<PAGE>


                         UNAFFILIATED SELLER'S AGREEMENT

                          dated as of December 1, 2000

                                  by and among

                   BEAR STEARNS ASSET BACKED SECURITIES, INC.,
                                  as Depositor,

                               ABFS 2000-4, INC.,
                             as Unaffiliated Seller



                                       and



                         AMERICAN BUSINESS CREDIT, INC.,
              HOMEAMERICAN CREDIT, INC., D/B/A UPLAND MORTGAGE, and
                    NEW JERSEY MORTGAGE AND INVESTMENT CORP.,
                                 as Originators


<PAGE>


                                TABLE OF CONTENTS
<TABLE>
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Article I DEFINITIONS.................................................................................1

   Section 1.01     Definitions.......................................................................1


Article II PURCHASE, SALE AND CONVEYANCE OF MORTGAGE LOANS............................................3

   Section 2.01     Agreement to Purchase the Mortgage Loans..........................................3
   Section 2.02     [Reserved]........................................................................3
   Section 2.03     Purchase Price....................................................................3
   Section 2.04     Conveyance of Mortgage Loans; Possession of Mortgage Files........................3
   Section 2.05     Delivery of Mortgage Loan Documents...............................................4
   Section 2.06     Acceptance of Mortgage Loans......................................................5
   Section 2.07     Transfer of Mortgage Loans; Assignment of Agreement...............................6
   Section 2.08     Examination of Mortgage Files.....................................................7
   Section 2.09     Books and Records.................................................................7
   Section 2.10     Cost of Delivery and Recordation of Documents.....................................7


Article III REPRESENTATIONS AND WARRANTIES............................................................7

   Section 3.01     Representations and Warranties as to the Originators..............................7
   Section 3.02     Representations and Warranties as to the Unaffiliated Seller.....................10
   Section 3.03     Representations and Warranties Relating to the Mortgage Loans....................12
   Section 3.04     Representations and Warranties of the Depositor..................................22
   Section 3.05     Repurchase Obligation for Defective Documentation and for Breach of a
                    Representation or Warranty.......................................................23

Article IV THE UNAFFILIATED SELLER...................................................................25

   Section 4.01     Covenants of the Originators and the Unaffiliated Seller.........................25
   Section 4.02     Merger or Consolidation..........................................................26
   Section 4.03     Costs............................................................................26
   Section 4.04     Indemnification..................................................................27


Article V CONDITIONS OF CLOSING......................................................................29

   Section 5.01     Conditions of Depositor's Obligations............................................29
   Section 5.02     Conditions of Unaffiliated Seller's Obligations..................................31
   Section 5.03     Termination of Depositor's Obligations...........................................32


Article VI MISCELLANEOUS.............................................................................32

   Section 6.01     Notices..........................................................................32
   Section 6.02     Severability of Provisions.......................................................33
</TABLE>

                                       i

<PAGE>

<TABLE>
<CAPTION>
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                                                                                                    ----
<S>                                                                                               <C>
   Section 6.03     Agreement of Unaffiliated Seller.................................................33
   Section 6.04     Survival.........................................................................33
   Section 6.05     Effect of Headings and Table of Contents.........................................33
   Section 6.06     Successors and Assigns...........................................................33
   Section 6.07     Confirmation of Intent; Grant of Security Interest...............................33
   Section 6.08     Miscellaneous....................................................................34
   Section 6.09     Amendments.......................................................................34
   Section 6.10     Third-Party Beneficiaries........................................................35
   Section 6.11     GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.....................35
   Section 6.12     Execution in Counterparts........................................................36
</TABLE>


                             SCHEDULES AND EXHIBITS

Schedule I - Mortgage Loan Schedule

Exhibit A - [Reserved]




                                       ii

<PAGE>


                  This UNAFFILIATED SELLER'S AGREEMENT, dated as of December 1,
2000 (this "Agreement"), by and among BEAR STEARNS ASSET BACKED SECURITIES,
INC., a Delaware corporation, (the "Depositor"), ABFS 2000-4, INC., a Delaware
corporation (the "Unaffiliated Seller"), AMERICAN BUSINESS CREDIT, INC., a
Pennsylvania corporation ("ABC"), HOMEAMERICAN CREDIT, INC. D/B/A UPLAND
MORTGAGE, a Pennsylvania corporation ("Upland") and NEW JERSEY MORTGAGE AND
INVESTMENT CORP., a New Jersey corporation ("NJMIC", and together with ABC and
Upland, the "Originators").

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

                  WHEREAS, Schedule I attached hereto and made a part hereof
lists certain fixed rate business purpose loans and consumer purpose first and
second lien mortgage loans (the "Mortgage Loans") owned by the Originators that
the Originators desire to sell to the Unaffiliated Seller, the Unaffiliated
Seller desires to sell to the Depositor and that the Depositor desires to
purchase; and

                  WHEREAS, it is the intention of the Originators, the
Unaffiliated Seller and the Depositor that simultaneously with the Originators'
conveyance of the Mortgage Loans to the Unaffiliated Seller and the Unaffiliated
Seller's conveyance of the Mortgage Loans to the Depositor on the Closing Date,
(a) the Depositor shall sell the Mortgage Loans to the ABFS Mortgage Loan Trust
2000-4, a Delaware statutory business trust (the "Trust") pursuant to a Sale and
Servicing Agreement to be dated as of December 1, 2000 (the "Sale and Servicing
Agreement"), to be entered into by and among the Depositor, as depositor, the
Trust, as issuer, ABC, as servicer (in such capacity, the "Servicer"), and The
Chase Manhattan Bank, a New York banking corporation, as indenture trustee and
collateral agent (respectively, the "Indenture Trustee" and the "Collateral
Agent"), and (b) the Trust shall issue its Mortgage Backed Notes (the "Notes"),
pursuant to an Indenture, to be dated as of December 1, 2000 (the "Indenture"),
by and between the Trust and the Indenture Trustee, which Notes will be secured
by a pledge of the assets of the Trust.

                  NOW, THEREFORE, in consideration of the premises and the
mutual agreements hereinafter set forth, the parties hereto agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

                  Section 1.01 Definitions. (a) Whenever used herein, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article I:

                  "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

                  "Prospectus" means the Prospectus dated December 6, 2000
relating to the offering by the Depositor from time to time of its Mortgage
Backed Notes (Issuable in Series) in the form in which it was or will be filed
with the Commission pursuant to Rule 424(b) under the Securities Act with
respect to the offer and sale of the Notes.

<PAGE>

                  "Prospectus Supplement" means the Prospectus Supplement dated
December 6, 2000, relating to the offering of the Notes in the form in which it
was or will be filed with the Commission pursuant to Rule 424(b) under the
Securities Act with respect to the offer and sale of the Notes.

                  "Registration Statement" means that certain registration
statement on Form S-3, as amended (Registration No. 333-43278) relating to the
offering by the Depositor from time to time of its Mortgage Backed Notes
(Issuable in Series) as heretofore declared effective by the Commission.

                  "Securities Act" means the Securities Act of 1933, as amended.

                  "Termination Event" means the existence of any one or more of
the following conditions:

                  (a) a stop order suspending the effectiveness of the
          Registration Statement shall have been issued or a proceeding for that
          purpose shall have been initiated or threatened by the Commission; or

                  (b) subsequent to the execution and delivery of this
          Agreement, a downgrading, or public notification of a possible change,
          without indication of direction, shall have occurred in the rating
          afforded any of the debt securities or claims paying ability of any
          person providing any form of credit enhancement for any of the Notes,
          by any "nationally recognized statistical rating organization," as
          that term is defined by the Commission for purposes of Rule 436(g)(2)
          under the Securities Act; or

                  (c) subsequent to the execution and delivery of this
          Agreement, there shall have occurred an adverse change in the
          condition, financial or otherwise, earnings, affairs, regulatory
          situation or business prospects of the Note Insurer or the
          Unaffiliated Seller reasonably determined by the Depositor to be
          material; or

                  (d) subsequent to the date of this Agreement there shall have
          occurred any of the following: (i) a suspension or material limitation
          in trading in securities substantially similar to the Notes; (ii) a
          general moratorium on commercial banking activities in the State of
          New York declared by either Federal or New York State authorities; or
          (iii) the engagement by the United States in hostilities, or the
          escalation of such hostilities, or any calamity or crisis, if the
          effect of any such event specified in this clause (iii) in the
          reasonable judgment of the Depositor makes it impracticable or
          inadvisable to proceed with the public offering or the delivery of the
          Notes on the terms and in the manner contemplated in the Prospectus
          Supplement.

                  (b) Capitalized terms used herein that are not otherwise
defined shall have the respective meanings ascribed thereto in Appendix I to the
Indenture.


                                       2
<PAGE>


                                   ARTICLE II

                 PURCHASE, SALE AND CONVEYANCE OF MORTGAGE LOANS

                  Section 2.01 Agreement to Purchase the Mortgage Loans. (a)
Subject to the terms and conditions of this Agreement, the Originators agree to
sell, and the Unaffiliated Seller agrees to purchase on the Closing Date and
immediately subsequent thereto, the Unaffiliated Seller agrees to sell, and the
Depositor agrees to purchase, the Mortgage Loans having the Cut-Off Date
Aggregate Principal Balance or, in accordance with Section 2.08 hereof, such
other balance as is evidenced by the actual Cut-Off Date Aggregate Principal
Balance of the Mortgage Loans accepted by the Depositor on the Closing Date and
listed in the Mortgage Loan Schedule.

                  (b) Subject to Section 2.08 hereof, the Depositor and the
Unaffiliated Seller have agreed upon which of the Unaffiliated Seller's Mortgage
Loans are to be purchased by the Depositor on the Closing Date pursuant to this
Agreement, and the Unaffiliated Seller has prepared a schedule describing the
Mortgage Loans (the "Mortgage Loan Schedule") setting forth all of the Mortgage
Loans to be purchased under this Agreement, which Mortgage Loan Schedule is
attached hereto as Schedule I. The Mortgage Loan Schedule shall conform to the
requirements of the Depositor and to the definition of "Mortgage Loan Schedule"
in Appendix I to the Indenture.

                  (c) The closing for the purchase and sale of the Mortgage
Loans shall take place at the offices of Dewey Ballantine LLP, New York, New
York, at 10:00 a.m., New York, New York time, on the Closing Date, or such other
place and time as the parties shall agree.

                  Section 2.02 [Reserved].

                  Section 2.03 Purchase Price. On the Closing Date, as
consideration for the Originators' sale of the Mortgage Loans to the
Unaffiliated Seller, the Unaffiliated Seller will deliver to the Originators an
amount in cash equal to the sum of (A) 99.75% of the Original Note Principal
Balance as of the Closing Date of the Class A Notes plus (B) accrued interest on
the Original Note Principal Balance of the Class A Notes at the rate of 7.05%
per annum, from (and including) December 1, 2000 to (but not including) the
Closing Date, payable by wire transfer of same day funds.

                  On the Closing Date, as full consideration for the
Unaffiliated Seller's sale of the Mortgage Loans to the Depositor, the Depositor
will deliver to, or at the direction of, the Unaffiliated Seller (i) an amount
in cash equal to the sum of (A) 99.75% of the Original Note Principal Balance as
of the Closing Date of the Class A Notes plus (B) accrued interest on the
Original Note Principal Balance of the Class A Notes at the rate of 7.05% per
annum, from (and including) December 1, 2000 to (but not including) the Closing
Date, payable by wire transfer of same day funds, and (ii) the Trust
Certificates to be issued pursuant to the Trust Agreement.

                  Section 2.04 Conveyance of Mortgage Loans; Possession of
Mortgage Files. (a) On the Closing Date, the Originators shall sell, transfer,
assign, set over and convey to the Unaffiliated Seller, without recourse, but
subject to the terms of this Agreement, all right, title and interest in and to
the applicable Mortgage Loans, including all principal outstanding as of,



                                       3
<PAGE>

and all interest due after, the related Cut-Off Date, the Insurance Policies
relating to each such Mortgage Loan and all right, title and interest in and to
the proceeds of such Insurance Policies and all of its rights under this
Agreement with respect to the Mortgage Loans from and after the related Cut-Off
Date and the Unaffiliated Seller shall sell, transfer, assign, set over and
convey to the Depositor, without recourse, but subject to the terms of this
Agreement, all right, title and interest in and to the applicable Mortgage
Loans, including all principal outstanding as of, and all interest due after,
the related Cut-Off Date, the Insurance Policies relating to each such Mortgage
Loan, all right, title and interest in and to the proceeds of such Insurance
Policies and all of its rights under this Agreement with respect to the Mortgage
Loans from and after the related Cut-Off Date. Upon payment of the purchase
price for such Mortgage Loans as provided in Section 2.03 of this Agreement, the
Originators and the Unaffiliated Seller shall have hereby, and shall be deemed
to have, sold, transferred, assigned, set over and conveyed to the Depositor
such Mortgage Loans, the Insurance Policies relating to each such Mortgage Loan,
all right, title and interest in and to the proceeds of such Insurance Policies
and all of its rights under this Agreement with respect to the Mortgage Loans
from and after the related Cut-Off Date.

                  (b) Upon the sale of such Mortgage Loans, the ownership of
each related Mortgage Note, each related Mortgage and the contents of the
related Mortgage File shall immediately vest in the Depositor and the ownership
of all related records and documents with respect to each Mortgage Loan prepared
by or which come into the possession of the Originators or the Unaffiliated
Seller shall immediately vest in the Depositor. The contents of any Indenture
Trustee's Mortgage File in the possession of the Originators or the Unaffiliated
Seller at any time after such sale, and any principal collected and interest due
on the Mortgage Loans after the related Cut-Off Date and received by the
Originators or the Unaffiliated Seller, shall be held in trust by the
Originators or the Unaffiliated Seller for the benefit of the Depositor as the
owner thereof, and shall be promptly delivered by the Originators or the
Unaffiliated Seller to or upon the order of the Depositor.

                  (c) Pursuant to the Sale and Servicing Agreement, the
Depositor shall, on the Closing Date, assign all of its right, title and
interest in and to the Mortgage Loans to the Trust. Pursuant to the Indenture,
the Trust shall, on the Closing Date, pledge all of its right, title and
interest in and to the Mortgage Loans to the Indenture Trustee, for the benefit
of the Noteholders and the Note Insurer.

                  Section 2.05 Delivery of Mortgage Loan Documents. (a) On or
prior to the Closing Date, the related Originator shall deliver to the
Unaffiliated Seller, and the Unaffiliated Seller shall deliver to the Collateral
Agent, on behalf of the Indenture Trustee (as pledgee of the Trust pursuant to
the Indenture, the Trust being the assignee of the Depositor pursuant to the
Sale and Servicing Agreement), each of the documents for each applicable
Mortgage Loan in accordance with the provisions of Section 2.05 of the Sale and
Servicing Agreement.

                  (b) As promptly as practicable, but in any event within thirty
(30) days from the Closing Date, the Unaffiliated Seller shall promptly submit,
or cause to be submitted by the related Originator, for recording in the
appropriate public office for real property records, each assignment referred to
in Section 2.05(a)(iv) of the Sale and Servicing Agreement. The Collateral
Agent, on behalf of the Indenture Trustee, shall be required to retain a copy of
each assignment submitted for recording. In the event that any such assignment
is lost or returned


                                       4
<PAGE>

unrecorded because of a defect therein, the Unaffiliated Seller or such
Originator shall promptly prepare a substitute assignment or cure such defect,
as the case may be, and thereafter the Unaffiliated Seller or such Originator
shall submit each such assignment for recording.

                  (c) The Unaffiliated Seller or the related Originator shall,
within five (5) Business Days after the receipt thereof, deliver or cause to be
delivered to the Collateral Agent, on behalf of the Indenture Trustee (as
pledgee of the Trust pursuant to the Indenture, the Trust being the assignee of
the Depositor pursuant to the Sale and Servicing Agreement): (i) the original
recorded Mortgage and related power of attorney, if any, in those instances
where a copy thereof certified by the related Originator was delivered to the
Collateral Agent, on behalf of the Indenture Trustee, pursuant to Section 2.05
of the Sale and Servicing Agreement; (ii) the original recorded assignment of
Mortgage from the related Originator to the Indenture Trustee, which, together
with any intervening assignments of Mortgage, evidences a complete chain of
assignment from the originator of the Mortgage Loan to the Indenture Trustee in
those instances where copies of such assignments certified by the related
Originator were delivered to the Collateral Agent, on behalf of the Indenture
Trustee, pursuant to Section 2.05 of the Sale and Servicing Agreement; and (iii)
the title insurance policy or title opinion required in Section 2.05(a)(vi) of
the Sale and Servicing Agreement.

                  Notwithstanding anything to the contrary contained in this
Section 2.05, in those instances where the public recording office retains the
original Mortgage, power of attorney, if any, assignment or assignment of
Mortgage after it has been recorded or such original has been lost, the
Unaffiliated Seller or the related Originator shall be deemed to have satisfied
its obligations hereunder upon delivery to the Collateral Agent, on behalf of
the Indenture Trustee, of a copy of such Mortgage, power of attorney, if any,
assignment or assignment of Mortgage certified by the public recording office to
be a true copy of the recorded original thereof.

                  From time to time the Unaffiliated Seller or the related
Originator may forward or cause to be forwarded to the Collateral Agent, on
behalf of the Indenture Trustee, additional original documents evidencing an
assumption or modification of a Mortgage Loan.

                  (d) All original documents relating to the Mortgage Loans that
are not delivered to the Collateral Agent, on behalf of the Indenture Trustee,
as permitted by Section 2.05(a) hereof are and shall be held by the Servicer,
the Unaffiliated Seller or the related Originator in trust for the benefit of
the Indenture Trustee, on behalf of the Noteholders and the Note Insurer. In the
event that any such original document is required pursuant to the terms of this
Section 2.05 to be a part of an Indenture Trustee's Mortgage File, such document
shall be delivered promptly to the Collateral Agent, on behalf of the Indenture
Trustee. From and after the sale of the Mortgage Loans to the Depositor pursuant
hereto, to the extent that the Unaffiliated Seller or the related Originator
retains legal title of record to any Mortgage Loans prior to the vesting of
legal title in the Indenture Trustee, such title shall be retained in trust for
the Trust as the owner of the Mortgage Loans, as the Depositor's assignee, and
the Indenture Trustee, as the Trust's pledgee.

                  Section 2.06 Acceptance of Mortgage Loans. (a) To evidence the
transfer of the Mortgage Loans and related Mortgage Files to the Collateral
Agent, on behalf of the Indenture Trustee, the Collateral Agent shall deliver
the acknowledgement of receipt, the Initial


                                       5
<PAGE>

Certification and the Final Certification required to be delivered pursuant to
Section 2.06(b) of the Sale and Servicing Agreement.

                  (b) The Sale and Servicing Agreement provides that, if the
Collateral Agent during the process of reviewing the Indenture Trustee's
Mortgage Files, finds any document constituting a part of an Indenture Trustee's
Mortgage File which is not executed, has not been received, is unrelated to the
Mortgage Loan identified in the Mortgage Loan Schedule, or does not conform to
the requirements of Section 2.05 of the Sale and Servicing Agreement or the
description thereof as set forth in the Mortgage Loan Schedule, the Collateral
Agent shall promptly so notify the Servicer, the Unaffiliated Seller, the
Indenture Trustee, the related Originator and the Note Insurer. The Unaffiliated
Seller and the Originators agree that in performing any such review, the
Collateral Agent may conclusively rely on the Unaffiliated Seller and the
Originators as to the purported genuineness of any such document and any
signature thereon. Each of the Originators and the Unaffiliated Seller agrees to
use reasonable efforts to remedy a material defect in a document constituting
part of an Indenture Trustee's Mortgage File of which it is notified. If,
however, within sixty (60) days after such notice neither the Unaffiliated
Seller nor any Originator has remedied the defect and the defect materially and
adversely affects the interest of the Noteholders in the related Mortgage Loan
or the interests of the Note Insurer, then the Unaffiliated Seller and the
Originators shall be obligated to either substitute in lieu of such Mortgage
Loan a Qualified Substitute Mortgage Loan or purchase such Mortgage Loan in the
manner and subject to the conditions set forth in Section 3.05 hereof.

                  (c) The failure of the Collateral Agent, the Indenture Trustee
or the Note Insurer to give any notice contemplated herein within the time
periods specified above shall not affect or relieve the Unaffiliated Seller's or
the Originators' obligation to repurchase for any Mortgage Loan pursuant to this
Section 2.06 or Section 3.05 of this Agreement.

                  Section 2.07 Transfer of Mortgage Loans; Assignment of
Agreement. The Originators and the Unaffiliated Seller each hereby acknowledges
and agrees that the Depositor or the Trust may assign its interest under this
Agreement to the Indenture Trustee as may be required to effect the purposes of
the Indenture and the Sale and Servicing Agreement, without further notice to,
or consent of, the Unaffiliated Seller or the Originators, and the Indenture
Trustee shall succeed to such of the rights and obligations of the Depositor and
the Trust hereunder as shall be so assigned. The Depositor shall, pursuant to
the Sale and Servicing Agreement, assign all of its right, title and interest in
and to the Mortgage Loans and its right to exercise the remedies created by
Sections 2.06 and 3.05 hereof for breaches of the representations, warranties,
agreements and covenants of the Unaffiliated Seller or the Originators contained
in Sections 2.05, 2.06, 3.02 and 3.03 hereof to the Trust, and the Trust shall,
pursuant to the Indenture, pledge such right, title and interest to the
Indenture Trustee, for the benefit of the Noteholders and the Note Insurer. Each
of the Originators and the Unaffiliated Seller agrees that, upon such assignment
to the Trust and pledge to the Indenture Trustee, such representations,
warranties, agreements and covenants will run to and be for the benefit of the
Indenture Trustee and the Indenture Trustee may enforce, without joinder of the
Depositor or the Trust, the repurchase obligations of the Unaffiliated Seller
and the Originators set forth herein with respect to breaches of such
representations, warranties, agreements and covenants.


                                       6
<PAGE>

                  Section 2.08 Examination of Mortgage Files. Prior to the
Closing Date, the Unaffiliated Seller shall make the Mortgage Files available to
the Depositor or its designee for examination at the Unaffiliated Seller's
offices or at such other place as the Unaffiliated Seller shall reasonably
specify. Such examination may be made by the Depositor or its designee at any
time on or before the Closing Date. If the Depositor or its designee makes such
examination prior to the Closing Date, and identifies any Mortgage Loans that do
not conform to the requirements of the Depositor as described in this Agreement,
such Mortgage Loans shall be deleted from the Mortgage Loan Schedule and may be
replaced, prior to the Closing Date, by substitute Mortgage Loans acceptable to
the Depositor. The Depositor may, at its option and without notice to the
Unaffiliated Seller, purchase all or part of the Mortgage Loans without
conducting any partial or complete examination. The fact that the Depositor, the
Collateral Agent or the Indenture Trustee has conducted or has failed to conduct
any partial or complete examination of the Mortgage Files shall not affect the
rights of the Depositor or the Indenture Trustee to demand repurchase or other
relief as provided in this Agreement.

                  Section 2.09 Books and Records. The transfer of each Mortgage
Loan shall be reflected on each of the Originators' and the Unaffiliated
Seller's accounting and other records, balance sheet and other financial
statements as a sale of assets by the Originators to the Unaffiliated Seller, by
the Unaffiliated Seller to the Depositor and by the Depositor to the Trust;
provided, that the Unaffiliated Seller's tax returns shall not reflect the
transfer from the Unaffiliated Seller to the Depositor and from the Depositor to
the Trust as a sale of the Mortgage Loans. Each of the Originators and the
Unaffiliated Seller shall be responsible for maintaining, and shall maintain, a
complete set of books and records for each Mortgage Loan which shall be clearly
marked to reflect the ownership of each Mortgage Loan by the Trust, and the
pledge of each Mortgage Loan by the Trust to the Indenture Trustee, for the
benefit of the Noteholders and the Note Insurer.

                  Section 2.10 Cost of Delivery and Recordation of Documents.
The costs relating to the delivery and recordation of the documents in
connection with the Mortgage Loans as specified in this Article II and in
Article II of the Sale and Servicing Agreement shall be borne by the
Unaffiliated Seller or the Originators.

                                  ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

                  Section 3.01 Representations and Warranties as to the
Originators. Each of the Originators hereby represents and warrants to the
Unaffiliated Seller and the Depositor, as of the Closing Date, that:

                  (a) The Originator is a corporation duly organized, validly
          existing and in good standing under the laws of (i) with respect to
          ABC and Upland, the State of Pennsylvania, or (ii) with respect to
          NJMIC, the State of New Jersey, and has all licenses necessary to
          carry on its business as now being conducted and is licensed,
          qualified and in good standing in each state where a Mortgaged
          Property is located if the laws of such state require licensing or
          qualification in order to conduct business of the type conducted by
          the Originator and to perform its obligations as the Originator
          hereunder, and in any


                                       7
<PAGE>

          event the Originator is in compliance with the laws of any such state
          to the extent necessary to ensure the enforceability of the related
          Mortgage Loan; the Originator has the full power and authority,
          corporate and otherwise, to execute and deliver this Agreement and to
          perform in accordance herewith; the execution, delivery and
          performance of this Agreement (including all instruments of transfer
          to be delivered pursuant to this Agreement) by the Originator and the
          consummation of the transactions contemplated hereby have been duly
          and validly authorized; this Agreement evidences the valid, binding
          and enforceable obligation of the Originator; and all requisite
          corporate action has been taken by the Originator to make this
          Agreement valid and binding upon the Originator in accordance with its
          terms;

                  (b) No consent, approval, authorization or order of any court
          or governmental agency or body is required for the execution, delivery
          and performance by the Originator of, or compliance by the Originator
          with, this Agreement or the sale of the Mortgage Loans pursuant to the
          terms of this Agreement or the consummation of the transactions
          contemplated by this Agreement, or if required, such approval has been
          obtained prior to the Closing Date;

                  (c) Neither the execution and delivery of this Agreement, the
          acquisition nor origination of the Mortgage Loans by the Originator or
          the transactions contemplated hereby, nor the fulfillment of or
          compliance with the terms and conditions of this Agreement, has or
          will conflict with or result in a breach of any of the terms,
          conditions or provisions of the Originator's charter or by-laws or any
          legal restriction or any agreement or instrument to which the
          Originator is now a party or by which it is bound or to which its
          property is subject, or constitute a default or result in an
          acceleration under any of the foregoing, or result in the violation of
          any law, rule, regulation, order, judgment or decree to which the
          Originator or its property is subject, or impair the ability of the
          Indenture Trustee (or the Servicer as the agent of the Indenture
          Trustee) to realize on the Mortgage Loans, or impair the value of the
          Mortgage Loans;

                  (d) Neither this Agreement nor the information contained in
          the Prospectus Supplement (other than the information under the
          caption "Plan of Distribution") nor any statement, report or other
          document prepared by the Originator and furnished or to be furnished
          pursuant to this Agreement or in connection with the transactions
          contemplated hereby contains any untrue statement or alleged untrue
          statement of any material fact or omits to state a material fact
          necessary to make the statements contained herein or therein, in light
          of the circumstances under which they were made, not misleading;

                  (e) There is no action, suit, proceeding or investigation
          pending or, to the knowledge of the Originator, threatened before a
          court, administrative agency or government tribunal against the
          Originator which, either in any one instance or in the aggregate, may
          result in any material adverse change in the business, operations,
          financial condition, properties or assets of the Originator, or in any
          material impairment of the right or ability of the Originator to carry
          on its business substantially as now conducted, or in any material
          liability on the part of the Originator, or which would draw into
          question the validity of this Agreement, the Mortgage Loans, or of any
          action taken or to be taken in connection with the obligations of the
          Originator contemplated herein,


                                       8
<PAGE>

          or which would impair materially the ability of the Originator to
          perform under the terms of this Agreement or that will prohibit its
          entering into this Agreement or the consummation of any of the
          transactions contemplated hereby;

                  (f) The Originator is not in violation of or in default with
          respect to, and the execution and delivery of this Agreement by the
          Originator and its performance of and compliance with the terms hereof
          will not constitute a violation or default with respect to, any order
          or decree of any court or any order, regulation or demand of any
          federal, state, municipal or governmental agency, which violation or
          default might have consequences that would materially and adversely
          affect the condition (financial or other) or operations of the
          Originator or its properties or might have consequences that would
          materially and adversely affect its performance hereunder or under any
          subservicing agreement;

                  (g) Upon the receipt of each Mortgage File by the Depositor
          (or its assignee) under this Agreement, the Depositor (or its
          assignee) will have good title to each related Mortgage Loan and such
          other items comprising the corpus of the Trust Estate free and clear
          of any lien created by the Originator (other than liens which will be
          simultaneously released);

                  (h) The consummation of the transactions contemplated by this
          Agreement are in the ordinary course of business of the Originator,
          and the transfer, assignment and conveyance of the Mortgage Notes and
          the Mortgages by the Originator pursuant to this Agreement are not
          subject to the bulk transfer or any similar statutory provisions in
          effect in any applicable jurisdiction;

                  (i) With respect to any Mortgage Loan purchased by the
          Originator, the Originator acquired title to the Mortgage Loan in good
          faith, without notice of any adverse claim;

                  (j) The Originator does not believe, nor does it have any
          reason or cause to believe, that it cannot perform each and every
          covenant contained in this Agreement. The Originator is solvent and
          the sale of the Mortgage Loans by the Originator pursuant to the terms
          of this Agreement will not cause the Originator to become insolvent.
          The sale of the Mortgage Loans by the Originator pursuant to the terms
          of this Agreement was not undertaken with the intent to hinder, delay
          or defraud any of the Originator's creditors;

                  (k) The Mortgage Loans are not intentionally selected in a
          manner so as to affect adversely the interests of the Depositor or of
          any transferee of the Depositor (including the Trust and the Indenture
          Trustee);

                  (l) The Originator has determined that it will treat the
          disposition of the Mortgage Loans pursuant to this Agreement as a sale
          for accounting and tax purposes;

                  (m) The Originator has not dealt with any broker or agent or
          anyone else that may be entitled to any commission or compensation in
          connection with the sale of the Mortgage Loans to the Depositor other
          than to the Depositor or an affiliate thereof; and


                                       9
<PAGE>

                  (n) The consideration received by the Originator upon the sale
          of the Mortgage Loans under this Agreement constitutes fair
          consideration and reasonably equivalent value for the Mortgage Loans.

                  Section 3.02 Representations and Warranties as to the
Unaffiliated Seller. The Unaffiliated Seller hereby represents and warrants to
the Depositor, as of the Closing Date, that:

                  (a) The Unaffiliated Seller is a corporation duly organized,
          validly existing and in good standing under the laws of the State of
          Delaware and has all licenses necessary to carry on its business as
          now being conducted and is licensed, qualified and in good standing in
          each state where a Mortgaged Property is located if the laws of such
          state require licensing or qualification in order to conduct business
          of the type conducted by the Unaffiliated Seller and to perform its
          obligations as the Unaffiliated Seller hereunder, and in any event the
          Unaffiliated Seller is in compliance with the laws of any such state
          to the extent necessary to ensure the enforceability of the related
          Mortgage Loan; the Unaffiliated Seller has the full power and
          authority, corporate and otherwise, to execute and deliver this
          Agreement and to perform in accordance herewith; the execution,
          delivery and performance of this Agreement (including all instruments
          of transfer to be delivered pursuant to this Agreement) by the
          Unaffiliated Seller and the consummation of the transactions
          contemplated hereby have been duly and validly authorized; this
          Agreement evidences the valid, binding and enforceable obligation of
          the Unaffiliated Seller; and all requisite corporate action has been
          taken by the Unaffiliated Seller to make this Agreement valid and
          binding upon the Unaffiliated Seller in accordance with its terms;

                  (b) No consent, approval, authorization or order of any court
          or governmental agency or body is required for the execution, delivery
          and performance by the Unaffiliated Seller of or compliance by the
          Unaffiliated Seller with this Agreement or the sale of the Mortgage
          Loans pursuant to the terms of this Agreement or the consummation of
          the transactions contemplated by this Agreement, or if required, such
          approval has been obtained prior to the Closing Date;

                  (c) Neither the execution and delivery of this Agreement, the
          acquisition nor origination of the Mortgage Loans by the Unaffiliated
          Seller nor the transactions contemplated hereby, nor the fulfillment
          of or compliance with the terms and conditions of this Agreement, has
          or will conflict with or result in a breach of any of the terms,
          conditions or provisions of the Unaffiliated Seller's charter or
          by-laws or any legal restriction or any agreement or instrument to
          which the Unaffiliated Seller is now a party or by which it is bound
          or to which its property is subject, or constitute a default or result
          in an acceleration under any of the foregoing, or result in the
          violation of any law, rule, regulation, order, judgment or decree to
          which the Unaffiliated Seller or its property is subject, or impair
          the ability of the Indenture Trustee (or the Servicer as the agent of
          the Indenture Trustee) to realize on the Mortgage Loans, or impair the
          value of the Mortgage Loans;

                  (d) Neither this Agreement nor the information contained in
          the Prospectus Supplement (other than the information under the
          caption "Plan of Distribution") nor any


                                       10
<PAGE>

          statement, report or other document prepared by the Unaffiliated
          Seller and furnished or to be furnished pursuant to this Agreement or
          in connection with the transactions contemplated hereby contains any
          untrue statement or alleged untrue statement of any material fact or
          omits to state a material fact necessary to make the statements
          contained herein or therein, in light of the circumstances under which
          they were made, not misleading;

                  (e) There is no action, suit, proceeding or investigation
          pending nor, to the knowledge of the Unaffiliated Seller, threatened
          before a court, administrative agency or government tribunal against
          the Unaffiliated Seller which, either in any one instance or in the
          aggregate, may result in any material adverse change in the business,
          operations, financial condition, properties or assets of the
          Unaffiliated Seller, or in any material impairment of the right or
          ability of the Unaffiliated Seller to carry on its business
          substantially as now conducted, or in any material liability on the
          part of the Unaffiliated Seller, or which would draw into question the
          validity of this Agreement, the Mortgage Loans, or of any action taken
          or to be taken in connection with the obligations of the Unaffiliated
          Seller contemplated herein, or which would impair materially the
          ability of the Unaffiliated Seller to perform under the terms of this
          Agreement or that will prohibit its entering into this Agreement or
          the consummation of any of the transactions contemplated hereby;

                  (f) The Unaffiliated Seller is not in violation of or in
          default with respect to, and the execution and delivery of this
          Agreement by the Unaffiliated Seller and its performance of and
          compliance with the terms hereof will not constitute a violation or
          default with respect to, any order or decree of any court or any
          order, regulation or demand of any federal, state, municipal or
          governmental agency, which violation or default might have
          consequences that would materially and adversely affect the condition
          (financial or other) or operations of the Unaffiliated Seller or its
          properties or might have consequences that would materially and
          adversely affect its performance hereunder or under any subservicing
          agreement;

                  (g) Upon the receipt of each Mortgage File by the Depositor
          (or its assignee) under this Agreement, the Depositor (or its
          assignee) will have good title to each related Mortgage Loan and such
          other items comprising the corpus of the Trust Estate free and clear
          of any lien created by the Unaffiliated Seller (other than liens which
          will be simultaneously released);

                  (h) The consummation of the transactions contemplated by this
          Agreement are in the ordinary course of business of the Unaffiliated
          Seller, and the transfer, assignment and conveyance of the Mortgage
          Notes and the Mortgages by the Unaffiliated Seller pursuant to this
          Agreement are not subject to the bulk transfer or any similar
          statutory provisions in effect in any applicable jurisdiction;

                  (i) With respect to any Mortgage Loan purchased by the
          Unaffiliated Seller, the Unaffiliated Seller acquired title to the
          Mortgage Loan in good faith, without notice of any adverse claim;


                                       11
<PAGE>

                  (j) The Unaffiliated Seller does not believe, nor does it have
          any reason or cause to believe, that it cannot perform each and every
          covenant contained in this Agreement. The Unaffiliated Seller is
          solvent and the sale of the Mortgage Loans by the Unaffiliated Seller
          pursuant to the terms of this Agreement will not cause the
          Unaffiliated Seller to become insolvent. The sale of the Mortgage
          Loans by the Unaffiliated Seller pursuant to the terms of this
          Agreement was not undertaken with the intent to hinder, delay or
          defraud any of the Unaffiliated Seller's creditors;

                  (k) The Mortgage Loans are not intentionally selected in a
          manner so as to affect adversely the interests of the Depositor or of
          any transferee of the Depositor (including the Trust and the Indenture
          Trustee);

                  (l) The Unaffiliated Seller has determined that it will treat
          the disposition of the Mortgage Loans pursuant to this Agreement as a
          sale for accounting purposes;

                  (m) The Unaffiliated Seller has not dealt with any broker or
          agent or anyone else that may be entitled to any commission or
          compensation in connection with the sale of the Mortgage Loans to the
          Depositor other than to the Depositor or an affiliate thereof; and

                  (n) The consideration received by the Unaffiliated Seller upon
          the sale of the Mortgage Loans under this Agreement constitutes fair
          consideration and reasonably equivalent value for the Mortgage Loans.

                  Section 3.03 Representations and Warranties Relating to the
Mortgage Loans. The Originators represent and warrant to the Unaffiliated Seller
and the Unaffiliated Seller represents to the Depositor that, as of the Closing
Date, as to each Mortgage Loan, immediately prior to the sale and transfer of
such Mortgage Loan by the Unaffiliated Seller to the Depositor:

                  (a) The information set forth in each Mortgage Loan Schedule
          is complete, true and correct;

                  (b) [Reserved];

                  (c) Each Mortgage is a valid first or second lien on a fee
          simple (or its equivalent under applicable state law) estate in the
          real property securing the amount owed by the Mortgagor under the
          Mortgage Note subject only to (i) the lien of current real property
          taxes and assessments which are not delinquent, (ii) with respect to
          any Mortgage Loan identified on the Mortgage Loan Schedule as secured
          by a second lien, the related first mortgage loan, (iii) covenants,
          conditions and restrictions, rights of way, easements and other
          matters of public record as of the date of recording of such Mortgage,
          such exceptions appearing of record being acceptable to mortgage
          lending institutions generally in the area wherein the property
          subject to the Mortgage is located or specifically reflected in the
          appraisal obtained in connection with the origination of the related
          Mortgage Loan obtained by the Unaffiliated Seller and (iv) other
          matters to which like properties are commonly subject which do not
          materially interfere with the benefits of the security intended to be
          provided by such Mortgage;


                                       12
<PAGE>

                  (d) Immediately prior to the transfer and assignment by the
          related Originator to the Unaffiliated Seller and by the Unaffiliated
          Seller to the Depositor, the Unaffiliated Seller or such Originator,
          as applicable, had good title to, and was the sole owner of each
          Mortgage Loan, free of any interest of any other Person, and the
          Unaffiliated Seller or such Originator has transferred all right,
          title and interest in each Mortgage Loan to the Depositor or the
          Unaffiliated Seller, as applicable;

                  (e) As of the applicable Cut-Off Date, no payment of principal
          or interest on or in respect of any Mortgage Loan remains unpaid for
          thirty (30) or more days past the date the same was due in accordance
          with the related Mortgage Note without regard to applicable grace
          periods;

                  (f) As of the Cut-Off Date, no Mortgage Loan has a Mortgage
          Interest Rate less than 9.650% per annum and the weighted average
          Mortgage Interest Rate of the Mortgage Loans is 12.046%;

                  (g) At origination, no Mortgage Loan had an original term to
          maturity of greater than 360 months;

                  (h) As of the Cut-Off Date, the weighted average remaining
          term to maturity of the Mortgage Loans is 243 months for the Mortgage
          Loans;

                  (i) To the best knowledge of the Unaffiliated Seller and each
          of the Originators, there is no mechanics' lien or claim for work,
          labor or material (and no rights are outstanding that under law could
          give rise to such lien) affecting the premises subject to any Mortgage
          which is or may be a lien prior to, or equal or coordinate with, the
          lien of such Mortgage, except those which are insured against by the
          title insurance policy referred to in (ff) below;

                  (j) To the best knowledge of the Unaffiliated Seller and each
          of the Originators, there is no delinquent tax or assessment lien
          against any Mortgaged Property;

                  (k) Such Mortgage Loan, the Mortgage, and the Mortgage Note,
          including, without limitation, the obligation of the Mortgagor to pay
          the unpaid principal of and interest on the Mortgage Note, are each
          not subject to any right of rescission (or any such rescission right
          has expired in accordance with applicable law), set-off, counterclaim,
          or defense, including the defense of usury, nor will the operation of
          any of the terms of the Mortgage Note or the Mortgage, or the exercise
          of any right thereunder, render either the Mortgage Note or the
          Mortgage unenforceable, in whole or in part, or subject to any right
          of rescission, set-off, counterclaim, or defense, including the
          defense of usury, and no such right of rescission, set-off,
          counterclaim, or defense has been asserted with respect thereto;

                  (l) To the best knowledge of the Unaffiliated Seller and each
          of the Originators, the Mortgaged Property is free of material damage
          and is in good repair, and there is no pending or threatened
          proceeding for the total or partial condemnation of the Mortgaged
          Property;




                                       13
<PAGE>

                  (m) Neither the Originators nor the Unaffiliated Seller has
          received a notice of default of any first mortgage loan secured by the
          Mortgaged Property which has not been cured by a party other than the
          Unaffiliated Seller;

                  (n) Each Mortgage Note and Mortgage are in substantially the
          forms previously provided to the Depositor and the Indenture Trustee
          on behalf of the Unaffiliated Seller;

                  (o) No Mortgage Loan had, at the date of origination, a CLTV
          in excess of 100%, and the weighted average CLTV of all Mortgage Loans
          as of the Cut-Off Date is approximately 76.07%;

                  (p) The Mortgage Loan was not originated in a program in which
          the amount of documentation in the underwriting process was limited in
          comparison to the originator's normal documentation requirements;

                  (q) No more than the following percentages of the Mortgage
          Loans by Cut-Off Date Aggregate Principal Balance are secured by
          Mortgaged Properties located in the following states:



                                       14
<PAGE>


                               Mortgage Loan Pool
          -------------------------------------------------------------
                                                 Percentage of Cut-Off
                                                     Date Aggregate
           State                                   Principal Balance
          ----------------------------         ------------------------

           Arizona                                        0.04%
           Colorado                                       0.22%
           Connecticut                                    1.93%
           Delaware                                       0.55%
           District of Columbia                           0.13%
           Florida                                        7.45%
           Georgia                                        3.40%
           Illinois                                       4.57%
           Indiana                                        1.12%
           Iowa                                           0.39%
           Kansas                                         0.46%
           Kentucky                                       1.26%
           Louisiana                                      0.02%
           Maryland                                       2.75%
           Massachusetts                                  4.98%
           Michigan                                       2.91%
           Minnesota                                      0.66%
           Mississippi                                    0.48%
           Missouri                                       1.79%
           Nebraska                                       0.25%
           New Hampshire                                  0.40%
           New Jersey                                    13.47%
           New York                                      25.61%
           North Carolina                                 3.47%
           Ohio                                           5.18%
           Pennsylvania                                   8.26%
           Rhode Island                                   0.80%
           South Carolina                                 1.03%
           Tennessee                                      1.88%
           Texas                                          0.01%
           Vermont                                        0.07%
           Virginia                                       3.53%
           Washington                                     0.15%
           West Virginia                                  0.15%
           Wisconsin                                      0.68%
                                                -----------------------
                                                         100.00%
                                                =======================



                                       15
<PAGE>



                  (r) The Mortgage Loans were not selected by the Unaffiliated
          Seller or the Originators for sale hereunder or inclusion in the Trust
          Estate on any basis adverse to the Trust Estate relative to the
          portfolio of similar mortgage loans of the Unaffiliated Seller or the
          Originators;

                  (s) No more than 10% by aggregate Principal Balance of the
          Mortgage Loans as of the Cut-Off Date constitutes a lien on leasehold
          interests;

                  (t) Each Mortgage contains customary and enforceable
          provisions which render the rights and remedies of the holder thereof
          adequate for the realization against the related Mortgaged Property of
          the benefits of the security including (A) in the case of a Mortgage
          designated as a deed of trust, by trustee's sale and (B) otherwise by
          judicial foreclosure. To the best of the Unaffiliated Seller's and the
          Originators' knowledge, there is no homestead or other exemption
          available to the related Mortgagor which would materially interfere
          with the right to sell the related Mortgaged Property at a trustee's
          sale or the right to foreclose the related Mortgage. The Mortgage
          contains customary and enforceable provisions for the acceleration of
          the payment of the Principal Balance of such Mortgage Loan in the
          event all or any part of the related Mortgaged Property is sold or
          otherwise transferred without the prior written consent of the holder
          thereof;

                  (u) The proceeds of such Mortgage Loan have been fully
          disbursed, including reserves set aside by the Unaffiliated Seller or
          the Originators, there is no requirement for, and neither the
          Unaffiliated Seller nor the Originators shall make any, future
          advances thereunder. Any future advances made prior to the applicable
          Cut-Off Date have been consolidated with the principal balance secured
          by the Mortgage, and such principal balance, as consolidated, bears a
          single interest rate and single repayment term reflected on the
          applicable Mortgage Loan Schedule. The Principal Balance as of the
          applicable Cut-Off Date does not exceed the original principal amount
          of such Mortgage Loan. Except with respect to no more than $150,000 of
          escrow funds, any and all requirements as to completion of any on-site
          or off-site improvements and as to disbursements of any escrow funds
          therefor have been complied with. All costs, fees, and expenses
          incurred in making, or recording such Mortgage Loan have been paid;

                  (v) All Mortgage Loans were originated in compliance with the
          Originators' Underwriting Guidelines;

                  (w) The terms of the Mortgage and the Mortgage Note have not
          been impaired, waived, altered, or modified in any respect, except by
          a written instrument which has been recorded, if necessary, to protect
          the interest of the Indenture Trustee and which has been delivered to
          the Collateral Agent, on behalf of the Indenture Trustee. The
          substance of any such alteration or modification will be reflected on
          the Mortgage Loan Schedule and, to the extent necessary, has been or
          will be approved by (i) the insurer under the applicable mortgage
          title insurance policy, and (ii) the insurer under any other insurance
          policy required hereunder for such Mortgage Loan where such insurance
          policy requires approval and the failure to procure approval would
          impair coverage under such policy;


                                       16
<PAGE>

                  (x) No instrument of release, waiver, alteration, or
          modification has been executed in connection with such Mortgage Loan,
          and no Mortgagor has been released, in whole or in part, except in
          connection with an assumption agreement which has been approved by the
          insurer under any insurance policy required hereunder for such
          Mortgage Loan where such policy requires approval and the failure to
          procure approval would impair coverage under such policy, and which is
          part of the Mortgage File and has been delivered to the Collateral
          Agent, on behalf of the Indenture Trustee, and the terms of which are
          reflected in the Mortgage Loan Schedule;

                  (y) Other than delinquencies described in clause (e) above,
          there is no default, breach, violation, or event of acceleration
          existing under the Mortgage or the Mortgage Note and no event which,
          with the passage of time or with notice and the expiration of any
          grace or cure period, would constitute such a default, breach,
          violation or event of acceleration, and neither the Originators nor
          the Unaffiliated Seller has waived any such default, breach, violation
          or event of acceleration. All taxes, governmental assessments
          (including assessments payable in future installments), insurance
          premiums, water, sewer, and municipal charges, leaseholder payments,
          or ground rents which previously became due and owing in respect of or
          affecting the related Mortgaged Property have been paid. Neither the
          Originators nor the Unaffiliated Seller has advanced funds, or
          induced, solicited, or knowingly received any advance of funds by a
          party other than the Mortgagor, directly or indirectly, for the
          payment of any amount required by the Mortgage or the Mortgage Note;

                  (z) All of the improvements which were included for the
          purposes of determining the Appraised Value of the Mortgaged Property
          were completed at the time that such Mortgage Loan was originated and
          lie wholly within the boundaries and building restriction lines of
          such Mortgaged Property. Except for de minimis -- -------
          encroachments, no improvements on adjoining properties encroach upon
          the Mortgaged Property. To the best of the Unaffiliated Seller's and
          the Originators' knowledge, no improvement located on or being part of
          the Mortgaged Property is in violation of any applicable zoning law or
          regulation. All inspections, licenses, and certificates required to be
          made or issued with respect to all occupied portions of the Mortgaged
          Property (including all such improvements which were included for the
          purpose of determining such Appraised Value) and, with respect to the
          use and occupancy of the same, including but not limited to
          certificates of occupancy and fire underwriters certificates, have
          been made or obtained from the appropriate authorities and the
          Mortgaged Property is lawfully occupied under applicable law;

                  (aa) To the best of the Unaffiliated Seller's and the
          Originators' knowledge, there do not exist any circumstances or
          conditions with respect to the Mortgage, the Mortgaged Property, the
          Mortgagor, or the Mortgagor's credit standing that can be reasonably
          expected to cause such Mortgage Loan to become delinquent or adversely
          affect the value or marketability of such Mortgage Loan, other than
          any such circumstances or conditions permitted under the Originator's
          Underwriting Guidelines;

                  (bb) All parties which have had any interest in the Mortgage,
          whether as mortgagee, assignee, pledgee or otherwise, are (or, during
          the period in which they held


                                       17
<PAGE>

          and disposed of such interest, were) (i) in compliance with any and
          all applicable licensing requirements of the laws of the state wherein
          the Mortgaged Property is located and (ii) (A) organized under the
          laws of such state, (B) qualified to do business in such state, (C)
          federal savings and loan associations or national banks having
          principal offices in such state, (D) not doing business in such state,
          or (E) not required to qualify to do business in such state;

                  (cc) The Mortgage Note and the Mortgage are genuine, and each
          is the legal, valid and binding obligation of the maker thereof,
          enforceable in accordance with its terms, except as such enforcement
          may be limited by bankruptcy, insolvency, reorganization, moratorium,
          or other similar laws affecting the enforcement of creditors' rights
          generally and except that the equitable remedy of specific performance
          and other equitable remedies are subject to the discretion of the
          courts. All parties to the Mortgage Note and the Mortgage had legal
          capacity to execute the Mortgage Note and the Mortgage and convey the
          estate therein purported to be conveyed, and the Mortgage Note and the
          Mortgage have been duly and properly executed by such parties or
          pursuant to a valid power-of-attorney that has been recorded with the
          Mortgage;

                  (dd) The transfer of the Mortgage Note and the Mortgage as and
          in the manner contemplated by this Agreement is sufficient either (i)
          fully to transfer to the Depositor all right, title, and interest of
          the Unaffiliated Seller and the Originators thereto as note holder and
          mortgagee or (ii) to grant to the Depositor the security interest
          referred to in Section 6.07 hereof. The Mortgage has been duly
          assigned and the Mortgage Note has been duly endorsed. The Assignment
          of Mortgage delivered to the Collateral Agent, on behalf of the
          Indenture Trustee, pursuant to Section 2.05(a)(iv) of the Sale and
          Servicing Agreement is in recordable form and is acceptable for
          recording under the laws of the applicable jurisdiction. The
          endorsement of the Mortgage Note, the delivery to the Collateral
          Agent, on behalf of the Indenture Trustee, of the endorsed Mortgage
          Note, and such Assignment of Mortgage, and the delivery of such
          Assignment of Mortgage for recording to, and the due recording of such
          Assignment of Mortgage in, the appropriate public recording office in
          the jurisdiction in which the Mortgaged Property is located are
          sufficient to permit the Indenture Trustee to avail itself of all
          protection available under applicable law against the claims of any
          present or future creditors of the Unaffiliated Seller and the
          Originators, and are sufficient to prevent any other sale, transfer,
          assignment, pledge, or hypothecation of the Mortgage Note and Mortgage
          by the Unaffiliated Seller or the Originators from being enforceable;

                  (ee) Any and all requirements of any federal, state, or local
          law including, without limitation, usury, truth-in-lending, real
          estate settlement procedures, consumer credit protection, equal credit
          opportunity, or disclosure laws applicable to such Mortgage Loan have
          been complied with, and the Servicer shall maintain in its possession,
          available for the Indenture Trustee's inspection, and shall deliver to
          the Indenture Trustee or its designee upon demand, evidence of
          compliance with all such requirements. The consummation of the
          transactions contemplated by this Agreement will not cause the
          violation of any such laws;


                                       18
<PAGE>

                  (ff) Such Mortgage Loan is covered by an ALTA mortgage title
          insurance policy or such other generally used and acceptable form of
          policy, issued by and the valid and binding obligation of a title
          insurer qualified to do business in the jurisdiction where the
          Mortgaged Property is located, insuring the Unaffiliated Seller, and
          its successors and assigns, as to the first or second priority lien,
          as applicable, of the Mortgage in the original principal amount of
          such Mortgage Loan. The assignment to the Indenture Trustee of the
          Unaffiliated Seller's interest in such mortgage title insurance policy
          does not require the consent of or notification to the insurer. Such
          mortgage title insurance policy is in full force and effect and will
          be in full force and effect and inure to the benefit of the Indenture
          Trustee upon the consummation of the transactions contemplated by this
          Agreement. No claims have been made under such mortgage title
          insurance policy and none of the Unaffiliated Seller, the Originators
          nor any prior holder of the Mortgage has done, by act or omission,
          anything which would impair the coverage of such mortgage title
          insurance policy;

                  (gg) All improvements upon the Mortgaged Property are insured
          against loss by fire, hazards of extended coverage, and such other
          hazards as are customary in the area where the Mortgaged Property is
          located pursuant to insurance policies conforming to the requirements
          of Section 3.05 hereof. If the Mortgaged Property at origination was
          located in an area identified on a flood hazard boundary map or flood
          insurance rate map issued by the Federal Emergency Management Agency
          as having special flood hazards (and such flood insurance has been
          made available), such Mortgaged Property was covered by flood
          insurance at origination. Each individual insurance policy is the
          valid and binding obligation of the insurer, is in full force and
          effect, and will be in full force and effect and inure to the benefit
          of the Indenture Trustee upon the consummation of the transactions
          contemplated by this Agreement, and contain a standard mortgage clause
          naming the originator of such Mortgage Loan, and its successors and
          assigns, as mortgagee and loss payee. All premiums thereon have been
          paid. The Mortgage obligates the Mortgagor to maintain all such
          insurance at the Mortgagor's cost and expense, and upon the
          Mortgagor's failure to do so, authorizes the holder of the Mortgage to
          obtain and maintain such insurance at the Mortgagor's cost and expense
          and to seek reimbursement therefor from the Mortgagor, and none of the
          Unaffiliated Seller, the related Originator or any prior holder of the
          Mortgage has acted or failed to act so as to impair the coverage of
          any such insurance policy or the validity, binding effect, and
          enforceability thereof;

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

                  (ii) The Mortgaged Property consists of one or more parcels of
          real property separately assessed for tax purposes. To the extent
          there is erected thereon a detached or an attached one-family
          residence or a detached two-to-six-family dwelling, or an individual
          condominium unit in a low-rise condominium, or an individual unit in a
          planned unit development, or a commercial property, a manufactured
          dwelling, or a


                                       19
<PAGE>

          mixed use or multiple purpose property, such residence, dwelling or
          unit is not (i) a unit in a cooperative apartment, (ii) a property
          constituting part of a syndication, (iii) a time share unit, (iv) a
          property held in trust, (v) a mobile home, (vi) a log-constructed
          home, or (vii) a recreational vehicle;

                  (jj) There exist no material deficiencies with respect to
          escrow deposits and payments, if such are required, for which
          customary arrangements for repayment thereof have not been made or
          which the Unaffiliated Seller or the related Originator expects not to
          be cured, and no escrow deposits or payments of other charges or
          payments due the Unaffiliated Seller have been capitalized under the
          Mortgage or the Mortgage Note;

                  (kk) Such Mortgage Loan was not originated at a below market
          interest rate. Such Mortgage Loan does not have a shared appreciation
          feature, or other contingent interest feature;

                  (ll) The origination and collection practices used by the
          Unaffiliated Seller, the Originators or the Servicer with respect to
          such Mortgage Loan have been in all respects legal, proper, prudent,
          and customary in the mortgage origination and servicing business;

                  (mm) The Mortgagor has, to the extent required by applicable
          law, executed a statement to the effect that the Mortgagor has
          received all disclosure materials, if any, required by applicable law
          with respect to the making of fixed-rate mortgage loans. The Servicer
          shall maintain or cause to be maintained such statement in the
          Mortgage File;

                  (nn) All amounts received by the Unaffiliated Seller or the
          Originators with respect to such Mortgage Loan after the Cut-Off Date
          and required to be deposited in the Collection Account have been so
          deposited in the Collection Account and are, as of the Closing Date,
          in the Collection Account;

                  (oo) The appraisal report with respect to the Mortgaged
          Property contained in the Mortgage File was signed prior to the
          approval of the application for such Mortgage Loan by a qualified
          appraiser, duly appointed by the originator of such Mortgage Loan, who
          had no interest, direct or indirect, in the Mortgaged Property or in
          any loan made on the security thereof and whose compensation is not
          affected by the approval or disapproval of such application;

                  (pp) When measured by the Cut-Off Date Aggregate Principal
          Balance, the Mortgagors with respect to at least 89.76% of the
          Mortgage Loans represented at the time of origination that the
          Mortgagor would occupy the Mortgaged Property as the Mortgagor's
          primary residence;

                  (qq) Each of the Originators and the Unaffiliated Seller has
          no knowledge with respect to the Mortgaged Property of any
          governmental or regulatory action or third party claim made,
          instituted or threatened in writing relating to a violation of any
          applicable federal, state or local environmental law, statute,
          ordinance, regulation, order, decree or standard;


                                       20
<PAGE>

                  (rr) [Reserved];

                  (ss) With respect to second lien Mortgage Loans:

                          (i) the Unaffiliated Seller and the Originators have
                  no knowledge that the Mortgagor has received notice from the
                  holder of the prior mortgage that such prior mortgage is in
                  default,

                          (ii) no consent from the holder of the prior mortgage
                  is needed for the creation of the second lien Mortgage or, if
                  required, has been obtained and is in the related Mortgage
                  File,

                          (iii) if the prior mortgage has a negative
                  amortization, the CLTV was determined using the maximum loan
                  amount of such prior mortgage,

                          (iv) the related first mortgage loan encumbering the
                  related Mortgaged Property does not have a mandatory future
                  advance provision, and

                          (v) the Mortgage Loans conform in all material
                  respects to the description thereof in the Prospectus
                  Supplement.

                  (tt) [Reserved];

                  (uu) To the best of the Unaffiliated Seller's and the
          Originators' knowledge, no error, omission, misrepresentation,
          negligence, fraud or similar occurrence with respect to a Mortgage
          Loan has taken place on the part of any person, including without
          limitation the Mortgagor, any appraiser, any builder or developer, or
          any other party involved in the origination of the Mortgage Loan or in
          the application of any insurance in relation to such Mortgage Loan;

                  (vv) Each Mortgaged Property is in compliance with all
          environmental laws, ordinances, rules, regulations and orders of
          federal, state or governmental authorities relating thereto. No
          hazardous material has been or is incorporated in, stored on or under
          (other than properly stored materials used for reasonable residential
          purposes), released from, treated on, transported to or from, or
          disposed of on or from, any Mortgaged Property such that, under
          applicable law (A) any such hazardous material would be required to be
          eliminated before the Mortgaged Property could be altered, renovated,
          demolished or transferred, or (B) the owner of the Mortgaged Property,
          or the holder of a security interest therein, could be subjected to
          liability for the removal of such hazardous material or the
          elimination of the hazard created thereby. Neither the Unaffiliated
          Seller nor any Mortgagor has received notification from any federal,
          state or other governmental authority relating to any hazardous
          materials on or affecting the Mortgaged Property or to any potential
          or known liability under any environmental law arising from the
          ownership or operation of the Mortgaged Property. For the purposes of
          this subsection, the term "hazardous materials" shall include, without
          limitation, gasoline, petroleum products, explosives, radioactive
          materials, polychlorinated biphenyls or related or similar materials,
          asbestos or any material containing asbestos, lead, lead-based paint
          and any other substance or material as may be defined as a hazardous
          or toxic


                                       21
<PAGE>

          substance by any federal, state or local environmental law, ordinance,
          rule, regulation or order, including, without limitation, CERCLA, the
          Clean Air Act, the Clean Water Act, the Resource Conservation and
          Recovery Act, the Toxic Substances Control Act and any regulations
          promulgated pursuant thereto;

                  (ww) With respect to any business purpose loan, the related
          Mortgage Note contains an acceleration clause, accelerating the
          maturity date under the Mortgage Note to the date the individual
          guarantying such loan, if any, becomes subject to any bankruptcy,
          insolvency, reorganization, moratorium, or other similar laws
          affecting the enforcement of creditors' rights generally; and

                  (xx) To the best of the Unaffiliated Seller's knowledge, none
          of the Mortgage Loans are Section 32 loans subject to the Home
          Ownership and Equity Protection Act.

                  Section 3.04 Representations and Warranties of the Depositor.
The Depositor hereby represents, warrants and covenants to the Unaffiliated
Seller, as of the date of execution of this Agreement and the Closing Date,
that:

                  (a) The Depositor is a corporation duly organized, validly
          existing and in good standing under the laws of the State of Delaware;

                  (b) The Depositor has the corporate power and authority to
          purchase each Mortgage Loan and to execute, deliver and perform, and
          to enter into and consummate all the transactions contemplated by this
          Agreement;

                  (c) This Agreement has been duly and validly authorized,
          executed and delivered by the Depositor, and, assuming the due
          authorization, execution and delivery hereof by the Unaffiliated
          Seller and the Originators, constitutes the legal, valid and binding
          agreement of the Depositor, enforceable against the Depositor in
          accordance with its terms, except as such enforcement may be limited
          by bankruptcy, insolvency, reorganization, moratorium or other similar
          laws relating to or affecting the rights of creditors generally, and
          by general equity principles (regardless of whether such enforcement
          is considered in a proceeding in equity or at law);

                  (d) No consent, approval, authorization or order of or
          registration or filing with, or notice to, any governmental authority
          or court is required for the execution, delivery and performance of or
          compliance by the Depositor with this Agreement or the consummation by
          the Depositor of any of the transactions contemplated hereby, except
          such as have been made on or prior to the Closing Date;

                  (e) The Depositor has filed or will file the Prospectus and
          Prospectus Supplement with the Commission in accordance with Rule
          424(b) under the Securities Act; and

                  (f) None of the execution and delivery of this Agreement, the
          purchase of the Mortgage Loans from the Unaffiliated Seller, the
          consummation of the other transactions contemplated hereby, or the
          fulfillment of or compliance with the terms and conditions of this
          Agreement, (i) conflicts or will conflict with the charter or bylaws
          of the Depositor or


                                       22
<PAGE>

          conflicts or will conflict with or results or will result in a breach
          of, or constitutes or will constitute a default or results or will
          result in an acceleration under, any term, condition or provision of
          any indenture, deed of trust, contract or other agreement or other
          instrument to which the Depositor is a party or by which it is bound
          and which is material to the Depositor, or (ii) results or will result
          in a violation of any law, rule, regulation, order, judgment or decree
          of any court or governmental authority having jurisdiction over the
          Depositor.

                  Section 3.05 Repurchase Obligation for Defective Documentation
and for Breach of a Representation or Warranty. (a) Each of the representations
and warranties contained in Sections 3.01, 3.02 and 3.03 shall survive the
purchase by the Depositor of the Mortgage Loans, the subsequent transfer thereof
by the Depositor to the Trust and the subsequent pledge thereof by the Trust to
the Indenture Trustee, for the benefit of the Noteholders and the Note Insurer,
and shall continue in full force and effect, notwithstanding any restrictive or
qualified endorsement on the Mortgage Notes and notwithstanding subsequent
termination of this Agreement, the Sale and Servicing Agreement or the
Indenture.

                  (b) With respect to any representation or warranty contained
in Sections 3.01 or 3.03 hereof that is made to the best of the Originators'
knowledge or contained in Sections 3.02 or 3.03 hereof that is made to the best
of the Unaffiliated Seller's knowledge, if it is discovered by the Servicer, any
Subservicer, the Indenture Trustee, the Collateral Agent, the Depositor, the
Note Insurer or any Noteholder that the substance of such representation and
warranty was inaccurate as of the Closing Date, and such inaccuracy materially
and adversely affects the value of the related Mortgage Loan, then
notwithstanding the Originators' or the Unaffiliated Seller's lack of knowledge
with respect to the inaccuracy at the time the representation or warranty was
made, such inaccuracy shall be deemed a breach of the applicable representation
or warranty. Upon discovery by the Originators, the Unaffiliated Seller, the
Servicer, any Subservicer, the Indenture Trustee, the Collateral Agent, the Note
Insurer, the Depositor or any Noteholder of a breach of any of such
representations and warranties which materially and adversely affects the value
of Mortgage Loans or the interest of the Noteholders, or which materially and
adversely affects the interests of the Note Insurer or the Noteholders in the
related Mortgage Loan in the case of a representation and warranty relating to a
particular Mortgage Loan (notwithstanding that such representation and warranty
was made to the Originators' or the Unaffiliated Seller's best knowledge), the
party discovering such breach shall give, pursuant to this Section 3.05(b) and
pursuant to Section 4.02 of the Sale and Servicing Agreement, prompt written
notice to the others. Subject to the last paragraph of this Section 3.05(b),
within sixty (60) days of the earlier of its discovery or its receipt of notice
of any breach of a representation or warranty, the Unaffiliated Seller and the
Originators shall (a) promptly cure such breach in all material respects, or (b)
purchase such Mortgage Loan at a purchase price equal to the Loan Repurchase
Price, or (c) remove such Mortgage Loan from the Trust Estate (in which case it
shall become a Deleted Mortgage Loan) and substitute one or more Qualified
Substitute Mortgage Loans. Any such substitution shall be accompanied by payment
by the Unaffiliated Seller of the Substitution Adjustment, if any, to be
deposited in the Payment Account pursuant to the Sale and Servicing Agreement.

                  The Originators shall cooperate with the Unaffiliated Seller
to cure any breach and shall reimburse the Unaffiliated Seller for the costs and
expenses related to any cure,


                                       23
<PAGE>

substitution (including any Substitution Adjustment) or repurchase incurred by
the Unaffiliated Seller pursuant to this Section 3.05.

                  (c) As to any Deleted Mortgage Loan for which the Unaffiliated
Seller or an Originator substitutes a Qualified Substitute Mortgage Loan or
Loans, the Unaffiliated Seller or such Originator shall effect such substitution
by delivering to the Indenture Trustee and the Collateral Agent, a certification
in the form attached to the Sale and Servicing Agreement as Exhibit F, executed
by a Servicing Officer and the documents described in Section 2.06(c) of the
Sale and Servicing Agreement for such Qualified Substitute Mortgage Loan or
Loans. Pursuant to the Sale and Servicing Agreement, upon receipt by the
Indenture Trustee and the Collateral Agent of a certification of a Servicing
Officer of such substitution or purchase and, in the case of a substitution,
upon receipt by the Collateral Agent, on behalf of the Indenture Trustee of the
related Mortgage File, and the deposit of certain amounts in the Payment Account
pursuant to Section 2.06(c) of the Sale and Servicing Agreement (which
certification shall be in the form of Exhibit G to the Sale and Servicing
Agreement), the Collateral Agent, on behalf of the Indenture Trustee, shall be
required to release to the Servicer for release to the Unaffiliated Seller the
related Indenture Trustee's Mortgage File and shall be required to execute,
without recourse, and deliver such instruments of transfer furnished by the
Unaffiliated Seller as may be necessary to transfer such Mortgage Loan to the
Unaffiliated Seller or such Originator.

                  (d) Pursuant to the Sale and Servicing Agreement, the Servicer
shall deposit in the Payment Account all payments received in connection with
such Qualified Substitute Mortgage Loan or Loans after the date of such
substitution. Monthly Payments received with respect to Qualified Substitute
Mortgage Loans on or before the date of substitution will be retained by the
Unaffiliated Seller. The Trust will own all payments received on the Deleted
Mortgage Loan on or before the date of substitution, and the Unaffiliated Seller
shall thereafter be entitled to retain all amounts subsequently received in
respect of such Deleted Mortgage Loan. Pursuant to the Sale and Servicing
Agreement, the Servicer shall be required to give written notice to the
Indenture Trustee, the Collateral Agent and the Note Insurer that such
substitution has taken place and shall amend the Mortgage Loan Schedule to
reflect the removal of such Deleted Mortgage Loan from the terms of the Sale and
Servicing Agreement and the substitution of the Qualified Substitute Mortgage
Loan. The parties hereto agree to amend the Mortgage Loan Schedule accordingly.
Upon such substitution, such Qualified Substitute Mortgage Loan or Loans shall
be subject to the terms of the Indenture, the Sale and Servicing Agreement and
this Agreement in all respects, and the Unaffiliated Seller shall be deemed to
have made with respect to such Qualified Substitute Mortgage Loan or Loans, as
of the date of substitution, the representations and warranties set forth in
Sections 3.02 and 3.03 herein. On the date of such substitution, the
Unaffiliated Seller will remit to the Servicer and, pursuant to the Sale and
Servicing Agreement, the Servicer will deposit into the Payment Account, an
amount equal to the Substitution Adjustment, if any.

                  (e) With respect to any Mortgage Loan that has been converted
to an REO Mortgage Loan, all references in this Section 3.05 or Section 2.06 to
"Mortgage Loan" shall be deemed to refer to such REO Mortgage Loan. With respect
to any Mortgage Loan that the Originator or Unaffiliated Seller is required to
repurchase that is or becomes a Liquidated Mortgage Loan, in lieu of
repurchasing such Mortgage Loan, the Originator or Unaffiliated Seller shall
deposit into the related Payment Account, pursuant to Section 8.01 of the
Indenture


                                       24
<PAGE>

an amount equal to the amount of the Liquidated Loan Loss, if any, incurred in
connection with the liquidation of such Mortgage Loan within the same time
period in which the Originator or Unaffiliated Seller would have otherwise been
required to repurchase such Mortgage Loan.

                  (f) It is understood and agreed that the obligations of the
Unaffiliated Seller and the Originator set forth in Section 2.06 and this
Section 3.05 to cure, purchase or substitute for a defective Mortgage Loan as
provided in Section 2.06 and this Section 3.05 constitute the sole remedies of
the Depositor, the Indenture Trustee, the Note Insurer and the Noteholders
respecting a breach of the foregoing representations and warranties.

                  (g) The Unaffiliated Seller and the Originator shall be
obligated to indemnify the Indenture Trustee, the Trust, the Depositor, the
Owner Trustee, the Collateral Agent, the Noteholders and the Note Insurer (in
their individual and trust capacities) and their successors, assigns, agents and
servants (collectively, the "Indemnified Parties") from and against, any and all
liabilities, obligations, losses, damages, taxes, claims, actions and suits, and
any and all reasonable costs, expenses and disbursements (including reasonable
legal fees and expenses) of any kind and nature whatsoever (collectively,
"Expenses") which may at any time be imposed on, incurred by, or asserted
against any Indemnified Party in any way relating to or arising out of a breach
by the Unaffiliated Seller or the related Originator of the representations or
warranties in Article III hereof. The indemnities contained in this Section 3.05
shall survive the resignation or termination of the Owner Trustee or the
termination of this Agreement.

                  (h) Each of the Originators and the Unaffiliated Seller shall
be jointly and severally responsible for any repurchase, cure or substitution
obligation of any of the Originators or the Unaffiliated Seller under this
Agreement, the Indenture and the Sale and Servicing Agreement.

                  (i) Any cause of action against the Unaffiliated Seller or an
Originator relating to or arising out of the breach of any representations and
warranties or covenants made in Sections 2.06, 3.02 or 3.03 shall accrue as to
any Mortgage Loan upon (i) discovery of such breach by any party and notice
thereof to the Unaffiliated Seller or such Originator, (ii) failure by the
Unaffiliated Seller or such Originator to cure such breach or purchase or
substitute such Mortgage Loan as specified above, and (iii) demand upon the
Unaffiliated Seller or such Originator by the Indenture Trustee for all amounts
payable in respect of such Mortgage Loan.

                                   ARTICLE IV

                             THE UNAFFILIATED SELLER

                  Section 4.01 Covenants of the Originators and the Unaffiliated
Seller. Each of the Originators and the Unaffiliated Seller covenants to the
Depositor as follows:

                  (a) The Originators and the Unaffiliated Seller shall
          cooperate with the Depositor and the firm of independent certified
          public accountants retained with respect to the issuance of the Notes
          in making available all information and taking all steps reasonably
          necessary to permit the accountants' letters required hereunder to be
          delivered within the times set for delivery herein.


                                       25
<PAGE>

                  (b) The Unaffiliated Seller agrees to satisfy or cause to be
          satisfied on or prior to the Closing Date, all of the conditions to
          the Depositor's obligations set forth in Section 5.01 hereof that are
          within the Unaffiliated Seller's (or its agents') control.

                  (c) The Originators and the Unaffiliated Seller hereby agree
          to do all acts, transactions, and things and to execute and deliver
          all agreements, documents, instruments, and papers by and on behalf of
          the Originators or the Unaffiliated Seller as the Depositor or its
          counsel may reasonably request in order to consummate the transfer of
          the Mortgage Loans to the Depositor and the subsequent transfer
          thereof to the Indenture Trustee, and the rating, issuance and sale of
          the Notes.

                  Section 4.02 Merger or Consolidation. Each of the Originators
and the Unaffiliated Seller will keep in full effect its existence, rights and
franchises as a corporation and will obtain and preserve its qualification to do
business as a foreign corporation, in each jurisdiction necessary to protect the
validity and enforceability of this Agreement or any of the Mortgage Loans and
to perform its duties under this Agreement. Any Person into which any of the
Originators or the Unaffiliated Seller may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Originators or the Unaffiliated Seller shall be a party, or any Person
succeeding to the business of the Originators or the Unaffiliated Seller, shall
be approved by the Note Insurer which approval shall not be unreasonably
withheld. If the approval of the Note Insurer is not required, the successor
shall be an established mortgage loan servicing institution that is a Permitted
Transferee and in all events shall be the successor of the Originators or the
Unaffiliated Seller 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. The Originators and the Unaffiliated Seller shall send notice
of any such merger or consolidation to the Indenture Trustee and the Note
Insurer.

                  Section 4.03 Costs. In connection with the transactions
contemplated under this Agreement, the Trust Agreement, the Indenture and the
Sale and Servicing Agreement, the Unaffiliated Seller shall promptly pay (or
shall promptly reimburse the Depositor to the extent that the Depositor shall
have paid or otherwise incurred): (a) the fees and disbursements of the
Depositor's (100% of fees in excess of $25,000), the Unaffiliated Seller's and
the Originators' counsel; (b) the fees of S&P and Moody's; (c) any of the fees
of the Indenture Trustee and the fees and disbursements of the Indenture
Trustee's counsel; (d) any of the fees of the Owner Trustee and the fees and
disbursements of the Owner Trustee's counsel; (e) expenses incurred in
connection with printing the Prospectus, the Prospectus Supplement, any
amendment or supplement thereto, any preliminary prospectus and the Notes; (f)
fees and expenses relating to the filing of documents with the Commission
(including without limitation periodic reports under the Exchange Act); (g) the
shelf registration amortization fee of 0.04% of the Note Principal Balance of
the Notes on the Closing Date, paid in connection with the issuance of Notes;
(h) the fees and disbursements for Deloitte & Touche LLP, accountants for the
Originators; and (i) all of the initial expenses (not to exceed $65,000) of the
Note Insurer including, without limitation, legal fees and expenses, accountant
fees and expenses and expenses in connection with due diligence conducted on the
Mortgage Files but not including the initial premium paid to the Note Insurer.
For the avoidance of doubt, the parties hereto acknowledge that it is the
intention of the parties that the Depositor shall not pay any of the Indenture
Trustee's or Owner Trustee's fees and expenses in connection with the
transactions contemplated by this Agreement, the Trust


                                       26
<PAGE>

Agreement, the Indenture and the Sale and Servicing Agreement. All other costs
and expenses in connection with the transactions contemplated hereunder shall be
borne by the party incurring such expenses.

                  Section 4.04 Indemnification. (a) The Originators, the
Servicer and the Unaffiliated Seller, jointly and severally, agree

                  (i) to indemnify and hold harmless the Depositor, each of its
          directors, each of its officers who have signed the Registration
          Statement, and each of its directors and each person or entity who
          controls the Depositor or any such person, within the meaning of
          Section 15 of the Securities Act, against any and all losses, claims,
          damages or liabilities, joint and several, to which the Depositor or
          any such person or entity may become subject, under the Securities Act
          or otherwise, and will reimburse the Depositor and each such
          controlling person for any legal or other expenses incurred by the
          Depositor or such controlling person in connection with investigating
          or defending any such loss, claim, damage, liability or action,
          insofar as such losses, claims, damages or liabilities (or actions in
          respect thereof) arise out of or are based upon any untrue statement
          or alleged untrue statement of any material fact contained in the
          Prospectus Supplement or any amendment or supplement to the Prospectus
          Supplement or the omission or the alleged omission to state therein a
          material fact required to be stated therein or necessary to make the
          statements in the Prospectus Supplement or any amendment or supplement
          to the Prospectus Supplement approved in writing by the Originators or
          the Unaffiliated Seller, in light of the circumstances under which
          they were made, not misleading, but only to the extent that such
          untrue statement or alleged untrue statement or omission or alleged
          omission relates to the information contained in the Prospectus
          Supplement referred to in Section 3.01(d). This indemnity agreement
          will be in addition to any liability which the Originators and the
          Unaffiliated Seller may otherwise have; and

                  (ii) to indemnify and to hold the Depositor harmless against
          any and all claims, losses, penalties, fines, forfeitures, legal fees
          and related costs, judgments, and any other costs, fees and expenses
          that the Depositor may sustain in any way related to the failure of
          any of the Originators or the Unaffiliated Seller to perform its
          duties in compliance with the terms of this Agreement. The Originators
          or the Unaffiliated Seller shall immediately notify the Depositor if a
          claim is made by a third party with respect to this Agreement, and the
          Originators or the Unaffiliated Seller shall assume the defense of any
          such claim and pay all expenses in connection therewith, including
          reasonable counsel fees, and promptly pay, discharge and satisfy any
          judgment or decree which may be entered against the Depositor in
          respect of such claim. Pursuant to the Indenture, the Indenture
          Trustee shall reimburse the Unaffiliated Seller in accordance with the
          Indenture for all amounts advanced by the Unaffiliated Seller pursuant
          to the preceding sentence except when the claim relates directly to
          the failure of the Unaffiliated Seller to perform its duties in
          compliance with the terms of this Agreement.

                  (b) The Depositor agrees to indemnify and hold harmless each
of the Originators and the Unaffiliated Seller, each of their respective
directors and each person or entity who controls the Originators or the
Unaffiliated Seller or any such person, within the


                                       27
<PAGE>

meaning of Section 15 of the Securities Act, against any and all losses, claims,
damages or liabilities, joint and several, to which the Originators or the
Unaffiliated Seller or any such person or entity may become subject, under the
Securities Act or otherwise, and will reimburse the Originators and the
Unaffiliated Seller and any such director or controlling person for any legal or
other expenses incurred by such party or any such director or controlling person
in connection with investigating or defending any such loss, claim, damage,
liability or action, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in the Registration
Statement, the Prospectus, the Prospectus Supplement, any amendment or
supplement to the Prospectus or the Prospectus Supplement or the omission or the
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, but only to the extent that such untrue
statement or alleged untrue statement or omission or alleged omission is other
than a statement or omission relating to the information set forth in subsection
(a)(i) of this Section 4.04; provided, however, that in no event shall the
Depositor be liable to the Unaffiliated Seller under this paragraph (b) in an
amount in excess of the Depositor's resale profit or the underwriting fee on the
sale of the Notes. This indemnity agreement will be in addition to any liability
which the Depositor may otherwise have.

                  (c) Promptly after receipt by an indemnified party under this
Section 4.04 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 4.04, notify the indemnifying party in writing of the
commencement thereof, but the omission to so notify the indemnifying party will
not relieve the indemnifying party from any liability which the indemnifying
party may have to any indemnified party hereunder except to the extent such
indemnifying party has been prejudiced thereby. In case any such action is
brought against any indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. After notice from the indemnifying party
to such indemnified party of its election to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section 4.04 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation; provided, however, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it that are different from or additional to those
available to the indemnifying party, the indemnified party or parties shall have
the right to select separate counsel to assert such legal defenses and to
otherwise participate in the defense of such action on behalf of such
indemnified party or parties. The indemnifying party shall not be liable for the
expenses of more than one separate counsel.

                  (d) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in the preceding
parts of this Section 4.04 is for any reason held to be unavailable to or
insufficient to hold harmless an indemnified party under subsection (a) or
subsection (b) of this Section 4.04 in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, the
indemnifying party shall


                                       28
<PAGE>

contribute to the amount paid or payable by the indemnified party as a result of
such losses, claims, damages or liabilities (or actions in respect thereof)
subject to the limits set forth in subsection (a) and subsection (b) of this
Section 4.04; provided, however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to a contribution from any person who was not guilty of such
fraudulent misrepresentation. In determining the amount of contribution to which
the respective parties are entitled, there shall be considered the relative
benefits received by the Originators and the Unaffiliated Seller on the one
hand, and the Depositor on the other, the Originators', the Unaffiliated
Seller's and the Depositor's relative knowledge and access to information
concerning the matter with respect to which the claim was asserted, the
opportunity to correct and prevent any statement or omission, and any other
equitable considerations appropriate in the circumstances. The Originators, the
Unaffiliated Seller and the Depositor agree that it would not be equitable if
the amount of such contribution were determined by pro rata or per capita
allocation. For purposes of this Section 4.04, each director of the Depositor,
each officer of the Depositor who signed the Registration Statement, and each
person, if any who controls the Depositor within the meaning of Section 15 of
the Securities Act, shall have the same rights to contribution as the Depositor,
and each director of the Originators or the Unaffiliated Seller, and each
person, if any who controls the Originators or the Unaffiliated Seller within
the meaning of Section 15 of the Securities Act, shall have the same rights to
contribution as the Originators and the Unaffiliated Seller.

                                   ARTICLE V

                              CONDITIONS OF CLOSING

                  Section 5.01 Conditions of Depositor's Obligations. The
obligations of the Depositor to purchase the Mortgage Loans will be subject to
the satisfaction on the Closing Date of the following conditions. Upon payment
of the purchase price for the Mortgage Loans, such conditions shall be deemed
satisfied or waived.

                  (a) Each of the obligations of the Unaffiliated Seller
required to be performed by it on or prior to the Closing Date pursuant to the
terms of this Agreement shall have been duly performed and complied with and all
of the representations and warranties of the Unaffiliated Seller and the
Originators under this Agreement shall be true and correct as of the Closing
Date and no event shall have occurred which, with notice or the passage of time,
would constitute a default under this Agreement, and the Depositor shall have
received a certificate to the effect of the foregoing signed by an authorized
officer of the Unaffiliated Seller and the Originators.

                  (b) The Depositor shall have received a letter dated the date
of this Agreement, in form and substance acceptable to the Depositor and its
counsel, prepared by Deloitte & Touche LLP, independent certified public
accountants, regarding the numerical information contained in the Prospectus
Supplement including, but not limited to the information under the captions
"Prepayment and Yield Considerations" and "The Mortgage Loan Pool" regarding any
numerical information in any marketing materials relating to the Notes and
regarding any other information as reasonably requested by the Depositor.


                                       29
<PAGE>

                  (c) The Mortgage Loans will be acceptable to the Depositor, in
its sole reasonable discretion.

                  (d) The Depositor shall have received the following additional
closing documents, in form and substance reasonably satisfactory to the
Depositor and its counsel:

                  (i) the Mortgage Loan Schedule;

                  (ii) this Agreement, the Sale and Servicing Agreement, the
          Indenture, the Trust Agreement, and the Underwriting Agreement dated
          as of December 6, 2000 between the Depositor and Bear, Stearns & Co.
          Inc., as representative of the underwriters named on Schedule A
          thereto and all documents required thereunder, duly executed and
          delivered by each of the parties thereto other than the Depositor;

                  (iii) officer's certificates of an officer of each of the
          Originators and the Unaffiliated Seller, dated as of the Closing Date,
          and attached thereto resolutions of the board of directors and a copy
          of the charter and by-laws;

                  (iv) copy of each of the Originators and the Unaffiliated
          Seller's charter and all amendments, revisions, and supplements
          thereof, certified by a secretary of each entity;

                  (v) an opinion of the counsel for the Originators and the
          Unaffiliated Seller as to various corporate matters in a form
          acceptable to the Depositor, its counsel, the Note Insurer, S&P and
          Moody's (it being agreed that the opinion shall expressly provide that
          the Indenture Trustee shall be entitled to rely on the opinion);

                  (vi) opinions of counsel for the Unaffiliated Seller, in forms
          acceptable to the Depositor, its counsel, the Note Insurer, S&P and
          Moody's as to such matters as shall be required for the assignment of
          a rating to the Notes of "AAA" by S&P and "Aaa" by Moody's (it being
          agreed that such opinions shall expressly provide that the Indenture
          Trustee shall be entitled to rely on such opinions);

                  (vii) a letter from Moody's to the effect that it has assigned
          a rating of "Aaa" to the Notes;

                  (viii) a letter from S&P to the effect that it has assigned a
          rating of "AAA" to the Notes;

                  (ix) an opinion of counsel for the Indenture Trustee in form
          and substance acceptable to the Depositor, its counsel, the Note
          Insurer, Moody's and S&P (it being agreed that the opinion shall
          expressly provide that the Unaffiliated Seller shall be entitled to
          rely on the opinion);

                  (x) an opinion of counsel for the Owner Trustee in form and
          substance acceptable to the Depositor, its counsel, the Note Insurer,
          Moody's and S&P (it being agreed that the opinion shall expressly
          provide that the Unaffiliated Seller shall be entitled to rely on the
          opinion);


                                       30
<PAGE>

                  (xi) an opinion or opinions of counsel for the Servicer, in
          form and substance acceptable to the Depositor, its counsel, the Note
          Insurer, Moody's and S&P (it being agreed that the opinion shall
          expressly provide that the Unaffiliated Seller shall be entitled to
          rely on the opinion); and

                  (xii) an opinion or opinions of counsel for the Note Insurer,
          in each case in form and substance acceptable to the Depositor, its
          counsel, Moody's and S&P (it being agreed that the opinion shall
          expressly provide that the Unaffiliated Seller shall be entitled to
          rely on the opinion).

                  (e) The Policy shall have been duly executed, delivered and
issued with respect to the Notes.

                  (f) All proceedings in connection with the transactions
contemplated by this Agreement and all documents incident hereto shall be
satisfactory in form and substance to the Depositor and its counsel.

                  (g) The Unaffiliated Seller shall have furnished the Depositor
with such other certificates of its officers or others and such other documents
or opinions as the Depositor or its counsel may reasonably request.

                  Section 5.02 Conditions of Unaffiliated Seller's Obligations.
The obligations of the Unaffiliated Seller under this Agreement shall be subject
to the satisfaction, on the Closing Date, of the following conditions:

                  (a) Each of the obligations of the Depositor required to be
performed by it at or prior to the Closing Date pursuant to the terms of this
Agreement shall have been duly performed and complied with and all of the
representations and warranties of the Depositor contained in this Agreement
shall be true and correct as of the Closing Date and the Unaffiliated Seller
shall have received a certificate to that effect signed by an authorized officer
of the Depositor.

                  (b) The Unaffiliated Seller shall have received the following
additional documents:

                  (i) this Agreement and the Sale and Servicing Agreement, and
          all documents required thereunder, in each case executed by the
          Depositor as applicable; and

                  (ii) a copy of a letter from Moody's to the Depositor to the
          effect that it has assigned a rating of "Aaa" to the Notes and a copy
          of a letter from S&P to the Depositor to the effect that it has
          assigned a rating of "AAA" to the Notes.

                  (iii) an opinion of counsel for the Indenture Trustee in form
          and substance acceptable to the Unaffiliated Seller and its counsel;

                  (iv) an opinion of counsel for the Owner Trustee in form and
          substance acceptable to the Unaffiliated Seller and its counsel;


                                       31
<PAGE>

                  (v) an opinion of counsel for the Note Insurer in form and
          substance acceptable to the Unaffiliated Seller and its counsel;

                  (vi) an opinion of the counsel for the Depositor as to
          securities and tax matters; and

                  (vii) an opinion of the counsel for the Depositor as to true
          sale matters.

                  (c) The Depositor shall have furnished the Unaffiliated Seller
with such other certificates of its officers or others and such other documents
to evidence fulfillment of the conditions set forth in this Agreement as the
Unaffiliated Seller may reasonably request.

                  Section 5.03 Termination of Depositor's Obligations. The
Depositor may terminate its obligations hereunder by notice to the Unaffiliated
Seller at any time before delivery of and payment of the purchase price for the
Mortgage Loans if: (a) any of the conditions set forth in Section 5.01 are not
satisfied when and as provided therein; (b) there shall have been the entry of 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, marshalling of assets and
liabilities or similar proceedings of or relating to the Unaffiliated Seller, or
for the winding up or liquidation of the affairs of the Unaffiliated Seller; (c)
there shall have been the consent by the Unaffiliated Seller to the appointment
of a conservator or receiver or liquidator in any insolvency, readjustment of
debt, marshalling of assets and liabilities or similar proceedings of or
relating to the Unaffiliated Seller or of or relating to substantially all of
the property of the Unaffiliated Seller; (d) any purchase and assumption
agreement with respect to the Unaffiliated Seller or the assets and properties
of the Unaffiliated Seller shall have been entered into; or (e) a Termination
Event shall have occurred. The termination of the Depositor's obligations
hereunder shall not terminate the Depositor's rights hereunder or its right to
exercise any remedy available to it at law or in equity.

                                   ARTICLE VI

                                  MISCELLANEOUS

                  Section 6.01 Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered to or mailed by registered mail, postage prepaid, or
transmitted by telex or telegraph and confirmed by a similar mailed writing, if
to the Depositor, addressed to the Depositor at Bear Stearns Asset Backed
Securities, Inc., 245 Park Avenue, 4th Floor, New York, New York 10167,
Attention: Chief Counsel, or to such other address as the Depositor may
designate in writing to the Unaffiliated Seller and the Originators and if to
the Unaffiliated Seller or an Originator, addressed to the Unaffiliated Seller,
2530 Shannon Drive, Wilmington, Delaware 19810, Attention: Jeffrey Ruben, or to
such Originator at Balapointe Office Centre, 111 Presidential Boulevard, Suite
127, Bala Cynwyd, Pennsylvania 19004, Attention: Mr. Anthony Santilli, Jr., or
to such other address as the Unaffiliated Seller or such Originator may
designate in writing to the Depositor.


                                       32
<PAGE>

                  Section 6.02 Severability of Provisions. Any part, provision,
representation, warranty or covenant of this Agreement which is prohibited or
which is held to be void or unenforceable shall be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof. Any part, provision, representation, warranty or covenant of
this Agreement which is prohibited or unenforceable or is held to be void or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof.

                  Section 6.03 Agreement of Unaffiliated Seller. The
Unaffiliated Seller agrees to execute and deliver such instruments and take such
actions as the Depositor may, from time to time, reasonably request in order to
effectuate the purpose and to carry out the terms of this Agreement.

                  Section 6.04 Survival. The parties to this Agreement agree
that the representations, warranties and agreements made by each of them herein
and in any Note or other instrument delivered pursuant hereto shall be deemed to
be relied upon by the other party hereto, notwithstanding any investigation
heretofore or hereafter made by such other party or on such other party's
behalf, and that the representations, warranties and agreements made by the
parties hereto in this Agreement or in any such certificate or other instrument
shall survive the delivery of and payment for the Mortgage Loans.

                  Section 6.05 Effect of Headings and Table of Contents. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.

                  Section 6.06 Successors and Assigns. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Except as expressly permitted by
the terms hereof, this Agreement may not be assigned, pledged or hypothecated by
any party hereto to a third party without the written consent of the other party
to this Agreement and the Note Insurer; provided, however, that the Depositor
may assign its rights hereunder without the consent of the Unaffiliated Seller.

                  Section 6.07 Confirmation of Intent; Grant of Security
Interest. It is the express intent of the parties hereto that the conveyance of
the Mortgage Loans by the Originators to the Unaffiliated Seller as contemplated
by this Unaffiliated Seller's Agreement be, and be treated for all purposes as,
a sale of the Mortgage Loans and that the conveyance of the Mortgage Loans by
the Unaffiliated Seller to the Depositor as contemplated by this Unaffiliated
Seller's Agreement be, and be treated for accounting purposes as, a sale of the
Mortgage Loans. It is, further, not the intention of the parties that any such
conveyance be deemed a pledge of the Mortgage Loans by the Originators to the
Unaffiliated Seller or by the Unaffiliated Seller to the Depositor to secure a
debt or other obligation of the Originators or the Unaffiliated Seller, as the
case may be. However, in the event that, notwithstanding the intent of the
parties, the Mortgage Loans are held to continue to be property of the
Originators or the Unaffiliated Seller then (a) this Unaffiliated


                                       33
<PAGE>

Seller's Agreement shall also be deemed to be a security agreement within the
meaning of Articles 8 and 9 of the Uniform Commercial Code; (b) the transfer of
the Mortgage Loans provided for herein shall be deemed to be a grant by the
Originators to the Unaffiliated Seller and by the Unaffiliated Seller to the
Depositor of a security interest in all of such parties' right, title and
interest in and to the Mortgage Loans and all amounts payable on the Mortgage
Loans in accordance with the terms thereof and all proceeds of the conversion,
voluntary or involuntary, of the foregoing into cash, instruments, securities or
other property; (c) the possession by the Depositor (or its assignee) of
Mortgage Notes and such other items of property as constitute instruments,
money, negotiable documents or chattel paper shall be deemed to be "possession
by the secured party" for purposes of perfecting the security interest pursuant
to Section 9-305 of the Uniform Commercial Code; and (d) notifications to
persons holding such property, and acknowledgments, receipts or confirmations
from persons holding such property, shall be deemed notifications to, or
acknowledgments, receipts or confirmations from, financial intermediaries,
bailees or agents (as applicable) of the Depositor (or its assignee) for the
purpose of perfecting such security interest under applicable law. Any
assignment of the interest of the Depositor pursuant to any provision hereof
shall also be deemed to be an assignment of any security interest created
hereby. The Originators, the Unaffiliated Seller and the Depositor shall, to the
extent consistent with this Unaffiliated Seller's Agreement, take such actions
as may be necessary to ensure that, if this Unaffiliated Seller's Agreement were
deemed to create a security interest in the Mortgage Loans, such security
interest would be deemed to be a perfected security interest of first priority
under applicable law and will be maintained as such throughout the term of this
Agreement.

                  Section 6.08 Miscellaneous. This Agreement supersedes all
prior agreements and understandings relating to the subject matter hereof.

                  Section 6.09 Amendments. (a) This Agreement may be amended
from time to time by the Originators, the Unaffiliated Seller and the Depositor
by written agreement, upon the prior written consent of the Note Insurer,
without notice to or consent of the Noteholders, and with prior written notice
to the Owner Trustee to cure any ambiguity, to correct or supplement any
provisions herein, 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 (i) an Opinion of Counsel,
at the expense of the party requesting the change, delivered to the Indenture
Trustee or (ii) a letter from each Rating Agency confirming that such amendment
will not result in the reduction, qualification or withdrawal of the then
current rating of the Notes, adversely affect in any material respect the
interests of any Noteholder; and provided, further, that no such amendment shall
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 Note without the
consent of the Holder of such Note, or change the rights or obligations of any
other party hereto without the consent of such party.

                  (b) This Agreement may be amended from time to time by the
Originators, the Unaffiliated Seller and the Depositor with the consent of the
Note Insurer, the Majority Noteholders and the Holders of the majority of the
Percentage Interest in the Trust Certificates and with prior written notice to
the Owner Trustee 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

                                       34
<PAGE>

in any manner the rights of the Holders; provided, however, that no such
amendment shall 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
Note without the consent of the Holder of such Note or reduce the percentage for
each Class the Holders of which are required to consent to any such amendment
without the consent of the Holders of 100% of each Class of Notes affected
thereby.

                  (c) It shall not be necessary for the consent of Holders under
this Section 6.09 to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent shall approve the substance thereof.

                  Section 6.10 Third-Party Beneficiaries. The parties agree that
each of the Trust, the Owner Trustee, the Note Insurer, Collateral Agent and the
Indenture Trustee is an intended third-party beneficiary of this Agreement to
the extent necessary to enforce the rights and to obtain the benefit of the
remedies of the Depositor under this Agreement which are assigned to the Trust
and then to the Indenture Trustee, for the benefit of the Noteholders and the
Note Insurer, pursuant to the Sale and Servicing Agreement and the Indenture,
respectively, and to the extent necessary to obtain the benefit of the
enforcement of the obligations and covenants of the Unaffiliated Seller under
Section 4.01 and 4.04(a)(ii) of this Agreement. The parties further agree that
the Underwriters and each of their directors and each person or entity who
controls the Underwriters or any such person, within the meaning of Section 15
of the Securities Act (each, an "Underwriter Entity") is an intended third-party
beneficiary of this Agreement to the extent necessary to obtain the benefit of
the enforcement of the obligations and covenants of the Unaffiliated Seller with
respect to each Underwriter Entity under Section 4.04(a)(i) of this Agreement.

                  Section 6.11 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF
JURY TRIAL. (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS) OF

THE STATE OF NEW YORK.

                  (b) THE ORIGINATORS, THE DEPOSITOR AND THE UNAFFILIATED SELLER
EACH HEREBY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE
OF NEW YORK AND THE UNITED STATES DISTRICT COURT LOCATED IN THE BOROUGH OF
MANHATTAN IN NEW YORK CITY, AND EACH WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY
REGISTERED MAIL DIRECTED TO THE ADDRESS SET FORTH IN SECTION 6.01 OF THIS
AGREEMENT AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE DAYS AFTER
THE SAME SHALL HAVE BEEN DEPOSITED IN THE U.S. MAIL, POSTAGE PREPAID. THE
ORIGINATORS, THE DEPOSITOR AND THE UNAFFILIATED SELLER EACH HEREBY WAIVES ANY
OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY
ACTION INSTITUTED HEREUNDER AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION
SHALL AFFECT THE RIGHT OF THE ORIGINATORS, THE DEPOSITOR AND THE UNAFFILIATED
SELLER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER


                                       35
<PAGE>

PERMITTED BY LAW OR AFFECT EITHERS' RIGHT TO BRING ANY ACTION OR PROCEEDING IN
THE COURTS OF ANY OTHER JURISDICTION.

                  (c) THE ORIGINATORS, THE DEPOSITOR AND THE UNAFFILIATED SELLER
EACH HEREBY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH,
RELATED TO, OR IN CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTE RESOLVED
IN COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.

                  Section 6.12 Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which so executed shall be
deemed to be an original, but all such counterparts shall together constitute
but one and the same instrument.

                  [Remainder of Page Intentionally Left Blank]




                                       36
<PAGE>


                  IN WITNESS WHEREOF, the parties to this Unaffiliated Seller's
Agreement have caused their names to be signed by their respective officers
thereunto duly authorized as of the date first above written.

                                            BEAR STEARNS ASSET BACKED
                                              SECURITIES, INC.



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


                                            ABFS 2000-4, INC.



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


                                            AMERICAN BUSINESS CREDIT, INC.



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


                                            HOMEAMERICAN CREDIT, INC., D/B/A
                                              UPLAND MORTGAGE



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


                                            NEW JERSEY MORTGAGE AND
                                              INVESTMENT CORP.



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



<PAGE>


                                                                      SCHEDULE I
                                                                      ----------


                             MORTGAGE LOAN SCHEDULE



<PAGE>


                                                                       EXHIBIT A
                                                                       ---------


                                   [RESERVED]