent not
         retained by the related Servicer or Wells Fargo Sub-Servicer;

                  (xi) to reimburse or pay any Servicer or Wells Fargo
         Sub-Servicer any such amounts as are due thereto under the applicable
         Servicing Agreement or Servicing Guide and have not been retained by or
         paid to the Servicer or Wells Fargo Sub-Servicer, to the extent
         provided in the related Servicing Agreement or Servicing Guide;

                  (xii) to reimburse the Trustee or the Securities Administrator
         for expenses, costs and liabilities incurred by or reimbursable to it
         pursuant to this Agreement;

                  (xiii) to remove amounts deposited in error; and

                  (xiv) to clear and terminate the Distribution Account pursuant
         to Section 10.01.

         (b) The Master Servicer shall keep and maintain separate accounting, on
a Mortgage Loan by Mortgage Loan basis, for the purpose of accounting for any
reimbursement from the Distribution Account pursuant to subclauses (i) through
(vi), inclusive, and (viii) or with respect to any such amounts which would have
been covered by such subclauses had the amounts not been retained by the Master
Servicer without being deposited in the Distribution Account under Section
4.02(b).

         (c) On each Distribution Date, the Trustee shall distribute the Group
Available Funds for each Loan Group to the Holders of the Certificates in
accordance with Section 6.01.



                                      -51-

<PAGE>




                                    ARTICLE V

                                  Certificates

         Section 5.01. CERTIFICATES. (a) The Depository, the Seller and the
Trustee have entered into a Depository Agreement dated as of May 31, 2001 (the
"Depository Agreement"). Except for the Residual Certificates, the Private
Certificates and the Individual Certificates and as provided in Subsection
5.01(b), the Certificates shall at all times remain registered in the name of
the Depository or its nominee and at all times: (i) registration of such
Certificates may not be transferred by the Trustee except to a successor to the
Depository; (ii) ownership and transfers of registration of such Certificates on
the books of the Depository shall be governed by applicable rules established by
the Depository; (iii) the Depository may collect its usual and customary fees,
charges and expenses from its Depository Participants; (iv) the Trustee shall
deal with the Depository as representative of such Certificate Owners of the
respective Class of Certificates for purposes of exercising the rights of
Certificateholders under this Agreement, and requests and directions for and
votes of such representative shall not be deemed to be inconsistent if they are
made with respect to different Certificate Owners; and (v) the Trustee may rely
and shall be fully protected in relying upon information furnished by the
Depository with respect to its Depository Participants.

         The Residual Certificates and the Private Certificates are initially
Physical Certificates. If at any time the Holders of all of the Certificates of
one or more such Classes request that the Trustee cause such Class to become
Global Certificates, the Trustee and the Seller will take such action as may be
reasonably required to cause the Depository to accept such Class or Classes for
trading if it may legally be so traded.

         All transfers by Certificate Owners of such respective Classes of
Book-Entry Certificates and any Global Certificates shall be made in accordance
with the procedures established by the Depository Participant or brokerage firm
representing such Certificate Owners. Each Depository Participant shall only
transfer Book-Entry Certificates of Certificate Owners it represents or of
brokerage firms for which it acts as agent in accordance with the Depository's
normal procedures.

         (b) If (i)(A) the Seller advises the Trustee in writing that the
Depository is no longer willing or able to properly discharge its
responsibilities as Depository and (B) the Trustee or the Seller is unable to
locate a qualified successor within 30 days or (ii) the Seller at its option
advises the Trustee in writing that it elects to terminate the book-entry system
through the Depository, the Trustee shall request that the Depository notify all
Certificate Owners of the occurrence of any such event and of the availability
of definitive, fully registered Certificates to Certificate Owners requesting
the same. Upon surrender to the Trustee of the Certificates by the Depository,
accompanied by registration instructions from the Depository for registration,
the Trustee shall issue 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.

         (c) (i) REMIC I will be evidenced by (x) the REMIC I Regular Interests,
which will be uncertificated and non-transferable and are hereby designated as
the "regular interests" in REMIC


                                      -52-

<PAGE>



I and (y) the Class R-I Certificates, which is hereby designated as the single
"residual interest" in REMIC I.

         The REMIC I Regular Interests and the Class R-I Certificates will have
the following designations and pass-through rates, and distributions of
principal and interest thereon shall be allocated in the following manner:

                                                 CORRESPONDING CLASSES
                                                    OF CERTIFICATES
                                                    ---------------
                                          PASS-       ALLOCATION      ALLOCATION
      REMIC I    INITIAL UNCERTIFICATED  THROUGH           OF             OF
     INTEREST    PRINCIPAL BALANCE ($)    RATE         PRINCIPAL      INTEREST
     --------    ---------------------   -------       ---------     ---------
1A                       80,256,000.00     (1)            I-A            I-A
1B                        3,781,757.00     (1)            (3)            (3)
2A                       17,416,100.00     (2)           II-A            II-A
2B                          820,794.00     (2)            (3)            (3)
2C                               50.00     (2)           R-II            R-II
R-2                              50.00     (1)            N/A            N/A
---------------
(1) During each Interest Accrual Period, REMIC I Regular Interests 1A and 1B
will bear interest at a variable Pass- Through Rate equal to the weighted
average of the Net Rates of the Group 1 Mortgage Loans.

(2) During each Interest Accrual Period, REMIC I Regular Interests 2A, 2B and 2C
and the Class R-II Certificates will bear interest at a variable Pass-Through
Rate equal to the weighted average of the Net Rates of the Group 2 Mortgage
Loans.

(3) The corresponding Classes of Certificates for these REMIC I Regular
Interests are all the Class B Certificates. Principal and interest shall be
allocable to the Class B Certificates and shall be apportioned among such
Certificates in the same order and priority as payments are to be made on such
Certificates in the chart above.

         Principal and interest shall be payable to, and shortfalls, losses and
prepayments are allocable to, the REMIC I Regular Interests in the same order
and priority as payments are to be made on, and shortfalls, losses and
prepayments are allocable to, the corresponding Classes of Certificates.

(ii) REMIC II will be evidenced by (x) the Certificates (other than the Class R
Certificates) (the "REMIC II Regular Certificates"), which are hereby designated
as the "regular interests" in REMIC II and have the principal balances and
accrue interest at the Pass-Through Rates equal to those set forth in Section
5.01(d) and (y) the Class R-II Certificate, which is hereby designated as the
single "residual interest" in REMIC II.

         (d) The Classes of the Certificates shall have the following
designations, initial principal amounts and Pass-Through Rates:


       DESIGNATION        INITIAL PRINCIPAL AMOUNT          PASS-THROUGH RATE
       -----------        ------------------------          -----------------
          I-A             $          80,256,000.00                 (1)



                                      -53-

<PAGE>




          II-A   $                   17,416,100.00                 (2)
           R-I   $                           50.00                 (3)
          R-II   $                           50.00                 (3)
           B-1   $                    1,278,400.00                 (4)
           B-2   $                    1,022,800.00                 (4)
           B-3   $                      767,000.00                 (4)
           B-4   $                      869,400.00                 (4)
           B-5   $                      306,800.00                 (4)
           B-6   $                      358,050.00                 (4)
-------------
(1) The Class I-A Certificates will bear interest at a variable Pass-Through
Rate equal to the weighted average of the Net Rates of the Group 1 Mortgage
Loans, weighted on the basis of the respective Scheduled Principal Balances of
each such Mortgage Loan as of the beginning of the Due Period immediately
preceding the related Distribution Date. The Pass-Through Rate with respect to
the first Interest Accrual Period is expected to be approximately 7.391% per
annum.

(2) The Class II-A Certificates will bear interest at a variable Pass-Through
Rate equal to the weighted average of the Net Rates of the Group 2 Mortgage
Loans, weighted on the basis of the respective Scheduled Principal Balances of
each such Mortgage Loan as of the beginning of the Due Period immediately
preceding the related Distribution Date. The Pass-Through Rate with respect to
the first Interest Accrual Period is expected to be approximately 9.323% per
annum.

(3) The Class R-I Certificates and Class R-II Certificates will bear interest at
a variable pass-through rate equal to the weighted average of the net rates of
the Group 2 Mortgage Loans, weighted on the basis of the respective Scheduled
Principal Balances of each such Mortgage Loan as of the beginning of the Due
Period immediately preceding the related Distribution Date. The pass-through
rate with respect to the first Interest Accrual Period is expected to be
approximately 9.323% per annum.

(4) The Class B-1, Class B-2, Class B-3, Class B-4, Class B-5 and Class B-6
Certificates will bear interest at a variable Pass-Through Rate equal to the
weighted average of the REMIC I Regular Interest 1B and REMIC I Regular Interest
2B, each weighted based on its Uncertificated Principal Balance. The
Pass-Through Rate with respect to the first Interest Accrual Period is expected
to be approximately 7.7360% per annum.

         (e) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date immediately following the maturity date for
the Mortgage Loan with the latest maturity date in the Trust Fund has been
designated as the "latest possible maturity date" for the REMIC I Regular
Interests and the Certificates.

         (f) With respect to each Distribution Date, each Class of Certificates
shall accrue interest during the related Interest Accrual Period. With respect
to each Distribution Date and each such Class of Certificates, interest shall be
calculated, on the basis of a 360-day year comprised of twelve 30-day months,
based upon the respective Pass-Through Rate set forth, or determined as
provided, above and the Current Principal Amount of such Class applicable to
such Distribution Date.

         (g) The Certificates shall be substantially in the forms set forth in
Exhibits A-1, A-2 and A-3. On original issuance, the Trustee shall sign,
countersign and shall deliver them at the direction of the Seller. Pending the
preparation of definitive Certificates of any Class, the Trustee may sign and
countersign temporary Certificates that are printed, lithographed or
typewritten, in authorized


                                      -54-

<PAGE>



denominations for Certificates of such Class, substantially of the tenor of the
definitive Certificates in lieu of which they are issued and with such
appropriate insertions, omissions, substitutions and other variations as the
officers or authorized signatories executing such Certificates may determine, as
evidenced by their execution of such Certificates. If temporary Certificates are
issued, the Seller will cause definitive Certificates to be prepared without
unreasonable delay. After the preparation of definitive Certificates, the
temporary Certificates shall be exchangeable for definitive Certificates upon
surrender of the temporary Certificates at the office of the Trustee, without
charge to the Holder. Upon surrender for cancellation of any one or more
temporary Certificates, the Trustee shall sign and countersign and deliver in
exchange therefor a like aggregate principal amount, in authorized denominations
for such Class, of definitive Certificates of the same Class. Until so
exchanged, such temporary Certificates shall in all respects be entitled to the
same benefits as definitive Certificates.

         (h) Each Class of Book-Entry Certificates will be registered as a
single Certificate of such Class held by a nominee of the Depository or the DTC
Custodian, and beneficial interests will be held by investors through the
book-entry facilities of the Depository in minimum denominations of (i) in the
case of the Senior Certificates (other than the Residual Certificates), $1,000
and in each case increments of $1.00 in excess thereof, and (ii) in the case of
the Offered Subordinate Certificates, $25,000 and increments of $1.00 in excess
thereof, except that one Certificate of each such Class may be issued in a
different amount so that the sum of the denominations of all outstanding
Certificates of such Class shall equal the Current Principal Amount of such
Class on the Closing Date. On the Closing Date, the Trustee shall execute and
countersign Physical Certificates all in an aggregate principal amount that
shall equal the Current Principal Amount of such Class on the Closing Date. The
Private Certificates will be issued in certificated fully-registered form in
minimum denominations of $25,000 and increments of $1.00 in excess thereof,
except that one Certificate of each such Class may be issued in a different
amount so that the sum of the denominations of all outstanding Certificates of
such Class shall equal the Current Principal Amount of such Class on the Closing
Date. The Residual Certificates shall each be issued in certificated
fully-registered form in the denomination of $50 and $50, respectively. Each
Class of Global Certificates, if any, shall be issued in fully registered form
in minimum dollar denominations of $50,000 and integral multiples of $1.00 in
excess thereof, except that one Certificate of each Class may be in a different
denomination so that the sum of the denominations of all outstanding
Certificates of such Class shall equal the Current Principal Amount of such
Class on the Closing Date. On the Closing Date, the Trustee shall execute and
countersign (i) in the case of each Class of Offered Certificates, the
Certificate in the entire Current Principal Amount of the respective Class and
(ii) in the case of each Class of Private Certificates, Individual Certificates
all in an aggregate principal amount that shall equal the Current Principal
Amount of each such respective Class on the Closing Date. The Certificates
referred to in clause (i) and if at any time there are to be Global
Certificates, the Global Certificates shall be delivered by the Seller to the
Depository or pursuant to the Depository's instructions, shall be delivered by
the Seller on behalf of the Depository to and deposited with the DTC Custodian.
The Trustee shall sign the Certificates by facsimile or manual signature and
countersign them by manual signature on behalf of the Trustee by one or more
authorized signatories, each of whom shall be Responsible Officers of the
Trustee or its agent. A Certificate bearing the manual and facsimile signatures
of individuals who were the authorized signatories of the Trustee or its agent
at the time of issuance shall bind the Trustee, notwithstanding


                                      -55-

<PAGE>



that such individuals or any of them have ceased to hold such positions prior to
the delivery of such Certificate.

         (i) No Certificate shall be entitled to any benefit under this
Agreement, or be valid for any purpose, unless there appears on such Certificate
the manually executed countersignature of the Trustee or its agent, and such
countersignature upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly executed and delivered hereunder.
All Certificates issued on the Closing Date shall be dated the Closing Date. All
Certificates issued thereafter shall be dated the date of their
countersignature.

         (j) The Closing Date is hereby designated as the "startup" day of each
REMIC within the meaning of Section 860G(a)(9) of the Code.

         (k) For federal income tax purposes, each REMIC shall have a tax year
that is a calendar year and shall report income on an accrual basis.

         (l) The Trustee on behalf of the Trust shall cause each REMIC to timely
elect to be treated as a REMIC under Section 860D of the Code. Any
inconsistencies or ambiguities in this Agreement or in the administration of any
Trust established hereby shall be resolved in a manner that preserves the
validity of such elections.

         Section 5.02. REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES.
(a) The Trustee shall maintain at its Corporate Trust Office a Certificate
Register in which, subject to such reasonable regulations as it may prescribe,
the Trustee shall provide for the registration of Certificates and of transfers
and exchanges of Certificates as herein provided.

         (b) Subject to Subsection 5.01(a) and, in the case of any Global
Certificate or Physical Certificate upon the satisfaction of the conditions set
forth below, upon surrender for registration of transfer of any Certificate at
any office or agency of the Trustee maintained for such purpose, the Trustee
shall sign, countersign and shall deliver, in the name of the designated
transferee or transferees, a new Certificate of a like Class and aggregate
Fractional Undivided Interest, but bearing a different number.

         (c) By acceptance of an Individual 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 in the Securities
Legend and agrees that it will transfer such a Certificate only as provided
herein. In addition to the provisions of Subsection 5.02(h), the following
restrictions shall apply with respect to the transfer and registration of
transfer of an Individual Certificate to a transferee that takes delivery in the
form of an Individual Certificate:

                  (i) The Trustee shall register the transfer of an Individual
         Certificate if the requested transfer is being made to a transferee who
         has provided the Trustee with a Rule 144A Certificate or comparable
         evidence as to its QIB status.

                  (ii) The Trustee shall register the transfer of any Individual
         Certificate if (x) the transferor has advised the Trustee in writing
         that the Certificate is being transferred to an


                                      -56-

<PAGE>



         Institutional Accredited Investor; and (y) prior to the transfer the
         transferee furnishes to the Trustee an Investment Letter (and the
         Trustee shall be fully protected in so doing), provided that, if based
         upon an Opinion of Counsel to the effect that the delivery of (x) and
         (y) above are not sufficient to confirm that the proposed transfer is
         being made pursuant to an exemption from, or in a transaction not
         subject to, the registration requirements of the Securities Act and
         other applicable laws, the Trustee shall as a condition of the
         registration of any such transfer require the transferor to furnish
         such other certifications, legal opinions or other information prior to
         registering the transfer of an Individual Certificate as shall be set
         forth in such Opinion of Counsel.

         (d) Subject to Subsection 5.02(h), so long as a Global Certificate of
such Class is outstanding and is held by or on behalf of the Depository,
transfers of beneficial interests in such Global Certificate, or transfers by
holders of Individual Certificates of such Class to transferees that take
delivery in the form of beneficial interests in the Global Certificate, may be
made only in accordance with this Subsection 5.02(d) and in accordance with the
rules of the Depository:

                  (i) In the case of a beneficial interest in the Global
         Certificate being transferred to an Institutional Accredited Investor,
         such transferee shall be required to take delivery in the form of an
         Individual Certificate or Certificates and the Trustee shall register
         such transfer only upon compliance with the provisions of Subsection
         5.02(c)(ii).

                  (ii) In the case of a beneficial interest in a Class of Global
         Certificates being transferred to a transferee that takes delivery in
         the form of an Individual Certificate or Certificates of such Class,
         except as set forth in clause (i) above, the Trustee shall register
         such transfer only upon compliance with the provisions of Subsection
         5.02(c)(i).

                  (iii) In the case of an Individual Certificate of a Class
         being transferred to a transferee that takes delivery in the form of a
         beneficial interest in a Global Certificate of such Class, the Trustee
         shall register such transfer if the transferee has provided the Trustee
         with a Rule 144A Certificate or comparable evidence as to its QIB
         status.

                  (iv) No restrictions shall apply with respect to the transfer
         or registration of transfer of a beneficial interest in the Global
         Certificate of a Class to a transferee that takes delivery in the form
         of a beneficial interest in the Global Certificate of such Class;
         provided that each such transferee shall be deemed to have made such
         representations and warranties contained in the Rule 144A Certificate
         as are sufficient to establish that it is a QIB.

         (e) Subject to Subsection 5.02(h), an exchange of a beneficial interest
in a Global Certificate of a Class for an Individual Certificate or Certificates
of such Class, an exchange of an Individual Certificate or Certificates of a
Class for a beneficial interest in the Global Certificate of such Class and an
exchange of an Individual Certificate or Certificates of a Class for another
Individual Certificate or Certificates of such Class (in each case, whether or
not such exchange is made in anticipation of subsequent transfer, and, in the
case of the Global Certificate of such Class, so long as such Certificate is
outstanding and is held by or on behalf of the Depository) may be made only in
accordance with this Subsection 5.02(e) and in accordance with the rules of the
Depository:



                                      -57-

<PAGE>



                  (i) A holder of a beneficial interest in a Global Certificate
         of a Class may at any time exchange such beneficial interest for an
         Individual Certificate or Certificates of such Class.

                  (ii) A holder of an Individual Certificate or Certificates of
         a Class may exchange such Certificate or Certificates for a beneficial
         interest in the Global Certificate of such Class if such holder
         furnishes to the Trustee a Rule 144A Certificate or comparable evidence
         as to its QIB status.

                  (iii) A holder of an Individual Certificate of a Class may
         exchange such Certificate for an equal aggregate principal amount of
         Individual Certificates of such Class in different authorized
         denominations without any certification.

         (f) (i) Upon acceptance for exchange or transfer of an Individual
Certificate of a Class for a beneficial interest in a Global Certificate of such
Class as provided herein, the Trustee shall cancel such Individual Certificate
and shall (or shall request the Depository to) endorse on the schedule affixed
to the applicable Global Certificate (or on a continuation of such schedule
affixed to the Global Certificate and made a part thereof) or otherwise make in
its books and records an appropriate notation evidencing the date of such
exchange or transfer and an increase in the certificate balance of the Global
Certificate equal to the certificate balance of such Individual Certificate
exchanged or transferred therefor.

                  (ii) Upon acceptance for exchange or transfer of a beneficial
         interest in a Global Certificate of a Class for an Individual
         Certificate of such Class as provided herein, the Trustee shall (or
         shall request the Depository to) endorse on the schedule affixed to
         such Global Certificate (or on a continuation of such schedule affixed
         to such Global Certificate and made a part thereof) or otherwise make
         in its books and records an appropriate notation evidencing the date of
         such exchange or transfer and a decrease in the certificate balance of
         such Global Certificate equal to the certificate balance of such
         Individual Certificate issued in exchange therefor or upon transfer
         thereof.

         (g) The Securities Legend shall be placed on any Individual Certificate
issued in exchange for or upon transfer of another Individual Certificate or of
a beneficial interest in a Global Certificate.

         (h) Subject to the restrictions on transfer and exchange set forth in
this Section 5.02, the holder of any Individual Certificate may transfer or
exchange the same in whole or in part (in an initial certificate balance equal
to the minimum authorized denomination set forth in Section 5.01(h) above or any
integral multiple of $1.00 in excess thereof) by surrendering such Certificate
at the Corporate Trust Office, or at the office of any transfer agent, together
with an executed instrument of assignment and transfer satisfactory in form and
substance to the Trustee in the case of transfer and a written request for
exchange in the case of exchange. The holder of a beneficial interest in a
Global Certificate may, subject to the rules and procedures of the Depository,
cause the Depository (or its nominee) to notify the Trustee in writing of a
request for transfer or exchange of such beneficial interest for an Individual
Certificate or Certificates. Following a proper request for transfer or
exchange, the Trustee shall, within five Business Days of such request made at
such Corporate


                                      -58-

<PAGE>



Trust Office, sign, countersign and deliver at such Corporate Trust Office, to
the transferee (in the case of transfer) or holder (in the case of exchange) or
send by first class mail at the risk of the transferee (in the case of transfer)
or holder (in the case of exchange) to such address as the transferee or holder,
as applicable, may request, an Individual Certificate or Certificates, as the
case may require, for a like aggregate Fractional Undivided Interest and in such
authorized denomination or denominations as may be requested. The presentation
for transfer or exchange of any Individual Certificate shall not be valid unless
made at the Corporate Trust Office by the registered holder in person, or by a
duly authorized attorney-in-fact.

         (i) At the option of the Certificateholders, Certificates may be
exchanged for other Certificates of authorized denominations of a like Class and
aggregate Fractional Undivided Interest, upon surrender of the Certificates to
be exchanged at any such office or agency; PROVIDED, HOWEVER, that no
Certificate may be exchanged for new Certificates unless the original Fractional
Undivided Interest represented by each such new Certificate (i) is at least
equal to the minimum authorized denomination or (ii) is acceptable to the Seller
as indicated to the Trustee in writing. Whenever any Certificates are so
surrendered for exchange, the Trustee shall sign and countersign and the Trustee
shall deliver the Certificates which the Certificateholder making the exchange
is entitled to receive.

         (j) If the Trustee so requires, every Certificate presented or
surrendered for transfer or exchange shall be duly endorsed by, or be
accompanied by a written instrument of transfer, with a signature guarantee, in
form satisfactory to the Trustee, duly executed by the holder thereof or his or
her attorney duly authorized in writing.

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

         (l) The Trustee shall cancel all Certificates surrendered for transfer
or exchange but shall retain such Certificates in accordance with its standard
retention policy or for such further time as is required by the record retention
requirements of the Securities Exchange Act of 1934, as amended, and thereafter
may destroy such Certificates.

         (m) The following legend shall be placed on the Residual Certificates
and Private Certificates, whether upon original issuance or upon issuance of any
other Certificate of any such Class in exchange therefor or upon transfer
thereof:

         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


                                      -59-

<PAGE>



         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 SECURITIES ADMINISTRATOR, THE MASTER
         SERVICER OR THE TRUSTEE, WHICH WILL BE DEEMED REPRESENTED BY AN OWNER
         OF A BOOK-ENTRY CERTIFICATE OR A GLOBAL CERTIFICATE AND WILL BE
         EVIDENCED BY A REPRESENTATION OR AN OPINION OF COUNSEL TO SUCH EFFECT
         BY OR ON BEHALF OF AN INSTITUTIONAL ACCREDITED INVESTOR.

         Section 5.03. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES. (a) If
(i) 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 (ii) there is delivered to the Trustee such security or
indemnity as it may require to save it harmless, and (iii) the Trustee has not
received notice that such Certificate has been acquired by a third Person, the
Trustee shall sign, countersign and deliver, in exchange for or in lieu of any
such mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
tenor and Fractional Undivided Interest but in each case bearing a different
number. The mutilated, destroyed, lost or stolen Certificate shall thereupon be
canceled of record by the Trustee and shall be of no further effect and evidence
no rights.

         (b) Upon the issuance of any new Certificate under this Section 5.03,
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 duplicate Certificate issued pursuant to this Section 5.03 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.

         Section 5.04. PERSONS DEEMED OWNERS. Prior to due presentation of a
Certificate for registration of transfer, the Seller, the Trustee and any agent
of the Seller 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 pursuant to Section 6.01 and for all other purposes whatsoever.
Neither the Seller, the Trustee nor any agent of the Seller or the Trustee shall
be affected by notice to the contrary. No Certificate shall be deemed duly
presented for a transfer effective on any Record Date unless the Certificate to
be transferred is presented no later than the close of business on the third
Business Day preceding such Record Date.

         Section 5.05. TRANSFER RESTRICTIONS ON RESIDUAL CERTIFICATES. (a)
Residual Certificates, or interests therein, may not be transferred without the
prior express written consent of the Tax Matters Person and the Seller. As a
prerequisite to such consent, the proposed transferee must provide the Tax
Matters Person, the Seller and the Trustee with an affidavit that the proposed
transferee is a Permitted Transferee (and, unless the Tax Matters Person and the
Seller consent to the transfer to a person who is not a U.S. Person, an
affidavit that it is a U.S. Person) as provided in Subsection 5.05(b).

         (b) No transfer, sale or other disposition of a Residual Certificate
(including a beneficial interest therein) may be made unless, prior to the
transfer, sale or other disposition of a Residual Certificate, the proposed
transferee (including the initial purchasers thereof) delivers to the Tax


                                      -60-

<PAGE>



Matters Person, the Trustee and the Seller an affidavit in the form attached
hereto as Exhibit E stating, among other things, that as of the date of such
transfer (i) such transferee is a Permitted Transferee and that (ii) such
transferee is not acquiring such Residual Certificate for the account of any
person who is not a Permitted Transferee. The Tax Matters Person shall not
consent to a transfer of a Residual Certificate if it has actual knowledge that
any statement made in the affidavit issued pursuant to the preceding sentence is
not true. Notwithstanding any transfer, sale or other disposition of a Residual
Certificate to any Person who is not a Permitted Transferee, such transfer, sale
or other disposition shall be deemed to be of no legal force or effect
whatsoever and such Person shall not be deemed to be a Holder of a Residual
Certificate for any purpose hereunder, including, but not limited to, the
receipt of distributions thereon. If any purported transfer shall be in
violation of the provisions of this Subsection 5.05(b), then the prior Holder
thereof shall, upon discovery that the transfer of such Residual Certificate was
not in fact permitted by this Subsection 5.05(b), be restored to all rights as a
Holder thereof retroactive to the date of the purported transfer. None of the
Trustee, the Tax Matters Person or the Seller shall be under any liability to
any Person for any registration or transfer of a Residual Certificate that is
not permitted by this Subsection 5.05(b) or for making payments due on such
Residual Certificate to the purported Holder thereof or taking any other action
with respect to such purported Holder under the provisions of this Agreement so
long as the written affidavit referred to above was received with respect to
such transfer, and the Tax Matters Person, the Trustee and the Seller, as
applicable, had no knowledge that it was untrue. The prior Holder shall be
entitled to recover from any purported Holder of a Residual Certificate that was
in fact not a permitted transferee under this Subsection 5.05(b) at the time it
became a Holder all payments made on such Residual Certificate. Each Holder of a
Residual Certificate, by acceptance thereof, shall be deemed for all purposes to
have consented to the provisions of this Subsection 5.05(b) and to any amendment
of this Agreement deemed necessary (whether as a result of new legislation or
otherwise) by counsel of the Tax Matters Person or the Seller to ensure that the
Residual Certificates are not transferred to any Person who is not a Permitted
Transferee and that any transfer of such Residual Certificates will not cause
the imposition of a tax upon the Trust or cause any REMIC to fail to qualify as
a REMIC.

         (c) Unless the Tax Matters Person shall have consented in writing
(which consent may be withheld in the Tax Matters Person's sole discretion), the
Residual Certificates (including a beneficial interest therein) may not be
purchased by or transferred to any person who is not a United States Person.

         (d) By accepting a Residual Certificate, the purchaser thereof agrees
to be a Tax Matters Person, and appoints the Trustee to act as its agent with
respect to all matters concerning the tax obligations of the Trust.

         Section 5.06. RESTRICTIONS ON TRANSFERABILITY OF CERTIFICATES. (a) No
offer, sale, transfer or other disposition (including pledge) of any Certificate
shall be made by any Holder thereof unless registered under the Securities Act,
or an exemption from the registration requirements of the Securities Act and any
applicable state securities or "Blue Sky" laws is available and the prospective
transferee (other than the Seller) of such Certificate signs and delivers to the
Trustee an Investment Letter, if the transferee is an Institutional Accredited
Investor, in the form set forth as Exhibit F-l hereto, or a Rule 144A
Certificate, if the transferee is a QIB, in the form set forth as Exhibit F-2
hereto. Notwithstanding the provisions of the immediately preceding sentence, no
restrictions shall


                                      -61-

<PAGE>



apply with respect to the transfer or registration of transfer of a beneficial
interest in any Certificate that is a Global Certificate of a Class to a
transferee that takes delivery in the form of a beneficial interest in the
Global Certificate of such Class provided that each such transferee shall be
deemed to have made such representations and warranties contained in the Rule
144A Certificate as are sufficient to establish that it is a QIB. In the case of
a proposed transfer of any Certificate to a transferee other than a QIB, the
Trustee may require an Opinion of Counsel that such transaction is exempt from
the registration requirements of the Securities Act. The cost of such opinion
shall not be an expense of the Trustee or the Trust Fund.

         (b)      The Private Certificates shall each bear a Securities Legend.

         Section 5.07. ERISA RESTRICTIONS. (a) Subject to the provisions of
subsection (b), no Residual Certificates or Private Certificates may 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 ERISA and/or Section 4975
of the Code, unless the proposed transferee provides either (i) the Trustee, the
Securities Administrator and the Master Servicer with an Opinion of Counsel
satisfactory to the Trustee, the Securities Administrator and the Master
Servicer, which opinion will not be at the expense of the Trustee, the
Securities Administrator or the Master Servicer, that the purchase of such
Certificates by or on behalf of such Plan is permissible under applicable law,
will not constitute or result in a non-exempt prohibited transaction under ERISA
or Section 4975 of the Code and will not subject the Trustee, the Securities
Administrator or the Master Servicer to any obligation in addition to those
undertaken in the Agreement or (ii) in the case of the Certificates, a
representation or certification to the Trustee (upon which the Trustee is
authorized to rely) to the effect that the proposed transfer and/or holding of
such a Certificate and the servicing, management and operation of the Trust: (I)
will not result in a prohibited transaction under Section 406 of ERISA or
Section 4975 of the Code which is not covered under an individual or class
prohibited transaction exemption including but not limited to Department of
Labor Prohibited Transaction Exemption ("PTE") 84-14 (Class Exemption for Plan
Asset Transactions Determined by Independent Qualified Professional Asset
Managers); PTE 91-38 (Class Exemption for Certain Transactions Involving Bank
Collective Investment Funds); PTE 90-1 (Class Exemption for Certain Transactions
Involving Insurance Company Pooled Separate Accounts), PTE 95-60 (Class
Exemption for Certain Transactions Involving Insurance Company General
Accounts), and PTCE 96-23 (Class Exemption for Plan Asset Transactions
Determined by In-House Asset Managers and (II) will not subject the Seller, the
Master Servicer or the Trustee to any obligation in addition to those undertaken
in the Agreement.

         (b) Any Person acquiring an interest in a Global Certificate which is a
Private Certificate, by acquisition of such Certificate, shall be deemed to have
represented to the Trustee that either: (i) it is not acquiring an interest in
such Certificate directly or indirectly by, or on behalf of, an employee benefit
plan or other retirement arrangement which is subject to Title I of ERISA and/or
Section 4975 of the Code, or (ii) the transfer and/or holding of an interest in
such Certificate to that Person and the subsequent 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, PTE 84-14, PTE 91-38, PTE
90-1, PTE 95-60 or PTE 96-23 and (II) will not subject the Seller, the Master
Servicer or the Trustee to any obligation in addition to those undertaken in the
Agreement.


                                      -62-

<PAGE>




         (c) Neither the Trustee, the Master Servicer nor the Securities
Administrator will be required to monitor, determine or inquire as to compliance
with the transfer restrictions with respect to the Global Certificates. Any
attempted or purported transfer of any Certificate in violation of the
provisions of Subsections (a) or (b) above shall be void AB INITIO and such
Certificate shall be considered to have been held continuously by the prior
permitted Certificateholder. Any transferor of any Certificate in violation of
such provisions, shall indemnify and hold harmless the Trustee, the Securities
Administrator and the Master Servicer from and against any and all liabilities,
claims, costs or expenses incurred by the Trustee, the Securities Administrator
or the Master Servicer as a result of such attempted or purported transfer. The
Trustee shall have no liability for transfer of any such Global Certificates in
or through book-entry facilities of any Depository or between or among
Depository Participants or Certificate Owners made in violation of the transfer
restrictions set forth herein.

         Section 5.08. RULE 144A INFORMATION. For so long as any Certificates
are outstanding and are "restricted securities" within the meaning of Rule
144(a)(3) of the Securities Act, (1) the Seller will provide or cause to be
provided to any holder of such Certificates and any prospective purchaser
thereof designated by such a holder, upon the request of such holder or
prospective purchaser, the information required to be provided to such holder or
prospective purchaser by Rule 144A(d)(4) under the Securities Act; and (2) the
Seller shall update such information from time to time in order to prevent such
information from becoming false and misleading and will take such other actions
as are necessary to ensure that the safe harbor exemption from the registration
requirements of the Securities Act under Rule 144A is and will be available for
resales of such Certificates conducted in accordance with Rule 144A.


                                      -63-

<PAGE>




                                   ARTICLE VI

                         Payments to Certificateholders

         Section 6.01. DISTRIBUTIONS ON THE CERTIFICATES. (a) Interest and
principal on the Certificates will be distributed monthly on each Distribution
Date, commencing in June 2001, in an aggregate amount equal to the sum of the
Available Funds for such Distribution Date.

        (i) On each Distribution Date, the Group 1 Available Funds shall be
        distributed as follows:

                  (A) On each Distribution Date prior to the Cross-Over Date,
                  the Group 1 Available Funds will be distributed in the
                  following order of priority among the Group 1 Senior
                  Certificates:

                           FIRST, to the Group 1 Senior Certificates, the
                           Accrued Certificate Interest on such Class for such
                           Distribution Date;

                           SECOND, to the Group 1 Senior Certificates, any
                           Accrued Certificate Interest thereon remaining
                           undistributed from previous Distribution Dates, to
                           the extent of remaining Group 1 Available Funds;

                           THIRD, to the Class I-A Certificates in reduction of
                           the Current Principal Amounts thereof, the Group 1
                           Senior Optimal Principal Amount for such Distribution
                           Date to the extent of remaining Group 1 Available
                           Funds, until the Current Principal Amount thereof has
                           been reduced to zero;

                  (B) On each Distribution Date prior to the Cross-Over Date,
                  the Group 2 Available Funds will be distributed to the Class 2
                  Senior Certificates as follows:

                           FIRST, to the Group 2 Senior Certificates, the
                           Accrued Certificate Interest on such Class for such
                           Distribution Date;

                           SECOND, to the Group 2 Senior Certificates, any
                           Accrued Certificate Interest thereon remaining
                           undistributed from previous Distribution Dates, to
                           the extent of remaining Group 2 Available Funds;

                           THIRD, sequentially, to the Class R-I, Class R-II and
                           Class II-A Certificates, in that order, in reduction
                           of the Current Principal Amounts thereof, the Group 2
                           Optimal Principal Amount for such Distribution Date
                           to the extent of remaining Group 2 Available Funds,
                           until the Current Principal Amounts thereof have been
                           reduced to zero.




                                      -64-

<PAGE>



                  (C) Except as provided in (D) and (E) below, on each
                  Distribution Date prior to the Cross-Over Date, an amount
                  equal to any remaining Group 1 and Group 2 Available Funds
                  after the distributions in (A) and (B) above will be
                  distributed sequentially, in the following order, to the Class
                  B-1, Class B-2, Class B-3, Class B- 4, Class B-5 and Class B-6
                  Certificates, in each case up to an amount equal to and in the
                  following order: (a) the Accrued Certificate Interest thereon
                  for such Distribution Date, (b) any Accrued Certificate
                  Interest thereon remaining undistributed from previous
                  Distribution Dates and (c) such Class's Allocable Share for
                  such Distribution Date, in each case, to the extent of the sum
                  of remaining Available Funds.

                  (D) On each Distribution Date prior to the Cross-Over Date,
                  but after the reduction of the Current Principal Amount of the
                  Group 1 or Group 2 Certificates to zero, the remaining Class
                  or Classes of Senior Certificates will be entitled to receive
                  in reduction of their Current Principal Amounts, pro rata
                  based upon their Current Principal Amounts immediately prior
                  to such Distribution Date, in addition to any Principal
                  Prepayments related to such remaining Senior Certificates'
                  respective Loan Group allocated to such Group of Senior
                  Certificates, 100% of the Principal Prepayments on any
                  Mortgage Loan in the Loan Group relating to the fully repaid
                  Class of Senior Certificates; PROVIDED, HOWEVER, that if the
                  weighted average Subordinate Percentage equals or exceeds
                  9.00% on such Distribution Date, then the additional
                  allocation of Principal Prepayments to the Senior Certificates
                  in accordance with this clause (D) will not be made.

                  (E) If on any Distribution Date on which the aggregate Current
                  Principal Amount of any Class or Classes of Senior
                  Certificates would be greater than the aggregate Scheduled
                  Principal Balance of the Mortgage Loans in its related Loan
                  Group and any Subordinate Certificates are still outstanding
                  in each case after giving effect to distributions to be made
                  on such Distribution Date, (i) 100% of amounts otherwise
                  allocable to the Subordinate Certificates in respect of
                  principal will be distributed to such Class or Classes of
                  Senior Certificates in reduction of the Current Principal
                  Amounts thereof, until the aggregate Current Principal Amount
                  of such Class or Classes of Senior Certificates is an amount
                  equal to the aggregate Scheduled Principal Balance of the
                  Mortgage Loans in its related Loan Group, and (ii) the Accrued
                  Certificate Interest otherwise allocable to the Subordinate
                  Certificates on such Distribution Date will be reduced, if
                  necessary, and distributed to such Class or Classes of Senior
                  Certificates in an amount equal to the Accrued Certificate
                  Interest for such Distribution Date on the excess of (x) the
                  aggregate Current Principal Balance of such Class or Classes
                  of Senior Certificates over (y) the aggregate Scheduled
                  Principal Balance of the Mortgage Loans in the related Loan
                  Group. Any such reduction in the Accrued Certificate Interest
                  on the Subordinate Certificates will be allocated in reverse
                  order of the Subordinate Certificates numerical designations,
                  commencing with the Class B-6 Certificates.




                                      -65-

<PAGE>



         (b) If, after distributions have been made pursuant to priorities FIRST
and SECOND of clauses (a)(i)(A) and (B) above on any Distribution Date, the
remaining Group 1 or Group 2 Available Funds are less than the sum of the Group
1 or Group 2 Senior Optimal Principal Amounts such amount shall be reduced, and
such remaining funds will be distributed on the related Senior Certificates on
the basis of such reduced amount.

         On each Distribution Date, any Group 1 or Group 2 Available Funds
remaining after payment of interest and principal as described above with
respect to the Group 2 Certificates will be distributed to the Class R
Certificates.

         (c) "Pro rata" distributions among Classes of Certificates will be made
in proportion to the then Current Principal Amount of such Classes.

         (d) On each Distribution Date, any Available Funds remaining after
payment of interest and principal to the Classes of Certificates entitled
thereto, as described above, will be distributed to the Class R-II Certificates.

         (e) No Accrued Certificate Interest will be payable with respect to any
Class of Certificates after the Distribution Date on which the Current Principal
Amount of such Certificate has been reduced to zero.

         (f) If on any Distribution Date the Available Funds for the Senior
Certificates in any Certificate Group is less than the Accrued Certificate
Interest on the related Senior Certificates for such Distribution Date prior to
reduction for Net Interest Shortfall and the interest portion of Realized
Losses, the shortfall will be allocated among the holders of each Class of
Senior Certificates in such Certificate Group in proportion to the respective
amounts of Accrued Certificate Interest that would have been allocated thereto
in the absence of such Net Interest Shortfall and/or Realized Losses for such
Distribution Date. In addition, the amount of any interest shortfalls will
constitute unpaid Accrued Certificate Interest and will be distributable to
holders of the Certificates of the related Classes entitled to such amounts on
subsequent Distribution Dates, to the extent of the applicable Available Funds
after current interest distributions as required herein. Any such amounts so
carried forward will not bear interest. Shortfalls in interest payments will not
be offset by a reduction in the servicing compensation of the Master Servicer or
otherwise, except to the extent of applicable Compensating Interest Payments.

         (g) The expenses and fees of the Trust shall be paid by each of the
REMICs, to the extent that such expenses relate to the assets of each of such
respective REMICs, and all other expenses and fees of the Trust shall be paid
pro rata by each of the REMICs.

         Section 6.02.     ALLOCATION OF LOSSES.  (a)  On or prior to each
Determination Date, the Master Servicer shall determine the amount of any
Realized Loss in respect of each Mortgage Loan that occurred during the
immediately preceding calendar month.

                  (b) With respect to any Certificates on any Distribution Date,
         the principal portion of each Realized Loss on a Mortgage Loan shall be
         allocated as follows:



                                      -66-

<PAGE>



                           first, to the Class B-6 Certificates until the
                  Current Principal Amount thereof has been reduced to zero;

                           second, to the Class B-5 Certificates until the
                  Current Principal Amount thereof has been reduced to zero;

                           third, to the Class B-4 Certificates until the
                  Current Principal Amount thereof has been reduced to zero;

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

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

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

                           seventh, to the Group 1 Senior Certificates and the
                  Group 2 Senior Certificates, to the extent of Realized Losses
                  on the Mortgage Loans in the related Loan Group, on a pro rata
                  basis, based on the Current Principal Amounts thereof; and

                           eighth, to the remaining Senior Certificates, on a
                  pro rata basis, based on the Current Principal Amounts
                  thereof.

                  (c) Notwithstanding the foregoing clause (b), 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").

         (d) 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.

         (e) 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.

         (f) On each Distribution Date, the Securities Administrator shall
determine and notify the Trustee of the Subordinate Certificate Writedown
Amount. Any such Subordinate Certificate Writedown Amount shall effect a
corresponding reduction in the Current Principal Amount of (i) if prior to the
Cross-Over Date, the Current Principal Amounts of the Subordinate Certificates,
in


                                      -67-

<PAGE>



the reverse order of their numerical Class designations and (ii) from and after
the Cross-Over Date, the Senior Certificates, which reduction shall occur on
such Distribution Date after giving effect to distributions made on such
Distribution Date.

         (g) Any Net Interest Shortfall will be allocated among the Classes of
Certificates in proportion to the respective amounts of Accrued Certificate
Interest that would have been allocated thereto in the absence of such Net
Interest Shortfall for such Distribution Date. The interest portion of any
Realized Losses with respect to the Mortgage Loans occurring on or prior to the
Cross-Over Date will not be allocated among any Certificates, but will reduce
the amount of Available Funds on the related Distribution Date. As a result of
the subordination of the Subordinate Certificates in right of distribution, such
Realized Losses will be borne by the Subordinate Certificates in inverse order
of their numerical Class designations. Following the Cross-Over Date, the
interest portion of Realized Losses on the Mortgage Loans in any Loan Group will
be allocated to the related Senior Certificates.

         Section 6.03. PAYMENTS. (a) On each Distribution Date, other than the
final Distribution Date, the Trustee shall distribute to each Certificateholder
of record on the directly preceding Record Date the Certificateholder's PRO RATA
share of its Class (based on the aggregate Fractional Undivided Interest
represented by such Holder's Certificates) of all amounts required to be
distributed on such Distribution Date to such Class, based on information
provided to the Securities Administrator by the Master Servicer. The Securities
Administrator shall calculate the amount to be distributed to each Class and,
based on such amounts, the Securities Administrator shall determine the amount
to be distributed to each Certificateholder. All of the Securities
Administrator's calculations of payments shall be based solely on information
provided to the Securities Administrator by the Master Servicer. The Securities
Administrator shall not be required to confirm, verify or recompute any such
information but shall be entitled to rely conclusively on such information.

         (b) Payment of the above amounts to each Certificateholder shall be
made (i) by check mailed to each Certificateholder entitled thereto at the
address appearing in the Certificate Register or (ii) upon receipt by the
Trustee on or before the fifth Business Day preceding the Record Date of written
instructions from a Certificateholder 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, HOWEVER,
that the final payment in respect of each Class of Certificates will be made
only upon presentation and surrender of such respective Certificates at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final payment.

         Section 6.04. STATEMENTS TO CERTIFICATEHOLDERS. (a) Concurrently with
each distribution to Certificateholders, the Securities Administrator shall make
available via the Securities Administrator's internet website as set forth
below, the following information, expressed with respect to clauses (i) through
(vii) in the aggregate and as a Fractional Undivided Interest representing an
initial Current Principal Amount of $1,000, or in the case of each Class of
Residual Certificates, an initial Current Principal Amount of $50:

                  (i)      the Current Principal Amount or Notional Amount of
         each Class of Certificates immediately prior to such Distribution Date;



                                      -68-

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                  (ii) the amount of the distribution allocable to principal on
         each applicable Class of Certificates;

                  (iii) the aggregate amount of interest accrued at the related
         Pass-Through Rate with respect to each Class during the related
         Interest Accrual Period;

                  (iv) the Net Interest Shortfall and any other adjustments to
         interest at the related Pass-Through Rate necessary to account for any
         difference between interest accrued and aggregate interest distributed
         with respect to each Class of Certificates;

                  (v) the amount of the distribution allocable to interest on
         each Class of Certificates;

                  (vi) the Pass-Through Rates for each Class of Certificates
         with respect to such Distribution Date;

                  (vii) the Current Principal Amount or Notional Amount of each
         Class of Certificates after such Distribution Date;

                  (viii) the amount of any Monthly Advances, Compensating
         Interest Payments and outstanding unreimbursed advances by the Master
         Servicer, the Servicer or Wells Fargo Sub- Servicer included in such
         distribution separately stated for each Loan Group;

                  (ix) the aggregate amount of any Realized Losses (listed
         separately for each category of Realized Loss and for each Loan Group)
         during the related Prepayment Period and cumulatively since the Cut-off
         Date and the amount and source (separately identified) of any
         distribution in respect thereof included in such distribution;

                  (x) with respect to each Mortgage Loan which incurred a
         Realized Loss during the related Prepayment Period, (i) the loan
         number, (ii) the Scheduled Principal Balance of such Mortgage Loan as
         of the Cut-off Date, (ii) the Scheduled Principal Balance of such
         Mortgage Loan as of the beginning of the related Due Period, (iii) the
         Net Liquidation Proceeds with respect to such Mortgage Loan and (iv)
         the amount of the Realized Loss with respect to such Mortgage Loan;

                  (xi) with respect to each Loan Group, the amount of Scheduled
         Principal and Principal Prepayments, (including but separately
         identifying the principal amount of principal prepayments, Insurance
         Proceeds, the purchase price in connection with the purchase of
         Mortgage Loans, cash deposits in connection with substitutions of
         Mortgage Loans and Net Liquidation Proceeds) and the number and
         principal balance of Mortgage Loans purchased or substituted for during
         the relevant period and cumulatively since the Cut-off Date;

                  (xii) the number of Mortgage Loans (excluding REO Property) in
         each Loan Group remaining in the Trust Fund as of the end of the
         related Prepayment Period;



                                      -69-

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                  (xiii) information for each Loan Group and in the aggregate
         regarding any Mortgage Loan delinquencies as of the end of the related
         Prepayment Period, including the aggregate number, aggregate
         Outstanding Principal Balance and aggregate Scheduled Principal Balance
         of Mortgage Loans (a) delinquent 30 to 59 days on a contractual basis,
         (b) delinquent 60 to 89 days on a contractual basis, and (c) delinquent
         90 or more days on a contractual basis, in each case as of the close of
         business on the last Business Day of the immediately preceding month;

                  (xiv) for each Loan Group, the number of Mortgage Loans in the
         foreclosure process as of the end of the related Due Period and the
         aggregate Outstanding Principal Balance of such Mortgage Loans;

                  (xv) for each Loan Group, the number and aggregate Outstanding
         Principal Balance of all Mortgage Loans as to which the Mortgaged
         Property was REO Property as of the end of the related Due Period;

                  (xvi) the book value (the sum of (A) the Outstanding Principal
         Balance of the Mortgage Loan, (B) accrued interest through the date of
         foreclosure and (C) foreclosure expenses) of any REO Property in each
         Loan Group; PROVIDED THAT, in the event that such information is not
         available to the Securities Administrator on the Distribution Date,
         such information shall be furnished promptly after it becomes
         available;

                  (xvii) the amount of Realized Losses allocated to each Class
         of Certificates since the prior Distribution Date and in the aggregate
         for all prior Distribution Dates;

                  (xviii) the Average Loss Severity for the prior calendar month
         for each Loan Group; and

                  (xix) the then applicable Group 1 and Group 2 Senior
         Percentage, Group 1 and Group 2 Senior Prepayment Percentage,
         Subordinate Percentage and Subordinate Prepayment Percentage.

         The information set forth above shall be calculated or reported, as the
case may be, by the Securities Administrator, based solely on, and to the extent
of, information provided to the Securities Administrator by the Master Servicer.
The Securities Administrator may conclusively rely on such information and shall
not be required to confirm, verify or recalculate any such information.

         The Securities Administrator may make available each month, to any
interested party, the monthly statement to Certificateholders via the Securities
Administrator's website initially located at "www.ctslink.com." Assistance in
using the website can be obtained by calling the Securities Administrator's
customer service desk at (301) 815-6600. Parties that are unable to use the
above distribution option are entitled to have a paper copy mailed to them via
first class mail by calling the customer service desk and indicating such. The
Securities Administrator shall have the right to change the way such reports are
distributed in order to make such distribution more convenient and/or more
accessible to the parties, and the Securities Administrator shall provide timely
and adequate notification to all parties regarding any such change.


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<PAGE>



         (b) By April 30 of each year beginning in 2002, the Trustee will
furnish such report to each Holder of the Certificates of record at any time
during the prior calendar year as to the aggregate of amounts reported pursuant
to subclauses (a)(ii) and (a)(v) above with respect to the Certificates, plus
information with respect to the amount of servicing compensation and such other
customary information as the Securities Administrator may determine and advises
the Trustee to be necessary and/or to be required by the Internal Revenue
Service or by a federal or state law or rules or regulations to enable such
Holders to prepare their tax returns for such calendar year. Such obligations
shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Securities Administrator or the
Trustee pursuant to the requirements of the Code.

         Section 6.05. MONTHLY ADVANCES. If the Scheduled Payment on a Mortgage
Loan that was due on a related Due Date and is delinquent other than as a result
of application of the Relief Act and for which the related Servicer or Wells
Fargo Sub-Servicer was required to make an advance pursuant to the related
Servicing Agreement or Servicing Guide exceeds the amount deposited in the
Master Servicer Collection Account which will be used for an advance with
respect to such Mortgage Loan, the Master Servicer will deposit in the Master
Servicer Collection Account not later than the Distribution Account Deposit Date
immediately preceding the related Distribution Date an amount equal to such
deficiency, net of the Master Servicing Fee and Servicing Fee for such Mortgage
Loan except to the extent the Master Servicer determines any such advance to be
nonrecoverable from Liquidation Proceeds, Insurance Proceeds or future payments
on the Mortgage Loan for which such Monthly Advance was made. Subject to the
foregoing, the Master Servicer shall continue to make such advances through the
date that the related Servicer or Wells Fargo Sub- Servicer is required to do so
under its Servicing Agreement or Servicing Guide. If applicable, on the
Distribution Account Deposit Date, the Master Servicer shall present an
Officer's Certificate to the Trustee (i) stating that the Master Servicer elects
not to make a Monthly Advance in a stated amount and (ii) detailing the reason
it deems the advance to be nonrecoverable.

         Section 6.06. COMPENSATING INTEREST PAYMENTS. The Master Servicer shall
deposit in the Master Servicer Collection Account not later than each
Distribution Account Deposit Date an amount equal to the lesser of (i) the sum
of (A) the aggregate amounts required to be paid by the Servicers and Wells
Fargo Sub-Servicers under the Servicing Agreements and Servicing Guides with
respect to subclauses (a) and (b) of the definition of Interest Shortfall with
respect to the Mortgage Loans not serviced by First Union for the related
Distribution Date, and not so paid by the related Servicers and Wells Fargo
Sub-Servicers and (B) the aggregate amount with respect to subclause (b) of the
definition of Interest Shortfall with respect to the Mortgage Loans serviced by
GE Capital Mortgage Servicing Inc. and Wells Fargo Home Mortgage, Inc. in
accordance with the Saxon Guide for the related Distribution Date, and (ii) the
Master Servicing Fee for such Distribution Date (such amount, the "Compensating
Interest Payment"). The Master Servicer shall not be entitled to any
reimbursement of any Compensating Interest Payment.


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<PAGE>




                                   ARTICLE VII

                               The Master Servicer

         Section 7.01. LIABILITIES OF THE MASTER SERVICER. The Master
Servicer shall be liable in accordance herewith only to the extent of the
obligations specifically imposed upon and undertaken by it herein.

         Section 7.02. MERGER OR CONSOLIDATION OF THE MASTER SERVICER. (a) The
Master Servicer will keep in full force and effect its existence, rights and
franchises as a corporation under the laws of the state of its incorporation,
and will obtain and preserve its qualification to do business as a foreign
corporation in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Agreement, the
Certificates or any of the Mortgage Loans and to perform its duties under this
Agreement.

         (b) Any Person into which the Master Servicer may be merged or
consolidated, or any corporation resulting from any merger or consolidation to
which the Master Servicer shall be a party, or any Person succeeding to the
business of the Master Servicer, shall be the successor of the Master Servicer
hereunder, 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 7.03. INDEMNIFICATION OF THE TRUSTEE, THE MASTER SERVICER AND
THE SECURITIES ADMINISTRATOR. (a) The Master Servicer agrees to indemnify the
Indemnified Persons for, and to hold them harmless against, any loss, liability
or expense (including reasonable legal fees and disbursements of counsel)
incurred on their part that may be sustained in connection with, arising out of,
or relating to, any claim or legal action (including any pending or threatened
claim or legal action) relating to this Agreement or the Certificates (i)
related to the Master Servicer's failure to perform its duties in compliance
with this Agreement (except as any such loss, liability or expense shall be
otherwise reimbursable pursuant to this Agreement) or (ii) incurred by reason of
the Master Servicer's willful misfeasance, bad faith or gross negligence in the
performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder, provided, in each case, that with respect to
any such claim or legal action (or pending or threatened claim or legal action),
the Trustee shall have given the Master Servicer and the Seller written notice
thereof promptly after the Trustee shall have with respect to such claim or
legal action knowledge thereof. This indemnity shall survive the resignation or
removal of the Trustee, Master Servicer or the Securities Administrator and the
termination of this Agreement.

         (b) The Seller will indemnify any Indemnified Person for any loss,
liability or expense of any Indemnified Person not otherwise referred to in
Subsection (a) above.

         Section 7.04.     LIMITATIONS ON LIABILITY OF THE MASTER SERVICER AND
OTHERS. Subject to the obligation of the Master Servicer to indemnify the
Indemnified Persons pursuant to Section 7.03:

         (a) Neither the Master Servicer nor any of the directors, officers,
employees or agents of the Master Servicer shall be under any liability to the
Indemnified Persons, the Seller, the Trust Fund


                                      -72-

<PAGE>



or the Certificateholders for taking any action or for refraining from taking
any action in good faith pursuant to this Agreement, or for errors in judgment;
provided, however, that this provision shall not protect the Master Servicer or
any such Person against any breach of warranties or representations made herein
or any liability which would otherwise be imposed by reason of such Person's
willful misfeasance, bad faith or gross negligence in the performance of duties
or by reason of reckless disregard of obligations and duties hereunder.

         (b) The Master Servicer and any director, officer, employee or agent of
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.

         (c) The Master Servicer, the Custodian and any director, officer,
employee or agent of the Master Servicer or the Custodian shall be indemnified
by the Trust and held harmless thereby against any loss, liability or expense
(including reasonable legal fees and disbursements of counsel) incurred on their
part that may be sustained in connection with, arising out of, or related to,
any claim or legal action (including any pending or threatened claim or legal
action) relating to this Agreement, the Certificates, any Servicing Agreement or
any Servicing Guide (except to the extent that the Master Servicer is
indemnified by the Servicer or Wells Fargo Sub-Servicer thereunder), other than
(i) any such loss, liability or expense related to the Master Servicer's failure
to perform its duties in compliance with this Agreement (except as any such
loss, liability or expense shall be otherwise reimbursable pursuant to this
Agreement), or to the Custodian's failure to perform its duties under the
Custodial Agreement, respectively, or (ii) any such loss, liability or expense
incurred by reason of the Master Servicer's or the Custodian's willful
misfeasance, bad faith or gross negligence in the performance of duties
hereunder or under the Custodial Agreement, as applicable, or by reason of
reckless disregard of obligations and duties hereunder or under the Custodial
Agreement, as applicable.

         (d) The Master Servicer shall not be under any obligation to appear in,
prosecute or defend any legal action that is not incidental to its duties under
this Agreement and that in its opinion may involve it in any expense or
liability; provided, however, the Master Servicer may in its discretion, with
the consent of the Trustee (which consent shall not be unreasonably withheld),
undertake any such action which it may deem necessary or desirable with respect
to this Agreement and the rights and duties of the parties hereto and the
interests of the Certificateholders hereunder. In such event, the legal expenses
and costs of such action and any liability resulting therefrom shall be
expenses, costs and liabilities of the Trust Fund, and the Master Servicer shall
be entitled to be reimbursed therefor out of the Master Servicer Collection
Account as provided by Section 4.03. Nothing in this Subsection 7.04(d) shall
affect the Master Servicer's obligation to supervise, or to take such actions as
are necessary to ensure, the servicing and administration of the Mortgage Loans
pursuant to Subsection 3.01(a).

         (e) In taking or recommending any course of action pursuant to this
Agreement, unless specifically required to do so pursuant to this Agreement, the
Master Servicer shall not be required to investigate or make recommendations
concerning potential liabilities which the Trust might incur as a result of such
course of action by reason of the condition of the Mortgaged Properties but
shall give notice to the Trustee if it has notice of such potential liabilities.



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<PAGE>



         (f) The Master Servicer shall not be liable for any acts or omissions
of any Servicer or Wells Fargo Sub-Servicer, except as otherwise expressly
provided herein.

         Section 7.05. MASTER SERVICER NOT TO RESIGN. Except as provided in
Section 7.07, the Master Servicer shall not resign from the obligations and
duties hereby imposed on it except upon a determination that any such duties
hereunder are no longer permissible under applicable law and such
impermissibility cannot be cured. Any such determination permitting the
resignation of the Master Servicer shall be evidenced by an Opinion of
Independent Counsel to such effect delivered to the Trustee. No such resignation
by the Master Servicer shall become effective until EMC or the Trustee or a
successor to the Master Servicer reasonably satisfactory to the Trustee shall
have assumed the responsibilities and obligations of the Master Servicer in
accordance with Section 8.02 hereof. The Trustee shall notify the Rating
Agencies of the resignation of the Master Servicer.

         Section 7.06. SUCCESSOR MASTER SERVICER. In connection with the
appointment of any successor Master Servicer or the assumption of the duties of
the Master Servicer, EMC or the Trustee may make such arrangements for the
compensation of such successor master servicer out of payments on the Mortgage
Loans as EMC or the Trustee and such successor master servicer shall agree. If
the successor master servicer does not agree that such market value is a fair
price, such successor master servicer shall obtain two quotations of market
value from third parties actively engaged in the servicing of single-family
mortgage loans.

         Section 7.07. SALE AND ASSIGNMENT OF MASTER SERVICING. The Master
Servicer may sell and assign its rights and delegate its duties and obligations
in its entirety as Master Servicer under this Agreement and EMC may terminate
the Master Servicer without cause and select a new Master Servicer; provided,
however, that: (i) the purchaser or transferee accepting such assignment and
delegation (a) shall be a Person which shall be qualified to service mortgage
loans for Fannie Mae or Freddie Mac; (b) shall have a net worth of not less than
$10,000,000 (unless otherwise approved by each Rating Agency pursuant to clause
(ii) below); (c) shall be reasonably satisfactory to the Trustee (as evidenced
in a writing signed by the Trustee); and (d) shall execute and deliver to the
Trustee an agreement, in form and substance reasonably satisfactory to the
Trustee, which contains an assumption by such Person of the due and punctual
performance and observance of each covenant and condition to be performed or
observed by it as master servicer under this Agreement, any custodial agreement
from and after the effective date of such agreement; (ii) each Rating Agency
shall be given prior written notice of the identity of the proposed successor to
the Master Servicer and each Rating Agency's rating of the Certificates in
effect immediately prior to such assignment, sale and delegation will not be
downgraded, qualified or withdrawn as a result of such assignment, sale and
delegation, as evidenced by a letter to such effect delivered to the Master
Servicer and the Trustee; (iii) the Master Servicer assigning and selling the
master servicing shall deliver to the Trustee an Officer's Certificate and an
Opinion of Independent Counsel, each stating that all conditions precedent to
such action under this Agreement have been completed and such action is
permitted by and complies with the terms of this Agreement; and (iv) in the
event the Master Servicer is terminated without cause by EMC, EMC shall pay the
terminated Master Servicer a termination fee equal to 0.25% of the aggregate
Scheduled Principal Balance of the Mortgage Loans at the time the master
servicing of the Mortgage Loans is transferred to the successor Master Servicer.
No such assignment or delegation shall affect any liability of the Master
Servicer arising prior to the effective date thereof.


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<PAGE>




                                  ARTICLE VIII

                                     Default

         Section 8.01. EVENTS OF DEFAULT. "Event of Default," wherever used
herein, means any one of the following events (whatever the 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) and
only with respect to the defaulting Master Servicer:

                  (i) The Master Servicer fails to cause to be deposited in the
         Distribution Account any amount so required to be deposited pursuant to
         this Agreement, and such failure continues unremedied for a period of
         two Business Days after the date upon which written notice of such
         failure, requiring the same to be remedied, shall have been given to
         the Master Servicer; or

                  (ii) The Master Servicer fails to observe or perform in any
         material respect any other material covenants and agreements set forth
         in this Agreement to be performed by it, which covenants and agreements
         materially affect the rights of Certificateholders, and such failure
         continues unremedied for a period of 60 days after the date on which
         written notice of such failure, properly requiring the same to be
         remedied, shall have been given to the Master Servicer by the Trustee
         or to the Master Servicer and the Trustee by the Holders of
         Certificates evidencing Fractional Undivided Interests aggregating not
         less than 25% of the Trust Fund; or

                  (iii) There is entered against the Master Servicer a decree or
         order by a court or agency or supervisory authority having jurisdiction
         in the premises for the appointment of a conservator, receiver or
         liquidator in any insolvency, readjustment of debt, marshaling of
         assets and liabilities or similar proceedings, or for the winding up or
         liquidation of its affairs, and the continuance of any such decree or
         order is unstayed and in effect for a period of 60 consecutive days, or
         an involuntary case is commenced against the Master Servicer under any
         applicable insolvency or reorganization statute and the petition is not
         dismissed within 60 days after the commencement of the case; or

                  (iv) The Master Servicer consents to the appointment of a
         conservator or receiver or liquidator in any insolvency, readjustment
         of debt, marshaling of assets and liabilities or similar proceedings of
         or relating to the Master Servicer or substantially all of its
         property; or the Master Servicer admits in writing its inability to pay
         its debts generally as they become due, files a petition to take
         advantage of any applicable insolvency or reorganization statute, makes
         an assignment for the benefit of its creditors, or voluntarily suspends
         payment of its obligations; or

                  (v) The Master Servicer assigns or delegates its duties or
         rights under this Agreement in contravention of the provisions
         permitting such assignment or delegation under Sections 7.05 or 7.07.


                                      -75-

<PAGE>




In each and every such case, so long as such Event of Default with respect to
the Master Servicer shall not have been remedied, either the Trustee or the
Holders of Certificates evidencing Fractional Undivided Interests aggregating
not less than 51% of the principal of the Trust Fund, by notice in writing to
the Master Servicer (and to the Trustee if given by such Certificateholders),
with a copy to the Rating Agencies, and with the consent of EMC, may terminate
all of the rights and obligations (but not the liabilities) of the Master
Servicer under this Agreement and in and to the Mortgage Loans and/or the REO
Property serviced by the Master Servicer and the proceeds thereof. Upon the
receipt by the Master Servicer of the written notice, all authority and power of
the Master Servicer under this Agreement, whether with respect to the
Certificates, the Mortgage Loans, REO Property or under any other related
agreements (but only to the extent that such other agreements relate to the
Mortgage Loans or related REO Property) shall, subject to Section 8.02,
automatically and without further action pass to and be vested in the Trustee
pursuant to this Section 8.01; and, without limitation, the Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the Master
Servicer as attorney-in-fact or otherwise, any and all documents and other
instruments and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents, or otherwise. The Master Servicer agrees to cooperate with
the Trustee in effecting the termination of the Master Servicer's rights and
obligations hereunder, including, without limitation, the transfer to the
Trustee of (i) the property and amounts which are then or should be part of the
Trust or which thereafter become part of the Trust; and (ii) originals or copies
of all documents of the Master Servicer reasonably requested by the Trustee to
enable it to assume the Master Servicer's duties thereunder. In addition to any
other amounts which are then, or, notwithstanding the termination of its
activities under this Agreement, may become payable to the Master Servicer under
this Agreement, the Master Servicer shall be entitled to receive, out of any
amount received on account of a Mortgage Loan or related REO Property, that
portion of such payments which it would have received as reimbursement under
this Agreement if notice of termination had not been given. The termination of
the rights and obligations of the Master Servicer shall not affect any
obligations incurred by the Master Servicer prior to such termination.

         Section 8.02. TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR. (a) Upon the
receipt by the Master Servicer of a notice of termination pursuant to Section
8.01 or an Opinion of Independent Counsel pursuant to Section 7.05 to the effect
that the Master Servicer is legally unable to act or to delegate its duties to a
Person which is legally able to act, the Trustee shall automatically become the
successor in all respects to the Master Servicer in its capacity under this
Agreement and the transactions set forth or provided for herein and shall
thereafter be subject to all the responsibilities, duties, liabilities and
limitations on liabilities relating thereto placed on the Master Servicer by the
terms and provisions hereof; PROVIDED, HOWEVER, that EMC shall have the right to
either (a) immediately assume the duties of the Master Servicer or (b) select a
successor Master Servicer; PROVIDED FURTHER, HOWEVER, that the Trustee shall
have no obligation whatsoever with respect to any liability (other than advances
deemed recoverable and not previously made) incurred by the Master Servicer at
or prior to the time of termination. As compensation therefor, but subject to
Section 7.06, the Trustee shall be entitled to all funds relating to the
Mortgage Loans which the Master Servicer would have been entitled to retain if
the Master Servicer had continued to act hereunder, except for those amounts due
the Master Servicer as reimbursement permitted under this Agreement for advances
previously made or expenses previously incurred. Notwithstanding the above, the
Trustee


                                      -76-

<PAGE>



may, if it shall be unwilling so to act, or shall, if it is legally unable so to
act, appoint or petition a court of competent jurisdiction to appoint, any
established housing and home finance institution which is a Fannie Mae- or
Freddie Mac-approved servicer, and with respect to a successor to the Master
Servicer only, having a net worth of not less than $10,000,000, as the successor
to the Master Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Master Servicer hereunder.
Pending appointment of a successor to the Master Servicer hereunder, the Trustee
shall act in such capacity as hereinabove provided. In connection with such
appointment and assumption, the Trustee may make such arrangements for the
compensation of such successor out of payments on the Mortgage Loans as it and
such successor shall agree; PROVIDED, HOWEVER, that the provisions of Section
7.06 shall apply, no such compensation shall be in excess of that permitted the
Trustee under this Subsection 8.02(a), and that such successor shall undertake
and assume the obligations of the Trustee to pay compensation to any third
Person acting as an agent or independent contractor in the performance of master
servicing responsibilities hereunder. The Trustee and such successor shall take
such action, consistent with this Agreement, as shall be necessary to effectuate
any such succession.

         (b) If the Trustee shall succeed to any duties of the Master Servicer
respecting the Mortgage Loans as provided herein, it shall do so in a separate
capacity and not in its capacity as Trustee and, accordingly, the provisions of
Article IX shall be inapplicable to the Trustee in its duties as the successor
to the Master Servicer in the servicing of the Mortgage Loans (although such
provisions shall continue to apply to the Trustee in its capacity as Trustee);
the provisions of Article VII, however, shall apply to it in its capacity as
successor master servicer.

         Section 8.03. NOTIFICATION TO CERTIFICATEHOLDERS. Upon any termination
or appointment of a successor to the Master Servicer, the Trustee shall give
prompt written notice thereof to Certificateholders at their respective
addresses appearing in the Certificate Register and to the Rating Agencies.

         Section 8.04. WAIVER OF DEFAULTS. The Trustee shall transmit by mail to
all Certificateholders, within 60 days after the occurrence of any Event of
Default known to the Trustee, unless such Event of Default shall have been
cured, notice of each such Event of Default hereunder known to the Trustee. The
Holders of Certificates evidencing Fractional Undivided Interests aggregating
not less than 51% of the Trust Fund may, on behalf of all Certificateholders,
waive any default by the Master Servicer in the performance of its obligations
hereunder and the consequences thereof, except a default in the making of or the
causing to be made any required distribution on the Certificates. Upon any such
waiver of a past default, such default shall be deemed to cease to exist, and
any Event of Default arising therefrom shall be deemed to have been timely
remedied for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereon except to the
extent expressly so waived. The Trustee shall give notice of any such waiver to
the Rating Agencies.

         Section 8.05. LIST OF CERTIFICATEHOLDERS. Upon written request of three
or more Certificateholders of record, for purposes of communicating with other
Certificateholders with respect to their rights under this Agreement, the
Trustee will afford such Certificateholders access during business hours to the
most recent list of Certificateholders held by the Trustee.



                                      -77-

<PAGE>



                                   ARTICLE IX

             Concerning the Trustee and the Securities Administrator

         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 which may have occurred, and the Securities Administrator each
undertake to perform such duties and only such duties as are specifically set
forth in this Agreement as duties of the Trustee and the Securities
Administrator, respectively. If an Event of Default has occurred and has not
been cured or waived, the Trustee shall exercise such of the rights and powers
vested in it by this Agreement, and subject to Section 8.02(b) use the same
degree of care and skill in their exercise, as a prudent person would exercise
under the circumstances in the conduct of his own affairs.

         (b) Upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments which are specifically
required to be furnished to the Trustee and the Securities Administrator
pursuant to any provision of this Agreement, the Trustee and the Securities
Administrator, respectively, shall examine them to determine whether they are in
the form required by this Agreement; PROVIDED, HOWEVER, that neither the Trustee
nor the Securities Administrator shall be responsible for the accuracy or
content of any resolution, certificate, statement, opinion, report, document,
order or other instrument furnished by the Master Servicer; PROVIDED, FURTHER,
that neither the Trustee nor the Securities Administrator shall be responsible
for the accuracy or verification of any calculation provided to it pursuant to
this Agreement.

         (c) On each Distribution Date, the Trustee shall make monthly
distributions and the final distribution to the Certificateholders from funds in
the Distribution Account as provided in Sections 6.01 and 10.01 herein based the
report of the Securities Administrator. In addition, the Trustee shall promptly
notify the Master Servicer if, on any Distribution Account Deposit Date, First
Union fails to remit to the Trustee the funds required to be remitted by First
Union under its Servicing Agreement.

         (d) No provision of this Agreement shall be construed to relieve the
Trustee or the Securities Administrator from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct;
PROVIDED, HOWEVER, that:

                  (i) Prior to the occurrence of an Event of Default, and after
         the curing or waiver of all such Events of Default which may have
         occurred, the duties and obligations of the Trustee and the Securities
         Administrator shall be determined solely by the express provisions of
         this Agreement, neither the Trustee nor the Securities Administrator
         shall be liable except for the performance of their respective duties
         and obligations as are specifically set forth in this Agreement, no
         implied covenants or obligations shall be read into this Agreement
         against the Trustee or the Securities Administrator and, in the absence
         of bad faith on the part of the Trustee or the Securities
         Administrator, respectively, the Trustee or the Securities
         Administrator, respectively, 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 or the
         Securities Administrator, respectively, and conforming to the
         requirements of this Agreement;


                                      -78-

<PAGE>




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

                  (iii) Neither the Trustee nor the Securities Administrator
         shall be liable with respect to any action taken, suffered or omitted
         to be taken by it in good faith in accordance with the directions of
         the Holders of Certificates evidencing Fractional Undivided Interests
         aggregating not less than 25% of the Trust Fund, if such action or
         non-action relates to the time, method and place of conducting any
         proceeding for any remedy available to the Trustee or the Securities
         Administrator, respectively, or exercising any trust or other power
         conferred upon the Trustee or the Securities Administrator,
         respectively, under this Agreement;

                  (iv) The Trustee shall not be required to take notice or be
         deemed to have notice or knowledge of any default or Event of Default
         unless a Responsible Officer of the Trustee's Corporate Trust Office
         shall have actual knowledge thereof. In the absence of such notice, the
         Trustee may conclusively assume there is no such default or Event of
         Default;

                  (v) The Trustee shall not in any way be liable by reason of
         any insufficiency in any Account held by or in the name of Trustee
         unless it is determined by a court of competent jurisdiction that the
         Trustee's gross negligence or willful misconduct was the primary cause
         of such insufficiency (except to the extent that the Trustee is obligor
         and has defaulted thereon);

                  (vi) Anything in this Agreement to the contrary
         notwithstanding, in no event shall the Trustee or the Securities
         Administrator be liable for special, indirect or consequential loss or
         damage of any kind whatsoever (including but not limited to lost
         profits), even if the Trustee or the Securities Administrator,
         respectively, has been advised of the likelihood of such loss or damage
         and regardless of the form of action; and

                  (vii) None of the Securities Administrator, EMC or the Trustee
         shall be responsible for the acts or omissions of the other, it being
         understood that this Agreement shall not be construed to render them
         partners, joint venturers or agents of one another.

         Neither the Trustee nor the Securities Administrator shall be required
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if there is reasonable ground for believing that the repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it, and none of the provisions contained in this Agreement
shall in any event require the Trustee or the Securities Administrator to
perform, or be responsible for the manner of performance of, any of the
obligations of the Master Servicer under the Servicing Agreements or Servicing
Guides, except during such time, if any, as the Trustee shall be the successor
to, and be vested with the rights, duties, powers and privileges of, the Master
Servicer in accordance with the terms of this Agreement.



                                      -79-

<PAGE>



         (e) All funds received by the Trustee and required to be deposited in
the Distribution Account pursuant to this Agreement will be promptly so
deposited by the Trustee.

         (f) Except for those actions that the Trustee or the Securities
Administrator is required to take hereunder, neither the Trustee nor the
Securities Administrator shall have any obligation or liability to take any
action or to refrain from taking any action hereunder in the absence of written
direction as provided hereunder.

          Section 9.02. CERTAIN MATTERS AFFECTING THE TRUSTEE AND THE SECURITIES
ADMINISTRATOR. Except as otherwise provided in Section 9.01:

                  (i) The Trustee and the Securities Administrator may rely and
         shall be protected in acting or refraining from acting in reliance on
         any resolution, certificate of a Seller or Master Servicer, Servicer or
         Wells Fargo Sub-Servicer, certificate of 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 and the Securities Administrator may consult
         with counsel and any advice of such counsel or any Opinion of Counsel
         shall be full and complete authorization and protection with respect to
         any action taken or suffered or omitted by it hereunder in good faith
         and in accordance with such advice or Opinion of Counsel:

                  (iii) Neither the Trustee nor the Securities Administrator
         shall be under any obligation to exercise any of the trusts or powers
         vested in it by this Agreement, other than its obligation to give
         notices pursuant to this Agreement, or to institute, conduct or defend
         any litigation hereunder or in relation hereto at the request, order or
         direction of any of the Certificateholders pursuant to the provisions
         of this Agreement, unless such Certificateholders shall have offered to
         the Trustee 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 of which a
         Responsible Officer of the Trustee's Corporate Trust Office has actual
         knowledge (which has not been cured or waived), subject to Section
         8.02(b), 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 under the circumstances in
         the conduct of his own affairs;

                  (iv) Prior to the occurrence of an Event of Default hereunder
         and after the curing or waiver of all Events of Default which may have
         occurred, neither the Trustee nor the Securities Administrator shall be
         liable in its individual capacity 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) Neither the Trustee nor the Securities Administrator shall
         be bound to make any investigation into the facts or matters stated in
         any resolution, certificate, statement, instrument, opinion, report,
         notice, request, consent, order, approval, bond or other paper or


                                      -80-

<PAGE>



         document, unless requested in writing to do so by Holders of
         Certificates evidencing Fractional Undivided Interests aggregating not
         less than 25% of the Trust Fund and provided that the payment within a
         reasonable time to the Trustee or the Securities Administrator, as
         applicable, of the costs, expenses or liabilities likely to be incurred
         by it in the making of such investigation is, in the opinion of the
         Trustee or the Securities Administrator, as applicable, reasonably
         assured to the Trustee or the Securities Administrator, as applicable,
         by the security afforded to it by the terms of this Agreement. The
         Trustee or the Securities Administrator may require reasonable
         indemnity against such expense or liability as a condition to taking
         any such action. The reasonable expense of every such examination shall
         be paid by the Certificateholders requesting the investigation;

                  (vi) The Trustee and the Securities Administrator may execute
         any of the trusts or powers hereunder or perform any duties hereunder
         either directly or through Affiliates, agents or attorneys; PROVIDED,
         HOWEVER, that the Trustee may not appoint any agent to perform its
         custodial functions with respect to the Mortgage Files or paying agent
         functions under this Agreement without the express written consent of
         the Master Servicer, which consent will not be unreasonably withheld.
         Neither the Trustee nor the Securities Administrator shall be liable or
         responsible for the misconduct or negligence of any of the Trustee's or
         the Securities Administrator's agents or attorneys or a custodian or
         paying agent appointed hereunder by the Trustee or the Securities
         Administrator with due care and, when required, with the consent of the
         Master Servicer;

                  (vii) Should the Trustee or the Securities Administrator deem
         the nature of any action required on its part, other than a payment or
         transfer under Subsection 4.01(b) or Section 4.02, to be unclear, the
         Trustee or the Securities Administrator, respectively, may require
         prior to such action that it be provided by the Seller with reasonable
         further instructions;

                  (viii) The right of the Trustee or the Securities
         Administrator to perform any discretionary act enumerated in this
         Agreement shall not be construed as a duty, and neither the Trustee nor
         the Securities Administrator shall be accountable for other than its
         negligence or willful misconduct in the performance of any such act;

                  (ix) Neither the Trustee nor the Securities Administrator
         shall be required to give any bond or surety with respect to the
         execution of the trust created hereby or the powers granted hereunder,
         except as provided in Subsection 9.07; and

                  (x) Neither the Trustee nor the Securities Administrator shall
         have any duty to conduct any affirmative investigation as to the
         occurrence of any condition requiring the repurchase of any Mortgage
         Loan by the Mortgage Loan Seller pursuant to this Agreement or the
         Mortgage Loan Purchase Agreement, as applicable, or the eligibility of
         any Mortgage Loan for purposes of this Agreement.

                  Section 9.03. TRUSTEE AND SECURITIES ADMINISTRATOR NOT LIABLE
FOR CERTIFICATES OR MORTGAGE LOANS. The recitals contained herein and in the
Certificates (other than the signature and countersignature of the Trustee on
the Certificates) shall be taken as the statements of the Seller, and


                                      -81-

<PAGE>



neither the Trustee nor the Securities Administrator shall have any
responsibility for their correctness. Neither the Trustee nor the Securities
Administrator makes any representation as to the validity or sufficiency of the
Certificates (other than the signature and countersignature of the Trustee on
the Certificates) or of any Mortgage Loan except as expressly provided in
Sections 2.02 and 2.05 hereof; provided, however, that the foregoing shall not
relieve the Trustee of the obligation to review the Mortgage Files pursuant to
Sections 2.02 and 2.04. The Trustee's signature and countersignature (or
countersignature of its agent) on the Certificates shall be solely in its
capacity as Trustee and shall not constitute the Certificates an obligation of
the Trustee in any other capacity. Neither the Trustee or the Securities
Administrator shall be accountable for the use or application by the Seller of
any of the Certificates or of the proceeds of such Certificates, or for the use
or application of any funds paid to the Seller with respect to the Mortgage
Loans. Subject to the provisions of Section 2.05, neither the Trustee nor the
Securities Administrator shall not be responsible for the legality or validity
of this Agreement or any document or instrument relating to this Agreement, the
validity of the execution of this Agreement or of any supplement hereto or
instrument of further assurance, or the validity, priority, perfection or
sufficiency of the security for the Certificates issued hereunder or intended to
be issued hereunder. Neither the Trustee nor the Securities Administrator shall
at any time have any responsibility or liability for or with respect to the
legality, validity and enforceability of any Mortgage or any Mortgage Loan, or
the perfection and priority of any Mortgage or the maintenance of any such
perfection and priority, or for or with respect to the sufficiency of the Trust
Fund or its ability to generate the payments to be distributed to
Certificateholders, under this Agreement. Neither the Trustee nor the Securities
Administrator shall have any responsibility for filing any financing or
continuation statement in any public office at any time or to otherwise perfect
or maintain the perfection of any security interest or lien granted to it
hereunder or to record this Agreement other than any continuation statements
filed by the Trustee pursuant to Section 3.20.

         Section 9.04. TRUSTEE AND SECURITIES ADMINISTRATOR MAY OWN
CERTIFICATES. The Trustee and the Securities Administrator in its individual
capacity or in any capacity other than as Trustee hereunder may become the owner
or pledgee of any Certificates with the same rights it would have if it were not
Trustee or the Securities Administrator, as applicable, and may otherwise deal
with the parties hereto.

         Section 9.05. TRUSTEE'S AND SECURITIES ADMINISTRATOR'S FEES AND
EXPENSES. The fees of the Trustee and the Securities Administrator shall be paid
in accordance with a side letter agreement. In addition, the Trustee and the
Securities Administrator will be entitled to recover from the Master Servicer
Collection Account pursuant to Section 4.02(b) all reasonable out-of-pocket
expenses, disbursements and advances and the expenses of the Trustee and the
Securities Administrator, respectively, in connection with any Event of Default,
any breach of this Agreement or any claim or legal action (including any pending
or threatened claim or legal action) incurred or made by the Trustee or the
Securities Administrator, respectively, in the administration of the trusts
hereunder (including the reasonable compensation, expenses and disbursements of
its counsel) except any such expense, disbursement or advance as may arise from
its negligence or intentional misconduct or which is the responsibility of the
Certificateholders or the Trust Fund hereunder. If funds in the Master Servicer
Collection Account are insufficient therefor, the Trustee and the Securities
Administrator shall recover such expenses from the Seller. Such compensation and
reimbursement obligation shall not be limited by any provision of law in regard
to the compensation of a trustee of an express trust.


                                      -82-

<PAGE>




         Section 9.06. ELIGIBILITY REQUIREMENTS FOR TRUSTEE AND SECURITIES
ADMINISTRATOR. The Trustee and any successor Trustee and the Securities
Administrator and any successor Securities Administrator shall during the entire
duration of this Agreement be a state bank or trust company or a national
banking association 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 and undivided profits of at
least $40,000,000 or, in the case of a successor Trustee, $50,000,000, subject
to supervision or examination by federal or state authority and, in the case of
the Trustee, rated "BBB" or higher by Fitch with respect to their long-term
rating and rated "BBB" or higher by Standard & Poor's and "Baa2" or higher by
Moody's with respect to any outstanding long-term unsecured unsubordinated debt,
and, in the case of a successor Trustee or successor Securities Administrator
other than pursuant to Section 9.10, rated in one of the two highest long-term
debt categories of, or otherwise acceptable to, each of the Rating Agencies. The
Trustee shall not be an Affiliate of the Master Servicer, unless the Trustee
acts as successor Master Servicer hereunder. If the Trustee 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 shall be
deemed to be its total equity capital (combined capital and surplus) as set
forth in its most recent report of condition so published. In case at any time
the Trustee or the Securities Administrator shall cease to be eligible in
accordance with the provisions of this Section 9.06, the Trustee or the
Securities Administrator shall resign immediately in the manner and with the
effect specified in Section 9.08.

         Section 9.07. INSURANCE. The Trustee and the Securities Administrator,
at their own expense, shall at all times maintain and keep in full force and
effect: (i) fidelity insurance, (ii) theft of documents insurance and (iii)
forgery insurance (which may be collectively satisfied by a "Financial
Institution Bond" and/or a "Bankers' Blanket Bond"). All such insurance shall be
in amounts, with standard coverage and subject to deductibles, as are customary
for insurance typically maintained by banks or their affiliates which act as
custodians for investor-owned mortgage pools. A certificate of an officer of the
Trustee or the Securities Administrator as to the Trustee's or the Securities
Administrator's, respectively, compliance with this Section 9.07 shall be
furnished to any Certificateholder upon reasonable written request.

         Section 9.08. RESIGNATION AND REMOVAL OF THE TRUSTEE AND SECURITIES
ADMINISTRATOR. (a) The Trustee and the Securities Administrator may at any time
resign and be discharged from the Trust hereby created by giving written notice
thereof to the Seller and the Master Servicer, with a copy to the Rating
Agencies. Upon receiving such notice of resignation, the Seller shall promptly
appoint a successor Trustee or successor Securities Administrator, as
applicable, by written instrument, in triplicate, one copy of which instrument
shall be delivered to each of the resigning Trustee or Securities Administrator,
as applicable, and the successor Trustee or Securities Administrator, as
applicable. If no successor Trustee or Securities Administrator shall have been
so appointed and have accepted appointment within 30 days after the giving of
such notice of resignation, the resigning Trustee or Securities Administrator
may petition any court of competent jurisdiction for the appointment of a
successor Trustee or Securities Administrator.

         (b) If at any time the Trustee or the Securities Administrator shall
cease to be eligible in accordance with the provisions of Section 9.06 and shall
fail to resign after written request therefor


                                      -83-

<PAGE>



by the Seller or if at any time the Trustee or the Securities Administrator
shall become incapable of acting, or shall be adjudged a bankrupt or insolvent,
or a receiver of the Trustee or the Securities Administrator, as applicable, or
of its property shall be appointed, or any public officer shall take charge or
control of the Trustee or the Securities Administrator, as applicable, or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Seller shall promptly remove the Trustee, or shall be
entitled to remove the Securities Administrator, as applicable, and appoint a
successor Trustee or Securities Administrator, as applicable, by written
instrument, in triplicate, one copy of which instrument shall be delivered to
each of the Trustee or Securities Administrator, as applicable, so removed and
the successor Trustee or Securities Administrator, as applicable.

         (c) The Holders of Certificates evidencing Fractional Undivided
Interests aggregating not less than 51% of the Trust Fund may at any time remove
the Trustee or the Securities Administrator and appoint a successor Trustee or
Securities Administrator by written instrument or instruments, in quadruplicate,
signed by such Holders or their attorneys-in-fact duly authorized, one complete
set of which instruments shall be delivered to the Seller, the Master Servicer,
the Securities Administrator (if the Trustee is removed), the Trustee (if the
Securities Administrator is removed), and the Trustee or Securities
Administrator so removed and the successor so appointed.

         (d) No resignation or removal of the Trustee or the Securities
Administrator and appointment of a successor Trustee or Securities Administrator
pursuant to any of the provisions of this Section 9.08 shall become effective
except upon appointment of and acceptance of such appointment by the successor
Trustee or Securities Administrator as provided in Section 9.09.

         Section 9.09. SUCCESSOR TRUSTEE AND SUCCESSOR SECURITIES ADMINISTRATOR.
(a) Any successor Trustee or Securities Administrator appointed as provided in
Section 9.08 shall execute, acknowledge and deliver to the Seller and to its
predecessor Trustee or Securities Administrator an instrument accepting such
appointment hereunder. The resignation or removal of the predecessor Trustee or
Securities Administrator shall then become effective and such successor Trustee
or Securities Administrator, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with like effect as if originally named as Trustee or
Securities Administrator herein. The predecessor Trustee or Securities
Administrator shall after payment of its outstanding fees and expenses promptly
deliver to the successor Trustee or Securities Administrator, as applicable, all
assets and records of the Trust held by it hereunder, and the Seller and the
predecessor Trustee or Securities Administrator, as applicable, shall execute
and deliver such instruments and do such other things as may reasonably be
required for more fully and certainly vesting and confirming in the successor
Trustee or Securities Administrator, as applicable, all such rights, powers,
duties and obligations.

         (b) No successor Trustee or Securities Administrator shall accept
appointment as provided in this Section 9.09 unless at the time of such
acceptance such successor Trustee or Securities Administrator shall be eligible
under the provisions of Section 9.06.

         (c) Upon acceptance of appointment by a successor Trustee or Securities
Administrator as provided in this Section 9.09, the successor Trustee or
Securities Administrator shall mail notice of the succession of such Trustee or
Securities Administrator hereunder to all Certificateholders at


                                      -84-

<PAGE>



their addresses as shown in the Certificate Register and to the Rating Agencies.
EMC shall pay the cost of any mailing by the successor Trustee or Securities
Administrator.

         Section 9.10. MERGER OR CONSOLIDATION OF TRUSTEE OR SECURITIES
ADMINISTRATOR. Any state bank or trust company or national banking association
into which the Trustee or the Securities Administrator may be merged or
converted or with which it may be consolidated or any state bank or trust
company or national banking association resulting from any merger, conversion or
consolidation to which the Trustee or the Securities Administrator,
respectively, shall be a party, or any state bank or trust company or national
banking association succeeding to all or substantially all of the corporate
trust business of the Trustee or the Securities Administrator, respectively,
shall be the successor of the Trustee or the Securities Administrator,
respectively, hereunder, provided such state bank or trust company or national
banking association shall be eligible under the provisions of Section 9.06. Such
succession shall be valid without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.

         Section 9.11. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE. (a)
Notwithstanding any other provisions hereof, at any time, for the purpose of
meeting any legal requirements of any jurisdiction in which any part of the
Trust or property constituting the same may at the time be located, the Seller
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
and the Seller 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, and
to vest in such Person or Persons, in such capacity, such title to the Trust, or
any part thereof, and, subject to the other provisions of this Section 9.11,
such powers, duties, obligations, rights and trusts as the Seller and the
Trustee may consider necessary or desirable.

         (b) If the Seller shall not have joined in such appointment within 15
days after the receipt by it of a written request so to do, the Trustee shall
have the power to make such appointment without the Seller.

         (c) No co-trustee or separate trustee hereunder shall be required to
meet the terms of eligibility as a successor Trustee under Section 9.06
hereunder and no notice to Certificateholders of the appointment of
co-trustee(s) or separate trustee(s) shall be required under Section 9.08
hereof.

         (d) In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 9.11, all rights, powers, duties and obligations
conferred or imposed upon the Trustee and required to be conferred on such
co-trustee shall be conferred or imposed upon and exercised or performed by the
Trustee and such separate trustee or co-trustee jointly, except to the extent
that under any law of any jurisdiction in which any particular act or acts are
to be performed (whether as Trustee hereunder or as successor to the Master
Servicer hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust or any portion thereof in any such
jurisdiction) shall be exercised and performed by such separate trustee or
co-trustee at the direction of the Trustee.

         (e) 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.


                                      -85-

<PAGE>



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.

         (f) To the extent not prohibited by law, any separate trustee or
co-trustee may, at any time, request the Trustee, its agent or attorney-in-fact,
with full power and authority, to do any lawful act under or with respect to
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.

         (g) No trustee under this Agreement shall be personally liable by
reason of any act or omission of another trustee under this Agreement. The
Seller and the Trustee acting jointly may at any time accept the resignation of
or remove any separate trustee or co-trustee.

         Section 9.12. FEDERAL INFORMATION RETURNS AND REPORTS TO
CERTIFICATEHOLDERS; REMIC ADMINISTRATION. (a) For federal income tax purposes,
the taxable year of each of REMIC I and REMIC II shall be a calendar year and
the Securities Administrator shall maintain or cause the maintenance of the
books of each such REMIC on the accrual method of accounting.

         (b) The Securities Administrator shall prepare and file or cause to be
filed with the Internal Revenue Service, and the Trustee shall sign, Federal tax
information returns or elections required to be made hereunder with respect to
each of REMIC I and REMIC II, the Trust Fund, if applicable, and the
Certificates containing such information and at the times and in the manner as
may be required by the Code or applicable Treasury regulations, and shall
furnish to each Holder of Certificates at any time during the calendar year for
which such returns or reports are made such statements or information at the
times and in the manner as may be required thereby, including, without
limitation, reports relating to interest, original issue discount and market
discount or premium (using a constant prepayment assumption of 25% CPR). The
Securities Administrator will apply for an Employee Identification Number from
the IRS under Form SS-4 or any other acceptable method each of REMIC I and REMIC
II. In connection with the foregoing, the Securities Administrator shall timely
prepare and file, and the Trustee shall sign, IRS Form 8811, which shall provide
the name and address of the person who can be contacted to obtain information
required to be reported to the holders of regular interests in each of REMIC I
and REMIC II (the "REMIC Reporting Agent"). The Trustee shall make elections to
treat each of REMIC I and REMIC II as a REMIC (which elections shall apply to
the taxable period ending December 31, 2001 and each calendar year thereafter)
in such manner as the Code or applicable Treasury regulations may prescribe, and
as described by the Securities Administrator. The Trustee shall sign all tax
information returns filed pursuant to this Section and any other returns as may
be required by the Code. The Holder of the Class R-I Certificate is hereby
designated as the "Tax Matters Person" (within the meaning of Treas. Reg.
ss.ss.1.860F-4(d)) for REMIC I, and the Holder of the Class R-II Certificate is
hereby designated as the "Tax Matters Person" for REMIC II. The Securities
Administrator is hereby designated and


                                      -86-

<PAGE>



appointed as the agent of each such Tax Matters Person. Any Holder of a Residual
Certificate will by acceptance thereof appoint the Securities Administrator as
agent and attorney-in-fact for the purpose of acting as Tax Matters Person for
each of REMIC I and REMIC II during such time as the Securities Administrator
does not own any such Residual Certificate. In the event that the Code or
applicable Treasury regulations prohibit the Trustee from signing tax or
information returns or other statements, or the Securities Administrator from
acting as agent for the Tax Matters Person, the Securities Administrator and the
Trustee shall take whatever action that in its sole good faith judgment is
necessary for the proper filing of such information returns or for the provision
of a tax matters person, including designation of the Holder of a Residual
Certificate to sign such returns or act as tax matters person. Each Holder of a
Residual Certificate shall be bound by this Section.

         (c) The Securities Administrator shall provide upon request and receipt
of reasonable compensation, such information as required in Section
860D(a)(6)(B) of the Code to the Internal Revenue Service, to any Person
purporting to transfer a Residual Certificate to a Person other than a
transferee permitted by Section 5.05(b), and to any regulated investment
company, real estate investment trust, common trust fund, partnership, trust,
estate, organization described in Section 1381 of the Code, or nominee holding
an interest in a pass-through entity described in Section 860E(e)(6) of the
Code, any record holder of which is not a transferee permitted by Section
5.05(b) (or which is deemed by statute to be an entity with a disqualified
member).

         (d) The Securities Administrator shall prepare and file or cause to be
filed, and the Trustee shall sign, any state income tax returns required under
Applicable State Law with respect to each of REMIC I and REMIC II or the Trust
Fund.

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

         (f) The Trustee and the Securities Administrator agree to indemnify the
Trust Fund and the Seller for any taxes and costs including, without limitation,
any reasonable attorneys fees imposed on or incurred by the Trust Fund, the
Company or the Master Servicer, as a result of a breach of the Trustee's
covenants and the Securities Administrator's covenants, respectively, set forth
in this Section 9.12, but neither the Trustee nor the Securities Administrator
shall be liable or indemnify the Trust Fund for the failure by the other to
perform any duty under this Agreement or the breach by the other of any covenant
in this Agreement.



                                      -87-

<PAGE>




                                    ARTICLE X

                                   Termination

         Section 10.01. TERMINATION UPON REPURCHASE BY THE SELLER OR ITS
DESIGNEE OR LIQUIDATION OF THE MORTGAGE LOANS. (a) Subject to Section 10.02, the
respective obligations and responsibilities of the Seller, the Trustee, the
Master Servicer and the Securities Administrator created hereby, other than the
obligation of the Trustee to make payments to Certificateholders as hereinafter
set forth shall terminate upon:

                  (i) the repurchase by or at the direction of the Seller or its
         designee of all Mortgage Loans and all related REO Property remaining
         in the Trust at a price equal to (a) 100% of the Outstanding Principal
         Balance of each Mortgage Loan (other than a Mortgage Loan related to
         REO Property) as of the date of repurchase, net of the principal
         portion of any unreimbursed Monthly Advances made by the purchaser,
         together with interest at the applicable Mortgage Interest Rate accrued
         but unpaid to, but not including, the first day of the month of
         repurchase, plus (b) the appraised value of any related REO Property,
         less the good faith estimate of the Seller of liquidation expenses to
         be incurred in connection with its disposal thereof (but not more than
         the Outstanding Principal Balance of the related Mortgage Loan,
         together with interest at the applicable Mortgage Interest Rate accrued
         on that balance but unpaid to, but not including, the first day of the
         month of repurchase), such appraisal to be calculated by an appraiser
         mutually agreed upon by the Seller and the Trustee at the expense of
         the Seller; or

                  (ii) the later of the making of the final payment or other
         liquidation, or any advance with respect thereto, of the last Mortgage
         Loan remaining in the Trust Fund or the disposition of all property
         acquired with respect to any Mortgage Loan; PROVIDED, HOWEVER, that in
         the event that an advance has been made, but not yet recovered, at the
         time of such termination, the Person having made such advance shall be
         entitled to receive, notwithstanding such termination, any payments
         received subsequent thereto with respect to which such advance was
         made; or

                  (iii) the payment to Certificateholders of all amounts
         required to be paid to them pursuant to this Agreement.

         (b) In no event, however, shall the Trust created hereby continue
beyond the expiration of 21 years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late Ambassador of the United States to
the Court of St. James's, living on the date of this Agreement.

         (c) The right of the Seller or its designee to repurchase all the
Mortgage Loans pursuant to Subsection 10.01(a)(i) above shall be exercisable
only if (i) the aggregate Scheduled Principal Balance of the Mortgage Loans at
the time of any such repurchase is less than 10% of the Cut-off Date Balance or
(ii) the Seller, based upon an Opinion of Counsel, has determined that the REMIC
status of the REMIC I or REMIC II has been lost or that a substantial risk
exists that such REMIC status will be lost for the then-current taxable year. At
any time thereafter, in the case of (i) or (ii)


                                      -88-

<PAGE>



above, the Seller may elect to terminate the REMIC I or REMIC II at any time,
and upon such election, the Seller or its designee, shall repurchase all the
Mortgage Loans.

         (d) The Trustee shall give notice of any termination to the
Certificateholders, with a copy to the Master Servicer, Securities Administrator
and the Rating Agencies, upon which the Certificateholders shall surrender their
Certificates to the Trustee for payment of the final distribution and
cancellation. Such notice shall be given by letter, mailed not earlier than the
l5th day and not later than the 25th day of the month next preceding the month
of such final distribution, and shall specify (i) the Distribution Date upon
which final payment of the Certificates will be made upon presentation and
surrender of the Certificates at the office of the Trustee therein designated,
(ii) the amount of any such final payment and (iii) that the Record Date
otherwise applicable to such Distribution Date is not applicable, payments being
made only upon presentation and surrender of the Certificates at the office of
the Trustee therein specified.

         (e) If the option of the Seller to repurchase or cause the repurchase
of all the Mortgage Loans under Subsection 10.01 (a)(i) above is exercised, the
Seller and/or its designee shall deliver to the Trustee for deposit in the
Distribution Account, by the Business Day prior to the applicable Distribution
Date, an amount equal to the repurchase price for the Mortgage Loans being
purchased by it and all property acquired with respect to such Mortgage Loans
remaining in REMIC I and REMIC II. Upon presentation and surrender of the
Certificates by the Certificateholders, the Trustee shall distribute to the
Certificateholders an amount determined as follows: with respect to each
Certificate (other than the Class R Certificates), the outstanding Current
Principal Amount, plus with respect to each Certificate (other than the Class R
Certificates), one month's interest thereon at the applicable Pass-Through Rate;
and with respect to the Class R Certificates, the percentage interest evidenced
thereby multiplied by the difference, if any, between the above described
repurchase price and the aggregate amount to be distributed to the Holders of
the Certificates (other than the Class R Certificates). If the proceeds with
respect to the Group 1 Mortgage Loans are not sufficient to pay all of the Group
1 Certificates in full, any such deficiency will be allocated first, to the
Subordinate Certificates, in inverse order of their numerical designation, and
then to the Group 1 Senior Certificates. If the proceeds with respect to the
Group 2 Mortgage Loans are not sufficient to pay all of the Group 2 Certificates
in full, any such deficiency will be allocated first, to the Subordinate
Certificates, in inverse order of their numerical designation, and then to the
Group 2 Senior Certificates on a PRO RATA basis. Upon deposit of the required
repurchase price and following such final Distribution Date, the Trustee shall
release promptly to the Seller and/or its designee the Mortgage Files for the
remaining applicable Mortgage Loans, and the Accounts with respect thereto shall
terminate, subject to the Trustee's obligation to hold any amounts payable to
Certificateholders in trust without interest pending final distributions
pursuant to Subsection 10.01(g). Any other amounts remaining in the Accounts
will belong to the Seller. Upon deposit of the required repurchase price and
following such final Distribution Date, the Trustee shall release promptly to
the Seller and/or its designee, as the case may be, the Mortgage Files for the
remaining Mortgage Loans, and the Accounts with respect thereto shall terminate,
subject to the Trustee's obligation to hold any amounts payable to
Certificateholders in trust without interest pending final distributions
pursuant to Subsection 10.01(f).

         (f) In the event that this Agreement is terminated by reason of the
payment or liquidation of all Mortgage Loans or the disposition of all property
acquired with respect to all Mortgage Loans


                                      -89-

<PAGE>



under Subsection 10.01(a)(ii) above, the Master Servicer shall deliver to the
Trustee for deposit in the Distribution Account all distributable amounts
remaining in their Protected Accounts. Upon the presentation and surrender of
the Certificates, the Trustee shall distribute to the remaining
Certificateholders, in accordance with their respective interests, all
distributable amounts remaining in the Distribution Account. Upon deposit by the
Master Servicer of such distributable amounts, and following such final
Distribution Date, the Trustee shall release promptly to the Seller or its
designee the Mortgage Files for the remaining Mortgage Loans, and the Master
Servicer Collection Account and the Distribution Account shall terminate,
subject to the Trustee's obligation to hold any amounts payable to the
Certificateholders in trust without interest pending final distributions
pursuant to this Subsection 10.01(f).

         (g) If not all of the Certificateholders shall surrender their
Certificates for cancellation within six months after the time specified in the
above-mentioned written notice, the Trustee shall give a second written notice
to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
six months after the second notice, not all the Certificates shall have been
surrendered for cancellation, the Trustee may take appropriate steps, or appoint
any 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 this Agreement.

         Section 10.02. ADDITIONAL TERMINATION REQUIREMENTS. (a) If the option
of the Seller to repurchase all the Mortgage Loans under Subsection 10.01(a)(i)
above is exercised, the Trust Fund and each of REMIC I and REMIC II shall be
terminated in accordance with the following additional requirements, unless the
Trustee has been furnished with an Opinion of Counsel to the effect that the
failure of the Trust to comply with the requirements of this Section 10.02 will
not (i) result in the imposition of taxes on "prohibited transactions" as
defined in Section 860F of the Code on each of REMIC I and REMIC II or (ii)
cause any REMIC to fail to qualify as a REMIC at any time that any Regular
Certificates are outstanding:

                  (i) within 90 days prior to the final Distribution Date, at
         the written direction of the Seller, the Trustee, as agent for the
         respective Tax Matters Persons, shall adopt a plan of complete
         liquidation of REMIC I and REMIC II provided to it by the Seller
         meeting the requirements of a "qualified liquidation" under Section
         860F of the Code and any regulations thereunder.

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

                  (iii) at or after the time of adoption of such a plan of
         complete liquidation of any of REMIC I and REMIC II and at or prior to
         the final Distribution Date, the Trustee shall sell for cash all of the
         assets of the Trust to or at the direction of the Seller, and REMIC I
         and REMIC II shall terminate at such time.



                                      -90-

<PAGE>



         (b) By their acceptance of the Residual Certificates, the Holders
thereof hereby (i) agree to adopt such a plan of complete liquidation of the
REMIC upon the written request of the Seller and to take such action in
connection therewith as may be reasonably requested by the Seller and (ii)
appoint the Seller as their attorney-in-fact, with full power of substitution,
for purposes of adopting such a plan of complete liquidation. The Trustee shall
adopt such plan of liquidation by filing the appropriate statement on the final
tax return of each REMIC. Upon complete liquidation or final distribution of all
of the assets of the Trust Fund, the Trust Fund and each of REMIC I and REMIC II
shall terminate.


                                      -91-

<PAGE>



                                   ARTICLE XI

                            Miscellaneous Provisions

         Section 11.01. INTENT OF PARTIES. The parties intend that each of REMIC
I and REMIC II shall be treated as a REMIC for federal income tax purposes and
that the provisions of this Agreement should be construed in furtherance of this
intent.

         Section 11.02. AMENDMENT. (a) This Agreement may be amended from time
to time by the Seller, the Securities Administrator and the Trustee, and the
Servicing Agreements and the Servicing Guides may be amended from time to time
by the Master Servicer and the Trustee, without notice to or the consent of any
of the Certificateholders, to cure any ambiguity, to correct or supplement any
provisions herein or therein that may be defective or inconsistent with any
other provisions herein or therein, to comply with any changes in the Code or to
make any other provisions with respect to matters or questions arising under
this Agreement which shall not be inconsistent with the provisions of this
Agreement; PROVIDED, HOWEVER, that such action shall not, as evidenced by an
Opinion of Independent Counsel, adversely affect in any material respect the
interests of any Certificateholder.

         (b) This Agreement may also be amended from time to time by the Seller,
the Securities Administrator and the Trustee, and the Servicing Agreements and
Servicing Guides may also be amended from time to time by the Master Servicer
and the Trustee, with the consent of the Holders of Certificates evidencing
Fractional Undivided Interests aggregating not less than 51% of the Trust Fund
or of the applicable Class or Classes, if such amendment affects only such Class
or Classes, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or of modifying in
any manner the rights of the Certificateholders; PROVIDED, HOWEVER, that no such
amendment shall (i) reduce in any manner the amount of, or delay the timing of,
payments received on Mortgage Loans which are required to be distributed on any
Certificate without the consent of the Holder of such Certificate, (ii) reduce
the aforesaid percentage of Certificates the Holders of which are required to
consent to any such amendment, without the consent of the Holders of all
Certificates then outstanding, or (iii) cause REMIC I or REMIC II to fail to
qualify as a REMIC for federal income tax purposes, as evidenced by an Opinion
of Independent Counsel which shall be provided to the Trustee other than at the
Trustee's expense. Notwithstanding any other provision of this Agreement, for
purposes of the giving or withholding of consents pursuant to Section 11.02(b),
Certificates registered in the name of or held for the benefit of the Seller,
the Securities Administrator, the Master Servicer, or the Trustee or any
Affiliate thereof shall be entitled to vote their Fractional Undivided Interests
with respect to matters affecting such Certificates.

         (c) Promptly after the execution of any such amendment, the Trustee
shall furnish a copy of such amendment or written notification of the substance
of such amendment to each Certificateholder, with a copy to the Rating Agencies.

         (d) In the case of an amendment under SubSection 11.02(b)
above, it shall not be necessary for the Certificateholders to approve the
particular form of such an amendment. Rather, it shall be sufficient if the
Certificateholders approve the substance of the amendment. The manner


                                      -92-

<PAGE>



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.

         (e) Prior to the execution of any amendment to this Agreement, the
Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating
that the execution of such amendment is authorized or permitted by this
Agreement. The Trustee and the Securities Administrator may, but shall not be
obligated to, enter into any such amendment which affects the Trustee's or the
Securities Administrator's own respective rights, duties or immunities under
this Agreement.

         Section 11.03. RECORDATION OF AGREEMENT. To the extent permitted by
applicable law, this Agreement is subject to recordation in all appropriate
public offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the Mortgaged Properties are situated, and
in any other appropriate public recording office or elsewhere. The Seller shall
effect such recordation, at the expense of the Trust upon the request in writing
of a Certificateholder, but only if such direction is accompanied by an Opinion
of Counsel (provided at the expense of the Certificateholder requesting
recordation) to the effect that such recordation would materially and
beneficially affect the interests of the Certificateholders or is required by
law.

         Section 11.04. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS. (a) The
death or incapacity of any Certificateholder shall not terminate this Agreement
or the Trust, nor entitle such Certificateholder's legal representatives or
heirs to claim an accounting or to take any action or proceeding in any court
for a partition or winding up of the Trust, nor otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.

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

         (c) No Certificateholder shall have any right by virtue of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon, under or with respect to this Agreement against the
Seller, the Securities Administrator, the Master Servicer or any successor to
any such parties unless (i) such Certificateholder previously shall have given
to the Trustee a written notice of a continuing default, as herein provided,
(ii) the Holders of Certificates evidencing Fractional Undivided Interests
aggregating not less than 51% of the Trust Fund shall have made written request
upon the Trustee to institute such action, suit or proceeding in its own name as
Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs and expenses and liabilities to be
incurred therein or thereby, and (iii) 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.

         (d) No one or more Certificateholders shall have any right by virtue of
any provision of this Agreement to affect the rights of any other
Certificateholders or to obtain or seek to obtain


                                      -93-

<PAGE>



priority or preference over any other such Certificateholder, or to enforce any
right under this Agreement, except in the manner herein provided and for the
equal, ratable and common benefit of all Certificateholders. For the protection
and enforcement of the provisions of this Section 11.04, each and every
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.

         Section 11.05. ACTS OF CERTIFICATEHOLDERS. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Agreement to be given or taken by Certificateholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Certificateholders in person or by an agent duly appointed in writing.
Except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee and,
where it is expressly required, to the Seller. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Agreement and conclusive in favor of the Trustee and the Seller,
if made in the manner provided in this Section 11.05.

         (b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his or her individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his or her authority. The fact and date of the execution of any such
instrument or writing, or the authority of the individual executing the same,
may also be proved in any other manner which the Trustee deems sufficient.

         (c) The ownership of Certificates (notwithstanding any notation of
ownership or other writing on such Certificates, except an endorsement in
accordance with Section 5.02 made on a Certificate presented in accordance with
Section 5.04) shall be proved by the Certificate Register, and neither the
Trustee, the Securities Administrator, the Seller, the Master Servicer nor any
successor to any such parties shall be affected by any notice to the contrary.

         (d) Any request, demand, authorization, direction, notice, consent,
waiver or other action of the holder of any Certificate shall bind every future
holder of the same Certificate and the holder of every Certificate issued upon
the registration of transfer or exchange thereof, if applicable, or in lieu
thereof with respect to anything done, omitted or suffered to be done by the
Trustee, the Securities Administrator, the Seller, the Master Servicer or any
successor to any such party in reliance thereon, whether or not notation of such
action is made upon such Certificates.

         (e) In determining whether the Holders of the requisite percentage of
Certificates evidencing Fractional Undivided Interests have given any request,
demand, authorization, direction, notice, consent or waiver hereunder,
Certificates owned by the Trustee, the Securities Administrator, the Seller, the
Master Servicer or any Affiliate thereof shall be disregarded, except as
otherwise provided in Section 11.02(b) and except that, in determining whether
the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Certificates which the
Trustee knows to be so owned shall be so disregarded. Certificates which have
been pledged in good faith to the Trustee, the Securities Administrator, the
Seller, the Master


                                      -94-

<PAGE>



Servicer or any Affiliate thereof may be regarded as outstanding if the pledgor
establishes to the satisfaction of the Trustee the pledgor's right to act with
respect to such Certificates and that the pledgor is not an Affiliate of the
Trustee, the Securities Administrator, the Seller, or the Master Servicer, as
the case may be.

         Section 11.06. GOVERNING LAW. THIS AGREEMENT AND THE CERTIFICATES SHALL
BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REFERENCE TO ITS CONFLICT OF LAWS RULES AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

         Section 11.07. NOTICES. All demands and notices hereunder shall be in
writing and shall be deemed given when delivered at (including delivery by
facsimile) or mailed by registered mail, return receipt requested, postage
prepaid, or by recognized overnight courier, to (i) in the case of the Seller,
245 Park Avenue, New York, New York 10167, Attention: Vice President-Servicing,
telecopier number: (212) 272-5591, or to such other address as may hereafter be
furnished to the other parties hereto in writing; (ii) in the case of the
Trustee, at its Corporate Trust Office, or such other address as may hereafter
be furnished to the other parties hereto in writing; (iii) in the case of the
Master Servicer or Securities Administrator, to 11000 Broken Land Parkway,
Columbia, Maryland 21044 (Attention: BART 01-4), facsimile: (410) 884-2360, or
such other address as may hereafter be furnished to the other parties hereto in
writing; or (iv) in the case of the Rating Agencies, Fitch, Inc., One State
Street Plaza, 32nd Floor, New York, New York 10004, Moody's Investors Service,
Inc., 99 Church Street, 4th Floor, New York, New York 10004, and Standard &
Poor's, a division of the McGraw-Hill Companies, Inc., 55 Water Street, 41st
Floor, New York, New York, 10041, Attention: Residential Mortgage Surveillance.
Any notice delivered to the Seller, the Master Servicer, the Securities
Administrator or the Trustee under this Agreement shall be effective only upon
receipt. Any notice required or permitted to be mailed to a Certificateholder,
unless otherwise provided herein, shall be given by first-class mail, postage
prepaid, at the address of such Certificateholder as shown in the Certificate
Register. Any notice so mailed within the time prescribed in this Agreement
shall be conclusively presumed to have been duly given when mailed, whether or
not the Certificateholder receives such notice.

         Section 11.08. 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 severed 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 11.09. SUCCESSORS AND ASSIGNS. The provisions of this Agreement
shall be binding upon and inure to the benefit of the respective successors and
assigns of the parties hereto.

         Section 11.10. ARTICLE AND SECTION HEADINGS. The article and section
headings herein are for convenience of reference only, and shall not limit or
otherwise affect the meaning hereof.



                                      -95-

<PAGE>



         Section 11.11. COUNTERPARTS. This Agreement may be executed in two or
more counterparts each of which when so executed and delivered shall be an
original but all of which together shall constitute one and the same instrument.

         Section 11.12. NOTICE TO RATING AGENCIES. The article and section
headings herein are for convenience of reference only, and shall not limited or
otherwise affect the meaning hereof. The Trustee shall promptly provide notice
to each Rating Agency with respect to each of the following of which it has
actual knowledge:

         1. Any material change or amendment to this Agreement, the Servicing
Agreements and the Servicing Guides;

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

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

         4.       The repurchase or substitution of Mortgage Loans;

         5.       The final payment to Certificateholders; and

         6. Any change in the location of the Master Servicer Collection Account
or the Distribution Account.




                                      -96-

<PAGE>



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

                               STRUCTURED ASSET MORTGAGE
                               INVESTMENTS INC., as Seller

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


                               BANK ONE, NATIONAL ASSOCIATION, as
                               Trustee

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


                               WELLS FARGO BANK MINNESOTA, NATIONAL
                                  ASSOCIATION, as Securities Administrator

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


                               WELLS FARGO BANK MINNESOTA, NATIONAL
                                  ASSOCIATION, as Master Servicer

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


                               EMC MORTGAGE CORPORATION

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




<PAGE>




Accepted and Agreed as to Sections 2.01, 2.02, 2.03, 2.04 and 9.09(c) in its
  capacity as Mortgage Loan Seller

EMC MORTGAGE CORPORATION

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



<PAGE>



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

         On the 31st day of May, 2001 before me, a notary public in and for said
State, personally appeared ____________________, known to me to be a
____________________ of Structured Asset Mortgage Investments Inc., the
corporation that executed the within instrument, and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.

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


                                                ------------------------------
                                                         Notary Public
[Notarial Seal]



<PAGE>



STATE OF       )
               ) ss.:
COUNTY OF      )

         On the 31st day of May, 2001 before me, a notary public in and for said
State, personally appeared ____________________, known to me to be a
____________________ of Bank One, National Association, the corporation that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.

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



                                                ------------------------------
                                                         Notary Public
[Notarial Seal]



<PAGE>



STATE OF MARYLAND        )
                         ) ss.:
COUNTY OF                )

         On the 31st day of May, 2001 before me, a notary public in and for said
State, personally appeared ____________________, known to me to be a
_______________________ of Wells Fargo Bank Minnesota, National Association, the
corporation that executed the within instrument, and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.

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




                                                ------------------------------
                                                         Notary Public
[Notarial Seal]



<PAGE>


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

         On the 31st day of May, 2001 before me, a notary public in and for said
State, personally appeared ______________________, known to me to be a
____________________ of EMC Mortgage Corporation, the corporation that executed
the within instrument, and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.

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


                                                ------------------------------
                                                         Notary Public
[Notarial Seal]




<PAGE>