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                          SALOMON BROTHERS REALTY CORP.
                         390 GREENWICH STREET, 4TH FLOOR
                            NEW YORK, NEW YORK 10013

                                                                    June 1, 2001

NC Capital Corporation
18400 Von Karman, Suite 1000
Irvine, California 92612
Attention: Mr. Patrick Flanagan
           President

New Century Mortgage Corporation
18400 Von Karman, Suite 1000
Irvine, California 92612
Attention: Mr. Brad Morrice
           Chief Executive Officer

Ladies and Gentlemen:

            This letter agreement (the "Letter Agreement") confirms the
understanding and agreements among NC Capital Corporation ("NCCC"), New Century
Mortgage Corporation ("New Century") and Salomon Brothers Realty Corp. ("SBRC"),
under the terms set forth herein, regarding SBRC's agreement to provide a
financing line (the "Financing Line") to NCCC in connection with certain
adjustable-rate and fixed-rate, first lien and second lien mortgage loans that
are originated by New Century (the "Mortgage Loans").

            1. MORTGAGE LOANS.

            (a) IN GENERAL. SBRC agrees to make available to NCCC and New
Century the Financing Line from June 1, 2001 until December 31, 2001; provided,
however, that the availability of the Financing Line may be extended beyond
December 31, 2001 by mutual agreement among the parties hereto. The amount of
Mortgage Loans on the Financing Line at any time shall not exceed $500,000,000.

            (b) SERVICING OF THE MORTGAGE LOANS. The purchase by SBRC of a
Mortgage Loan pursuant to the Financing Line shall include the purchase of the
related servicing rights for such Mortgage Loan. Unless otherwise agreed to
between SBRC and NCCC, SBRC hereby covenants and agrees to hire New Century to
service; and New Century hereby covenants and agrees to service the Mortgage
Loans for a term beginning on the related Settlement Date (as defined in Section
2(a) hereof) and ending on the related repurchase date as provided for in the
Purchase and Sale Agreement (as defined in Section 2(a) hereof); provided that
if a Termination Event (as defined in Section 4(b) hereof) has occurred, New
Century shall immediately be terminated as servicer. In connection with its
servicing duties, New Century can service the Mortgage Loans itself or through
such other sub-

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NC Capital Corporation
New Century Mortgage Corporation
June 1, 2001                                                             Page 2.


servicer which SBRC has accepted in writing, as the sub-servicer (the
"Sub-Servicer") provided that, SBRC shall have the right to perform due
diligence on any entity appointed as servicer or sub-servicer of the Mortgage
Loans and may require New Century to select another servicer or sub-servicer to
the extent that SBRC is not satisfied with the results of such due diligence.
The Mortgage Loans shall be serviced in accordance with the servicing provisions
specified in the Pooling and Servicing Agreement, Series 2000-NC1 dated as of
March 1, 2000 among Firstar Bank, N.A., U.S. Bank National Association, Salomon
Brothers Mortgage Securities VII, Inc. and New Century. New Century or the
Sub-Servicer shall enforce "due-on-sale" provisions to the extent permitted by
law, shall administer all escrow/impound deposits, shall pay compensating
interest on principal prepayments in any month up to the amount of its servicing
compensation in such month and shall make all servicing advances on any Mortgage
Loan (including advances of delinquent principal and interest payments). New
Century or the Sub-Servicer shall be required to make advances in respect of
delinquent payments of principal and interest on the Mortgage Loans through
foreclosure, subject to New Century's or the Sub-Servicer's determination
regarding recoverability. The Mortgage Loans shall be serviced for a servicing
fee equal to 0.50% per annum payable monthly on the then-outstanding principal
balance of each Mortgage Loan (the "Servicing Fee"). Any fee payable to the
Sub-Servicer shall be paid by New Century without any right of reimbursement by
SBRC. Any Sub-Servicer shall execute a letter agreement recognizing SBRC's
interest in the Mortgage Loans in the form of Exhibit A. Notwithstanding the
foregoing, in the event NCCC fails to repurchase a Mortgage Loan on the related
repurchase date or if a Termination Event occurs, New Century and any related
Sub-Servicer will no longer be servicer with respect to such Mortgage Loan or
Mortgage Loans, unless the term of servicing is extended by SBRC in its sole
discretion. In such event, SBRC shall have the right to transfer such servicing
to another servicer without payment of any fee to New Century. New Century will
cooperate in good faith to effect such servicing transfer and shall pay all
costs associated with such servicing transfer. In connection with a termination
of New Century as servicer, neither New Century nor NCCC shall be responsible
for the costs (other than the costs of transferring servicing files) associated
with the appointment of a successor servicer.

            (c) CONDITIONS PRECEDENT TO MORTGAGE LOAN PURCHASES. SBRC's
obligation to purchase any Mortgage Loans and related servicing rights which it
accepts for its Financing Line shall be subject to each of the following
conditions:

                  (i)   there shall have been delivered to SBRC a Trust Receipt
                        issued by U.S. Bank National Association ("U.S. Bank")
                        with a mortgage loan schedule attached thereto and an
                        exception report which is acceptable to SBRC in its sole
                        discretion, at least 24 hours prior to purchase;

                  (ii)  SBRC shall have had an opportunity to perform a due
                        diligence review of each Mortgage Loan and shall have
                        arranged for reappraisals of value with respect to each
                        Mortgage Loan if desired by SBRC;

                  (iii) NCCC shall have provided to SBRC such other documents
                        which are then required to have been delivered under the
                        Purchase and Sale

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NC Capital Corporation
New Century Mortgage Corporation
June 1, 2001                                                             Page 3.


                        Agreement or which are reasonably requested by SBRC,
                        which other documents may include UCC financing
                        statements, a favorable opinion or opinions of counsel
                        with respect to matters which are reasonably requested
                        by SBRC, and/or an officer's or secretary's certificate;
                        and

                  (iv)  there shall have been delivered to SBRC a limited
                        guaranty of New Century, in the form of Exhibit B
                        hereto, by which New Century guarantees the obligations
                        of NCCC under this Letter Agreement and the Purchase and
                        Sale Agreement.

            (d) NON-UTILIZATION FEE. To the extent that the amount of Mortgage
Loans subject to this Financing Line averages less than $125,000,000 for any
calendar month, NCCC must pay a non-utilization fee (the "Non-Utilization Fee")
of 0.1875% on the difference between $125,000,000 and the amount of Mortgage
Loans on the Financing Line during such month.

            (e) INFORMATION. NCCC and New Century will furnish SBRC with all
financial and other information concerning NCCC and New Century as SBRC deems
reasonably appropriate in connection with the performance of the services
contemplated by this letter, including (without limitation) "Monthly Cash Flow
Projections and Sensitivity Analyses," and will provide SBRC with reasonable
access during normal business hours to NCCC's and New Century's officers,
directors, employees, accountants, and other representatives. NCCC and New
Century acknowledge and confirm that SBRC (i) will rely on such information in
the performance of the services contemplated by this letter without
independently investigating or verifying any of it, (ii) assumes no
responsibility for the accuracy or completeness of such information and (iii)
will not disclose such information to any third party without the prior written
consent of NCCC or New Century, as applicable.

            2 FINANCING LINE.

            (a) IN GENERAL. Pursuant to the terms of this Financing Line, SBRC
shall simultaneously purchase from, and sign a forward commitment to resell to,
NCCC Mortgage Loans and the related servicing rights that are deemed acceptable
for such Financing Line as set forth below. The Financing Line shall be more
fully documented pursuant to the Mortgage Loan Purchase and Sale Agreement (the
"Purchase and Sale Agreement") to be entered into among NCCC, New Century and
SBRC, which shall be substantially similar in form to the Mortgage Loan Purchase
and Sale Agreement dated November 30, 2000 between New Century and SBRC but
shall provide for servicing provisions similar to those set forth in Section
1(b) of this Letter Agreement. Under the Purchase and Sale Agreement, NCCC will
make standard secondary market corporate representations and warranties as of
the date such Purchase and Sale Agreement is executed and as of any settlement
date for the purchase and sale of any Mortgage Loans pursuant to such Purchase
and Sale Agreement (each such date, a "Settlement Date") and NCCC shall make
standard secondary market representations and warranties with respect to each
Mortgage Loan as of the Settlement Date on which such Mortgage Loan is sold to
SBRC.

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NC Capital Corporation
New Century Mortgage Corporation
June 1, 2001                                                             Page 4.


            Except as described below, the "Purchase Price" with respect to each
Mortgage Loan and related servicing rights which conforms to the Underwriting
Standards of New Century which were most recently reviewed and approved by SBRC
and which is not a Special Risk Mortgage Loan (as defined in Section 2(b)
hereof), a High Balance/High LTV Mortgage Loan (as defined in Section 2(c)
hereof) or a Fallout Mortgage Loan (as defined in Section 2(d) hereof) (a
"Standard Mortgage Loan") shall be equal to the lesser of (i) 101.50% of the
unpaid principal balance of such Standard Mortgage Loan and (ii) the fair market
value of such Standard Mortgage Loan in SBRC's sole discretion. The "Purchase
Price" for each Special Risk Mortgage Loan and related servicing rights shall be
equal to the amount determined in accordance with the provisions of Section
2(b)(ii) hereof, the "Purchase Price" for each High Balance/High LTV Mortgage
Loan and related servicing rights shall be equal to the amount determined in
accordance with the provisions of Section 2(c)(ii) hereof and the "Purchase
Price" for each Fallout Mortgage Loan and related servicing rights shall be
equal to the amount determined in accordance with the provisions of Section
2(d)(ii) hereof. Notwithstanding the foregoing, the "Purchase Price" for each
Mortgage Loan will be reduced by the amount of any Collateral Value Deficiency
paid by NCCC with respect to such Mortgage Loan.

            The repurchase price shall reflect the agreed upon return to SBRC
for providing the Financing Line (the "Financing Cost"). With respect to any
Mortgage Loan subject to the Financing Line, the Financing Cost shall equal One
Month LIBOR (as defined herein) plus 1.50%. NCCC shall retain principal and
interest on any Mortgage Loans subject to the Financing Line.

            "One Month LIBOR" means as of the related Settlement Date, the 30
day London Interbank Offered Rate as of 11:00 a.m. (London time) on such date,
as indicated on page number 3750 of the Telerate Service (rounded upwards if
necessary to the nearest whole multiple of 1/16%). If One Month LIBOR cannot be
so determined, then One Month LIBOR shall mean the rate determined by SBRC in
its sole discretion.

            The Financing Line at any one time shall be initially limited to
$500,000,000 in amount of Mortgage Loans and shall have a term of one month. The
maximum amount of Special Risk Mortgage Loans and High Balance/High LTV Mortgage
Loans in the Financing Line shall not exceed $65,000,000 at any one time and
Fallout Mortgage Loans in the Financing Line shall not exceed $75,000,000 at any
one time. The Special Risk Mortgage Loans, the High Balance/High LTV Mortgage
Loans and the Fallout Mortgage Loans are collectively referred to herein as the
"Non-Standard Mortgage Loans"; and together with the Standard Mortgage Loans,
the "Mortgage Loans".

            NCCC shall have the right to add Mortgage Loans to the Financing
Line up to four times each month. Standard Mortgage Loans may be removed from
the Financing Line up to four times a month (one of which shall be on the roll
date). Non-Standard Mortgage Loans may be removed from the Financing Line with
24 hours prior written notice by NCCC to SBRC.

            SBRC shall provide not less than twenty eight days' prior notice to
NCCC and U.S. Bank National Association (or such other warehouse lender as
directed by NCCC) in the event that SBRC elects to not renew the Financing Line
for any month.

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NC Capital Corporation
New Century Mortgage Corporation
June 1, 2001                                                             Page 5.


            (b) SPECIAL RISK MORTGAGE LOANS. A "Special Risk Mortgage Loan" is
defined as any Mortgage Loan (i) that is a second lien Mortgage Loan; (ii) that
is a first lien Mortgage Loan with an unpaid principal balance of less than
$50,000. Special Risk Mortgage Loans shall be subject to the following
qualifications with respect to the Financing Line:

            (i)   the maximum Financing Line with respect to Special Risk
                  Mortgage Loans shall equal $20,000,000 (of which no more than
                  $10,000,000 shall be second lien Mortgage Loans and no more
                  than $10,000,000 shall be first lien Mortgage Loans that have
                  unpaid principal balances less than $50,000);

            (ii)  with respect to the Special Risk Mortgage Loans, the Purchase
                  Price shall be equal to (A) with respect to any Special Risk
                  Mortgage Loan that is a second lien Mortgage Loan, the lesser
                  of (i) 80.00% of the unpaid principal balance of such Special
                  Risk Mortgage Loan and (ii) the fair market value of such
                  Special Risk Mortgage Loan in SBRC's sole discretion and (B)
                  with respect to any Special Risk Mortgage Loan that is a first
                  lien Mortgage Loan with an unpaid principal balance of less
                  than $50,000, the lesser of (i) 80.00% of the unpaid principal
                  balance of such Special Risk Mortgage Loan and (ii) the fair
                  market value of such Special Risk Mortgage Loan in SBRC's sole
                  discretion.

            (c) HIGH BALANCE/HIGH LTV LOANS. A "High Balance/High LTV Mortgage
Loan" is defined as any Mortgage Loan (i) with an unpaid principal balance in
excess of $1,000,000; or (ii) that has a loan-to-value ratio in excess of 85.00%
(up to a maximum of 95.00%). High Balance/High LTV Mortgage Loans shall be
subject to the following qualifications with respect to the Financing Line:

            (i)   the maximum Financing Line with respect to High Balance/High
                  LTV Mortgage Loans shall equal $80,000,000 (of which no more
                  than $10,000,000 shall have unpaid principal balances greater
                  than $1,000,000 and no more than $75,000,000 shall be Mortgage
                  Loans with a loan-to-value ratio in excess of 85.00% (up to a
                  maximum of 95.00%));

            (ii)  with respect to the High Balance/High LTV Mortgage Loans, the
                  Purchase Price shall be the lesser of (i) 100.50% of the
                  unpaid principal balance of such High Balance/High LTV Loan
                  and (ii) the fair market value of such High Balance/High LTV
                  Loan in SBRC's sole discretion.

            (d) FALLOUT MORTGAGE LOANS. A "Fallout Mortgage Loan" is defined as
any Mortgage Loan which was removed from the Financing Line by New Century or
NCCC and sold to a third party in a whole loan sale or securitization and which
was subsequently rejected by the buyer in such whole loan sale or removed from
such securitization due to any of the following: (i) failure of such Mortgage
Loan to comply with applicable federal and state laws (any such Fallout Mortgage
Loan, a "Non-Compliant Fallout Mortgage Loan"); (ii) rejection of the credit
profile of the borrower

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NC Capital Corporation
New Century Mortgage Corporation
June 1, 2001                                                             Page 6.


of such Mortgage Loan (any such Fallout Mortgage Loan, a "Credit Risk Fallout
Mortgage Loan") or (iii) rejection of the appraisal relating to such Mortgage
Loan (any such Fallout Mortgage Loan, a "Appraisal Risk Fallout Mortgage Loan").
Fallout Mortgage Loans shall be subject to the following qualifications with
respect to the Financing Line:

            (i)   the maximum Financing Line with respect to Fallout Mortgage
                  Loans shall equal $75,000,000 (of which no more than
                  $5,000,000 shall be Non-Compliant Fallout Mortgage Loans, no
                  more than $40,000,000 shall be Credit Risk Fallout Mortgage
                  Loans and no more than $30,000,000 shall be Appraisal Risk
                  Fallout Mortgage Loans);

            (ii)  with respect to any Non-Compliant Fallout Mortgage Loan that
                  is not delinquent, the Purchase Price shall be the lesser of
                  (i) 98% of the unpaid principal balance of such Non-Compliant
                  Fallout Mortgage Loan and (ii) the market value of such
                  Non-Compliant Fallout Mortgage Loan as determined by SBRC
                  acting in good faith;

            (iii) with respect to any Credit Risk Fallout Mortgage Loan that is
                  not delinquent, the Purchase Price shall be the lesser of (i)
                  the unpaid principal balance of such Credit Risk Fallout
                  Mortgage Loan and (ii) the market value of such Credit Risk
                  Fallout Mortgage Loan as determined by SBRC acting in good
                  faith;

            (iv)  (A) with respect to any Appraisal Risk Fallout Mortgage Loan
                  that is not delinquent, the Purchase Price shall be the lesser
                  of (i) 90% of the unpaid principal balance of such Appraisal
                  Risk Fallout Mortgage Loan and (ii) the market value of such
                  Appraisal Risk Fallout Mortgage Loan as determined by SBRC
                  acting in good faith;

                  (B) with respect to any Appraisal Risk Fallout Mortgage Loan
                  that is 30 days delinquent, the Purchase Price shall be 85% of
                  the lesser of (i) the unpaid principal balance of such
                  Appraisal Risk Fallout Mortgage Loan and (ii) the BPO of such
                  Appraisal Risk Fallout Mortgage Loan;

                  (C) with respect to any Appraisal Risk Fallout Mortgage Loan
                  that is 60 days delinquent, the Purchase Price shall be 80% of
                  the lesser of (i) the unpaid principal balance of such
                  Appraisal Risk Fallout Mortgage Loan and (ii) the BPO of such
                  Appraisal Risk Fallout Mortgage Loan; and

                  (C) with respect to any Appraisal Risk Fallout Mortgage Loan
                  that is 90 days or more delinquent, the Purchase Price shall
                  be 65% of the lesser of (i) the unpaid principal balance of
                  such Appraisal Risk Fallout Mortgage Loan and (ii) the BPO of
                  such Appraisal Risk Fallout Mortgage Loan.

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NC Capital Corporation
New Century Mortgage Corporation
June 1, 2001                                                             Page 7.


            "BPO" shall mean a broker's price opinion, obtained at the expense
of New Century, prepared by a duly licensed real estate broker who has no
interest, direct or indirect, in the Mortgage Loan or in New Century or NCCC or
any affiliate of New Century or NCCC and whose compensation is not affected by
the results of the broker's price opinion and which valuation indicates the
expected proceeds for a sale of the related mortgaged property and, with respect
to any condominium development or planned unit development that was not Fannie
Mae or Freddie Mac approved, the amount, if any, by which the valuation was
decreased as a result of such lack of approval, and includes certain
assumptions, including those as to the condition of the interior of the
applicable mortgaged property and marketing time; provided, however, that the
vendor providing such BPO must be approved by SBRC.

            SBRC hereby approves the following vendors: Hanson Quality Loan
Services, Nationwide Appraisal Services Corp., Ocwen Federal Bank FSB, Premiere
Real Estate Services, Inc., Ball Asset Management and Goodman Dean Corporate
Real Estate Services.

            SBRC has the right to obtain a new BPO and to perform due diligence
on any Mortgage Loan subject to this Financing Line, at the expense of New
Century, every three (3) months; provided, however, that the costs of such BPO
and/or due diligence shall not exceed $25,000 in the aggregate; provided,
further, that such $25,000 cap shall not apply to any BPO obtained or due
diligence performed with respect to any Fallout Mortgage Loan.

            Notwithstanding the foregoing, with respect to any Mortgage Loan
that remains subject to the Financing Line following 120 days from the date of
origination of such Mortgage Loan and not previously classified as a Fallout
Mortgage Loan, the Purchase Price shall be the Purchase Price for a
Non-Compliant Fallout Mortgage Loan, a Credit Risk Fallout Mortgage Loan or an
Appraisal Risk Fallout Mortgage Loan, as applicable. Furthermore, with respect
to any Mortgage Loans subject to the Financing Line, the adjusted Purchase Price
set forth in the previous sentence for such Mortgage Loan shall decrease by 10%
beginning on the date that is 180 days from the date of origination and by an
additional 10% for each succeeding month thereafter.

            No Mortgage Loan shall be subject to the terms of the Financing Line
if: (i) the unpaid principal balance of such Mortgage Loan exceeds $1,500,000 or
(ii) such Mortgage Loan has a loan-to-value ratio greater than 95.00%.
Furthermore, no Mortgage Loan the mortgagor of which had a FICO score of less
than 500 or any Mortgage Loan originated in accordance with Section 32 of the
Homeownership and Equity Protection Act of 1994 shall be subject to this
Financing Line.

            (e) MARK-TO-MARKET. If with respect to any Mortgage Loan, SBRC at
any time determines, in its sole discretion, that there exists a Collateral
Value Deficiency (as defined below) and SBRC notifies NCCC in writing of such
Collateral Value Deficiency, NCCC shall, no later than one (1) Business Day
after receipt of such notice, pay to SBRC an amount equal to such Collateral
Value Deficiency, such that after giving effect to such payment, the Collateral
Value Deficiency is reduced to zero. With respect to any Mortgage Loan, a
"Collateral Value Deficiency" shall mean any time the excess, if any, of (a) the
outstanding Purchase Price of such Mortgage Loan as defined in

<PAGE>
NC Capital Corporation
New Century Mortgage Corporation
June 1, 2001                                                             Page 8.


Section 2(a) hereof over (b) the Market Value of such Mortgage Loan. "Market
Value" shall mean, as of any date in respect of any Mortgage Loan, the value of
such Mortgage Loan as determined by SBRC in its sole discretion. SBRC shall have
the right to mark-to-market any Mortgage Loan on a daily basis.

            (f) MORTGAGE LOAN SCHEDULE. No Mortgage Loan shall be included in
the Financing Line unless NCCC shall have delivered to SBRC at least 48 hours
prior to such inclusion, a magnetic tape, in a format acceptable to SBRC,
consisting of the loan characteristics agreed upon by SBRC and NCCC with respect
to each Mortgage Loan.

            (g) MARKETING OF MORTGAGE LOANS. SBRC may (subject to NCCC's consent
unless a Termination Event has occurred) market the Non-Standard Mortgage Loans
on NCCC's behalf for a purchase price acceptable to NCCC and shall provide NCCC
with a copy of a trade ticket or letter of intent with respect to any commitment
to sell such Mortgage Loans.

            (h) HEDGING. NCCC will have the option to establish one or more
securities or commodities accounts at Salomon Smith Barney Inc. and to enter
into transactions in such accounts (and only in such accounts) that are intended
to hedge the interest rate risk on Mortgage Loans included in the Financing
Line.

            3 [RESERVED].

            4. TERMINATION.

            (a) NCCC shall have the right to terminate its obligations hereunder
upon (i) any material default by SBRC of its obligations under this Letter
Agreement which is not cured within 30 days following written notice of such
default to SBRC by NCCC.

            (b) SBRC shall have the right to terminate this Letter Agreement
upon the occurrence of any of the following events (each, a "Termination
Event"):

            (i)   the judgment by SBRC in good faith that a material adverse
                  change has occurred with respect to the business, properties,
                  assets or condition (financial or otherwise) of NCCC;

            (ii)  SBRC shall reasonably request, specifying the reasons for such
                  request, information, and/or written responses to such
                  requests, regarding the financial well-being of NCCC and such
                  information and/or responses shall not have been provided
                  within three business days of such request;

            (iii) Either (A) a change in control of NCCC shall have occurred
                  without the consent of SBRC, other than in connection with and
                  as a result of the issuance and sale by NCCC of registered,
                  publicly offered common stock; or (B)

<PAGE>
NC Capital Corporation
New Century Mortgage Corporation
June 1, 2001                                                             Page 9.


                  SBRC determines in its sole discretion that any material
                  adverse change has occurred in the management of NCCC;

           (iv)   There is (A) a material breach by NCCC of any representation
                  and warranty contained in the Purchase and Sale Agreement,
                  other than a representation or warranty relating to particular
                  Mortgage Loans, and SBRC has reason to believe in good faith
                  either that such breach is not curable within 30 days or that
                  such breach may not have been cured in all material respects
                  at the expiration of 30 days following discovery thereof by
                  NCCC or (B) a failure by NCCC to make any payment payable by
                  it under the Purchase and Sale Agreement or (C) any other
                  failure by NCCC to observe and perform in any material respect
                  its material covenants, agreements and obligations with SBRC,
                  including without limitation those contained in the Purchase
                  and Sale Agreement, and SBRC has reason to believe in good
                  faith that such failure may not have been cured in all
                  material respects at the expiration of 30 days following
                  discovery thereof by NCCC;

           (v)    There shall have occurred any outbreak or material escalation
                  of hostilities, declaration by the United States of a national
                  emergency or war or other calamity or crisis, the effect of
                  which on the financial markets is such as to make it, in the
                  judgment of SBRC, impracticable to continue the commitment; or

           (vi)   NCCC fails to provide written notification to SBRC of any
                  material change in its loan origination, acquisition or
                  appraisal guidelines or practices, or NCCC, without the prior
                  consent of SBRC (which shall not be unreasonably withheld),
                  amends in any material respect its loan origination,
                  acquisition or appraisal guidelines or practices; or

           (vii)  A default by NC Residual II Corporation under the provisions
                  of the Global Master Repurchase Agreement, dated as of
                  December 11, 1998, between Salomon Smith Barney Inc., as agent
                  for Salomon Brothers International Ltd. and NC Residual II
                  Corporation; or

           (viii) NCCC's default in the payment of the amount of any Collateral
                  Value Deficiency for more than one (1) Business Day after
                  receipt of written notice of such Collateral Value Deficiency
                  as provided in Section 2(d) hereof;

provided, that SBRC shall have the right to dispose of any collateral held by
SBRC pursuant to this Letter Agreement. In connection with a Termination Event
under this Section 4, SBRC shall have the right to transfer servicing as
provided in Section 1(b).

<PAGE>
NC Capital Corporation
New Century Mortgage Corporation
June 1, 2001                                                            Page 10.


            (c) Subject to the provisions of this Section 4, this Letter
Agreement shall terminate upon the earlier of (i) December 31, 2001 and (ii)
twenty eight days following receipt by NCCC of written notice from SBRC that
this Letter Agreement shall terminate; provided, however, that the parties
hereto may, upon mutual agreement, extend the term of this Letter Agreement
beyond December 31, 2001. In addition, upon receipt by NCCC of the written
notice referred to in (ii) above, NCCC will not be permitted to increase the
amount of Mortgage Loans on the Financing Line beginning on such date without
SBRC's consent.

            Notwithstanding any other provision of this Section 4, any grace or
notice period provided herein in respect of a notice to be given or action to be
taken by SBRC (other than with respect to the notice provided by SBRC in Section
4(c)(ii)) may be shortened or eliminated by SBRC if, in its sole good faith
discretion, it is unreasonable to do so under the circumstances, taking into
consideration, among other things, the volatility of the market for the Mortgage
Loans involved, the extent and nature of any Termination Event (or events which
with the giving of such notice and passage of time would constitute Termination
Events) and the risks inherent in deferring the exercise of remedies for the
otherwise applicable grace or notice period.

            5. GENERAL PROVISIONS.

            (a) SBRC'S DISCRETION. It is understood that SBRC shall have
absolute discretion in determining whether to accept or reject any Mortgage
Loan. Notwithstanding the foregoing, however, subject to NCCC's representations,
warranties and covenants as set forth herein and in any related agreements, all
Mortgage Loans originated by New Century in accordance with the underwriting
standards of New Century which were most recently approved by SBRC shall be
eligible for financing under the Financing Line in accordance with the terms
hereof. It is further understood that SBRC shall have absolute discretion in
determining whether any Mortgage Loan is a Standard Mortgage Loan or
Non-Standard Mortgage Loan and SBRC shall have the right to approve or
disapprove any Mortgage Loan with an unpaid principal balance in excess of
$1,000,000 (for which such Mortgage Loans, NCCC shall have obtained two
appraisals).

            (b) GOVERNING LAW. This Letter Agreement shall be governed by and
construed in accordance with the laws of the State of New York (without regard
to its conflicts of laws principles).

            (c) AMENDMENT OR WAIVER. This Letter Agreement may not be amended or
modified except in writing signed by each of the parties hereto.

            (d) COUNTERPARTS. This Letter Agreement may be executed
simultaneously in any number of counterparts. Each counterpart shall be deemed
to be an original, and all such counterparts shall constitute one and the same
instrument.

            (e) SEVERABILITY CLAUSE. Any part, provision, representation or
warranty of this Letter Agreement which is prohibited or which is held to be
void or unenforceable shall be ineffective

<PAGE>
NC Capital Corporation
New Century Mortgage Corporation
June 1, 2001                                                            Page 11.


to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof. Any part, provision, representation or warranty of
this Letter Agreement which is prohibited or unenforceable or is held to be void
or unenforceable in any jurisdiction shall be ineffective, as to such
jurisdiction, to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. 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. If the invalidity of any
part, provision, representation or warranty of this Letter Agreement shall
deprive any party of the economic benefit intended to be conferred by this
Letter Agreement, the parties shall negotiate, in good-faith, to develop a
structure the economic effect of which is nearly as possible the same as the
economic effect of this Letter Agreement without regard to such invalidity.

            (f) NO PARTNERSHIP. Nothing herein contained shall be deemed or
construed to create a co-partnership or joint venture between the parties
hereto.

            (g) FURTHER AGREEMENTS. New Century, NCCC and SBRC each agree to
execute and deliver to the other such reasonable and appropriate additional
documents, instruments or agreements as may be necessary or appropriate to
effectuate the purposes of this Letter Agreement.

            (h) TERMINATION. Other than those sections intended to survive in
the letter agreement dated November 30, 2000 among New Century, NCCC and SBRC,
such letter agreement is hereby terminated.

            (i) EXPENSES. NCCC shall pay the expenses of Thacher Proffitt &
Wood, counsel for SBRC, in connection with the Financing Line and any amendment
thereto, which fees and expenses will not exceed $20,000 in connection with the
Financing Line and will not exceed a negotiated cap between the parties in
connection with each amendment thereto, if any.

<PAGE>

            Please confirm that the foregoing is in accordance with your
understanding by signing this letter of agreement and two enclosed copies and
returning to us the enclosed copies. The letter signed by you shall constitute a
binding agreement between us as of the date first above written.

                                        Yours sincerely,

                                        SALOMON BROTHERS REALTY CORP.


                                        By: ____________________________________
                                        Name:
                                        Title:

ACCEPTED AND AGREED TO
AS OF THE DATE FIRST ABOVE WRITTEN:

NEW CENTURY MORTGAGE CORPORATION

By: /s/ Kevin Cloyd
    --------------------------------
Name:  Kevin Cloyd
Title: Vice President


NC CAPITAL CORPORATION

By: /s/ Kevin Cloyd
    --------------------------------
Name:  Kevin Cloyd
Title: Senior Vice President